Transcription
Welcome into the reaction channel, ladies and gentlemen. So, AMD, this should be illegal. AMD stock is down. Okay, we'll speak about AMD at the top of this video. It's always of interest. Good old AMD. Seems like I got to get some daily commentary around AMD. So, we'll talk about that at the top of the video.
Then, we want to get into this. I bought two hypergrowth stocks here today. I'll share how much I put in these stocks, what stocks they are, why I bought these particular stocks, and yes, they are hypergrowth companies. So, looking forward to reacting that one. Want to react to this one that just came out an hour ago around the market. I want to hear all these gentlemen's opinions, kind of share my per opinion, perspective. Edard Denny went on Bloomberg just a few hours ago and is actually boosting his S&P 500 target on unprecedented earnings expectations. So, looking forward to reacting that one. Dan Niles, he's a little bearish. So, Dan Niles market bubble can inflate a lot more before it ends. That seems like a backhanded compliment if I ever heard one, right? um basically saying market bubble but then saying it could inflate a lot more. So looking forward to sharing my opinion and perspectives on that video there.
Welcome in to the new office reaction channel. The first video I ever did was on the main channel in the space and now this is the first video in history for the reaction channel. Um I appreciate y'all for joining me in the new office. I appreciate everybody that smashes that thumbs up icon. Thank you for doing that. I'm glad you enjoy the channel and looking forward to hopefully producing you guys a lot of great videos. And also it's a historic day. You know why? Today I'm supposed to receive the silver play button for the reaction channel which will then become the fifth silver play button uh since I started on YouTube about a decade ago. So I appreciate y'all for being here. I appreciate you being subscribed to the channel and all that good stuff.
Additionally, I want to let you guys know I released a video on the main channel last night. This stock is the next AMD or Micron. I spoke about a ton of different stocks in that video. So if you want a video sometimes people like talk about this stock, talk about that stock. I talked about so many stocks in that video is ridiculous. Okay, so you might want to check out that one if you haven't gotten to check it out. Looks like about 141,000 people have gotten to watch it so far.
Okay, already ladies and gentlemen. So AMD, listen, AMD has had a heck of a run. Okay, the last 5 days, this is even after today's 4% drop. The stock's up 6% on a one month, it's up 84% on a 6 month. It's up 75%. Year to date, it's up 101%. And on a one-year, it's up 299%. It's had a heck of a run, right? And so, you're going to have pullbacks here and there. This is kind of a weak sauce pullback to be honest. Like 4%. If anything, that shows me like AMD's got a lot of strength moving forward. Like, that's not a big pullback. Like, if this stock was really already topped and was ready to start heading down, this stock would be down 8 10 12%. after a run like it's went on. This is like a weak sauce pullback. 4% it's nothing. So, I would not be shocked at all if this one continues upward and next thing you know we have a five in front of us. So, we'll see what happens. We're in no man's land right now. That's the important thing you got to understand about AMD. We're in no man's land right now. I told you guys like, you know, the biggest thing for AMD was it had to break 290, right? Cuz that was the average analyst price target as of a few weeks ago. Once it broke that, we were going deep into the 3s. And I said once we break 380, that was the highest analyst price target at that particular time. I said, then we're going deep into the fours. And that's exactly what we've seen play out, right? So now we're kind of in this moment. A lot of analysts have adjusted their price targets. So I feel like we're kind of in no man's land a bit here, unless we break into the fives and then kind of go into the 525 to 550 range cuz that's where it seems like most of the most bullish analysts are at. Then if you break that, we're going sixes. So, you know, AMD is just a fun ride right now. You know, you have nothing in its way right now. The CPU demand's insane. The margins and the gross margins and net margins for AMD are about to just absolutely balloon, right? We have the GPUs obviously coming online this summer and then especially into the fall and the winter. I mean, that's going to be insane. And so you got CPU and GPU side that are about to just go absolutely incredible in regards to revenue skyrocketing and margin skyrocketing which was going to mean what? Profitability is going to skyrocket as well, right? And so you just have nothing in the way of AMD right now. If if the Chinese market was to be opened in the next 3 to 6 months, that would add another level of hype and excitement cuz I mean, if that market really opened up to AMD in a major way and Nvidia as well, by the way, huge new opportunity, you know, in terms of like they're not doing crap in China right now, right? And so if that market really opens up in a major way, especially on the GPU side, gosh, like that's a whole new big opportunity there. And so AMD's just got nothing in its way right now. Nothing. You know, there's just going to be more partnerships, more great announcements, right? We know the the big guys are spending a fortune on capex. They're not pulling back in the short term. There's a debate 2 years from now, 3 years from now, four years from now if they'll pull back. It's not in the short term, not in the next year or so, right? And so we know the spend is going to be insane. So you just have nothing in its way right now. And you have a lot of negativity around the market, a lot of negativity around consumer stocks, right? if that some of that can alleviate you get a new level of excitement coming to the stock and so AMD is just running man like it's just got nothing in it way analysts are still going to have to keep chasing price targets up higher right which is going to help with the algos and pushing the stock even further you have a lot of options activity and based upon what I'm seeing in the options market for the pricing on which you have to pay for a lot of these call options like it feels like these stocks AMD and a stock like Micron still have further to go you in regards to this run.
So on the fundamental side, you got nothing in the way. Just exciting things for quite some time. Valuation, you can't really look at it from a valuation standpoint right now cuz people say, "Oh, AMD's uh trilling 12 month P's blah blah blah, right? Irrelevant. AMD's got two fundamental changes in this business model going on for the next several years." So what happened over the last year is completely irrelevant when you have fundamental changes in your business model. Same thing if you your business model is going bad, you have fundamental change. Doesn't matter what you earn last year. If you have two fundamental changes for your business model going bad, it's irrelevant what you used to earn because your earnings profile is about to shrink massively, right? The same thing works on the other side. You can't even properly value the stock in the very short term because you have no clue what their margins are going to be. They're going to be dramatically higher than what they were last year and it's like not even close. The revenues are going to be dramatically higher over the next year than they were over the last year. And it's not even close. the EPS is like a night and day difference. And so to try to say, oh, you know, Tron 12th P or ran a discounted cash flow, you can't do that right now. You got multiple fundamental changes going on for AMD's business model that you just you so don't even try to make an argument around, you know, uh, valuation right now because you just can't. You just can't, right? Um, and so very exciting moment, very exciting moment for AMD. And so that's why the stock could just keep running. That's why I'm like, you know, I have the stock going to $1,100 to $2,600. The most bullish case is $2,600, right? But my realistic case is $1,100, but that's over the next several years. But I mean, I wouldn't be shocked if AMD ran to a,000 sooner rather than later because people price these things into the future, right? And there's going to when you start seeing those margins, what's going to happen with the margins, the revenue, and the EPS, the excitement is going to be insane, right? And so just understand like, you know, we're at a we're at a moment in time where people are calling bubble this, bubble that, and I'm like, dude, you ain't seen nothing yet. You ain't seen nothing yet. Oh man, fun times, right?
Okay. So on my X page, I always have my X page linked in the description area down there. Okay. And I posted this on my X page here today. If you use X, you might want to follow me on there. I said I'm about to uh I'm about to buy two hypergrowth stocks. Guess which two. And I don't know if anybody got it, but these are two hypergrowth stocks. By the way, pinned comment down there today will be if you're looking to apply to join our own private group. Demand's ridiculous in there right now. So, just understand if you do apply today, probably won't be able to see if you're a good fit to join us in there till like the end of week or maybe next week. So, just something to be aware of in regards to private group. That's access to all my course curriculums, access to the private Discord chat, see the moves I'm making every week, um access to thousandx.com, all that good stuff. Okay.
The two hypergrowth stocks I bought today are these two right here. Just a little buying day. SoFi. SoFi Technologies I bought 650 shares of SoFi. Paid571 on those. Where the next dollar is in SoFi, I don't know. Could go down to 14, could go up to 16. I don't know. And I don't care. I believe SoFi it's on its way to becoming a 50 to $100 stock longterm. And so if I can get SoFi at 14, 15, 16. A lot of the shares I bought of SoFi were $6. So, you know, it's gone up dramatically since I started buying, but the fundamentals of the company are incredible. We'll talk about that in just a moment. Celsius Holdings is the other one, CH. This one I'm buying pretty aggressively right now, especially under 30 bucks, above 500 shares here today. 2970. In regards to that, you know, you take a look at these companies earnings, right? Go to the income statements tab here for these two particular stocks. I create a lot of income statements. Um, Celsius, this was their latest earnings from a few days ago. Look at this. Revenue was up 138% year-over-year for the company. This is like hyper hyper hyper growth, right? Like this is another growth level even higher than AMD. Now, keep in mind a lot of it comes from acquisitions, but still like these are insane numbers. Income from operations up 167%. Net income was up 148%. I mean, just incredible numbers. Dul DPS up 120% for the company and it's growing triple digits across the board. That's nuts. So, Celsius is a beast. And, you know, I just like a stable business model like that, right? Energy drinks. And now we're going to look for SoFi Technologies here. Where you at? SoFi. Oh, did I go back too far? SoFi. When did they report earnings? Anybody remember when SoFi reported earnings? I don't remember if it was late. Uh, well, this is back in February. Why is it going back to February? What are you doing, Discord? March. Well, we're in May. Oh my gosh, I'm tripping. I'm tripping. Where are we at here? May. May. May. May. Where you at? SoFi. I could just search it, couldn't I? Why don't I just search it? That might be a more intelligent thing to do, huh? So, search for SoFi. Did it not pull it up? No. I need to see SoFi here. So's income statement was insane. Come on. We got to find this, baby. I got to show you guys this. Where's it at? There it is. Look at SoFi. That's what we call an A+. 31% total interest income was up. If we take a peek at net interest income, NI, one of the most important things you can look at for a banking related company, right? 39%. Oh my gosh, now I'm zoomed in. What are we doing here? 39% that was up. Total net revenues up 43%. Dude DPS up 100%. Net income up 135%. That's an A+ man. Just an absolute banger for SoFi overall.
So both those companies, I mean, here's the deal, okay? You want the truth around SoFi and Celsius. When people are nervous around the market, they don't want to own those stocks. And the truth is people are nervous about this market. And you say, "Well, but it's at all-time highs." Have you heard the commentary? Everybody's talking about bubble this, bubble that because stocks like AMD are running so heavy. Stocks like Micron, the semiconductor stocks are running so heavy. I just ran you through last night in the main channel. What I took you through that we're actually in a stock market crash right now. The amount of stocks that are down 30, 40, 50, 60, 70% is astonishing. Just because you got, you know, even stocks like I was looking at McDonald's. Did you know McDonald's at like a 52- week low? Did you know Home Depot 52- week low? Like very respected companies like at 52- week lows, multi-year lows for a lot of these companies. It's rough out there. But if you're a semiconductor name or something dealing with, you know, AI related equipment, if you're a Caterpillar, things are the best they've ever been for you, right?
Okay, let's react to some Wall Streeters, give my opinion, perspectives here. >> Make of this. It seems like part of it is a hotter than expected CPI. The headline number 3.8 28% higher year-over-year. >> So, what I find is the market does what it's going to do and then we look backwards and say what was the reason and we can all come up with one. So, if we want to use CPI, let's use CPI. But in reality, we had some very crowded trades and uh most of the damage right now seems to be the the heaviest damage seems to be contained to the SMH names. And these are stocks that are up 200%. So for people to be sitting at a micron, down 7% from its high, uh obviously in a perfect world, everyone sells at the top. >> That's literally nothing. Down 7% from its high micron. The stock's up 770% or some insane amount over the past year. Like it's just ridiculous, right? Like that's nothing. >> The reality is live by the gun, die by the gun. If you're very heavily positioned in these stocks, you've done extraordinarily well and this is the give back. and you want to say, "Oh, it's just CPI." You can do that. I I don't think the the reason matters as much. And I think when you're riding crowded trades like these, the really key thing to do is not try to guess when it'll end, cuz obviously nobody knows how to do that. Uh but position size. Like how much? >> Yes. Position size. And you know what else is important? Invest in these companies before they go on the big run. You know, these people trying to play catch-up now. They're buying they bought Micron at 800 yesterday, right? like you know there could still be money to be made micron might go to a thousand might go to 2,000 like you you don't know but I'm just saying like now it's like like the big money's already been made so now you're trying to chase this thing same thing with an AMD AMD probably will run to a thousand before it's all said and done right probably even more than a thousand and so could there be money to be made yeah but dude like the time to be buying AMD was last year when we were buying AMD when it was like a hundred bucks liberation day around liberation time last year AMD got down to like the 80s the '8s these and you had great opportunities to buy it this year. Like that's when the gamechanging money was to be made. You can still make money in these but it's just it's a lot more nerve-wracking now cuz these stocks have run so big and you're like what if we have a pullback in the market and next thing you know you're all a sudden down 20 or 30% on Micron or AMD right and while you're looking at everybody else and we're all like laughing and partying with champagne right eating at the finest restaurants because we made 300% on the stock and then somebody else invested into it and they're down 30%. and they're like, "This stock sucks." And we're like, "This is the greatest stock ever. What are you talking about?" Right? Same thing with a stock like Palanteer. If you bought Palanteer back when we bought Palunteer, it was like what, seven bucks a share, eight bucks a share back in 2022. Made life-changing money in that stock. Other people waited to buy Palunteer till it was 200. It's like, dude, you might be able to make money in Palunteer at 200 still and might go to 400, whatever. But I'm just like, you you missed the big money. Like, it was out there for you. So, that's what happens all the time in the market. People chase late. You can still make money late. You can get more lemon squeezes out of it. It's just man, you missed the gamechanging money. And so then it's about finding the next one. >> Have do I still do I have so much more of uh Western Digital today than I had when I put the trade on 3 months ago? Of course you do because it's gone parabolic. So you can manage, you can stay in these positions if you want to. You can remain allocated to the AI capex theme, but recognize it's not early. way more people have. >> The scariest thing is with these stocks like Micron could be down another 78% and you're stopped out, right? You got a stop loss on it and all of a sudden the very next day Micron's up 15%. And you got stopped out the previous day and dude, are you kidding me? Like don't mess around with this trading stuff and chasing just invest for the long term and call it a day and party on, man. you know, I I don't care if AMD goes down to 380 or up to 480. Like, you know, my long position, you know, I believe it's going to go to a,000 plus. So, like, you know, whatever happens in the very short term here, the fluctuations like it is what it is. >> Knock now to sell then then uh >> and when you own semiconductors, boy, you better be ready for volatility. Semiconductor >> going to get new buyers and if you have an appropriate position size, you can live through it.
>> All right. Uh Josh pointing out some of the SMH names. There's a lot of crossover when it comes to momentum names as well. Joe, coming over to you. You're a big uh proponent of the momentum trade. Barkley today upgrading momentum actually from neutral to positive >> now. >> Well, really, >> however, I mean, I'll read part of we upgrade momentum from neutral to positive as the rally has proven resilient amid the renewed risk on environment. Concerns around crowded positioning as Josh has talked about are mitigated by fundamentals with momentum delivering the strongest earnings profile. However, today the MTUM ETF pulling back quite a bit, down more than two and a half%. A lot of lot of crossover though, Joe. A lot of chip names there like Broadcom and Intel, some of the top holdings there. >> Yeah, that's like becoming a Knicks fan when they're up 3 0 against Philly going into the fourth game. Um, look, momentum has had a very powerful rally in Q2, up nearly 30%. And I believe one of the driving forces behind the Q2 recovery that we're experiencing is isolated to that momentum factor. Now, a couple of things related to it. Josh talked about positioning. I'm always looking at positioning. Goldman Sachs last week puts out a report that says over the last relative to the last 5 years, positioning and the momentum factor is in guess what the 100th percentile. So we know positioning is full as it relates to allocating towards the momentum factor. You're now past earnings. So what else is going to feed that momentum factor other than price alone? And then what tends to really be the oxygen for the momentum factor is the rate environment. If you think back to when the significant outperformance for the momentum factor began, it was in the fall of 2024 and it correlated with the change in monetary policy and the beginning of lower rates. So the momentum factor likes lower rates. Am I surprised today that the momentum factor is down 2.8%. Not at all. I've talked about that over the last several days. It could very clearly unfold. And the question is, does it extend over the next several days? I wouldn't be surprised to see it do so. You have the S&P which is sitting somewhere close to 7% above its 50-day moving average. So, you just kind of understand this is the environment. This is what has been the winning strategy in the current quarter and you're now giving back some of that outperformance and over the next several days it can continue. Be prepared for that. I don't think you jump up and down and say, "Okay, I'm going to add to positioning because I'm getting the momentum factor down 2.8%. 8%. I think you just have a little degree of patience here.
>> All right. So, you're mentioning higher uh rates right now. Part of that is the CPI story, the fact that it's higher than expected. So, I want to come over to you, Snipe. Um, how are you viewing this higher than expected CPI? A lot of notes came out today. I'm going to point to one from Julia Herman from New York Life. She says cuts are still possible. Um, I think a lot of other people are looking at the other central banks around the world. They're actually hiking rates and that's a bit surprising. I think that point of view from her. What is your thoughts on the impact of CPI in this market? Josh says we got to look back and look for an explanation. But do you think this is a big reason for the pullback? >> I mean, relatively in line, right? I mean, the on the on the uh top line, you know, uh headline, I should say. CPI 3.8%, highest it's been in two years. Um more concerned about core as I look through the bleed through that was obviously a little bit hotter uh than expected. But to Joe's point, I mean, yields are up across the curve. I think that's also a story as you kind of look to what's been flying. Obviously the um you know the semis are now 15% of the of the index. You know crude's up 4%. You know I think these are and and we're taking a brever. You know we we've run a lot. The SMH is up 25% in the last month 50% year. >> You know people have very misunderstand how the market reads a little hotter inflation report than this. They think oh that's bad news. No. No. Here's why. When it comes to big corporations, right, which is what the stock market is, those companies, it's a 3% CPI. They would rather have it than a 2% CPI. For the majority of those companies, they're going to end up being able to increase revenues and keep margins the same for the far majority of great companies, right? Like these are the strongest of the strong companies. So that means their revenue growth can be even a little stronger, which means their margins are going to at least come in. sometimes their margins actually go up in this sort of environment and we've seen that a lot like you could look at countless companies over the last you know 3 4 years when we've had way higher than inflation than the previous 3 or four years right and yet despite that company's margins a lot of these companies margins have been going up right while revenues also been increasing at a more rapid pace the worst thing for big corporations is deflation deflation disaster for all corporations right um that means their revenues are likely going to go down. When their revenues go down, the margins go down rapidly. Like their operating leverage is just eroded completely and you could see a company all a sudden with, you know, 6% revenues down, but their profits down 60%. Is dramatic. And so the market worries about inflation if it's so high that it makes the Federal Reserve raise rates. That's when the market gets concerned. But we're not even remotely close to that. you would need a CPI 5%. For them to say, "Okay, we got to start raising rates again." And so, you're not even remotely close to that ballpark. And uh obviously, we know a lot of this just has to do with oil prices going up so dramatically, right? And gas prices. So, that's the other thing. It's going to read through that. And you know, yeah, gas prices are really expensive. Oil price really expensive. 6 months from now, 12 months from now, it could be totally different. It could be much more expensive. It could be much cheaper. Like, you know, that that moves around. So, you can't freak out too much about that. Um, so, so for me, I think it is a little bit of a mixed bag with all these factors. Um, and I think to to Joe's point as well, I think it it deserves a degree of patience and prudence going forward. I think it could create opportunities, but let's see how this thing plays out over the next >> days. I think that's what I'm watching for >> when I think of patience and prudence. Who else? Jim, >> buddy, thank you. Well, listen, I've had six minutes here to listen to what everybody said. Great stuff. No, it's wonderful. It's wonderful. Um, the postfacto analysis that Josh, you're referring to, I agree that is quite often what we do. There's another sort of phenomenon though in the markets that when the markets are rallying in the face of bad news, we tend to brush off uh the bad news. And there has been a lot of bad news, mainly on the Persian Gulf recently. And yet, just yesterday, we were setting an all-time high uh in the S&P 500. Where I'm going with this is there are some things that I do think are troubling that may actually rear their ugly head in the not too distant future. So this is before the fact. I'm saying I'm not, you know, I'm not getting overly worried, but look, the straight of hormones is still closed. All right? And uh, you know, if we go back a month, 6 weeks ago, we would have said, "Oh, it's going to be over by the end of March. It's going to be over by the end of April." And yet here we are. Gas prices are high. Diesel prices are high. Fertilizer isn't getting through. Aluminum isn't getting through. And the price shocks that we see today in the CPI are likely to continue. So I'm not trying to, you know, shout fire in a crowded theater, but I will say that, hey, the chances of a rate hike by the end of the year have crept up to one in three. Now, that's a very, very sporadic Fed funds futures market that can change tomorrow. I will grant you. I'm just saying there's some things that maybe we shouldn't ignore. Um, with regards to what everybody's been saying though about the recent price action, look, when you have things going parabolic the way the semiconductor industry has and particularly a name like Qualcomm, it's probably wise, and I'm going back to what Josh said, to think about your position size. I did that with Qualcomm and I'm taking half off today because basically what I think has happened is that future gains maybe into 2027 have been brought forward to the present day. I'm not completely abandoning the position because I do still have the investment thesis both of the handset market picking up and diversity at at Qualcomm away.
>> See, this is a move I worry a little bit of more about with Qualcomm there. Qualcomm down 13% today. That is a move that if AMD made that today, I'd be like, "Oo, shoot." Like, maybe this run is kind of wrapping up. AMD's move is a baby move. This is a baby move, man. Look at this. Oh my gosh. Now it's only down 3.2%. This is a baby move, you know, but when you see something like a Qualcomm down 13%, that's a move that worries me much more about like, oh shoot, like >> handsets into automotive and into data centers as well. But still, I've got to respect the market action and I'm taking about half off.
>> All right. So, you're taking some some money off the table when it comes to Qualcomm. You think the action when it comes to their business, when it comes to phones and autos is being pulled forward or is it the other things that people >> The share price is being pulled forward, the share price returns are being pulled forward. reports are going to get into AI devices. So, you think that's already priced in, that's already been pulled forward as well? >> Yeah, I I do. And, you know, we had this and Jason and I have talked about this a few times on the show in the last week or so. We had this earnings report from Qualcomm a couple of weeks ago. You know, it wasn't actually that good. They lowered guidance for the quarter ahead, but everybody seized on this fact that they've got some unnamed data center client uh for their chips. That actually wasn't news, Jason. That wasn't news for those of us who have been in the stock, but the market seized on it. Use that as the reason. You know, Josh, this is maybe exactly what you're talking about. The price goes higher and it looks for a reason. And the reason was something that anybody who's been in the >> This is where you got to differentiate between like a Qualcomm and let's say an AMD, right? Qualcomm is riding on hope. Hope of we might have some data center client, hope of, you know, we might just magically compete in these markets very well. AMD is not hope. AMD is two fundamental changes. CPU demand's going insane. It's going to benefit them in a massive way, right? GPU demand's going insane. The 450 series is about to get ramped here. They've got customers lined up. All the big customers you could possibly want for these chips. It's not riding on hope. It's riding on we're about to make so much money, you can't even believe it. Our margins are about to go insane. Our earnings per share is going to skyrocket for the next several years. It's not a story on hope. It's a story on fundamentals. And that's where you got to differentiate between a stock like a Qualcomm and a stock like an AMD. Qualcomm, who knows like what happens with that stock over the next 3 6 12 24 months. Like I wouldn't be surprised if it flat lines. I wouldn't be surprised if it goes up. I wouldn't be surprised if it goes down. We know what's going to happen with A&D, right? And so not all these stocks are the same.
Ed Denny, >> outside of recoveries, GFC, the pandemic, strip that out. Outside of recoveries, when was the last time earning season and projections for earnings were this good? >> I I don't really recall anything like this. It's been extraordinary. Uh the first quarter earnings uh expectations really weren't uh all that bad coming into the first quarter earning season. Actually, they were holding up pretty well. And uh instead, they turned out to be much better. And in top of that, they're the analysts are raising their second, third, and fourth quarter numbers. Uh, so now it looks as though we're going to have something like an 18% year-over-year increase in the first quarter and for the year as a whole, they're expecting 24%. And that's definitely unprecedented. >> Wow. 8250. Whoa. New S&P 500 target. Okay. Edar and Denny very bullish. Very bullish. The previous gentlemen, I mean, they were all kind of a little more cautious, let's call it. Not necessarily bearish, but definitely cautious. Uh, Ed Denny, not be not bearish. not cautious. Bullish 8250. He believes S&P 500 is going to by a year end. Wow. >> Kind of double digit gains you see coming out of a recession. Uh, you don't see it in an economy that's been growing for a while. >> Ed, looking across industry groups, the semis right now make up about 18% of the S&P 500. How much heavy lifting are the chip players doing? Well, I think that's part of the story, but uh we're also seeing that the u earnings expectations for the small caps and the midcaps have been going up to to record highs. Uh th those two areas of the market were actually sort of in a coma uh flatlining since 2022 in terms of earnings expectations. And then over the past 6 months or so, we've suddenly seen them picking up and going to to new record highs. So I I think earnings breath is actually improving and if that's the case that should lead to an improvement in the breadth of the market.
>> How sustainable is this Ed given the fact that we're hearing about consumers increasingly pushing back on price increases increasingly being choosy as a result of uh some of the inflations they're seeing across the market. >> Well, you mentioned it before. there's a widespread belief that this is the K economy where a lot of people are facing an affordability crisis and only a few people are doing well. Uh I think that's uh I'm not dismissing that but I think a lot of that misses the impact of demography. I'm I'm a baby boomer. I'm still working for a living. Uh but I'm seeing a lot of my friends retiring and the baby boomers collectively have a record $89 trillion of net worth and they're starting to spend it. So all this anxiety about disposable income going flat. Well, that that's natural. I mean, baby boomers are at the the peak of their careers and they're retiring, so that's going flat. Meanwhile, they're spending their uh retirement uh assets, and so they're continuing to spend. And I think a lot of baby boomers uh are helping their young adult children maybe with mortgage payments, helping out with the grandchildren's afterchool activities, some of the fees there. I I see this from personal experience as well as for my friends and um so I I think that's what's missing here and that explains why the consumer has been so remarkably resilient and I think that continues. So I I don't really buy the idea that this economy is just being propped up by the capital spending on technology behi just brought up a phenomenal point. Did you know I retired once in my life? It's true. I retired for once in my life. Uh I was 24 years old and I retired for over a year and I just hung out. I still invest in stocks obviously but um I didn't do anything income related. didn't try to get a job, didn't um you know, I just lived off savings. I had about 200,000 maybe um in stocks and so I just pulled money out of the my portfolio to like pay the rent, lived in like a three-bedroom apartment was like $1,150 a month and stuff like that, right? But um one thing I'll tell you about that is you're more likely to spend a lot more money when you're retired. You know why? Cuz you just have so much more time on your hands. So you're like looking for stuff to do, right? So you're much more likely to go golfing. You're much more likely to go out to eat. You're much more likely to go to the mall because you get bored and you're just like, I want to do something, right? And so you know, because when you're working, right, you like that takes up 40, 50 hours a week, maybe more. Depends if you have a commute and all those sorts of things, right? It takes up a lot of time. And that time is busy time that you can't be spending money because you're making money, right? And you're at your job, you're doing that thing, right? You're working on your business. And so, yeah, all these baby boomers retiring, they're going to spend a lot of money because they got a lot of money. They got a lot of money and that money is gonna feed into the economy, right? And um you know, all the things that baby boomers like to do, like it takes a lot of people to do that. Whether it's talking about going golfing and all the people running the golf course, right? Whether it's talking about going on cruises, it's a lot of staff. Whether it's talking about going on vacation in this hotel, coming out to my city, Vegas, baby, come on out to Vegas, that's a lot of staff. like anything they want to do, go to the restaurants, go do this, go do that. Like it's all people business, right? And so, um, that's an interesting point. I, you know, very interesting point. Great point by Ed Yarn Denny right there.
>> A few companies. I think the consumers are definitely there and the weakness of the consumer in the fourth quarter and the first quarter was weather related. So, we're about to test that. We'll see what retail sales looks like up ahead here. um and um put it all together and I think the economyy's remains resilient as it has been since the beginning of the well I call it the roaring 2020s and so far so good.
>> If that's the case Ed then isn't it true that we would see a more sustainable inflation rate moving higher as a result of the increased consumer spending power the uh increased amount of money and frankly supply shock after supply shock that's hit the economy. Yeah, that's a that's a good point and I I I think it's uh we have a recent example of uh what can happen and that was in 2022 when we saw uh a spike in energy prices but that was on top of supply side disruptions and uh you know supply chain disruptions and you could argue that the same thing is happening now but the big difference is wage inflation is really moderating and u we we're we have a labor market that's in equilibrium supply equals demand And so we're not seeing a lot of upward pressure on wages whereas we saw a tremendous amount of wage pressure in 2122 when there was a lot more demand and supply of labor and that led to a wage price spiral. So I think what's missing on the inflation side this time is a wage price spiral. Uh we certainly have an energy spike and that'll certainly uh lead to higher inflation for the next few months. But uh I think both the bond and the stock market have basically looked looked through it. By the way, I I I kind of view bond yields of four and a quarter percent to four and three/4ers percent as normal. I'm not getting freaked out by it. Um that, you know, suddenly we're we're going to see the bond vigilantes act up, though, you know, I'm watching them. Right now, the bond vigilantes are acting up in Tokyo and and in London. Um I I don't see them uh here just yet.
>> So, Ed, with that in mind, just build on that. When does it become a threat this move in fixed income? >> Well, it's interesting. you know, a couple years ago, I think it was in 2024, we saw the bond yield going up from 4% to to 5% in 3 months. Uh that was August, September, October. Uh and uh it got up to 5% uh on November 1st and Janet Yellen, who was Treasury Secretary back then, said, "Okay, okay, we're the Treasury is not going to increase the supply of bonds. We're going to do our increased financing in the T-Bill market." And so the bond gelanes are not the only players here. And and by the way, the bond yield came tumbling down. And so the Treasury and the Fed could still uh intervene in the market to keep it from going above 5%. And on top of all that, I think we still have the carry trade going on where I think a lot of hedge funds are in fact uh sitting there in the Cayman Islands or at least their books are sitting in the Cayman Islands uh borrowing in Japan at 0.75% and buying bonds and getting a nice spread on it. Do you think Kevin Walsh has got appetite to use the balance sheet the Federal Reserve to intervene in the Treasury market? >> Uh well I think Bessant uh Treasury Secretary Bessant has the appetite to do what he was against doing when when Janet Yellen did it and that is issue more more bills and fewer bonds if if that's necessary. I don't think they're they're going to just kind of sit there and let the bond deal go from 5 to 6%. Uh and I don't think it's going to go there. I think there's a lot of uh the bond is the US bond is still viewed as a safe haven and there's plenty to to reasons to worry about things these days.
>> It's just people always find a way to make a buck, right? Like it's just crazy, man. Borrow money in Japan, be on the Cayman Islands and uh go and buy US treasuries, right? Make the spread there. Just just cracks me up. Okay, next one up here. market bubble can inflate a lot more before the end, says Dan Niles. >> This is not Pets.com when everything, you know, had a couple dollars of cash flow and was tripling overnight. Do you really see the similarities between the behavior of these stocks now and then? >> Absolutely. But it doesn't mean this can't continue. And that's the analogy I'd like to to make because if you go back to the internet buildout. So you had the Netscape Navigator come out at the end of 1994 and the NASDAQ over the next 3 years was up 109%. You get to year four though and NASDAQ was up 40%. And then in year five in 1999 it was up 86. So you look at when chat GPT came out at the end of 2022 and you're three years into this. NASDAQ is up 122%. So first three years of the internet was up 109 and I think this is going to be a great year as well and the point is that you had two more great years back during that period of the internet buildout and I think you at least have one more great year this year. So you can be >> okay what he brings out here a phenomenal point. Listen, you have fundamental changes that happen with business models. We spoke about that earlier. AMD, CPU, GPU, blah blah blah, right? You can also have fundamental changes that happen in the stock market overall. And a fundamental change bad, right, cause the stock market to go down dramatically. A fundamental change for the stock market for the good side, I mean, that's when you're talking about stocks that's is party on, right? And we're going through a fundamental change for the good side right now, right? And this is such a big fundamental change like AI, you know, like it was pretty irrelevant subject three or four years ago unless you were super into tech, right? Like people weren't really using AI in any way. Corporations were not using it. Now it seems like almost everybody is using AI and this all has just happened in the last like really like the last 24 months. Last 24 months now seems like almost every person is starting to use AI in some respect whether they realize it or not, right? And then it seems like basically every corporation is coming up with
Some sort of AI strategy or AI tools or using AI this or that and this and that, right? And so obviously, you know that because what's happening with OpenAI's revenues are absolutely ballooning, right? What's going on with Anthropic? The revenues are going insane. Like, I heard the latest numbers that got leaked out of there is ridiculous in terms of their rate of growth. That is like astonishing, right?
Um, you're seeing it with ServiceNow's AI product, right? You're seeing it with uh Salesforce Agent Force numbers. Like, you're seeing it in the numbers. You're starting to see it with the cloud companies even, right? You're even seeing with a company like Meta. Like, Meta's revenue growth was 33% last quarter. That's an insane number. Like, for Meta, a company that size, 33%. But you're seeing with AWS continues to accelerate growth. Google Cloud, oh my gosh, is that the growth rate is insane. I think the last quarter was, I want to say like 63%, I want to say for Google Cloud. Like, that's an incredible number. So you're seeing it with companies, and then we obviously talk about all the semiconductor companies that are benefiting, the infrastructure companies that are benefiting. And so it's a fundamental change that's going on for the stock market right now. It's a very, very good thing, right? And so, um, yeah, party on, party on.
>> Bubble, but still have it inflate a lot more before you get to the end of that. >> What caused it? And I, I will add as well. I mean, I have only vague memories of it, but they were enough to know. I mean, back in the era of magazines, right? You'd get these magazines and you'd have these cover stories of all these high-flying companies and everybody was day trading. It was a total phenomenon. I'm not sure we're there yet with the public right now.
>> Oh, absolutely not. And that's, but more important than that is what's going on fundamentally. Back then, it was just internet traffic doubling every quarter or so. And that kind of kept it going. This time, you had a very major event happen at the beginning of this year, and that's basically open claw got finalized on January 30th. And a >> very important thing to understand about this if you want to compare it to the internet age and that that whole situation, this has taken off way faster. Internet age came along slow compared to AI. Like, you know, a lot of people, you could say, okay, people started getting internet like '94, '95 for the most part, right? Um, you know, in terms of like consumers, but a lot of people still didn't even have internet till we started pushing out to '98, '99 or even into the 2000s, you know, before people actually got internet in their homes. And still, even then, a lot of people didn't have it. Now, it seems like almost every American home you could possibly find has internet of some kind, right? It could be through their phone carrier, or it could be through, you know, like an actual internet provider. Like, that took a long time, long time before it became commonplace. AI, it seems like almost everybody is already starting to use AI, and this has just happened really in the last like 24 months. And if they're not using AI yet, it seems like within the next 12 months, they'll be using AI in some way, either for their work or for their personal life. So that's incredible, right? This is going way faster, way faster than the internet age went, right? And the companies were building way bigger than anything we saw in the internet age. That kind of ushered in this whole agentic AI thing where before, Kelly, right? You would ask your ChatGPT or Gemini question and it would give you an answer. So that's just chat-based AI.
>> With agentic, you may say, "Hey, go to the SEC website, pull this down. Go to CNBC, pull this down. Go to, you know, whatever website, pull down some stock information, and then put it all in a spreadsheet, and I want you to conform it this way."
>> That takes 10 to 100 times more compute power.
>> Don't do that. Use thousandx.com. It's so much better, so much easier. Like, that's ridiculous. Ridiculous >> to have that happen. And you can see it in the token. do it a lot better in like in seconds for you.
>> Data where the two months prior to open claw being finalized, token growth was about 20% over the prior two months. And in the two months after open claw was finalized, the growth was over 120%. And so you should see at least strong growth, in my opinion, through the beginning of next year, and then you're going to lap those harder comparisons, and then we'll see what happens. But that's one major difference, at least between now and I think year four and five of the internet, is you have this major step change in token generation that you need right now.
>> Remind me, what was it that kind of pulled the rug out, uh, from under the tech trade back? It was what, March of 2000 that things peaked? Do you remember if there was a story or a data point?
>> Oh yeah. No, there, there's 100%. Like, well, you got to remember what's what kicked the bubble off. Believe it or not, 1998, the Fed was cutting rates. So easy money kind of kept going. And then in 1999, even though the Fed ostensibly started to raise rates starting in June, remember there was this thing called the Y2K scare, right? You were going to get to 2000, computers were going to crash around the world. So the Fed was flooding the markets with money underneath this. And so M2 money supply was up over 10%.
>> And so that kept lifting that. Then you got into 2000, oil prices, by the way, spiked. And then the Feds started withdrawing that liquidity because computer systems did not crash on January 1st of 2000. And so you take away those two things. Internet traffic went from doubling every three months to doubling every year, which isn't bad. But that slowdown was not what was built into the valuations. And then NASDAQ went back down to where it was in the middle of 1996, declining 86% over two and a half years.
>> And then >> so >> yeah, that's the other side of it.
>> Yeah, 100%. The good offset you have here. By the way, if you guys didn't get to check out this video, definitely check it out. Um, 141,000 people got to see it so far. Came out 20 hours ago. This stock is my next AMD, Micron. Uh, man, we've talked about a lot of stocks in that video. But, um, the the interesting offset we have in this situation that you didn't really have in the tech bubble, you, I mean, there's so many differences. I'm not going to go into all of them, but one of the ones I think about is let's say, let's say Meta, Google, Amazon, you know, all these big tech companies, Microsoft, go through the whole list of them. Let's say they cut down on spending two years from now. Okay? All of a sudden they're like, "We're cutting down, right?" Well, that'd be not good for AMD, for Micron, for Nvidia, all those sorts of stocks, right? And so semiconductor stocks go down. You might think, "Oh crap, we're stock market screwed." Well, I can make a very strong argument that then the cash, obviously the cash flows of of, you know, the free cash flow of Amazon, Meta, all those companies would skyrocket because they wouldn't be spending as much then, right? Uh, which then you could say those stocks might actually be the play because the main reason people don't want to buy, like, why is Meta stock stuck at $500, $600 right now? Why is Meta stock not a thousand today or 2,000? The reason is because they're spending so much and everybody's like, "Dude, you're spending every dollar that's coming in right back out and we don't even know like what ROI this is going to get or if this is even going to get us in a good ROI." So therefore, no one's excited to buy Meta, even though they have 33% revenue growth, which is absolutely ridiculous for a company their size. Still, people are like, "Don't no, they're spending way too much, right?" So if Meta was all going to say like, "We're going to spend half that." Oh, Meta stock goes to a thousand almost overnight. A thousand be awkward because then they'd have to say, "Oh, like, why are you guys cutting down so much?" It'd be like an awkward phase, but a thousand like that. So, but it obviously wouldn't be good for AMD. Wouldn't be good for Nvidia because Meta's spending 135 billion or whatever they'll spend this year. We'll see what the numbers end up shaking out. Uh, guess where a lot of that money is going? AMD's pockets, Nvidia's pockets, right? Um, MU will be a big beneficiary of that, I'm sure. Something to keep in mind there. Okay. Hope you guys enjoyed today's beast of a video, 47 minutes. Uh, once again, my private group, that will be the pinned comment down there. Demand's insane right now. So, definitely get in your application and uh, we'll try to get to you as soon as possible. And we'll send you your Steel membership cards to your house once you join us in there. Much love and have a great.