The Fed Is Wrong & The Market Knows It | Basis Points

[00:00:00]All right, we're good.

[00:00:03]All right, three, two, one.

[00:00:11]>> That was a great opening, buddy.

[00:00:14]>> Dude, I just blanked out.

[00:00:15]>> You're right.

[00:00:16]>> I just lost the purpose of life right there.

[00:00:19]>> Um, >> all I heard was three, two, one, and nothing.

[00:00:25]>> Nixon five.

[00:00:26]>> Sure, we can go with that. Mixing five parades today.

[00:00:32]>> This whole week has been crazy, dude.

[00:00:34]There's just Anyway, >> you want to do this next week?

[00:00:39]>> You want to just go get stakes now? We We'll do this next week. What you want to do?

[00:00:43]>> All right. All right. All right. Three.

[00:00:44]>> No, you're keeping this. You're not doing You're not doing just go. You're keeping This is the opening. The Fed Wars, what do you think?

[00:00:51]>> Welcome everybody to Basis Points.

[00:00:53]Steve, how are you doing? Great.

[00:00:56]>> On your >> 44th year of being alive on this planet.

[00:00:59]>> It's just another day.

[00:01:00]>> It's not just another day, dude. It's See, that's why I messed up in the intro because I was be like, should I say happy birthday? Should I say welcome back to the pod? So, it's really fault to be honest. It's your fault. You messed it up.

[00:01:09]>> Yeah, it's my fault.

[00:01:10]>> I was going to start singing happy birthday. That's a little too cringe.

[00:01:12]I'm a guy. Like, you know, >> you're grabbing at straws right now, aren't you?

[00:01:15]>> Anyway, dude, it's your birthday. I think we should acknowledge >> you've been on this planet for a while.

[00:01:19]>> Yeah.

[00:01:19]>> You're getting to do what you want every day. No corporate America. Get to talk stocks. You have a great community that loves you. So, >> community is amazing.

[00:01:26]>> I I hope you at least acknowledge how far you've come in life and are enjoying the process.

[00:01:31]>> Enjoying it a lot. And you know what? I guess I can't dress like a bum anymore because when I dressed like a bum, nobody took me seriously.

[00:01:39]>> I like Backward Cap Steve though.

[00:01:40]>> You know, Backward Cap Steve said oil was going to go under 80 the second that this deal got signed. And Backwards Cap Steve said, "Don't be surprised if it trades between a band of 65 and 75 and inflation's going to cool.

[00:01:54]I guess I may know what I'm talking about.

[00:01:57]>> Well, I think that should be the first topic of the day. Oil, baby. 7542. I think it was at 90 last time we talked.

[00:02:05]You have been pounding the table. Oil's coming down. We got anou signed yesterday with Trump and Iran. Oil has come down.

[00:02:13]>> Yeah, >> inflation looks like it's going to come down. There's a lot to talk about with the Fed, which was the biggest story of the week. But thoughts on oil and where it's going from here and inflation now that oil's down. oil. I think 65 to 75.

[00:02:26]I'm not going to make a call that yes, we're going 50. No, can't do that. You need a little bit of time for the tankers to go through. You moving your computer around now. What's going on?

[00:02:37]>> I'm trying to make sure it's not in your shot, you know, cuz I actually care about your shot. I appreciate that.

[00:02:41]>> It's your birthday.

[00:02:42]>> Oil, I think, is going to train a band of 65 to 75 for a little bit and you'll see it gradually come down. You need a couple of weeks of free flowing ships to go through the straight. make sure this isn't a fluke and it will start coming down. I think we need two to three reports, probably three reports at this point for CPI and PPI to really cool off to kind of right around where we were, maybe just above where we were. And it's going to take a little bit of time for it to w work through. Gasoline is down.

[00:03:12]Y >> oil's down.

[00:03:13]>> Average price is down. And the bears all they want to do is sound smart in a moment without realizing that time is not on their side ever.

[00:03:24]Well, so that is what so last week we I had co so we did it virtually and what happened last week was uh a draw down.

[00:03:32]We 720 on the S&P from 760 though that that was a bit hurtful and what happened this week was a full recovery. We're not fully at 760, but a lot of names have hit all-time highs. And a lot of that is due in part because of what you've been saying, which is oil will come down. And that was enough for the market to move on, which once again begs the question, can you actually get that bearish in this market?

[00:03:53]>> No.

[00:03:54]>> Especially now that the biggest bear case, inflation, theoretically shouldn't be an issue anymore.

[00:03:59]>> You can get bearish on companies. You can think that things are mispriced and overpriced and underpriced. It's very hard to get bearish on the market overall. Corporate earnings are good.

[00:04:10]Companies are not pulling back guidance.

[00:04:12]Yep. Companies are not retracting Q2 numbers. And Q1, I think the stat was something like 71 72% of S&P 500 companies beat estimates. It's pretty hard to get bearish on that, especially if you put the largest companies into a calculator and look at forward numbers.

[00:04:33]A lot of them trade under 20 times forward for 2028. This is not an expensive market. There are pockets that are expensive but overall the market is not expensive.

[00:04:44]>> So uh that begs the question around how the Illuminati you could call them thinks about >> the broader market oil labor market inflation which is the Federal Reserve.

[00:04:56]Kevin Worsh officially is the chair of the Federal Reserve.

[00:05:01]I mean, there's a lot to talk about in his speech, but what was your overall thoughts on him as a Fed, but also him as a Fed chair, but then the Fed members that 50% of them voted to have a hike this year?

[00:05:12]>> Those 50% should be kicked off the Fed, period. I mean, I'm so happy that we have Kevin Worsh. Kevin Worsh is going to do good. I'm very excited that he is taking the initiative to start these task force and he is going to ask I am hoping now he did not say who I'm going to read between the lines I put a very Elon I cracked the X length for posts I found where the bottom is roughly 4,451 words I had to shorten it by about a paragraph today but I found the bottom of where we cut off because you wrote about the Fed.

[00:05:52]>> Yeah. And look, I think if you can get some of the brightest minds that are running the most important companies and in the most inflation sensitive areas in the economy to come in and be strategic adviserss, sit on committees. I think that's great. my recommendation and I put a list of who I think should be asked to donate their time. It was Jamie Diamond, >> Brad Jacobs and I have reasoning for everything in there >> and these are for the task force >> for the different task force that he >> which is Kevin Kevin Worsh is basically trying to come up with these committees to help us have a better chance of finding price stability in the market.

[00:06:28]Yeah, David Freeberg, Sachs, Mark Cuban. Um, there is a couple other ones. Patrick Bad David. I threw Chimath in there for very certain reasons. And there's one, oh, Larry Frink and Bill Aman.

[00:06:44]>> The combination of that is a very wide range with very specific aspects and expertise. And they are going to be voices that will have that argument that he wants to have. And I think that these are all leaders in their industries that can come in and provide real knowledge to a bunch of Fed members that haven't been in the private sector or creating jobs or anything for a very long time.

[00:07:15]>> Well, I thought the craziest thing was the summary of economic projections, which every Fed member fills out. Worse to not fill it out.

[00:07:21]>> Good. because his argument is like the forward guidance we give you is BS anyway.

[00:07:26]>> It can change on a dime.

[00:07:28]>> I mean, he literally said the Fed members that filled it out with a pencil have a very big eraser on that pencil because it can change anytime. I thought that was just >> it was incredible, >> unbelievably exciting because if there was real reform in the F, we are the greatest country on the planet with the largest economy, most developed. Why do we look at owner's equivalent rent to figure out the price of housing when it comes to inflation? I mean, there's so many more variables you could look on a day-to-day basis. I think Pinter could play a role in easily kind of coming up with that data aggregation, and we don't do it. We do surveys. If he actually goes as far as reforming the Fed to not give you uh the guidance on on on inflation in the labor market, but rather try to find the truth, I think, and you've been saying this for years, the free market will figure out how to price interest rates.

[00:08:16]>> Think about what you said. We're using surveys that we're sending to business leaders. So, you're going to send a survey out, wait for it to come back, and it's going to be on stale data anyway. Everybody pays their taxes, >> and it's going to be politically motivated many times as well.

[00:08:31]The data is the data, but when you ask somebody to fill out a survey, it is subjective.

[00:08:35]>> Yep.

[00:08:36]>> Now, the biggest thing that if you listen to Allin, which I happen to think is one of the best shows on YouTube, >> what have they been saying, specifically Chimamath and Freeberg, what have they been saying? Overhaul the data. Real time data. There is no reason why they're making decisions looking in the rearview mirror. They should be using real time data. This is a United States government. You have access to companies like Palanteer and everything is real time these days. There is not a corporation in the world that is worth their weight in salt that does not act on real- time data. They're not looking at data from last quarter. They're they're looking at current cash flow and where it is now. The last quarter stuff is for trending analysis, not making actionable decisions today because you know what 90 days ago is a light year away.

[00:09:28]So, do we think this is going to res?

[00:09:31]Okay. Do we think we're going to get a hike this year?

[00:09:33]>> No.

[00:09:34]>> Uh, do you think we get a cut this year?

[00:09:36]>> I still would like to think we get at least one cut. I've been saying one to two. I've been more bullish on two, but I said after I heard Wars speak, I would have to change my mind one way or another. I think we get one, maybe two.

[00:09:49]And I think it's for these reasons. the people that put a hike on the dot plot. I don't know what economy that they're living in, but when you look at the amount of debt on credit cards, you look at the amount of debt on the national deficit, it would be the worst thing that you can do.

[00:10:10]>> If you add that to carrying costs, you people. Also, I'm not going to debate that the historical average on the Fed funds rate and borrowing rates has been higher. Not going to debate that. The difference is you can't look at what happened in the 70s and 80s and think that that's a blueprint for the 2020s because services is now twothirds of the economy. Services were not two-thirds of the economy back then.

[00:10:37]Here's the other big thing. When you think about where we have come, okay, when you put rates at next to nothing because of the pandemic and you have so much cheap capital out there, companies borrow at very low rates. Yeah.

[00:10:54]>> When they have to go refi because corporate debt terms on five and 10 year tranches. When you go refi at higher rates, your margins compress. You have to make that up at some point. And when you have to make that up, if you can't make it up on goods, good goods u cost of services and if you can't make that up on the operating cost of running the business, the only thing that you can make it up on is either raising prices or cutting staff. Yep.

[00:11:22]>> That's it.

[00:11:23]>> And the last thing you want is to have to refi at higher rates and cut people.

[00:11:28]Because if you're refying at higher rates, that means that if companies are accessing the capital markets at higher rates, they may not expand as quickly and the job market could even get even more shakier than it is. And if you have companies laying people off in a market that's getting stricter on hiring, that leads to unemployment going up.

[00:11:47]Unemployment going up leads to recession. That's not what you want at all. You want the free markets to figure it out. You want the free markets. If there's more demand than supply, more supply will come on. It may take a month or two, but it'll come on. It'll even out. If companies are able to make money, they will make money. You don't have to worry about that. This is a capitalist society. And that whole line of thinking needs to be thrown out. And these people that put for a hike, I truly believe they don't know what they're talking about. I don't care what their background is. Get them off the Fed.

[00:12:21]>> But they also don't know what it means to live under 50 grand a year. No income. Yeah.

[00:12:25]>> No. Let's raise it. 100 grand a year for a family is not comfortable. I would say in a lot of cities and the reality is that there's a I think it's 1.2 or 1.4 trillion in credit card debt and a lot of homes carry a balance. We're 500 basis points above where we are on the APR from pre- pandemic. So, you want to hike again and make it even harder for people to pay their bills? How How is that going to help anybody? Nobody will convince me ever that if you go spend $100 at the grocery store today, that next year, if it's going to cost 102 or 103, you're not buying what you need over a dollar. Like, that's what this comes down to. When you pick a fictitious number, think about what that really means. Whether you're at the 2% or 3%. In the grand scheme of things, it's nothing.

[00:13:21]>> It's really nothing. No.

[00:13:23]>> So, it seems like Kevin Walsh then played it the right way and he he basically, you know, implicitly told everyone he doesn't think the rest of the Fed governors are making any sense, but obviously they're independent.

[00:13:35]They're allowed to make their choice. As long as oil comes down, as long as inflation comes down, maybe we don't get a cut. But we're definitely not getting a hike.

[00:13:42]>> I don't see how we can go up. And look, this is all predicated on the jobs report in my opinion. And jobs don't show up in prices. Labor costs do.

[00:13:50]>> Jobless claims were good today, too.

[00:13:51]>> Like, you're not seeing a I mean, the jobs report was so good two Fridays ago, the market went down >> for no for no reason.

[00:13:58]>> Yeah. It was a stupid reason, but it's like that's how good jobs are >> because you know what's on the other side of it? Productivity. Yep.

[00:14:03]>> And productivity is going up. It's evening out >> which is deflating.

[00:14:06]>> Exactly. Now, I do believe and I put this in the post. I'm pretty sure I put this in the post today. I've been saying this for a while. The Phillips curve has been cracking for decades. And I think there's too many academics that hang their hat on the Phillips curve, the Phillips curve, the Phillips curve.

[00:14:20]>> I mean, dude, the amount of academics that said the the two and the 10-year inversion back in 2023 meant we had to have a recession.

[00:14:27]>> And what did I say?

[00:14:28]>> Didn't happen.

[00:14:29]>> And and what what I keep telling everybody on your channel that unemployment is the factor you look at, not inverted yield curve. How many times did I say that on your channel?

[00:14:38]>> A lot of times I remember.

[00:14:39]>> And everybody not everybody, but a lot of people like, well, no, you're wrong.

[00:14:42]I'm like, "Okay, let's say and what happened? It stayed inverted for how long? We never got a recession."

[00:14:47]And that that that what was that lady?

[00:14:48]The uh Sam's rule. Remember that lady?

[00:14:52]>> Sam's rule. It got triggered or something >> as like Lisa Sam or something. And it had to do with like it a lot of these things don't know how to factor exponential growth in AI.

[00:15:02]>> And a lot of these things >> are just so people think they sound smart. Yes.

[00:15:06]>> That's all it is. Look, if you want to look at what I'm saying about the Phillips curve, you have to look at two specific areas. The late 1990s, unemployment was under 4% with inflation falling. And then 2019, we had 50year low near 3.5%.

[00:15:24]And core inflation was under 2%.

[00:15:28]Right there, that shatters the Phillips curve.

[00:15:30]>> Yeah.

[00:15:30]>> So, I don't want to hear any of these academics talking about it. Trust me, if you look at you go to ecom 101, you go through all these economic courses, you look at what the economy is like today, there is a lot of proof that it is an incorrect metric to look at. And I think Wars is doing the right thing. And the only thing I will say is please bring in Jamie Diamond, Larry Frink, and all these captains of industry. Please do it because it would be a breath of fresh air to get people, especially Brad Jacobs. A lot of people don't even know who Brad Jacobs is. He has his hand on everything. Serial entrepreneur built huge companies and the areas he he works in very inflation sensitive.

[00:16:13]>> Yeah.

[00:16:15]And if we actually do get those cuts, Brad Jacobs, QX, I mean these LAR home builders, they've got a rally coming for them.

[00:16:23]>> I wasn't going to go there, but you want to raise rates when >> people mortgages are where they are.

[00:16:29]People seem to think that if you cut rates, housing prices is going to go up.

[00:16:34]And I know that's a very common thing.

[00:16:36]They're only going to go up if there's not enough supply on the market. If everybody goes and puts their houses on the market, prices are going to come down.

[00:16:43]>> Also, if rates come down, the home builders will be more easily able to build homes.

[00:16:47]>> That's right. Now, in certain areas, you can't build more. Long Island, if you're not talking about out east and you're talking about Nassau County, it's very hard to build. There's no question about that. People are buying plots, knocking down a house and building a big bigger house. They're renovating. It's very hard. But a lot that's certain areas, but still if rates come down, you're going to see a lot of supply coming on because there will be demand and people are locked into golden handcuffs right now. People, and I am a fan of transporting the mortgage, by the way, because you know what? If you took a loan out at 2.8 to 32 3.2%, why should you get penalized if you still have 25 years on it? you should be able to transfer that. I don't hate that. I hate a 50-year and 100red-year mortgage.

[00:17:32]>> I remember when 50-year was being floated.

[00:17:34]>> No, >> I think that's crazy.

[00:17:37]>> But transferring your rate from your bank, you've already borrowed the money.

[00:17:42]I don't hate that.

[00:17:45]>> Should we talk about SpaceX?

[00:17:46]>> You want to talk about SpaceX? We can.

[00:17:48]>> SpaceX went public.

[00:17:49]>> Yes, it did.

[00:17:50]>> Got up to 230, $3 trillion company. It's back down to the 190s. Obviously the IPO was successful. IPOed at 135.

[00:17:58]>> Huge success.

[00:17:59]>> I mean where do you think the future of SpaceX SpaceX is going?

[00:18:03]>> How many years?

[00:18:05]>> Let's do next 12 months.

[00:18:07]>> Difficult.

[00:18:09]>> Dude, there's a world where this thing really collapses badly. There's also a world where there is so much excitement that all the share dumps on the open market, whether they're buying cursor, whether it's the employee lockup might not matter.

[00:18:23]>> I would. Well, that's my heart saying it, not my head.

[00:18:25]>> I was surprised they are issuing 20 billion for a and I have not I'm just going by what everybody was saying.

[00:18:32]>> I looked into it. Pay the bridge roll.

[00:18:34]That doesn't seem like that big of a deal. But it is more dilution.

[00:18:36]>> It's just Why are you issuing You just raised $85 billion. Why do you need to issue debt for 20 billion?

[00:18:42]>> Now they're public company now. People can buy their bonds. I mean, >> but but cursor, they're not spending a dollar for it. It's all >> It's all dilution. The cur the cursor employees should want this stock to be as low as possible within the next two weeks.

[00:18:55]>> Oh yeah.

[00:18:55]>> Like they do not want this thing at 230 when they get their shares.

[00:19:00]>> I think SpaceX is going to have a difficult year. I think that the ne the upcoming earnings call when they have it is going to be a big tell. How is Elon going to sound? What's he going to talk about?

[00:19:14]Long term. I think this company is going to be great. It's just it's very hard for me to wrap my head around. And I understand that the Anthropic and the Alphabet deal are not embedded in.

[00:19:24]That's $2.4 billion a month in revenue.

[00:19:28]Colossus cost them roughly 15 billion.

[00:19:30]So that's going to be a incredible tailwind for that business. And they may even have an ace up their sleeve with OpenAI or somebody else. No question about that. That's not what I'm questioning. When I see intraday trading and SpaceX becomes a larger company than Amazon and Microsoft in the same day that's kind of crazy and they are unprofitable. That is actually crazy.

[00:19:50]>> And they're unprofitable. Now look, I understand that Elon gets a premium. You can hate that. You can like it.

[00:19:56]Whatever. It is what it is. He gets a premium.

[00:20:00]Do does he get enough of a premium that an unprofitable company becomes a larger company than Microsoft which does $192 billion in Ibida?

[00:20:12]>> I think that doesn't make sense.

[00:20:14]>> I don't think it makes sense either.

[00:20:16]>> I think that really does not make sense.

[00:20:18]>> I don't know the number off the top of my head for cash from operations. I think it's like 162 billion or something like that. Amazon's was like 134 138. We could look at it, but >> but the thing is it's like again, >> okay, so the narrative was SpaceX might crash the market. That didn't happen.

[00:20:32]No, >> why would it?

[00:20:34]>> Well, but that was the narrative last week.

[00:20:35]>> Not even part of the S&P.

[00:20:36]>> But the narrative was last week that there's so much liquidity that But that didn't happen. Now I wonder, yeah, it might not crash the market, but does the stock itself crash if people like, look, here's the thing. Once a stock has a bunch of red days underneath it because for the first four days of it being public, it was just up and up and up.

[00:20:54]Today was the first actual red day.

[00:20:56]today proved like, oh, the stock can go down. What you get a couple of those days in, people stop feeling excited, but they start realizing, oh, it's another stock.

[00:21:04]>> Well, what happens when the lockup periods end and people can get out?

[00:21:07]>> Yeah. So, the only 4% of the float is tradeable, which I underestimated. I don't even think you knew. I think a lot of people didn't know that there were only going to put out a couple hundred million shares. If I knew that, I think it would have made more sense to be like, well, it's a short-term trade that could pump. I did not know 4% of the fully diluted float would be available to trade.

[00:21:24]>> I didn't look into it that hard. I didn't look into it that I thought like I knew like some VCs couldn't sell. I didn't think 4% is nothing. Like >> I looked into the valuation like this doesn't make sense. I want nothing to do with it right now.

[00:21:33]>> It's speaks to Elon's genius.

[00:21:35]>> I have to be very transparent. I'm a shareholder.

[00:21:41]>> How your your wife bought it?

[00:21:42]>> My wife bought it. So technically I'm a shareholder. Now I also purchas IPO day.

[00:21:48]>> I don't know my I don't what do I know?

[00:21:50]All I know is I'm I'm an indirect direct shareholder. Not by choice.

[00:21:54]>> Saying she's up there. She bought on the IPO.

[00:21:56]>> Yeah, I get it. And I bought I personally purchased shares from my nephew. So my nephew is young and you know SpaceX and that's why I asked you in the beginning what's the time frame is if you're talking 10 20 years.

[00:22:08]>> Yeah. That's that's >> Yeah. The the potential is almost infinite with this company.

[00:22:12]>> But the thing is Elon really pulled it off in a smart way by only unlocking a certain amount >> uh to make the IPO successful. And then eventually whoever's left holding the bag when insider sellers whoever's left holding the bag but like the first five days of this thing have been great unless you bought at 230 but if you bought right yeah there's always someone who has to hold the bag there >> and I wonder when even if even when supply comes onto the market what if the company's mature enough for people to absorb that supply >> which is a very legit possibility over the next year.

[00:22:42]>> I tried calling Chris today and he didn't pick up. I have a running joke with Chris about guess what's in spy.

[00:22:51]>> Did they put SpaceX in there?

[00:22:52]>> They put SpaceX in there >> in the value ETF.

[00:22:54]>> Yes. At first it was a running joke.

[00:22:56]>> Very valuable company.

[00:22:57]>> At first it was a running joke because Amazon was in there. Then it was a running joke because Apple and Microsoft were in there. And I'm like, "All right, when I think value, I'm thinking J&J.

[00:23:08]I'm thinking Pepsi, Coca-Cola, stuff that pays a dividend. Old school companies." Now, Apple is not to me a value company. Amazon and Microsoft these prices actually is to me.

[00:23:18]>> Yeah, >> Tesla was in there the other day when I looked and then there's a headline today on Seeking Alpha that SpaceX is now part of the value index for SPY >> which does not make sense to me.

[00:23:32]>> That has more to do with the index than >> I'm just saying it doesn't make sense to me. But look, if the index wants to attract funds and people want to buy SpaceX, Schwab said uh the retail investors that bought SpaceX on Schwab, it was the fifth largest day of activity for them in the history of the company the day SpaceX went public.

[00:23:50]>> Can we talk about retail?

[00:23:51]>> Let's talk about retail.

[00:23:53]>> I'm going to try to be nice.

[00:23:54]>> You are a retail investor, first of all, so you should be nice to yourself.

[00:23:58]>> Well, I get that, but I'm just I'm gonna try to be nice.

[00:24:00]>> Okay. I don't understand why everybody wants to play the game of trying to make a million dollars in a week. It is not an easy game to win and right now a lot of people think it is. There are so many companies that should not be where they are on the up and on the downside.

[00:24:18]>> Do you see birds?

[00:24:20]>> No.

[00:24:20]>> They you know that bird company >> the one that stopped the shoe making and they went with data centers or something.

[00:24:25]>> Yeah. They changed their name to smart bird now.

[00:24:27]>> Smartbird.

[00:24:28]>> Yeah.

[00:24:28]>> Their stock was up 50%. on changing their name to Smart Bird.

[00:24:32]>> And they raised another 50 million to buy GPUs.

[00:24:35]>> Great. Just what we need. A Smartbird GPU data center. Just what we need. No, but look, in all seriousness, there are companies that are not profitable. This is not SpaceX. Just in general, there are companies that are not profitable. There are companies that are profitable that trade at the most ridiculous valuations.

[00:24:55]And there are companies that do a tremendous amount of cash flow and are growing that are trading at valuations that would have been laughable a year and a half ago. And they've only gotten better. There's a very mis big misconception about what the future holds. And here's the reality. Nobody knows what the future holds. I don't know what the future holds. You don't know. Nobody knows. But companies that are still growing that have never had a year of declining revenue growth and are adapting to the AI revolution. I mean right now you look at Microsoft and you look at Amazon where they trade.

[00:25:36]What are they not going to be winners?

[00:25:39]LLMs could be commoditized. Data centers aren't going to be you have to have these data centers for all this to work.

[00:25:46]Why they're trading at these levels makes no sense. Well, that's get that gets us into this conversation, which is that the Mac 7 once again have had a horrible twoe stretch. Like a disgusting Amazon loses everything for the year.

[00:26:00]Meta well below 600. Nvidia can barely touch 210. Uh Micron hit new alltime highs today.

[00:26:05]>> They should.

[00:26:07]>> Sandisk hit new alltime highs today.

[00:26:08]>> They should.

[00:26:09]>> Uh Western Digital, Seagate, ASML, Intel all new alltime highs today. I mean it really begs the question once and I I I can tell the frustration when people ask me this question. I mean I have people that DM me that are just like a minute I'm buying amazing companies Meta, Microsoft, Amazon and I am looking at other people have gains of a and you can't even say oh those are idiot in they're not idiot investors. Those are ASML is a phenomenal company.

[00:26:34]>> You take the risk you deserve the rewards >> 100%. But nonetheless, people are still annoyed that the Max Evans are being treated like the piggy bank for the capex companies to win. And I guess I'm curious. Do you think a year from now Micron Perplexity CEO said Micron should be bigger than Meta? Do you think it outperforms Meta? Do you think it outperforms Amazon? Do Do you think the capex names just keep winning? And is there a world where trimming Amazon here to buy ASML makes more sense?

[00:27:01]>> I don't know that you have to trim those companies to buy Micron. I would say trim Walmart.

[00:27:07]>> No, but let's say someone let's let's let's make it difficult. Let's say someone is in the Mag Sevens. They're not in the Cos. I'm just saying.

[00:27:13]>> And they have to make a you you only have $100,000. You're in Amazon, Microsoft Meta.

[00:27:18]>> Do you want to be in Sandis, Micron, and ASML for the next year?

[00:27:21]>> Like, it's a hard question for a reason.

[00:27:23]You can't just take the easy way out and say, "Oh, to go make more money and put it." It's like, "Yeah, sure. I could do that." the but >> okay there is a halfway decent probability you you will make more money with Micron SanDisk >> and Western and Western Digital over the next year than Microsoft Amazon and Meta >> the difference in my mind is I'm not worried about the music stopping with Amazon Meta and Microsoft >> which is why most people aren't buying the SanDisks of the world >> we're not going to know when the music stops before it does and when to get out of the other three.

[00:27:59]>> No, but here's the thing. If the if the music stops uh or I rather I should say the music can't stop. It can slow down.

[00:28:10]>> Yeah, but this AI buildout, Jensen said it's a 100 millionx computer need.

[00:28:15]>> Jensen is building his systems to utilize less memory. I I actually went through Cisco systems latest quarter because I just did an article on them.

[00:28:24]They're building their networking hardware to utilize less memory. Also, these companies are making their product more memory efficient. Yeah, I don't know how far that goes down.

[00:28:34]>> Gonna need more memory.

[00:28:34]>> We're going to need more.

[00:28:35]>> We're going to need a lot.

[00:28:36]>> I don't know. I don't know if it's two years, five years. I don't know what it is. I think both sides of the trade can win. There's a lot of companies in the S&P I would never own directly. How about that? My response to this question is if you can stomach the volatility of the Micron Sandis ASML capex trade, you buy them.

[00:28:54]>> They'll probably do well.

[00:28:56]>> But if you want to bask in the glory of the greatest companies on planet Earth that at this moment in time and probably for the next few months, hopefully not, but let's say, you know, next year don't catch a bid, which could change overnight for any headline, but let's say they just don't. You can sleep well at night being in those names. you can't sleep well at night being in the very small Pix and shovels names that like you have no idea what's going to happen with them or or even the SAS names with like but you can sleep well in Microsoft, Amazon or Meta.

[00:29:22]>> So let's stick with this and we'll go to SAS but Amazon a lot of people are pissed because as I've showed many times it's underperformed the S&P for the past five years.

[00:29:32]>> You know what's outperformed the S&P in the past 10 years?

[00:29:35]>> Oh past 10 years Amazon >> Intel as of today.

[00:29:39]>> Intel. That's correct. I saw that stat today. The fact that none of us got on the train when uh our president said uh we're investing in Intel is just >> that's in this market has rewarded just vibes.

[00:29:52]>> Yeah, >> the vibe was memory. The vibe was Intel and the hard thinking of like well Amazon's free cash is like >> you know how many people have messaged me saying why doesn't Amazon just spin out AWS and unlock the value and I'm like you don't want that to happen.

[00:30:07]>> Yeah, you would not. You do not want that to happen because you're going to have one company that is going to catch a bid and then the rest of Amazon's going to be dead.

[00:30:15]>> No, >> nobody's going to want to buy that.

[00:30:19]>> Okay. So, basically the Mac 7 you think are still a buy. Uh >> I mean I have to think it I'm still buying them.

[00:30:25]>> But you're not buying ASML or Micron or anything any >> I mean you did public I I made 41% in 23 days on Micron. I exited I moved that money into Broadcom. I think Broadcom is very undervalued. Nvidia is neck andneck with Meta is my largest individual positions. I think Nvidia, the fact that these other companies are running on Vibes and Nvidia is sitting at 210 or 212 or wherever it ended today is disgusting.

[00:30:55]>> But you know what's funny about this? I had the president of semi- analysis on the market open today and he made the same argument that all these analysts are making. Nvidia's too big. He was like, "They're like Apple in 2014. They need to buy back stock." And he was like, "Yeah, they're on the right path to do that." But he was not excited about Nvidia at all. Like from from a stock perspective.

[00:31:12]>> So we hate profitability.

[00:31:14]>> No, no. He he he loves all that stuff.

[00:31:15]It's just like again, who's the next incremental buyer? And and and it's making me wonder like, man, I don't know if Nvidia has a really good year next year.

[00:31:25]>> I don't agree with that line of thinking. And here's why. That was said about Apple and Microsoft when they had 1 trillion, when they had two trillion, and then when they had three trillion.

[00:31:33]that that argument's been said before that these companies are too big.

[00:31:37]Where's the next buyer? Where's the liquidity gonna come from?

[00:31:39]>> Well, the next buyer ended up being themselves.

[00:31:41]>> Think about it. Microsoft's underperformed because of all this capex, which is still a necessary thing.

[00:31:46]A Apple >> Well, and because people think that AI is going to eliminate Excel and Office and all these other things.

[00:31:53]>> Correct. Apple only outperformed the past 10 years because they actually bought back their stock. And then you've got Nvidia here which has already said they're going to buy back stock, but all the companies that benefit from Nvidia are smaller and people are more excited about it. Like just logically AMD was the better buy this year because it went up more. It was the better buy from the logic of hey, can this thing move?

[00:32:13]>> It was a harder If you go back a year ago, it was a much harder buy than Nvidia, even though it worked out better because people were not beating down the doors of AMD. They were beating down the doors of Nvidia, then going to AMD to pick up the scraps.

[00:32:26]>> Correct. But I don't want to take away credit from the AMD investors because it's the same >> Oh no, they did great.

[00:32:30]>> But it's the same debate I had uh with someone when pounder was seven and Tesla was like 130. I was like dude I think pounder can 10x before Tesla goes from 300 billion to 3 trillion. I think pounder can go from 30 billion to 300 billion. I was right.

[00:32:42]>> Yeah.

[00:32:43]>> Like I mean it it was like it was a very naive argument. It was like I just think it's smaller and it can move higher. AMD is way smaller. It moved faster. Your money doubled or tripled in AMD. It did not in in Nvidia as easily. And I don't think that Nvidia is going to double or triple from here anytime soon. I'm just saying that their f fair value is probably more like 270 than where it is today.

[00:33:04]>> Probably 300 to be honest.

[00:33:05]>> I'm not trying to get overboard with making something where people are going to clip it and blah blah blah. Like 270 is a pretty much a fair price for Nvidia here when you look at their profitability and you actually look at the business fundamentals.

[00:33:17]So once again, the Max 7 plus Nvidia and now I guess you throw SpaceX in there.

[00:33:23]um SpaceX more volatile, but the other like really strong fundamentals of all those companies not being rewarded by the market. The capex names being rewarded. Your argument is pick your favorite capex name, but don't let go of the the ones that are spending money on the capex.

[00:33:39]>> I think everybody has to do what's best for them and what's best for me. I know that I'm not going to be able to get out of these other ones. I am >> quick enough. I based on what I'm seeing, I'm a shareholder in Coreweave and Nebus for that exact reason because I think the spillover on compute is going to be excessive for several years and I think those are going to do very well. That's my play on the hyper growth side. I'm not exiting the mag seven even though they're the lag seven at this point. I'm just not I'm not willing to do that. not throwing away companies that are the greatest companies in the market that are the largest cash flowing companies in the market just because they're trading at low valuations. This is when I want to buy more and that's when I look at SAS and I still fight all the bears on.

[00:34:28]>> So let's get into SAS cuz SAS continues to be dead >> service now 140 to 94. Dude, what a fake out that was.

[00:34:36]>> Would you rather buy Altria Group? Okay, which is a tobacco company or a SAS company such as give you three names. Workday, service now, Salesforce >> rather by Service Now.

[00:34:56]>> Is there any situation where you would pick Altria Group over those three companies?

[00:35:01]>> If I had $10 million and just wanted a dividend, maybe.

[00:35:04]>> That's not the question. That's not the question.

[00:35:07]>> Even then, I'd probably not pick Altria Group. I I mean, no, I pick Service Now.

[00:35:10]It's just >> And here's the crazy part.

[00:35:13]>> It's growing.

[00:35:14]>> Going forward to 2028, these companies, not Service Now, but Workday and Salesforce traded about 8 and a half times earnings. Altria Group trades about 11 times earnings. And they have more than double the forward EPS growth.

[00:35:35]Yet they traded a lower multiple than a tobacco company. That's how hated these companies are. They are the new PayPal.

[00:35:42]And it's because of a narrative from a bunch of people who are not decision makers in their companies.

[00:35:48]>> But hold on. I don't I don't think you could just blame the people that haven't negotiated contracts like you have. This is a structural like we've heard all heard that spiel. You're 100% right on it. But this is a structural.

[00:36:01]>> You can't prove it's structural until it happens. Well, dude, from 80 to 100 to 80 to 140 >> structural in price, but in in business, >> you can't prove that they're losing clients and their revenue.

[00:36:14]>> I think the institutional investors are dumping these things, dude.

[00:36:17]>> This is not retail didn't drive it up to 140 and then take it. I refuse to believe retail did that.

[00:36:21]>> These are big companies like >> retail didn't move Micron either. Micron moved because a lot of institutions said, "Okay, this memory story is going on for a long time." I don't want to misquote any numbers. So, I'm actually going to bring up the numbers. And when I look at profitability, this is just I am at the point where it does not make sense anymore because when you look at a salesforce that's now at 150, the actual numbers from AI were were good from them. They're still a growing company.

[00:36:50]And this is a company that is now generating on a trailing 1242.8 billion in revenue. 13.2 2 billion in IBIDA, 9.4 billion in operating income. Their margins, IBIDA margin is 31%, cash from operations margin is 35.5%.

[00:37:09]They're trading at 9.4 time. They're trading at 8.2 times cash from operations and 8.5 times free cash flow.

[00:37:19]That means in eight and a half years, they'll generate enough free cash flow to buy back the entire company. It's the same thing with PayPal. PayPal doesn't make sense based on numbers. Neither does this.

[00:37:31]And companies unlike PayPal, PayPal, the contracts are not there. Whereas Salesforce, the agreements for 5 years, and you can't, we've how many people have we asked that use Salesforce, they may not like it, but they know that they can't get out of it.

[00:37:47]>> Look, the fact that Salesforce was at $25 two weeks ago and completely pivoted from 160 means that But that's my point.

[00:37:54]Then it just came right I I don't think it came back down just because people were bored of Salesforce. It's because something structural whether it's alos market makers whatever said get rid of SAS from a certain it's why soi and Anthonyto said it on this desk right here. You got PMs that just can't buy it until they get clarity on rate cuts. Now Fable 5 came out from Enthropic. Maybe that was part of like but but I don't even think Fable 5 was seen as like this the SAS killer again.

[00:38:21]>> And we need Fable 5 back. I don't think people realize how good that LLM was.

[00:38:26]>> I It went away so quickly I didn't even get to use it.

[00:38:28]>> It is light years better than 4.8 light years.

[00:38:31]>> Well, it'll be back 100%. I mean, Anthropic is already having discussions with the Trump administration. But like that's good for the SAS companies in my opin >> 100%.

[00:38:41]>> Unless the model is going to do what all the SAS companies, which is like I think we're past that narrative.

[00:38:47]>> Look, if you don't care about profitability, these names are not exciting. If you care about a store, you care about a vibe, you care about swing trading, these aren't the companies. But if you care about value and actual business fundamentals and actually buying great businesses at a great valuation, if you believe that SAS is still going to be here, Salesforce trades at 10.8 times this year's earnings, not next year, 10.8 this year's earnings.

[00:39:15]It trades at 9.7 next year and 8.5 2028.

[00:39:19]From the end of this year through 2028, the next two fiscal years, they're expected to grow EPS by 27%.

[00:39:29]I don't know what else to say. I've been wrong on it. I fully admit that I have been wrong on Salesforce. At the same time, what was the first company I pitched on?

[00:39:40]Finance junkies in >> Cisco.

[00:39:42]>> Okay.

[00:39:42]>> Did it work? Cisco was around 40 took >> two years but it worked out.

[00:39:45]>> It was around 46.

[00:39:46]>> Yep.

[00:39:46]>> Okay. It was around that area. It was around 40. It was under 50 because I bought each of you a share. I remember >> and it was under 200 for the four of you.

[00:39:53]>> So I think it was around 46 or so. And I didn't go and check. But I had a very similar theory on Cisco because of the free cash flow and because people didn't understand the narrative and data centers were not the thing then because I think it was right around track GBT or right before and the big thing with Cisco that I said was most people have never stepped foot in a data center and unless you step foot in a data center or you are part of a imple implementation team with building out an office you don't understand the back end that makes an office work in that back end. And once again, Ethernet cable, you can fact check me on this everybody, you can only use it for 300 feet before you have to go into a switch and run another Ethernet cable. So when people talk about drops, you may have an office with two or 300 drops. A lot of offices do drops for the telephone and then they daisy chain to the computer. Now, I may be speaking a different language right now, but I'm going to weave it in. Where most large footprint offices, you have a data center and then 300 feet away, you have an IDF closet where you have another rack with a bunch of different switches and you put another Ethernet cord in, you go all the other drops.

[00:41:05]Now, in addition to the switches, you need firewalls, you need WAPs, wireless access points, you need security. Cisco does all of that. And my thing was, no matter what you do, for your Wi-Fi to work in an office, you actually need networking equipment. And sales, I'm sorry, Cisco is now roughly 48 or 47% services and subscription. It's no longer 80 90% dominated by networking. I have the same theory on Salesforce right now as I did in Cisco.

[00:41:40]It may take a little bit of time. The problem is Salesforce doesn't have any hardware or networking aspect to the AI trade. So you got you got it right. I don't even think you understood how much the capex was for the wrong reason. But Salesforce doesn't have that narrative.

[00:41:53]So you're right on the the cash flow and the multiple >> which look I think you're going to I think Salesforce is going to play out for you. I the way we saw it go to 200, the way we saw pound go to 160, the way we saw Reddit go to 199. The way we saw these Zeta go to 25 as quickly as they did even though it was a head fake proved the market is not indefinitely hating these. They're not Verizon for the next 20 years. So, you're going to be right on this. I just wonder when.

[00:42:17]>> Yeah. How long? I couldn't tell you. But these companies are not going away.

[00:42:21]They're too important to actual enterprise. And when you're an enterprise client, you actually care about how data is stored. you care about sock 2 reports, you care about how they answer the third party questionnaires for your auditors. That's something that vibe coding is not going to fix. So, it's going to take some time unless I'm >> buying more here.

[00:42:41]>> I bought more yesterday, I think.

[00:42:44]>> Just straight Salesforce stock.

[00:42:45]>> Yeah.

[00:42:47]>> Is there another SAS stock you're buying >> at the moment? No, >> cuz I only have bought pounder reddit shop and Zeta. I am really thinking of service now at the because we just saw it flip so quickly but once again it's like dude I've already have software names that are >> I was so I may be out of where Reddit closed today >> 168 I think >> Reddits has amazing growth but >> it was 170 something right >> oh sorry 174 yeah >> all right so I'm not out of it yet I had call options against it at 175 so I'm still in it I may sell it Monday >> okay >> and the reasoning is I actually ran how much I made on the cover calls I made I think 14% on the cover calls and another 6 or 7% on the equity. And I think it's run its course for me. This was never a long-term holding. And I think on Monday, I'm going to sell it and take that capital and maybe I'll buy more Salesforce, but I think some of the SAS is exciting here.

[00:43:44]>> Adobe, I'm assuming you're not.

[00:43:46]>> No.

[00:43:47]>> No. Look, >> Adobe Adobe is the one I've been very consistent on that I will not defend. It is the cheapest fundamentally and it makes no sense based on the numbers. The problem with Adobe, I don't see the enterprise mode, you can get rid of your premier subscription at a moment's notice. You can get rid of Acrobat at a moment's notice. There's no five-year lockin contract that your entire company needs. There are real alternatives.

[00:44:15]Acrobat, we used to use Nitro.

[00:44:18]>> Yeah. So I as much as Adobe makes sense on paper, it's the one I can't wrap my brain around because structurally how important is it to the enterprise and that I don't think it is even in the same paragraph, let alone the same sentence. Is a service now a workday or a Salesforce? Workday is actually the one that I think is the most overlooked because nobody talks about it. They don't have a CEO that's out there talking about things. And when you look at Workday's numbers, they are incredible. And I would say more stickier than Salesforce, more stickier than Service Now. And I've used all three products and I've negotiated all three.

[00:45:02]>> So SAS Summer you still think is possible? I don't know when it's going to come back, but lookie, companies are not get if if anything, if you want, you can argue with me on Salesforce, you argue with me on Service Now, whatever. You're not getting rid of if you use Workday, SAP, Oracle Fusion, Microsoft Dynamics. The only way you're getting rid of it is for another company. You're not getting rid of it just to get rid of it. You house your payroll. You house your accounts payable, your accounts receivable. You house your HR. You house your learning and talent. You house everything there.

[00:45:38]You do everything out of it. You can't have a company in corporate America without a legit ERP system. You just it's just not possible unless you do a combination of an HRIS system, which is what ADP system is because they strictly focus on payroll and finance side, right? They don't focus on HR or paycom and then layer it on with a several different finance modules. We went from ADP and a bunch of different finance modules into an ERP.

[00:46:12]So I I think that workday is something that I don't know how that people are going to get excited about because nobody talks about it anywhere, but the numbers are incredible.

[00:46:22]>> Can we talk about something you've been wrong about for a long time?

[00:46:25]>> Yes. that you've yet to acknowledge?

[00:46:27]>> I'm pretty sure I know where you're going. I'm pretty sure I acknowledged it like four days ago.

[00:46:31]>> Where am I going?

[00:46:32]>> I mean, is it the B- word?

[00:46:34]>> What's the B word? What are you talking about?

[00:46:37]>> We're going crypto.

[00:46:38]>> No.

[00:46:38]>> Oh, I don't care about crypto. Sure.

[00:46:40]You've been Dude, Cryp Bitcoin's been horrible. You've been You've been right on Bitcoin this whole time.

[00:46:45]>> No, I I was thinking more of the Ethereum trade.

[00:46:47]>> Oh, Ethereum. All crypto. Everyone, what do you want? Everyone who's been bullish crypto for the past year has been wrong.

[00:46:53]You saw the announcement from Snapchat.

[00:46:56]>> You saw those you have been saying for three years and defending that people left on this.

[00:47:04]>> They will look at you. They will scan your LinkedIn years left. This was a 5year thesis.

[00:47:09]>> You have been so wrong. I've been wrong.

[00:47:11]>> You've been so wrong. So unbelievably wrong. Chris has been wrong, too. Chris got on your train. I gave him the Ray-B band glasses. He stopped using it after a week. Can we acknowledge this glasses?

[00:47:19]is stupid. It's over. It's not real. It's not happening.

[00:47:25]>> We will not have billions of people interact with the world with these idiotic behemoth goggles on your face that are scanning a person's face while you're talking. How is that social? How is that not dystopian? Like >> I'm going to give you a clippable moment. You ready?

[00:47:40]>> Okay, let's get it.

[00:47:41]>> Hey Zuckerberg, come on. Bring your glasses, your latest version. make sure that when I put them on, it'll scan a mitt and in the glasses it'll show me his name, all of his social media stuff, and give me a whole itinerary of him, etc., etc. >> Dude, why would I want to sit and get a coffee with you if I know, like, just be honest with me. Forget your thesis here for a second. Just like, why would I want to have a conversation with you if I know you're scanning me and like finding facts about me without me telling you? Like, how is that even kind of >> It's about efficiency.

[00:48:12]>> It's not No, don't be Don't troll. Like, >> oh, I'm not trolling. I will tell you right now, do you know how amazing that would have been in business?

[00:48:20]>> Dude, no. Do you know how horrible that is for a relationship? Let's say you're raising money from someone.

[00:48:24]>> You mean I don't have to go on LinkedIn and read everything about you? I can have my glasses do everything.

[00:48:28]>> You're dig yourself in a bigger hole, right? There's no If I'm trying to get money out of someone for an investment and I'm staring at them and they know I have some glasses that can read through.

[00:48:37]Like that's just who wants to give me money? Who wants to like have a conversation? You want to have a human connection.

[00:48:42]>> If it's a good enough investment, they'll give you money. If a lot of this time this is about relationships and I think these are not $2,000 for this really.

[00:48:51]>> Oh, like >> I was very public. This is dumb.

[00:48:54]>> No, but it's it's not that Snapchat is dumb. It's the entire idea is so dumb.

[00:49:00]You have idiotic. You have idiotic sub ideas.

[00:49:03]>> I don't believe the idea is >> of $4,000 for the Vision Pro. 21,100 for this.

[00:49:06]>> The Vision Pro was you. So, here's there's two sides of it. There's entertainment and then there's actual life functionality. Let's separate the two baskets. From an entertainment standpoint, you cannot have a headset with glasses. You've used Oculus. I have an Oculus. I don't use it. It's been in a Tupperware bin for God.

[00:49:26]>> No one uses it. Kids use it for gaming.

[00:49:28]That's it.

[00:49:29]>> But if you make it where it is legit glasses that are very light, you don't even realize you have them on. Okay.

[00:49:38]People will use it. I will use that instead of watching my huge TV.

[00:49:41]>> You've been saying this for years and that's not true.

[00:49:44]>> It is true. But >> I would that Knicks game I would not have wanted to see in glasses.

[00:49:48]>> Why?

[00:49:48]>> Game five. I want to see it on a 70inch TV like I did in my living room.

[00:49:52]>> Do you understand that when you look in the glasses we're talking about 150inch TV in front of you, right, >> dude? I don't think that's the experience that is actually happening.

[00:50:01]Otherwise, >> that's the experience that needs to happen for entertainment.

[00:50:04]>> Well, >> that you can watch Netflix laying in bed, not moving your neck. perfectly where your eyes are.

[00:50:10]>> It's not a convincing enough reason for those things to scale. Maybe you're right about the >> $300. It is not at 2100.

[00:50:16]>> I think it's trying to create a use case where you don't need it.

[00:50:21]>> You don't need to like navigate through the streets of New York by talking to your glasses. You have a phone. You don't need to watch the game on your eyes when you have a or in your glasses when you have 150 inch screen in front of you or 70 inch screen.

[00:50:32]>> What about if you're on a plane?

[00:50:35]>> Okay. On a plane, I think there is some level of a use case, but that's not If you're on a subway or if you're on a bus.

[00:50:39]>> No, I'm not wearing goggles on a subway.

[00:50:41]>> What if you're at the beach?

[00:50:42]>> Also, the edge compute on a subway is not even going to be able to be as effect like >> there's Wi-Fi on the subway.

[00:50:46]>> What subway has Wi-Fi?

[00:50:47]>> New York City now.

[00:50:48]>> No, it does not. If they did, I would use it on the subway. I take the subway every time I go here.

[00:50:53]>> Dude, I just >> I think it's >> entertainment. It'll work out.

[00:50:58]>> Thesis is done.

[00:50:59]>> It needs to be for >> I wish I could I wish Polymarker was around the time. I would have bought so many no contracts on this So many.

[00:51:07]I don't know what told me in 2023 that this is stupid. Maybe because I wear glasses and I'm like I wouldn't want but like you wear glasses too but but also I wanted it to kind of work because I'm like dude this could be a trillion dollar enterprise. There would be so many different companies.

[00:51:20]>> I just don't think that we're going to be conformed to screens and that's been my thesis on this.

[00:51:23]>> I think we will always be I don't think that's ever stopped really.

[00:51:26]>> I think Neuralink would have to be how we get off of it. So you don't think that >> the iPhone, the Google Pixel, these are perfect ways for us to interact with the world that yes, you have to hunch over and look at a screen, but it's way better than a pendant or a watch like or >> No, watch is too small. But you don't think that at some point we're going to have glasses? No.

[00:51:45]>> Where we can have everything in front of us that we need. Move it move it around.

[00:51:49]>> No, dude. You look like a magician, like a mime. Like it's stupid. Like it's like we need to stop acting like the these tech companies are gaslighting us into thinking we need a new device.

[00:51:59]>> Open invitation to Mark Zuckerberg.

[00:52:01]Please come on and change Amit's mind.

[00:52:04]Bring the latest tech. Show him how cool it is.

[00:52:07]>> I legit if if I had to actually debate Zux on this, I I would glaze the crap out of Zucks. Okay. But this I would actually hold my own and be like, why do you think people would do this? Like why do you really think Billy? Cuz look, the reason Zuck started this whole thing was to get out of the grasp of Apple because the phone controls >> because he's going to own the whole ecosystem.

[00:52:25]>> Yeah, but there there is no ecosystem here is my point.

[00:52:27]>> There will be >> maybe for healthcare, maybe for gaming, maybe for entertainment, not for day-to-day life. It's not happening, bro.

[00:52:34]>> I really think I'm going to go to Poly Market and see if there's a freaking market for if glasses become a thing. I will I will buy the no contracts. I will actually put some money on this. I can't short meta because because I I love meta and they don't they don't need the glasses. How many people walking around looking at maps on their phones when you can just have it in front of you on your glasses?

[00:52:50]>> You just answered your own question. If you can look at it on your phone, the the problem >> I don't want to walk around my phone like this. My glasses are already here.

[00:52:56]>> This is such a first world problem that it's not even worth.

[00:52:58]>> I'm not saying it isn't.

[00:53:01]>> Look, I'm not saying it's a luxury problem. There's no question about that.

[00:53:04]But for $300, I want that technology. I want to be able to know the background of somebody without having to work.

[00:53:12]>> That's weird, Steve.

[00:53:14]>> That's so weird, bro.

[00:53:16]>> You didn't grow up with the Terminator movies. We only got three years left to live our lives. Admit. Okay, let me have some fun. Why can't I have a Terminator eye in the glasses? Why? Because it's not normal. It's really not. It's normal to go on a date with someone or before the date you >> I'm not going on dates. No, but let's say you're about to have a date with someone and you you go look them up before the date to just like get a glimpse of who they It is not normal to be on the date, stare at them in your weird glasses, and be like, "So, you went to Penn State, huh?" Like, that's just weird, bro.

[00:53:50]>> Luckily, I'll never know.

[00:53:53]>> I don't think it's gonna be a thing.

[00:53:55]>> We'll see. Well, right now, you're right. It's not a thing. We have two years left on this because I said it's going to take 5 years >> and a company needs to come out with something that actually is comfortable on your face.

[00:54:04]>> Well, the whatever Apple made was not comfortable >> by I have an Apple headline for you. So, Bloomberg says they're trying to make uh AirPods with cameras on them by 2027.

[00:54:14]>> AirPods with cameras on them.

[00:54:16]>> The cameras are not expected to be in use for taking photos or videos, but instead to help Siri understand the user surroundings and provide more visual context.

[00:54:22]>> Useless.

[00:54:24]It's useless. for the love of God.

[00:54:27]>> But I'm saying like these these I think it's not even an Apple thing. I think there's some there's some idea for the tech companies that >> Can you just make Siri good? Please, please, please just make Siri good, >> dude. But why do you think glasses will work, but camera? What I'm saying? Like they're the same It's all wearable nonsense.

[00:54:42]>> There's no screens with this.

[00:54:45]>> Okay, there is a screen.

[00:54:46]>> No, I'm talking about the the putting a camera on an earbud. Why?

[00:54:49]>> Because it'll tell you how to >> Has Apple run out of ideas?

[00:54:52]>> No, but it's not. Don't blame Apple.

[00:54:54]It's not Apple's fault. It's not Apple's fault. It's it's them thinking, "Oh, if you're walking around New York City, the camera will show you the latest the nearest pizza shop and give you some updates about the like it's it makes no sense, dude. It's not a thing. Google Glasses in 2011 didn't work for a reason. Yes, they were ahead of their time, but the format itself didn't make sense." And I think that's what we're seeing with Apple Meta.

[00:55:15]>> I think Apple's running over ideas when you tell me that type of headline.

[00:55:19]That just hurts to hear. They are improving Siri as per WWDC.

[00:55:24]>> Oh, sure. We're getting features that Android's already had for how long?

[00:55:27]>> Well, it's better we get it than we don't.

[00:55:29]>> Sure. It's better we get them, but how about you actually make it same level or better? Oh, wait. We can't because we're running on Gemini.

[00:55:36]>> So, it'll never be as good as Android.

[00:55:40]>> All right, last topic.

[00:55:41]>> And I don't even have an Android.

[00:55:43]>> Oh, I know. You were going to have an Android last week when you saw the Google event and now >> I mean, it did look pretty damn good.

[00:55:47]>> Dude, you're easy to convince, bro. You are so easy to convince.

[00:55:50]>> This well say when I went out to breakfast with Douggee. Okay. Did you play with his phone?

[00:55:55]>> Douggee has been trying to convince me on this foldable nonsense for I told him to his face. I'm like, "Dude, >> did you play with his phone?"

[00:56:00]>> Yes. He showed me YouTube.

[00:56:01]>> How awesome is that phone?

[00:56:02]>> It's not. It's It's a little iPad that it's It's too much >> that fits in your pocket.

[00:56:06]>> You don't need it for someone like me.

[00:56:08]>> I'm not saying you need it.

[00:56:10]>> I want it though.

[00:56:11]>> I just don't think it's going to scale.

[00:56:12]>> I'm waiting to see what Apple's foldable phone looks like though because >> you know why you're not getting the Google foldable phone? Why? because it's first of all, the Google ecosystem is not as compelling.

[00:56:21]>> The Google ecosystem I don't like.

[00:56:22]>> So once again, the AI stuff is not getting you off Apple. Number two, the the form factor of a foldable phone isn't exciting enough for you to be like, I got to try it. Which is why when Apple launches it, it's also not going to be exciting enough.

[00:56:34]>> What? Apple's going to be that much better than the Google phone. Like >> if it's the same, if it looks the same and feels the same, that will be the upgrade I buy. I'm still on a 14 Pro Max. I have to get an upgrade. So, that would be the one I pick if it is anything near what Douggey's phone is.

[00:56:51]>> Yeah. I just I just I don't buy I don't know why I'm so bearish against this wearable hardware. Just I just like I think the iPhone is perfect. I don't think we have to mess with it.

[00:56:59]>> Well, >> but Apple has to grow. So, they obviously need new models.

[00:57:02]>> We just need more people like you to buy their products. I mean, you're captain Apple.

[00:57:06]>> I love I love their product. But I also am not going to trick myself into think like I never bought the Vision Pro even though I love Apple.

[00:57:12]>> Vision Pro was >> stupid. Yeah, >> it's a helmet. You can't build it into a helmet. People aren't keeping that on their heads for five hours.

[00:57:22]>> All right, last topic of this week. I think we covered most of the important stuff. It was Kevin Worsh, SpaceX, um, semis continue to rally. We talked about some of the SAS stuff. I guess this is like kind of the last big thing right here. Bernie Sanders is proposing legislation that would impose a onetime 50% stock tax on major AI companies generating at least 200 million in annual AI revenue. Now Trump has also talked about investing in AI companies.

[00:57:47]Bernie's version of it is a little different. He wants 50% of SpaceX. Uh do you think the government should play any role in helping push the AI narrative forward with their own capital?

[00:57:58]I think it is better use of the taxpayer dollars to invest in great American companies than some of the things that they allocate capital to now.

[00:58:06]>> I agree.

[00:58:08]>> I do not think it is good for the current and future environment for the government to take equity from companies.

[00:58:20]>> Yeah, >> two completely different philosophies.

[00:58:23]And I think it is disgusting that we are even having anybody that is an elected official talking about taking sweat equity out of Americans that are paying taxes and corporations that are paying taxes.

[00:58:37]>> Yeah. I don't think Bernie Sanders argument I mean he's talking about 50% of the and he wants to then pay it as a dividend like based on the profit. Like it doesn't make any sense because you can't buy up 50% of a company. You can't just randomly get 50% of equity. you the dividend would be so minimal to distribute to 300 million 150 million Americans like it. But I could see Trump putting some money into OpenAI like he did with Intel, >> which is fine. I don't have a problem with that. I do not have a problem with the United States government taking a certain amount of money that they collect from taxes and making an investment in that that is going to fund programs for the American public. That I don't have a problem with.

[00:59:15]>> Yeah, >> I actually think it's a better use of capital. It's pretty smart if you do it the right way. But if you're talk, think about social security.

[00:59:24]>> If you would, so you go down the line with the numbers and anybody can fact check this theory. You put into social security over 40 years and you think about how much you're going to get paid out to you every month for the rest of your life. If you had taken that same amount of money and just put it in an S&P fund, >> it would have been multiple trillions higher. We would have to survive 2008, 2020, the dot crash. But still it's better than the treasuries that we invested in.

[00:59:54]>> The government is not a good allocator of capital. We know that social security should never been in treasuries. Should and people can roast me for that.

[01:00:02]Whatever. I don't care. The data has always shown that putting it in an S&P fund would do better. And you really look at what this is. Have it be forced savings.

[01:00:17]>> Yeah.

[01:00:17]>> That's all it is. forced savings in the S&P, not only are you invested in America and the greatest companies in this country, you're actually going to get a much larger return. And I just think that if we're not good at capital allocators now, why are we just going to take 50% of the equity now when these companies are at these stages? They're only going to get bigger most likely.

[01:00:46]>> Well, well, I agree with you there. I mean like we spend so much money on stupid if we put it into these tech like the Intel investment >> put into the tech companies. Don't take the equity out of them. Put taxpayer dollars into there and let it grow.

[01:00:57]>> They're not allowed to fail.

[01:00:59]>> Like they're really Microsoft's not allowed to fail. It could have a bad >> Microsoft fails. We have big problems.

[01:01:03]>> So it's like it's it's kind of we all know the market's rigged to go higher which is why the fact that social security wasn't put into the markets is always baffling to me because it's going to run out in 2033. we're either going to have to raise taxes or lower the the payments we give to senior citizens. So, it's it's kind of one of those things where it's like if we know that these companies are going to win and they have to win, like Meta can't go under. Meta can have a bad few years. They cannot go. It's too important of a company.

[01:01:30]Yeah, the US should buy it while it's cheap.

[01:01:33]I think it 100% makes sense.

[01:01:36]>> I just I I don't understand where he's getting this idea from. It doesn't make any sense to me. What is it 10 trillion for Microsoft, Apple, and Nvidia now or something like that? So, let's call it you take half of the equity on $20 trillion worth of companies. You have 10 trillion that you're going to distribute out to $3 million people. 350 million people.

[01:02:06]Makes >> no sense.

[01:02:07]>> And you're going to pay them a one-time dividend.

[01:02:11]What are you going to give them?

[01:02:12]$25,000, $30,000 for what? To take half the equity out of these companies and make them smaller. What are we doing?

[01:02:21]>> That it doesn't make sense.

[01:02:24]What makes sense?

[01:02:27]balance the budget, get rid of debt, have a surplus on the annual budget, and pay a dividend from the surplus to every American that pays taxes. Maybe that's a better idea.

[01:02:41]>> That's the harder part, but I think it is a better idea. I agree.

[01:02:44]>> Pay an annual dividend to everybody from a balanced budget that has a surplus every year. Don't go destroy companies.

[01:02:52]>> All right, folks. That is it for us this week. Uh Steve and I are about to get some steak.

[01:02:57]>> Oh, before we go.

[01:02:59]>> Yes.

[01:03:00]>> Stock draft.

[01:03:01]>> Oh, yeah. So, if you're watching this today, it's Friday. Uh on Steve's channel, we will be doing the second annual stock draft on Saturday night, 9:00 p.m. I did win the first one.

[01:03:13]>> You did win. Congratulations.

[01:03:14]>> Steve was second. Matt was second.

[01:03:16]>> We don't have to get into who >> No, but just get to the results. It was me, Steve, Matt, Chris, Tanner, and this time Jason will be doing it. Jason Techno Tuesday. A lot of people know him for my channel. So, it'll be all six of us.

[01:03:27]>> So, you got you got the first pick.

[01:03:28]>> I do have the first pick.

[01:03:29]>> Do you know what you're going to pick?

[01:03:32]>> I have a good idea of what I'm going to pick.

[01:03:33]>> I have a good idea.

[01:03:34]>> You want to let everybody know?

[01:03:35]>> No, they got to tune into the draft.

[01:03:37]>> Got to tune into the draft.

[01:03:38]>> It's 100. It's 99%.

[01:03:41]>> So, there's a chance I may get what I want first.

[01:03:43]>> There's a chance you as having the second pick may get what you want. Maybe that's my birthday presentation.

[01:03:48]>> No, don't do that.

[01:03:48]>> Maybe that's my because I don't want to win on technicality this year.

[01:03:51]Absolutely not. I do not want to win on a technicality. I want to win fair and square. But th this year is going to be a lot better everybody. So what we're doing is last year we all picked 10 companies and we had to hold them for a year. It was equal weight. This year we're going to get a little bit more involved.

[01:04:11]We are going to be picking 12 companies because there are six of us. So, we're each going to pick twice and we are allowed to trade with each other throughout the year at any time. The way that it works is if Amid and Chris want to do a deal, they can act on it privately and then when they come to an agreement, they let me know because I will be taking care of everything on the sheets and then the position that they exit their gain or loss will be locked in and then the new position will start from that point. Once a quarter, we will be having a quarterly meeting which will be live and each person will be able to discard two companies and go back to the Russell 1000 and get two new companies.

[01:04:56]So, it's going to be more active this year and it's going to be a lot of elements and we are also allowed to short. So, if somebody takes SpaceX long, >> yeah, >> somebody else can take SpaceX short.

[01:05:10]Yep. I am wondering how many short positions are there going to be. I'm calling two. I think there's only be two short positions in the entire draft.

[01:05:19]>> Yeah. I don't think if it's a bull market, I don't know how many people want to go short.

[01:05:23]>> I think only Chris and I are going to take a short.

[01:05:26]>> What are you going to short?

[01:05:28]>> I'm thinking about I'm thinking about a company that I'm going to get roasted for, but I'm thinking about >> What is it? SpaceX.

[01:05:33]>> We're going to have to tune in to find out. If you're not going to tell us what your first pick is, I can't tell you what the short is.

[01:05:38]>> We can't leave the audience on a cliffhanger, bro. They're gonna be upset.

[01:05:42]>> All right. My first pick might be Nvidia.

[01:05:43]>> And my short may be Rocket Lab.

[01:05:46]>> Wow.

[01:05:48]I completely disagree with that.

[01:05:51]>> You can disagree.

[01:05:52]>> I don't think that's >> not your pick.

[01:05:54]>> I don't think at a hundred bucks that's a good short, dude.

[01:05:57]>> Okay. Does 660 million in revenue and it's a $60 billion company and >> Well, this will be the fun of the draft.

[01:06:02]We could all >> be the fun of the draft. Now, I'm not saying I'm gonna do it, but it doesn't make any sense to me.

[01:06:09]>> I agree. The it's expensive, but I don't know if that's a reason. That's never been a reason to short anything.

[01:06:14]>> And I think that now with SpaceX being public, you're I think there's more of a reason to go into certain defense names than I than Rocket Lab. I think that the liquidity is going to go to SpaceX.

[01:06:26]>> Now, I'm not >> Matt's going to get mad at you.

[01:06:28]>> Sure. F. I mean, >> I may not do it, but I I do.

[01:06:32]>> But it it'll be funny because he's probably going to take it. So, >> which is fine. Which is fine.

[01:06:37]>> All right, folks. Thank you all for joining. Thank you again for listening to Basis Points every week. Deeply deeply appreciated. Uh appreciate everyone who listened to the pod last week, even though we were virtual.

[01:06:45]Obviously, we do enjoy being in person more.

[01:06:47]>> Yes.

[01:06:47]>> Uh happy birthday.

[01:06:48]>> Thank you >> to Mr. Steve. We're going to go get some steak. And >> yeah, summer's coming up. I mean, three days until it's officially summer. We'll be here every single week in the summer.

[01:06:58]Oh, next week I will be in Singapore.

[01:06:59]So, next week we will So, >> we'll do virtual next week if we can and then we'll be back in studio.

[01:07:05]>> Yeah, the next two weeks we're going to be virtual and if we miss a week, forgive us, but July 9th, July 10th for sure, we'll be back. That's the first Friday of July. And hopefully next two weeks we can easily just do it virtually. But, uh, yeah, appreciate everyone watching and listening. Stock Draft, Steve's channel, it'll be linked in the description on a Saturday night.

[01:07:25]We'll see you next week.

[01:07:26]>> 900 p.m. Saturday.