This Is Where the Rubber Meets the Road, with Jurrien Timmer

There's no limit to what people will do physically. You saw the 61-year-old woman that just did a five and a half-hour plank What six-one-year-old lady five-and-f-hour plank. Well, I'm like I said my my wife just did the world championship Ironman 70.3 in niece France without training. That doesn't make sense. You got eight and a half hours to do it She didn't eight hours and fifty minutes. Why without why without training? She was just already in shape for that I could do 20 pushups without stopping without because she doesn't she's too busy to train and for her This is like it's just fun. Like it's not she's not trying to meddle or anything. Oh my god But a number of years ago She had this trophy case installed with no trophies and she says I'm gonna fill this case up with trophies And now it's full of trophies. That's that's that's determining. That's pretty awesome I have a cousin who is doing or attempting to do a Marathon seven marathons and seven days and seven continents. You know about this Seven marathons, so that's like an extra super seven days on seven different continents You run a marathon and wake up the next day and run a marathon. Yeah. How do you get from one to the other? You run there? You swam Wow That when I heard people are maniacs It's good to be back We're so happy to see you because I was in Europe the last time with the Peter Lynch thing So I unfortunately missed it. I was one one of the one of our crazy Institutional road shows that fidelity international does our sister organization and This year I did three weeks throughout all of Asia Pacific on one carry on but last year it was that's a big year of trip Yeah, how many cities three weeks and it's Seoul and then the southern City where the national pension fund is then Tokyo Then Beijing Shanghai type a Hong Kong is fidelity have clients in all these places. Yeah, I met with all the central banks They have mandates with the governments. Yeah, so fidelity international is Institutional and wholesale, so it's not like the U.S. where you buy a mutual fund And being the fidelity brand we have access. I mean, I was at the PVC I was at CIC the big sovereign wealth fund all asking about gold. What's going on with gold in this day and age? Because they don't they don't have a reserve currency. It's for you know for us. It's a luxury like who cares, right It's a size show. It's like Bitcoin you play or you don't but for them. It's it's it's existential that That fidelity event I did with Peter Lynch who's definitely like a career highlight nice Like guys like you and I were always talking we're always he doesn't do a lot of that and He was razor sharp. Yeah, and I think so I think at first we did a prep call and as you could imagine its fidelity. So there's 10 people on the prep call So this is true story. So We're taught he has no idea. He's it's a podcast I don't and then all of a sudden he starts telling stories and I slacked I forget who I was slacking with somebody on my side. Yeah, I was like Holy shit. He thinks this is the podcast like I was worried because he was like he was great He was roughing. He was making jokes and I'm like I think he thinks we're recording the podcast It turns out I'm an idiot What he was doing was warming me up like hey, I can have fun I know the types of things that you want to ask me he was showing me that he's into it, which was really cool so We get on stage. He was kind of like backstage. He was kind of like I would only do this for fidelity clients He's like that's that's pretty much it So I thought like all right. He kind of like got dragged into this But he warmed up and by the end the audience was laughing at everything he was like so can I tell you my Room over so Pina Lynch was the only person other than me who ever did TV for a finale. He was on that true He was on well for the 99% for yeah, he was on Lewis Rook eyes or Wall Street week And then he retired, but nobody nobody who's a big shareholder at fidelity ever really retires I think they just they just kind of keep you on and you still not really retired But he was retired enough that when he did TV he need to be Coach a little bit so I was his coach. So that's how I start so I so he was the guy down in the field And I'm the guy in the booth feeding him the stats Amazing and ironically now I'm him. I'm no one's ever him, but like now I do the TV But I was like you know, I like he's like you're in fill me in like you know, what are the latest stats and this and that so So somebody said to me He hasn't he retired in 1990. What is he what does he know about the market? I said have you ever read a book? About the market. It's always the same. That's number one number two This guy just spent 40 years doing philanthropy at like the highest imaginable levels You think he has less to say than you do you know like it like it it was one of those things where you realize Because he's like I don't know any tech stocks. Yeah, and I'm not involved in the AI stuff. Yeah, but his stories were so much more important than that Because well because all the stuff that we're going through now with AI stocks. It's just a time in a place He's already been through all of that right. I thought it was I thought it was magical shouts of fidelity for a lot of us do that So that was so cool Um, I Think the venue was really amazing till was the was the Boston Museum of fine art or MFA you've been there I would imagine all all our Anniversary events are there so if you if you hit a round number anniversary like 15 20 25 We do an event at the MFA and Peter's there Abby's there and it's it's nice How what's your next friend number? How many years? I'm a 31 so I got away a few years till I get to 35 And and Bruce Johnstone who is our I think our oldest act kind of active Employee he's at 61 and he sits close by I've known him for 61 years at Fidelity He was in the same class. Oh, he was there. I met him. Yeah, so same class as Peter Lynch like in terms of when they Were there like Bruce I'm catching up to you. I'm a 31. He'll never catch up to me So he was backstage sitting with Peter and me. Yep. You remember that you came backstage I didn't meet that kind of the the other older gentleman that was sitting in the chair was that's Bruce. Yeah I was gonna say So so when Peter ran Magellan Bruce ran like our value fund. Yes, so they were kind of like Duo's in that sense, but in different style boxes. I was gonna say the other thing that happened that week is they invited Michael and I into the chart room Which we had only ever heard about It was it's pretty it's pretty epic. Yeah, and and it's It's kind of a shadow of its former self in a way because you know life has moved on and you know Will Danoff knows that anything that is worth seeing someone's gonna show to him He doesn't need to go meander to the chart room But I was hired to work in the chart room by Ned Johnson himself like you know if you were a PM fine You go through the thing, but if you're working in his chart room He he he vetoes whatever comes through so my last out of like 12 interviews back in 1990 Early 95 was with Ned Johnson and we just talked about the markets and it was like the most amazing experience ever but I would so a lot of those charts I created And you know, we were always on the favorite um Yeah, it's like having a favorite child, you know, I I'm a big fan as you probably know from my work to Incorporate different disciplines. So I'm not Exclusively a technical analyst. I'm not exclusively a macro fundamental and so I'd like to tell stories So if if there are different indicators both technical fundamental whatever that really give the narrative of what we need to think about Then to me that's that's a great chart Although there is something to be said for keeping the technicals and the fundamental separate and Ned always insisted on that because he wants to signal to be pure and not to be you know Infected by other disciplines because that that's going to come from someone else. Oh, it's interesting Yeah, what what was the purpose? What do they tell you when you went to work there in the chart room? What was the purpose that they explained to you? This is why we're keeping so for people that don't know what what we're talking about in the fidelity headquarters There's a room with walls inside of the room and every wall is plastered with these massive charts Some of them are highly detailed some of them are like a zoom out But so I mean they there's eight foot long charts in there, right? It's like what do they tell you you were supposed to be doing? It's both a like a museum and archive a lab The kind of the the center full chart for lack of a better who word is a daily chart And I think it goes back to like 1789 or something and you know Ned was very precise about displaying information so the music the lights are museum lights But everything would be on a equivalent log scale so that when you look at the NASDAQ in 2000 versus the Dow and the Dow goes flat the NASDAQ goes down whatever it was 80% On a log scale even though they're different skills, but they're still log you can visually compare the two Which on a linear scale you can't do and like you know we were all always on standby. Okay, Mr. Johnson is in the building, be ready to go and spend two hours with him in the chart room, which is what he would do. He would be, he'd have to go to like a board meeting, but he would like sneak out like a kid and go to his candy store, which is the chart room. And you know, we would look at the S and P or whatever today. And he would just take his finger and kind of go to the left and say, okay, last time by well, just just it brings us back to this date in time. And on a chart that's, you know, 30, 40 feet wide and floor the ceiling high, 30 or 40 feet wide. Yeah, you can't do that on a screen, you have to do that. As if you're standing in front of Rembrandt's night watch, you know, and so that was so that that's the appeal in older versions of the chart room, we had you know, hundreds of flip panels with like every sector, every every select fund, which was our sort of our pre ETF sector funds. And you know, he would be like, let's take a look at gold or let's take a look at this and we're flipping to charts. And it's, you know, it was, that's what it was. But, but you know, times have evolved everything is electronic. And again, we have so much scale now and fund managers manage so much money. And they're so inundated with data that we have a team of technical analysts. And if there's something we're seeing, they will make sure that the portfolio manager sees it. We met, we met one of our favorite, now recurring guests on the compounded friends, Denise, Denise Chisholm when we were up there and we did a session with her. Yeah, she's great. Yeah. And I remember we looked at each other like, how many people like this does fidelity have hiding up here in Boston? Because we've never heard of her. And they're like, you should meet Denise Chisholm. And then she just crushed the show. So, and then they moved the museum of American finance out of New York, I think fidelity sponsored to have it to appear. Yeah. The peer is the new headquarters, which I saw in Wells, period. Okay. What's the museum like up there is cool? I have not seen it yet, actually, because we have two buildings. And I'm still in the old building, because we just don't have space because we're all back five days a week. So we just don't have the space. But I've been meaning to go and look at it. I'm there a fair amount, but it's sort of in and out to do. I'll go with you. Okay, I'll show you what everything is. That's good. All right. How are you doing, guys? All right, time is money, right? You're in. This podcast is brought to you by DBMF, the world's largest managed futures ETF. I feel like the world's changing fast. Sure do. Imagine a strategy built to move when everyone else is standing still going longer short across global markets as a trend shift. DBMF is made to move differently, a single low cost ETF, offering genuine diversification, even when stocks and bonds move together, discover why DBMF's liquid uncorrelated managed future strategy could be what your alt allocation is missing at www.dbmf.com/tcf DBMF made to move differently. The IMGP DBI managed future strategy ETFs investment objectives, risk charges and expenses must be considered carefully before investing. 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So if you're looking to give your clients consistent results, you're in any year out, go see the record for yourself at vanguard.com/audio that's vanguard.com/audio. All investing is subject to risk, Vanguard marketing corporation distributor. Oh, wow. 263. What a treat you guys are in for. Michael and I get research from all over Wall Street. Everybody sends us their stuff. My inbox is inundated with tables and charts and commentary. You cannot even imagine the volume. There's only a few must reads in there. I think you'd agree with this. Well, you know, you kind of have to. It's only a few must reads in there that I never miss. And the work of Yuri and Timmer is one of those long time listeners. You guys have heard and seen him on the show before. We are so thrilled to have him back. Yuri and his director of global macro and fidelity investments, where he is part of the firm's global asset allocation group, focusing on asset allocation and global macro strategy. He has held that role since 2005, having previously served as a technical research analyst and portfolio manager of the fidelity, global strategies fund. Welcome back, my friend. Thank you. All right. Let's start here. What is your year and S&P 500 target? This is, is this a Michael Nike saying it's the weirdest year? Yeah. But it's also one of the, I think it's one of the silliest things Wall Street strategists do. You don't like it? No. Do you understand why they have to do that? Yeah, because they make headlines. They have to be unrecorded. But it's such an arbitrary thing. Like I want to know what the returns are going to be the next, you know, one, five, 10 years, how much of that comes from price gains versus income. You know, and also, I, one of my pet peeves is that people are so focused on price, but price is just a byproduct of earnings and valuation, right? So solve for earnings, solve for what people are willing to pay for those earnings based on the longevity of the earnings cycle, the cost of capital, which of course is a big topic, the risk premium, how much of the earnings get paid, get returned to shareholders as dividends or buybacks. And then you get a sense of, okay, earnings are worth 20 X. And then you get an earnings forecast and you put them together in a DCF model and outcome surprise or a present value of future cash flows. And to me, that's what I, what I solve for price is just a residual counterpoint, though, like and you know this, you get sent out from Morgan Stanley or from wherever Bank of America, and you're sitting with institutions and professional asset managers and PMs, and they store to they sort of want like, is the house view higher or lower? And if it's higher, how much higher? So it's almost like a shorthand, like forget about the price target itself, directionally, we think the market will go higher. And we're just saying S and P8,000 just because we're saying, yeah, I mean, it's fair. They have to do that. Of course, the market goes up 67% of the time, right? So you'd, you definitely always want to be on the upper side, because if you're wrong, at least it doesn't happen very often. So Permabairs is a really tough business because you're really fighting the odds, but I see why, why firms do it, but I'm, I'm not a believer. And when I get it, and of course, I've also not allowed to make predictions from our compliance. You're better off. So when I get questions like that, like on TV, or questions that are maybe a little bit politically loaded, my stock answer is, well, I've been into business 41 years. And the reason for that is that I don't answer questions like, I love it. So I'm going to turn the mic off though, tell us what your target is. Alright, let's start. So you're, you, a lot of times when we're preparing the show, we have to load the shut the, the dock up with the charts that we're looking at as conversation starters, but when we talk to you, you've already done the most amazing stuff so we can just work on on what you're telling people, your October deck came out today. Okay, it's, it's, it's always evolving. It's evolves every week because every single weekend, I do a complete download of everything. And then I publish on Sunday, you get the report. And so the material is always fresh, which is why it's always in my head, which is, all right, here's something you put out on social media. Let's, let's do chart one. Tell us, tell us what we're looking at here. This is the increase in the national debt since COVID, almost 17 trillion. And there are no non economic buyers of that debt. So central banks are buying some are even selling like Japan, China, the commercial banks are not really buying. And so when that happens and when rates start to approach or exceed growth rates in the economy, the market starts pricing and fiscal risk, which is obviously what's happening here, but everywhere in the world, except for China, where nobody wants to take any risk on anything so they buy Chinese government bonds. But of course, France is is sort of exhibit A right now because the economy in nominal terms is like growing at 2% and bond yields are like four and a half. And when you have a lot of debt and you don't have the abilities are out. grow it, then you have a debt sustainability problem. The US isn't there, and it's a priority I think of the administration in Washington to outgrow the debt, and that's why they're all proponents of AI in part. But it's an issue because there are economic buyers, like I would be an economic buyer. An economic buyer is somebody that cares what the interest rate is, non-economic buyer is somebody that's, they have like international trade issues and they need to have treasuries on hand. Yeah, it's reserves, it's like big banks in Europe that are strictly police by the central banks in terms of their risk budgets, but they kind of have to buy it. So we don't really have any of those. And as that gap keeps widening, you wonder what the end game is, and we're looking at 5.3% nominal 10-year treasuries and almost 2.9% real rates. And it's not entirely because a fiscal risk is also about growth, and there's technical things about mortgage convexity and all this stuff. But the bond move is a big one, and that chart is part of the story. I have a question about this. Do you think that, "Oh, are we about to get blasted?" It's a fire drill, right? It's not an actual fire. No, I just mean by the noise. Yeah, no go ahead. Just stay there for the next hour. I go to Burning Land, I'm used to bleak you. So, Dan, if we thought chart six, so obviously you can't take this out of the equation because it's a huge part of the story. Hyper-scaler bonds, this is from 22V research. Hyper-scaler bonds is a percentage of net new treasury borrowing. It's a lot. It's 14%. Obviously giving investors a lot of choice. There's a spread. It's not a huge spread, but whatever. If you can get a spread of Microsoft is money good. How much lower do you think yields would be absent in this particular part of the story? I think reverse crowding out is definitely one of the factors here. So, it's fiscal risk. It's just real growth. What's reverse crowding out? We're crowding out the government with private debt. Historically, read the economic books, and crowding out is like governments are, they're spending too much, and it squeezes the corporate sector because there's too much supply of debt. But this is reverse crowding out, right? So, the hyper-scalers are borrowing half a trillion this year. Our analysis suggests they're going to borrow another half a trillion next year. If you look at the Fedflow funds data, the corporate sector alone, both bonds and now also equity. But the IPO thing has flipped right now. Companies are net issuers of equity because instead of buying back shares, they're spending it on CapEx and then other companies are going public. When you add those two up over the last 12 months, it's about $3.6 trillion of new capital that's being raised. And it's being absorbed pretty well. It's being absorbed so far, so good. But, you know, we always wonder like when does the boom turn into a bubble and we think about the internet story? And I don't think we're in a bubble at all because earnings are exploding to such a degree that valuations are actually falling. And, you know, when the melt-up started for AI, which I think was started in April 2025 after the tariff tantrum, the market went vertical. The PE on the tech sector was like 21 and today it's 20. So, it's like the earnings are exploded. It's hard to have a bubble when you're paying less for earnings. It totally. But, that doesn't mean the story doesn't have an unhappy ending and that's not a prediction. But, you know, at what point does the market sort of choke on the firehose of capital? Not yet. Not yet. And the irony is that, you know, the Fed is now raising rates. But like the hyperscalers could care less where rates are because they go into the market, they borrow bonds and they'll make a 30-40% return on that debt issuance because they're building the data center and there's insatiable demand. But it's not just the hyperscalers. I was talking about the day Paramount, not exactly Microsoft in terms of their creditworthiness raised $52 billion. And $150 billion worth of buying showed up. There is a lot of money sloshing around looking for returns. Yes. There is. And so, so far, it's okay. You know, the capacity is so constrained in terms of semiconductors, GPUs, other infrastructure. I mean, you look at Japan is one of the hottest markets because they are supplying the AI space, not with semiconductors, but equipment. So it's still going on. And, you know, the part is-- I think Japan is where the transistor was invented. Yes. Like, so it's sort of like, I want to double down though on a question, Michael, ask you. So if you had the quantify, not in percentage terms, but maybe in a rank of the cause of what we've seen happen this summer with rates, you would not put reverse crowding out or corporate selling of bonds at number one. You would probably put energy prices or no-- I think it's a confluence of narratives. So fiscal risk definitely is-- It's why I'm asking you. Maybe you'll answer it differently. I think what a lot of people are thinking is we had this really fun summer of a broadening trade. We had small caps, mid caps, rise, and value stocks working. We had stocks in every sector making 50-to-week highs. That seems to have come to an end when WTI crude crossed 80 and the yield on the 10-year crossed 5%. All of a sudden, the market got more selective again, which makes perfect sense. So now, if the question is, how do we end the year and people are thinking about, well, what would be the catalyst for a catch-up trade, all those blown-up sectors for the stocks to recover in my mind? Well, the only real answer is yields at least stop going up, and maybe we get a little bit of pressure from high oil prices down. That's the catalyst for the re-broadening. So I guess the reason I'm asking you that question is, what do we need to look for to get some kind of inkling that that's possible? Yeah, so you hit the nail on the head because I look at correlations a lot. And so oil and the S&P are about 50% negatively correlated, and the S&P and long-term government bonds are about 50% positively correlated. So it's all one trade. It's oil feeding into sticky inflation. It's just inflation in general, like we were talking about buyers of bonds, but the whole savings glut era, the kind of the new normal, the secular stagnation, that's all in the rearview mirror. And it turns out that that really was the exception in history, not the rule, but it is the period that most of us grew up in a career-wise. So clearly, that's a big part of it. I just see, I have a colleague who, this is genius, who looks at all of these esoteric things, and he's telling me about oil tanker rates, how they've gone up like tenfold. So there are still real bottlenecks. So I think that's probably the number one. Fiscal risk definitely is being reprised. The term premium is out 90 basis points. Real rates have gone from minus 200 bips five years ago to now, almost 300 bips. There's a real interest right now in inflate, like adjusting for inflation, you actually are earning something. What a concept. And that is the fiscal risk. If you buy a five-year tips and you hold it to maturity, you're getting like 2.6% real, plus whatever the inflation is going to be over the next five years, which is, my view is going to be at least 3%. Those are good numbers, right? And so you don't want to overstay your welcome being short bonds, and they could easily go to six, and per the Fed model, a 6% bond yield is a 16 PE on the S&P. So that's 20% down, but again, not price, but PE. And then there's a question of two odd degrees that offset by earnings, which are growing 30%, 40%. And so I see this as like an echo of 2022, and we're having a sort of a stealth correction where, like you just said, 25% of stocks are above their 50 day, as of last week, 46% was about their 200 day. That is a 1994, like correction, and it's-- In response to rates. Yeah, and a 2022. And again, it's the DCF math, right? If earnings are, like in 2022, earnings were decelerating because they had boomed after COVID, but that was all base-effect recovery. So earnings was slowing, and it ended up being 8% in 2022. But the PE went down 33% because the cost of capital went from like zero to five, and that's what's going to happen to PEs. And especially now, and this is the essence of the Fed model, that if the risk-free asset treasuries are competitively priced against risky assets, which they are at 5.3, their yield is higher than the S&P. If that yield goes up, the S&P has to listen. And if it ignores it, we get an 87, a 1987. Where it's ignored up until a point where it can no longer be ignored, and all of that risk gets we priced in one day. Yeah, it's ignoring it right now. Are you surprised? No, it's not because the PE is falling. So again, this is not about prices, but valuation. But like 87, right? Rates went up, cost capital went up, Fed was tightening, bond yields went to 10%, stock markets like, yeah, nothing to see here, and then it crashed. All right, so I said that it's not responding to what you said. No, it actually is. It is. I'm looking at the price of the S&P and drawing the wrong conclusion. PE ratio. You're saying the PE is rewriting precisely because of screaming rates. It's re-rating because of screaming rates. It's re-rating because-- Maybe peak earnings. Peak earnings growth. And we don't know for a peak earnings growth. But, you know, earnings growth is like 35%. I'm getting close. And the x-ray cases aren't that dumb. They're not going to keep bidding it up high. So investors do not pay for peak earnings. And I think one of the key things we need to solve for-- and I don't know if we can-- is not the level of earnings growth, which is, of course, is very high, but how durable that is. And then you have the separation between long duration stocks like the Mag 7 and more cyclical stocks with weaker balance sheet. Those companies do get hurt by fat tightening. And I think that's one of the delineations that we're going to be looking at. But again, it's, you know, present value of future cash lows across the capital goes up. PE goes down all else being equal, which, of course, it never is, especially right now. And so in 2022, there was not enough earnings offset to keep the market from falling-- It's pretty chat-y-p-t. And now there is enough earnings offset. And that's why the market, since early June, has really not gone anywhere. And underneath the internals are pretty-- I looked at the industry group in sector internals earlier this week. Somebody did a piece. And it just-- it occurs to me that most of the damage in the market, the sub-rosal correction that's happening, it's in order of what's the most rate-sensitive. It's almost monotonically in order. It's rational. It's completely rational. And the way I think about it is, it looks as though every portfolio manager independently decided I want less exposure to rate-sensitive and more exposure to long duration tech assets. And they all did that individually. And then the collective aggregated manifestation of that is the leaders and lagers by sector. And it's worth, of course, some of the students of history. But 1994 is a cycle worth looking back at. That was under Alan Green's fan, of course. He doubled the cost of capital. We had, at that point, I think the worst bond bear market in history-- Well, he did it between meetings. It was a shock. It was a shock. And he was famously opaque. I think Kevin Worsh is trying to take a page from that playbook. But the market just sat there. It had two drawdowns of 10%. And it basically did nothing for a year while the internals were kind of rotting, right? Like more than 2/3 of the stocks in the S&P were down more than 20%. But you didn't see it because it was kind of a cap heavy market. And earnings were very strong, just like they are today. And as soon as he took his heavy hand off of the rate market, the market exploded. And to your question earlier, we could see that, right? Because if somehow this aron thing gets settled-- and here we are, like a month to 8 and still hasn't been-- and where the market calls the all clear on the bond side, we could get another big break out. I think that's going to happen. I have a few pieces of evidence that I'd like to get your take on. Let's start with chart 8. So this happened today. I think today might prove to be an interesting day looking back on the internal breakdown. Lisa Romerks tweeted evidence of how leveraged the entire tech sector is to open AI and Anthropic. An FT story about open AI's revenue being less than initially reported is sparring on more than a 5% drop in Oracle shares, exacerbating losses from NVIDIA and AMD to Microsoft. So in conjunction with that, you have the 30-year making a pretty decent reversal, which we haven't seen that in weeks and weeks and weeks. And I know that you are-- you respect technicals. Jump to chart 12a, please Daniel. All right. We have a 12a and a 12b. So here we go. So look at on top first. This is the ratio of the equal weight to the S&P. And this got very stretched very fast, where the S&P was holding out and underneath the surface, the average stock is getting the shit kicked out of you. So it bottomed here in October of 2025. I come in November. It bottomed here in May, 2026. And for whatever reason, not for whatever reason, the rubber band is going to stretch to the same levels. And you have this monster reversal. The ratio is up 1% today. It's the best day of equal weight versus the S&P since July, while everybody is talking about it. Everybody has been focused on how weak the breath breakdown is. And Josh and I were looking at this chart. You like stories. I think this is a terrific one. Chart 10. So this comes from duality research. This is such an awesome chart, you're in. The purple line is the SCP-500 technology index. And the green line is the rest of the market. S&P 500 X-Tech. And what Alex was saying is that everybody is focused on the wrong signal. They are worried about the breath breakdown leaning to further weakness in the index. And he's saying, no, no, no, the opposite has proved it to be true. Every time tech breaks down, the rest of the market seems to wobble. Tech leading and the rest of the market selling off is not a bad thing, because what has happened for the last five years is the rest of the market catches up eventually. And if we get interest rates coming down a little bit, some energy prices coming in a little bit, and rotation away from the tech trade into the rest of the market-- - That's the happy ending. - You could see a report to the fourth quarter. - And a piece of trivia. So Goldman has all these thematic equity baskets. So they have an AI basket and an XAI basket. And the two are negatively correlated to each other. Which is pretty amazing, because there are two halves of the same index. And the same applies to equal-- I tracked max seven to equal weight. And equal weight, the SBW has outperformed by 1,800 basis points over the last-- sorry, max seven is outperformed by 1,800 basis points. And so I-- - Would you like to hear a fun fact? - Yes. - Goldman stole that idea from me when I coined the term halo earlier this year, which is heavy assets, low obsolescent stocks. - Low Oreos. - What? - I didn't invent Oreos. - No, no, no. Goldman started saying halo literally that phrase in their research. And then that gave rise to, we should have a basket to show the anti-AI trade. They expressed it differently than I would have. But-- - Dolly noted, I have one more thing for you. This is going to knock your socks off. A lot of the breadth conversation that we're having-- yes, the breadth sucks, to be clear. But a lot of what we're seeing that's like looking really funky and bizarre. It's due to the concentration. So in 2018, I did a chart, a data point where this is July 2018, so eight years ago, the top five stocks at the time were equal to the bottom 282 companies in the index. Chart 11, please. Today, look at this how wild this is. Today-- - Oh, that's a good chart. - The top five are equal to the bottom 434. It went from the bottom 282 in 2018 to the bottom 434 today. Which is stock 67 through 500. And my favorite chart that we've done in a while, chart 12. So this is charting that through time. So the top five equals the bottom x over time of stocks. Look at this explosion. It's unfrikin' believable. It's never been this high, obviously. - Yeah, so it's making it into the chart, right? - I mean, that's a good one. - So we have versions of this. So we track the top 10 stocks versus the bottom. 490 to top 50 versus bottom 450. And I've done a lot of work on this, tracking this all the way back to the '60s, talking about the nifty 50 period in early '70s. Obviously, the dot-com period was a similar thing. So I've studied this in depth. And, you know, right now we're in a cyclical bull market and a cyclical bull market. But cyclically, SUV's up about 125%. And only about 38% of the stocks in the index are outperforming the index. And that's very similar stats to, like, 99 and 70. - So is that a top event inherently? - It's really difficult because the market is obviously very top-heavy, right? So top 50 stocks are 60% of the index. Top 10 stocks are 40%. Max 7 is, like, 35% or something like that. These regimes, like, late '90s, it was a, it was like a Cape model, like, reversal. But throughout, like, 40s, 50s, 60s, early '70s. - There's always leaders. - That regime, it was a top-heavy market for decades, right? And so these companies have huge modes. There are some cases, national champions. So it's, you can't play the mean reversion game other than the valuation side. So in '73, so what happened was '68, this is a lesson from that Johnson in the chart room. '68, we had the glamour stock bubble. Everyone was buying. Many company with the work tronics in it went to a 50 PE. - Yeah. - Didn't Bill Psi work at Fidelity? - What? - Jeff. - Was it Bill or Jerry? - Jerry Psi. - Jerry Psi. - Yes, yes, he did, yeah. And so that happened. - Well, he was like the Kathy Wood of his day, okay. - But so late '60s, and then we had the recession 1970, the retail investing public got wiped out. And then early '70s, it was institutions running money, including Fidelity. And PMs just wanted safe quality, high quality stocks that were going to deliver earnings. And that was called the Nifty 50. - The brand, they were brands. - And the, yeah. It was like, it was Chlorox, IBM zero. - Sure, obviously. - And the irony is that all of those companies through that 48% bear market in '73, '74, they all delivered on their earnings. Their earnings didn't skip a beat, but they still got annihilated because valuations, right? Inflation will kill valuations, and that's what happened. And, At that extreme, the top 50 stocks were trading at 2X, the PE, of the bottom 450. Same thing happened in late 90s. From 1998, that LTCM moment, the meltup started. From that point, the top 50 doubled their PE from 20 to 40 while the rest of the market stayed at 20. That was like Cisco, Microsoft, Intel. Yeah, and that was another bubble. And then you had this massive rotation, but it was in a down market. Now we don't have to value, we never had to evaluate a valuation extreme. 21. Well, yeah, 21. But that was for the whole market too. But even a year ago, when a max seven sort of lost its momentum, its PE was only about 30% more than the other. Well, so can I ask you about this then? That's what the people that have been bearish, they've pivoted to. They said, no, no, no, you have it all wrong. You're thinking about 1999, and you're looking for an S&P at 50 times earnings, and it's not. And you're looking for a NASDAQ at 100 times earnings, if it's not. It's an earnings bubble. We don't need high valuations for this to be a bubble, because actually what's happening is a pull-forward in demand related to the CAPEX data center CAPEX, and it's global. And all of a sudden, one day, these companies will start missing their earnings, and they'll never hit their earnings again until the analysts furiously ratchet down their expectations. And that process, I don't care that you're 21 times earnings. It's going to hurt like hell, and you'll be back at 14 times earnings, and earnings will be falling. And that's, I think, their get out of jail free card. We're over-earning. Is there any truth to that? Is there some? I think there's some truth to that. So, semiconductor earnings are up 178% year. So that doesn't sound sustainable to me. No, it's a cyclical interest. And so, of course, people are making the argument, well, it's no longer cyclical, it's secular, but it's different this time, are not good words to live by. And the semiconductor index has a very clear 40-month earnings cycle, and we're like right at the part where it should start to roll over. And of course, 178% is not sustainable. But then we look at the companies, you know, I'm not going to mention names, but the companies are that are in the, you know, that are providing all the stuff to the, to the CAPEX build out. You know, it's so tight, they cannot, cannot keep up with demand. So I think the earnings story, actually-- It's talking about five-year backlogs. Yeah, exactly. So I'm not worried about the earnings story so much, but what I worry about, and you showed that that plummet in the OpenAI, you know, anthropic-- I worry about two things. One is, again, too much demand for capital, unknown ROI's. And the MAC 7 is sort of part of this, or the hyperscalers, is they used to pay back, you know, they're obviously cash cows, they happen for a long time. And they used to pay back 90 cents on the dollar in terms of the earnings that they make and give back to the shareholders via dividends, but mostly buybacks. Now they're spending all their cash low on CAPEX. And, you know, a purist would say that's good. You're not supposed to be, you know, like, you're not supposed to give the money back. You're a company, you're supposed to be investing it. But those buybacks, even if the return is lower, it's like a known return. Like, you know what you're getting, as opposed to an unknown return in terms of the ROI on this CAPEX. And so it's a burden of hand, right? So the market will pay up for certainty. And that's actually another reason why bond yields are rising, because Kevin Worsh wants to be like Greenspan and be more opaque and less predictable. And I think that's very wise and honorable. Like, the market doesn't need its hand help, because you lose price discovery, but it creates less certainty. And that means a higher-term premium, because investors want to be paid for uncertainty. And so the irony is that in a way, he's driving a bond yields almost not deliberately, but it's a byproduct of this policy, because investors will price in risk. And the risk is that nobody knows what Fed's going to do. I want to ask. Including the Fed, of course. I want to ask you about another market meme of the moment. And I'm part of this noise. But one of the things that I've been saying is, in an interest, a rising interest rate environment, the traditional defensive sectors don't act like defense. Utilities are the worst sector of the year, I think. And real estate and staples and staples. The three of them are like neck and neck. They all look awful. They're considered bond proxies. Right. So those stocks have been used as bond substitutes and equity portfolios for 15 years now. And rates as well. Right. So what do people do when they get nervous? I think they buy in video and Apple. And I'm not saying those are actually defensive stocks. I'm saying it is the defensive trade of the moment. Number one, they're huge. Number two, they're highly liquid. You can buy them like that in size. Number three, we may not know what the right multiple is. In fact, the moment certain apples multiples were wrong and so is in videos based on their growth rate, but that's a whole other conversation. But what we do know is the earnings is going to show up. You might not like the amount that people are paying for those earnings. I sort of feel like they've become risk off would be the wrong etymology. But I sort of think they've become almost a default. All right, you know what? I don't like how the home building stocks are acting. I don't love how the biotech are acting. Let's just do a little bit more Apple. Yeah, no, I totally agree with that. And the max seven and it's Microsoft two lately. Netta is back. They are quality stocks with and they generate a lot of free cash flow. They are spending some of them are spending it on on CapEx, but they are immune to what the Fed does. Yeah. Because their their cash flow growth is so big, they don't need to really borrow money. I mean, they can and they are for the CapEx. But if they decide we're not going to do CapEx, their stocks actually will go to the moon. A lot of the economy is immune to what the Fed does, which is such a bizarre state of affairs. So what do they think it is? I mean, yes and no. I mean, so part of the corporate sector is immune. Anything that's touching AI is immune, because the ROI's are so high. But if you're a weaker credit, more leverage, you know, shitty balance sheets and you're looking at a maturity wall in 2027 or 28 and you look at, you know, high yield spreads are now moving higher, triple C's are, you know, like so there are there are pockets of the economy that are sensitive to that. And and that's why the breath is not good. And the same thing happened in 2022. But the strong companies, the Mag 7, other high quality companies with solid balance sheets and good cash flow growth are relatively immune. And that's actually fairly typical. Historically, it's quality that wins during periods of rough sledding. And so that that's happening again. I guess I was thinking more in terms of the economy and consumer spending. So yeah, so I'm glad you corrected me on that. So obviously, what's what the hyperscalers don't care about does not translate to a home buyer who's now looking at, you know, a seven handle on mortgages or weaker corporate credits. And of course, the government doesn't like it, even though the government can kick the can down the road. But I think, you know, France is a very good lesson. I mean, the US is not France, but France has no growth. They have a lot of debt. They have obviously a lot of political shenanigans going on. It seemed to be going well there. Yeah. So and bond yields are exploding. And they are well, well above the speed limit of the economy. And you know, it's like, who are the two people that rode the debt, the 90s? No, no, no, no, no, it was that what the there were these two people who wrote this famous book about debt. Exactly. And so the key is you need to outgrow your debt. And I think Scott Bessent has laid that out. And I think that's a very clear strategy. But the funding rate needs to be below the growth rate. And in France, it's now well above. And that creates a crunch. And we're seeing that in the bond market there in the US. We're not there yet. But we're getting, we're getting close, right? The real GDP growth, real, sorry, real potential GDP growth is now at two and a half percent. And starting to edge down because the base effects from 2021 are rolling off. If you look at a five year Kager. And the real yield is at 2.8. Now, maybe that speed limit is too low because we're going to get this big, this big AI productivity. And maybe that real rate is going to go to three or four. Then we're okay. Potential nominal GDP growth is running around six. And the 10 years at 5.3. So we're not quite there. But it's getting close enough that you're starting to see the job voting. The whole silly thing about buying off the runs and going from four billion to six billion. It's like a drop in the ocean, right? I think our attempts to try to talk the market down. And you know, the market has the last word. Would you expect gold to be performing better, given these fears, or high real rates just putting a lid on it? Gold is a very interesting asset class that I've been trying to understand for a long time. And until 2022, the simple benchmark for gold was real rates. So you take the real, the real tips yield, put it upside down, and it's exactly the price of gold. And not anymore. And in 2022, that narrative went upside down. Based on that metric, Gold should have gone to one thousand. 2000 in 2022 instead it doubled and now it's a proxy on global liquidity growth, global M2, which is growing at about 7, 8, 9 percent. It's about 120 trillion and that now explains the price of gold as well as, you know, central bank buying. And this is why when I was in Asia talking to central banks or around the Asia-Pacific reason, there are three questions where AI, boom or bubble, what the Fed's going to do, dollar, you know, kind of because they're of central banks, they invest in treasuries. And the third was what the hell is going on with gold, why is it not doing what it's supposed to. And to me, the short answer is that in 2025, gold had a big run. As always happens, the tourists jump in, they start buying GLD and this is after a Bitcoin had just put in a four year having cycle peak. So the speculator said, goodbye Bitcoin, hello, gold. And it brought gold up to like 5,600 and it never should have been more than 4,800 based on my model of global money supply. And then Iran happened and all of a sudden gold is for sale because it's a reserve asset, right? If you're a GCC state and you can't sell your oil, you got to sell something. And then gold and treasuries became highly correlated because treasuries are also for sale in that environment. And so the combination of being overbought and all of a sudden this regime change happens not go down to about 4,039, it's at 42. I think that will pass and based on global money supply, 5,000 to me is the right number and rising. And I think now not to change subjects, but now that Bitcoin, in my view, has done a full winter, a mild winter. But even a year ago when it broke that trend line and it's interesting Bitcoin as chaotic as it looks, when you put both time and price on a log scale, it's like a beautiful harmonic picture based on the power law. And every wave up and down fits a harmonic pattern. And that peak in 2025, it was a little short of where it should have gone. It should have gone to 150 over 150 weeks, but it went to 126 over 40 weeks. 126,000 a Bitcoin is still the high. And so at that point based on trend lines and knowing that every winter gets smaller, I'm like, you know, 60K is a level that I'm going to, I'm going to buy. And it went to 58 and not to, not to my own, because I don't, I don't think, I don't think in, in, in length, but, but so we hit 60, yes, it's a maturing asset, right? So it's going to, it's going to moon less and it's going to swoon less. And that's what maturing assets do. But when it hits 60 earlier this year, I'm like, the price is right, but the time is wrong because these winters last nine to 12 months. And then as recently as maybe a month or two ago, it was still at 60 and I'm like, okay, I'm really going to pay attention. And then it broke above 80 that confirmed the double bottom. And when you price Bitcoin in terms of gold, it's a really beautiful pattern. So I think gold, I think Bitcoin's going to, I think they're both going to go up and Bitcoin's going to go up more, even though we're still kind of looking for a narrative. But as you know, when things move without a narrative, you always have to pay attention because that's, there's something going on. We just don't see it yet. On the economic side, if you go back and read some of the commentary in 2024 about what AI is going to mean for the economy, the predictions of job loss by 2026 or 2027, I mean some of them, not everyone, some of them were cataclysmic. Yeah. We haven't seen any of it. Yeah. You know, the job's numbers are starting to disappoint to the downside somewhat. But in the scheme of a, I don't know, 350 million people in the country, and we're arguing about 50,000 or 100,000 jobs, it's not really relevant. It's a rounding error. Yeah. And also one thing to remember about the job's data is that, you know, we have no immigration and boomers are leaving the labor force. So what we call the break even rate in the jobs is only like 30,000 where it used to be 70 or 100,000. So the weaker numbers, they're not really weak, they're just, they're measured against a labor force that is growing a lot less. And so you have to kind of normalize for that. But you know, the fears, and who was the report that came out with the really distributed? Yes, yeah. The fears of wholesale or large-scale job losses, I think is one of the reasons why the Fed took out these three insurance cuts in 2025, right? They saw inflation getting closer to two, everyone's worried about AI eating the job. So they cut three times and it turned out to be a false alarm, A, because Iran pushed inflation back up and B, the job's market is fine, the economy's running pretty hard. You're saying the Fed was already worried about AI-driven disinflation in 25. Yeah, that's why they started to build a seclusion. That's why the Fed cut. And now they have to uncut. So I don't see this as a tightening cycle. I see it more as they should not have eased those last three times and they need to take them back. And that's what they're doing. That's as simple as that. As simple as that. Okay. It doesn't appear that mass job loss is on the horizon for Q4 or Q1 of 2027. Those predictions all ended up being either charredably extreme early or they just misunderstood the nature of what this technology really means. Which of those would you agree with more? I think it's a little bit of both. I think the risks are we're overstated and I think they probably still are because new industries are created when you have a technological innovation. We don't always see it. I mean, remember like in 1999 when we were all fretting about pets.com, nobody had any idea that someday we would all be ubering everywhere. But that was a byproduct of the internet revolution because of the connectivity. And so I think AI is going to infiltrate every part of life, every part of the economy. But we don't even really know what it's going to look like. And so I think that that's the point at where we are. I think so far it's a tool that makes people smarter. I'm best friends with ChatGPT now, because I always have all these questions swirling in my head. I got to wait until I go to the office to ask someone, now I can just ask ChatGPT. I love that so much. And so I'll give you one example. I run a food camp at Burning Man and I need to do some legal work on waivers and liabilities stuff like that. Normally you go to a lawyer and they draft something that people have to sign and you go back and forth and it's going to cost $x,000. I did this and I did 99% of it with ChatGPT iterating, right? Everything is an iteration. And then finally I was happy with it. Then I gave a tool lawyer and I probably say 5 grand doing that. And I think that's to me for the typical person or business or enterprise, that is the promise of AI. So yes, does it require fewer bodies? Yes, of course. Do you know how many lawyers you just fired? And one thing that is worth mentioning, it's not an original idea of mine. But you think about other technological revolutions like the railroad system, right? Those took a long time to build or the highway system, all these networks and it took a long time to feel the downstream effects because it takes so long, right? You build the railroads, then you build economies around it. And it takes almost like a generation. And so those things all created job losses, but they happen so slowly that they just get reabsorbed. And the one thing I do worry about is that AI is happening so fast to everything. I think faster than anyone, it's so fast it makes people uncomfortable, including the people running the actual frontier labs, that it may be more disruptive for that reason. Well, no industries immune. I mean, the railroads came for horses. Yeah. This is a lot different. Yeah. And speaking of horses, actually, it was trolley carts, not horses. But if you look, I've studied S curves because we're in an S curve right now, Bitcoin has been in S curve. So I studied S curves going back like a couple hundred years. And the most spectacular failure of an S curve were the the trolleys because they came and then the cars came and that was the end. So that was an S curve that imploded. And sometimes that does happen because you said you have cities that kept the infrastructure, but almost like as a novelty, like in Lewis and San Francisco. The car came too quickly after the trolleys and yes, in San Francisco, of course, we doesn't like to go on the trolley, but all right. So overall, then given like everything that you've said, we know that there's this debt limit out there, like at a certain point, it will become apparent to everyone that there are no, you call them non economic buyers and the rate is outstripping our potential economic growth. All right. But everybody knows that, right? So that's like a thing that we just have to think about. I don't know that there's anything actionable about it per se. No, but when it when push comes to shove like one thing that's in my on my mind and you just asked about gold is at what point does financial repression come back or will it? I mean, when we had financial effect, you know, QE zero bound, when we had that in the past, there was no, there was a deflation risk, not an inflation risk. So I don't know what that's going to look like at a period in a time when inflation's running at 2. three to four percent. I don't know how that's going to be executed, but you look at France, like it's a, it's a, it's a debt spiral because their cost of funding is going from two to three to four to five and they, they, it's going to eat up their interest expense and they don't have the growth. So someone has to go and try to fix that, which would be the ECB. But, of course, Europe is a kind of a, I should show anyway. And fiscally, of course, they're all different countries, but you wonder at what point do you get back to a treasury fed accord, like we had in the 1940s and Bessenden Wars start to coordinate or they at least kind of force the banks to be that non-economic buyer, which is actually pretty easy to do. You stop paying interest on excess reserves and they're going to buy treasuries pretty quickly. And so, I, you wonder what the end game is if, if there needs to be one. And, you know, Bessenceray doing this with sort of issue more bills by issue fewer bonds, but there are limits to how much you can do that with without the fed being complicit, right? Because otherwise they're going to push T-bills up. That's going to upset the, the repo rate, the T-bill ratio. You can have another repo problem, like we had in 2019 that forced the fed to cut rates. So you, like, those are the things I wonder about if the cost of capital keeps going up or at least doesn't come down. And then, you know, back to your earlier point about what do you buy when this stuff is happening? You know, I've been pounding the table on what I call the 60-2020 for the last four years. How does what the 60-2020 is? So we all grew up in the 60-40 era, right? You buy 60% S&P, 40% Bloomberg Ag, which has become 80-20 years. And from the late 90s until COVID, that made you a 9% keger and against a 9% annualized fall when inflation was two and a half. Like, what's not to like, right? That's on the sweet spot of the efficient frontier. But it's built on the premise that the 40 is negatively correlated to the 60, which it no longer is because when the cost of capital rises and the risk-free acid is competitive, the correlation goes positive. And so bonds, I think they're attractive, right? The risk reward of owning 10-year treasuries is like 11 to minus 1, right? If you use fall 100 basis points, you get your 5% coupon plus 6% in duration. And if they go up 100, you get your 5 minus 6, you lose 1. Those are pretty good. Those are pretty good notes, right? And it's driven by real rates, which is even better because you can lock in that real rate. So I like them for that reason. But not you don't like them enough for them to be 40. But not 40. And so like, I love short to intermediate term tips right now because they have a duration of like two and a half and they have a real rate of like two and a half. So it's like, to me, that's like a sweet spot. Leverage loans, you know, they're like high yield but floating rate or syndicated loans, no duration risk. Those are interesting gold, bitcoin, commodities. Some people do the things that you would stuff into that other one. You want stuff that is uncorrelated because in the what the the world that many people know is that when the 60% wobbles, the stock market goes down, the bonds are there to bill you out. Now it's the bond. They're the it's the bonds that are causing the wobble the wobble in stocks, right? So you have a you have a positive correlation. So you need to have stuff in there that doesn't move in relation. So I look a lot at correlations and for instance, the the BCOM spot index commodity index is is so if you have four quadrants of correlation to equities and to bonds, this is in the lower left quadrant where it is negatively correlated to everything else, managed futures the same probably because they all are long commodities short bonds and short bonds. Again, short data tips. S&P XAI is like uncorrelated to everything. It's like so there are so many places to go and that's one that that's a great thing compared to five years ago. There was a danger though that if the wobble is so powerful in bonds and stocks that components of that other 20 fall prey to it and the correlation snapped to one. I'm thinking Bitcoin, like how fast could Bitcoin go back to being a NASDAQ proxy? Could happen in two seconds. It was. No, for some of them, that is a risk. And actually we're seeing this in the the European banks are now that's been one of my favorite sectors. You got a tremendous growth in the payout, the payout ratios 88%. They've out until just a few weeks ago since April 2025, they outperformed the S&P by as much as AI did, which is incredible. These are the most boring part of the world, European banks, but that's because they were they were handcuffed for so long by negative rates and policy and now positive yields are very good for banks. But so you do worry about that, but for me, the bigger worry is when when this very diversified portfolio and again, the start investment device doesn't have to be 60, 20, 20. That's just back at the envelope stuff. My worry is that does will that perform in a in a high beta environment or a low beta environment? And my guess is it's going to be in a lower beta beta, meaning the market return, right? So we're in a secular bull market since 09. Many people disagree with me on the starting point, including Barry when he did my bloom my podcast on Bloomberg. He loves debating that time. Yeah, but to me, it's only I'm very annoying about that. And I can go for an hour about that, but that's not the next time. But the the the the the return in the market's been about 17, 18%. Just over the last 10 years on real nominal returns 15, real returns 11. Those are outsized returns, right? So we've been over earning to back to your earlier point beta for a long, long time. And of course, that comes from the price gains, which comes from the large cap growth story and now the AI story. And my sense is and the Cape models suggest this as well as secular analogs that the next 5, 10 years, they're not going to be terrible, but they're going to be a lower beta than what we've seen over the last five years. And I want to focus on the income side. I want to coupon clip equities that that have high payout ratios and good payout growth and good good dividends and and buyback shares. But it's not going to be a sexy as you know, earning 20% a year. Are you last thing I want to get to before we let you escape? I want to do this. I want to do this chart of the internet 1995 to 2000 versus the AI, which you're dating from I guess the end of 2022 to 2026. It's a 16 Daniel. I know the chart. All right. So without getting into every aspect of this and going back into PEs, just generally speaking, are you at all concerned by, I don't know if it's pattern matching or just the the length that this has now been going on? Because I very specifically have memories of that 1995 to 99 run, which was four years because that was how I started in the markets. And we're sort of knocking on that door. And I know it doesn't really actually mean anything, but a little bit like bullmark, even secular bull markets that run on for a long time have resets during the course of that. You just talked about a few of them. Like you would all worry that maybe 27 could be a hiccup year, even if the AI boom goes on 20 years. Yes. And not just because of this chart, but just other analogs as well. But with the caveat that price analogs are for entertainment purposes only because they work until they don't. But there is some there is some parallel here, right? So 1995, so 94, obviously, the rate cycle, green span, stealth bear market is generally how technicians refer to it. You can overlay that with 2022, which again, earnings were fine, but there was cost of capital increase lowered PEs. Then the fed stepped off the brakes in 95 to market went vertical. I think up 38% and net scape went public that year. And that was the aha moment where everyone was like, oh, internet, you know, and so you had this massive boom until 1998, then LTCM happened, like totally unrelated to the internet. You had a 22% decline. The Fed blinked, ease rates three times. And that's the meltup then the meltup phase start 98 to 2000. Make a cap stocks doubled in valuation. And they did not have the earnings to back it up. And you had Cisco vendor financing. Everybody else, just like Nvidia is doing today. So April 2025 is that same moment market had gone 21% down. So back up 2022, chat GPT's launch, that was the, oh, my God. Right. Now we're years since then. And it's been straight up. Yeah. And it went straight up until spring of 2025, the tariff tantrum happened, 21% drawdown, that ended, Fed blinked, eased rates, meltup. And so that's the analog that I showed on the chart is 98 to 2025. And we've gone up exactly the same amount over the same length of time. It's crazy. Now and then. Yeah. But the, but the, the, the, the opposite of that is the valuation, right? SMP tech traded at a 70 PE in 2000, it's a 21 PE to that's the saving grace. Another analog, very different situations, but situational awareness and LTCN. But just to take that one point further, valuation is such a fascinating topic because even though the earnings are the earnings, a permabaric can look at the same data as a permabull and come up with opposite conclusions, right? So the next 12 month PE is falling like a stone. The last 12 month PE is falling, you know, not as a stone, but as a pebble. But the five-year caper ratio is at an all-time high. And so in this chart, if I showed five-year capes for the S&P then and now, they're identical. But what is the five-year cap, right? That includes 2021, which is COVID. So I caution to look at that, but it just shows you how fascinating valuation is and you can come up with any conclusion. It's like as beauty is in the eye of the behold. We think you're fascinating. Thank you so much for being here. Can we give you a present? Yes. All right, you got to open it here though, okay? Yeah. All right, Nicole, you're going to help? All right, this FIO, you could take the card with you. So we wanted to just recognize you as a fan-favorite guest and you're Michael and I love talking to you. We learned so much from all the research that you put out in our audience, always learns a lot from you as well. So we have a scissor or a knife for you. I got it. All right, all right. So we wanted to get you a little something and why you're seeing that this is on the air, I might get a call for compliance, but no, no, it's not it's not it's not gold bars. It's nothing. It's not outrageous. We know we're I was in the brokerage industry for a long time. I'm well aware. Actually, it's the reverse. You can't give us a guess. I think it's the way the way it really works. Yes, it's all right. So we know you cook you cook for an army of people when you do burn. By the way, how is this year's burn? It was great. It was one of the good ones. It was one. It was one of the easy ones. So I'm the chief cat, herder, and orchestra conductor. Yes. And we had a hundred people this year. Amazing. Including a Canadian TV crew that was their document food culture. So we're actually going to be on Canadian TV at some point. But it was there was no drama. There was some rain, but we're kind of used to it now. So it doesn't phase us. Okay. We fed more artists than ever before. And it was great. That's super cool. All right. Well, I want you to bring this to the minute to the next turn. Do you know what it is? Yes, I know. I mean, I'm assuming you got plenty of knives, but this is your travel knife set for your next, for your next burn from William Sonoma, which is actually a stock and a bull market. Yes. I know you can't comment on the stock, but it looks pretty good right now. Let's say you ready to rock with those or what? Oh, yeah. Yeah. Wow. We like. Thank you. All right. That's our pleasure. Thank you for everything, Gary. And you're the best. Thank you. Appreciate it. Some day Michael will come to a burning man. I know. I know someone you can talk. Yeah. I won't. I won't, but he might. All right. That's it for us this week. Guys, huge thanks to you're in Timmer. What's the best way for people to keep up with your research? I know you're active on LinkedIn. Is there a specific site at Fidelity? They can subscribe to you or the easiest places to find me. So every Monday, I do a podcast, half hour podcast. Okay. It's actually for Canadian sister organization, but they put it out on YouTube. It's really good. All the charts are there. And then every Sunday I publish, I nerd out all weekend and I publish on Sunday. It's internally internal, originally, then it then it goes out after compliance looks at it, it goes on LinkedIn, usually by Tuesday morning. And it gets connected to X that way as well. Although the people on X complaining, why is the wrong for online LinkedIn, but it's a long story. But so everything is out there to consume. All right. Guys, follow Yurian on X on LinkedIn. Get all his research. Ladies and gentlemen, thank you for watching. Thank you for listening. We'll see you soon. Hank joined BJ's wholesale club the day he became a father of 30. I coach football. Now coach Hank saves up to 25% off grocery store prices, 30 pounds of pasta, three cases of protein bars, 75 sports drinks. And that's just pregame. He knows teamwork and BJ's knows savings. This is your home coach, home of the save. Join for just $20 at BJ's dot com slash mosquito and save 10 cents per gallon for six months. Open soon limited time offer new members only. BJ's home of the save.