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STOCK MARKET TALK | LIVE EARNINGS
Recorded: April 29, 2025 Duration: 3:40:42Space Recording
Short Summary
In a dynamic market landscape, discussions reveal trends of growth and decline, particularly in the biotech sector and major tech companies. The conversation emphasizes the importance of strategic partnerships and upcoming earnings reports, indicating a potential shift in investor sentiment and opportunities for growth in various sectors.
Full Transcription
Thank you. yeah what is up what is up What's up? What's up, man?
You mean you're going to start here?
Yeah, there we go.
We're starting to move us higher a little bit.
My portfolios, you know, if we don't look at the year-to-date chart or one or two others,
we're doing good right now.
So good times.
We have a couple earnings coming up after the close today, which should be on the spaces.
Visa, Starbucks, Snapchat, et cetera.
A couple interesting names.
I see we already got like three or four people up here.
So it should be a good conversation today.
But yeah, a nice move in the market.
We had percent talking.
It seems like a trade deal might be coming today.
I heard some people talking about Trump,
talking about the economy at like 4.10 p.m. Eastern.
There was plan.
I don't know.
Maybe you have a little bit more information on that one.
But yeah.
That is correct.
He's speaking, I think, in Michigan or somewhere tonight at 410 Eastern.
There was mention of a possible deal in place, and there's speculation that that would be with India.
That's kind of the rumor floating around.
Of course, we heard from Letnick.
We heard from Besant.
We heard from Levitt twice today.
A lot of things moving around. I think it was Bespoke who said,
who added it up.
If you heard from Besant, it was a down day.
If you heard from Lutnik, it was a down day.
Besant was the up day.
Well, to be fair, this is a pretty big announcement.
I mean, they think that we're going to get some, you know, some trade deals in place with Liechtenstein and maybe Latvia.
So, you know, I think we got some big upside here.
Is that the penguin country?
No, those are small countries in Eastern Europe.
Estonia too. We might get Estonia there.
I heard Estonia was holding out.
Anyways, let's jump into it a little bit. Estonia too, we might get Estonia I heard Estonia was holding out Anyways
Let's jump into it a little bit
Looking around the market
Obviously we are up here
For the time being
We filled the gap
If you look at your gap
From Liberation Day on April 2nd
We actually just filled that gap
On the S&P and QQQ
Has actually pushed a little
bit higher than that. It pushed up to where we closed that day. So interesting spots that we're
at on our QQQ and SPY charts and a lot of other charts, of course. And yeah, looking around the
market, we've had kind of a mixed day until this last little push here. Tesla basically break even.
NVIDIA is up almost a percent, as well as Netflix and
Meta. Meta had their LamaCon event today. Apple also green. Amazon, Broadcom, and Google all
slightly red. And I'm excited to hear what everyone's thinking. If things have changed,
I mean, we're continuing to float higher. We almost got to that 50-day moving average on a
couple of those indice names as well.
I'll tell you what, Gary, you jumped in.
Do you want to start us off with any thoughts you've got today?
Listen, I mean, it's pretty obvious.
I think it was Brinker in my portfolio this morning that reported fantastic earnings,
and it's like 13% down.
But this is one that's like 300% up over the past year.
So I don't think we're out of the water. I wrote in my newsletter this morning, and I agree with most everybody else on these spaces over the past week.
We are not hitting all-time highs this year.
I just kind of did the math and looked at the earnings and said, hey, earnings shouldn't take us there.
hey, earnings shouldn't take us there. GDP was revised down, I think, by the Atlanta Fed.
GDP was revised down, I think, by the Atlanta Fed.
So, and I wrote, you know, Amp, you and I, I was laughing last night when I did this thing.
I am now a tariff expert. I am a bond expert. I am every expert that has been in this market
for this year. AI expert. Yeah, I'm not a Trump expert. And I think that's what the market is hounding on. And you
see it today when Amazon said, or there was a leak of a report of Amazon putting a tariff line
on their receipt, like a tax line. I mean, the administration just ran back at them and said,
why didn't you put an inflation line? I don't think it's appropriate, but it is what it
is. I mean, they're going to go at, and they are trying to hound on their message that this is not
a tax or not going to inflate any kind of a cost to the American consumer. So they're staying on
that message. They are pushing it out there. I think the people that actually know what a tariff is and say that, you know, and I saw a good, a great one.
I forget where it was, but they said for Trump's reconciliation, they're trying to use the tariffs as the write off to justify the tax reduction later in the year.
But the problem is the tariffs need to become law in order to do that because they can just be wiped out by the next administration.
So I'm staying on my hands as far as the indexes.
I think you may wind up the year higher than you are today.
And I think Ryan Dietrich has said it before on his Twitter that there's a large percentage that you will wind up positive by the end of the year.
a percentage that you will wind up positive by the end of the year.
But I can't imagine that we get back to all time highs,
unless the market is a forward looking market.
And they're looking at 2026 and not 2025.
So for me, I'm kind of doing that stock pick.
You cut out for anybody else yeah yeah cut out for me oh well we lost gary gary we had you back one testing two there he got wrecked brian why don't you go ahead and jump in leave us with uh
your thoughts for what's going on in this market right now hey why don't i go ahead and jump in and leave us with your thoughts for what's going on in this market right now? This is not a political statement. It's just a fact, right? If we didn't have an administration that tweets nonstop, that doesn't have any sort of cohesion among its messages,
if that didn't exist, looking at the charts right now, I would say we are in an awesome position to rocket higher.
We've put in a higher low since that big flush on the 7th, some nice consolidation.
One thing that I've noticed the last three sessions is at the end of the day, we've ramped,
which is totally different than what we've seen at the end of the day since we started this pullback back in February.
So again, codicil is you can put one tweet out or you could have one bad announcement
and tank the market. But from a technical standpoint, it looks great. People ask,
how do you know when a pullback or a correction is over? Well, there's never one single event.
It's a series of things. The first thing you have to do, stop going down. It sounds stupid,
but that's the first thing. Then you have to firm up. You have to start
recapturing levels. You have to start recapturing moving averages. We've been doing that. We stopped
going down. We put in a higher low. We recaptured the eight. We recaptured the 21. We're back above
a resistance level. We're back above the VWAP on the Qs. So from a progressive standpoint,
we are getting healthier. So that's where I see the market from a technical standpoint. In terms of where the market can or can't go, I really try to make an effort not to predict what your mind open to what could happen. And the classic example of this
goes back to October of 2023, when we had skyrocketing inflation, mortgage rates were
going through the roof, and nobody thought there was any way that housing stocks could rocket. And
I think XHB went up like 100% in a couple of months. So it's nice to have an opinion, but don't
get too wedded to it. And then the last thing I would say is there's a stock that I bought
in early February. I added to it about three weeks ago. It's Okta, right? Now today,
they announced that Okta is being added to the S&P 400 mid cap, whatever the hell that is, on Thursday.
And of course, it's getting a nice pop. It's up like eight and a half percent.
But even before that, the reason I was looking at Okta is because it looks to me like it might be coming out of a stage one base.
Now, for those people that aren't aware of this, there's four stages generally in the life cycle of the stock, right?
There's an accumulation phase.
There's a distribution phase.
There's a decline phase.
And there is a markup phase, right?
The markup phase is two.
There's different labels for, you know, Stan Weinstein calls it one thing.
Brian Shannon calls it another.
But the point is, is after you get out of that accumulation stage, that sideways
basing period that comes after the distribution and decline stage, once you get into stage two,
that's where you often get big moves and moves that can last anywhere from six months to two
years. So I'm positioned in Okta right now. It looks really good. My next move in this would be if it can break above the recent highs.
I'd like to see if it pulls back.
But if it really is transitioning from a stage one to stage two, this thing could rip quite a bit over the next six to 24 months.
Appreciate you picking us up there brian uh gary let's get you back on stage i don't know if you wanted to finish your thought no i think brian did it well you know i i the only thing i'll say
is that i do have a what i call the liberation strategy which i wrote it's a technical strategy
it's based on a weekly candle it's based on a couple of moving averages. And I backtested it against the 2000 dot bomb.
I backtested it against the financial crisis, COVID and 2022. And it seems to get me back in
where I'm comfortable. And backtesting, I think nine years, it gains almost as much as buy and hold.
So I'm kind of mixing my fundamentals with my technical strategies and just assuming that I'm no better than anybody else in picking when to get in.
I just know that I just don't feel comfortable right now pouring a bunch of money into the market.
Appreciate that, Gary. appreciate that Gary options Mike let's go over and get your thoughts next hey yeah uh groundhog day I mean today kind of feels like a carbon copy of yesterday we've had
very little range and momentum throughout the day uh we are up a little bit. The administration has not been able to shut the F up today.
They even contradict each other, and it's fine.
I'm speaking tonight. I think it's 6 o'clock Eastern time.
He's going to announce tariff relief on auto industry. We all know this.
This is why GM held off on their conference call on their earnings report until tomorrow.
There's nothing new.
There's no, you know, Besson said there's no deals imminent, none this week.
Then London comes out and says, I have a deal in hand.
I mean, these guys just, they just say whatever they have,
and the market doesn't want to hear it.
I think the less we talk about tariffs moving forward, the better, honestly,
until there's something one way or the other more concrete,
because this is just getting old.
So that said, the market still looks constructive to me.
You know, when I look at what's going on here, we're breaking higher here. We're in the gap.
We're looking, we're heading for the 50 day on the SPY. You know, we're not flying through it.
We're eking into it. We have earnings have not been great. You know, earnings have been okay.
You know, UPS was not good. Coke was good. You know, SoFi was good, but they sold it off. I'm
sitting in some calls on that
that i bought this morning not too happy with that but i think it'll come back so i thought that was
an excellent report from them but it seems to me like they like to buy you know they just don't
want to you know good reports are not really getting rewarded right now and that's just
interesting to me netflix was one of the only ones that has but even that took a couple days before
it went uh you know market breath today is pretty
good you know we're holding in we're positive here you know it's just it's just a market of a
lack of momentum you know i think we're waiting for these earnings i really think we're waiting
until we start getting into tomorrow night you're going to get microsoft and meta and then apple and
amazon on thursday and i think they're looking for these big tech earnings and they want to see what
they're going to have to say
and what they're going to say about their CapEx spending,
what they're going to say about their guidance.
You know, we saw this morning GM withheld their guidance.
We saw a lot of companies are withdrawing their guidance
or just saying, you know, we really just can't tell you right now.
So, you know, I think that's the big deal.
How do you guys, you know, how do you feel about everything? But Palantirantir doesn't care palantir just spiked to 117.23 for whatever reason here
um so for me i'm still long uh some things i'm long the spy i'm on the q's i'm long
amazon nvidia apple and ivit uh in my in my long-term account that i bought into dips here
i added back into on dips uh today traded n NVIDIA twice, took two losses on it.
That almost never happens for me there.
Made some money on TQQQ, but slightly red on the day.
And sitting in some SoFi calls that are red, but they're out into June.
I have time.
And I'm just trying not to overtrade.
So, you know, when I see these pops in the market like we just had a couple of minutes ago, I don't see the news.
I know there's some headline, but it's not taking off, which means it's probably something already known.
So, you know, we'll see.
You know, nice and easy here.
I think, you know, we'll know more by Friday.
There's a headline coming out from Reuters, which we know their track record's not great right now,
but something around limiting AI chips or something coming from the U.S.
No, the headline I think I saw was US President Trump reportedly to unveil more
tire relief during a trip to Michigan.
No, no, that was earlier.
No, that was earlier. Look at the video right now.
Yeah, and the video getting dumped. There's a headline
coming here right now on the
Biden era rule.
Yeah.
Yeah.
There you go.
Boom.
Never ends today.
I can't catch a breath.
There's probably been 12 headlines in the last hour and a half.
It's been a wild day.
I am a little bit out of breath.
Mike, one follow-up question real fast.
When you look at the daily chart, what sticks out to you right now?
On any name?
On SPI or QQQ?
On the SPI, you have a rising wedge, and we're in the gap,
and we're working our way back towards the 50 to 200-day.
And I think it's a constructive chart.
We've broken above that Wednesday's candle here,
and we're above it right now going into the close.
I think that's a very big positive.
The Qs, believe it or not, are actually well above it and almost to the 50 day and are stronger
and i think you know you're trying to get some constructive action here and the market's trying to shrug off everything listen i i agree with stock chart said yesterday i think he's dead right
you know if if these tariffs don't go away it's not built into the markets you know we all agree
that these things are a negotiating tool but those deals need to get in place. So right now, to me, again,
the risk here is still to the upside, I think, over the next short term. And by short term,
I mean the next week or two. Appreciate that. Let's keep it moving around here. Godfather,
let's get your thoughts next, please.
Yeah. Hey, Rudy. So, yeah, I agree with options, Mike. I'm clearly a quieter day. I've certainly been sitting on my hands waiting for the bulk of the meat to come on earnings season with Amazon, Apple, Meta and Microsoft. The only one that I'm sitting in for earnings in my long-term account is Meta.
I'll be watching Snap this afternoon, just in terms of an advertising read-through.
I think it was relatively decent at Google, but certainly there's some other things at play
there. So it would be nice to see another read-through. The only other earnings that I'm
really paying attention to after a close today are Lending Club. And again, it's just a read-through
into my largest fintech position, OpFi, which reports on the morning of the 7th, I believe.
Yeah, May 7th. So that's it for earnings season prior to the big cap tech names on Wednesday and Thursday.
Look, you were right to point out that we're right back to where we were the day before Liberation Day.
So does that seem right?
It certainly means that risk is again elevated, I think, that we're back at these levels.
And I think, you know, as Options Mike pointed out and others, you know, there clearly is fatigue in the market.
I think we've had enough of jaw boning from Trump and the other folks in the administration.
We want to see real trade deal.
And again, hopefully it is somebody like India or Japan or South Korea as opposed to somebody like Latvia.
So that would be nice.
I also agree with Options Bank that we are sort of biased to go higher here, I think. Sentiment clearly couldn't be more washed out. a really, really difficult environment, as I mentioned on small cap spaces yesterday for
those kind of names. It's just, it's, yeah, it's hard to play offense in an environment,
especially for small cap companies where, you know, you just don't have the capital
that the large cap guys do to absorb the cost of tariffs. And of course, the other dynamic
that's going on that's helping the large cap names is as of Friday last week, we came out of the corporate buyback blackout. So we've seen
it. We saw announcements from Broadcom, obviously. We saw HSBC this morning, $3 billion buyback.
We're going to see more of that. My understanding from some numbers out of Goldman is that there's like $1.45 trillion worth of authorizations. Now, the actual executions are
a fraction of that, but typically you do see some 20% of all annual executions take place in this
timeframe, this window that we're in right about now. So, you know, that should be good in terms
of providing support to this market. But, you know, that should be good in terms of providing support to this market. But,
you know, given that we're right back to where we were on Liberation Day, you know, to get above
that, this market is going to need performance from its leadership groups. And that needs to
be large cap tech, obviously. And it also needs to be financials. And financials is a group that
I was looking at today. I'm just, I'm struggling to figure out how to play it and position it, but I strongly believe that in the Q3, Q4 time period of this year, in addition to what we know is trying to get pushed through in terms of tax relief to offset these tariffs, the other big lever that the administration really wants to pull is loosening
bank regulation to stimulate the economy. And, you know, I think what you want to do and the way I'm
looking at it is positioning in ETFs that are, you know, concentrated in money center banks.
So, you know, I know that there's some weakness under the surface in financials with respect to guys that do some commercial levered lending.
But, yeah, I think the market will start at some point, probably, you know, middle to late summer, you know, starting to pre-reward the banks and, you know, potential loosening of regulation.
Otherwise, the pockets of strength that we're seeing in the market don't surprise me a whole lot.
Obviously, the asset light names software with special focus on cyber, crowd, PanW, clearly leadership groups, as was highlighted, Palantir, Honey Badger stock in this market, Netflix, the subscription names.
Although interesting to see, I guess perhaps Spotify didn't quite live up to expectations.
But I would note that there was a consistent bid in the stock all the way through from the weakness from this morning.
So it'll be interesting to see how that trades up going forward.
But yeah, software,
you know, we're up six days in a row now. And I look at some of the other groups,
like biotech, for example, you know, green yesterday, green again today, and otherwise
quiet, you know, relatively flat tape. So that doesn't surprise me a great deal.
Yeah, what else? That's really it. You know, this market is struggling for direction
until we get some clear earnings. And that's got to come from the big cap names, some clear
economic numbers. You know, we've seen across the board this weakness and the soft data. And it is,
in my opinion, just a question of time before it hits the hard data. And I think the board, this weakness and the soft data. And it is, in my opinion, just a question of time
before it hits the hard data. And I think the first, perhaps the first look of consequence
that we're going to see into that comes with non-farm on Friday. I know we get ISM on Thursday
and GDP on Wednesday, but I don't think it's going to show up quite yet there. We might see a bit of
a bump in prices paid on ISM, which is one of the things that I'm looking at. Input cost to
manufacturing in the last read showed that they're rising at the fastest rate since 2022. So
there's clearly a headwind or a tailwind to that, given what's happening right now in terms of tariffs and costs to relocate manufacturing, etc.
So other than that, a little bit of focus on the Bank of Japan meeting on Wednesday,
in so much as the U.S. dollar levels and U.S. debt levels are in focus as people try to gauge whether foreign selling of U.S. equities,
you know, leaning against this U.S. exceptionalism trade has fully run its course.
It does appear to me that a large part of this unwind has already happened.
And this is why I believe that, well, there's definitely some, you know, caution in terms of reacting to earnings reports.
Upside rewards for beats have been fairly muted and guys that miss are definitely being taken out to the woodshed without hesitation.
I do think that from a flow basis and a positioning basis, what we saw, this big de-risking and the fact that cash balances on
long-only funds were like one, one and a half percent of AUM, you know, a lot of that has now
come back into balance. So I think that's constructive for the market again, you know,
for the near term, but we do need to see progress on all these fronts, trade and,
and large cap tech earnings, and foremost front and center.
I'll leave it there.
Appreciate you, Godfather.
It's always great hearing you on that small cap space as well on Monday afternoons.
I heard biotech mentioned in there, so logical if you're available.
Would love to get your thoughts and see if you had anything around that.
Yeah, I'll keep it short. I'm short i'm mostly listening today feeling really mentally exhausted so
i'm taking it easy but uh yeah i mean i agree with biotech it's 50 of my portfolio
um i think it makes sense uh heading into a slower environment uh for the consumer. And you're basically coming into this with very low
valuation. So it's not really that demanding to buy biotechs when you put your fundamental
investor hat on. We already saw peak pessimism and capitulation in the industry. XBI retested
its lows from the last 10 years, which have held on the last five retests
around that $67 value. So yeah, I mean, I think it was actually down the most earlier today and
it's actually up the most now today. So from the major indexes, which is interesting. So
strong balance, it's been resilient. Yeah, I i mean i look at biotech as essentially
early stage healthcare growth stocks and so i think that in an environment where we're going
to be lacking growth candidates you're going to be able to find growth here high margins here
low tariff impact that kind of thing so yeah i'm very bullish uh biotech again i have three themes in my portfolio
right now um biotech being the largest the second theme being more catalyst driven trades and then
the third theme being latin america which we've talked about a good amount um especially yesterday
so but yeah i mean besides that yeah, I still like rocket companies.
I think lower rates are definitely coming and the housing market will unfreeze.
I think Dollar Tree still looks great, set up really nicely.
Those are probably good things for a slowing economy.
But yeah, I think you generally want to have holdings that are going to be okay in a slowing economy environment because earnings can definitely deteriorate from growth and tech and consumer related names.
So while people are buying that dip, assuming that we're pricing in a lot of that slowdown now, we don't really know the severity of that slowdown.
Now, we don't really know the severity of that slowdown.
We're also coming into these prints with historically pretty premium valuations still, even after a 10, 20, 30% sell-off in some of these names.
So I think that the market looks like it's shaping up a lot nicer.
It's taking any sort of news and kind of shrugging it off.
You're reclaiming moving averages things are just much stronger um and it feels like you know when you get trump coming out
and saying oh we're gonna give more tariff reliefs you know it just seems like they're walking back
a lot of this and yeah i don't i don know. It seems like a clown show, to be honest.
All these politicians are the same.
They're going to blow out the deficit, most likely.
They don't really have a tolerance for pain.
I don't think he wants to go down as the worst president in history,
which it seemed like it was going down that direction.
You could tell from their tone that their stance is softening.
I still just think
moving forward um i'd rather own things that are going to do well if we see a slowdown clearly if
we see a better economy then you know the names that have continued to do well will continue to do well. But yeah, I just think that there's more risk to large cap growth,
large cap tech.
The valuations are high.
The liquidity isn't there to support them.
I want to look outside of that,
and I wouldn't be surprised to see the RSP,
which is the equal weighted S&P,
do better than the market cap weighted SPI moving forward.
So I think people will start looking at other areas of the market.
RSP has actually held up better than SPI this year.
So yeah, and when you get into those periods of RSP outperforming SPI,
those can last for years.
So I think if you've just been watching large cap growth, mega cap growth winning,
it feels like that'll continue to happen.
But I think what's really important to note is that rotations happen in markets all the time when things go too far in one direction and passive investing in the indexes has definitely basically crushed all active managers. And when you get that many
active managers throwing in the towel because they can't beat the index, you know, maybe we're
finally getting to a point where that starts to mean revert a little bit. So yeah, I mean,
I still think SPY does great, but I'm just talking about relative outperformance. And that's really good if you're a stock picker, because now the opportunities
are going to remain to the people who are doing all the work and looking for those opportunities.
Like you could still outperform in a strong index passive driven environment by stock picking,
but now more so given, I think, the relative underperformance of the index.
But now more so given, I think, the relative underperformance of the index.
So we'll see what happens.
But I don't know if it's going to be as easy as it has been.
I mean, if you think about Palantir, around that 125 point, it was trading at 100 times sales.
We're back at 117.
It's still near 100 times sales.
You know, I just don't see it.
I don't and I'm not even saying that that's necessarily mega cap tech, but if you put your
fundamental investor hat on, I'm not talking about momentum, et cetera.
There's really not much that I should expect on a five-year forward basis from returns
from a Palantir at this valuation.
So if you, you know, you're're in the name congrats on a great trade
i just don't see how you can you know underwrite non-negative returns in the next five years but
yeah so that's why i think you should look out uh where there's value and there's a lot of value in
the market you just have to find it and it's tougher than it used to be and you have to be
a little bit more savvy and yeah i you know there's
still going to be tariff impacts there's still going to be economic slowdown um i expect you
know uh probably tlt to catch a bit at some point it already has it's back over 90.
those are typically not strong signs for uh you know a strong economy typically
you know, a strong economy typically.
Appreciate that logical.
Hope you get to feeling better.
Options, Mike, did I see a hand go up from you
somewhere in the last few minutes?
Yeah, I just wanted to piggyback on something Godfather had said.
And Wells Fargo today dropped a dividend increase
in a $40 billion buyback.
So he's right about that.
And I think GS, Goldman Sachs was yesterday,
said that buybacks in the first quarter were the largest they've seen in history or something like that.
So just a tremendous amount of buybacks coming into this market.
And he's right.
That's going to help put a floor under the market.
I agree.
Yeah, I'll second the buybacks being a good way for large cap growth to chug along and help provide support to their stocks. I think that can help for sure stabilize it. So that'll definitely help. I'll disagree. You guys all suck.
Hey, I'd like to just jump in on that. What you said about the equal weight starting to
outperform, we did, of course, start to see some of that breadth come into the
market, away from a large cap tech. And of course, the year over year earnings growth that we saw
from 23 into 24 isn't going to repeat this year. But I really think that, at least in terms of
near term flows, the foreigners own about 40%. And a big chunk of that is, of course, at least in terms of near term flows, you know, the foreigners own
about 40%. And a big chunk of that is, of course, in big cap tech, this has been, you know, the
the tip of the spear when it comes to the US exceptionalism trade, and, you know, they sold
some $60 billion worth of US equities since the beginning of March. And, you know, I agree with
whoever it was that said that, you know, look, if the tariffs stay and go into place, you know, as they are proposed,
that's not in the market. I just can't see it happening because that for sure, in my opinion,
would put the U.S. economy into a major recession. And I don't think that, you know, Trump has the political will to,
you know, to want to see that. So I do expect we're going to see continued walkbacks
of these policies. And as we see that, I think, you know, my point is that I think you're going
to see some of that foreign money come back into the market again. And I think it'll come right
back into these same names again.
I don't expect it to be like we saw in the beginning of 2024
when there was no other performance in the market.
But that's clearly where the biggest hits have been seen.
And I wouldn't be surprised to see the biggest snapback there
to the extent that people get some confidence
that the U.S. hasn't completely lost its marbles.
Yeah. that people get some confidence that, you know, the U.S. hasn't completely lost its marbles. Hey, can I just jump in here real quick and talk about something about just the macro risk in the market?
Absolutely.
So I'm probably the oldest person on this call.
And so I like to think I have a little bit more perspective on what's going on right now.
And, you know, this market really bothers me.
I mentioned earlier how one tweet or one statement from the administration can send this market either way.
This isn't really the way markets are supposed to work. This isn't the way administrations are supposed to work. But we have increasingly
moved towards this more of an executive decision-making process in the United States.
If you go back to 2008, executive orders were very rare and they were used mostly for emergencies. Right. And the
reason is, is we're not set up as a country to have one person be able to just, you know, like
king or a queen make declarations and affect the the economy, affect the populace, affect the
markets. And the problem was, is that 2008, when Barack Obama got into the
presidency, our Congress was doing nothing. I mean, laws and trade policy and things like that
are supposed to emanate from our congressional body, right? It's a big body. They don't make
decisions every two seconds. It takes time. And because of that, we have the ability to digest
changes in the economy. The markets don't react the way
they do now when Congress is making laws. So Congress did nothing in 2008, and Barack Obama
famously said, well, I've got a pen and a cell phone. And he said, he's just going to go around
Congress. So he kind of started the process of using executive orders more. That was picked up
by the Trump administration in their first four
years. And then it was accelerated, partly due to COVID and partly due to the Biden administration.
And now we are like on 11, right? But this is not how markets are supposed to work. This is not a
good thing for our markets. Because again, you don't want to have one person that just makes some decision and can tank the
market 50 handles. So I think, you know, hopefully we're going to get back to a point at some,
you know, sometime when we have a Congress again, when they're less concerned about zinging each
other on social media or insider trading and actually creating legislation. But until that
happens,
I worry that we are going to have a new dynamic.
And it won't matter whether it's this president or if we get a Democratic president next time,
they'll just undo all the stuff
that the previous president did.
And we'll get this back and forth ping pong.
And I just don't think over the long term,
that's good for markets.
I think if that's the way it is,
we're going to rely less on fundamentals and less on macros because you won't be able to predict them.
And you'll have to know more about technicals and about how to trade in all the markets.
But this is not an ideal situation.
But this is also not the way it's supposed to be set up.
Brett, can I come over to you next and get your thoughts um yeah for sure um I guess when um I guess just kind of looking around taking taking a little bit
of stock of um just kind of where we're at with everything for for the record I agree with Brian
um that we're not supposed to be
as headline driven as we have been. And I do agree that it's not a positive. It's hard to have certainty when things can change based on a tweet or a post. And that can be several times a
day, especially in these high vol situations. And it just makes things more difficult, makes things more volatile.
It pushes certainty down.
And they say markets love certainty, and they say it for a reason.
It's because they do.
All you have to do is listen to a few of these conference calls over the last few weeks to
see how much some of these companies are not certain.
They're very unsure of what to do.
I think someone said it really well last week. I believe it was the CEO of maybe Comerica, CEO or CFO, but it said
people are taking their foot off the gas. They're not hitting the brake, but it's off the gas. And
they're just kind of waiting to see. They're coasting just to see how things go. And I think
that kind of sums things up fairly nicely anyway. And it's not
the worst thing in the world. Obviously, hitting the brakes would be a bigger concern. But it's
if you go on a prolonged period of not putting your foot back on the gas, you're inevitably
going to slow down quite a bit. And maybe we're starting to see that now.
You know, your consumer confidence number again
came in low today. I think it's a five-year low, lowest since May 2020, I want to say off the top
of my head. I know it's the fifth month in a row it's declined, which is not great, just given how
important the consumer is for the U.S. economy. The jolts number missed expectations. I think
kind of going back to that, you know, sort of idea of
management teams taking their foot off the gas. I think that's sort of illustrating,
it's starting to kind of show itself on some of these reports where the jolts, you know,
companies aren't hiring as much, or they're at least toning down the number of job openings
they have until they have a better understanding, so they have a better feeling on how things are going to go. And this week is obviously a very important week when it
comes to figuring out how things are going. We have PC, GDP, jobs, jobless claims. So far,
we're not seeing this horrible deterioration in the numbers. We've seen some noise and some
bumpiness in it, which is, I don't think, too surprising. I think everyone would expect that given how things have been going over
the last few months in regards to global trade. But earnings are also, and we touched on that
earlier, but earnings are also a big part of this week. And Google last week sort of reiterated
where its spend was, where its CapEx was at. I think, you know, for me, that was reassuring to hear that at least some of these big spenders
are still committed to their growth plans, still committed to AI.
I think it was kind of a reassuring read through to NVIDIA, which unfortunately has its own
headline risks at the moment, just given the global trade situation and tariffs and what
companies could be or what companies could be
or what countries could be sort of cut off and blacklisted for some of its products.
But I think if, you know, Amazon, Microsoft, Meta come out
and sort of reiterate some of those big spending targets,
maybe that gives some confidence to the AI, you know, the AI trade.
Maybe it gives some confidence to the idea that, you know,
some of these companies,
the big spenders aren't slowing down as much as maybe has been feared. Obviously,
we need to see tech come back. We want to see the indices come back. They've done great. The indices, it's been a nice rebound off the lows that the pause and the walk back off of some of
the Powell criticisms, I think have kind of been a sigh of relief for investors.
But, I mean, tech makes up 30% of the S&P.
So, you know, if these names are going to get in, and it's, you know, it's down twice as much as the index is on the year.
So they've been an anchor. They've been a weight.
If we want to keep seeing the S&P come back, we need to see tech come back to life.
And it's not really an opinion. It's just
kind of a fact. It'd be a lot easier to rally if we could have mega cap tech acting as the wind in
our sails. But I think when you look at the S&P, to be honest, it is fairly constructive, at least
the recent rally, I think, getting maybe a little stretched here, which I don't love to see on a sort of a dead cat bounce or at least a bear market rally or however you want to kind of call it.
But for me, the 545, 550 level in the SPY, it's like 5500-ish in the SPX was pretty key.
That had been support in March, resistance through most of this month.
You know, we pushed through that, some resistance areas.
So obviously, when you unwind this quick and you come down this fast, a lot of overhead levels,
a lot of potential resistance marks, whether you're looking at a weekly chart, we're running
into the 10-week EMA now. If you're on the daily, 50-day and 565 aren't that far away. So
obviously, a lot of issues, a lot of things to work through from a technical perspective, but at least some constructive, some action here.
We're not just consistently, you know, failing at all the resistance points.
So a lot of work to do on that front.
And I think a lot of it's going to come down to the headlines.
Like Brian was mentioning, we just were in an era with a lot of headline risk.
And I think it's going to have a lot to do with trade clarity.
No news is good news at this point.
I think that's sort of given this rally a little bit of life over the last few days.
But we need to avoid the sort of major escalations, particularly between us and China, if we want to keep seeing markets move higher.
So, yeah, that's kind of what I'm looking for.
It's kind of how I'm viewing things right now.
Appreciate those thoughts, Brett.
Ariel, I don't think we've heard from you yet this afternoon.
How are you?
And what do you have to throw into the mix today?
Yeah, thanks for having me.
I'm doing well.
So I guess really we could start with the
positives in the market. And that is, you know, stocks are, generally speaking, acting pretty
well here. And, you know, if you just kind of have been focusing on the stocks that were showing
the most relative strength while the market was pulling back, you know, that would have led you to some cybersecurity stocks like CrowdStrike,
Zscaler, even something like Okta. So that is definitely fairly constructive. Obviously,
Palantir, it rallied effectively 50% off the lows, gave us a five little day bull flag while
the market went on that four little day losing streak.
Palantir was showing incredible relative strength in that period. And then again,
started to rally up over a hundred. And then as the market begins to rally itself,
Palantir is acting really well. Uber is another one that's acting really well.
So really all that to just say that there are stocks that, you know, are really holding in there nicely.
And those kind of feel like leadership, you know, when the when the market rallies, you know, what rallies most when the market kind of pulls back, what pulls back least, you know, you can
throw a take two into the mix, a TTWO in there. Again, some of these tobacco names still continue
to act well. Some of these aerospace and defense names like like a KTOS or a DRS continue to act well. So we do have things that are acting
well. Again, something in the, if I'm not mistaken, in the biospace, TGTX, GH is another one. I don't
know if that's a bio name on its own. Let me just check here really quickly. No, it's a diagnosis and research. I
guess that's the sub-industry group that it's in, but there are names that are acting really,
really well. Hood, Toast, Geo, I mean, the Lisk SE, Dash, Zscaler, be nice to see Tesla finally
get back over the 200. But the reality is, is if you if you dip your toe and, you know, you gain some traction and then you can grab another position and gain some traction there and then grab a few more and gain some traction there.
The reality is, is that over the last, you know, call it a week and a half, two weeks, the market has allowed you to, you know, get positioned and grab a few stocks in groups that are working. So that I think is the positive.
And without getting too bearish, that's why I had tweeted this before. Whoever came up with the
whole 20% is a bear market, if I have to wait for 20% to finally get negative, you've missed the
boat on a bunch of great shorts. Because I remember being short stocks as early as mid-February and stocks that I'm even still short
today. So coincidentally, some of those names like an MU are red today or a Regetti or GRRR,
and these stocks are red while the market's pushing higher. And then on the flip side of that,
the market is allowing you to be long stocks
that really just weren't breaking down while the market was going lower.
So, you know, always focus on stocks that are in leading groups.
And, you know, some of those leading groups are kind of showing their hand.
Obviously, we've got the declining 50 day coming up here on the markets and we have
a flattening 200-day just above that.
So without getting overly aggressive here and just letting the market pull you in,
then if you have to sidestep, if the market starts to roll back over, you're not fully
invested. But if the market can rally and get through the 50 and you can rally and get through
the 200, markets do like to climb a wall of worry.
And I don't want to focus on every little message Lutnik and Besant and Trump are saying,
otherwise you're just missing the meat of some really good moves that can move your portfolio.
Something like Netflix is acting fantastic. And obviously the market was going down when this thing reported earnings. And so, you know, it wasn't the best time to buy, but you know, if you focus
on technicals and you say to yourself, yeah, well, over a thousand is a pretty nice flat base.
And you can get yourself positioned into Netflix, you know, you're now quite a bit higher. So it's
hard to imagine that all is bad when, you know, names are at 52 week or all time highs,
again, TGTX and the Netflix and, you know, a take two, and there's more than just those names,
but just goes to show you that there are places to be, you know, don't continue to stop looking
for relative strength, just because you think, you know, the market's going to reject at the 50 or at the 200. And then if you wait for this ultimate confirmation of you have to be back
above the 200, you know, to start buying stocks, it's the same thing as, you know, waiting to short
until the market's down 20% to start to get negative. You know, it's just you're late to
the party on both sides. You know, it's best to track relative strength when the market is super weak and then track
relative weakness when the market is super strong.
You know, that puts you in the weakest stocks if you want a short and that puts you in the
strongest stocks when it's time to go long.
And if the market gives us distribution, you know, against the 50 or against the 200, you
know, what stocks are acting pretty rough?
You know, is that that something as simple as maybe
semiconductors? Is it still more solar stocks? Is it still some software names? That's kind of
still to be determined. And when names are breaking down on earnings, some of them are
continuing lower. But again, we could look at something really simple as Spotify today and you get
the gap down on earnings and then you get effectively a nice all day rally on heavy
volume.
You know, I can't imagine that that's just retail piling in.
So, you know, something like Spotify continues to act well and Zscaler at highs today, Pan
W at highs right now.
It's hard to get negative when the stocks are climbing
that wall of worry. Again, I don't advocate for going from 0% invested to 100% invested super
quickly, but just kind of using progressive exposure to get yourself exposed into stocks
that have relatively tight risk from a technical perspective.
And then looking at earnings and sales and saying to yourself, does this company have
good earnings and sales? Is this group in a top 20 or 30 or 40 group in the market?
And the reason that they are that high is because of relative strength, going up more when the
markets are going up and going down the least when the markets are going up and going down
the least when the markets are going down. So that, you know, that is at least how I've always
done it. It puts me typically in some of the very best names. And really for now, it's been fairly
low headache. So I think just kind of sticking to that is going to be pretty good and not getting too aggressive right in front of, you know, some of these declining moving averages.
And then just seeing how the market acts, continuing to track, you know, the stocks that I'm already in.
And if, you know, they begin to fail, then, you know, not just clicking the buy button on new merchandise.
merchandise. So it's kind of how I'm operating here. It will be nice, you know, to see a name
So it's kind of how I'm operating here.
like Tesla, which is literally right up against the 200 day simple moving average, you know,
how does something like this act? I think, you know, it can't hurt the market if this thing
starts to build above the 200 day. So, you know, names are acting well. And, you know, there's a whole list of stocks that I'm watching, whether it's Melly or Okta or Zscaler or SE names with, you know, eight to 10 to 12%
to 15% positions, depending on, you know, how quickly they move with their ADR. And, you know,
just take it once one stock at a time, you know, use progressive exposure to get yourself,
you know, dip a toe. And if you have to back out, you know, you didn't hurt yourself too bad.
And then, you know, operate behind a place of traction. So it's kind of what I'll continue
to do here. And yeah, that's kind of it. Those are my thoughts really going forward, just taking
things one day and one setup at a time and letting the market pull me in.
Go ahead, StockSapper.
Go ahead, StockSapper.
Mic check.
Can I get a mic check real quick?
Mic check, mic check.
Could I go over a couple of the quick earnings coming out right after close?
Yeah, go ahead.
Okay, so with Snapchat, we're looking at an implied move of $1.47 or 16%.
Previous reactions, we see Snap has some crazy moves. chat we're looking at a implied move of one dollar and 47 cents or 16 percent um previous reactions
we see snap has some crazy moves minus eight percent plus 15.89 minus 26.93 plus 27.63
since the last report snap shuts down 21.06 percent coming into this report with open
interest at 1 million 456 445 um another big one that everybody's really worried about or caring about, we have First Solar.
First Solar, we have $10.51 move or 7.46%.
We see previous reactions at 6.36% beat, minus 1.01% miss, plus 2.42, plus 1.65.
And since the last report, we were down about 4.5% percent coming into this earnings report, 509,665 open interest. With this earnings, we also have a couple of
other ones that people are worried about. I could go over the numbers on the other ones if anybody
wants to know them. But I think we're going to have pretty exciting earnings after close. And
I think throughout this week, Microsoft and Meta tomorrow, especially with Robinhood coming under there, a name I'm personally looking forward to and really
excited to seeing.
And Thursday, we also got Amazon and Apple.
So I think we're going to have a great week of spaces.
Definitely a lot of stuff coming up here.
Wolfie, Senior Lobo.
Actually, I see the number one Snapchat fan down there in the audience here, Gavin.
Wolfie, how are you today?
What are your thoughts around the conversation?
Yeah, as the number 17 account to follow on Fintwit, I am just trying to stay afloat.
And I think, you know, you guys covered most of the bases.
And I think you guys covered most of the bases.
The thing I'm kind of paying attention to, some of the things I'm paying attention to on an earnings front are Starbucks in terms of that turnaround story.
The international stuff.
I want to pay attention to Caterpillar, which kind of has a read through on the global economy a little bit more than
deer. I want to see if there's any connection there.
And then another boring one for you, Humana.
We got UNH that got, you know,
deposed last week for lack of a better term.
And then, you know,
just want to pay attention to some of those earnings fronts.
You got earnings coming up for the major ones the next couple of days as well.
For like what worked for me, you know, when we were two Mondays ago, I mentioned Eli Lilly trading up against the level.
Got a little fortunate with the headline.
I trimmed some.
HIMS, same thing, came into prior all-time high around the $25 level.
Trimmed some today.
And then some of the stuff that's working that just kind of like flies under the radar.
There's like some of these boring names.
I've talked about boring names before.
You just take a look at like Tenant Healthcare, for example, THC, really crushed earnings.
look at like tenant healthcare, for example, THC really crushed earnings. Like, you know, if,
if, uh, if I could, uh, quote a stock talk, uh, a remix from, from, uh, the, the Netflix earnings
that, that really beat like, I was a street soft size. If you buy a dollar 24 guides, uh, 25 in
line revenues in line, and then, you know, guided up on some things as
well. And so it's just kind of like some of these things that are boring that you can't really cut
from are working, um, on one side. And then on the other side, it's just like momentum. Like,
where's the momentum going to go? So speaking of momentum, you guys just talked about Tesla,
uh, it's pressed up against the downtrend on top of that 200-day that was just mentioned.
And then there's just kind of like nothing above it if it gets to that 300 level for a little while.
So just kind of paying attention to that stuff.
I want to echo what the sage Brian Lund said about markets aren't supposed to work this way.
And the reason I want to echo it is because of the headline this morning from
amazon the follow-up headline was that trump called bezos and then there was like a press
release from amazon so it becomes this like chicken egg thing like were they really gonna
do it did they pull it back because they got a phone call and that sort of stuff kind of erodes the fabric of trust in our markets and it might not
seem like a big deal currently when you look at your screen and things are up half a percent
um but then if you like you know i actually retweeted uh i tweeted the meme earlier about
the you know there's that meme of the guy that bites his gold that bites the metal and looks
like he's winning and he's zoom out he's like at the bottom of the stand it's that meme of the guy that bites his gold that bites the metal and looks like he's
winning and he's zoom out he's like at the bottom of the stand it's kind of like the logic here so
you know you can look at the screen be like oh we're up um but stuff like that erodes the fabric
of trust in our markets and the reason that we get the kind of wealth that we get and we get the
kind of trading that we get and the kind of stuff that we get because there's that trust there and so i kind of not not kind of i'm
not a fan of seeing stuff like this um i don't want things to kind of to be left alone and then
um you know you guys mentioned that you know historically beset speaks markets go up lundin speaks marks go down
and it was almost like they gave him talking points today to be like hey don't fuck this up dude
uh mentioned yesterday it's the 100 day anniversary of the trump presidency he has the thing in
michigan you guys alluded to the to the the auto stuff that potentially could get rolled back
or some sort of things that could be eased up on the auto terra front.
So we'll see.
But then outside of that, I'm just kind of looking, again,
I kind of look for these idiosyncratic type plays
that don't really move the needle on the overall market, but they get strong setups or they give you strong setups and they can go. But things like DoorDash, StockDocFaveKratos, some of these other related health...
By the way, market did just close.
Oh, my bad.
We may get some numbers here in a second.
No, you're good.
You can keep going, but we may interrupt again.
No, some of these other healthcare related names, like Cardinal Health.
I said tenant.
There's some other ones as well.
So I've just got to pay attention to that stuff and then uh just trying to stay reflexive have an opinion strong opinions loosely
held um and then for me like i said i'm paying attention to these idiosyncratic names mentioned
the ones i did mentioned rivian yesterday uh which is going to be affected by some of this
white house stuff that's coming out and uh we'll see that's that's pretty much it trying to move in Rivian yesterday, which is going to be affected by some of this White House stuff
that's coming out. And we'll see. That's pretty much it. Trying to move up the ranks, though,
too. Trying to go from 17, maybe 16. If I'm lucky, I'll get to 13. We'll go from there.
So a lot of these numbers should be coming out around. So Starbucks says 405. Visa says 405.
Bookings as well. Snapchat, 410, First Solar, 405.
I see we do also have Greg Gavin up here.
First of all, I appreciate you, Wolfie.
Greg, I know we have you up here.
So if you're seeing some numbers out, feel free to jump in.
But a bunch of names reporting earnings here in the next couple of minutes.
Infecting a lot of different industries.
And we also have a bunch of different names reporting earnings tomorrow as well.
So before the open. uh booking just reported earnings if anyone cares
about booking.com yeah some people will travel people care let's see what what's what are they
doing uh top one is a beat top line is at 4.76 billion market expected 4.59 the five thousand $5,000 stock. No, they had...
Oh, yeah.
Didn't they know to split?
I feel like they should.
They definitely should, but there's clearly...
Yeah, there was some talks about the split,
if I'm correct, two quarters ago,
but I don't think they went ahead with that, apparently.
Grants bookings, $46.7 million in line.
Airline tickets sold Up 44%
Rooms up
Booking now down 2%
First solar
I'm seeing that name just reported earnings
Initial move is down
Someone gives about gambling names
Is up 2% initial move
I'll let you know on that one
first day your move for first solar is now down 6%
8% we'll see
so there's a White House
confirms incentivizations for domestic
automobile production that just
came out of 4pm as well you might want to read
in that one probably
yeah I saw a 15% deduction for first
year 10% for second year for domestic
manufacturer purchases of auto parts is what I just saw
for solar revenue of 844 million market expected 839 pre-tax profit is a mess. They posted to 17 million market expected 268
Net income is a mess. They posted to or 9 million market expected 267
Operating income is also a mess. They posted to 21 market expected 276
EPS of a dollar 95 market expected 250
PS of $1.95, market expected $2.50.
Seems like a lot of these numbers should be coming out in the next two or three minutes.
I'm solo down 9% after hours.
I know you're watching Snapchat.
I am.
4.10.
Snapchat every day.
Did you end up buying Snapchat because of me?
No, let's see, did I buy a share? every day. Did you end up buying Snapchat because of me? No.
Let's see. Did I buy a share?
No. No. I did not own any shares
which means it might be safe to go higher.
Oh yeah. Don't buy them. Buy it after
it goes up.
The thing about Evan is. Evan
jinx all the earnings.
If he buys right before earnings, the stock
goes down. Yes. If he sells,
the stock goes up. How long did he sells, the stock goes up.
So, you know.
How long did it take you to figure that out, Gergavin?
I think 14 and a half years.
Logitech numbers are out too, but I don't think anyone cares about them.
Starbucks should be out any second now.
Four or five usually.
That Trump event is starting in five minutes as well at 4.10.
What do you have for Starbucks, Evan?
Did you look at the numbers?
I'm saying EPS was, I see 50 cents, and revenue, I see expectations is 8.85.
So last year they had revenue off 8.54, and EPS off 68 cents in Q2,
but they reported that in April.
So they have a weird year.
So this is at the Q2, correct?
Just make sure.
I don't know what you said, sorry.
I honestly was just concentrating on getting this tweet ready for Starbucks.
Okay.
Now I'm a multitasker, for the record.
Starbucks is moving down.
Visa's out, I'm seeing.
I can dig into that in a second.
Starbucks is not in here.
Trump signs an executive order
Trump signs an executive order to prevent, basically, tariff stacking.
to prevent tariff stacking.
Trump reiterates China and EU ripping off the US.
Starbucks number's out.
Revenue, $8.8 billion.
China will probably eat those tariffs.
That was a direct quote just now.
China, Starbucks sales down.
One person, the market is expected, $1.56.
These are the comp sales
No, we'll look out for Starbucks. Do you see EPS?
EPS 41 cents missing expectations to 49 cents revenue of 8.8 missing expeditions of 8.83 billion
Com 41 cents
Still a mess but not yet-GAP PBS, we'll see.
North America
down one, US
down two percent,
China flat out. China is holding up
pretty well after the last three quarters,
which is pretty bad for China and Starbucks.
this quarter, China held up,
global sales are down
one,
China flat, North America down one, But just quarter, China held up. Global sales are down to one. China, flood.
North America down to one.
Average ticket down to one percent.
Transactions down to two.
Yeah, everything is down all over the place.
Then there's a miss for Starbucks.
a mess for Starbucks.
Other than China, which is surprising.
The Wall Street Journal, S&P 500
just had its biggest loss in the first
100 days of a new presidential term
since Nixon's in 93.
So Starbucks missed, was that
called out?
Starbucks was a miss, but it wasn't terrible.
What's the stock doing? I haven't looked too deep into either
of those. It's flat now.
Stock went up, then
down one person. Now it's
down one and a half.
Yeah, just, you know, barcoding.
Visa is out too.
Visa, beat, beat, beat,
beat, beat. Yeah, okay.
Visa authorizes new $30 million
share buyback program.
Yes.
EPS of 276, market expected 268,
revenue of 9.6, market expected 9.55,
net income was 5.4 billion,
gap EPS of 232.
Excuse me.
Beats across the boat for Visa.
There's another buyback.
We talked about that earlier.
A billion.
Besson just said no trade deal
is done until Trump announces it.
Oh, gosh.
Oh, gosh.
Mondelez is out.
APS 0.74 beats 0.66.
Cells missed slightly.
9.31 versus 9.32. All right, big name for you, Gerg, in two minutes, Snapchat.
Snapchat?
The position seemed a bit high these are now with an
initial move higher about one percent snapchat down about two but about some of the ones that
went a little bit earlier as well what was the one that was down big for solar
i was talking about a different one oh okay. I thought I wasn't sure what you meant.
One minute for that.
And guys, if everyone else says we're kind of going through the initial stuff,
if there's stuff that you find interesting... Big beat on bookings.com.
EPS of $24.
Market expected $17.
Revenue of 4.8.
Market expected $4.58 billion.
Stocks down 5%.
Let me take a look at this. I have snapchat stock in front of me so
now okay well solo now down 12% okay they lowered their guidance pretty bad
from what I saw yeah we're gonna have to go back there and read some of these
forward guidances. Guidance I, as well.
Snapchat should be.
Snapchat numbers are out, Gurg.
I'm seeing some stuff there.
Initial move on the stock is up 4%.
I'm 9% though.
Loss of 8 cents.
Oh, I'm 5% now.
I mean, I can read some of the numbers here,
but I'll let us come to 1.36 billion
on revenue.
EPS was...
Loss of 8 cents versus loss of 13.
Is that right?
Nope.
That might be adjusted numbers.
Big B done a bit off.
That was the right EPS negative eight cents on it was non-gap Let me double check
The AUS is a beat
Our pool is a beat
Guidance from snap
Macro, but what does not just care about?
They just needed a cop-out
Stocks now you got anything on anything any of these numbers standing out so far i saw you tweet the buyback um yeah the the buyback. I mean, that's a pretty nice buyback for Visa, but
the rest of these numbers, no, nothing
significant. I mean, none of my names report today.
Most of my names are going to go
first couple weeks of
May. I have a lot
of the mid-cap defense names I've been talking
about. I have some of these U.S. border
plays, which I actually did really nicely
today. Gio and CoreCivic
were both up nicely today but
um yeah they're just not reporting this week nothing really except for amazon
nothing else oh i have huntington and gallus the shipbuilder they report on the first
um i also have asnd which is a speculative biotech position. They report on the 1st.
Outside of that, most of my stuff is on the 7th, 6th, first week of June.
So, yeah, I don't really have any earnings that I'm going to be super tuned into this week.
I do think there are a couple that are important to pay attention to just for economic purposes.
I think Visa, the report's pretty important.
I'm probably going to go a little bit deeper into it here in the next 10 minutes.
Obviously, the big tech reports matter just for market enthusiasm more than the broader economy.
We have Caterpillar in the morning.
You have GHC in the morning.
Later this week, you have Cisco,
Exxon Mobil on Friday. So, you know, McDonald's this week as well. So a lot of big kind of
broad economy names today that are going to give you, not sorry, not today, this week that are
going to give you a feel of consumer enthusiasm, spending trends, forward outlook, all that good stuff.
So even though I don't own any names that are reporting outside of Amazon,
I'm going to pay attention to a lot of those reports.
But nothing from today.
You didn't even mention Amazon on Thursday
You didn't even mention Amazon on Thursday. I'm shocked.
I'm shocked
I just did.
You didn't say it first
Did I just hear an ESPN notification
No, it's President Trump's speech
at the National Guard
Oh, yeah
They're playing
some nice music
in the background
I know that is one that's an airport hanger right now too. We got a double monster right now. Some nice music in the background.
I know that is one that's an
airport hanger.
Yeah, he's not
on yet, is he?
Yeah, he is.
Yeah, she'd
definitely keep us
updated if some
stuff comes out of
that one.
Are there any more
of this numbers
and earnings
information that's
been interesting?
I'm seeing Seagate and some of the other ones.
Snapchat now down
9%? Damn.
What a move.
20% move.
What were you saying?
Quickly, then Monitiv.
Almost a 20% move.
From up 10 to down 10.
Snapchat every day.
Monitiv, you were saying something there?
Was that Corvive? Corvive. nap chat every day you were saying something there was that core beef
Corvo
QRVO
half their revenue comes from Apple
and how'd they do
double beat
it's a double beat
great company
great company
that's a good sign for Apple
services revenue is going to be solid we know all that because we already know that because of Google great company but yeah i mean that's that's a good sign for apple guys i mean look services
revenue is going to be solid we know all that because we already know that because of google
and now you know one of their uh you know biggest one of their big suppliers not biggest by any
stretch but one of their big suppliers is also reporting solid revenue so should be interesting i think that that that uh i mean
if if you want to take a chance yeah there's two positive things for apple
anyone else want to say anything nice about apple now's a good time nope
no takers ouch
vouch what's up kg
what's going on guys how you doing thanks for the long pause everyone guys
apple we get the longest pause on here yeah i do hear do hear you, Kevin. I thought it was kind of funny to leave how long it would stay blank.
So the slow response was funny. What do you got here? I know we got some people talking right
now. So who knows what we're saying might change in the next five, 10 minutes. But what do you got
for us, Kevin? What's going on? Yeah, look, I think the markets obviously have had a really decent run over
the last couple of trading sessions, and rightfully so.
I think it's really trading on news.
I get a little bit concerned.
I'm going to post a couple of charts here, and I have them on my page.
I'll post them to the nest here in a little bit.
If I'm looking at the E-mini S&P 500 or getting close to the anchor VWAP from the highs, I
think we're about 30 points,
40 points away. That would be a pretty big resistance level that we've rejected pretty
much since we had those highs. And so I'm kind of looking at that as a potential setup.
Market breadth is looking really good. And so I have to keep, I definitely have to give props
to the bulls on that, which kind of makes me a little bit hesitant on what I'm going to say next.
But the reason why I'm a little bit cautious here is just,
if you're looking at like CDS markets or just certain CDS indexes,
especially I look at the North American investment grade credit default swaps,
that index actually continues to move a little bit higher actually since Friday.
And I would say like 90% of the time, I think the correlation is around 90, negative.
It's a negative 90 correlation.
So 90% of the time they move opposite of equities.
And since Friday, Friday, Monday, and then today, they've been moving up with equities,
which is something that's a little bit out of the ordinary.
So I'm keeping my eye out on that. I just feel like that's a little bit of a signal.
Vol is coming down, but you would think that it would actually crush a little bit more than what
we've seen. So I'm just keeping my eye out on the Vol front as well. High yield spreads,
credit spreads also continuing to stabilize and inch up higher just a little bit over the last two trading sessions.
So just given the fact that we have the confluence with the potential resistance level, another 30 to 40 points to the upside for the mini S&P 500.
Credit default swaps kind of stabilizing and moving higher with equities, which is not normal.
10 year, three month treasury spread has inverted once again.
Those usually haven't been recipes for us sustaining rallies, but we might be in a new
regime too, so I always have to caveat this.
We might be in this bad news is good for equities type of regime.
I think we'll figure that out tomorrow.
Today's data, consumer confidence, obviously, that was the lowest that we've seen since March of 2020, getting close to those COVID lows.
The market kind of shrugged that off after the initial print, kind of pulled to the downside there.
Jolts, you know, jolts, I would kind of discount it because that was before Liberation Day.
But obviously, we're seeing what the trend is going to be there.
So it looks like we is going to be there.
So it looks like we're going to be in the downward trajectory.
I think the biggest risk for the market for tomorrow,
in my opinion, is actually GDP.
Wide range of estimates that are out there right now.
The consensus estimate for the street
is sitting at a 0.4% for Q1.
Some people hate on on Atlanta Fed,
but Atlanta Fed's thinking it's going to come in at, what, negative 2.7%.
UX out gold is still looking at a negative print.
And if we do kind of get that 0.4% positive print for GDP,
this would probably be the one of the biggest divergences
that we've seen from the Atlanta Fed tracking tool
and what we actually have for Q1 GDP since COVID-19 once again.
So I'm kind of looking at it and saying if there is a potential risk, and let's say the Atlanta Fed GDP now forecast is, if you kind of go back, it's somewhat in the ballpark.
You know, 20 basis points, 0.2%, give or take.
You will have 20 basis points, 0.2%, give or take.
Even if you have that 0.2% to the upside compared to what their estimates are, you're still looking at a negative print for Q1 GDP.
And I don't see how you get around the whole gold import thing.
I mean, on a nominal basis, that is going to have an impact, right?
So I'm kind of looking at that and saying that could be your vol risk event for tomorrow, in my opinion.
I'm not like bearish, like you got to sell this market off or anything like that.
I'm just a little bit concerned because I am starting to see some divergences and correlations that generally either recorrect in one way or another.
And unfortunately, I think the equities have probably moved a little bit too aggressively.
That being said, I have to also put an asterisk here.
The news flow is going to drive this.
I don't know how sustainable that is going to be.
So that will be like the tailwind for the bulls.
Sounds like we will get an announcement here probably in the next 24 hours.
I don't know who the country is.
We could all speculate.
don't really matter to me if it's not China and it ain't the EU, I really could care less.
It don't really matter.
Maybe if it's not China and it ain't the EU, I really could care less.
But those type of announcements definitely probably will bring some bullish activity
into the market. But technically speaking, and then looking at the vol front, looking at the
credit market front, three of those four areas for me signal a potential pullback in the market.
I'm not saying that we make new lows or anything of that nature,
but I think that a pullback might be necessary and reset some of those correlations.
So that's what I kind of got.
Oh, and then somebody asked me about crude.
Yeah, what is crude oil doing right now?
It's pricing in an economic shutdown.
It's pricing in a recession.
Anything below 65 and it continues to see some weakness what you will see on the back of this
trade though what is actually very interesting because of this dynamic is natural gas is now
trading inversely to a little bit more stronger a stronger inverse relationship to crude oil right
because if we have lower prices, eventually three months from now,
probably lower production in shale,
just across the board,
lower production in shale,
lower production in natural gas,
which is a byproduct of that.
We still have LNG exports
and things of that nature.
Prices kind of move up.
The natty trade has been a tough short.
I ain't going to lie.
I tried to shorten it.
I did short it in scalped yesterday, tried to reenter here today, and then I just kind of gave
up on it. But I'm starting to see that inverse relationship starting to get stronger and stronger
as crude has broken through 65. So until we recapture 65, crude's price again, economic
slowing, pretty much a lot of these commodities are doing the same. So be mindful of that. And that's kind of what I got. And I continue to say, look for values
out there, continue to rotate, buy stocks. If you've got a long-term portfolio, buy stocks that
you don't mind seeing a drawdown in. And some of the yield plays are starting to get out of
attractive yields, but dividend stocks also look pretty decent for me.
And they have been kind of working out over the last couple of weeks.
So I'll kick it back.
Hey, Evan, I got something nice to say about Apple.
At least they're not Snapchat.
Well, they do get 30% of Snapchat sales or something, so I guess they kind of are.
You're not really helping yourself there, Evan.
Oh, they're also your favorite app, too.
What's up, Kurt?
Hey, how are you guys doing?
Doing well. How are you, sir?
Good. Just a couple of things.
Back in February, I talked about how I was amazed at the travel that was falling off when I was out in Vegas and out east before that.
So I had mentioned that I was taking some shorts.
The only short that I still have, and it was the one that I hadn't made any money on until a couple minutes ago, was Booking.com.
I closed all my other shorts, the airlines, the casinos, hotels, the week before Easter,
and they were all profitable.
The Booking.com one, if anybody wants to hop on, if there's a little rebound rally,
I have a target of around $3,200, $3,300 on Booking.com by the next quarter or two.
It's a company I've been pretty involved with all the way back to
the Priceline days in 2002. It's a stock that my uncle brought to me and he had been a trader
in Chicago. So we kind of have followed this stock for over 20 years through all its
mergers and whatnot. We were dumb. We sold it at like $1,800.
So, you know, we have not caught the last giant leg. Of course, we bought an under $30,000, so
did okay. Always wish you had put all your money into something like that, right?
So the only short that I still have is Booking.com of the batch from February.
And this is just in a personal account.
I do it for my own aggressive money.
The one thing I would tell people is if you're going to short the markets, the one thing that I do, and maybe it doesn't help you, but it helps me,
is I write down my ideas and my thesis on a notebook that I look at every morning.
It's on a notebook that I look at every morning, and it helps me build out the trades.
And it helps me build out the trades.
So when I talk to you guys about travel falling off a cliff from what I could tell back in February
and then did some channel checks, those are the types of bets I took.
I think booking.com, if I'm looking at my chart right and my quant indicators right,
chart right and my quant indicators right, there's going to be some piling on here. And it probably
goes down to $4,100, $4,200 pretty easy. And then it's just a matter of does it keep falling through
those steps on the way down. I don't think that international travelers are going to pick up here
to the United States this year. So I think there's a lot more pain coming. The other trades were harder
though. If you take a look at Caesars and you take a look at Delta and Expedia and UAL,
some of the hotel companies, Park Hotels is a REIT that I've been playing with.
I want to be long in it, so I'm trying to figure out how to get long Park Hotels
for investment. I think a lot of the trades are hard because the market liquidity still hasn't completely dried out.
But that leads me to my next thing.
I have started building a short on a couple of banks, but also the regional bank ETF, KRE, just started last couple of days.
KRE just started last couple of days.
From what I can tell, playing with some of the real estate guys here in town, and actually
I have a meeting with some big time real estate investors next week, you know, like handling
big piles of insurance company money.
I can't figure out how the regional banks are going to survive through what's coming.
I think that a lot of regional banks have big, big problems.
And I think that if you want to have a hedge, right, if you want to hedge against the long side of your portfolio,
which is basically all I'm doing, I'm not outright speculating, you know on just going 100% short or anything. I'm just
insuring my portfolio with some selective hedges. I think the regional bank market is in danger
from liquidity. I think Druckenmiller might be right. I think interest rates might not come down.
And the commercial real estate that they've been stretching and stretching and stretching,
you're starting to see more and more foreclosures and bankruptcies.
The banks are going to have this on their balance sheets,
and a lot of them are going to have to write them off this year.
I mean, they might pull it off into next year,
but they've really stretched a lot of this stuff out already.
And when you take a look at the regional banks, much different than the community banks and the
big banks. Those in-between banks, I think they got problems. I think we saw the tip of the
iceberg a couple of years ago. I think we get three, four, five more bank failures. And that
brings down the valuations of the entire group. I think this year it's not an easy short, but I think it's
a high impact short if what I'm saying actually comes to pass.
Well, Evan's headed to the Knicks game tonight,
so that's definitely a short on them.
Definitely want to throw that in there and make sure everyone's aware
that you should bet against the Knicks 100%.
I heard that about the Giants the other day.
Boy, Snapchat's down 14%.
And you get to keep us rolling around.
And long the Knicks, Knicks in five.
I would advise nobody to bet on the Bucs.
Not to the long side.
Well, we'll see.
Pain, pain.
I think everyone else has gone up here.
Look for a micro. Pussy some numbers. Well, we'll see. Pain, pain. I think everyone else has gone up here. Supermicro.
Post some numbers.
Navidia's selling off hard here in After Hours, by the way.
Yeah, SMCI just posted some numbers.
If anyone cares about Supermicro down 15%
SMC says customers are
pushing their sales to Q4
Some delayed customer platforms decision moved to Q4 EPS now 29 to 31 cents
Nothing really meaningful, but...
Do you guys remember like seven inches ago when they got delisted SMCI?
This is what they were doing.
Exactly the same shit.
When customers were ordering stuff for Q4 to meet Q3 quotas,
they were just pre-shipping them, sometimes unfinished products,
which they took back.
End of the quarter was...
It's not just NVIDIA
and SMCI, it's
Avago, Dell, like the whole
space is getting smoked.
I was looking for that story.
Trump did just walk out and begin speaking
in Michigan.
Are we being liberated again?
No, it's probably on the SMCI.
No, we just got back.
Yeah, 2% down on video here.
Yeah, it's SMCI.
20% now, 19%.
Kevin, do you have the – did you see the numbers on that?
For what, SMCI?
Yeah.
Do you have any thoughts on that?
No, I mean, so I looked at the statement,
and Greg Evan might have something more than that.
I don't see anything that they provided from what I have on my Thompson here
I don't have any of the commentary and I'm too lazy to open up
On Bloomberg they did put some numbers like the pre-announced
EPS expected as 30 cents market expected 53 and this is a Q3
Net sales are 4.5 to 4.6 billion
But the main reason that they're giving is customers are delaying
Decisions you for which is our Q2
This is just me the channels of stuff then people you know bought more in the previous quarter
This is why we're selling.
Oh, fuck.
Down 22% now on SMCI after hours.
So SMCI prelim third quarter net sales, $4.5 billion.
Estimate was $5.35 billion.
EPS, $0.29.
Estimate was $0.53.
So they got really shit quarter
I don't think SMC has a great read on Dell and HP and then we they are I mean they are a big customer
But you know, I don't think
It'd be down to five person on this. I
Mean they started one of the pullbacks if I'm not mistaken, right? Yeah
Yeah, 100% just a moment I just try short it
I just try to shorten it.
Let's see if I can run over.
The chart is crazy for SMC.
I'd still up like 500% over the last four years.
But last year was insane from $10 to $150 in March.
Just as soon as we get unliberated and get back to the Liberation Day, then this comes out, huh?
Hey, can I jump in on SMCI?
Yes, please.
That was the one that I wrote the article.
I just put it up on Twitter.
I shorted that back in December.
I closed it in February for a little bit of a profit.
for a little bit of a profit.
But I think that between the tariffs
and the fact that they're just a blatantly dishonest company
that's probably breaking all kinds of laws,
you know, if you could figure out a way
to have the intestinal fortitude
to short that one down to single digits
or maybe even zero,
because I still think it might get delisted permanently.
I mean, like in poker, to single digits or maybe even zero. So I still think it might get delisted permanently.
Like in poker, that'd be called a hero call. I mean, it might be a hero move to try to short SMCI,
but I do think they're a dog shit company
run by dog shit people doing dog shit things.
So that might be a zero if you have the ability to really dive into it and figure out how the stock is going to move.
Because I don't think Trump's going to love him, that's for sure.
The tariffs aren't going to love him.
And, you know, unlike a lot of people who think that the tariffs are just a negotiating thing, I believe Donald Trump when he says that 10% is the baseline.
I think that you're not going to see tariffs go down to zero. You know, I mean, there'll be exceptions and things like that, but
he's going to try to keep that 10% baseline wherever he can because he wants a tax cut
for people making, you know, big bucks. And that's how he's going to get it. So
it's going to put a sales tax on the rest of us,
and it's going to be a tax break for people making over a million bucks a year.
So he basically has said it.
Just keep that in mind.
There's going to be casualties along the way,
and Supermicro is a great casualty because they're a crap company to begin with.
crap company to begin with.
My opinion.
My opinion.
So do you think that this read-through is an overreaction?
Or is it worthwhile reading through what they are seeing
and seeing this reaction around the market and other cities?
So I think the traders just run around with the news of the day and the narrative
of the day. But I also think that when you take a look at the big traders, right, your hedge funds,
your bigger hedge funds, and, you know, professional traders, I don't think there's a lot of real pros
that are super positive on super micro. So when something like this happens, it's just a chance to close some of your short positions at a profit. You know, there's two groups, right? You got your
professional traders and you got your wannabes and the wannabes run around. And I think that
honestly, I can't say anything that Hindenburg said about them is wrong.
I think Hindenburg is spot on on this one.
The only reason he's shutting down is because he got rich
and they're going to make shorting harder in the next year.
So, you know, that's why I've talked to a lot of the professional shorts.
They understand that the rules are going to change.
They got a one-year reprieve on the reporting rule in February.
And the lawsuit that's out there
that holds brokerages accountable for damages from naked shorting, that's going to be hugely
impactful. It's in appeals right now, but the brokerages are going to lose and they're going
to have to start enforcing no more naked shorting. So, I mean, because the technology exists, it's not like they can't enforce the no naked shorting rules.
So, I don't know.
I think shorting is going to get hard probably by the end of this year.
But between now and then, this is probably one of the ones that I think you can beat the heck out of because, no, I don't think this is an overreaction.
I think it's just traders being traders. But I don't think you're an overreaction. I think it's just traders being traders,
but I don't think you're going to see a big buying surge, right?
There's nobody big that wants to come in and buy these shares
because they're cheaper, right?
That would be normally what you'd expect
is somebody with some money would write a check now
because, oh, I can get them cheaper.
Nobody that I have ever talked to,
and I've talked to 50 big traders in the last couple of years, nobody I've ever talked to in San Francisco, in New York, in Stanford, Dallas, anywhere I've been, Puerto Rico, nobody has ever said, I just love Supermicro.
stock talk do you see this story what thoughts do you have around smci
sorry i'm outside with leo right now i can barely hear you
oh you're all good let us know when you uh get back in pocket there
he didn't do the disconnect today that's weird he must have taken the staircase
no one
monodiv let me ask you that same question are you looking into this story much uh
with the numbers here do you think it's uh gonna affect simies as a whole
going to affect semis as a whole no i don't think so i think there's some specific problem look
super micro does have a very high customer concentration i don't know who their largest
customer is it's been rumored to be either meta or tesla could be somebody else so one of those
could very well have pulled back some buy from them. Look, I have known SMCI and you then years ago.
They were only suppliers of small quantity of custom servers
to smaller companies.
They just happened to be at the right place at the right time
with a design that just took off when that whole OpenAI drama started
back in Q423.
And they had a design that was immediately adopted and they started shipping those out
while the Lenovo's and Dell's and HP's of the world were caught flat-footed and didn't have a competing product.
So they built up a large customer business only very recently, only in the cycle.
They had not one single large customer before that.
So I don't think anything happening to SMCI is a damning commentary on what's going on in tech or semis for that matter.
I think somebody else is just going to pick up the slack.
In fact, I was just hoping NVIDIA would dip below 100 on stupid news like that so I could pick up.
I had an order, didn't fill, of course.
But I don't think, I mean, look, it's possible that it's meta and we hear meta pulling their capex and that could be it.
That could be everything.
I don't know.
I don't have enough information to prove it one way or the other.
But they do have, I think, from the last risk report that they did, 31% comes from a single customer.
So, you know, it could be one customer, you know, that pulled back and that'll do it.
So I don't know who that customer is. So I don't think this is beyond SMCI. Is there a risk of,
you know, CapEx pullback? Absolutely. I think it's over time too. I think
it's about damn time that CapEx starts pulling back because we've clearly seen all this bullshit
narrative about AI revenue is growing at 10,000% and it's going to, you know, be hundreds of
billions a year. All that's bullshit for now. It's growing fast because it's growing from zero.
It'll eventually get large enough to matter.
But as of now, everything that's been spent on AI
is more about staving off further loss of leadership in AI
and to keep up with the rest of the companies that are also spending.
But this first set of spend is going to be written off. There is not going to be a return
anywhere close to the normal internal rate of return that's there in tech, right, which is somewhere north of 30%.
They're not going to get that before they have to write off this first set of spend.
It'll get there, right?
AI revenue will come, but it's not coming fast enough.
So I think CapEx will fall, but I don't think it has anything to do with SMCI.
Hey, Monitiv, can i ask you a question yes of course
are you following uh dell real closely i'm trying to figure out where their growth because i think
they're best in breed in this space um where is their growth at a value price is it 60s
we should really look at it or do you think it can go lower than that?
Look, I like Dell.
Dell still has exposure to lots of non-data center things that are dead in the water still, right?
Like PC market.
We've been talking about PC market that's been dead forever.
So even, you know, a minor pulse is going to help there.
They have networking where they're low price leader, not really anything great there.
They have storage, which they have a huge business, but it's not really paid off as much as it has for some of the standalone server storage providers so i think there is a lot to you know go right with dell if if we don't get into a
recession or a stagflation here and i think their their data center business is is probably the
strongest by by by a lot but the thing that i don't know about dell is they have so many of
these interconnections through michael dell i i don't know what dell is they have so many of these interconnections through michael dell
i i don't know what they're gonna announce next i don't know what they're gonna spin off next i
don't know what they're gonna do next that's what always worries me um so i mean look at vmware right
they did a pretty shitty job with vmware when they had it and they, you know, Michael Dell took a majority stake in that
and he made the money from there and he made the money, you know, after Avago ran up becoming the
second largest shareholder in Avago, right? So I don't know. It's not the best track record recently,
but I still think it's the best of breed as far as um you know data
centers are concerned personally i still like the contract manufacturers they are cheap and i think
you'll see more and more of um hyperscalers neoscalers go their own way design their own
boards and get it made by one of the contract manufacturers. Gotcha.
I'm back, by the way, Amp. I don't know if there
was something you were asking me. I couldn't hear you when I was outside.
I was going to ask for your thoughts
around this same discussion with
SMCI cutting their
outlook. I don't know if you've got
back long enough to look into it yet.
I haven't looked
too much in the SMCI results,
but I mean, we were talking about this two months ago, right?
When we got those first reports from the MAG-7
and everyone reiterated their guide.
And, you know, I said on these spaces, I said,
you have two scenarios.
You either believe these guys or you don't.
And at that time I said I didn't believe them.
And over the course of the last few months, I said I didn't believe them.
And over the course of the last few months, that has been proven to be true.
You know, we've seen pretty much everybody cancel forward leases in the space,
Amazon, Microsoft, namely.
But there have been speculation from analysts that other guys are doing the same.
Even if not, Amazon and Microsoft doing it in a vacuum is a significant enough headwind
to growth expectations in that industry.
There's just a strategic reconfiguration going on.
Since the deep seek moment,
there's a very clear strategic reconfiguration going on
and how data center spend is gonna be deployed.
In some cases you have spend that's been allocated, and there's a hesitancy to deploy it in the traditional way.
In other words, buy a bunch of GPUs, house them in a facility, find some sort of power supply and backup power supply for the facility, and get it up and running as soon as possible. That's been the blueprint for like the last, well, really since the introduction of ChatGPT,
within two months, there was a blueprint for how US data centers were going to be built.
And pretty much everyone copied that.
And obviously Elon with XAI
took it a little bit of a step further.
And now he's raising money for a million GPU cluster.
So there are clearly people in the space
that are still championing that type of investment and that strategic style of investment in the space.
But I think broadly speaking, there's a reconfiguration going on and that's going to lead to a little bit of trimming in forward growth expectations around this industry.
But it's also going to lead to a new investment strategy in this space,
which could completely change the picks and shovels plays that a lot of people have been focused on.
So I'm going to let it play out.
I'm going to rush to get back into any data center names right now.
I am looking at some of the power producers, which, you know, sold off with the AI names on the way down,
largely because they were thought to be connected to data center, and they are.
But there are some more diversified names
and some names that have nuclear power exposure
for the sake of having nuclear power exposure.
You know, there's this weird dynamic that happened in the last six months
where the nuclear power trade sort of got linked with the AI trade.
And I get it to an extent but I
mean nuclear power's only purpose is not powering data centers and so I think
there's a little bit of a an overlook happening there and there's been some
babies tossed out with the bathwater as a consequence of that so I have started
looking again at names like talent energy Vistra energy constellation energy
I'll probably wait for this earnings season.
I don't want to rush back into any of those names.
I made some nice trades on Talon last year.
It was actually one of my best trades last year.
And I'm not going to rush to get back into it at these prices.
But I do think the chart's setting up nicely.
All the MAs are stacking.
If you actually go through just those three names I mentioned,
you can pull in some other of those power producing names of nuclear exposure into the list.
You'll see a lot of them are stacked above all of their moving averages really cleanly.
You know, they've had consolidated volume for three or four weeks. So I actually like the
sector set up there with some of those power producers. I might look to initiate a position
in the next couple of weeks or so.
I'd like to wait for at least one of them to report to get a feel on,
on how industry momentum's going. But yeah,
I think there are a couple of categories, like I said,
that got thrown out with the bathwater.
And I think there's a couple of categories where you still want to be a
little bit more patient and see if they're going to lower their growth
guidance, just like
SMCI did, which I think is on the table for a lot of those names. So yeah, it's not a tremendous
area of focus for me right now. As I've been talking about, my focus right now is the US
border servicing plays. Those are some of the best charts on the market, GEO and CoreCivic,
in my opinion. And so I'm staying along those and i'm focused on the mid-cap defense
names which i have been all year they're all performing really well all holding up really well
they don't go down a lot on down days they go up a decent amount on green days those are the types
of stocks i'm looking for in this environment um especially as a position trader you know this is
not a conducive environment for swing trading so as a positional trader you know what i'm i'm not
trying to like buy a stock
and sell it the next day. There are some stocks that do that with, there are some stocks that
day trade occasionally, but for the most part, that's not what I'm trying to do. And so it's
important in an environment like this, at least for somebody like me, to find stocks that are
resilient, that when the market does go down or, you know, we do when we do have the next two or
3% down day, which is, which is, I have no doubt we will
get another one, probably many more of them. When we do have those days, I want stocks
that hold up. I want stocks that on those types of days are either slightly green or
barely red. And I can stay in those positions and not get shaken out during market volatility.
So that's kind of where I'm focused. It's very different from my approach last year,
obviously, but it was a different market. You know, last year I was looking at the high momentum names. I was hitting basically anything in a hot sector that I like that was
sitting above the nine and 21 EMAs. Like those were easy longs in last year's bull market.
This is not obviously nearly as easy of an environment. So I think you have to be more
careful with your stock picking. I think you have to understand the industries
you're deployed in really well.
So I'm trying to be as specific as possible
and not navigate out of my zone of comfort
in this environment.
But who's to say a quarter from now,
a lot of these economic concerns are behind us, maybe.
And in that case, I'll get a little broader
with my approach, but for now, that's where I'm sitting.
I did think the story today about from the State Department about the U.S.
considering an equity stake in minerals companies.
I did think that story was interesting.
I don't know if we talked about that earlier or not.
But Maritav, I see your hand up.
Yeah, just a couple of things.
You saw Dylan's latest post, right?
He's saying that they are tracking Microsoft cancellations of active projects going on now. That's far worse than, you know, yeah, that's worse than
canceling projects that have been announced, right? And not started. So, so they are pulling
back hard, at least if, if those reports are true. So. Yeah, I'm pretty sure they are sure. I mean,
the funny, the funny thing is about this, TD was first to this.
TD called out that Microsoft was going to cancel their leases months before the first lease was canceled.
And Microsoft denied it.
Like, Microsoft PR came out and said, no, we are not.
You know, we're committed to our same level of spending.
And TD was like, it was so funny.
If you read the notes, TD issued the first note.
This was like back in, I think this is right after DeepSeek, a week after DeepSeek.
They issued the first report of the weekend.
It got disseminated on Twitter.
And then on that Monday, or maybe it was a Tuesday, I don't recall the exact date, but
the Monday or Tuesday after, Microsoft came out and they're like, no, we're still committing
to our $80 billion in data center capex.
We've not canceled any leases. And then TD came out with a note
the day after they said that and said, according to our channel checks, this isn't true.
We have direct evidence of data center lease cancellations and Microsoft
was denying it. And then here we are three weeks later and now everyone
and their mother knows that they're canceling data center leases.
And the co-pilot
co-pilot subs are flatlining and everybody is now reporting that too so there's a lot going on there
yeah i agree you know there's these a lot of these tech companies i feel like are under the surface
having to make some pretty big strategic changes but it was funny because when we were first
talking about this you had a lot of people that were like,
hey, you know, this is so stupid to think data center spend
is going to slow down because we still need chips.
And it's like that type of thinking is so rudimentary.
Of course, we still need chips.
No one in the history of these spaces, I think,
has ever said that we don't need chips.
We need chips.
We need more chips every year.
And that's going to continue probably in perpetuity. The fact that semiconductors
are integrally important to the economy. But that doesn't mean the estimates are accurate.
And that was the whole point all along. And it's a point that I was trying to make. That's a point
that a lot of people were trying to make in February post deep seek. And a lot of people
didn't believe it. And now here we are, where a lot of those names trading materially lower, some of them trading
50%, 60%, 70% lower.
But there could still be more pain ahead because, again, if there's a complete recalibration
of the way that we approach AI infrastructure, which could be already underway, then all
bets are off when it comes to projected data center growth.
We can't just expect these guys to spend $300, $400, $500, $600 billion and grow that amount significantly year over year over year
if they don't really believe in that strategic approach anymore. So I think that that's a problem
for those names. And it's part of the reason why I haven't rushed back into any of them,
even after the pullback that a lot of them have had. So yeah, I do think on the
point I was talking about with the China-US minerals thing, I did think that statement
was interesting from the State Department because I think we're getting to a point now, I think this
tariff stuff has sort of illuminated this, but I think we're getting to a point now where
there's greater recognition from the US.S. side that we are
competing. And obviously, this has been obvious for a long time, but it seems like the tariff
thing is, like I said, pulled the curtain on it, that we're competing with an authoritarian
economy and an authoritarian government. Right. And the issue with that is, is that when China champions a cause, you know, when they want to do something, they just do it.
There's not red tape. There's not congressional approval that they need to go through.
There's no judicial oversight. You're not going to have some Chinese regional judge tell President Xi what to do.
That's just not the way it works right he
won his reelection three thousand four hundred and eighty two votes to zero he has zero opposition
in the government anyone that has opposed him in the prior seven years has been removed from office
the political standing committee uh which used to be a check on presidential power in china
has been completely gutted and has now just been replaced with
loyalists. That happened two years ago, for those that pay attention to Chinese politics.
So China is effectively a dictatorship. It's really hard to make the argument. Otherwise,
you can come up with semantic differences and say, oh, no, they're an authoritarian,
communist, whatever. Bottom line is they is their dictatorship. And the difficult thing about
competing with a dictatorship when you're a democracy, and again, I'm not saying we're a
perfect democracy. I'm not saying we don't have elements of, you know, oligarchical control. I'm
not saying that, you know, everything is perfect in America. But relative to our authoritarian
competitors, we do change our
president regularly. We do change our members of Congress semi-regularly, depending on which
members of Congress those are. We do have, you know, branches of government and some semblance
of checks and balance. These, China does not, right? And so we're getting to a point now,
I think, where these tariffs have highlighted,
obviously, this big clash between the United States and China, but have also made us realize
that in certain industries like minerals and semiconductors and a handful of others,
it's going to be really hard, even with the right incentives, even with tariffs in place,
even with tax break incentives in place,
it's going to be really hard to become immediately competitive with China in a lot of those areas. And that includes shipbuilding. And so that is something that's starting to, I think,
emerge as a concern in the political environment, which is why I think the State Department is
starting to consider things like the U.S. taking an equity stake in mineral companies, which, by the way, I am not a proponent of, you know, I don't want us to become a country where we take strategic stakes in companies because, you know, that pulls us one step closer to being the sort of political structure that we fight against and that we are opposed to. So I'm not in favor
of it, but I do think there are some concerns in those two industries specifically, in rare minerals
and in semiconductors specifically, where we may have to take measures outside of
just tariffs or just fiscal support to ensure that we're competitive in those industries quickly.
And I don't know the answer to that question.
I don't know how you do it without what the State Department is considering
or some other form of direct fiscal intervention.
But yeah, that is concerning to kind of recognize and realize that,
even though it's been obvious for a long time, to sort of sit back in light of all these tariffs and say, wow, we are competing with an authoritarian
country and that that puts us at a disadvantage in certain categories. You know, you look at
the United States dominance in the last since World War Two. And a lot of it has been on the
idea that we are different from our counterparts. You know, a lot of the confidence in U.S. debt and the U.S. dollar and U.S. stocks has come from the foreign outlook that, well,
the large economically significant counterpart to the United States is has completely different
political structure and is a unilaterally effectively a unilaterally controlled government
in which decision making process is completely different and the risks are different as a result, right?
Like if you invest in the United States, you're like, OK, I may not like the current regime, but it's going to change in four to eight years.
Or, you know, I may not. There may be a stall in Congress right now, but eventually there'll be a reshuffling and maybe some of these priorities will get reevaluated.
there'll be a reshuffling and maybe some of these priorities will get reevaluated.
That's a de-risking mechanism for investors, right? To think that the change is going to be
relatively moderate as a product of a balanced economic system, right? I'm sorry, balanced
political system. Balanced political systems tend to produce slower, more mediated results. It's just
inherently how they work. And when you have a balanced
political system opposed to an unbalanced authoritarian political system,
those translate as disadvantages. That mediation of pace translates it as a disadvantage.
It's part of the reason why people have bought our government debt instead of China's for a long,
long time. Currency has something to do with that as well. Same reason the dollar is a reserve currency and
not the yuan, because there's a tremendous amount of confidence in the political ongoing
in the United States and that, you know, we have more structure and more reliability than
our counterparts. So it's an advantage in that sense and has served us well in that sense.
But when it comes to direct conflict,
and we're not there yet, thankfully,
but we are in direct economic conflict, if you will.
When it comes to that direct conflict,
then you start to realize the disadvantages.
And so we're in a tricky spot, I think, right now
with this whole effort to reshore and nearshore
as quickly as possible,
because in certain areas
we're not going to be able to do it without other measures uh monitor what's up well it's it's more
than not able to do it with other measures right there are some areas where you just have to give
up and say you cannot do it shipbuilding is certainly one of them we cannot do it at scale
there's just no possibility that we come anywhere close to building in volume and cost, you know, anywhere near China or even for that matter, Korea or Japan, which are more expensive.
But that's one of those categories where we have to try, right?
Try what?
I mean, look, this is why you can't go it alone.
This notion that we will do everything we can is just wrong to begin with.
It's completely impossible.
There are places where you have to rely on others to do it for you.
In this case, there have been for a long time active discussions with countries, including India, including South Korea, including Japan, and now even the Nordic countries, which have, you know, a great tradition of shipbuilding, to take on some of that load.
Because we just do not have the people, the talent, the capabilities, the technology, or the, you know, or the infrastructure to do any of that.
So just to give you an example, icebreaker for Coast Guard, we are still building one.
It was supposed to be $600 million.
The cost has ballooned to $1.9 billion.
It's already two and a half years late. It is going to be further two years delayed before any chance of delivery.
Finland has offered to build it for $600 million apiece every nine months.
This is my point.
There are times when you just cannot do it and to exclude every other country that was willing to help and say, we're going to do it ourselves.
This is going to blow up in our face.
Some things, yeah, where we already have a lead, right?
Like aerospace, like semiconductors.
We already have a significant lead there. It makes sense to first build that mode even further
and to keep that IP here.
So it makes sense there.
But things that were lost 30, 40, 50 years ago,
they're not coming back, and they won't come back at any cost.
Yeah, no, that part I agree with.
I agree with you that we shouldn't alienate everyone and that we do need to nearshore in cooperation with allies before we completely reshore anything. Both of those points I agree with.
today? Absolutely not. Do we have the infrastructure today? Absolutely not. Do we have the talent and
the workers today? Absolutely not. But, you know, to me, that is a national security interest. You
know, for me, the three big, the big three for me personally are semiconductors, critical minerals,
rare earths, and shipbuilding. So, and to an extent, shipbuilding, that's tied to steel and aluminum as well.
We can sort of loop those together. But yeah, look, wanting me wanting independence for America in those categories is not a it's not a statement to say that we are ready for independence in those categories today. We're not not in any of them, not even in semiconductor manufacturing. Let's be realistic. We lead the world in design, but not in manufacturing.
So that's going to take years, too. Right. All these things are going to take years.
But I do think we have to try. I do think we have to try in those three categories specifically.
Are there areas where we absolutely have no chance like apparel?
Yeah, I agree. I don't give a shit if cotton T-shirts are made here.
There are some people that do, but I don't give a shit if cotton t-shirts are made here. There's some
people that do, but I don't care at all. I don't care if plastic toys are made here. I don't care
if cheap parts are made here. I don't care if the crap that you buy on Amazon for $10 or $15 is made
here. I just don't care about any of that. But I do care about strategic industries. And yes,
you're right that we don't have the capacity to do those things today. But I think that's part of, you know, four or five decades of complacency, frankly.
And, you know, and in part, it's due to the fact that our country is wealthy, you know,
and that we don't have the labor cost advantages that are needed to build those things in massive volume.
And maybe things like robotics and AI will help us bridge that gap.
But yeah, there are systemic problems with the way the U.S. economy is built that make
it really, really difficult to reintegrate those industries.
So yeah, there's going to be tons of growing pains.
There's going to be problems.
But I think we should try.
I think we should at least make an effort to to nearshore with our allies, as you mentioned, you know, and to de-risk away from China. I think
the bottom underlying theme is that, which is de-risking our exposure to China, because,
you know, the next conflict, whenever it will, it will be the next big conflict, I should say,
will likely between be between us and China in some extent, whether it's directly or indirectly or a fight over Taiwan or a proxy war over some other theater.
In some way, I think most geopolitical experts would agree that a conflict between the United States and China at some juncture is inevitable, whether it's 20 years from now, 10 years from now, 5 years from now, three months from now, who knows? When that time comes, you know, a lot of these weaknesses will be exposed.
And that is my concern.
And so I do think we need to try.
Yeah.
Yeah, I'll leave it at the – well, the shipbuilding, once again, I know it's like something near
and dear to your heart, but it really absolutely makes no sense for us to do it. And even if we were, I think the biggest question,
right, because I want to be constructive, the biggest question is how the hell you get any of
these companies to actually invest in something like that. And what I get nervous about,
you're a student of history, you've seen what has happened in the past. What I get nervous about is we truly try to completely force the issue,
which obviously it would have to be government supported.
And I don't think shipbuilding with government support would be something that,
one, will last because it's going to take decades upon decades.
And, you know, there's a lot of grandiose things
that this president wants to do,
but we have seen like in past presidents over time,
a lot of things also do get unraveled
as regimes change and as administrations change.
So I just don't see, if I'm just an executive,
I don't see the benefits of even trying
or attempting to bring that back here. That's one. And then yes, we don't see the benefits of even trying or attempting to bring that back here.
That's one. And then, yes, we don't have the labor. I mean, you know, it sounds a lot of
people kind of make it look like sunshines and rainbows, but shipbuilding is not, you know,
it's very tough work, very tough work. And I don't know if we have a labor base that's willing to actually
enter into that arena outside of having to go into it because of economic stress and things
of that nature. So I'm still of the mind that we probably should not bring shipbuilding back,
but that is what it is. National security concerns, I can understand that, right? If
you're talking about the actual,
you know, aircraft carriers and defense and things like that. Yeah, I mean, that makes sense. But
commercial shipbuilding makes absolutely no sense, in my opinion.
Yeah, I mean, in China, they've co-opted it, right?
Yeah, but you don't want to go down that road. That's what I'm trying to... Maybe I'll be the
one to step out on this plane. When you start talking about a lot of these things, there's a difference between
saying you're going to reshore or onshore something. And then there's a difference of
how are you actually going to do it? And there's only a couple of ways that you can do it, right?
Tax credits, tax cuts, money from government
in order to incentivize businesses
to be able to expand, right?
Or you make it difficult
when it comes to the economic environment
by putting on tariffs.
But as we will soon find out,
that will be destructive over time
if we do see any tariffs,
even 20% across the board, right?
10%, I think we'll probably be able to finesse,
but anything that's 20% or higher, I think it's going to be a problem if you're looking at the
weighted average. So, you know, I just feel like when you're looking at an industry like that,
it makes it very, very tough. It's not like solar, right? It's not like it's a solar industry
where it's like oh okay
we're gonna give everybody 14 000 cash credits build something on their roof yada yada yada i
mean you're talking about massive ships uh that cost hundreds of millions if not billions of
dollars for one ship so that it just makes it the scalability just doesn't seem like it's really
feasible i also find it just very odd that, you know, when we're talking about China, we're mad about lower prices.
And that also kind of concerns me longer term, right?
Like, are we looking for efficient markets or are we looking for protection markets?
And those are two different things.
And I feel like we're kind of, we're blaming the efficiency aspect of capitalism and free
markets as much as we possibly can have that in a realistic state. And now we're kind of like,
hey, everything that we need, we need to have in-house here in the United States, which
I don't know if that's the best thing for us, but we'll see. Certain industries, I would agree. Pharmaceuticals is one of those ones that,
yeah, I'll throw that out. I don't think we should be making pharmaceuticals out on a big scale,
but I can see the national security implications for what you're talking about, right? We're
pissing off China and China makes a boatload of pharmaceuticals for us, right? Like there's a risk there, but there's certain other industries
that's like shipbuilding. Yeah, not so much. Even like when you're looking at autos, I mean,
honestly, I feel like the automotive companies, they're going to do enough to appease for the
first year or so. But after you get through that two-year hump, I think they'll probably stall this out,
and hopefully things change as we get a new president, whether Republican or Democrat.
Because I do believe a fair amount of Republicans really don't want to see the automotive industry
kind of get hit the way it is. So that's just kind of my thoughts, right? Specific industries,
but I do feel like the rhetoric is ramping up a little bit more about efficient pricing and, you know, they're exporting deflation.
But it's like, you know, we also be able to buy cheaper goods and then utilize the excess capital for other things.
And that just seems like it's a little bit more of an efficient market.
But it's just all about economic theory. Who knows, right? How everything will be
structured. For right now, it looks like we're going to more protectionist regimes. And probably
when you're looking at it, my opinion, the small cap industrials are probably going to be the ones
that in material companies are probably going to be the one that benefits from this, right? I mean,
if you're looking for sourcing, if you're looking for areas of opportunity
over the next three to four years
that can benefit from top line,
in-house demand probably going to be coming
from the materials and industrials.
Yeah, I don't actually disagree
with much of what you said.
I mean, I agree that there are major issues
in a lot of these categories that make it difficult to reshore. I don't disagree with much of what you said. I mean, I agree that there are major issues in a
lot of these categories that make it difficult to re-shore. I don't disagree with any of that.
I mean, I don't disagree with anything really Monat have said either. My bigger point is that
there is a purpose here that is attempting to be fulfilled, whether or not it seems impossible in
some of these categories right now or not. It's obviously going to seem impossible to build ships at scale in the
united states because we haven't done it in so long you know um and it's going to seem impossible
for a lot of these industries to be reshored for the same reason because we have depended on
partners and i don't think that's always a bad thing by the way i'm not advocating for isolationism
i don't want people to be mistaken I'm advocating for specific measures in specific industries that I think are important. And look, shipbuilding capacity is a
tricky one, right? Because like you mentioned, commercial shipbuilding capacity doesn't really,
at least at face value, have a national security relevance, but it does. Because, you know, you go
back to World War II, which we've all studied and all familiar with.
One of the biggest reasons the United States was able to be so impactful in World War II was because we mobilized our industrial base to build things.
Right. Like there was Palmer Luckey gave a great TED talk recently, actually, which I encourage everyone to listen to.
It's a short one. I think it was actually just last week, if I'm not mistaken.
But it was very, very recent. But he talked about this, too.
He talked about how Ford Motor Company, during World War II, built a bomber every 60 minutes
out of Ford Motor Company factories that were repurposed for industrial use during World War II.
And there's countless examples of that, of everyday American factories making either weapons of war or parts
for war or components for war during World War II, which allowed America to be this massive
force when we did enter the war. Now, obviously, the next war is going to be very different
whenever it does happen, and it's probably not going to involve the same level of traditional industrial might that it has involved in the future, sorry, in the past, but it will involve industrial might.
It will involve the ability to manufacture drones at scale, to manufacture ships at scale, to manufacture autonomous systems at scale.
manufacture autonomous systems at scale. As much as we pride ourselves on being a nation that is
leading the world in software, and make no mistake, we are miles ahead of anyone else when it comes to
software and soft tech, I'll say, in general. But when it comes to building hardware at scale,
this country does have a problem. And that applies to many, many categories, not just building ships,
but building a lot of things. And so from that,
like, look, I've been very critical of this tariff policy in the rollout, right? We've been
on these spaces for weeks. I have slammed this tariff policy. I have slammed the rollout. I've
called it haphazard. So there's not enough detail put into it. So keep that in the back of your mind
that that is my opinion on this tariff policy. I'm not in flavor of it. But I mean, I'm not
one side or the other here. I do think there are strategic interests that are attempting to be
addressed. They're just being addressed poorly. And I think those strategic interests include
those categories I mentioned. And yeah, I hear you guys on saying that shipbuilding
is impossible in the United States. I don't agree with that.
I think it will take a long time.
Make no mistake, it'll probably take over a decade to even get close to having the infrastructure we need.
So I'm not saying this is a process that's going to take a few years or a few months.
No, no, no, no, no.
But is it impossible?
Is it impossible? I don't think so. And in the very long run, it's critical. Because if we look
I don't think so.
at today, if China's shipbuilding capacity today, okay, and China's what I don't study a lot of
countries deeply, I have deeply studied China's politics, I've deeply studied the Politburo
Standing Committee, the members, how they've evolved over the last five times, I have a pretty
good understanding of Chinese political structure and the general Chinese economy,
because I've spent a lot of time. What a lot of people don't realize about China's commercial
shipbuilding capacity is that, yes, it is mostly commercial, but every vessel, every single vessel
produced in China must meet military standards. And the reason for that is,
is that not only can the ships be co-opted, right? We're talking about an authoritarian country here.
They don't need to go and buy the ships from the individuals. The ships can be co-opted,
commercial ships can be co-opted in times of war. But more importantly than that,
commercial shipbuilding factories can be co-opted in times of war to build military ships.
And there's a I forgot the name. It's a long Chinese name. It's like Ching Kuang Zhang.
I don't know how to pronounce it, but it's one of the primary shipbuilders in China.
And if you there's a there's a video on YouTube of a guy going through their factory.
There's a video on YouTube of a guy going through their factory.
This is back in 2017.
And he sees a bunch of Chinese military branded stuff in their factory.
And he asks the guy, oh, do you build ships for the Chinese military?
He says, not now.
We're not at war.
That's what he responds to the guy.
So again, on face value, in a time when we are not at war, of course, our shipbuilding capacity is going to be largely used for commercial purposes.
And it's not going to appear to be military shipbuilding capacity.
But in a time of war, it will be.
And so I think that point is important to note as well.
But on the point of incentivizing people to do this, and how that's a problem,
I completely and wholeheartedly agree with you both on that. Because then that's how we got into
this conversation in the first place. The segue for this conversation was when I brought up the
fact that the State Department mentioned taking an equity stake in minerals companies today. And
I'm not in favor of that. But I brought it up because I was like, oh, this is sort of suggestive of how difficult
it is for us to reshore some of these sectors and be competitive with an authoritarian country
like China.
And it's so difficult that we have Republicans now considering taking equity stakes in private
companies, right?
That's how difficult it is.
That's how much people have been pushed into a corner.
So my point is to say we will need multi-tiered incentive to even dream of this happening.
And yes, that might involve tariffs on some of these specific strategic industries.
It might involve fiscal incentives, although we have to be very careful of that, of course, considering how much we've spent recently.
But I mean, you look at the defense bill, right? We talked a lot about
cutting spending or this administration talked a lot about cutting spending. Defense bills had a
new record, right? Defense spending is a new record. And we're getting an additional supplementary
$150 billion package from the Republicans, which a lot of people saying is likely to pass,
maybe not in its current form. You may need to shift around some of the allocations.
But that's a very, a supplementary package is very likely to pass. So if the supplementary
package passes on top of record defense spending, that'll be the biggest supplementary defense
package in 12 years. So like, we're sitting around pretending like we don't have the money,
we have the money, it just needs to be allocated, and we need to give it time. And yes, it may
involve some direct fiscal contributions from
the government. And even though I'm usually not in favor of that, I think in this instance,
we are competing with a government that does the same flippantly, frankly. Like when they have any
sort of strategic interest, they're ready to back those industries on a regional and national basis
on the
flip of a dime like they don't even wait they don't have to wait they don't have
to go through Congress they don't have to go through parliamentary formal
parliamentary approval don't have to get a bill written that's gonna be palatable
to everybody like they don't go through any of that so I think we're just
competing with a behemoth right now And I think there are parts of that competition
that are fine and dandy.
And I think there's trade elements to that conversation
that shouldn't be disrupted.
Like, I think for the most part,
trade between the United States and China is good.
Like you mentioned, you know,
they're selling us cheap stuff.
Lots of American companies build final products
and sell them on the market at affordable prices.
I think on balance, our trade with China is good.
But the fact that we're so dependent on them
in these handful of categories,
I think is a huge, huge, huge concern.
And in a time of peace,
of course we're gonna be complacent about it
and be like, well, it doesn't really matter.
Everything's chilling.
But all it takes is for China to flip a switch
and either invade Taiwan,
at which point we'll have to make a decision
or, you know, make some other sort of action that we have to intervene with. And then all of you,
all of a sudden the United States and China are at conflict. And then we're like, fuck,
we can't build any ships. We have to depend on Sweden or whoever else to build a ship,
you know, every six months for us. Like what, what are we even talking about? We'd be screwed
in that sort of scenario. And even if you don't believe in shipbuilding, what about drone
manufacturing capacity? We can't build drones for shit. We have a couple of mid-cap companies that
are involved in drone technologies, you know, that make a couple tens of thousands of them and sell
them to the government. Like, China can build millions and millions of drones
and we're just sitting around sucking our thumbs like these are problems whether you're Republican
or Democrat these are just logical problems like we need to be able to make shit if we go to war
period so that needs to be addressed and is this policy the right way to do it no absolutely not
I've been very very clear about. This policy has been a mess.
But we do need to find ways to reshore those industries or we're fucked.
I'll just say one thing, Stock Talk. I think the notion that we can go back and retake industries that we vacated five six seven decades ago is all of them well the
the point is not that the point is that we need to use our strengths to find out what we can do to
replace that industry not go after something that you know is is is gone 70 years ago and we have two generations of...
This isn't about what we can do.
This is about what we have to do.
You understand the distinction there?
Like, I agree with you.
This is difficult.
None of the things you brought up, Monadiv,
do I disagree with.
None of the restraints on capacity,
none of the restraints on talent or workforce.
You're absolutely right on all those points, but we don't have a choice.
The alternative is to say, well, we can't do it.
No, no.
And then more time comes and we're like, we're fucked.
No, it's talk talk.
That is the problem.
We don't have to do it.
Korea's of the world can do it.
India's of the world can do it.
This is the problem.
We cannot look.
We are trying to undo the entire notion the entire economic notion
of economies of scale we're we're just saying that economies of scale don't matter at all anymore
they don't matter only in select places otherwise they can't you can't afford the bill that will
that will come with it just not possible martin i'm in favor of de-risking China to India in the interim, right? I think it's smart in the
interim because India has proven to be less politically volatile and more politically
neutral when it comes to American stances, right? So in the interim, does it make sense to de-risk
China to India? Yeah. But tell me this, what happens in 25 years when India is a major global
power and has its own geopolitical interests that may or may not be aligned with the United States?
What then? Then do we shift to Africa? Like, what do we do then? You know, at what point do we say
we have to build it here? Because if we keep outsourcing critical industry and just passing the potato.
Right. OK, China. You know what? They've become a global power now.
We can we got to stop letting them leech off of us. And so we're going to de-risk and go to India.
OK, 25 years later, India is a global power and India's interests aren't aligned with the United States.
Now what? Now we go, go, let's go to Korea.
Okay, Korea becomes a major power 20 years later.
It's a cycle of nation growth, of political interests changing.
And I think at the bottom of the glass, right, at the very bottom of the glass,
you've come to the realization, wow, it might be hard.
It might take decades, but we have to fucking do it.
There's no alternative.
Like, if America cannot build drones and ships and planes at scale quickly, we are doomed whenever that conflict comes.
Like, it's that simple. And so we have to start, you know, and it may be baby steps, maybe for the first decade, nothing happens. Maybe for
the first decade, it's just investment commitments and infrastructure and training of workforces.
Maybe for the first 15 years, that's what it is. But at least it gives us a chance to be competitive when war does come. Because we're all students in history here. Let us make no mistake, war will come.
world of nations with different interests. And we are so diametrically opposed to the Chinese
culturally, politically, economically, that it's inevitable. Whether direct conflict,
proxy conflict, whatever you want to phrase it, it's inevitable. I mean, we've already had proxy
conflicts. But yeah, so I'm pretty much immovable on my opinion that we need to bring back those three industries, maybe more.
Who's going to buy those ships?
You say in the government?
Or are you saying a private business?
Are we forcing a private business to purchase a product that's going to be three eggs more?
Yeah, look, I'm a conservative, so it pains me to say this.
But yeah, you're right.
There will be an element of forcing these industries to exist, especially in the early stages.
Well, you would force a private business to purchase these ships.
Is that what you're saying?
Or is it a government?
Are you saying?
I don't know the exact way that we're going to float the industry.
Well, that's what I want to confirm here because it's either are you saying you build it up?
confirm here because it's either are you saying you built so private like so private organizations
will have to be forced to buy the u.s produced ships or are you saying no these are just government
in some way yeah whether it's tax breaks or you know uh favorable i don't know i mean we we can
find ways to incentivize them to buy u.s. ships. We can find ways to incentivize or even directly tie the government to buy those ships, especially the military ships, as a part of keeping our Navy refreshed and active.
Now, is that going to be enough volume to drive a national commercial shipbuilding industry? Of course not.
to drive a national commercial shipbuilding industry of course not so yes there will have
to be elements of subsidy involved there will have to be elements of like it's not going to
be an easy thing to do right but it's something that we have to do it's like it's not it's and
a lot of these a lot of the measures that would be required to accomplish the things that i'm
advocating for are measures that I am traditionally opposed to
in any other context. I don't like fiscal stimulus. Yeah, I got a quick question. I don't like
government spending money on invading private industry. I don't like that typically.
For sure. Yeah. I had another question because I'm walking up to pick my son up here. So food
security is also a national security concern.
So let's put that shipping light into food production here in the United States. Do you
think the same should apply for the produce that we have here in the United States, where we have
to grow everything in-house and people have to eat everything that's in-house here?
I don't think people have to eat everything that's in-house at all times, but I think we should have enough agricultural capacity to feed the country in a time of war.
So then why do we have a policy?
I don't think that means that we can't import agriculture at all, or I don't think that means that we can't import or Americans can't eat what they want.
or Americans can't eat what they want.
That's not what I'm saying.
I'm saying, but should we have enough agricultural capacity
so that the country won't starve during a time of war
or a time of isolation?
Yes, we should.
But is that to me as urgent a priority as semiconductors
or as urgent a priority as some of these other categories?
No, I don't think so.
So we don't have that structure now. So we don't have that structure now.
So we don't have that structure now on the agricultural front.
But you would say that that should be a priority as well, from what I'm hearing?
I would say anything by which we can be leveraged against in a time of war
is an industry that we should make an effort to reshore as best as possible.
That is the summation of my stance. Does that mean that every single industry,
we will be able to produce all of US capacity in this country? Of course, fucking not. I'm not an
idiot. But should we make efforts in those categories to do our best to assure American resilience in a time of war? Yes.
And I think that does matter because, again, whether you think the world's going to go back, resume a state of globalization within the next six months and that this was all a hiccup or not, the reality is, is that we're at a time of very, very high geopolitical tension globally. You have Israel, Gaza, you have Russia, Ukraine, you have Pakistan, India at the point of tension. You have the United States turning a cold shoulder
to legacy trading partners and allies. You have NATO in unrest over the inclusion of Ukraine.
Like there is, you know, you have tons of civil conflict in Africa right now.
I think I read a report like a few weeks ago from somebody on Twitter that said you're at five year highs of regional conflict in Africa.
So, like, you have all of these global theaters that are hot right now and we're sitting in the middle of it starting a trade war.
And we're sitting in the middle of it, starting a trade war.
And in the midst of that, I think, like I said, the curtain gets pulled on something that's been a reality for a long time.
But maybe this is just the point of urgency.
Well, those risks have always been out there, though.
I mean, if you go back, I mean, they've always been there.
Conflicts have been there for a long time.
We're just now choosing to address it because the tariff thing pulled the curtain where we're like oh shit we're we're so intertwined with these guys that us
putting these tariffs on them fucks the global economy right like the tariff and that's not a
good thing i'm not in favor of mutually assured mutually assured destruction mutually assured
destruction is not a deterrence.
Right?
I mean, that's how this has been built on. I don't think economically, because I don't think the Chinese think the same way economically that we do.
So I don't think economic interdependence is an effective deterrence to the Chinese, to be honest.
Well, take China out of it.
Let their economy burn for the sake of accomplishing it.
Take China out of it. Let's refocus on the sake of accomplishing it. Take China out of it.
Let's refocus on the EU because we're doing pretty much effectively the same thing.
You know what I'm saying?
I'm not in favor of a hard stance against the EU.
Okay.
I'm trying to figure out where the line is, right?
Because that makes it very difficult.
I think China is the main concern i don't really
i'm not concerned about the eu fighting us gotcha okay that's where i was just trying to that's
where my questions were kind of going because it's like no doing this on that point you're
not going to get any fight from me i don't think we need to be like i don't think we need to be, like, I don't think we need to be taking a hardline stance on the EU or Canada at all.
Like, you know, is there some things the EU could do for us?
Yeah.
Have we supported the EU a lot?
You know, yeah.
You know, yeah. Have we dumped a lot of money into Europe? Yeah.
Have we dumped a lot of money into Europe?
Yeah.
So, yeah. Can some concessions be made in good faith by the Europeans to sort of, I don't know, make up for some of that?
Yeah. Like, I don't have a problem with any of that.
Do I think we should take a hard line stance on the EU and, like, make them diametrically opposed to us? No.
Do I think the EU is a national security threat to the United States? No. But I do
think both of those things about China. So, you know, I guess that's where the line is for me,
is that I do think China is, frankly, an enemy of the United States. Like, I think at face value,
they don't say that, obviously, because they want to keep trading with us. But I think everything
about their culture,
their political structure, the fact that they're an authoritarian regime, the fact that they spy on
American companies, not saying we don't do the same. Of course we do. But, you know, they steal
American IP. They, you know, undermine American interests globally. So, yes, I think the Chinese
are the biggest threat to America. And I don't really think there's a second, you know, maybe somebody say like Iran or something, because
they're hyper volatile country. And, you know, maybe we'll have a nuke one day. Sure, you could
put Iran, there's a close second there, maybe Russia and that group, because they're huge
nuclear power, but it's really China. And, you know, again, I just it or it irks me because I do obviously want a world where everyone's kumbaya and there's global peace and we all trade with each other freely and nothing ever happens.
Like, fuck, yeah, I want that world. I think everyone wants that world. We can all just go hang out and have fun and party and, you know, eat good food. But that's not the world. You know, the world is full of
dictators who have ambitions and will do crazy things to achieve those ambitions. And Xi is one
of those dictators. He comes across as really polished and like, you know, a statesman,
comes across as a professional, frankly, but he's a dictator. And so, yeah, like we're sitting across
the table from a dictator, in my view, playing kind of naive, like playing this game of like,
it's okay, you know, you build all our shit and we need everything from you. But if you and me
ever go to war, like the lever that China could pull on us in war? Like if a war were to happen today,
like how are we even going to compete? China will be
pumping out drones and ships
and, you know...
Yeah, but hold on. Hold on. Hold on. Hold on.
Hold on. Hold on. I think
it's getting a little... If you look
at China's naval fleet,
they can't really operate anything outside
of the Taiwan Strait. Just based on
their fleet. They have more ships than we do, but the way that their fleet is constructed,
they're not an international power when it comes to their naval forces.
They are a regional power, but they're not an international power
just based on the infrastructure that they have within their fleet.
within their feet.
I'm not implying that they're going to be able to do this.
I'm implying the volume argument, right?
I'm implying a volume argument, right?
Yeah, they won't be able to go.
They're not going to be able to go
to, say,
the Horn of Africa
and completely hold it down.
They don't have range for that.
I'm not talking about a direct conflict. I'm talking about a conflict over Taiwan,
right? From a volume standpoint.
Oh, gotcha. Okay.
Obviously, I'm not saying the united states
couldn't compete with china in a direct conflict like in an all-out war of course we could we have
nukes right not to mention yeah much but much more technologically advanced navy but yeah that's not
my implication my implication is not that the u.s can't go to war with china in an all-out war
my implication is that if china wanted to accomplish a strategic objective in Taiwan and do so by volume alone, they could.
It'd be really difficult to stop them without nuclear weapons.
You know, like, what are we going to do? We're going to put the American Navy on the front lines in Taiwan?
Like, I don't know. I don't have an inside scoop on what the plan is for if China invades Taiwan. But what I do know is, is they have so much volume for drone
manufacturing and shipbuilding that they can throw an enormous volume at that country that we
probably can't defend against. And, you know, again, if it's about defending the mainland
United States, that's an entirely separate conversation. We have oceans on both sides,
and we probably could do a pretty effective job of that. But it's a different conversation when
it comes to Taiwan. And, you know, if China takes Taiwan, like, this is another thing that Palmer
Lucky discussed in his TED talk as well. The day if China does take Taiwan, and he didn't put he
And he didn't put, he didn't say if, by the way, he said when, which I think is actually a more appropriate characterization.
didn't say if, by the way, he said when, which I think is actually a more appropriate characterization,
When China takes Taiwan, the global economy is fucked.
Like, fucked.
Like, you will lose $10 trillion plus, $20 trillion plus in market capitalization, like, overnight.
Like, where are we going to get high tech chips you think china's going to take taiwan and then after we've attempted to stop them from
doing it say oh yeah by the way here are the chips that your companies need here are the chips that
nvidia had ordered that you guys need to build your ai of course they're not going to do that
of course not we're not so naive to believe that. And so, yeah, we need to build
these things in the United States. And is it going to be easy? No. And are there going to be arguments,
like Monard have said, can we do it? I don't frankly care about if we can do it. We have to
do it. And I believe in this country. We have We have done some crazy like American ingenuity is like, you know, the most powerful force in the world.
And we have we have done things that were deemed impossible before. Is this going to be hard to do? Is it going to take decades to do? Yes. But I think it's necessary. Like, I really, really believe it's necessary. I can't, in my mind, imagine a scenario
where it won't be necessary in a time of war. And war will come. Like, I hope none of us are naive
enough to believe that another world war is not going to come at some point. It will. And we'll
have to be competitive. We'll have to be able to make stuff here. We can't lean on Sweden and Norway
to build ships and lean on South Korea to build drones.
Just like that's not practical, especially in a case of, again, of World War.
So, yeah, I don't know.
There was a comment.
Yeah, for sure.
I just want to clarify, too.
There was a comment that we produced around 22.1 bushels of grains or what have you to feed the United States.
That would be the case if we had actual consumable grains.
So a lot of that's going to be corn,
and a lot of the corn that we produce is ethanol stock and feed stock for animals.
So we would have to still transition how we actually grow food here in the United States
in order for us to be able to sustain.
Right now, it's not the corn that we actually consume directly,
if that makes sense.
So I appreciate it.
You guys have a good day.
Yep, appreciate you chatting as always.
I'm going to add something to this.
I really don't think that we should be as worried about China
as people
are thinking right now and let me let me give you some some key points one of the greatest thing
that's ever happened to us when it comes to china is that they ended up putting a author
authoritarian pig farmer in charge of their country i mean when it comes to making bad
policy decisions this guy is like on the top of the list of uh of things so you know China right now is trying to be a strong man trying to do belt and road
It's basically alienated half the planet, you know, it's turned themselves into a pariah
Outside of basically the people who will you know bow to the Chinese because they're economically tied to them
Most people actually hate China
Not only regionally because if you ask anyone in Southeast Asia, they all
freaking hate China.
They've been literally messing with their shipping fleets, messing with sovereignty.
So no one likes them.
Africa, it's the same exact thing.
They're colonizers part two, and the Chinese are terrible at it.
So this guy coming in really fucked them hard in terms of the world stage
and then on top of it you know from a demographic standpoint they've got a huge problems coming down
the pike in about 10 years so they can all bitch whine complain oh we want taiwan which is an
insignificant little island yeah outside of the semiconductor manufacturing part of it
it's like who actually gives a shit aboutwan but but but hold on chris we
can't say outside of the semiconductor part of it that's the whole part i understand that and
that's one of the reasons why we're taking the proactive measures that we are with moving
semiconductor manufacturing especially euv lithography out of taiwan and bringing it to
the states bringing it to other parts of the other parts of the world i mean look we can transition
away from taiwan you know the taiwan is not the only parts of the world. I mean look we can transition away from Taiwan
You know the Taiwan is not the only place on the planet where where these high advanced chips can be made
The key is that you look lithography thing is a shield that the that the
Taiwanese developed on themselves to basically say look we are materially important to the world if not for us
Then you know x y and z would happen us, then, you know, X, Y, and Z would happen.
And the Chinese, you know, at some point, strategically,
China's got little man syndrome.
I don't know if you've ever noticed that.
Like literally, they've got 5,000 years of history
of getting gang fucked by, I'm sorry, my colorful language,
but getting gang banged by European powers,
the Japanese and everyone else.
So the one thing that they do not want
is to ever feel like they are the smallest person in the room.
And because of that, they always tend to blunder
on the side of, you know, anti-pragmatism.
I mean, the last pragmatic leader that they really had
was Deng Xiaoping and to some degree Hu Jintao.
But for the most part, they've elected this guy.
He's coming off as a strongman, alienated half the planet.
If he invades Taiwan, as much as it would pain us economically, it would kill China.
It literally would destroy any reputation that they have.
They already have these ambitions of becoming like the world's, you know, like a
superpower. It's like, they want the responsibility, but they don't know how to deal with it. And I
don't think they ever will, you know, and like I said, demographically, they are so fucked.
In about 15 years, they're going to have more old people than they do young people in their thing.
Look at the average age of the population in China. And if you look at their retirement age, it's in the 60s. So you have all these people that have been working their entire
lives, saving, saving, saving. It's not actually produced anything really tangible for them
outside of maybe a few, you know, like a good, good, like good roads and, you know, some more
modern industrial buildings, all that stuff is good. But the government has had ways where
they've really societally created problems for themselves. I mean, you also look at their
property sector right now. They thought, hey, you know what? Our goal is we're going to grow at all
costs. What did that do? That ended up making all these state and local governments spend money on
economic developments that weren't even necessary. Right now, China has more housing than anywhere else on the planet right now. And most of it's
unoccupied. Why? Because their entire focus was let's build, let's build, let's build.
And you basically used your wealth to do what? To build buildings that no one's going to occupy.
And then when your population declines, what's going to happen to those buildings?
Some of those buildings are falling apart and they're not even like 10 years old yet.
So like I said, I don't think we've got to worry about the Chinese nearly as much.
I do think we definitely need a strong defensive shield.
But the actions that the administration right now that are taking to basically isolate China, in my opinion, are good long term strategic moves.
I don't like the execution of trying to tariff Mexico, trying to tariff Canada, trying to mess
with the Europeans. I think if anything, we should just keep our focus on China and just be like,
look, these guys are aggressors, you know, look at every time they move anywhere, any of their ships close to Taiwan or do military exercises.
Raise the tariff on China by five percent. Watch them. Watch them back the fuck down after that.
You know, why are you going to Canada? Why are you going to Mexico, who are our strongest allies in the region?
Why not entice Mexico to take every single bit of manufacturing business from the Chinese?
Encourage the Vietnamese, the Cambodians,
the Laotians to do the same exact thing. You know, within a decade and a half to two decades,
China will end up becoming back to its insignificant self again, because all the
businesses have basically moved out and they'll have to literally rely on their domestic markets,
which by the way, are shrinking, you know? so I think the execution is a little bit flawed in my opinion.
But overall, I think China is well contained.
They made a lot of critical mistakes 20, 30 years ago in instituting policies that are
coming to bite them in the ass right now.
And the policy changes that they need to make in order to actually correct are very, very difficult to make.
And I don't think they have it in them to do it.
So like I said, I'm not worried about the Chinese.
They want to pretend like they're the big man in town.
Go for it.
Do what you can.
Instead of spending money on actually doing R&D and research, go ahead.
Spend more money on your military that you'll never actually use.
You know?
But I mean,
that's the thing, right?
Why have they built so much
military capacity in the last five years?
Do you really think they're planning on not using it?
Because I know why they're building it.
To me, it's a
dick measuring contest. That's the only
thing. They're basically saying, look at us. We can actually... measuring contest that's a that's the only thing you know they're basically
saying look at us we can actually like history says that's not true not i mean come on think
about the soviets right so history says pretty much every time a nation arms itself over a five
or ten year period it ends in war okay so so explain the soviets then why did they spend so
much i mean are there some exceptions?
Yeah.
There have been a handful of exceptions. But broadly speaking, when a nation starts accelerating military capacity, it usually ends in war.
To me, I think most of, from me, when I look at the military, especially with countries like China, some degree it's actually national defense.
some degree it's actually national defense the other side is just a way to employ people and
also geopolitically like use the power of the military to do negotiations and saying look you
know we're we're the big bad dog in this region so you better respect us because we have x y and z
you know i mean look at look at so many countries with these giant militaries, and they've never really used them on a one-to-one land war.
Why?
Because once you get into the nuke fight situation, the largest armies on the planet make no sense whatsoever.
They're not going to help you.
Tactically, believe it or not.
There's no model for efficacy that's better than a real theater war.
I mean, the United States did this, or at least did this under the surface in Afghanistan and Iraq,
where we tested cutting-edge weapon systems that we had invested in prior to the war on terror,
that we tested in the war on terror.
Same thing in Ukraine.
Do you think U.S. intelligence officials
that have been studying the war in Ukraine
have been more focused on whether Ukraine is winning or losing
or more focused on the efficacy of drone technologies?
I think the latter.
I 100% agree with you.
Yeah, and so what I'm saying is we,
as terrible and shitty as this sounds,
and most people in the audience who are, I
guess, naive or frankly, even just good people will be shocked by this.
Frankly speaking, war is about ROI and proof of concept.
Most conflicts, not the big ones in between, not your world wars.
Those are about huge geopolitical boil over.
But the wars that happen in between the world wars, are about huge geopolitical boil over but the wars that
happen in between the world wars that's what they're about like they're about
using your military to accomplish a highly sought-after or significant
objective or using your military either directly or indirectly in the case of
Ukraine the United States using its military technologies indirectly
to test those technologies in a real theater
as opposed to testing them in a model or simulation.
Both of those things have been like,
I think you could go through the conflicts
the last 20 years and label almost everyone
with one of those two purposes.
Yeah, I mean, weapons that are battle tested
are of course gonna be way more Yeah, I mean, weapons that are battle-tested are, of course, going to be way more valuable.
I mean, that's...
Yeah, and so are strategies that are battle-tested, right?
Like, do we all want a kumbaya world?
Of course.
But the calculus has to be made by the biggest powers in the world
to say, hey, if war does happen, you know,
with a major significant adversary, are our weapon systems going to work strategically the way that we think they will?
Like in this, in the war with Russia and Ukraine, a huge revelation was made globally, not just by the Russian and Ukrainian governments, but a revelation happened globally in the last three years where everyone said, oh, shit, like tanks are useless when it comes to drones. You have big enough drone swarms, you can disable
massive military investments, huge infrastructure that costs 200, 300 million dollars a pop,
you can disable it with a drone swarm that cost you a couple hundred thousand dollars.
Like that revelation in the Ukraine russia theater has led to
this global rush for drone capacity um and so again i think i think that's the one thing that
i'm actually scared of the most because the thing is the cost on terms of roi on a drone actually
doing real world damage especially when it's when it comes to terrorism
is huge i mean imagine right now you're on you're in long island you know you get a couple of these
drones you don't program them you know using like gps or anything you just do like distance and
altitude and then direction dude you could launch a thousand of these things go in one direction and
basically have mini 9-11 again you know and how do you
defend against something like that so it's it's kind of scary to see um this kind of stuff happen
um and i don't know how we eventually are going to deal with it i think that's why companies like
ram and tall are doing really well because they have like anti-drone systems and that's why
companies like anguil i think are going to do exceptionally well because their entire
focus, like not entire, but a lot of their
focus right now is in
drone defense technologies.
You know, whether that be using kinetic
kill
drones that basically, you know,
ram themselves into existing drones
or whether it's electromagnetic
pulses that can disable them,
RF waves that can disable them.
I mean, for God's sakes, if you watch the funeral of the Pope,
God rest his soul,
there were people out there with actual anti-drone guns.
I don't know if you saw that.
It looked like a really...
I did, yeah.
It was kind of crazy.
So that's where we are in the world.
And believe it or not, we should be, as investors,
we should be finding companies that have state-of-the-art anti-drone technology.
Because if we feel, and I mean, if you've noticed that drones are becoming a major problem and they're going to be a bigger problem in the future because of Ukraine, hell, if anything, we should be looking for companies that, you know, have technology that can defend against that.
Trust me, yeah.
I mean, i'm already
there i mean that's a lot of my portfolio right now is concentrated in these mid-cap defense
companies that produce these next-gen technologies like i think the biggest spending mega trend of
the next 10 years is going to be a reallocation of dollars from your legacy primes to smaller
companies working on new age technologies i genuinely believe that's
gonna 100 hundreds of billions of dollars annually you know 100 100 and and i think the future of
warfare is autonomous weapon platforms deployed at scale deployed at enormous scale whether that's
autonomous ships autonomous submarines autonomous jets i'm gonna go on a limb and just say Andrel is the next Lockheed Martin, in my opinion.
All right?
Andrel's going to be – Andrel's great.
Yeah, they're very well positioned.
If it was public, I'd buy the stock of media.
Yeah, same here.
Yeah, Andrel's fantastic.
And, you know, that Palmer Lucky TEDx I keep referring to, he makes a lot of similar points to some of the points I made today. But I encourage people to go watch it. It's like six or seven minutes. Just type in Palmer Lucky TEDx, I keep referring to, he makes a lot of similar points to some of the points I made today.
But I encourage people to go watch it. It's like six or seven minutes.
Just type in Palmer Lucky TEDx. But he gives a speech on the future of war and why we are unprepared to fight with China.
And I encourage everyone to listen to it. You know, the thing that a lot of people bring up is everyone says, well, we have nukes.
You know, we have the biggest nuclear arsenal in the world, the most advanced nuclear arsenal in the world. Some people argue that Russia does,
whatever. Point is, is that's what people say. They say, well, we have the nuclear backstop.
So if it came to it, we would just use nukes. And it's like, I don't think people understand
the consequence of like global thermonuclear war. We have to assume it's not going to come to that,
right? Because if it comes to that, then all bets are off and, you know, we're all screwed. If it comes to China and the United States and Russia throwing
nukes around flippantly, then we're all screwed anyway. So we have to assume that scenario is
off the table, okay? But in all other scenarios, we need these things. In all other non-thermonuclear global war scenarios,
which is basically an apocalyptic scenario. Outside of that scenario, in all the others,
you need drones, you need ships, you need manufacturing capacity, and you need a lot of it.
And we're just not prepared for it. One more thing to add to it, cyber, you need hardcore anti, uh, what is that
they call anti-cyber warfare, um, cybersecurity, security companies, because let me tell you,
if there's one thing that has the highest, highest ROI, even outside of the drones is
cybersecurity. Okay. If you can get access to certain, you know, government,
uh, government, um, or not just government, but basically even utilities and things like that,
access to their computer systems, dude, you can do way more damage. I mean,
look at what's going on in, in Europe right now with, uh, Spain and Portugal. I mean,
their entire country is crippled by electrical outage Hopefully it's not a cyber attack, but imagine something like that happening
I mean if you want to cripple a military or an economy
That's gonna do it. It's not gonna be like hey, let's drop a nuke
No, no, no, it's gonna be let's just disable the entire eastern seaboard, you know, so these kinds of things and that's why companies like
Sentinel one crowd strike
uh even google right now buying that whiz ai thing these are all heavy heavily important
companies that are going to have businesses not just i mean they're gonna have tremendous
amount of business not just for now but like literally decades into the future
for now, but like literally decades into the future.
Go ahead.
Yeah, I agree.
Cybersecurity is a very monitor.
Go for it.
I got to be very careful with how I say it.
I don't want to sound like I'm picking on things,
but I'll try to be diplomatic.
I have, you can invest in Andy Roll today, by the way.
I have, I put a significant chunk in it.
You know, there's a secondary.
There's a very healthy secondary market for it.
But, you know, you trust the valuation.
I haven't offered it getting into it via an SPV.
But like I said, I'd rather just do it publicly because I don't know what the...
It is. Chris, it's extremely overvalued at this time.
But, you know but what the fuck?
I threw some money into it.
I'm probably going to regret it unless it goes public soon, but it is what it is.
It's possible.
It deserves a premium, in my opinion.
It deserves a premium, not the kind of premium that it has.
That's fair.
Let me go to why.
I don't want to be nitpicking
on things.
But one,
the general tone of the conversation
the last 10-15 minutes
undersells the abilities
our defense primes.
To say that they do not
have the technology, they have
inefficiency problems. That's a different story. They have incredible depth of technology,
including in AI that they've been working on for decades now. This is not something that,
you know, that suddenly came out of nowhere. Most of these came from primary DARPA research years ago,
which really is an extension of the Defense Department
and nothing more than that.
So there is a lot of technology.
There's extreme inefficiency that needs to be addressed.
But I don't think the primes are going away anytime soon to be supplanted by, you know,
Ajani-Kam-Lately companies completely.
I'll tell you, I'll just give you a small example.
The reason why things are this expensive in defense is primarily attributed to the spec
that we write. It is such ridiculously detailed and extreme spec that,
you know, the edge cases are, you know, treated almost as important as the main case. And it's
very difficult to build anything to that. And when you build something that fulfills that spec,
that and when you build something that fulfills that spec it becomes extremely complex and
expensive and that's where we are to to to give you a point the performance of patriot defense
systems in ukraine has exceeded everything that was written in the spec that's why it's that
expensive it is still very expensive it's probably going to be expensive until we start producing the, you know, the, the, the,
the munitions for it at, uh, you know, in, in volume, but it more than met far exceeded
its, its original spec as it was written.
And, and, and we've seen how successful it has been in downing, you know, short range systems
from Russia.
So there is a lot of problems.
Yes, there's a lot of places where the defense primes are at fault for the situation we are
in. primes are at fault for for the situation we are in but there's also a lot of reasons why
they're absolutely the crown jewels of this country and will never will never be supplanted
by somebody new when when when yeah i didn't mean to imply that they're going to be supplanted i
agree i mean lockheed martin you know is not going anywhere i'm not i'm not implying they're
going to be supplanted i just think there's more upside in the mid-cap.
True.
There are things that they shouldn't be making, right?
If you want to get to the right way of doing this, right?
So there's probably our biggest problem right now is lack of munition.
We have the systems to deliver the munition.
We don't have enough munitions to go around, right?
Especially the ones that are you know guided so so those are very expensive and dural is probably and that was
the biggest reason for me to invest in and dural was their you know uh guided munitions at a at
least in theory at a fraction of cost of you know what, what your Raytheon and Lockheed Martin can provide today.
So when you go into that level of detail, yeah,
there is extreme value to a few of these new players to come in
and shake the, you know, the living daylights out of the existing companies,
wake them up and make them more efficient.
But I think we are years from now.
And Oregon acquired, yeah.
It is very much necessary.
I get that.
But they're not going to go away.
The other thing I'll say is, Chris, you're talking about cyber, right?
The problem there is not that we don't have the technology today to lock everything down.
There's only two problems.
One is resources, right?
The budget does not come from the main defense budget.
It comes from a side budget of sorts.
There is a separate layout for cybersecurity
within the defense arena.
So that's where it comes from.
And that needs to get much, much, much, much, much, much larger.
But the real problem is not even there.
The real problem is we do not have enough people with security clearance to be able to actually execute this.
It's not that we don't have the solution today.
Palo Alto, CrowdStrike, all the other ones you named,
those solutions will make an immense difference
compared to where we are today.
But in those secure settings,
we don't have enough people to be able to go in there,
access those systems,
and actually implement these solutions.
And the gatekeepers are the ones that are holding it back.
They're the ones that have hoarded the level of security clearance,
people with the level of security clearance,
because it's a low volume, high margin, high build rate business.
And there's only three people, right?
See, I've talked about this many, many, many, many times.
CACI Systems, SAIC, Booz Allen Hamilton. and there's only three people right see i've talked about this many many many many times caci systems saic booze allen hamilton they hold majority of the people that have the right
clearances and and and if you get through that if you break through that then you have you're right
we can implement all of the solutions that exist today that in commercial space are far more
hardened um you know if you're willing to pay the money for it then we have in the defense space
which is very unfortunate but that's what's holding it back and the last thing i'll say you
you talked about wiz right there was an acquisition before that that I think is even more consequential for Google that was Mandiant.
In fact, I know Kevin Mandia.
I have interacted with him. are not only security cleared in US, but they're security cleared in every country
that is an ally of US to be able to go and implement
at the most secure locations.
And that is making an actual difference to Google.
But it's a unique part of its threat response,
which is what you were mentioning.
So Google has that incredible pool of people that's locked in
because they've been given really good packages to stay back
that have the right security clearances in place.
Anyway, sorry, didn't mean to, you know, go off there,
but I just had to, you know, get a few things out.
No, I agree with that.
To your earlier point, I know you began with the notion that the primes or legacy primes
are not going to be replaced.
I never said they were going to be replaced.
I don't mean to imply that at all.
I just think there's more upside in the mid-cap specialized names from an investment standpoint.
And as you know, the legacy names, you know,
they move pretty slowly, you know, and even in a scenario where the legacy names leverage their
new technologies to meet the shifting priorities of U.S. defense spending, that's more of a
cannibalization for them, incrementally speaking, than it is for the smaller companies that are specialized
in those new technologies as pure plays, right?
So that was the only argument I'm making in my view.
The issue there, Stock Talk, is that we have a very incestuous system between, you know,
you know, DOD and the primes, right, and the industry. So it is these generals and admirals
DoD and the primes, right, and the industry.
and, you know, Air Force chiefs that go into these companies that end up becoming the decision
makers in these large companies, which is why it's very difficult for small companies to break
through, right? I mean, I've written about Kratos for, you know, years, many, many, many years now.
bought Kratos for, you know, years, many, many, many years now. Kratos had a better product than
almost anybody out there for the longest time. And they were, and they spent their own capital,
just to give you an example of the drone business, right? Or the, you know, collaborative combat
aircraft business. They had this for years, but they don't get the orders which is
unfortunate because you know it's it's it's the primes that that that that can do that with much
lesser technology sophistication and much higher cost but they get the orders because they have
those connections right so that is the real risk with with small ones and that and that's the but
that's precisely the the point that i'm saying
that i think is going to change right i think you're going to see a greater willingness i mean
i think elon has been pretty direct about this i think peg set has been pretty direct about this
as well um that there's going to be a greater willingness to go to some of these lighter uh
smaller companies.
You know, I mean, he mentioned Anduril specifically
when he was talking about it, Elon did.
But there's going to be more of a willingness
to go to these companies
because like you mentioned with Kratos,
Kratos not only developed a lot of their own technologies
with their own money,
Anduril's doing the same thing.
And that's a key differentiator
from a lot of legacy primes, not all of them.
A lot of them do have in-house programs,
as you know, where they spend their own money.
But that is a little bit point of strategic difference.
And I also think that, you know, there's a greater focus in a lot of these mid cap companies, sub 10 billion dollar market cap companies, a lot of them sub 5 billion, where there's a greater focus on cost efficiency as a point of differentiation.
And so I think those two things are important potential shifts in that trend. It's a mega
trend, though. Like you mentioned, it's about the military industrial complex. There's deep
set relationships. There's decade long relationships in many cases where, like you said,
you have ex-government officials
that have decade plus long tenures at these companies. And that intimacy is hard to overcome.
But I think we are going to see the beginnings of a little bit of differentiation in defense
spending where, you know, maybe we go from, I think, what was it,
12% going to these mid-cap contractors in the prior year to, you know, maybe 15%, maybe 18%,
you know, jumping up a couple of percentage points from the bottom, I think, would be a big
difference for their bottom lines. Whereas for the primes, you know, it's not going to make much difference, right.
Um, to, to the way they've been functioning normally.
So, yeah, I just think there's a bigger opportunity in, in the mid cap names and I hear you on,
there are obviously more risks and there is obviously a, uh, a sort of affinity for the
primes when it comes to, to the U S department of defense.
But, um, I think that's going to shift incrementally
in the next couple of years.
We'll see if I'm right or wrong.
I didn't even get a chance to ask you
about the meta LamaCon today, Sok Talk.
Did you look into that at all?
I did, but I heard they announced some AI app.
Yeah, so they introduced a standalone Meta AI app, which grok, basically.
And there was another thing, though.
They unveiled their API for Llama AI models,
which some people were inferring that as, hey, there's
another, they're getting into the data center side of things and trying to open up some more
revenue over there. I did think that was kind of interesting, the people that took that angle.
What were their API costs like? Were they comparable to some of the other players? I
didn't even look at any of this i need to look at it
yeah i didn't i didn't see a whole other detail that was obviously what's happening in the middle
of the day while the market was moving a lot but um llama con is the first thing that they've had
obviously llama being their ai for those that aren't familiar with it uh but meta had that
event today and there was it was a ton of like just huge headlines out of it but that was a
couple of the interesting ones that stuck out to me, especially that, that API
thing.
And if they are trying to essentially get into the data center side of things
as well.
Yeah.
I mean, they could be.
Did you see any of that?
No, I'm still catching up, man.
Same reason I was busy with the market today and had a few other things
going so I I will try to have a better answer for you by tomorrow yeah I haven't looked at it either
yeah but I'm looking at some tweets about right now yeah I'm wondering what the api costs are i said it was interesting enough to at least bring up and put on people's radar because that
did happen today yeah no i did see the headline it's a headline but i didn't get a look into it
um i'll probably read about it more tonight uh or maybe give you an opinion on it tomorrow.
Sounds good.
I think we're at a pretty good spot here to wrap it up for the day.
Yeah, sounds good.
It was a good conversation.
Obviously, we talked about a lot of stuff.
I know towards the end, we sort of talked a little bit more about geopolitics,
but I think we've covered the tariff issue pretty extensively, so I didn't feel the need to go back there.
But yeah, anyway, Monter, what's up?
Well, I want to bring it back to earnings, right?
So we are roughly 45% of the way into S&P earnings season.
So we are at 11.4% earnings growth
if we extrapolate the sort of result over the entire list and 4.4% revenue growth.
But what is interesting, what is very interesting is if you stop today, we are at 18% earnings growth and 4.5% revenue growth so that just tells you how much of s p earnings come from the larger
companies come from financials right because most of the financials are you know are done so so it's
something it's something to always remember and to to to close the loop with what logical was saying
saying uh you know um near uh equal weighted s p if you look at the uh if you look at the the
multiples on equal weighted s p it is trading at a 28 discount to you know cap weight s p so just over 20 versus just under 28 for the cap weighted S&P
so again
the thing there is
weight of
this would be even more different
you had fewer companies
in the mix because the farther
down the tail you go the weaker the
earnings are in s&p the the ones that report last are just mostly junk a lot of them losing money
or having much much much much richer multiples like the you know the the 100 to 200 billion
or 100 to 500 billion mega cap tech which are which are trading much richer than than
s p but yeah the data the data is still strong but again right it's backward looking but for now
the data is still very very strong how much waiting do you put in that monitor if no one really wants to give guidance right now
well they are they're sort of hedging and burying their words and you, after what happened with Amazon today, I'm not surprised.
I think that they are being given guidance or, you know, under the guise of guidance,
they're being threatened not to come out overly negative.
I don't think otherwise, you know, it makes any sense given the level of risk we have of things falling apart or teetering
at the very edge we should have seen a lot more negative guidance I think I think they've all been
talked to or they've gotten the gentle idea after a few of them have been talked to to to not
necessarily be too negative but rather couch rather couch that in confusing verbiage
rather than go out and say,
hey, if tariffs stay, we are shit out of luck.
Nobody has said that because they've been told not to say that.
That's the closest I can get.
I don't understand otherwise why we don't have more negative commentary.
Yeah, I think it's all just one big bluff call you know i think it's a i think it's a bluff call from
the markets i mean you look at the action of the markets in the last two weeks i think you look at
the commentary from companies i think everyone's just calling bluff like they don't believe that these tariffs are going to stay in place but but but but stock talk if you if you if you
deal with the risk teams they they don't they they there is they they don't zero price that
that bluff they cannot take that as an excuse they will still you know insist that you
you adjust for it right so so yeah no i agree but like how do you okay so let's put ourselves in the
shoes of of of risk calculators okay how do you how do you adjust for that how do you model it how
do you model it if the tariffs are changing every two weeks and there's exemptions being added. So I think the closest we are going to get to an ideal guide was from United saying, hey, we'll give you multiple guides if this goes away.
Yeah, I agree. That makes sense. That makes sense.
Or just punting all together, right?
Yeah, exactly. Exactly. If you're going to come out and say, if we get a recession, this is my guidance.
If we don't, this is my guidance.
I think that's cool.
I think some people hate it on it, but that's fine.
But in other cases, it's like, what are we expecting here?
Even from the sober operators, right?
right? Even from the sober C-suites, like, what are we expecting them to say? The tariffs have
Even from the sober C-suites, what are we expecting them to say?
changed, especially on China, rapidly and almost randomly at a whim. And constantly.
Yeah. And then we have had layering of tariffs. We've had huge inconsistency on that.
Canada has gone from having fentanyl tariffs to additional tariffs to maybe
car tariffs will go up on Canada to now there's huge exemptions for car tariffs across the board.
In fact, there's a two year relief period where they get a 15 percent kickback against the value
and all 85 percent plus components are exempt. Like these measures have just been thrown into
the mix. How do you,
like, if you're an operator, how do you sit down and say, okay, this is what tariffs are going to
be. This is how long they're going to be in place. You know, like you'd have to assume there's no
negotiations. There's no deals that are announced. How do you factor in the deals that may or may not
be announced? How do you factor in tariffs on parts versus final assembly, which it seems they're starting to differentiate on that point now as well?
It's like, I don't know how to do that.
The safest approach would have been to pull near-term guidance and say, you know what, we are going to wait on guidance until we get clear instructions from, you know, a trade deal or two or, or from, or from the
administration, right? I think it's a little, a little too risky what they've done, which is
hoping that, that the muddle talk will, will just obfuscate the problem for a long time to come.
And by the time it's clarified, it'll be time for the next,
next, you know, guide anyway, we can just wait it out and drag this out for a little bit longer.
I don't know what, what time they bought themselves and what they're going to do with
the time they bought themselves. Maybe it helps. Maybe it helps preserve consumer sentiment.
Other than that, I don't see anything else as an upside for what they've done.
No, I'm not saying there's upside.
I'm not implying that there's upside.
I agree with you that it's a shit show because, like you said,
it's hard to model, and in some cases,
they should be saying they're going to wait but like i'm not
putting the onus on the business managers for that i'm putting the onus on the white house for
that right like if if if if a business manager wants to say or if an executive or i don't know
i'm saying business manager if an executive or whoever's on the earnings call or whoever's delivering the guidance, if they want to say, we are giving you recessionary guidance and we're giving
you non-recessionary guidance, or if they want to say, we're pulling guidance because
we don't know what's going to happen with tariffs, or if they want to say, we're reiterating
guidance until we know what's going to happen with tariffs. I think all three of those responses are fine, to be frank, because, again, I think the issue here is the uncertainty around the policy delivery, not the uncertainty around like how it's being portrayed by Wall Street.
Like, I don't think that's a problem at all.
Like if a CEO, like I said, if they have the
confidence to give you a recessionary and non-recessionary guide, great. If they don't
have the confidence to do that and they say, hey, we want to pull the guide until we know more,
great. If they want to say, hey, we want to reiterate our pre-tariff guide until we know
what the final tariffs are or if they're on or off, that might be the least favorable of three in my view, but it's still
fine. Like I can hear that and be like, okay, dude, I get you probably want to save face,
you know, but sure. And the market can then make discretions on its own, right? Like in the cases
where a highly tariff exposed company, which isn't hard to figure out, it's easy to find out,
highly tariff exposed company, which isn't hard to figure out, it's easy to find out,
anyone can go to their favorite LLM and find out if their company is tariff exposed or the
company they're invested in is tariff exposed. The market can then correct further based on
what is said, right? If a company that is highly tariff exposed says they're reiterating their
guidance, then you probably get a negative reaction there
where people are like calling the bluff and saying, hey, no, you should be more sober with
your outlook here because 80 percent of your business is exposed to tariffs. But in the case
where a company that has two percent COGS exposure to tariffs reiterates their guidance, that's cool.
exposure to tariffs reiterates their guidance. That's cool. Like, that's fine. And maybe,
maybe that's a little too liberal on their end as well. And maybe they end up seeing a bigger
business impact than a 2% impact. Okay, but then they can cross that bridge when they come to it.
Because if this was set in stone, if we had like a one pager from the White House that listed all the tariffs and listed how long they were going to last and listed all the exemptions and it was set in stone, everyone could go see it.
Then I would expect I would have a higher standard for guidance issuance.
There's not any such one pager.
And because there is still, even after today's interview with Lutnik and Bessent, there's
still so much uncertainty around the policy.
I can't like I can't bring myself to pin it on the businesses because I think by no fault
of their own, this is going to be extremely difficult to model on a forward basis because
no one knows what the fuck is going to
happen. For all we know, in three months, we're back to 10% mutual tariffs on China. Like, I don't
know, I'm not saying that's my base case, but for all we know, that happens, you know, and all of
this was much ado about nothing. Like the global economy can stomach 10%. And I think somebody said
this earlier as Kevin or somebody else said this, but yeah, I agree with that. The global economy
can stomach 10%. You can probably adjust to that and move on but best than even said today that
like 10 wouldn't even be noticeable yeah i thought that was weirdly said that right because he didn't
say they were going back to 10 but he randomly said 10 would be unnoticeable so i'm like are
you implying that that's your goal is to get back to 10%? Yeah, is that your baseline now?
Like, I was kind of reading deeply into that.
Yeah, if the goal is to go back to 10%,
then all the panic and fear-bongering that has happened around this
will be much ado about nothing.
Maybe it'll be a little too late.
Maybe you'll see some lasting economic impacts.
impacts. But if it happens in a reasonable timeframe, yeah, I mean, I would be much less
But if it happens in a reasonable time frame, yeah.
concerned about everything if that happened. But who knows? You know, and if you're if you come out
today, and you're like, you're assuming these 140% tariffs are going to stay in place. And let's say
you have, I don't know, 40% of your businesses exposed to China, you're probably going to come
with a pretty negative tone. And if the
scenario changes or softens to that extent, you know, that's going to be great for you, you know?
So I'm okay with the balance of any of those responses is my point. Like I said, I least
prefer the last one where people just blindly reiterate. But I think if they justify it with
the idea of like, hey, we don't know how this is going to change or soften from here, then I think that context makes me a little bit more
okay with it. So yeah, I don't have a tremendous problem with what the street has been saying on
this. That whole Amazon situation was pretty wild today as well. Yeah. Trump even called Bezos
apparently. It was crazy because it was a report it wasn't directly from amazon it was a media report this
morning that the white house then like aggressively replied to you know it just was unnecessary i
felt like it was super unnecessary to to respond to it that way but maybe i'm being biased as amazon shareholder but um no i love it made a point to go right after it and then you saw like all the
walk back back taking like throughout the rest of the morning yeah and they said they were like hey
look look it's our just our amazon haul category because our amazon haul category is mostly sourced
from abroad right that's why the products are so cheap there. So they wanted to make it clear
why the prices were going up on their Amazon haul category,
which makes perfect sense.
You have to explain to your customers
why a department on your store
that is dedicated to low-cost products
is now not as low cost.
Like, that's a responsibility of yours as a business
to inform your customers of that. It's not,
it's not about like being political. So, you know, and like, there was another report that
were going to be labeled as like Trump tariffs. And Amazon was like, no, that was never going
to be the case. It was just going to be labeled as like tariff surcharge. So, you know, I thought
that was ridiculous and stupid, but whatever. I mean, you're going to, you're obviously these
costs are going to be, I think
what the White House wants is they don't want
there to be a recognition that these costs
are being passed on to the consumer. But like
anyone with a brain knows that's
going to be happening, you know?
So I would hope people
aren't naive enough to believe that
costs for things aren't going to go up as a consequence
of this. They absolutely are.
You know, and so many Americans are used to just like hopping on Amazon or hopping on
wherever your favorite e-commerce site and just buying stuff for pretty affordable prices and
just clicking the buy button and checking out with your credit card. Like that is a very,
very American consumer behavior, you know, popping open your laptop and punching in your credit card
and buying stuff online. Those people are going to notice price increases very quickly you know they're and they're going
to like what's the big deal with what's the big deal with like putting that on the website like
here here's what the prices are like you know here's where the tariff it's just like if you
put tax on there you know i'm down here in Mexico, everything, if I buy anything from Amazon US, it automatically pops up there and it says 30% EVA, IVA is included and it calculates it in.
It's a normal thing.
Yeah, it's very normal.
And like, you know, there's, I saw this ad, I think it was on like Instagram or something.
I can't remember where it was, but it was an ad for this company that makes gym clothing. They make like gym tank tops and like
athletic. They make athletic clothing for men. And it was like one of their spokespeople on the ad.
And he was like, hey, we pre-stocked a bunch of inventory ahead of the tariffs. And so we're encouraging
people who love our tank tops to go buy now because after the current inventory is depleted,
our prices will go up. That's what he was saying. It was like one of those real world ads where he's
like standing in the factory. I'm sure you guys have seen those with like a bunch of boxes behind
them. And he was like, yeah, you know, buy our current inventory now because we pre-stocked it before tariffs.
And after the tariffs, you know,
our prices are going to go up.
I think they ship their stuff from like Bangladesh
or something or Cambodia or something like that.
And so in the comments,
I like clicked into the comments
because I do that sometimes.
And I thought it was, you know,
there'd be interesting comments on there.
In the comments, there's a bunch of people
that are like, hey, your site says you're made in america why the
hell are your prices going up from tariffs and the dude is like in the comments replying to everybody
and he's like you don't understand like our cost of goods is going up because the stuff we import to make our straps and our buckles and our
whatever all this weightlifting equipment and apparel they make they're like the cost for those
components is going up yes we make the product here we assemble the final product in america
but a lot of the inputs we import and people in the comments just like didn't understand that
and so many people on twitter that i've seen tweet about just like didn't understand that and so many people on
twitter that i've seen tweet about this issue don't understand that either you know they go
just make it in america and i'm like dude that's not how it works like we have no supply chains in
this country for cheap components like next to none like the entire cheap electronic supply chain
the reason you can get a tv a huge tv for 200 bucks is because the components are sourced through a very, very cost effective supply chain in Asia.
And you can't just build that in the United States by like snapping your fingers.
fingers. You'd be like literally an idiot if you thought that that was possible. So these things
You'd be like literally an idiot if you thought that that was possible.
are going to take time and consumers will see price increases in the meantime. There's no way
around it. So yeah, I just, I just wish people would wake up to economics 101. I think that's
one of the things that's like really concerned me about this whole thing is like, there's a lot of
people that just like are talking about this issue that
literally don't understand basic fundamental economics one-on-one.
Like what happens when these, these policies go into place. So, you know,
if you, if you are somebody that's advocating for it and you think this is
great policymaking, then be aware of the consequences of it. Um, you know,
I saw other people posting today, like the same thing about like, hey, you know, don't let Wall Street convince you this is bad for you.
You know, tariffs are only going to impact stuff that you don't need.
You know, your tech products aren't going to be impacted like straight up lies, you know.
And that concerns me because people believe that at face value.
And a lot of people get shocked when they see these tariff surcharges. You're going to see them
on even on made in America products. You know, in fact, a lot of really popular made in America
brands that have a lot of like, you know, online staying power, have a ton of cult loyalty.
They assemble the products or bag the products or, you know, do final production in America.
But the vast majority of them are sourcing inputs from abroad to make those things. And so, you know, a lot of people
are like, oh, well, my made in America products aren't going to go up. Yeah, the made in China
stuff will go up. I mean, like, that's not true. You know, so yeah, I just hope people realize
like the facts and realities of this thing rather than just being super tented up in political
opinions. It seems everybody's tented up in political opinion.
And I think I can speak as,
I think I can uniquely speak to this situation because I supported the Trump administration pre-election.
I'm obviously a very vocal supporter of Elon.
And broadly speaking, you know,
I do like a lot of the other policy.
I just think this tariff policy has been rolled out stupidly,
haphazardly, and there's just not a lot of thought put into it.
And now we're retroactively putting thought into this, right?
We're retroactively going back and being like, well, we should give these guys two years.
You know, oh, we should give these guys more time to build supply chains.
We should offer them relief, you know, and that's just not the way to do it.
Like we should have been thinking about these things from the outset because these are such
obvious, obvious, like, you know, obvious consequences. And you, they should have been
obvious to the policymakers from the beginning, but I don't know. I've ranted about, I've ranted
about my discontent with it from
for a long time so yeah you're not alone in that i feel like that's that's been probably the most
common thing i've seen uh at least around this app different spaces and discussions is a lot of
trump supporters are making the exact same statement they're saying i'm i'm not pleased
and i disagree with either the policy the rollout the
makeup of it the handling of it whichever way you want to spin it i've heard the same same thing
from multiple circles that way and then yeah to your point there that the other interesting thing
is like hey uh yeah if you bring in auto parts from you know uh you you import auto parts um i the whole idea is i want you to make those auto parts
here but i'm also going to tear a few on the materials you need to make those here anyway
so like that some of those things just don't add up in my mind either
yeah we're like we're saying that should have been thought of up front. Like, hey, okay, 20%, 25% if you bring in auto parts to the manufacturer here, but if you make those parts here, we'll cut you slack on any other import duties.
Like, that would make more sense if that was the way it was rolled out.
Yeah, exactly.
And now they're retroactively saying that. And look, I want to be clear, I am in favor of using reasonable tariffs in strategic industries.
I think with semiconductors, reasonable tariffs will help expedite the transfer of technology to the United States, which I think is an essential national security
priority. We need to be making the most cutting edge chips in Arizona as quickly as possible.
And to be honest, the Arizona rollout has gone well. It's gone really well. Like,
there were concerns initially with Arizona that it would take a long time to get even close to the level
of fidelity that the Taiwanese factories have, but it's been done in just a couple of years.
And, you know, if that's any testament to the capability of the American workforce,
I think it's a damn good one, to be honest. And yes, it's going to be difficult, but we need to do it. And we need to do it quickly,
you know, because we don't know when something might may or may not happen in Taiwan.
And we can't allow something to happen in Taiwan before we reshore meaningful capacity to make
semiconductors in the United States, because our biggest companies all need it. All of our biggest
tech companies need those chips.
We can't just be, you know, flippant about it and wait for it to happen.
So I'm one of those people that's very like most people that you scroll through your feed are going to be on one side of this issue.
They're going to be on the tariffs good, tariffs great or tariffs bad.
That's what they're most people are going to be.
And I'm not minimizing their opinions. I'm just summarizing to say that's generally where most people are going to be. And I'm not minimizing
their opinions. I'm just summarizing to say that's generally where most people are going to
stand on this issue. I'm very much in the middle. I think broad tariffs are bad. I think tariffs on
our allies are bad. I don't think we need tariffs on Canada. I think we can renegotiate a trade deal
with the EU, but I don't think we need to treat the EU with hostility.
They're basically a vassal state of the United States, as far as I'm concerned.
And I do think that we need tariffs in specific industries like the ones that we talked about earlier,
like semiconductors and shipbuilding and these specific categories that we need for national defense drones.
And these specific categories that we need for national defense, drones, like these areas, I think we need production, whether or not we think we can get it done or not, we need to try.
And so I land very much in the middle of this issue.
And for me, I think I can be in favor of the strategic intention, but be very much opposed to the method by which we're attempting to accomplish
that strategic objective. And that's where I stand today, is that, yes, we need these industries
back, we're doing it the wrong way. And I think it can be done with much more grace and finesse
and detail. So yeah, that's where I am on this issue. And hopefully the administration gravitates towards that middle ground. That's what I would hope for. I would hope for a softening of tariffs on most countries, which we've already seen a pause. We'll see where we end up in the next 90 days, how much lower when all is said and done. But obviously the most important thing remains China,
and I don't know what's going to happen on that front.
So we'll have to wait and see.
All right.
I think we're at a good spot there.
Monit, if you're still around, any last words you want to leave?
No, no.
I think the rest of the week we have
larger earnings coming up and uh by the end of this month we should have a pretty good idea of
how the season's going to shape up so by market cap we would have probably crossed 50 percent of
s&p by the end of the month so or much more actually yeah super interesting day tomorrow for sure
uh we mentioned earlier caterpillar in the morning and uh afternoon obviously microsoft meta
robin hood qualcomm i mean coca-cola ebay a lot of other big names as well and then of course
couple more mag 7 names on thursday so still we'll have a lot to talk about tomorrow afternoon.
Stock Talk, do you want to – I know you've had some nice rants today.
Do you have any final words for the people?
No, no, I'm going to have done enough talking.
We'll see you guys tomorrow.
Yeah, sounds good.
I'm going to have to get off here and get me some food
and watch the Knicks game.
I'm fading Evan.
I figure if Evan's there that Detroit's going to win.
So I took plus five and a half on that.
We'll see if that plays out.
That's my lotto play for the night.
My thesis, I think, is pretty solid since Evan Quartz out of the Knicks.
You just got to fade it, right?
But either way, that's it.
That's another day of Stocks on Spaces.
Thanks, everybody, for tuning in.
Make sure you follow all these great speakers, of course.
And we will be back tomorrow
right here,
same time,
same place,
starting Power Hour.
We'll get thoughts
around the market.
We'll see what happens
in six green days
in a row, essentially.
So we'll see
what happens tomorrow
and then we'll get prepared
for Microsoft,
Meta,
Robinhood,
and others
on this call tomorrow.
Hope everyone has a great
rest of their evening
and for today and today only, go Pistons. others on this call tomorrow. Hope everyone has a great rest of their evening.
