Stocks Took the Stairs Down and the Elevator Up

Sam is here everybody. Sam, bro. All right. So Sam. Sam, how's it going to see you? I haven't seen you since. What do we think about a new blood sport? I mean, I'm not paying for it. So yeah, the answer is yes. I'm willing to try it out. But what do you mean? I don't know. New cast full reboot or one of these AI things that-- No, I think it's like-- I don't know. Honestly, I try to look this morning in preparation for talk and you know what they're doing. And there's not much. Not much. Yeah, it's always like-- it's the kind of thing that you really want to do well. But when's the last time like a sequel or a reboot has done well, outside of like Top Gun 2? Yeah, I don't know. Like a full-- oh, the new He-Man looks horrendous. Yeah. My god, that's an 80s movie. You know what I'm actually kind of interested in? Have you seen that like the trailers were the teasers for the new Street Fighter movie? There's a new Street Fighter movie coming out. And it looks like it's pretty clear that they're not trying to take themselves too seriously, which I think is always the right move when it comes to stuff like that. Speaking of Van Damme, he was in the Street Fighter movie. Oh, yeah, you're right. Yeah, yeah, yeah, that was terrible. But yeah, that was another movie where they tried to make it serious. It's like an actual action movie with like him doing the stuff but it's like-- He's our cartoon character. He's like-- So Steve, speaking of not that, you've been working for Petr-Fee for a long time. Third, it's a little over 30 years. I feel like he is maybe underappreciated. Like I bet you our average listener viewer doesn't know who Thomas Petr-Fee is. I bet you the average. A lot of people don't. I mean, you know, I still get like, you know, where do you work? I tell them like interactive what? Interactive who? Yeah. So it's just we've always kind of flown under the radar and yeah, as multi-billionaires go, I think he flies under the radar to a large extent. So you people-- The industry know him. People outside the industry, he's not a household name. So interactive brokers is, how would you describe the company? What we are now is we're very-- we're strictly customer facing. We-- our bones are as-- are as market makers from proprietary traders. We were the largest options market making firm. We exited that business just before COVID hit. And changed the industry a bit. We sold the market making division to Sigma, the hedge fund. I stayed because at that point, I had-- even though I was still actively market making, I had become a public, you know, a talking head for lack of a better word. So I stayed behind, which ended up being OK, because the two sigma sales did not work out so well for that market making group. But you know, right now we're just-- it's really all about how to bring as many markets and opportunities to investors. And I would say our investor base, you know, we're thought of as a retail brokerage firm. But I think we're-- I think it was more like hedge fund institutional. That's the way we want to be thought of. I would say we have a lot of individual customers. That my-- I don't know if you ever met my friend Henry Schwartz at the SIBO. He once came up with the term "protail" to describe a lot of individual investors who are very sophisticated and highly engaged. I think that applies. That's not an official term we use. Talking uses interactive, right? [LAUGHTER] But yeah, so that's-- so it's-- he's an intense guy. I mean, I've been-- I don't know. Or in the early days-- in the early days, you know, I sat here and he sat there. And I told him much later on that I had-- one of the reasons-- one of my little tricks was I had a picture frame with the family in it. But it was like-- the picture was like this big and the mirror was like this big. And I'm like, you know, but after all these years, I could tell you that's how I knew you were coming. And he's like, oh, yeah, he was always wondered that. So-- But he was an intense guy. I mean, you know, was-- Yes, he's still very engaged. I don't see him very much. He's really based-- he's not in Connecticut very often, if at all. He's really based out of Florida and wherever else he chooses to be. But I can get calls or emails from him that at all hours of the day and night knowing he's just his fingers on the pulse. What does he lean on you for? Bullshit detection for lack of a better work? Can I say that? Yeah, absolutely. OK, that's all. Yep. Yeah, so I mean, like I've got a call from him not that long ago with one of his friends who's in a similar tax bracket, saying, we're trying to mull through these employment numbers. Does this make sense to you? Got it. That kind of thing. All right. Speaking of the-- That's one time, boys. All right. Speaking of what Sam-- Tracking your boss who might be behind you. Back when I was at business insider, and I reported to Joe Eisenthal for five years, the office had no carpet, right? So it's just like hard-- I don't know, whatever the hard stone flooring was. And every once in a while, you hear the elevators open and then you don't really hear anything. But whenever you knew when Joe showed up, because when the elevators would open, you could hear cowboy boots coming down the hall. And then you could definitely tell that the demeanor of the office would change slightly. I was fine with it. We got along really well, and we worked really well. But I'll never forget, there was always those times, whether it's super early in the morning or like him coming back from lunch, the doors would open, and you hear the cowboy boots coming down the hall. Amazing. All right, John, let's get started. Let's start it up this time. Come on in friends. Episode two. Where am I now? 37. Whoa, whoa, whoa, stop the clock. Here's a word from our sponsor. This podcast is brought to you by Vanneck. The assets built in the future aren't all in tech. Data centers need electricity. AI needs copper. Reshore needs steel. And gold is signaling that the old rules about money, debt, and currency are shifting. Something Vanneck's real assets team has been hiring for years. Rax, the Vanneck real assets ETF is built for this environment. It's an actively managed one-stop shop for real assets exposure, including gold, commodities, natural resource equities, and infrastructure, adjusting as macro conditions evolve. If you're looking to add inflation protection and a real world diversification to a portfolio, Rax is worth a serious look. Learn more at vanneck.com/RAAXCompound. Today's show is sponsored by Janice Henderson Investors, where we believe working together is the way to work better. Like combining your portfolio plans and our in-depth strategy, your valued assets, and our valuable insights, your mission, and our vision. Always working in perfect harmony to find the right investment opportunities, Janice Henderson Investors investing in the future. Janice Henderson Investors investing in a brighter future together. Visit JaniceHenderson.com. (upbeat music) - Welcome to The Compound in Friends. All opinions expressed by Josh Brown, Michael Batnik, and their castmates are solely their own opinions and do not reflect the opinion of Redhold's wealth management. Janice's podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Redhold's wealth management may maintain positions in the securities discussed in this podcast. - All right, very, very excited for this one. You too. We are joined today. First time guest, longtime industry veteran, Steve Sosnik. Steve is the Chief Stratius at Interactive Brokers. He has held numerous roles in the organization since joining Timber Hill, Interactive's predecessor in 1995. As equity risk manager and an options market maker, prior to joining Interactive Brokers, Steve held senior trading roles at Morgan Stanley, Liam Brothers and Solomon Steve. Welcome to the show. Thank you so much. It's so great to be here. Thanks for having me. And Sam Ra, we all know Sam. We all love Sam. Sam is the founder and editor of Ticker, an award-winning sub-sack newsletter to offering market news, data, and insights. Talent for long-term investors. Stocks usually go up, Sam. - That's right. - That's right. Prior to launching Ticker, Sam served as managing editor at Yahoo Finance and deputy editor of markets at Business Insider where he led coverage of global markets and the economy. All right. (audience cheering) All right, exciting shot today. Steve, in your seat, what was your take on the market's reaction or lack thereof to what would have normally thought to be maybe a black swan type of event? Am I overstating things? You close the straight-of-hor movies. That's like a down-pun-per-set day. You hit upon my theme for like the last month was, as managing risk, which I did for a long time. And we were at that point the largest options market making firm on the street. And it was crucial to make sure we didn't, the model worked great. We just had to make sure we didn't blow up. And so my job was to think of black swans and the straight-of-hor movies. Now I'm not being creative here. That was always the blackest of black swans. And the paradigm that we always used was oil going about 150 to 200 a barrel in media 10% correction in the S&P 500. Big flight to quality in short-term fixed income and the dollar. And, flash forward to what we ended up having. Yeah, we got up to maybe 100, 110, 115. And what are the VIX top out of 35? 35 or something like that? Yeah, VIX would have been 45, 50, something like that or undermodeling. What happens here is, and it's no coincidence, we're taping this exactly one year to the day from the face-ripper post-liberation day rally. And that sticks in everybody's mind. Retail is, you know, individual investors are powered a lot by FOMO, institutional investors. Literally have career risk without FOMO. FOMO? They need to have FOMO because you always have to be afraid of missing your benchmark. And so what we had was this reaction where we're always looking to, OK, this will get fixed. And I think also remembering how most of the geopolitical events have resolved themselves extraordinarily quickly, whether you want to call it taco, whether you want to call it the Trump put, whatever, all that others put the label on that. But this is what happened. And so I ran some numbers this morning, probably a little bit before we started-- we started the midday rally we're taking this Thursday afternoon, was oil was up about 45% in the last month. It's very easy from February 27, so it's a nice delineating point. Oil was up about 47%. Two and 10-year yields call it up about 35 basis points on average over that period of time. Rate-cut expectations evaporating. And yet stocks were down essentially like 1%. So it's telling you that there's this residual optimism there. And as a result, that's why we never had the reaction that I think a lot of market veterans were looking for and expecting. And a lot of the headlines that we've been hearing are somewhat familiar, right? Middle East, that's familiar. Iran, we've heard it before in recent history. Straight of Hormuz, by the way-- I mean, I don't recall people talking about it before like 10 years ago, but every couple of months since like 10 years ago, the straight of Hormuz comes up. And now everyone's an expert in oil choke points. Not that it's not serious, but we're now familiar with it. And we know that it's something that's going to be in the headlines every once in a while. Even the disruption of a waterway is not new. I mean, this is almost completely apples and oranges, but the Suez Canal-- I don't know if we remember a couple of years ago, was shut down for a while. And people are freaking out because the supply chain is going to be collapsing on itself. Now, I think something that might be, perhaps, misprice is the fact that all this stuff is happening at the same time, right? Middle East tensions, straight of Hormuz being shut down, and then all these other things. But to your point, yeah, there's a FOMO. And we've learned that there's all kinds of instances in recent history that felt like it was the end of the world. But it's like there's probably going to be something positive on the other side of this. It's an interesting backdrop because investors did freak out. John Chardon, please. They were looking at a chart from Bloomberg intelligence showing the daily turnover in the S&P, or SPY, specifically, has breached $60 billion. Now, the numbers are bigger, but nevertheless, the point remains. A record number of times in 2026. So it's not as if traders weren't really anxious and turning over their portfolio a lot. Josh and I were talking about a chart that somebody made about the rush to cash was at levels that you only see in a panic. And yet the market just didn't seem to care. And I have been pretty consistent on this, not patting myself on the back, I'm patting the market on the back here. That to me, this idea that the market was going to persistently sell under price, an outlier event, just seemed like that is a very low probability event. Now, in the first couple of days after the event, you said, okay, like, trap door, we're going to go way lower. But we're now two, three, four weeks removed and the market was still holding firm. What more would have had to happen for them to be surprised? - I'm not sure if it's actually the right framing to say that the market didn't do a whole lot worse. Like, I know that the max drawdown in the S&P 500 has been something like a reset. But when you put that against the fact that the earning story has actually been improving during this period, even after this information has been digested in. And you look at the PE Ford PE ratio correction, which is like something like 18 or 19%. If you didn't have that improving earning story, you're basically in a bear market. So I think relative to the fact that there's an improving fundamental backdrop, at least from an analyst's forecast perspective, the 9% drawdown is actually much more significant. - It belies how bad that is. - The thought PE drawdown was way worse. - The Ford PE drawdown was way worse and the 9% drawdown in the S&P belies the fact that it's almost like you're falling down an escalator that's going up, right? Like, you're in the same place, but you're getting banged up a whole bunch of times because the stairs are going up. - So to continue with the escalator, this was a very weird outcome where the market took the stairs down and the elevator back up. And it's usually the exact opposite. That's why I brought up the experience of a year ago. Since COVID, you've got a new generation of investors and honestly, they pretty much only know that markets rebound quickly from shocks. Okay, someone the other day, I sort of was screaming at the TV 'cause I forgot where I saw it exactly. I'm not gonna call the guy out, but it was like, this is Remind Josh Brown. - No, it's not Josh Brown. - I would have called him out, but it was, this reminds me of the post-COVID environment. I'm like, yes, except for the massive interest rate cuts and the fiscal stimulus. - And the 11 million people, that's nice. - Yeah, so come on. But realistically, the lesson that was learned post-COVID was market goes up and dips, every dip should be bought. There was maybe a call it a six month period in 2022 where it didn't work out for a while, but since then, every dip has been a buying opportunity. Geo politics have been buying opportunities because most of these things have worked themselves out very quickly. The Venezuela, the Venezuela will go into Venezuela, will rip out the president, that's, I don't mean to minimize this by the way, but from a market point of view, stock, the stock market, I'll actually argue, has become increasingly bad at factoring in Geopolitics because stocks are moving on, stocks move on stories, stocks move on rhetoric. We all get involved in the narrative. Whereas when I look to, when there's a crisis, I look to see what a oil trader's doing because it's pure supply and demand. What are bond traders doing? Because if you're a government bond trader, you're pretty much laser focused on inflation expectations. If you're a stock trader, you can always come up with a good story. Well, to Sam's point, I'm not criticizing your point. Earnings are good. So we'll be okay. But let me throw this out to you. I think Sam's earlier point about the earnings, the estimates keep coming up, is really important. Keep going. But investors didn't buy the dip because retail has not rushed into the fire this time. Yes, the market rebounded, but it was a lot of selling. Like people were bearish and we built the wall of worry and we climbed over it. And now, is this a market clearing event? Like, I think it is. I mean, we're going to go back to war next week. Well, maybe if they charged, if, you know, let's, first of all, let me challenge you a little bit because our customers who are not necessarily, I would argue that they're a bit more battle tested than a lot of other firms. We actually did see a lot of dip buying until I guess last Thursday, and then they actually started to lighten up a little bit into the upward move, you know, by low sell high. That's where you see it. So I saw a truck recently, I think, I can't remember who posted, maybe sure, I have no idea. Where it was, people were selling stocks with buying ETFs. Is that what happens in depth? I can't, somebody told me that one thing. We traded, stopped buying in the little size. They started buying baskets. To some extent, I mean, the most active stocks remained micron and video. They bought a lot of micron on the way down, but micron. Right by? Yeah. Well, yes, depending when, if you started buying it day one, well, you know, if you bought it last week, yes. But the, but the most bought stock of the last week was VLO. Well, it's an ETF. And to me, that's very critical because VLO is spy for investors. Spy was the most active options in our firm by far were spy. You know, it's the Vanguard 500. That's the buy and hold, not the buy and trade. Exactly. Because the liquidity is not great. The option liquidity is essentially nil. But at the fees of Wi-Fi are the lowest. So investors tend to park their money in VLO or active traders who want to, you know, a sort of a basic market exposure from the long side, they park in VLO. So we did see a lot of customers moving in there. Yeah, they continued to buy dips in the usual favorites. They've been, you know, they bought Teslas itself sold off. They bought, they've been steadfastly buying Microsoft, despite it not doing much. But to me, the big standout was VLO. So let me ask you, I mean, you're uniquely situated to answer this question. How much does buying like money, new money coming in impact the names directionally? Because you said Microsoft was a favorite, well, guess what? The stock has no bid. Just, it just goes lower every day. You know, the the point being that, you know, if you're, if you're trying to move, you know, if you're managing multi-billions, it doesn't matter, you know, reach, you know, that you're, that's a trillion, yeah, a trillion-dollar stock. Exactly. So the, so individuals are to them a source of liquidity. If you're, you know, if you're making a secular move out of Microsoft, the individuals, the individuals can keep it propped up for certain extent, they're not going to do it. It's something like Tesla, which maybe be a bit more retail driven. Yeah, they're going to do it. Or and as we mentioned in micron, the first way of down institutions were selling, individuals were buying. It didn't help very much. It finally, the institutions needed to stop selling for a while for that to work. Did buyers and Microsoft just like the meme with like the Cheeto in front of the door lock? I like that just right, right. It's going to break. Let's do some charts. So we had a surge in new four week highs, which is not bearish in my opinion. So highest level since July 2025, not bad. I'm a fan of this type of stuff. The next chart comes from, who's this from? I want to get proper credit, Valkyrie on Twitter posted, all right. So what happens when the Nasdaq 100 gaps up 3%. And he said, let me quote this person, basically it's 100% of the time, all right, 12 times. This is happened 12 times since 2011. Three months forward, 100% win rate. Where's case plus 3.4% average return of 22.4%. Big gaps usually marked turning points in major bottoms. Now 12 of 12 times is not 174, but it's not zero either. Well, 80% of the time it works all the time. (laughing) But I mean, it's hard to argue with math like that. But again, if this, we're still in a very fluid geopolitical situation. You know, right now there's still, there's still missiles flying. We still don't know where the Persian Gulf is. But to that point, in each of the examples on that chart, which are basically almost all since 2020 with the exception of the flash crash, which was a unique event. You know, this, this I think points to the post, you know, the post-COVID mentality. And now so actually, Well, that flash crash, that was the Chinese devaluation. No, that was, that was like a freakish, like it was basically like some, a fat finger. No, no, no, because you're right. The real flash crash was 2010. I think this is mislabel. This is 2015. Okay. That was the, you want devaluation. Okay. Anyway, yeah. And also, by the way, notice that the fur, the next like five or six are all that immediate post-COVID recovery or so. Not a huge sample size. Yeah, so it's, so I can't argue with 100%. But it's just, here's a matter one. Here's a matter one. Charge four. This is a sentiment trader. Historically, when the percentage of nanosecond 100 components trading above their 10 day moving average, rockets from under 10% to over 70% in just five days, the index boasts an 80%, there's 80% of a hundred or 80% of a hundred percent of the time frame. Now, you know what? Well, who cares? 75% of the time stocks are up one year later. Yeah. All right. Whatever. Maybe not, maybe not some meaningful. All right. One of the really interesting substories in the market, and of course, we're all we're talking about is, you know, the market in general and oil prices and, but inside the market, there's a really interesting story going on. The shift out of the shift, the blood bath and the software stocks continues. It can't even get a baby, it got a baby bounce. It couldn't even hold the baby bounce. And the unstoppable tidal wave of money going to semis and hardware, Warren Pi's tweeted, as the Iran war has ebb and flowed, GPU availability for B200s has collapsed to zero. H100s are close behind. Whatever happens with this war, the AI complexes likely to lead any true sustainable market, unsurprising to see SMH less than 1% from all time highs. And it's this really interesting dynamic where you've got, of course, this AI story and the sensational demand for the chips. And so not surprisingly to Warren's point, the semi-stacks are going wild, but the software names that are being wildly disrupted. Microsoft is included, Microsoft is the biggest holder in IGV. I don't know that Microsoft is being disrupted by AI, but I think it's maybe the closest proxy for like what open AI would trade if it were public. So the three-month correlation between the semis and software has collapsed to its lowest level in a decade from Sherwood. Thoughts? - Yeah, I mean, I think, I mean, obviously everyone is freaked out with software because they think AI is going to replace all that. I guess we just don't need software anymore, which is actually kind of a ridiculous statement. Like, you can't run a computer without software. So I think it's a matter of trying to, not necessarily a floor, but people need to have sort of like a vision for some future where like there, there is a starting point where software makes sense as a business. But for the time being, it just seems like the story is overwhelmingly about how AI tools is going to disrupt this business. - You know, to some extent, right? One of the beauty parts of AI is it's a disruptive technology. Well, who gets disrupted first? That's the focus. And you also in the software sector wrap up a couple of nasty elements there because a lot of the software boom was financed with private credit, there I said it. Also, the latest story with this anthropic mythos that I've been reading about for the last couple of days, which is the secret anthropic software that they couldn't release 'cause apparently it found thousands of bugs and all kinds of published software. So they only released it to trusted firms, has to make you wonder, well, what if somebody else figures this out and doesn't just offer it to these other firms? So this is where the focus of fear has come from. To the charts point, yeah, there's a shortage of available chips right now. I'm not gonna pretend to be global helium expert 'cause I had no idea that liquid helium was so crucial or that it all came from the Persian Gulf, but it's not gonna make the chip shortage go away anytime soon. What's in the T1000 made of liquid helium? Maybe, I don't know, but I don't know exactly what I guess you need it though to make top quality chips. But so if you're missing, silicon's everywhere, go to the beach, you're a silicon. But if you, but I know that's not what's going on with the software and destruction. Nobody really does exactly. Everybody's guessing, but I think it was Warren actually who said there's never been a sector or industry group or whatever. That was more than 8%, which the software was. That was in a 30% drawdown and yet the market's 3% from all time highs. This was a couple months ago. But I'm looking at the screen today and Palantir is down 8% on the day. It was down like 8% yesterday, I think. Michael Barry tweeted something about them being disrupted. Palo Alto's down 5% crash track is down 8%. These are cybersecurity names. Are they getting vibe coded out of existence? I don't know. That may be a thropic. Because yeah, yeah. It seems to be an overreactual. I mean, what do I know? Service now down 8%. I mean, these names bounce for like, they stabilize for a minute. And now, who knows where the floor is. So yesterday, I had a chart kid make me something. I said, hey, this feels weird, where the S&P is almost 1% and software is down like 3%. Drawdown please, 6A John. This is so yesterday had never happened. Whoa. All right. So on one axis, we've got the IGV and on the other, we've got the S&P. And you've never had a day where the S&P was up as much as it was with software down. In fact, it's never been down at all. You've never had the S&P up 1% with software down and software is down 93 basis points. And today it's even worse. The chart today, it's quite literally, I mean, it's off the charts almost. Here we go. Look at those 20% periods, right? Yeah, look at this. Yeah. So the two day change, the S&P is up 3.1%. And IGV is down 5.2%. Now, we all might say that this is an overreaction and maybe it is and maybe it isn't. And obviously there's more than an element of truth here. I'm sure Salesforce is going to be under pressure. But it is this really weird dynamic. I can't have the chart here, but Matt made this earlier. The estimates for the software names. It's still at all time highs. And guess what? The companies are reporting all time highs. It don't be just reported in the last couple of weeks on all time high. And the stock market say, I don't care. Yeah, right. I'm not looking out over the next quarter. You could two quarters to quarters. Because we think your terminal value is a fraction of what is today. So the question that I have for you guys is, how many quarters do you think we would need to say of more autumn highs for the fears to be like, all right, maybe it was overblown? At least a couple more, I think. Yeah. And I think, well, first of all, I noticed, and it's very well labeled chart that it starts since 2001. So it's like, you're talking about a software era. So it's like, of course, you're going to have this correlation where software and this and P is going to have this type correlation. But like if we're talking about a new era, a future era where it's like maybe software, I mean, it doesn't go away, but becomes a little less relevant in the context of how the global economy works, then yeah, maybe you start to see these sort of things that begin to look like outliers that might actually become a trend in the future. But that's not to say that this stuff won't correct again. But I think you bring up a really good point, though, about how these companies have record high earnings and maybe even for the rest of the year, they're going to have extremely high earnings and earnings growth. This is actually not about software, but it reminds me of what we're talking about with like the other Mag 7 names, the hyperscalers that are investing. all this money in these data centers and all this stuff. And while today they're minting insane amounts of earnings and insane amounts of earnings growth, the valuations on a lot of the meg seven names have been, you know, shrinking for months. And that's not because of earnings that they're earning today and this year. It's because of what people are worried about, you know, in five or 10 years from now, when all these investments come back in the form of depreciation expenses and stuff that start to collapse, you know, the profitability of these companies. So it's possible that, I mean, you know, this is just the stock thing, right? It's not about, you know, what happened last quarter or what's going to happen this year, but it's like that's just telling us that this is what, you know, maybe the investor or the trader or whatever is, is imagining a world four or five years from now where, you know, this company is not generating this earnings growth or earnings is much smaller than what it is today. - Although today for the first time in a while, we've rewarded a company for spending money with meta having a nice day today because they're committing to spending, what was it, $21 billion? - Core weave? - With Core weave. So for a while there, they were getting, you know, they were all getting put in the penalty box, which I think is an interesting tell on the psychology. So the psychology in the software sector, to your point remains in the toilet. The, but I think in terms of AI spend, you know, bottom line is people, there's a lot of people who really want these max seven stocks to go up. We kind of have to have them go up as, you know, you know, Barry Redholz, Coin the term closet indexer and whether you're-- - No, he didn't. - Didn't he? - No way. - I thought he did. - No way. - I was gonna give him credit. I'm in his office. - I'm in his office. - I'm in your guys' office as I always credited him with that. We'll find a different citation, but for a closet indexer, one of the things I tell people is, you know, oh, how do I get exposure to AI? I'm like, put your money in an S&P 500 mutual fund. You've got 40% of your exposure in AI and AI related stuff. You, the trick is not being exposed to it if you don't want to be. And so I think that to me is an interesting question to your point Sam. I don't know that, I don't know that the people buying meta today are thinking four to five years out. I think some of the institutional managers who are not buying meta today and have not been buying it to the same extent are thinking that way. So other public proxies for the AI trade, like nobody wants to own Oracle, it's basically at a new low. If this announcement happened a year ago, that meta was going to be investing $21 billion into Corviv. I don't know the details of the story, but who cares? It would, the stock will be up 19%. - Absolutely. - It's up 3.5% and, you know, off the highs, I guess that's, are you kidding me? 3.5%. - Better than zero or better than down 3.5%, which I think has been the trend. The more, you know, when you do Oracle's point, you know, people said, wait, you're spending all this money for what? And I think so, you know, a plus sign is better than a minus sign I guess. - But does it, does it make sense? Throw the next shot on. So it's hardware than the next software. We're looking at a trot of SIP 500 software, which, you know, obviously has gotten crushed. And look at the hardware. So I took Apple out of this, out of this. It's Dell, Hewlett Packard, both segments, NetApp, Super Micro, Sandisk, Western Dig, and I know this is a chart heavy show, so I understand people at night, everybody's watching. But these names are going absolutely vertical. So what did you think that if there's so much fear, forget about the stocks that are getting disrupted by AI? Forget about like the software names. But the hyperskellers that are so pot committed, where everybody thinks that their margins are gonna come under pressure and their free cash flow is going to contract because how could it not? Surely then at some point, they're gonna pull back and they'll be less demand for the hardware. Does this chart make sense to you? In the short term, yes, because if we're all freaking out, think about the logic here. If you're freaking out because all these companies are borrowing bucket loads of money to be able to buy, to be able to fill these data centers, what do they fill? And you'd be like, okay, maybe I don't want to buy the companies that are flipping from cash flow generating machines to roughly cash flow neutral companies. What are they spending all their money on? Well, you just had them all in the chart. So maybe that's where I should be going. As it got an extreme, that's a whole lot of short. Investing in the picks and shovels versus the 49ers going out there. And so this is the picks and shovels market. Sorry, two more charts, then we'll segue. Software to the S&P 500. So relative crash, obviously not pretty, that bounce lasted for about a cup of coffee. And on the other side, semis, new relative highs and then Microsoft, I would think the poster trial for public companies of the I trade, new lows back to March 2020. It's really hard to believe with how much success Microsoft, the business has had, the cloud, like all of the success and all the growth. And you could have just bought the S&P five years ago, six years ago and been in the same place. Well, to your point though, I think a lot of the rise was because of the open AI buzz. And now, open AI is kind of a tarnished name relative to anthropic, to a certain extent. I think that's not completely reflective of it. I think markets get in momentum trends and as I mentioned, narratives are important. The narrative on Microsoft kind of stinks now. But I think that goes a long way to explaining some of the outperformance. And also again, remember, the premise here was Microsoft and Friends, they didn't know what to do with their cash. Now they have to go to the well to borrow money, which means they've got higher, it changes this business model that was always this perfect storm of amazing margins and basically no fixed costs. I'm afraid of what's going to happen when open AI comes public. So they just raised $120 billion in the private market. The largest capillaries ever in the history of public markets was $25 billion. And they just took 120 in private markets at an $830 billion valuation. I mean, who knows? Okay, the market is fluid and the market environment changes. But I think that if open AI were public today, the stock would be going down every day. I agree. And I think this is one of the, to me, an existential risk that I think we need to focus on. It's hard to value. I don't really, but you've got SpaceX coming public. Which is going to be the largest IPO ever. And if retail, if it's as big as as threatened and 30% goes to retail, retail's got to come up with $25 billion. And then it's going to go in the index, 15, at least then QQQs in the MDX, 15 days later before it's even seasoned. And so that's a huge one. And then you've got inthropic potentially going public, open AI potentially going public. Is there enough money to support all this? That's the open question. I don't know. Nobody, I don't know, you know, $22 billion, they're certainly going to have to sell something. If you're an index, if you're in Vesco, you're certainly going to have to sell parts of 99 other stocks to be able to afford to buy, to put SpaceX in your account. I think this is, I think this is, you know, it'll be a grinding of the gears. But I do think this is a risk that people have to look at. One of the beauty parts of investing in the market in SAM, you've had a, you know, you've, I think, hit on this for years, is that the supply demand for stocks has been pretty good, right? Because you've had more buyers and sellers. Well, besides more buyers and sellers, you've had a lot, private company, you know, buy out firms taking out a lot of companies reducing the supply of stock and buybacks, which you can argue whether they're reducing the supply of stock or just, you know, keeping the treadmill running to buy back the stuff they're issuing to people. The supply demand calculus has been very favorable. This will change it. Sam, can the market digest $2 trillion IPOs? I guess we're about to find out. But yeah, like, to your point, yeah, for years, all we've been hearing about is the, you know, the number of publicly traded company shrinking. And, you know, there's not enough stuff to buy out there. So, so that may be driving up the premiums everyone's paying for the stock center out there. But I don't know, like, I don't, I don't want to be that guy. I don't want to be that guy, but it's like, you know, I remember the last time, you know, an extremely buzzy private company with, you know, executives and founders that are on the cover, you know, magazines and speaking at every event. Was it a kappa? No, it kind of reminds me of when Blackstone, when public, like in 2007 or something. And I'm like, I get it. Listen, listen, like, apples and oranges and whatever. But it's like, there's something about a coming, an IPO that's coming that has all these people so excited about getting a part of it that it's like. It does feel like a title wave that's like 500 miles away. Yeah, because everyone's gonna buy it on day one. And it's like, all right, so who do you have left to trade this thing? It's people who are trying to cash out. Yeah. All right, I saw a chart from JP Morgan's Guide to the Markets that blew my face off. I chart 11, please John. We're looking at consensus estimates for 2026 earnings per share growth. And everybody is basically, you know, sort of neck and neck. There's one huge outlier in its EM. And I talked to myself, the hell is going on with EM? Consisting assessment earnings are 35% year over year. And it, you know, the spoiler, it's not much of a spoiler at all. It's, it's, it's, it's some of the conductors. So I had our trusted friend Claude make me a chart of what's going on inside of of IEMG. This is Clyde. This is Clyde. This was quad. Very nice. So, yeah, no mystery here. 21% of the portfolio is semi-conductors. You've got TSMC, biggest manufacturer in the world at 11% of the portfolio. Samsung is 5% SK high nexus 3, 32% of the of EMS tech. And member one EM, I know you guys do, it was like an energy proxy. It was like the brick trade. And while the indexes reinvented itself. Well, because, you know, yes, to your point, it was always, it was resources because essentially, emerging market meant underdeveloped. I've never been to Taiwan. My kids have been there. I've been to Seoul. My kids have been all over Korea, actually. It is not an underdeveloped country by any means. It's, you know, you could argue that things are much more advanced in many ways than they are here except the capital markets are not fully open to the same way. So they get classified as emerging. You know, Samsung is not exactly this scrappy, you know, new economy company that we're trying to figure out what they do. Right. I think last year, international stocks outperform the S&P by the widest margin of long time. Now listen, you zoom out long enough. It looks like a blip because the US ice of app performed for so long. But I want to ask you guys, like, are international stocks, does this trade have legs because there is much less exposure in international markets, John charred 14 please, much less exposure to things like software and much more exposure to some of the things that are that are working. And just technically this, this looks pretty damn good. If this were to like to roll over and break down, it would be a, it would be a funky chart. This certainly looks like a bottom and it looks like a continuation pattern that this is going to take out new recent highs. It looks, it just, it looks like this trade is going to continue. I think it's, I think it's absolutely something worth watching for a reason that I think kind of flies under the radar. And it's that a lot of these countries are actually starting to push through reforms and efforts and policies that are focused on enhancing shareholder value. I think, I think China, Korea and Japan, they all have policies that have been rolling out for the last couple of years where it's like, you know, it's not good enough for your companies to be making money. I mean, listen, companies everywhere including across Korea and Japan and Taiwan, like they, everybody makes money. The question is, you know, why is in the stock price going, why aren't the stocks going up further? It's because the earnings growth isn't there. So it's like, you know, how do you get this, how do you get people to change their attitudes? Because it's like, you know, you can go to work, you can run a company, you can employ tons of people and never have layoffs if, you know, you're making a billion dollars every year and that's it. But if you have no earnings growth, the stock price isn't going to go up. So I don't know the details of how these reforms work, but I think it's something to be very excited about as a person who's exploring international markets. Because if, if, if, if the story of earnings growth starts to turn around for, for regardless of if it's an Asia or Europe or whatever, then, then yeah, then you suddenly have an interesting stock market. Well, you know why? Because there's been so many people over the last couple of years, like, listen, I don't want to be overly reliant on the max seven hyperscalers, but where else are you going to go? International? No, that's not working. Well, now it's working. Well, it's, there's your point. Exactly. I think, you know, first of all, set in a secular sense, there are two things that have been helping international investing as a whole. Number one is, you know, I think we've had a, we've at least started to recognize maybe value is not to be tossed away at the expensive growth. So we have seen a rotation from growth to value. It's not exactly a gold rush here, but it's, with that, that move has been occurring. Well, if you're looking for value and you're, and well, there's a lot of value in Europe to Sam's point, these companies make a lot of money that don't grow very fast, but, but they're stable. I think also at the same time, I never was a big believer in the sell America trade, but I do think that a lot of international investors are saying, you know, maybe how about we keep a little more money at home rather than just buying these same stocks in the US? And so I think those two combine to give a, to give a bit more of a, a basis trade, a value basis, I should say, to, um, to international investing. I started it doing my first job was international equity arbitrage. It's all my brothers, which meant I was up all night and things of that nature was, it was a little unsustainable, uh, as a lifestyle. But, um, you know, I, I, there's great, there've always been great companies around the world. Now, I'll actually argue it's never been easier to invest in these great companies around the world. I self self interested plug. We offer access to, I forget how many markets now for 50 or something like that. But the point being it's, it's really easy to access international investments. And I think if, if you're starting to think from a value point of view, if you're starting to think from a geographical diversification point of view, because a lot of, you know, are we the cleanest dirty shirt in the drawer? So to speak anymore, it's not, it's not clear that that's the case. And so if there's other dirty shirts in the hamper, maybe we pick a different, you know, the drawer is not that dirty. Yeah. We are about to enter an earning season and estimates are on their way up. Are they not Sam? They're on their way up. Isn't that crazy? It's like every week we get an update, you know, from fact set and the places that survey this stuff. And it's like even through last Friday, and we're going to find out tomorrow that earnings have been revised up for the last every week, even since the beginning of this war, like it's crazy. But that's what the, that's what the analysts have figured out. And that's what's being communicated by the companies to, you know, shareholders and all this, this kind of stuff. Yeah, they're, they're, I mean, they're all acknowledging the fact that, you know, things like higher energy prices is going to eat, you know, it's a headwind. And it's going to show up, you know, in their books, you know, when they report, not just in Q1. I mean, that's another thing that's interesting. Like they have a full quarter of experiencing this. And that's going to be reported in a couple of weeks. But they're going to start telling us about how this stuff affects them in Q2, Q3 and Q4. And all the indications so far is that, you know, it's not that bad. And in some cases, it's, you know, we're actually doing better than than we were at the beginning of the year. Sam, you brought a few charts from Deutsche Bank, showing the percentage of stocks, beating earnings estimates and the aggregate size of the earnings speeds. Anything interesting in here? No, I'm I'm going to take this. I have to repeat this. I repeat this every quarter because it's like, you know, you turn on a TV at, you know, no judgment to anybody because the nature of the storytelling is slightly different. But, um, this whole matter of, you know, a company beat earnings expectations. It's like that you don't get any information from that because historically, you know, more than half of the S&P 500 is always going to be expectations. And, you know, on average, it's like 70 or 80% of companies will be like 80% right? Yeah. Yeah. Yeah. Yeah. Go finish. And then the other thing too. And this is hilarious. It's usually with by a margin of about 5% and that actually, you know, if you extend that all the way back to like the 80s, that's also the case because, um, one of our friends, Nick Colis, at DataTrack, you know, writes about this every once in a while. He says, um, you know, at one point, he was considered one of the most accurate analysts on Wall Street. And he's like, this was the way he did it. And he's written about this. The way he did it was he waited until like earnings season rolled around. And then he just saw what the consensus estimate was and he added 5% to that. Which, it's funny. You said my, my, my father was an industry analyst for his career. And he, well, this, first, you know, one of the certain large company that was known for beating estimates. It's a household name based, based in Arkansas. Okay. That one. Um, and you know, what would happen would be he'd get a phone call. It would be, you know, you're at 50 cents. I think you're a little high. I think you're going to have 50 cents. I'm looking at your numbers. It's 50. You really need to go down to 48, 49. And so everyone on the street because they didn't want to be shut out would go to 48, 49. Guess what the number would be 50. And so, you know, yeah. So this isn't Jack Welch pushing pulling, you know, pennies out of the couch cushion, which eventually couldn't happen anymore. And so to me, I look at earnings season with two things in mind. Number one, beating your published estimate is a necessary, but not a sufficient condition for a rally. You have to do it because everybody else does it. And number two, part of a CFO's skill set at this point is managing the street as much as it is managing your bottom line. And so the fact would be that again, you know, I keep saying it, you know, 75% of the time works all the time. But if, if, if, if, if 73% and as much as recently as 80% of companies beat, that's not, there's, there's to your point. There's not a lot of information. Everybody's looking toward guidance at this point, rather than, and I think also, it's always because, because, because to Sam's point, you're not, you're not learning anything. The other thing I'd also, another thing that where I was taught early in the early in the game was watch free cash flow because a company can fudge its earnings to a certain extent. You could always, you know, you know, to time it differently, call it non, non-recurring. You can't fudge cash flow. You know what? You did the CFA stuff. Those formulas suck. There was like six different ways to value free cash flow, free cash flow. Far, free cash flow. It doesn't that. And a lot of publicly available sources of data don't publish free cash flow. It's not like a line item statement. Some companies report it most do not. - Right. - And so I was always like, well, how do I find the free cash roll? Well, that's what Nican, now chat, clawed anybody can give you the free cash roll in two seconds. - Yep. - Yeah, yeah, it's great. One last thing I will say though, in terms of-- - Oh, I'm this chart that is boring? - Yeah, the chart that's terrible. You connect this and you connect the expectation, you connect the beat, right, whatever, with what's already been established in terms of, you know, the Q and S and S. Now, admittedly, this is backwards looking. But again, you know, this is also factoring, you know, at least one month's worth of, you know, Iran war uncertainty and energy cost. Even though energy is gonna come on a lag for most people, the fact that we haven't had a whole lot of negative pre-enouncements, the fact that we've actually some positive pre-enouncements suggests that, again, this is gonna hold up again, which is actually something to be encouraged about considering this also includes one myth of war. As a long-term options trader, I'm gonna take the-- I'm gonna say that in some ways that scares me. The reason being when you don't have earnings warnings, when everybody's excited going into earnings, the bar has gotten raised pretty high. So you have to jump over a higher hurdle. That's a number two, the thing that specifically about this one, and I have to be careful how I say it because it-- But despite all the tragedy that's going on in the Persian Gulf, if you're CFO, this is the greatest excuse ever, right? You know, they were probably like talking about-- Oh wait, the first six months were snowy, we could talk about weather. This blows it away. You know, where's your guidance gonna be? I don't know, I have no clarity because of the situation in the Middle East. How many-- I wonder how many times we're gonna hear that, and the question will be, is the market charitable to that or not? But I think you're gonna-- And you did raise this point, but the cynic, the risk manager in me has to say, like, is this gonna be a legitimate explanation, or is this an excuse? All right, by the way, this is the second chance the CFOs and execs have, because they could have done this last year in the wake of all this tariff uncertainty, right? Trade policy uncertainty and cost uncertainty and our moving around our vendors and all this stuff. And it's very easy to slip in, you know, laying off a department that was, you know, obsolete or whatever, and bury that in your expenses. So it's like, if you didn't do that already last year, it's like, this is your second chance. And if they don't do it, that it's probably a reflection that the business are in incredible shape. You make a really good point. If everybody is bullish, then if the bar is higher, it's gonna be harder to move the stock price. Yeah, beating expectations is now expected. But the good news is that, even though the analysts estimates are high, I would be singing a much different tune if the stock market, and forget about the indexes, all right, let's talk about the individual names. If the breadth of the market, prior to like today, but just was, uh-oh, this is gonna listen, we're price for perfection, 'cause 90% of stocks are above the tune which they're moving average. Like there's no, the bar is too high. That's not the case. There are a lot of names that have been beat into absolute shit. And even if they only beat by a penny, you could see a re-reading way higher very quickly. There's no question that a lot, that in some cases the bar is set, you know, like for a little, you know, kid to hop over it. And that, you know, software company, I don't know that the market's ready to do that, but for them, it's not gonna be as hard for them to leap over this bar for a lot of these other companies where the market's pricing in all good news, you know, it's just gets a bit trickier. Yeah, exactly, exactly. Like it's especially with the software names, but I think another good example of this recently was like the Delta earnings, right? It's like going into the war, I mean, I remember coming back from future proof, right? And I was on a plane watching CNBC and you see all these charts of the airlines thinking because of war tensions and oil prices rising because they're entire cost structures is jet fuel prices which have been skyrocketing. And the next thing you know, they have a decent earnings announcement that stocks up 12%. Didn't hurt, didn't hurt that it was coinciding with a rip roaring day anyway, but yes, right. Right, right. The market was already predisposed to take that well, right? There was a quote from, I think the United CEO, CFO, who said something like if that we're already projecting 10 billion dollars in higher fuel costs for the rest of the year. And for some perspective, our best year ever for some sort of metric of free cash, it's always $5 billion. So just to show the scale of this, but it does come back to earnings and we're gonna see, we're gonna see, we're gonna say, all right, in the time we have left, we wanna talk about the queues, we wanna do some stuff on rate cuts, option stuff, where do we wanna go next? You deal with short out. You throw it out and we'll, how about we do lightening around? Lightening around. All right, that's a lot of sand. So let's do a minute or two on each. All right, the queues. And this is like, maybe it's sort of a boring story, but it's kind of interesting because the queues have had a stranglehold over the Nasdaq 100 in Vesco for a long time and are there, maybe there's deals I don't know about. Why has this been the case? It's 18 base points, not exactly a low fee product. Now there's the queues or structures of the UIT. There's all sorts of interesting deals where a lot of it goes to Nasdaq and it's like a loss leader for Vesco, whatever. But you've got, I shares filed for one and now stage street. What is the deal here? I'm not sure on the legal specifics. I mean, I do think there was probably some exclusivity SPX style where SPX is only on CBO, et cetera. I don't know the details there. As far as I'm concerned, as a user, as a brokerage firm, bring on the competition. We talked earlier about Spy versus VOO. And of course there's IVV. Why shouldn't there be more than ones? Why shouldn't there be more than one QQQ? I think that's the simple way to think about it. The competition is good. And every day there's like 100 bullshit ETFs that are launched. Why not try to take a chunk of something that's actually successful? And especially, I mean, the main thing being that if you can put it out there with a lower expense ratio, then the current market product, then it's like it's no brainer. I'm guessing Vesco was paying Nasdaq for exclusivity. I don't know why I have to guess I could buy for this publicly available information. We'll check. Yeah. All right, dude, where's my rate cuts? This is to me is one of the crucial points when it comes to thinking about where the stock market is. Okay, well, we came into this crisis. That was literally, by the way, dude, where's my rate cuts? It was actually literally something I wrote, in our IBKRcampus.com, by the way. And what I did was basically went back and said, we're, you know, I was looking at the Fed funds futures. And we were before the shooting started in February, we were pricing in, we Fed funds futures, we're pricing in two rate cuts, plus call it, I think 40% or 50% of a third rate cut. As of yesterday, we're pricing in a 25% chance of one cut. So we've taken, oh, called 60 basis points off the table in terms of rate cuts. I was like, is this unique to the US or is it not? It turns out the rest of the world is doing the same. The UK actually flipped from like 50 basis points to 50 basis points of hikes. The Royal Bank of Australia is a little lower because they raised rates already once, bank in Japan's in its own little world. But when Euro, the Eurozone is similar, Bank of Canada is similar. So again, this is why when I went back to the point earlier about stocks being essentially unchanged over this period, all things being equal. If I told you we were taking 60 basis points of rate cuts off the table, you'd think there'd be some negative impact in stocks. But that tells you the power of positive psychology. Isn't this, and the only, I'll add a counterfactual to that. I think it's possible. I think another way to think of that too is if the rate cut odds weren't falling, then maybe stock price is actually higher, maybe value is higher. Oh, that's fair. Okay, so given all of this, let's assume that nobody could see the future that this market clearing event has happened. Let's just assume that there's no further escalation, okay? So all of the headwinds of higher crude oil, higher interest rates, maybe rate rate hikes, nobody actually thought rate hikes were coming, but the market was pricing that it had. A higher dollar, all of those higher inputs, all of those headwinds easing everybody back in the ship. I know not to mention that seasonally, this is a very bad year in terms of midterm election years, and it is a very bad time of the year. This is tax season. This is and worn, my friend Warren Pies, funded the show, has done great work, showing quantitatively, this is a drain on liquidity, like literally this week, it's not great. And yet we are, the market close higher today near the highs of the day, we are in, okay, everybody back in the boat. And as dire as it fell over the last couple of weeks, as much as we had the sense of anxiety and like the market's gonna take another like lower, it never happened and the bulls can come back and absent another catalyst to send this lower with strong earnings, they probably will be back. >> I don't know that they ever left, but there's always something out there. And again, we've raised a few of them. >> They left. >> The sentiment got pretty bad. >> The sentiment did get bearish. But again, the drawdown wasn't very big. And again, we've got, you mentioned the midterm elections, which can be wrong. Rocky, new Fed chairs have an interesting way of getting tested when they take off. They do. Right? I mean, as a coincidence, I don't know about that. I mean, well, the Greenspan won. What Greenspan literally, the market crashed like six weeks after it took office. But Bernanke, the global financial crisis happened not long after it took office. Yellen got it, got to kind of skate through. And Powell, I forgot what it was for Powell, but Powell had something big happened shortly after. But so there's a sort of a history of Fed chairs getting a real world test. And again, we talked about the supply demand dynamic, potentially getting upended. That's the one. So those are the things that I want to keep an eye on. Yeah. It's very early in the year. Like, let's not rule out the possibility that we get like 14%, 18% max. Never can. Yeah. And listen, by the way, that's expected, right? And even in those years, most of the time, 75% of time, it's literally something that says, even what those max drawdowns, you end the year higher. All right. Options. What happened on Wednesday, Steve? Well, what happened on Wednesday was going into this number, on Tuesday, I put out a piece, basically, you know, mark, I call the markets hoping for Taco Tuesday or something like that. But literally, I looked at the S&P 500 and said, wait a minute, the normally, and I'm doing this. And I don't know a lot of you are listening and watching 24. Yeah. No, visually do it with your head. Okay. So normally, the skew on the S&P 500 is negative. But this is a probability. What is this mean? Nobody else is talking about. Okay. Yeah. Thank you. This is, this is years in an option trader. When you plot the implied volatilities by strike for a given option, typically people are willing to pay more for at for below market options out of the money points. So I did imply volatility. That is the plug in. You know, the amount, basically, the amount of premium that you're willing to pay for an option. So you're willing, typically willing to pay for index options more for insurance downside options than you are for upside. This is a, and then you can actually impute probabilities out of this. This was actually another, this was actually an idea that sprung out of Thomas pedophries had to come up with a graph like this. Oh, he invented skill. No, no, no, no, no, no, no, no, very Reynolds invented the skill. Very Reynolds. It was actually trader. It was actually traders in 1987 because they used to just price options all with the same implied volatility. And then people realized, oh, wait a minute. You get that's not, that's not a good move. Oh, my God. That's cute. If you take a time machine, straight back. Yes. Skewer rose in in October of 87. But what this is, the, the, the, the, the, basically you, from all the skews, you take the problem, the likely probability as on third on Tuesday, markets were pricing in a move to 6750. It's telling you people were bullish. People were expecting a bullish outcome, whether that was FOMO insurance or whether that was speculative. There was literally this bid under the market. And that's what I was pointing out on Tuesday. It was the, the, the base case was, you know, although in talking about it with people, it was kind of freaky on Tuesday. Well, because Tuesday was the day that Trump tweeted, we'll wipe out a solution or whatever. And I was talking to Josh. And the point I was me was like, how dumb do you think the market has to be for it to be down 20 basis points right now or whatever it was? You think the market is that wrong that there's going to be a global catastrophe that night? No, the market doesn't under react to risk. Yeah. And, and, and the charts that I put the charts that were that I've found with, you know, whether you're in options, skewer, not, but this chart telling you that the maximum probability priced in by SPX options was for a rally to 6750. So we got everybody knew and hindsight. And of course, hindsight is 2020. But it wasn't hindsight. That was four side because I took, I did this on Tuesday, not on Wednesday. Two shy. Two shy. Two shy. Okay. And lastly, this, we, we won't out here. This is a bummer. But Disney, what's they an asthma layoffs? Well, they have a new CEO coming in. Yeah, a new CEO coming in. I mean, okay, this is just sort of a speed run in an educational crash course in dealing with news headlines. Yeah. So Wall Street Journal reported that the new CEO is going to cut about a thousand jobs. All right. If that's all you say, it's very easy to start to extract all these macro stories. Oh, it's more a layoffs. Is this AI? Why color? What all these things? All right. So a couple of bullets. One, Disney employees is somewhere between like 150,000, 200,000 people. So it's like already, it's sort of like one percentage or less of their workforce. And so companies lay off people all the time. And so if you're that big, like this, this could be a run of the mill sort of turn in their office. Two, there was no mention of anything in terms of stuff like hiring freeze or headcount reduction. And if those things aren't paired with layoff announcements, then it's like, you know, they're going to have, they're going to replace all those people potentially. And I dropped this in the dock. I don't know if we caught this. But if you actually go to the Disney LinkedIn page, there's 1300 open roles. And again, this is not totally precise, but this is literally active job listings on the Walt Disney site. Maybe it's in reality, it's a lot smaller than this. But the point is, this is not zero, which means the net headcount at Walt Disney is not going to be shrinking by 1000. So this is just both the business and the macro story. And then again, all that stuff can be echoed out amplified out into how we think about macro narratives too. Even in a healthy economy, the US employers are laying off somewhere between a million to a million and a half people per month. So it's like layoffs are going to happen regardless, even during economic booms. And that million to a million and a half people a month I get laid off. And listen, it's awful. Like there again, there's no downplaying the human toll and the stress that it brings. But as you know, people invest in the market and thinking about the economy, this is run of the mill in terms of statistics from statistical perspective. And by the way, the one to one and a half million layoffs per month represents about 1% of the employed labor force. So when you hear or read, you know, stories about a company doing a ton of layoffs, yes, absolutely. It's something to pay attention to if you're exposed to that stock and you care about that business and you have family who work there on all these lines. But you know, be wary about extracting some big macro narrative because it might actually just be run of the mill economy working. All right. I won't do it. Lastly, the economy, it is weird because there is this continued disconnect. The economy is fine. But we keep seeing corporate profits all over the place at an all time high, maybe leading to confusion, further anxiety, why is the stock market up? What do I feel so bad? And the labor market is it's not frozen, but there's not a lot of hiring. There's not a lot of firing. It's weird. It is kind of a no hire, no fire. You know, I guess the key here is, you know, it's important for everybody to remember the stock market is not the economy nor is the nor is the economy the stock market. But they're inextricably related. But in general, you know, today, again, we shrugged off the fact that GDP came out with a 0.5 revision today. So that's not exactly a rip-roaring economy right now, along with a 0.4% rise in PCE. That's, you know, stagflation very light. But, you know, but yet at the same time, and I think Sam, you brought this up in the charts that we saw was you described the truck better, but it was basically that that net incomes are starting to fall, but yet spending is continuing to stay stable stable. It's hard to imagine that goes on for too long without some pain. And I guess the point being there is when people wish, and when we talked about rate cuts coming off the table, but when you wish for rate cuts because the economy, you know, because the economy is slowing, don't do that because the Fed is usually late and you don't want a weaker economy. If you can cut rates because monetary conditions are solid, sure, that's that's virtuous. But you should always be rooting for a stronger economy. Yeah. And in terms of closing that gap between stuff like the earnings growth story at the corporate level versus all the economic data that seems to be somewhat gloomy, you know, these are, this is sort of like, you know, this is calculus, right? You know, first, second derivative changes or whatever. Like, the bulk of the data when it comes to the economy is mostly about the acceleration and flattening out in terms of growth or whatever. Like we went from, you know, creating tons of jobs to, you know, now we're sort of, you know, hovering that sort of break even level. We had rip-roaring personal consumption expenditure growth, but it's like that starting to plateau off a little bit. Nothing is really falling off the cliff right now, which is of course, dude, not not exactly not yet. And to the point about like the no hiring, no firing economy and layoffs being relatively low, that means people are still going to work and they're still getting their paychecks, which means that they can still afford, you know, the trip to Disney World and all these things. All right. Sam Ruff, people want, first of all, this is great. You guys had a good time. Thank you. I hope you, I hope to come back soon. Yeah, absolutely. You will definitely come back. Sam, for people that want to follow Tickr, where do we find you? Yeah, just head to tickr.co. That's tk-e-r.co. If you haven't signed up already, you know, I have a free newsletter that goes out and if you reply to that, I'm happy to toss people some free months to see what they're missing. Oh, yeah. Well, I never miss it. Steve, I want to, dude, where's my car? I want to get some of your shit. How do I find you? Interactive, IBKRcampus.com is kind of where our learning stuff is. There's the Traders Insight tab you could search for me. I publish, I try to do something every day. It doesn't life interferes, but, you know, I try to put something out when I can and our stuff is all free and accessible. Hopefully to get you on our site, stay around stick around and open an account. And the platform, why do people choose interactive? Breath of product offering. Basically, you can buy futures, options, stocks, all from the same account, foreign currency, all the same account. You can access pretty much the entire tradable world from a single account. And we do it at a very low cost. And so to me, that's a pretty good value proposition. All right, gentlemen, awesome show. Thank you for coming on. Listeners, like, review, subscribe, bring it all to good stuff. We will see you next time. [APPLAUSE] All right, guys. [MUSIC PLAYING]