Transcription
All right, we're cruising through the summer. Uh, you guys can read it on your own. All right, so S&P up about 1% for the week. Small caps, uh, I'm pretty much done showing the Russell 2000. I've moved on to the S&P small cap index, uh, just because I think there's some, uh, some bad, some bad setup in, uh, in Russell in terms of the waitings with the unprofitable companies. So I'm going to focus on a pure small cap, uh, index going forward because I do think small caps are going to, uh, have a change and you can see small caps have done well during this period. This is on an absolute basis. They were up 3% last week, uh, relative to the S&P. There were a couple big days. We actually had the biggest day since November and before that, it was the biggest day in over a year, except for the one day at the election.
So the question is, what went on this week? Well, rate cuts. Uh, and obviously those two days there, and I tweeted about this or posted on X, a very large two-day move, uh, given up once the PPI came out to some degree, but for the week, it still was, like I said, a, a good performance, and you're talking about the biggest performance for small caps relative to the S&P, uh, except for the massive move on, uh, in April. So, this one was absolutely due to the belief that rates are going to be cut. There's a lot of other things that are going on, too. I'm going to kind of take you through some stuff. Uh, it'll probably be more in the coming weeks, but I do think small caps need to be looked at here for a variety of reasons, and one of them is this, and this was the other thing I posted in X, uh, the pure factor movements. So this is over the last year. This is a strength monitor of factors with inside Bloomberg. Uh, good thing to keep on your, on your radar, particularly when there's a regime shift that I think is happening. Uh, I think there's monetary policy shifts, fiscal policy shifts. I'm going to go through them. I think there's going to be the potential for court ruling on the tariff side, which I think would be a positive for small caps. There's a whole bunch of things going on as well as the next stage of AI, which I'm going to cover not only in this video but in papers coming forward. Uh, but all in all, I think this is going to be looked at historically as a major shifting point, as stage one of AI, which is really the infrastructure and and efficiency gains for the MAG 7 spreads out across industries in the adoption phase, which will be much more positive with a tide that lifts all boats. Uh, but the main thing is here, look at the sharp ratio over the last year, three and a half for size. Uh, it's obviously crowded. Momentum, same thing. Whenever you get like this, you have to be looking. High sharp ratios are something I always would monitor to look for the chance that hedge funds would be in a draw down. Uh, momentum had its worst week since March. So, we are seeing, and we've been seeing, I showed you a couple weeks ago some quant moves. Uh, I would just keep it in check.
Aside from that, corporate bond spreads sink to 27-year low. We've got the move index. So, the Bonval index finally starts to break down, uh, to the lowest level since '22. So, basically, we're finally going down. You've got the DAX at all-time highs. You've got the Italian Footsie MIB at all-time highs. You've got the Footsie in the UK at all-time highs. The Dey at all-time highs. Cosby's getting close. The Shanghai Composite's near five-year highs. Yeah, this is despite the perception that China has no, uh, no strength in its economy. Here we go. Remember this one here? Stimulus comes through, it consolidates. This certainly looks like it could be the beginning of some kind of a third wave in here, or it's in the midst of it. Look at this sharp ratio. This is many, many days in a row. China not getting the do that it deserves. And of course, we have the banks. The BKX is sitting near the all-time highs, uh, about to break out. The European banks have been hot all year, but they're just continuing to rage. The Asian bank index, again, look at this chart. Breaks out, kind of consolidates, comes down, retest once, and now going higher. Reflationary boom is the story. Um, and with reflationary booms, you look for overlaps with the Asian banks, and you do it versus the PMI. I'm going to keep harping on the fact that for those of you listening, pushing back consistently on everything you can, remaining bearish, PMIs are going higher. They are going higher. Uh, Q2 earning season has been so strong that Wall Street analysts are raising their 2025 S&P earnings estimates. The opposite was true before the last three earning seasons. Uh, six of 11 sectors. It's not just tech. Tide is lifting all boats. Is the stock market in a bubble? This is just to show that sentiment remains fixated on things that don't make sense. Jason Shapiro, why? It's the best thing to put. 20, 30% bulls, 46% bears this week on the AI. And if you want to fight it, here's the bearish. This is going back to 1978. This is where we are right now. Um, people are not bullish. That is for sure when you've got bearish down there. And here's the AI. Again, we just came in at minus 6, as I showed you. This is a one-year average. So, this is the 52 weeks. I mean, this is not a bubble. This is not anything that anyone is is grabbing on to except for retail and quants. Uh, computers don't have the same bias that people do. And as I go through this, I'll be calling it quote unquote the academic side that people are using. Oh, things are overvalued. Oh, we have this. It's just continuous. It won't stop. Uh, Tony P at Goldman Sachs, I thought this was a good, uh, thing. Folks have legitimate fundamental concerns, so the professionals aren't fully risked up. In the end, however, the broader flow of capital, which includes CTAs, systematic quant strategies, retail buybacks coupled with double-digit earnings growth, double-digit earnings growth when everyone was expecting everything to collapse and they had a 3% earnings growth and we came in at 12, has powered the market higher. Professional investors are fairly sober and have kept the risk on leash. I said it last week, I'm going to keep saying it. This is a very good broad equity syndicate, uh, indicator using the positioning across a bunch of things at Goldman Sachs. It's not bearish. It's just not where you'd think it would be like it was here at the end of '24 going into '25 when we had the big fall. So, we're just don't have the sentiment sitting up there at what you'd expect.
Now, we did have inflation data this week. CPI comes out and Bessant comes out immediately and talks about it. There were obviously some parts in it that were a little higher than expected, but again, when everyone was expecting the tariffs, the latest inflation report continues to show no negative impacts from tariffs. Core goods prices were up 2%. They're up just 1.1% over the past 12 months. It's very hard to argue that the inflation situation is out of control. There is an uptick, but again, it's coming from levels. So, this is the core CPI here. Little uptick here, and then the 12-month sticky X shelter has come back up, but they're both in line. They're higher than they were before. That's going to become a story for me as we go, but it's not like we've got some raging out of inflation situation. Um, and then here's another way to look at this is the annualized the five-month average of the three-month, uh, versus the core CPI. Let's leave that one alone. Now, the PPI. PPI comes out 0.9%, highest in three years. So this freaks people out. Here's the look of it. We're back into the point of COVID. So there's no doubt that the tariffs have had an impact if you don't believe it. Here's the just the finished goods. So the finished goods of PPI up here, and you've got the trend going similar to back then. So that has taken everyone and got them worried.
Other economic data for the week that was on the stronger side. Uh, here's the PMI, the white line. This is now we had the Empire number. This is a composite that I've kept over the years of the Empire, the Philly, so the Northeast plus Dallas. Uh, it's up here. So, it did have a bump, uh, back here. We followed. I still will contend that now that we've gotten through things, you're going to see PMIs go higher because of the one big beautiful bill being done, and at the same time the tariffs being done, and at the same time the AI action plan, and at the same same time all of the deregulation stuff that is going on. I'll highlight some of that going forward. Um, the small business survey came out. Optimism rises again while uncertainty remains high. Uh, and it got to the highest level since February. So, small business does overlay with PMIs. Uh, in terms of the job situation, just like I said last week, uh, I showed the employment tax receipts for the first week. Here they are again. They're up at 7.8%, which basically means all of the weakness we saw in receipts. And again, employment receipts are actual dollars that get paid. Um, so it does show this is not a hiring thing. So, this is not about people being hired. This is about dollars being paid. It gets back into why I said the aggregate payroll is a better measure to look at. We have a hiring problem in this country. It is only going to get worse because of AI.
Um, the big move for the week and the thing that made stocks gyrate that had an impact obviously on, uh, the, uh, the factors. So here is the move first from the CPI. This is the probability of the Fed going 25. So we got over 100%, meaning we were leaning at one point. So this is the inverted, uh, meaning we were actually talking 50, and you heard a few people talk 50. Bessant was one of them. Then we got the PPI, we reverse and went the other direction. So the market is telling you that it's at an inflection point right now with the Fed. One thing is clear from the Fed, there's zero consensus about the Fed going forward. That's all well and good. Besson came out, urges Fed to lower 50, lower rates by 150 basis points or more. Uh, Besson stated that if you look at any model, it suggests we should probably be 150 to 175 basis points lowering the Fed, implying the Fed funds rate ought to be around 2.6%. Um, over the last 33 years, this is from Jim Biano. The Fed only cut rates once over 33 years when core CPI was above 3%, which was last year. 10-year yield shot up from 3.6% September to 4.85% January. I talked about this last week. Um, I think it, this part here is what every single macro person believes, that if the Fed were to cut rates, this would go higher. It's a very different place than last year. The SOM rule was the only weakness in the jobs market back then. We are actually down to sub 100,000 jobs, uh, over the course of the last three months. We have a hiring problem in this country due to AI. It is only going to continue in my mind. Um, meaning we're going to be at the lower end. But also, they surprised last year. Don't forget that they weren't supposed to do 50 in September. It was a 50/50 shot. They did do 50. The market responded, but also Biden was the president. Trump is the president now. He has said he wants rates lower. He has been arguing he wants rates lower. And as this thing shows, he's basically got a noose around Pal at this point. Pal can do what he wants. But you're getting more and more Fed people that are basically showing that there is an argument to be made right now when it comes to inflation, which over the last six releases has surprised on the downside five times. Yes, one of them went higher, which was expected on the PPI. The CPI was in line. It's very hard to make the argument when the payroll numbers have gone down. You've seen some of the Fed governors say I do agree that that's happened. Um, so I wanted to bring this up because there's too many people having an opinion about what they think the Fed should do. And I was at a dinner back in 2023, right after Silicon Valley Bank. And remember, after Silicon Valley Bank, the Fed kept hiking. Um, and I was at a dinner with David Zervos, who basically said he would just call people out. That's a normative statement. You're not giving me any facts. You're just telling me what they should do based on the interpretation of economic conditions, and what ought to do as opposed to what they said they were going to do. So we have it built in right now. Pal can reverse that this week at Jackson Hole. But just remember, the pressure is not only coming right now. Now the market is starting to realize that every release that goes, there's more and more evidence that the administration is willing to tolerate a higher inflation rate. So I'm talked about it this week with many, many people. I believe you have to start believing there's an unofficial unannounced higher inflation target, and I'll go through the reason why. But in this case, with Bess, the reason that JP Pal gets nicknamed "Too Late" is because he wants to go into a series of rate hikes. He's not willing, he's not Alan Greenspan, who is very forward-thinking. Critical here, forward-thinking. They try to be more data-driven, backward-thinking, which I think is a mistake because I think we're going back into an economy like we had in the '90s. In the 1990s, we grew about 4%. The internet had just come out. This is his AI argument. This is what he said very recently after the announcement of the AI action plan on the All-In podcast. The capital expenditure boom will transition into a productivity boom from around 2026. Similar to past technology waves, you have to understand the White House is in bed. Literally, David Sachs almost lives in the White House with the AI people, with the crypto people. You cannot sit there and believe that the Fed is going to remain in this worried about an inflation scenario. JP Pal may or Drone Pal may, but this is not going to be a scenario that the White House is going to turn. So they're telling you that during this administration, they're going to put someone in charge who's going to be focused more forward-thinking. This is a change in monetary policy. This is a change in terms of viewing things. Most macro people are still fixated in the same way. And I hear this pushback on the PMIs, on the leis, on everything. This is about AI. This is about productivity. He believes AI could recreate that environment of high growth without inflation. Whether or not it's true, that's the bet that they're saying they're going to make. And they don't really have a choice because of the fiscal dominance side. And I'm going to go through other reasons why AI initiatives are running through the entire system and contributing to keep inflation expectations under control. People see technological advances, AI included, as part of a supply side narrative that increases efficiency and capacity to help offset inflationary pressures. The deregulation in the AI is what they're focused on. You have to adapt to a new monetary policy going forward. If you don't, you're going to get caught. The second that they cut rates, I think this is going to be a trigger point for people to change their views. Just remember, this is about artificial intelligence. Is why do these videos? Uh, I put this in there. This is not a quote in this. I asked Chachi BT to come up with a quote. "When exponential invasion is moving this fast, today is already yesterday. By the time you catch up, the future has passed you twice." Besson has criticized the Federal Reserve for being too academic, overly focused on backward-looking models and historical relationships instead of anticipating where the economy is headed. I 100% agree that forecasting on stupid things like SOM rules, like the Taylor rule, all of that garbage, when we are standing in front of humanoids and full self-driving and AI and people not being hired by companies that are growing rapidly where the, uh, S&P is being dominated by seven companies. We are in a completely different world, and the focus on old tools is ridiculous. He's not alone in those. He, these are all people that have been mentioned or still in possibility for the Fed chair role. You've got Rick Reer, David Malpass, don't laugh. Um, David Zervos, I'll get to him later. Um, if you go through all of the commentary that they said, it basically be summarized with this one. By the way, Mel Madison, very, very good. Listen to podcasts he's on. Uh, follow him on X. I think he's got a a clear head when it comes to the MMT narrative. Uh, I agree with what he's talking about, but most importantly, he's one of the few people out there basically just saying this is what the government has to do. They don't have any choice, which is part of the Bitcoin world. Uh, he's not a Bitcoin person, per se, but I think he's done a very good job this year, and he's had great calls on the market. Um, Fed is getting a makeover. It's what David Malpass talked about. Here are the details. Next Fed chair should challenge entrenched PhD economist thinking at the Fed. You know my thoughts on that. He wants the Fed to get out of the way, let the markets go, supports foundational changes, including improving access to loans for small businesses, advocates using forward-looking. He basically came out and went through the whole entire thing that Besson did. They're all rolling this out. What so many people are missing again, Mel Madison, is that they are desperately want to make the case against cut is that a new regime is being put in place at the Fed, one that wants deep down in places they don't talk about parties higher inflation. Mirren's appointment, just the start of it. Completely agree. You have to take these signals as what is going to happen because we invest in the market. The stock market moves based not on what the Fed is going to do in September. There'll be, you know, a movement because people are bearish and they want to sell things. So if the Fed doesn't cut in September, it's going to be a disappointment, obviously. Uh, but at the same time, if earnings are going to be good the next quarter, then the stock market's going to go back up, and the Fed will eventually cut into that. If the Fed does cut and the PMIs are above 50, watch out at that point because then you're talking about a reflationary boom, and they're sending that signal. But I wanted to bring up the Scott Mirren piece here based on all the commentary from the potential new Fed chairman in the paper by Steven Myron. Do you think the Federal will be focused soon on a forward-looking approach? I just added DPT to go through it. It laid it out here. You can read it on your own, but the answer is yes. This is who I want to be the Fed chair. How can David Zervos not be the Fed chair? The world will be a much better place with that. Um, Goldman Sachs is saying St. Pal will be hawkish again. This is the only thing I put this in there because this is what people care about. They're trading off that. Uh, AI impact of AI adoption over time. So, I went through, asked chat GPT to do this work for me and basically took it through what is going with with AI and what should we expect. The reason I wanted to do this, I want to see what it said about all of these. This is the big one. So, we're right now in finishing up wave one. We're about to go into wave two. This is the biggest part of where the profit growth should be. And that's because the digital employees will be higher. That's why you see the unemployment rate also go higher during this stage. GDP will grow on this thing. Inflation should come down over this period. This is a two to five-year period. This is into AGI. This is the most important part of the AI adoption. You have to think about that as you're making decisions. Targeted efficiency gains without large layoffs. So wave first, wave one is the one we're finishing. This is the one where you get a corporate profit proofs. We saw that you're kind of getting quiet labor displacement, targeted efficiency gains. This is mainly been by the companies that already had the ability of doing it, in particular the MAG 7. The second wave though, broad process automation. So it's going across the entire, uh, workflows. Mid-skill worker pressure, widening gap. More disposable income may accrue to the shareholders of companies and to high-skilled, high-paid workers, not to displace workers. It's going to lower aggregate demand unless policy offsets it. This is where you will be fighting Trump because his job is to find a way to keep the thing balanced. This is not a balanced thing. I just want to make sure you see this is where we are right now. We've got the MAG 7 earnings growth year-over-year 26%. We've got the S&P non-MAG 7 at 4%. This is where we are. Trump wants to change this. Uh, I wouldn't fight him on it. And we're going to finish this season somewhere north of here. Here's the market cap waiting. It's now somewhere up here or a little bit up here, maybe 35%. And then this is the percentage of the earnings growth. It's above 70 now when you count Nvidia coming up. This was something that was tweeted out. And again, I think this is people looking at things the wrong way, showing the concentration and thinking it's not justified because they're saying it's 30% of the earnings. That's not the way stocks are valued. This is on the earnings growth. If the growth comes down on the MAG 7, the stocks will come down, and that's what I think will happen at some point here. But the administration has made it fairly easily for them for them to do this. The third wave, just so you know, which is coming at the end of this decade, at the end of this decade, and is really important because I think it's going to start being built into the market late next year. Yes, it's going to start being built in, which means the stock market in multiples should even go higher. This is the AI embodiment, labor market restructuring. So, we're dealing with the cognitive labor force now, but in this next wave, it's really bad in terms of figuring out governments may respond with universal basic income. They've already kind of done it with transfer payments. Uh, we're just the next five years to me is going to be a very difficult time for the societal impact. Uh, even if GDP grows and it's not distributed well, they're going to have to find ways to bring affordability, and I'm going to get into all of this as we keep going. Um, did Besson say anything on the All-In podcast as he was talking about how this great productivity boom is going to go? Did he talk about AI causing job disruption? His focus was almost entirely on AI's economic upside. Anything about job creation was about was about job creation. This is the part that is the issue. Um, there's no way to refute this. So this is, uh, Parker Ross again, I highlighted in them office using job growth. So this is the finance side, the information, the office side. There's it's, it's nothing. It's and it's been nothing now for three years. Uh, it's happening already. Everyone's going to leap to go short bonds and short 30 years. I, I think it's a very dangerous thing to do because of this. Um, I don't know what Donald Trump is going to do, but I do know he is going to help the affordability thing. So this is the affordability gap in housing. It is a massive problem. It is one of the largest problems. It is being caused by the technology boom and it is going to be exacerbated by AI unless they can find a way to change this, which I think they will. I've talked about on prior podcasts. And the reason why the pressure is going to be there, affordability could be key message for the midterms. So, as this is going on, I don't think playing for bond yields to go higher is as good as playing Bitcoin, gold, or stocks. So, that's my take on that. And I also think commodities are even, you know, are going to do better as a whole. Um, something to to really pay attention to, unless I'm missing something here, I don't know why this isn't a bigger story. Uh, maybe they actually think Donald Trump can't, he's Teflon, and he can't be, can't lose anything. But this seems pretty straightforward. DOJ seems awfully nervous about the tariff loss lawsuits. Uh, warns of Trump warns of a great depression if the appeals courts tariff power. This really seems like, uh, it's going to go against legal experts see a real chance that Trump could lose the major tariff case currently making its way through the courts. The outcome remains highly uncertain and may ultimately be decided by the Supreme Supreme Court. But Paul Ryan, Supreme Court likely to restrict tariffs, emergency tariff authority, and that is exactly what I'm hearing from people in there. If that happens, which could go on, um, it's going to create uncertainty and it's going to take the tariffs off. I, I don't know the impact it'll have. It should be better for small caps since they've been hurt, um, dramatically, and obviously a lot of the companies on the value side or the, the, the, the manufacturing side, but we'll see what happens. Uh, I just think it's something to keep on your mind as we're getting closer to it. Michael Hartnett put a special piece out on gold revaluation. Definitely worth getting in your head. It was obviously mentioned in kind of passing this year by both Trump and Besson and then walked back. As we've seen with walking stuff forward and walking it back, they're kind of testing the market, uh, to see what the reaction will be. Uh, if they lose the court case, they've got to do something to increase the Treasury's balance sheet. So maybe this becomes the other option and figuring out some way to get it done. Uh, all I know is that Hartnett wrote something about it. All of these things are in there. Such a move would directly improve sovereign balance sheets by reducing domestic debt burdens. It would be a tacit acknowledgement of subordination of monetary policy to fiscal dominance. Um, we're already in that stage. I just think it's important for people to think about because it has been talked about. I've listened to a lot of podcasts and I've heard a lot of smart people on it. Uh, if it happens, everything else is very gold and crypto bullish, structural inflation and dollar debasement, revaluation, all of these things. Yes. Uh, August 1st, the Fed puts out a paper on revaluing gold reserves. So paper came out on it. Uh, again, the Fed's not the one that would do it. Could be from the Treasury, but they're clearly writing about it for a reason. Uh, Luke Groman has has been ahead on this all year in terms of the reasons why he's even connected it to China. And since we still have this trade situation with China, think about the Mara Lago accord. You can't get everybody into a room and get them to agree there is no other currency. We're not going back to gold. So, how do we do this? And one of the things that he brings up is you revalue gold higher. Uh, this podcast was back from I think February, but that's a good one if you want to go listen to a lot on it. Here are the highlights for if you don't want to listen to it in terms of what's going on. The solution could be settling net trade imbalances in gold rather than, uh, another nation's currency. Regardless of how it would be, you're talking about gold going much, much higher, and then you're repricing weakens the dollar versus the yuan, but in a mutually agreed manner. Then he's got the conspiracy side, speculation to a chain of recent events. JD Vance meeting with the Pope just before he dies. The Vatican is historically a major gold custodian. Trump's tweet the same evening. "He who holds the gold makes the rules." China announcement days later to speed up yuan convertibility for gold and expand Shanghai gold. Reports of Chinese officials quietly meeting in US. Again, I don't get into that stuff, but, uh, as Hartnett said, if this goes on, sell the dollar, buy gold and crypto and EM. I think that's the trade anyway for a different reason on my side. But I do believe that AI makes this more likely because it continues to pressure things, uh, from the government because I don't think we get the GDP side. But more importantly, I don't know where we get the tax receipts from on this without getting the GDP much higher. So here's what basically goes through. This is the reason why you should at least be focused on a reflationary boom. 88 central bank cuts year to date. Fastest cut cycle since '20. New debates on Fed independence, higher inflation target, sectoral price controls, gold revaluation, yield curve control. Again, I don't know how the Fed, I don't know how Trump is going to let yields go higher. So again, you got the issue here. You get it. Best podcast of the week, the one you guys should watch. Again, not surprisingly, moonshots, but the reason is pretty clear for me. The AI crypto collision that will redefine global power. Fantastic podcast. Uh, for anyone who's not yet up to speed on how AI and crypto are linked together, uh, I've talked about this repeatedly. When we give our AI agents access to tokenized assets, we're going to see an explosion in the economy. The future of the web will be built for AI agents, not humans. Humans make biased, stupid decisions. AI agents will make the smartest decision. Watch the waitings in portfolio management go dramatically higher towards crypto when AI agents are in charge since it's had the best sharp ratio. Go buy your Bitcoin now. The value of human cognitive ability is going to go negative. It'll have to be illegal for humans to get in the way of things, uh, like driving or diagnosing diseases. Uh, AI is electron limited. Yeah, we got through that. Um, all right. This is something I want to make sure if you guys don't listen to it or if you only listen to one part, you should listen to full self-driving. Um, I'm not going to read all of these things. It is critical that people understand the importance of full self-driving in robo taxis. I know people have heard about Waymo. I know that they've heard about this. You have to pay attention to what Elon Musk is doing. Why he just secured all of Samsung's chips. Millions of autonomous Teslas, millions, are expected to be operating without human oversight by late 2026. That is next year. This enables robo taxi fleets, dramatically lowering transportation costs. It obviously hurts driving, but this is a major thing. They tied it to city coverage, dozens of cities by the end of this year, covering 50% of the US population. Elon teased a major FSD update with 10 times improvements and better video compression aimed for public release at the end of next month. Full self-driving has many, many positive or many, many things associated with it that have are going to have factor impacts in the things that work. Societal shift, humans again, this is a major job thing, uh, in terms of that, but this is important for opening up self-driving leads to robots to clean your house, to a robot dense. It's the same underlying neural net capability. Tesla's 16.5 billion plus chip deal with Samsung was linked directly to scaling FSD. Means it's on the horizon. It means he believes this is going to take off dramatically. FSD is the first mass market AI application that will operate in the physical world. So this is a robot. This is a robot that learns as it goes. This is why it is critical. We didn't have this technology at any point. This is not the same as the Waymo and the stuff that you've seen around, uh, the country which was sensor-based. This is literally about looking at things and making decisions and learning from the mistakes as you go along on everything, which is critical for there to be robotics. Here's a way to think about it in another way. When robo taxis roll out in large numbers, will they benefit from this companionship? Um, this was, sorry, I, I have one out of order. So in LAN Lattis semiconductor reported this week, and they talked about the deployment of of companionships in advanced systems automotive. This is important. So that's what they said on there. The stock was up this week. I'll show you, uh, robo tax, or I asked that question now. When robo taxis roll out in large numbers, will they benefit from this companionship? Robo taxi self-driving, fully autonomous vehicles deployed at scale are likely to directly benefit from the companion model, and we, you can go read these things in here as you go through it. The main reason why I'm bringing this up is we have been in a bare market in autos now and housing for some time. You can see what has happened, uh, in Lattis Semiconductor, which is a semiconductor which has not benefited with the other semis. The other semis like the SMH are up here. I've highlighted this before to certain PMS as a stock, especially down in this area, as one that would benefit once we expanded and got into the next phase of AI, which would be when intelligence actually reached a level which is during phase two, which would lead to the embodiment stuff. Robo taxis is the beginning of the embodiment phase. Lattis Semiconductors are still sitting here. They should see tremendous demand going forward on this. Uh, another thing that was brought up on there, if you haven't seen this, and a lot of you are on vacation or not, you know, going around, Doge has been, you know, left for dead in terms of a mindset, but it's not dead. Uh, at least when it comes into the world of regulations. So, the Doge AI project they talked about, uh, the AI system is reviewing 200,000 federal regulations with a goal of eliminating 50% of them by 2026. In the housing and urban development where they reportedly cut 1,083 rules, 83 rules in just two weeks. They are trying to make it easier to build stuff. They are trying to make it easier for things to get through. AI-driven deregulation, the path to trillions of dollars of savings. This is the Manhattan project for deregulation. This is the first time in almost 250 years now that there's a chance to actually go down in the document stack. You're talking about regulations that have grown every single year. And now we're talking about them saying the goal is to eliminate 50% of the regulations by 2026. If you want to learn more about it, Wired magazine had this in there. It really should be focused on. You cannot be bearish on the economy. You cannot be worried about the academic side of the Fed when this is going on. Uh, final thing, uh, and important, they talked a ton about the crypto side. If you guys have not put in the time, the panel framed the new policy. This is the crypto plan as probably the most significant economic legislation and changes that we've seen in our lifetime. The concept of money and transactions is what the economy is based on. The US crypto plan is going to completely overhaul it, and people are still not focused on it in a big enough way. Tokenization is a game changer. If you wanted a license to print money in the past, that would be quite a test. Now you can say, "Give me a dollar. I'll give you a token, and this is legal whether or not you agree with it." Tokenization of real-world assets like real estate, gold, or stocks can unlock trillions of dollars of dormant value. If you own a house and you want to get some money for it, you have to go to the bank. You have to borrow money. You have to pay off interest on it. If you can use tokenization, you can go sell off a part of your house and get the cash, and you're not borrowing any money. And maybe you give them an offer on something like using the house two weeks a year. This is going to be common. You're going to release dormant value of dollars. Spend the time on it, people. Get to know it. Tokenization is the real thing. And it is happening, and is going to happen in a big, big way. We're going to see an explosion in the economy. Transaction explosion. I don't think GDP is going to be measured properly, but let's just leave that for another day. It's really as big a shift in our economy in our economy as I think we've ever seen. People don't understand the Pandora's box that this opens up in innovation. It will everything will be disrupted is basically the thing you need. If you want more on it, the final three slides, an interview with the head strategist of Tether. It was on Less Noise, More Signal. Uh, I did the podcast there. These guys are good. Uh, Tether is rebuilding the entire capital market stack, replacing not just digitizing every major layer of how capital markets operate. The primary market, secondary markets, clearing and settlement systems, custody, recordkeeping, payment rails, compliance, and reporting. This means designing finance 2.0. I'm not going to take you guys all through it. All I'm going to let you know is AI and crypto is the reason why I do these videos. This has been a major, major summer for all of them because of the AI action plan, because of the Genius Act. If you haven't spent the time going through it, the world that you left in June for the summertime has completely changed. And now we are about to accelerate into the second stage of AI, which is not about Nvidia. It's not about the MAG 7. It's about all the companies. Lattis Semiconductor is just an example of a company that's been left for dead. You're going to see cars, millions of robo taxis, which means get the transports ready, get all of the old school industrial stuff ready. PMIs are going higher. See you guys next week.