The Biggest Short Squeeze of All-Time (EP. 467)

13:53Ben Carlson:Yeah, obviously.

13:54Michael Batnick:The market's way bigger today. But yeah, we are in a moment. So last week, Anthropic raised a$65 billion Series H funding at a$965 billion post-money valuation. And then four days later, they said, we're going to IPO2 later this year. They filed their S1 yesterday. I haven't had time to go through it.

14:16Ben Carlson:I love how the headlines all say, Antropoc confidentially filed the S1. It's not confidential.

14:22Michael Batnick:We're all talking about it. I know we keep saying this, but it is the fundamentals driving this. Now, it's hard to know how much of the pie is excess speculation and excess euphoria. Obviously, that's a part of it. Investors are rightfully excited. but last week, Dell raised its outlook for the year. After sales climbed 88%, it now expects -

14:48Ben Carlson:It's crazy that Dell is still a company. Like, Gateway missed its moment here. Where's Gateway Computers?

14:54Michael Batnick:Not only is Dell a company, it's a gigantic company. It now expects full-year revenue to be 165 to 169 billion, up from a prior range of 138 to 140 billion. So the stock gapped up 38%. We just have to keep reminding ourselves that this is being driven by fundamentals. Here's a quote that I want to share, Ben.

15:15Ben Carlson:To me, the weirdest thing about this is so many of these companies have been around for a long time. Intel, Dell, Micron, Western Digital. These are not new companies that are springing up. These are companies that have been around forever. Correct.

15:28Michael Batnick:In technology terms, at least. I have been I tweeted this quote in 2017 from the pseudonymous Adam Smith he wasn't really pseudonymous but he went he penned his books under Adam Smith he wrote the money game which in my opinion is the greatest financial book ever written at least it's my favorite and he wrote a book called Super Money. And to me, this perfectly describes how we are all feeling about the bull market. We are all at a wonderful ball where the champagne sparkles in every glass and soft laughter falls upon the summer air. We know by the rules that at some moment, the black horsemen will come shattering through the great terrorist doors, wreaking vengeance and scattering the survivors.

16:21Michael Batnick:Those who leave early are saved, but the ball is so splendid, no one wants to leave while there is still time. So that everyone keeps asking, what time is it? What time is it? But none of the clocks have any hands. Is that chef's kiss or what? And I tweeted that in 2017 because at that time, there were so many. there were so many people wondering, begging, when is this great ride going to end? When is the splendid ball? When are the lights going to go off?

16:56Ben Carlson:I think you just have to have an open mind about this. And that's where I am, is that I know all the historical parallels. I do get worried that, oh my gosh, this is the excesses we've been waiting for that could tip us over and like honestly lead to a recession if the excesses get too big and there has to be a pullback. So that part does worry me. But I think you just have, if you don't have an open mind about what technology has done to the markets and to our lives in the past 15 years, then you haven't been paying attention.

17:22Michael Batnick:I think that's the right posture. The right posture is obviously not oblivious to the risks. How could you be at this point? But an open mind that this could go on for a lot longer than you think, and that some of the run-ups are justified. And have the Bulls not earned the benefit of the doubt?

17:42Ben Carlson:I got the bearish take later in the doc, but let's talk about the bulls more. Micron, this company went nuts. So this is all the$1 trillion. So you made this chart, it looks like. How many stocks is it now? 10, 11?

17:55Michael Batnick:This is the 11th.

17:57Ben Carlson:Which is crazy. So every stock in the top 10 of the S &P 500 now has a trillion-dollar market cap or more. Just nuts.

18:05Michael Batnick:Ben, think about what's not a trillion-dollar company below Micron. you know what I don't see on this chart? I don't see JP Morgan. I don't see Walmart. No Netflix. Well, forget about Netflix.

18:20Ben Carlson:I don't know. I'm just thinking of household names.

18:22Michael Batnick:But Walmart and JP Morgan are smaller than Micron. Okay. I guess.

18:29Ben Carlson:It's kind of cool to see Eli Lilly on here too. So Bloomberg had some charts here. Trading days between$500 billion and$1 trillion market cap. Micron is the fastest in history. And guess what? The next two are also happening now. Samsung and SK Hynix. which is, and like Microsoft and Berkshire took a lot longer, okay?

18:46Michael Batnick:Look at Alphabet. That wasn't like that long ago. It took Alphabet over a thousand trading days. That's four years.

18:55Ben Carlson:Bloomberg has Micron's earnings are expected to explode higher. This chart doesn't look real. So it shows they're trailing 12 months earning per share going back to 2017, and then the average analyst estimates for the next three quarters. And it's a tenfold increase. five-fold increase, it looks like a totally different chart to your point about the fundamentals. The crazy thing to me is just that it wasn't like two years, even a year ago, people were saying, this is going to happen. These memory stocks, that semiconductors are going to take off like this. This wasn't something people were foreseeing in this whole thing, right?

19:34Ben Carlson:This is a new thing that no one was pounding the table saying, these are the stocks. To your point about happening fast, This happens so fast. And the re-rating and the earnings re-ratings and the stock re-ratings of these, it's just, it's nuts.

19:48Michael Batnick:I want to give a shout to Roundhill for the greatest ETF launch of all time. So they launched DRAM in early April. The ETF is up 127%.

20:05Ben Carlson:Oh, I've had this later in the doc. They sent out an email today. So listen to this. This is from Roundhill. The Roundhill Memory ETF, ticker DRAM, surpassed$10 billion in assets under management in only 35 days, faster than any ETF in history.

20:19Michael Batnick:Wow. Holy crap.

20:21Ben Carlson:$10 billion in 10 days. So this is all those stocks that we just talked about. Micron, Sandisk, SK Hynix. It's only like six stocks, essentially.

20:28Michael Batnick:Oh, I don't know about that. I have no idea. I don't know what the whole thing is.

20:31Ben Carlson:That make up the majority of it.

20:32Michael Batnick:Okay, I would assume it's a bigger basket than that. But there's$14 billion in assets as of yesterday. This is credit to them. These guys are good, but better to be lucky than good. Unbelievable. Love to see it. Good for them.

20:46Ben Carlson:Okay, all right. Sorry, yeah, the top stuff, but oh, man.

20:51Michael Batnick:So we shared a chart on TCAF, the distance between SMH and its 200-day moving average, and there's nothing in history like this. At least, well, I'm sorry. It goes back to 2001, so maybe it's crazier in 99. but for goodness sakes, like if you are putting new money in here, I'm just have some sort of an exit plan. Like you gotta, you gotta fight. You gotta fight the fear, fight the, fight the FOMO. Well, this is the kind of thing where you said to like, people have such big profits here that

21:24Ben Carlson:there's going to be a time when these stocks, something happens and people, okay, my gosh, I need to, I need to lock these profits in now. And there's going to be a huge cascade of selling, Even if it's like a one day or one week thing.

21:34Michael Batnick:I keep saying this. When Micron reported its blowout numbers last quarter, blowout numbers, the stock fell 30 % in about two weeks, three weeks. And that was, guys, that was like in March. So I'm not, I don't want to be that guy. It's super lame, but just be careful.

21:52Ben Carlson:Yes, there's going to be those stats that say, oh my gosh, these stocks are on 30%, but still up 400 % for the year or whatever.

21:57Michael Batnick:And by the way, we own a lot of these names in Porterhouse. Like we own a lot of these names. And if and when they break our, whatever our rules are, they'll get sold.

22:06Ben Carlson:Yes, that's the point of momentum strategy. The AI trade is global. This is one of the things that I've kind of been talking about for a while and wondering or predicting whatever you want to say. So Michael Semblis looked at a basket of Chinese AI stocks and a basket of US AI stocks. And this is going back to the start of 2024. And they're essentially following each other beat for beat. Chinese stocks are actually outperforming a little bit. Going back to the same thing, the emerging markets ETF versus the NASDAQ 100 has kind of tracked it pretty similarly and are up about the same as each other since the start of 2024.

22:38Ben Carlson:So this is the kind of thing where this is not just on our shores anymore. This is a global phenomenon. And I've been thinking that AI, the internet really didn't level the playing field as much as people thought, I think, in terms of like US domination of the world. I think AI might be the thing that does it. That sort of brings the rest of the world up to us. I think it's possible. All right. I want to give the AI bear case now and talk about my favorite new macro podcast. So T.S. Lombard has a podcast. Dario Perkins is a guy I follow on Twitter. They have three macro people. They're all British.

23:14Ben Carlson:And they make macro calls. And then if they get it wrong, they all rip on each other on the next podcast. I love that. So I really enjoy it. So they said, let us lay out the bear case here because everyone has the bull case. So Dario Perkins says, I did the numbers. 80 % of the revenue right now is circular, meaning it's going from Google to Oracle. It's the CapEx from one company going to these other companies. So a lot of it is, he's saying, it hasn't quite broken out yet to the wider world of businesses yet. A lot of it is still circular. So all this CapEx we're seeing is them shuffling the chairs around, so to speak.

23:51And he's saying, if we don't see the leap, then that's a worry.

23:56Ben Carlson:If it's just these companies spending with each other. And it's interesting. Ben Thompson on his podcast last week said that NVIDIA is now starting to break out their quarterly numbers by hyperscalers versus non-hyperscalers. Because I'm sure they're getting crap about this. Like, hey, is this just a big circle jerk? What are we doing here? So anyway, it's worth a listen. So it's called Global Data is the name of the podcast. I think it's worth a listen for the bearish take. Because I think we are now in the camp that I feel like the bearish takes before an AI, we're kind of getting the most oxygen.

24:29Ben Carlson:And now I feel like the only thing you hear is bullish. So again, trying to keep an open mind. I want to, I want to think about both of these things still. And like what I should be looking for, for like mile markers and goalposts to be like, all right, fine. That bearish trope, that one was knocked down. Right.

24:44Michael Batnick:Anyway, you know what, you know what I found, you know what I found really helpful for me early in my journey as a young investor. I used to write down everything. When I bought or sold something, I would write down what I was doing. And Ben and I have joked about this in the past. In 2011, I think I shorted Amazon. And I would frequently reread what I wrote with a passage of time. And I don't mean years later. I mean, three months later, I would look back. And believe me, it didn't take very long before I discovered that I was not, in fact, the next Stanley Druckenmiller. And if you do that, especially in a time like right now, because whatever happens, it will have appeared obvious in hindsight for the most part.

25:31Michael Batnick:And I would say, listen, if the bull market goes another year, if we're up 30%, I don't think anybody's going to be like, not anybody. I don't think a lot of the narratives are like, well, well, of course we're up another 30, blah, blah, blah, blah, blah, blah, blah. Right? Like there will be more disbelief in my opinion. But if we're down 30%, everybody will have seen it coming. Everybody will have said it was so obvious. Oh yeah? Okay. If you think it's so obvious that we're in a bubble, then sell or short or whatever. But write down, write down. It's really, it's a really helpful exercise. Write down how you're thinking before you buy or sell something and do that for a couple of months and see if it doesn't sober you up about your own abilities to predict the future.

26:12Ben Carlson:Yes, I agree. That's one of the reasons that I like having a blog because it keeps me honest with that stuff. And it's one of the reasons that we have policy statements for our clients, writing stuff down, reminding you of your goals and why you're investing. Duality Research had a good one showing that this is really a tale of two bubbles, or not bubbles, two bull markets. Sorry, I got bubbles on the brain here. Also, the other thing is no one can time a bubble. No one can do it. It is impossible. Isaac Newton was probably the smartest person to ever walk the earth. One, maybe one of the top three.

26:43Ben Carlson:And he got caught up in a bubble in the South Sea. One of my favorite stories. It's impossible.

26:48Michael Batnick:No one can time it. One of my favorite stories about humility in the stock market is Stanley Druckenmiller, who I think everybody has on their, like Mount Rushmore of Mount Rushmore. Whatever your style is, he's on the Mount Rushmore, if not the GOAT. Okay. Okay, Druckenmiller was in the business for almost 20 years prior to the top in 2000. He had been killing it. He already was a legend for shorting the pound. He was a guy. And he fought the bubble. He fought, he fought, he fought. He was underinvested. He hired a couple of young kids because he was like, all right, clearly I'm out of sync with the market.

27:29Michael Batnick:I need some young blood. Maybe they have a better idea of what's going on than I did because, well, whatever. We don't have to get into his backstory. But, and he went all in, in his words, within hours of the actual top into tech stocks. He lost$3 billion in 24 hours, something like that. And as he reflected on what he learned, his answer was nothing. I knew I shouldn't have done it, but I did it anyway because I couldn't help it. Couldn't help it. That was from your book, right? That was my book. All right, so back to this chart. What are we looking at here?

28:00Ben Carlson:All right, so you talk about analogs between the 80s and 90s and today, I think this is another one, that it was that period, whenever you want to start it, 82 to 99, 80 to 2000, whatever it is, it was really two different bull markets that were just kind of mashed into one over time. And so Duality Research looked at, in the 2000, so 2013 to 2020, new highs in the S &P 500 came at low VIX prints, right? It was like the stair step up. But now, in the 2020s, since the pandemic, new highs have come with higher VIX prints. So there's more volatility. when it happens. And this is showing that since the pandemic, this is a totally different market.

28:37Ben Carlson:The bull market is acting differently. So here's how the market is still grinding higher, but without the same complacency we saw in the 2010s. In other words, investors are still paying up for protection, even during rallies, pointing to a more hedged, more cautious backdrop, which is interesting.

28:51Michael Batnick:Yeah. So that's why I pushed back a little bit because you're right. There's no fear today, but fear comes back so fast. It comes back so fast. um all right so we let's we'll do a little bit about spacex here i'm doing a full episode because it deserves a full episode tomorrow on talking wealth with aaron dylan about what advisors need to know about spacex because clients are asking a lot this is the we've got a ton of questions this is the hottest ipo of our lifetimes what does it mean for index inclusion what does it mean for buying so we'll get into that a little bit today um my dad texted me yesterday.

29:27Michael Batnick:Should I buy the SpaceX IPO? My dad never, ever asks me about individual stocks, ever. So this is on the brain. What did you tell him? I said, no. He said, okay. I said, the price might go up in the first few sessions. Who knows? But it's a clusterf**k. All right. So let me elaborate.

29:48Ben Carlson:I can't, I know you're going to get into this on Talking Wealth. I can't force myself to get up in arms about SpaceX being an anthropocopathy, eventually be included in index funds. I can't make myself get mad about it.

29:58Michael Batnick:Okay.

29:59Ben Carlson:So there's a lot of people want to be mad about it. I can't get mad about it. There's nuance in here.

30:04Michael Batnick:Yes. These companies should be in a cap weighted index. If they are like a top 15, top 10 stock in a cap weighted index, how could they not be included? It would be bizarre. Exactly. That's my feeling. People are upset because the NASDAQ and the index providers are changing the rules. Guess what? These rules were not handed down on a tablet by Moses. What do you mean? We're allowed to change the rules. The market looks so much different today than it did back then. The rules are allowed to change. Okay. The question is, are the rule changes protecting investors? And everybody has their opinion.

30:42Michael Batnick:I think to include an IPO of this size in the index after 15 days is kind of nuts. There are all sorts of chicanery that can be played. I don't think there's enough time for price discovery. I believe that they should be included in the index, but 15 days or even five seems nuts. Now, the part that I think the part that people are upset with is exit liquidity. They are coming out with a very short float so that the index has to buy all of it and it's manipulating. So that part I sort of understand, but the nuances of it matter. So here's Matt Levine. So the schematic maximally cynical approach for SpaceX would be something like this.

31:30Michael Batnick:Do an IPO, sell like one share of stock to the most ardent possible Elon Musk fan asset manager at a$2 trillion valuation, sell perhaps tens of billions of dollars of stock to ardent Elon Musk fan retail investors, whoever's willing to buy at that$2 trillion valuation, lock up all the rest of the stock so that no one can sell, get in all the indexes because you are huge. Something like 24 % of the stock of the average member of the S &P 500 index is held by index funds. At a$2 trillion valuation, that's like$500 billion of stock. Sell$500 billion of stock to index funds at that$2 trillion valuation.

32:10Michael Batnick:They can't say no. That is the maximally cynical approach is to sell as little stock as possible to price-sensitive investors in order to keep the supply low and the price high and then sell as much stock as possible to index funds who can't negotiate on price. Actually, can't negotiate on price understates the issue. If index funds need to buy 24 % of your stock and only 20 % of your stock is available to buy, then the index funds are forced to chase it, driving up the stock to whatever price you like. You have effectively created a short squeeze for the index funds. They have to buy stock at any price and there isn't enough stock for them to buy.

32:48Michael Batnick:Just keep bidding, you tell Vanguard. Okay, so that's Matt Levine. But the reality is a little bit more nuanced. Here's Luang and her colleagues also at Bloomberg. They say, fast track timelines vary by index. But if S &P follows its competitors, the resulting passive demand for SpaceX from funds tracking indexes would be nearly$20 billion, according to Bloomberg Intelligence Analyst James Seifert and Rob Duboff's estimates. With a$75 billion raise, all right, so they're raising$75 billion, that would be roughly a quarter of SpaceX's offerings. So to be clear, SpaceX will not be in the index at a$1.8 trillion valuation.

33:33Michael Batnick:We had a bunch of listeners email us like, hey, is this total horseshit? Like, should I sell my index funds? So here's where it is going to fall inside of the index. This is, so Callie Cox calculated this for us based on, you know, putting a few pieces together of the new float adjusted rules. The float is what's actually being available, okay? Callie said it's going to be right around Amgen and Gilead and Shopify and Honeywell. So if you look at this graphic that ChartKid created, it's going to be like the 195th company in the S &P.

34:13Ben Carlson:It's not automatically going to be a 3 % position right away or something.

34:16Michael Batnick:But that's assuming that they waive the profitability requirements, which are probably going to. Sounds like they're going to. And we don't know when it's going to get included. I think the bigger idea is what do future unlocks look like and how much supplies ultimately could be dumped on index funds. And what does that do to the price? And we will cover all of that if you want more on Talking Wealth.

34:35Ben Carlson:I'm sure this is going to cause the index providers to change more rules in the future if they try to manipulate them.

34:39Michael Batnick:All right. So half-baked idea that will never happen. What if there's a new rule for private companies where once you cross a certain threshold in market cap, you can't be private anymore? You can't come public at a trillion-dollar valuation. What if there's a limit? Like if you want to be a publicly traded company, there's just a limit. You can't come public at a$4 trillion market cap and only release 4 % of the float to investors, pushing stocks higher, pushing, like, I don't know. It's probably not going to happen. I'm sure that's probably not a great idea for various reasons. It's an interesting experiment.

35:23Michael Batnick:We'll see what's going to happen. And that brings us to one of the big questions is how much supply can the market handle? Because the money's got to come from somewhere. And if OpenAI is coming public and SpaceX is coming public and Anthropica is coming public and they're raising$200 billion, what was the number that Goldman – was it$250? If there's$250 billion in new shares coming to market, you have to sell something. And how does – what does that do? Okay, well, funny you should ask because Google apparently needs to raise money or they are choosing to raise money. So Google is doing an$80 billion equity offering.

36:05Michael Batnick:It is the first time since 2005.

36:09Ben Carlson:Tell you what, this is a narrative buster to me. This whole story is so bizarre to me. In what sense? The fact that people have been talking about Buffett sitting in a cash pile and the timing of Berkshire Hathaway getting into this is bizarre to me.

36:24Michael Batnick:So they bought Google last year. They're buying more. They're buying$10 billion, which is, I mean, what's their cash pile? Is it$300 billion? So it was done via private placement at only like a 4 % discount to current prices. And the whole story is fascinating. It's very interesting.

36:42Ben Carlson:A company as big as Google and mature as Google, raising equity is so weird. I looked it up. I'm like, when has this ever happened before? This is basically a one of one that this has happened. A company that produces this much. Yeah, this size, this mature. I mean, Tesla did a bunch of equity raises. I guess. Like I was scouring all the LLMs. Like when has this happened before? They're like, never. This is new. Like this has never happened before.

37:09Michael Batnick:Here's their press release. During its Q1 2026 earnest call, Alphabet announced that its 2026 CapEx are expected to be$180 to$190 billion and that it expects 2027 CapEx to significantly increase compared to 2026. The equity offering is part of Alphabet's plan to fund its investments in a balanced way while retaining a healthy balance sheet. Their other sources of funding include strong operating cash flow over the last 12 months. They generated$174 billion of cash flow and debt issuances over the last year. They raised$85 billion of debt. So people are rightfully saying like, hey, wait a minute, what in the world is going on?

37:51Michael Batnick:$175 billion of operating cash flow issued$85 billion worth of debt just over the last 12 months and you still need more money. To me, the clearest, my reading from this is I should buy more NVIDIA. I own NVIDIA. I should buy more.

38:05Ben Carlson:The narratives I was thinking about this is obviously this means there's so much demand. Yeah. So they needed money this bad that they had to raise equity, which is, to your point, crazy with how much CapEx they already produce. The other one is these are way more capital intensive businesses now. And if they can't fund everything with cash flows, that that potentially changes the business model. And those are the two things that I came away with here.

38:29Michael Batnick:So I forget the exact details. They did$10 billion in a private placement with Berkshire. They're doing a$40 million at the market equity offering sometime in the third quarter. And there were some preferreds in there. Now, this is like nuance that really who cares. Part of this is to pay the tax bill. So they issue a lot of stock to their employees that is treated like cash comp. They have to pay income tax for that. So they're doing that. I saw somebody make a good point. It's like, well, cash is fungible. They could just use it from operating, right? But they did say that's part of the use for this.

39:00Michael Batnick:So the stock is doing what in the pre-market? This morning, it was down 2.5%. The stock is down, the stock, oh, the market is open. The stock is down 4.5%. So to me, this is going to be very interesting, how the market digests.

39:13Ben Carlson:So there goes the discount right away, huh? You said they bought it at a 4 % discount?

39:18Michael Batnick:So Google's at 355. So we'll see how the market digests over the next couple of days and sessions. But it will be interesting to think about this in conjunction with all of the new supply that's coming to the market.

39:31Ben Carlson:I feel like we just need to start putting a file together for the thing that signaled the top, right? Because one of these things has to be it. Remember when Google raised money? That was it? That was not that easy. Let's talk about South Korea real quick. So someone from South Korea sent me a picture of my book at a bookstore there, which is kind of cool. People have sent me pictures from India and South Korea and New York of like seeing the book out in the wild. It's kind of cool. And so I wrote back to the guy and I said, hey, how crazy is our things in South Korea as far as investors go? And he said, it's crazier than you think.

40:03Ben Carlson:The speculation is nuts. So I got a few charts here.

40:06Michael Batnick:Wait, hold on. On the speculation thing, like, are you hearing from friends?

40:13Ben Carlson:No, I'm really not. You're right. That part of it seemed like I was hearing from more people in the 2021 meme stock thing than I am with this. So I guess, is it possible that this is, obviously retail is involved, but is it possible that so much of this is really just professional investors in these and not individuals? I don't know. So over the past 10 years, the South Korea ETF, EWY, is now outperforming the S &P 500. All of that outperformance for the past 10 years has come in the past year because it was wildly underperforming through 2024. This is from Bloomberg. we talked about how South Korea passed the UK before passed Canada.

40:50Ben Carlson:Now South Korea has a bigger market cap than India which has actually kind of stagnated a little bit. South Korea is just going nuts. Eric Belchunas the two times SK Hynix ETF in Hong Kong has grown AUM 10 times this year. It is now the third biggest ETF in that market accounting for 8.5 % of all assets. A leveraged ETF, a single ETF is almost 10%. He says that's insane. It would be like an ETF in the US having $1.3 trillion, which doesn't exist. It makes us look sober. It trades over a billion dollars a day, which is a U.S. equivalent of$150 billion, which has never happened before. Holy crap.

41:27Ben Carlson:And now everyone, of course, says, it's two stocks, idiots. Yes, we know that.

41:31Michael Batnick:Well, yeah, duh. By the way, just getting back to my point, the comment we made a second ago about retail investors, I think retail investors that are trading all the way in. Like, if you've been involved in the stock market, you are all the way in. I guess my question was like, Is it pulling in new people into the market the way that 2021 did? I don't think so.

41:49Ben Carlson:That's true. I think we pulled forward a lot of demand.

41:52Michael Batnick:This is an interesting dynamic. Kevin Gordon tweeted, quite the gap. The S &P 500 continues to look stretched relative to its 200-day moving average, like how far stretch we are above. Yet the percentage of members of trading above their 200-day moving average continues to struggle to move higher. Whatever, not really surprising dynamic. We know what's going on. Back to worrying about concentration again? Yeah, it's a lot of the mega caps doing the heavy lifting. And yeah, people are all in on tech. Cumulative flows into tech year to date, or actually since the March low, my bad, is, this is from Todd Sohn, it's like 30 billion.

42:25Michael Batnick:And the cumulative flows X tech is negative 4 billion. Did you listen to Dan Loeb on Patrick's podcast? I didn't listen yet. He was basically like, yeah, this is by far our biggest exposure is tech. And, you know, I mean, makes sense. this is where the market is.

42:42Ben Carlson:If you want to get out of ex-tech now, you're getting rid of like half the market. It's an enormous bet.

42:49Michael Batnick:We haven't spoken about money market funds in a while on the other side of the spectrum. There's now$8.28 trillion in money market funds. I don't necessarily want to say that this is going to like... In fact, you know what? I was 100 % right here. I was 100 %...

43:05Ben Carlson:You called this. I'll give you credit.

43:06Michael Batnick:Yeah, I was 100 % right.

43:07Ben Carlson:You said this money's not leaving.

43:07Michael Batnick:This money's not leaving. because it's just, yeah, go ahead.

43:10Ben Carlson:It helps that people thought the Fed was going to be keeping lowering rates and that would do it, but the rates have stayed pretty steady and we're still getting, what, three and a half, 4 % for money markets. It's not bad.

43:20Michael Batnick:So I don't think this impacts the stock market at all. There's probably personal finance ramifications here. I agree.

43:25Ben Carlson:Yeah, credit to you. You called this one. Okay, Heather Long. Let's look at the other side of things. This is stunning. She says, personal savings rate in April 2025 was 5.5%. Personal savings rate April 2026 is 2.6%. That's a sharp plunge. It underscores how squeezed Americans are right now with higher prices and incomes not keeping up. Maybe you can explain away some of it by baby boomers retiring, but not all of it. Now, a lot of people saw these numbers and said, oh my gosh, how is an economy like this with a booming stock market and all this stuff and people can't afford to save money? That's the intuitive way you read that.

43:59Ben Carlson:The counterintuitive way you read this and how it actually works in reality is, no, no, no, no. No, the wealth is so much higher, people think they don't need to save as much. And this happens all the time. This happened in the 90s. This happens in every boom. The savings rate decreases when asset prices boom because people's wealth is up and they don't need to save as much anymore.

44:19Michael Batnick:Nailed it. I mean, my savings rate is way down probably because exactly what you just described. Right.

44:25Ben Carlson:Mike Zaccardi posted a chart from Bank of America that shows just that. The savings rate tends to be negatively correlated with household wealth. When wealth goes up, you'd in. Of course it is.

44:36Michael Batnick:Of course it is. You're afraid to spend in bad times. Duh. Right. Yes. All right. This is from Torsten Slok. He says, here's a chart showing the US ADP weekly employment. He said it is Javon's paradox playing out in real time. Cheaper technology is creating more demand and more jobs. And this would be amazing. This would be an incredible outcome. We will see. I don't think that, I think it is way too early to draw any conclusions, like ridiculously early to draw any conclusions, but I hope it happens. I hope that all the fears and fears that I shared, I was, the Citrini report bummed me out. I'm not going to pretend like I wasn't bummed out.

45:29Michael Batnick:But I would love, I mean, we would all love for nothing more than for this to not be the case.

45:35Ben Carlson:This is, this is, there's certain segments that are going to be disrupted, obviously. I think the hardest part is the people who are in technology are the ones who are seeing the biggest disruption right now. And there's, the people in technology are like running around with their hair on fire because they see what's happening to software developers in their space. And they're going, no, you people don't get it. You have no idea what's coming. And I can't tell if it's true.

45:56Michael Batnick:I think they don't get it. I don't think they understand human beings as a group. I think that's a big part. I'm overgeneralizing.

46:02Ben Carlson:No, I definitely agree with that. I think the emotional intelligence, the EQ of tech in general, is a lot lower than other industries. That's not a slight. So Kevin Roos, no, their IQ is higher, their EQ is lower.

46:16Michael Batnick:That's the computer brain. Like we all know people like that. Kevin Roos tweeted, overheard an AI lab, how are you spending the last 300 days of work? Buko Capital retweeted and said, increasingly think the only options for the AI labs are to end up in prison or as government employees. I think he's being, I mean, I'm guessing he's being hyperbole. But he said, rhetoric and outcomes they are pushing for are completely incompatible with current society. They're either wrong, enemies consumed. Right.

46:44Ben Carlson:The point is, if everyone is right, that whatever, 50 million jobs are going away, something's going to happen. Yeah. We're not just going to let that happen.

46:53Michael Batnick:A friend of mine shared with me a YouTube video on somebody walking through Google's Gemini Spark, which is like the agentic stuff. Like, here's how it helps you throughout the day, right? So this is coming. I mean, it's here. So I haven't messed around with it yet and engaged. But here's an example, a few micro examples of something that I would love to have. I don't want to be on Twitter. It bums me out. It's a cesspool. um however that is where we get amazing content for the show yeah if you have the right filter in place twitter is still great there's there's there's tons of gold and there's great aspects of twitter but i don't want to be i don't want to be engaged because i get drawn into the negative aspects of it okay so but i need it so like i basically want like a i want my agent to go through all of our transcripts our our podcast transcripts find out the people that we pull charts from all the time, like Mike Sicardi and Carl Kintany and Boucherunas and blah, blah, blah, blah, blah, and just deliver them to me like Daily Chartbook does, right?

47:54Michael Batnick:So I'm sure I can build that. I'm sure that exists. So I will look to do something like that.

47:59Ben Carlson:So that's what Gavin Baker was on Patrick's show. And he said, what do you use it for? He said, I, I have, I take all the podcasts about AI and I have, I have it summarize it for me.

48:08Michael Batnick:Here's another example that's going to exist. If I wanted to know the price every day for what a Chipotle bull cost in New York City, and I wanted the AI to track that over time, it could do that very easily. It could go into Chipotle, create an order, and then just not hit submit and find out what the order is, and just do that every day. So I could see the trends. You could do that. Okay. Why would you need that? You don't, but just as like we're covering Chipotle, right? We talk about it. Now, of course you don't need it. It's a silly micro example, but my point is the possibilities are endless.

48:46Michael Batnick:Okay, like for, so I am going to the NBA finals.

48:51Ben Carlson:This is why AI is going to lead to more work for people. I listened to a big tech person on a podcast a few weeks ago and he was talking about how awesome it is and how it's going to destroy all the jobs. And he's, I just, I don't see how it doesn't destroy every job. And the host asked him, what is like the coolest thing that you've used AI for? And he said, you know what? I had all these pictures on my phone and had AI go through the pictures and like sort them in different buckets. And it's like, amazing. What good, what, no, but what good does that do you as a human being? It's just something that's kind of cool to have.

49:18Ben Carlson:It doesn't actually do anything for you. It's just cool to have. It's very cool to have. You're giving yourself more work with AI. That's the thing that's going to happen.

49:24Michael Batnick:I love it. More work. As a, as a hyper attention sort of person, I love more work.

49:31Ben Carlson:People, people think that it's going to save them time. It's just going to be doing more tasks that you weren't doing before.

49:36Michael Batnick:Yeah, sure. Of course. Of course. Here's another thing. Um, like I want to monitor the ticket situation for the NBA finals. I have to check it all the time. It's annoying. If that could be automated, if you have an agent do that, of course you can. Right. Fantastic. Um, all right. So, so it's all happening in, in news that's not happening. That was a God, what terrible segue that was. That was super lame. Michael Saylor, earlier last year, in February 2025, tweeted, sell a kidney if you must, but keep the Bitcoin. Well, well, well, look out, the tables have turned. This is from the Wall Street Journal.

50:16Michael Batnick:Strategy, the Bitcoin hoarding firm founded by Michael Saylor, said Monday that it sold 32 Bitcoin. I mean, it's 32 Bitcoin. It's not a lot of Bitcoin. But nevertheless, he sold 32 Bitcoin last week for roughly$2.5 million. Markets first sell since the depths of the crypto winter late 2022. Why? Why? Because they need to make payments on, I don't know, if it's their preferred stock, whatever it is. He told the Wall Street Journal, if you sold one Bitcoin to buy 10 more Bitcoin, technically you sold the Bitcoin, but economically you bought nine more Bitcoin. That's like Kenny Atkinson language.

50:44Michael Batnick:Analytically, they won. Give me a break. Come on, dude.

50:46Ben Carlson:I think that this is short-term negative for crypto, long-term positive. If they're a forced seller of Bitcoin, I think that's actually good. I don't think him being the face of Bitcoin is good for crypto. I think actually if they're forced as a seller, I think this is a good thing long-term for crypto.

51:03Michael Batnick:It depends how much crypto they're forced to sell. But I agree with your general statement. So Bitcoin is at 68 ,000 and going lower. How's strategy? It actually wasn't even that right. Oh, no. Okay. It's more right today. Don't you think

51:16Ben Carlson:that a lot of it was kind of priced in? Like people knew this was coming?

51:22Michael Batnick:What do you mean? I don't know.

51:25Ben Carlson:The stock's already in a 70 % drawdown or something. I know it's down more today. Oh, I think,

51:29Michael Batnick:I mean, it's down 7 % today. I don't know. I don't know what's priced in. I think that was probably a result of crypto being down. I wonder how the people

51:34Ben Carlson:who went all in on this stock are doing it because there's a lot of people who talked about it. We heard from a lot of, right?

51:40Michael Batnick:Yeah. I, it's sad. I don't.

51:44Ben Carlson:All right. Let's talk real estate. And I read this real estate story about real estate agents are quitting the slow housing market, which is like, there's no activity. There's not a lot of activity, right? So of course, people, here's a line from the Kim Taylor better career in the housing market. Mid to 2023, she launched her own brokerage firm with her husband. All right. She started out with a team of seven agents and quickly bought six more on board. By 2024, high mortgage rates and prices were weighing on demand. Home sat on the market. Most of her agents had to find other part-time work or full-time jobs to stay afloat.

52:16Ben Carlson:Her husband took a job last year working for a school district. She said, we became a bleeding artery. The last 11 months have been the hardest of my career. And so this is happening to realtors all over the country, of course. And the thing that, the hard part about this is, this is nothing that these people did personally. They didn't create this. They had no control over this. The fact that the housing market boomed, rates went lower, then rates went higher and the housing market slowed. These people had nothing to, this is just bad luck. And I think it's important to recognize that. You talked about like all this stuff going well, the beginning of the podcast for us.

52:48Ben Carlson:Like some of this is just great timing. Obviously hard work, yes. But like right place, right time too. And sometimes you're just in the wrong place at the wrong time.

52:58Michael Batnick:Absolutely. I think that we have earned a lot of our success. But I freaking met Josh at the train station by an absolute miracle. And had I not met Josh, and I've said this a million times, the reason why I am so appreciative is because I was eating shit. Like my life was going really poorly. I was 25 and I was my only friend that was unemployed and I was unemployable. Uh, I was in a dark, dark spot and, and it was my fault. It absolutely was my fault. Um, I was staring at the consequences of my own actions as a stupid young idiot. These people did nothing wrong. They were in a booming industry that they were rug pulled.

53:49Michael Batnick:And I mentioned like, I mentioned the strategy investors that said they lost their money. I mean, there's degrees of sad. That was like a choice that they made and whatever. This is sad. This is truly sad when people's actual livelihood is being torpedoed. And it is interesting that so much of the conversation during the boom time were, these people don't deserve 5%. What are they even doing?

54:10Ben Carlson:Right. The typical agent with two years of experience or less did three transactions in 2024 and earned$8 ,100 in gross income. The typical agent that completed 10 transactions earned$58 ,100 in gross income. So it's not like these people are rolling in it, right? From there. Oh, brutal. Really sad. It's tough. And so obviously there's people who are leaving and it said about 71 % of agents served with the NAR in 2025 said real estate was their only profession, the lowest proportion on record, meaning they have to have other jobs to stay afloat.

54:39Michael Batnick:All right, Ben. so movies are having a moment AMC Entertainment records highest May attendance since 2019 man I nailed the movie trade and I bought the wrong stock so I bought IMAX I've held IMAX for a long time it's doing fine

54:55Ben Carlson:I thought IMAX did okay no?

54:57Michael Batnick:no IMAX is doing fine but AMC is up well I mean I'm not buying AMC it was under a buck so I'm sort of half joking but it was up it went from it was up like I don't know 40 % in the last two days

55:10Ben Carlson:Yeah, but that's just because it's like maybe not going out of business anymore. This is still a slash that's done like 99%.

55:15Michael Batnick:No, I know. It was sub -$2. I was teasing. But what's -

55:21Ben Carlson:It's literally down 99.4 % from the highs in 2021.

55:25Michael Batnick:What's especially interesting, by the way, that was so weird that AMC was, and GameStop were the two faces of that period. Just what a - Yeah. AMC, what?

55:35Ben Carlson:That's like, at least the boom right now is like a real thing. You're right. That was not a real thing back then.

55:41Michael Batnick:What makes this current moment in cinema so very interesting and exciting is that the two gigantic hits over this and last week, juxtaposed with what happened with The Mandalorian, is exactly what you want to see. So Star Wars earned just$6.5 million on its second Friday. $6.5 million, dude. That's a 70 % drop, a 70 % drop. So the fact that Backrooms, which opened to$81 million, by far, by far, by far, its biggest opening weekend, and Obsession, which is going to cross$100 million, like both those movies are going to smash Star Wars, is unbelievable. So I listened to The Big Picture, did a podcast with this guy, Kane Parsons, who was the director of Backrooms.

56:41Michael Batnick:He was 18 when they greenlit this movie. Jeez. He's 20 years old. What was the story?

56:46Ben Carlson:He was a YouTube. He was making movies on YouTube. That's what he was doing.

56:49Michael Batnick:So I came home and the next morning, actually, Kobe said, Daddy, you saw Backrooms? And I'm like, how do you know Backrooms? He goes, it's on Roblox. So Backrooms was a YouTube series. there's been over 224 million views across 22 videos. So I raw dogged it. I had no idea. I didn't see the trailer. I didn't even know that this was a YouTube thing until I heard about this kid. So I went to see the theater and I saw an 850 on Friday night. And there was at least two other earlier showings. So it was on at least three screens. When I left at 11 o 'clock, there was a ton of young kids pouring into the theater.

57:40Michael Batnick:So Arts, Bill Arts, who is a huge movie fan, slacked me. Okay, I don't know what to make of Backrooms. And I'm going to quote myself because I don't want to freelance. This is how I felt. I said, so I love that this is all happening. And that was also my reaction. Did I love it? No. Was there some aspects of it that I did love? Yes. More weird shit and risk taking? Yes, exclamation mark. So I saw it in a packed theater and there were a lot of bright pieces. So like it wasn't just a dark movie. So you could see the audience, right? And every time I looked around me, the audience was enthralled, just a dead stare at the screen, no phones.

58:27Michael Batnick:And it was a young crowd, dude. Like it was a young crowd and nobody was on their phone. And Art said, that's exactly right. I don't think I'll watch it again, but it was a singular experience that I won't forget. It's just really cool that we're getting stuff like this rather than IP slop. And I couldn't agree more. I'll just say the opening scene was, was in my opinion, pretty terrifying, but it wasn't like, it wasn't like a scary movie that like, you know, you can't, that a normal person would be too scared to watch. It was something else and it's exciting. And then Obsessions, another indie movie, I think broke, broke a hundred million dollars.

59:03Michael Batnick:I mean, and that was another kid. So both these kids were on fantasies podcast and the maturity. So that other guy who did Obsession, I watched one of his YouTube shorts called the chair, which was excellent. What's this kid's name?

59:19Ben Carlson:So these are, these are horror movies. Cause I have no idea what these movies are about. It's just interesting to me that the horror movie has subsumed the superhero movie, But so again, the 50s and 60s, all the movies were Westerns. And now they never make Westerns anymore. That's going to be horror movies someday. They're making so many horror movies. Horror movies is the genre. It is.

59:38Michael Batnick:This is the Western of then. Because it's so cheap. So this kid, his name is Curry Barker. They gave him a million bucks to make this movie.

59:49Ben Carlson:I'm impressed. I'm never going to see these movies. I'm impressed.

59:52Michael Batnick:It's f***ing so cool, man. I'm so, so, so excited that we are over the hump. Now, there's still a ton of sequels.

59:59Ben Carlson:But you and Bill Artz didn't exactly sell it to me. Will I ever watch this movie again? No. I don't think that that sells the movie to me. Hold on.

1:00:05Michael Batnick:I want to come back to this for a sec. Dune 3 is still going to be one of the biggest movies of the year. Like, the sequels and the franchise movies like Mario, those are still dominating the box office. But the fact that we're getting this as well, and hopefully there's more of that, less of -

1:00:17Ben Carlson:Yeah, young filmmakers. That's cool to see. I agree.

1:00:19Michael Batnick:All right. So maybe we didn't sell the movie that well. Listen, don't watch it on your couch. I mean, you might as well skip it at that point. And, but going to the movies to see this was an absolute experience and a hundred percent worth it. If you were like, now, if you're not a movie person, don't watch it. Cause you're going to go there and be like, what is that bullshit? Like, fine. Don't watch it.

1:00:40Ben Carlson:No, if you're not a horror movie person, I'm a movie person. I'm not a horror movie person. It does nothing for me. Horror movies don't move my heart rate at all. They don't do anything for me. So I just can't watch them.

1:00:50Michael Batnick:That's so crazy. I know that, I know that you're not alone in there, but I was terrified. at least in the opening scene. So I love it. I'm jacked to the T's as Mr. Gosling said in the big short. All right. So did you finish Half Man?

1:01:07Ben Carlson:We're about one episode away. So that is honestly, it's one of the most stressful shows I've ever watched. And I almost, after the first episode, I told my wife, I'm like, I don't know if I can finish this show. It's too much. But then somehow it like draws you back in and it goes crazy. Then it draws you back in and it's that. I can't even explain what kind of show that that is.

1:01:27Michael Batnick:It is Uncut Gems. The anxiety that you get from watching Uncut Gems, it's that on HGH. It is... Something about it is really well done, though. It is so dark and so demented, depraved, and twisted. All right, so it was so well done. It's one of my favorite shows. It's one of the best miniseries I've ever seen. I thought it was incredible.

1:01:51Ben Carlson:It also kind of pulls you in and has emotions to it too. It's dark, but it also has emotions. It's very bizarre. I can't even compare it to another show before.

1:01:59Michael Batnick:I'm so excited for you to see the finale. Okay. All right.

1:02:05Michael Batnick:Finally, friend of the show. My friend was an executive at Amazon Studios. And two years ago, he called me and told me that I might be in Spider-Man Noir, the Nicolas Cage show. and he told me that he was writing me into the show and I was like, oh my God, that's so cool. And it was like, I think it was two years ago. So as it's getting closer to release, I'm getting like, you know, a little bit anxious. Like I'm like, am I, you know, this is gonna be fun for me. I want to show my kids. Uh, so I'm in episode three, Nicholas Cage plays Spider-Man noir and he goes into a hospital with an alias and his alias, his alias is officer Batnick.

1:02:47Michael Batnick:so he's outside the hospital he's going through some fake like id cards he's like he goes batnik batnik batnik that's the one so he goes to the hospital who are you i'm officer batnik he goes into a bedroom he goes i'm officer batnik blah blah blah blah um my kids had like no reaction they were like oh daddy's in spider-man i was like what nothing else what like uh i thought their head was going to melt. No reaction.

1:03:14Ben Carlson:Okay.

1:03:16Michael Batnick:I think it's like the coolest thing ever. So thank you, Matt. Okay, kids keep you grounded, right? Sure do.

1:03:23Ben Carlson:Anything for you, Ben? Yes, you had the, I was listening to the Rewatchables with Steven Spielberg and I've never seen, I've never seen, I've never seen Space Odyssey before. Okay.

1:03:33Michael Batnick:We got to play this clip. So this gave me nachos, which is a Jewish, a Yiddish word for just joy. this made me so happy so the rewatchables is my favorite podcast not even like I love it's my favorite podcast of all time there's not even close number two and to see Sean fantasy have this moment of joy brought a tear to my eye I thought it was so cool to see him get to experience this so I want to play this for the audience for you guys so he's talking to Steven Spielberg

1:04:11Ben Carlson:which is that in Dr. Strangelove, Major Kong says, fire the explosive bolts. And in 2001, the entry hatch sign reads, caution, colon, explosive bolts. Oh. Which is his own little...

1:04:25Michael Batnick:I never saw that. You know something? Look at Sean teaching you about movies. Hey guys, I'm just saying that I'm having such a good time talking to both of you about this movie. But that one insight just makes this day. That's great. It really does. Best moment in the history of the category. A criteria orgasm right there. Is that the coolest freaking thing ever?

1:04:50Ben Carlson:That was pretty cool. So I told you last week, I told you I watched the Martin Short documentary on Netflix and he intersperses in the documentary a lot of home movies. And he has a cabin on a lake in Canada that they would go to every summer. And the people who hung out the most, because their kids were all the same age, It was Marty Short and his family, Tom Hanks and his family, and Steven Spielberg and his family. And they said, listen, all our kids were the same age, so it just kind of made sense to do. And they showed all these home videos of these guys. And it was Marty Short and Tom Hanks acting out scenes for Steven Spielberg or something.

1:05:23Ben Carlson:It's just nuts. Anyway, really worth a watch. Interesting that those kind of guys were friends.

1:05:29Michael Batnick:So, all right. What a time to be alive. What a time to be an investor. if you, like me, are enjoying a good time in your life, be thankful. That's my Jerry Springer. That's my Jerry Springer impression. Take care of yourself and each other.

1:05:47Ben Carlson:Not everyone is, obviously.

1:05:48Michael Batnick:Not everyone is. So, all right.

1:05:52Ben Carlson:You're right. This is an exciting time in the markets. For the stuff that we do, this is a very exciting time.

1:05:58Michael Batnick:This is a time, yeah, we will look back on these times, hopefully with fond memories. Hopefully this doesn't turn into a bubble that burst. but for now, it's really something to experience.

1:06:05Ben Carlson:I just know there's going to be pain at the end of the rainbow at some point. There is. There just is. This is how markets work. Everything is cyclical. Is that cycle five to seven years from now? Or is it one year from now or three years from now? I don't know. There's going to be pain at some point. Prepare yourself for it. It's going to happen.

1:06:24Michael Batnick:So next week, I will take the other side of that. Barely. I will just offer a week because we spoke a lot about keeping an open mind. I will have the other take next week that this doesn't have to end badly okay

1:06:36Ben Carlson:I'm not saying it even has to come from AI but it's going to come from something

1:06:40Michael Batnick:don't hedge you said what you said okay yes

1:06:45Ben Carlson:everything is cyclical this cycle will come to an end at some point but it could last a lot longer than people think in the meantime

1:06:53Michael Batnick:alright animal spirits at the compound news.com thank you very much everybody for listening for the emails Hope everybody is enjoying their early summer. Go Knicks. We'll see you next time.

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