How Banks Make Billions From Market Volatility

Hello and welcome back to AmphiME's market maker podcast. And today we are breaking down how geopolitical chaos in the Middle East is driving oil toward $100 and generating massive amounts of volatility. But on Wall Street, it's a literal gold rush. We're going to explain, hopefully simply, the exact mechanics of how trading floors at JP Morgan and Bank of America and the like turn this global panic into record billions. And also whether the soaring semi conductor rally is an AI bubble or a super cycle pushing the S&P 500 north of 8,000 with the chorus of Wall Street banks lifting their year end targets to that figure and beyond in the spirit of Toy Story 5 coming out in cinemas soon. Nice. Awesome. Yeah, not a sponsor of the show. But also if you stay around, stick around to the very end of the episode, I might also have a couple of gems I can drop in regards to if you were keen whether you are a student looking to get into finance or just an investor interested in staying on the top of the macro scene as a list of some macro resources all freely available that I'm going to also run through at the very end of the show. So the bigger picture let's start with what is going on. And the fragile ceasefire between the US and Iran. But peace talks are negotiating on fumes on the ground. Things are still highly volatile. The US I think shot down four Iranian drones Q8 is into some intercepting missiles. So at the moment I think it was at the beginning of the week. I'm sure I had a sky news alert on my watch saying Trump said peace deal done. And in here we are under the week and we would it's just ongoing. It would seem but maybe just a recap of the importance of this from a macro context. Yeah and I think what is this this is like the I don't know. The 15th time Trump has claimed a deal has been done. Although I did see he did miss his own suns wedding. Did you read that over the weekend? His son was getting married and he missed the whole thing because he was focusing on Iran. So he doesn't miss 18 holes in Florida but he almost his son's wedding. Okay. That's where the deal making gets done. This is true. On the golf course. Come on. It's got golf things floating around. Good question. But yeah, I mean look just obviously everyone I assume is aware of all of this. Although it's been I think what we when did this even start now I lose track. I think we're 12 weeks kind of mid end feb. I think we're 12 weeks into this thing. And when it you know just to think back when it all kicks off you know the idea was it would be couple of weeks in and out done then it turned into all right well you know that was a bit probably optimistic. It's going to be four to six weeks. You know that was the kind of idea when this thing started when I double that and you know you look at the oil price I mean it has dropped below $100 and actually even Iran claimed a cease fire was deal was agreed before then the US rubbish that and said actually they're talking nonsense so it's kind of all a bit weird what's happening but I think when you look at the oil price there's something there because it's gone back below 100 but just for those you know that don't quite remember you know the straights four moves is the key bottle neck here that's where a fifth of the world's oil and liquefied natural gas passes through that key shipping straight and it you know goes all along the coast of Iran and Iran are basically if hijacked that shipping straight and now obviously then the US blockaded it as well so there's been you know very very limited traffic coming through and actually ship tracking data shows that traffic is completely dwindled so and actually you're apparently some ships are even going dark like turning off their trackers or they're being extorted by Iran for up to about two million dollars for safe passage right so this has all been going on for the last 12 weeks Brent crude and indeed all varieties of crude oil prices have been all over the place of course so but it is notable we're back below 100 dollars it's notable because we haven't been below $100 for five weeks if you're thinking on Brent crude $90 is a really key technical price we're not at 90 in this little episode to the downside we've we've dropped down to a yesterday's low is about 94 it's called it 94 30 okay 90 is key that's just because since his episode kicked off we've been at a really violent trading range which has been going from you know up to about 120 bucks down to 90 right 90 is the lowest point we've seen since this this thing kicked off and that that was on April 17th we briefly touched 90 before them bouncing back up so you know a significant shift would mean a move back below 90 dollars but I think that would require both sides um not only one side claiming that a deal's been done actually the other side also confirming that fact um but we haven't quite got there yet so in the meantime lots of volatility and of course then we're this feeds as we've been talking about at length on this podcast it's how does that how does that feed through to to the wider economy and of course it's about inflation risk and you know you got chat on the street where people are we won't get the uscpi reading for another couple of weeks right so the uscpi reading for me will be in a couple of weeks time you got some people talking about a 6% plus number um and it's certainly the consensus is now well above 4% and so you know what what does the Fed do with that and what does Kevin wash do with that the new Fed chair you know obviously that's that's key and so we'll hear from the Fed shortly but yeah how damaging is this for inflation how sustained is that increase in inflation and therefore do central banks actually have to hike rates you had a couple of ECB um board members both saying that they will be kind of voting for a hike at their next meeting so you know you really are starting to move into this new territory now of sustained inflation with central banks having to act so that'll be the next chapter but in the meantime price of oil has gone back below $100 so who knows maybe Trump can can save the pay on the inflation risk after all so everything you were just describing is quite quite a negative scenario economically sticky inflation moving higher inflation higher rates more pinch on the consumer I think if you're based in the UK I saw the energy providers you're going to be the average person in Britain is going to be charged another few hundred pounds on top of already very expensive bills at this point in time so all sounds very negative and yet this week two things you've had a number of the big wall street banks come out and talk specifically about how well they're doing as a form of forward guidance to speak to the market but also they're incredibly bullish so despite these economic headwinds that you know they continue to lift their year end targets for the major US stock indices so let's see if we can square that circle in the rest of the conversation and maybe we can start with the headlines first and what's happened is this is very commonplace so you'd imagine they only really do this well there's two scenarios when a CFO or a CEO of a firm will come out and speak to the market outside of a normal quarterly earnings period i.e. a conference call on a fixed schedule format and that's either the bank is doing or the firm is doing exceptionally well and we want to let the market know about that from a share price management point of view or there's something terribly bad that's happened and i want a front run that and it's transparent and get ahead of that to drip drip it feed it into the market before then it becomes something more negative this is more about the former than a latter so on the former yeah i know we've heard from lights the bank from america jp what other signals they're sending about how they've been performing in the same quarter of this year the signals are that it is off the scale bananas are time unbelievable fantastic and this is because you know if you think about the two kind of mean sort of divisions within an investment bank you've got the trading arm and then you've got the kind of deal the deal making arm the m&a side right actually both like last week we talked about SpaceX for example and open AI and unthropic and ipos are coming so actually on the deal flow side for the investment banking division you know things are looking great but if we just want to focus on the market side for the rest of this conversation and on the market side it's quite extraordinary what's happening and actually bank of america so they yet pre-release it they're expecting because look we're at the end of main hour right so if we're talking about quarter two earnings expectations we are two months through the three-month quarter. As you said, it's very unusual to get these updates. So, some it's going on. What's going on is massive upside on revenues from the trading floors. Bank of America are guiding a 15% year on year jump. Now, we'll get into the detail in a second, right? But these revenues are very much linked to the volume, it's often called the flow. You often call, you might have heard flow trading as a term, and this is where, you know, for investment banks, who won't remember, they're on the sell side of the equation, if you like. So, they're kind of market makers, they're helping buy side clients trade, buy side clients being the risk-clakers, the hedge funds, the asset management firms, and so on. But it's about volume, okay, volume of trades. What I want to quickly talk about is this 15% number, because what they're talking about there is year over year growth. So, quarter two of 2026 is 15% their guiding, it'll be 15% higher revenues than quarter two, 2025. Now, I was like, okay, well, 15%, awesome. But actually, I just kind of went back and thought, well, what happened in quarter two of 2025? Well, what happened was unbelievable volumes. Because on the second day of the quarter, the second of April, 2025, good old Donald had his famous liberation day speech where I slapped monster tariffs. And actually, I don't know if you remember, the S&P felt 18, in fact nearly 19% in the six days following liberation day, right? And the volatility index, like, you know, volatility we haven't seen since, literally the depths of the 2020 COVID crash, right? The VIX, for example, spiked to 45. This was on April the fourth, 2025. Again, the highest level the VIX had been since the pandemic. And so therefore, what I'm saying is, if these banks are guiding that they are 15% year on year growth compared to quarter two of last year, which is almost an impossible comp. This is extraordinary. And I think actually maybe what the situation here is that liberation day, it was sharp, but it was quite short, you know, massive sell off and then actually big rebound. It kind of all got done in April and then May and June, things kind of settled down a bit. I think what we've had here for 12 weeks now is this sustained volatility, whereas you get these geopolitical updates, good and bad, you're getting big swings one way and the another. And I think it's the sustained volatility through this quarter that's enabled these banks to somehow guide, you know, double digit growth, you know, over and above quarter two of 2025, which in of itself was amazing. - I was just on a point of terminology, you mentioned flow trading there. So just to really simplify that, because I was in a talk at JP Morgan listening to some of their traders talk to students about this and they were talking about flow and get versus structured desks. So the easiest way I think for people to think about this is with flow, if you think about highly standardized, very liquid financial products, traded frequently as you said, high volume. So think about things like Apple shares, the Eurodollar currency pair, the US T-note, the Tenier government bond, a structured desk would be dealing with complex, customized, often illiquid financial products, tailored to very specific unique needs of a client. So it could be a derivative tied to the weather or a multi asset note with specific downside protection. So the types of people as well, characteristics and skills tend to be quite different. The structured ones, you can imagine, much more numerical, a lot of modeling, a lot of Excel based tasks, a lot of figuring things out in a multi-dimensional way, whereas flow trading is a lot of facilitation of just client interaction. And as the title goes flow, but going back to then, the kind of teaching around the market maker model tied to the volatility that you've described. So yeah, I don't want to assume knowledge here. So how are these banks actually doing that in very simple form? - Right, yeah. So let's just use an example of a hedge fund, which is a buy side entity. So remember, I called them a second ago, I said they're the risk takers. Right, so a hedge fund will have client capital that they're managing. It's their job to invest it to buy and sell financial assets and try and make a profit, right? A return on their investment. Now one of the ways, and when you're executing a trade as a hedge fund trader, when you're, so one part's the strategy. So okay, what shall we buy? What shall we sell? Okay, then it's about, okay, once we've decided strategy, let's execute. Now that execution part is, you know, actually a pretty complex sort of role in itself because it depends on what the product is or the asset class is, it depends on its liquidity, relative to the size of the trade that you want to place. There's a whole load of variables here. So we won't go into the finer details of all of that, but one of the best ways for hedge funds to place big trades, 'cause don't forget these hedge funds have got a lot of capital under management. So they want to be placing big bets when they're trading. So they'll normally use the investment banks as a kind of broker, if you will, to a kind of a market maker, I should say, in order to, so the investment bank, one of their services is to facilitate trades for hedge funds. So when a hedge fund wants to buy something in volume or sell something in volume, they'll call the investment bank and the investment bank will facilitate that trade. What that means is they'll provide prices, for spoke pricing for that hedge funds trade. And they'll often quote what's called a bid and ask or a bid and offer spread, okay? That's two prices. So the hedge fund might say, I want to trade whatever Apple shares in X large volume, they don't say I'm a buyer or a seller at this point. They're saying to the bank, give me a price if I want to buy and give me a price if I want to sell. And these prices are different. So this is what we call the bid offer spread. It's the difference between the price you can buy out versus the price you can sell out. Now, the investment bank will provide these prices and that will be a bespoke set of prices based on the size of the hedge funds trade, the conditions in the market in that moment, how volatile is the market? And secondly or thirdly is that the liquidity conditions in the market, what's the volumes in terms of bid and offers on the order book and so on? So there's a few variables here. But when geopolitical factors escalate, then you tend to get a spike in volatility. This just means the speed in which prices are moving increases. It's actually partially a function of liquidity dropping. 'Cause if something's kicking off, if you've got orders on the order book waiting to trade, often you go, oh, go on, hang on, something's going on, I'll just pull my orders. Meaning you delete your orders, you take them off the order book. That means liquidity drops, which just exacerbates volatility. Now, in those moments, an investment bank will widen their bid offer spread that they're offering to the hedge fund who wants to trade, okay? They'll widen it. And this just means then that when the hedge fund trades through that bank, let's say the hedge fund selling, they'll be selling at the bank's bid, the bank is buying, right? And if the spread is wider, the bank is saying, fine, you can sell to us, but you're gonna have to sell to us at a lower price. And therefore we'll be buying at a lower price. So because bid asks spreads widen, you could say in one sense, that's the profit margin that the investment bank has for facilitating this trade. So the profit margins widen, okay? - So does that make sense? - Got a question for you then. So in order for, let's say the investment bank, me to facilitate that trade, surely I have to have some cash on hand in order to execute the other side of that trade. So how does that look like in practice? - Yeah, well, so let's just think about this from just before we get there actually. 'Cause you might think in a world where hang on, there's a peace deal is announced, Trump and Iran agree terms, the Straits of all moves reopens fully. What do you think's gonna happen to the oil price? It's gonna go down, right? Sharply, mini, but obviously I wanna sell oil 'cause this price is gonna go down, right? So if you're a hedge fund, this is a very simplistic example, but let's say you're a hedge fund and you're long oil, you've bought oil 'cause you're expecting prices to rise. Now there's a piece of agreement, right, I wanna sell it. The thing is you could say, well, the entire planet is gonna wanna sell oil at that moment in time 'cause oil is going down. So you've got a key problem there. If everyone's wants to sell, well you can't sell unless there's a buyer. So that's where the investment bank performs that key role of being the other side of the trade, but you might say, well, hang on, if the investment bank's gonna buy, will find they might earn a little bit. of a kind of commission for facilitating that hedge fund trade, but aren't they then long oil and the prices collapsing and they're just going to lose a fortune in the way the market moves. Well, so the key part, the next step for the investment bank, facilitate the trade. Sometimes depends on the products. You'll actually earn commission directly from the hedge fund for facilitating that trade. Next step, hedge it. Okay. So this is where you're then buying or selling a correlated product which hedges off your risk to that crude oil. So let's say you're now long crude oil futures. You might be long WTI. Sorry, you might be long Brent crude oil futures because your hedge funds just sold. Okay. So you're long something that's falling. I might go and sell WTI crude futures to offset my long exposure in Brent. Okay. Then both markets are falling. I'm losing money on my Brent crude long, but I'm making an offsetting amount of profit in my WTI crude short. Okay. Could just quick question on that. So would it be on the responsibility of the trader to enact on that utilizing their own knowledge and experience or is it like you're a fighter pilot in a jet and the technology and system interface now already is live calculating the correlation and mix and we'll just say, right, this is the most preferential trade to hedge off that risk. Yeah. I mean, of course, you're definitely getting help from technology to identify, yes, the optimum product to hedge that risk with. And I remember you're hedging that risk so that then in the end, it buys you time as an investment bank because don't forget, if you're facilitating a hedge fund client's trade, they're selling or you're buying, the investment bank is not in the business of staying positioned in markets. They're not, they're not the buy side. They're not, they don't want to buy crude oil because I think it's going to go up and we're going to make a profit. They're buying crude oil because they're facilitating their client's trade, right? So they need to sell crude oil at some point. And it's just a question of waiting because you can't sell unless there's a buyer. So you might have to wait some time until maybe the first big move happens before then there might be other buyers coming into the market that you can sell to. Now in that period of time, you're hedged if you're doing it effectively and you've got good systems that are accurately monitoring correlations and so on. And you've got quick execution speed, then you can be nicely hedged buying you time to then find the other side because you're a market maker, you're a broker essentially. You're just bringing together two counter parties to make a trade. And so this is how the investment bank makes money and the volume of trades that comes through the floor equals the revenue you're going to make as long as your hedging strategy is good, obviously. So this is why these banks are making huge amounts of money at the moment. Just for clarity of the difference is in the different participants within the market making space because I can't remember the figure to hand, but someone like Jane Street is making double even what a record breaking quarters are at JP Morgan. Is that because of what you've described if you can pull the lever harder and you can compound the results on the electrification of a lot of the processes you're describing? Yeah, it's automating processes to make execution and hedging more efficient. So the more efficient you can get that hedge, the less money you'll lose, the less kind of leakage, right? So that's one side, but they're going way beyond that and they're building predictive models to try and predict when the volume is going to increase from their sell side clients, or sorry, from their buy side clients, you know, what's going to happen to price next? And therefore further optimizing their hedge, but I guess one of the points here is, and actually it was Brian Moynihan mentioned it. So that's the Bank of America CEO. And he made a point which was saying, you know, describing this amazing revenue increase on their market side and he was saying that more of their balance sheet is being used to support trading and he was saying you have to be willing to put a lot of scale to work. So, you know, this is where the big boys have a key advantage. So think about a bank's balance sheet as it's, you know, financial muscle, if you like, or it's financial fire power. So when you get this geopolitical chaos kicking off and you get this market, you know, sudden illiquidity where everyone wants to sell and no one wants to buy, well then a giant institution like Bank of America uses its massive cash reserves and its assets. So that's what the balance sheet is. And they kind of step in and they're buying those assets from those panic clients and then they're hedging them off. And the bigger your balance sheet, the more volume of flow you can handle. Because there is risk here, no matter how good your hedging strategy, there is risk being taken. And so the smaller banks with smaller balance sheets, there's only so much risk you can take, right? Whereas the big boys can hoover all this stuff up. And actually, so when you're thinking about risk, they will have what's called the far limits. So this is value at risk. So basically every desk runs under a strict far limit. Value at risk, it's just a statistical model that says, based on historical volatility, you should not lose more than X pounds on a very bad day. Okay, it's just basically trying to calculate, what's the worst possible loss we could take given our current risk? And then they'll set a threshold. So if a trader's book breaches that limit, then that's it. You know, they have to stop. We can't take on any more flow. And actually, we're going to have to start reducing our positions here. So it's the big boys that are able to manage more volume. And so that's why, you know, ultimately in these kind of market conditions, it's the big boys that thrive. Is it right to think then that given what you've just been saying that if I was to work as a quant or often referred to as a strat, sort of same thing within a sales side, US firm, that I'd be predominantly working on solutions tied to risk management. Whereas you mentioned there about predictive price models. And would that be more of the domain of some of those more, yeah, the Jane streets. I don't know, the I.M.C.s, the optivas of the world. Would that be right in how those career pathways are kind of defined? Yeah, for sure. It's much more quantity. And like that simple example of a bid off a spread. So a catch from wants to trade big size. Where are they going to place the trade? Well, they're going to place it at the institution, the sales side institution that's offering them the best price. Now, a Jane street might be able through their predictive models. They believe they have an edge where they can accurately predict how the volatility, how the volumes, how the price direction might change in the future. And they're better able to say, well, actually our models are saying that liquidity is going to increase from here. So you know what, we're going to start to offer tighter spreads, more competitive pricing to our clients. And so they're winning this business because they've got more advanced systems to predict what's going to happen. In my superficial knowledge, understanding a lot of these mathematical models, a lot of them are built on data. So looking at historical data patterns. Now in the past in the history of financial markets, there have been blacks. One event says been high periods of bouts of volatility, but never quite the same mix or cocktail ingredients. Certainly that within this new AI world that we're living at the moment. So what are some of the risks where you talk about hedging and the models are built on historical data. Like, yeah, how do you tackle that problem? Well, it's all fine until it's not. This is what happened in 2008, right? Like all these models, I mean, obviously the models these days are way more advanced, like way, way, way, way more advanced, 2008 was 18 years ago. And if you think what AI's done to kind of prove things in just in the last few years, right? So obviously models are more advanced, however, they're built on historical data. And every market episodes, whilst it might be similar to previous episodes and cycles, it's always got nuance and there's always differences. And so, you know, it's fine making decisions about what's coming in the future based on historical data is almost always fine until the market episode is so extreme, the market dislocations. are so radical that correlations are, remember, the hedging strategy, which means that controls your your var, the hedging strategies great as long as those correlations stay and behave like they should, like historical data tells us that they should. It's just that if you get such an extreme dislocation that correlations break down, that's when your var just suddenly spikes through the roof and suddenly it's like, whoa, okay, we can't afford to lose this much. Stop the music stops. Let's just get out of all of our positions right now. This is the moment. So that's like a 2008 scenario. So there is always that risk again in the future. It's just what we call a black swan event. You just don't know when that might happen. Okay, so trading desks, a crushing it is the headline story. What about the rest of the market? We're seeing the S&P 500 back to record highs seemingly completely ignoring the Iran war sticky inflation that you talked about and the potential for higher rates. How is that possible? Chips and memory, baby. So what, fish and chips or that. So we talked about this, I think last week, we're thinking about the narrow wing of the rally as in the number of components of the S&P index that are actually driving the thing higher. The number of components that number of companies is shrinking and shrinking and shrinking and it's got down to this kind of semi conductor and memory companies. You know, it's got down to its absolute narrowest point, but the performance of those tiny select few is so extraordinary that it's still able to kind of drive a kind of move to the upside for the overall index. So one that you can look at this something at the right. So one way of monitoring this, there's something called the Philadelphia semi conductor index. Okay. And that's the name suggests. It's tracking these exact types of companies. That is up 160% over the last one year. And that actually that is the highest sort of year over year growth rate for that index. Since, guess what? The land, the land when time began. Since the dot com bubble, right, the last time the Philadelphia semi conductor index was up year over year, anything like 160% was literally the end of the 90s. So, you know, obviously, we haven't really heard much about the comparison. I would say in 2026, but certainly in 2025, and I would say certainly in 2024, everyone was like, oh my god, you know, in video through the roof, I was just the dot com bubble all over again, which proved out to be, you know, to be completely false narrative. So far, I should probably put in. But yeah, I guess talking about is, and I mentioned yesterday about this idea, not yesterday, the last pod episode where I was talking about this kind of secular AI shift. And other way of putting it, in other words, that the media are actually onto at the moment is super cycle, which is basically the same as what I was describing as a kind of secular shift. So a super cycle argument, this is where a cyclical industry experiences a permanent step up in demand, which is definitely, you know, what we've got. Now, the difference, you know, is this a, is this sustainable? Is this like the dot com bubble? And the answer is definitely no. It is not like the dot com bubble at all. And that is because ultimately the price action that we're seeing is backed up by cold hard cash. It is backed up by revenues. So actually, we're thinking about earning estimates, right, for the chip index, the earnings estimates rose by 69% this year. So expecting these companies to make 69% more profit this year than they did last year. Last year, so in 2025, the estimates were 55% profit increase on 2024. This is profit. It's not even revenue. This is actually literally bottom line. These are cash printing machines. And actually, if you think about some of these big companies like micron, for example, yes, their share price has done. And actually, if you go back over the last 12 months, so blow your mind micron share prices up over 900%. Oh, you're talking your book again, Piers. I don't like it when you do that. 900%. And so everyone's like, oh, bubble, bubble. But you know what's happened to their PE ratio in that 12 month period. So their PE ratio is the price, the share price relative to the profit they're making. Their PE ratio has gone down. It's actually gone down, even though their share price is 900% through the roof. So this is what I mean by backed up by cold hard cash in the dot com bubble. These companies, you know, like pets.com is like the famous one everyone talks about. These companies, they weren't making profit. They weren't even making any revenue. And their valuations were blowing up 900%. Right. So you might be seeing similar share price moves, which seem insane. It's just they're not when you think about the cash that's kind of coming in the front door. That's also just thinking like who who consumes the products of pet.com as opposed to who has the capital that they're spending in this current AI. So this is a very good point, right? So pets.com is B2C. That's your consumer individual, you know, the customers of micron are the super scalars, the biggest corporations on the planet. The planet has ever seen. And those biggest companies are spending more money than any companies have ever spent ever before. And they're spending almost all of that money on your stuff. So there is one risk though. It's all right. Well, why are the super scalars spending all that money? Great for micron. But are they going to carry on spending it? And they're they're spending the money to win the AI race. They're spending the money because they believe there will be a return on investment from this crazy spend because they believe the demand for AI from businesses and consumers is just going to carry on going up exponentially. So that's the part that's still in the future to be determined. Does the real demand from the end consumer continue to go exponentially if so? Then the spending by the super scalars is justified on their carry on spending. If so, then micron's revenues are going to carry on going up through the roof. Their profits are going to be 50% plus every year. And their share price despite having gone up 900% will carry on going up. So that's that's how it all works. And the education here, not invested in the vice by the way folks. And I was just finished by saying, how it was the ultimate measure of all of that. In the end, what's the measure of demand? And I think anthropics revenue is the ultimate measure at the moment. The problem is there a private company. So how do we get access to that revenue figure? It does get leaked and it does come out. But it's not like they have a quarterly earnings report, right? Obviously they're IPO-ing, at some point, then they will have to report and we will get quarterly updates. But right now, this has been the key thing why the S&P and these semiconductors have ramped in the last few months is because anthropic reported their quarter to revenue being 10.9 billion, which was 127% up on quarter one. That's not an annual increase. Insane. That's a quarterly increase. And people are like, if you're, if you go and talk to the mega-balls about this and I'm not saying the mega-balls are right. But they're saying if if anthropic carry on, if their revenue growth carries on like that, increasing that kind of rate, they're going to be doing 100 billion by the end of this year and they're going to be doing a trillion by the end of next year. Just let that settle down. One trillion, if they're on this current run rate and people talk about, I'm talking about the mega-balls, there is a bear case, but the mega-balls alike they talk about tam. This is your cat is the market big enough for there to be a trillion dollars of spend for anthropic to make a trillion dollars of revenue. And they, you know, the mega-balls think if the AI adoption is so broad-based that it's across the planet, then there is a trillion dollars worth of market size. So that's your ultra bull case, but it's it's as long as anthropics revenue carries on ramping like it is. Then this this game's on and it actually doesn't really matter what happens anywhere else. Do you're political or what have you? You know, that specific sector of the market is going to carry on going up. Just on the topic of Tams, I did do a post this week on Space X's filing that they made with the SEC with their IPO last week. And did you see the figure for their TAM? Um, I didn't actually go on. 28.5 trillion dollars. Take your one. Well, I'm knocking 30 in what it over when I'll give you the split. Give you the split. You've got three hundred and seventy billion in space from space enabled solutions. That's as far as they went and describing that. One point six trillion in connectivity. So eight hundred and seventy billion in Starlink broadband, seven hundred and forty billion in Starlink mobile, as well as additional options, he's enterprise government. Twenty six point five trillion, though, of the 28.5 is in AI. Two point four trillion AI infrastructure, seven hundred and sixty billion in consumer subscriptions, six hundred billion digital advertising, twenty two point seven trillion in enterprise applications. And one of the things that they talk about though, they themselves in that filing was major execution risk around themselves around this section was below the TAM section. So the execution risk on successfully scaling Starship, which is critical for increasing launch frequency, deploying new new next gen satellites and broader business expansion. They acknowledge this classic Elon, significant uncertainty around timelines, technology development, regulatory approvals, commercial adoption, commercial adoption, particularly in industry state that do not fully exist yet. Such a space tourism, lunar economy, asteroid mining, orbital AI infrastructure, human augmentation. So yeah, it was just, I thought that was, was quite funny. And then just before we kind of finish them with some of the Wall Street calls to wrap, wrap up, it's going to bullish sentiment that you, you're just talking about. As you were describing these, the Philadelphia semi conductor index. And I know you love a bit of history, lesson. So what, why is it called the Philly semi conductor index? Well, I know there's, there's another index that comes out of the Philadelphia area, which is called the Philly, Delphi Philly Fed survey. Which is more linking to just the broader manufacturing sector and the performance of that. So I'm guessing is it that in the Philadelphia area, there's some, a kind of concentration of semi conductor manufacturing going on. I like it. I like your interview response. But it's wrong. But it's wrong. So is a history lesson essentially where back in the US late 19th, 20th century, the different regions of America. So don't think of it as one United America. It is individual regions. And so there was competition when these exchanges were being created. So you actually had one in Philadelphia, San Francisco, Boston, New York. And so they were competing and Philly stock exchange was the pioneer in training options, specifically. And they what happened. So the Philadelphia stock exchange was created in deck of 93, rapidly grain sector around, including semi conductors amongst others. So you are right in that respect. And then they got acquired so much like all of the big exchanges. The Nasdaq purchase, the Philly stock exchange, I think that was 2007. And so, but it's kept its name. So there you go. History lesson for you. All right. So let's go to the close, which was really a headline where Goldman Sachs had upgraded their S&P 500 year end target. I think they went from 7,600 to 8,000. But they aren't the most bullish. So yeah, any, any final comments on that side of things and what is what are they saying that's just driving their upgrade? Yeah. I mean, so Goldman's, yeah, as you said, they're up to 8,000 now. So that means a 17% return on the whole year. It would be a lot more than that. If you're going to the low point that we had at the end of March, because we actually started the year in the index just just around about 6,900. So that's 17% over the year is going off 16,900 at the start of the year and to the 8,000, when they think it'll fetch up, you know, in the middle of the year, we dropped to 6,3. But anyway, they're looking 17% return. Morgan Stanley, even more bullish thinking 8,300. And so look, they're expecting that the earnings per share of the S&P 500 is going to hit $340 per share. So this is where it's coming from. They're expecting a 24% increase year over year for profit growth. And this is about, it's about the AI super cycle. Right. It's about infrastructure companies, particularly being responsible for half of that growth. So I've talked about that. That's the semi-conductors. Right. So basically they're saying they believe right now their main theme is that anthropics revenue or carry on ramping exponentially. And that will be the sign that the demand for this whole AI thing is there. It is there now. It is strong enough. And there is a lack of supply of things like data centers. Therefore, the whole circus carries on the hyperscalus carry on spending money like it's going at a fashion and the invidias and the like, you know, are just making hay in the sunshine. So they believe that that AI super cycle narrative is going to continue. But of course, there's risks. So and I literally, I do think the anthropic revenue is now the singular most important figure. Bar none. And it's just we don't get regular updates from it. So companies perspective then that's taken that mantle from Nvidia there, which was 12, 18 months ago. And that's because anthropic are at the the the call face that they are. That's a measure of actual demand. Whereas Nvidia's revenues, that's a measure of the demand of the hyperscalus appetite to build infrastructure. So that's the key difference. Now it's all about anthropic. Okay. So just to wrap up, I did say at the top of the show, I'd share some macro resources. Just I thought it advanced as I was putting together a few of these show notes that it could be useful. So a quick run through, first of all, like and subscribe to the market maker podcast. You will weekly digest of all things markets in a way that everyone can understand. And so that is all of this just a massive set up for you to do a plug for this show that people are already listening to. Well, well, you know, on YouTube, I think there's at least 30%, 35% who aren't subscribed. So we need to convert. Always if they've made it this far, we're in for a good, a good shot. Smash that like. There's also the market maker news letter. If you just search that on on Google, you'll find it or on our website. Other things though, this isn't just a shameless self plug is definitely if you're, I think a student thinking about finances, a potential error for your career. I think it is worth the investment. I know it comes up in an expense. However, I think, you know, going a quiz that we did the other week on an episode peers, the most expensive pint again is that one of our listeners paid with 17 pounds in Norway. The most expensive, expensive identifier in London was topping nine pounds. So at the price of, let's call it three points of Guinness in London, you could get your subscription to the FT and given that that's going to be a source of knowledge and potentially your future earnings potential in time to come that will compound. I think that's worth the three points of Guinness. So the app's super easy to navigate and use. I think that's really useful. And then I'll also go to the newsletters on the FT and when you have subscription, it unlocks access to them. One particular good one, which really, you know, shout out for highlighting the semi conductor kind of story is the FT unhedged newsletter. That's probably the biggest, the best and most well followed one on the macro front. But they'll have individual niche newsletters for all the different subject areas, private equity, M&A deals, commodities, list goes on. And so you can kind of, I always think when somebody used to say, go and read the FT, you're like, oh, where do I begin? Where's the end? Whereas if you think about it, if you just select into a specific topic or, or industry area, it's a curated newsletter of all of the relevant articles for you in your inbox in one place at one set time. And it should have the habit built in other ones. I'd say Morgan Stanley sorts on the market podcast, very useful just because it's daily and it's super. short. And that can be a good anchor to just get financially fluent by just listening to people as intelligent and as qualified as peers talking about these market macro matters, maybe not as handsome, but then there's looking at LinkedIn. And just three people, LinkedIn I think is kind of like what X Twitter can be if you put the time and effort in. There is quality information amongst the noise. And LinkedIn is kind of similar. So three people who all work at sales side institutions. So going full circle, we talked about their trading desks. If you work on the research side, well, what's your primary objective? Is to get these hedge funds to come to you to do the flow trading. And so this is where their research gives it the traders, the sales traders, the sales people, the firepower to go out and do that. And three people, there's Joe Little, who's the chief strategist at HSBCS at management, Mike Bella, RBC and Salita Marchelli at UBS. All three of those put out frequent regular content on macro topics as they are happening, as they are communicating to their clients. I mean, there's obviously a little bit of a delay. Hedge funds get it first, the public domain gets it second, but they're high quality and super useful. And then also just going on the insights section of various sales side banks, that's where then you'll have the underlying research that powers a lot of those sound bites that you see on LinkedIn, for example, asset managers will do the same. They're looking to attract funds, flows into their ETFs and so on. So the lights are black rock, have a big weekly commentary report that they put out, free to everyone. So yeah, hopefully some useful links there. And can I add one more? Yes. Anthony Chung. Yeah, look, I mean, honestly, I try to share, you know, I kind of speak to two communities on LinkedIn. One is the people we work with, so the various people who are heads of desks working different parts of finance, but also hiring teams, chief people officers, these sorts of people who want to invest in their talent acquisition strategies, their training, their talent identification, so on. But also, I talk, I'm, you know, my job primarily is to be the head of the community of the students. And so if you'd like what you've heard on the podcast, whether this episode or in the past, I try and do little snippets of that on LinkedIn on a pretty regular basis. So yeah, feel free to connect. All right. Thank you very much, everyone, for listening. Thank you, peers, and we'll see you next week. Thanks a lot.