Is The Market Rally Almost Over? Do NOT Count on It

0:00Hello, everyone. We've got a lot to discuss today. Stocks Bitcoin and gold are going much, much higher in the second half of this year. Tesla has unveiled more humanoid robots in a special Tesla diner. And Joe Pompliano, the GOAT, joins us to break down the money behind the world's greatest golfer and the details of how WNBA players want to get paid more money. We're live today from the desk of Anthony Pompliano.

0:31Ladies and gentlemen, the stock market is on fire the last few weeks. The S &P 500 and the Nasdaq each hit a new all-time high yesterday. This puts a cherry on top of an incredible performance run for Nasdaq in particular. Creative Planning's Charlie Blello writes that the index has doubled over the last five years and quadrupled over the last 10 years. Think about that for a second. A 2X in five years and a 4X in 10 years. Not too shabby, right? As for the S &P 500, its all-time high yesterday was the 10th of the year as well. It's not exactly what people expected earlier this year when the media and the economists, they were all predicting a recession or a massive financial calamity.

1:08In fact, the S &P is now up 30 % since the April lows. That's complete defeat of the pessimists and the doomsday enthusiasts. But there's something interesting happening underneath the surface of these financial markets. Stocks are going higher, but retail investors are also pouring capital into money market funds at a historic pace as well. Adam Kobisi writes that total retail assets in money market funds, it's now$2.9 trillion, which is a record. Since 2022, that has doubled for household inflows. The average yield is currently 4.15%, and retail investors are now chasing yield like we've never seen before.

1:44Now, the only explanation for retail investors stuffing more capital into both stocks and money market funds at the same time is that these investors are somehow getting more money than normal. And Belolo shows that wages have now outpaced inflation on a year-over-year basis for 26 straight months. It's a great sign for the American worker and hopefully it will continue. So your average American has more money today because real wages are finally growing in a sustainable way again. They're taking that money and they're allocating it to both U.S. stock market and money market funds. Two for one.

2:16And if there's more capital in the market, usually people will become more bullish. And that's exactly what the Wall Street Journal's Rachel Wolf and Conrad Pulitzer recently noticed in the economy. They wrote in an article this weekend that businesses and consumers are regaining their swagger and evidence is mounting that those who held back are now starting to splurge again. The stock market is reaching record highs. The University of Michigan's Consumer Sentiment Index, which tumbled in April to its lowest reading in almost three years, that index has now begun to climb again, retail sales are up more than economists had forecast, and all that sky-high inflation hasn't materialized, at least not yet.

2:51So the good times are rolling right now. Optimists are in control once again, and everything is smooth sailing, right? Well, hold on, not so fast. We're watching Bitcoin and gold skyrocket in recent years. Both assets are up 27 % to start the year, and usually that signals uneasiness investors have with the legacy system. If you zoom even further out, let me break your brain. Bitcoin and gold have both outperformed the S &P 500 over the last decade. People are now realizing they have to gain exposure to sound money principles if they hope to protect themselves from currency debasement. Now, this is important to pay attention to because we are watching the consensus economic views get violated in real time.

3:30The economists are in disbelief. Cash flowing companies are not necessarily going to outperform nonproductive assets unless those cash-flowing companies can grow very fast. Retail investors will allocate to stocks and money market funds at the same time, and the U.S. economy is doing much, much better than most people predicted. There are always potential issues on the horizon to be aware of, but right now, in this moment, things are looking good. A strong second half of the year should bring us many more new all-time highs in both stocks, Bitcoin, and gold, and investors will keep winning while those who are saving their economic value in U.S.

4:03dollars are going to continue to get punished by the undisciplined central bank and the government. Elon Musk recently left the government and he's back at Tesla, SpaceX, and the rest of his companies working hard to try to create the future. And Tesla is on an absolute tear. Everyone knows the company for their electric vehicles, but they also are pushing very heavily and very fast into the humanoid robot space. Take a look at this video right here. A humanoid serving popcorn. You know what that tells me? That tells me that the humanoid addressable market It's going to be one of the largest addressable markets for any product in human history.

4:38We simply are going to have these robots all over the place throughout our life, both personally and professionally. But Tesla, they understand marketing better than almost anyone in the world. And they just unveiled a brand new diner. Now, this diner is pretty interesting. You can drive your Tesla up. You can charge your car. You can go inside and you can get food. But you also can watch a movie. It brings back the nostalgia of yesteryear while infusing it with the future of Tesla automation and electrification. The whole idea of this is to simply take a product, which is pretty commoditized in a car, and to create a luxury positioning in the market.

5:14Tesla's done that better than almost anyone. And look at some of these photos here. The diner, high quality, luxury. The bathroom, people are literally taking photos of just the design and the aesthetic. One of the coolest parts to me about this entire situation is that Tesla is automating a lot of things. People are very worried of what's gonna happen to human labor. What about job opportunities? If all of a sudden there aren't drivers in the car, we have less human contact. But at the same time, Tesla's creating this diner. And in the diner, guess what you do? You interact with other people who drive Teslas or are watching a movie or getting food.

5:48And so that's the paradox of a company like this. They're pushing the edge of innovation. They're trying to push us into the future. but at the same time, they're creating spaces where more humans can come together and interact with each other. No one can put this company in a box and that's why you see so much controversy and debate around the stock and also around what the future prospects of the business is. But ultimately, the results speak for themselves. I see a heck of a lot of Teslas on the road. I see a lot of people excited about the humanoid robots and my guess is that the people who are pessimistic about this business and pessimistic about one of the greatest entrepreneurs of our lifetime, they're probably going to be on the wrong side of history.

6:25All right, let's have a little bit of fun before I let you guys go. Joe Pompliano, obviously my brother, but also the founder of Huddle Up. He is one of the foremost experts in the world when it comes to the intersection of sports and business. He's here to talk to us about the number one golfer in the world and how the heck is he winning so much and making so much money. And then we also get into the WNBA and what's going on with their contracts, why the players want to get paid more money, and how the franchise values are exploding to a level we've never seen in women's sports before. Here's my conversation with Joe Pompliano.

6:56All right, ladies and gentlemen, now we have the breakdown of sports. We've got Joe Pompliano, the sports business expert here with us. Joe, I saw Scotty Scheffler over the weekend. He won again. How much money is this dude making? Because he seems to be cleaning up all these tournaments. Yeah, I mean, he's making a ridiculous amount of money, but the most interesting part about it is he's doing it in sort of his own unique way. Now, with what's going on in professional golf, the PGA Tour, Live Golf, the prize money on the PGA Tour has drastically expanded over the last number of years. For people that don't know, they have these signature events, which are outside of the majors, but they have$20 million prize pools.

7:28The majors obviously have huge prize pools as well. But given that he's been winning so much and the increased prize pools, he's making$40,$50,$60 million a year now, whereas someone traditionally with this kind of record would have made much less. And again, the unique part of Scotty is that he doesn't care about anything but golf and his family. So you have other guys that are doing all these commercials, these endorsement deals, these events. He doesn't do anything besides practice and play golf, spend time with his family and do charity events. I've actually spoken to his manager before and he's just like, look, I can't get the guy to go do anything else.

7:58So I think it's a really unique situation where he's making so much money on the golf course where it really doesn't matter, right? Whereas some guys historically would have tried to maximize their earnings even off the course. He doesn't need to do that because he's making so much money on the course still. So wait, how much money is he going to make? Let's say this year. over$40 million just from playing golf, probably. So it really depends, right? So some of the tournaments, he's going to win$4 million at the majors, a couple of million dollars at some of the other tournaments when he wins, even top tens pay well, stuff like that.

8:25But then you have the tour championship, which has a$20 million prize pool. So it really depends on how he performs in there. But over the last number of years, yeah, he's set records of$40,$50 million in earnings. So that's just for actually winning the tournaments. Does he have any sponsors? Like I saw yesterday, the post-game interview or post-match interview, he didn't have any sponsors on his shirt. I don't know if that was the shirt that he wore all weekend. He wears Nike. So the Nike guys don't do other sponsorship deals. So if you'll notice him, Brooks Koepka, there was a few other guys, Tommy Fleetwood, Rory, obviously, those guys, they only wear Nike, which is sort of a unique part of the agreement with Nike.

8:59Nike obviously pays them a little bit more to give up some of the stuff that they would otherwise get on their shirts and their hat and other things like that. But yeah, he's just a Nike athlete. So he obviously makes money from that too. He probably has a couple other endorsement deals. for clubs and balls and other things like that. But you're not going to see him in the traditional, you know, car commercials and other things like that. He's much more reserved because he doesn't want to spend a lot of his time off the golf course doing all the things that come with that. Well, you know, with the PGA and certain players, maybe doing car commercials with the police incident, might not be the best choice of sponsor.

9:31Fair enough. Fair enough. Yeah. All right. Let's talk WNBA. I saw the shirts speaking of shirts. They said, pay us what you owe us. And then the internet has had a field day talking about how the WNBA is losing$40 million a year and people shouldn't be getting paid more money if the league's not making money. But it seems like there's a lot of missing details in the public conversation. So what's going on here? Yeah, everyone wants to break it down in a really simple sense, right? There's really two sides of the argument. One is that the league has grown a ton. Caitlin Clark shouldn't be making$75 ,000 a year.

10:01They need to be making more money. That's fair. The other side of the argument is that they can't make more money because the league loses$40 million a year and has never generated a profit in its near 30-year history. Now, if you can separate those two, again, to your point, there's some interesting details here that I think are worth explaining. The biggest problem with the WNBA right now is, one, the players aren't asking to get paid as much as NBA players. Obviously, no one thinks that's realistic. What they are asking for is to get the same revenue share. So NBA players get about 50 % of the revenue that's generated by the league.

10:30They split it 50-50 with the owners. Now, there are a few carve outs for expansion teams and other things like that, but roughly they get 50 % of the revenue. As for the WNBA, their players only get 9 or 10 % of the revenue, so a much smaller pie that they're actually getting from, which is the result and comes out to lower salaries. But the problem where it makes it a little bit challenging to get up to that 50 % is that the WNBA, since it hasn't ever generated a profit for nearly 30 years, the NBA has paid them a lot of money to cover those losses. Adam Silver, the commissioner of the NBA, estimates that it's around$10 million a year every year for the last 25 to 30 years.

11:04So it's quite a bit amount of money. In return, the NBA now owns 42 % of the WNBA. The WNBA also owns 42 % of its own league. And then they raised outside funding in 2022,$75 million from an investor group that included Nike and a bunch of other sports owners. That investment group owns a remaining percentage. I think it's around 16%, I guess. So when you add all that up, that's 100 % ownership stake. So WNBA players are asking for 50%, but it's a much smaller pie. So although the league has grown, they have this new$2.2 billion media rights deal. Less than half of that money from that media rights deal will end up going to the league itself.

11:39So again, the pie that they're having to divide up is much smaller than one would expect when you see the high level growth numbers of attendance, ratings, TV contracts, and everything else like that. So I do think that they're going to get some level of pay increase. I mean, it makes a lot of sense. Some of these teams are now selling for$250 million. The Golden State Valkyrie sold for$50 million last year to the ownership group of the Golden State Warriors. They simply just plugged that team into what they were doing with the Warriors from sponsorship sales and ticket sales. They use the same arena.

12:06They basically fill it on nights that would otherwise be empty. and that team is already worth four or$500 million based on revenue today. So the teams are really valuable. Everything is growing. The players deserve and we'll get more money. The question is just, where does that stop, right? A lot of these players have been asking for million dollar salaries when the maximum salary right now is around$250 ,000 to$300 ,000. So you're asking for a three to four X increase. I don't think that's going to happen with this CBA, but they're certainly going to get some other things. And look, the WNBA has been smart about this where they've left out some things that they can renegotiate like private flights and other things like that.

12:38So we'll see what happens. But the shirts were certainly the highlight of the All-Star game. Does the WNBA players, do they fly private or do they fly on commercial flights? So they used to fly commercial. But when Caitlin Clark entered the league, fans were chasing her and other players around the airports with cameras. So the commissioner came out pretty quickly within the first couple of weeks and said, all right, we're going to get all private charter flights, Delta sponsored. So I'm sure there was something there. But that's part of the reason why the loss is accelerated. The estimate was$40 to$50 million last year in losses for the league, which was partly because of the charter flights.

13:10But when the WNBA announced that, most people don't realize this. It wasn't a permanent change. They said this is going to be temporary. I think it was two years at the time. We'll renegotiate this when the CBA comes up. So if the players want access to those flights, which now I'm sure they're accustomed to and really want, they're going to have to give something up, right? If the WNBA is going to give them access to those private flights going forward. All right. Well, that's a little crazy. So Caitlin Clark at least got them private flights. I know they all are hating on her, but she seems to be pretty good.

13:35Speaking of Caitlin Clark, I also read that, yeah, maybe 250K, like kind of mid-level accounting manager, you know, KPMG maybe or something type salary. But didn't she sign like a eight-figure contract with Nike, I think it was? And she's getting paid like 20 or 30 million bucks just off of that. And I know she's kind of the outlier, but some of these athletes are making quite a bit of money through the endorsement money as well. Yeah. I mean, no one's making close to her, but correct. She did sign. It's going to be, depending on how much her signature shoes sell, it could be $25 to$30 million.

14:04Again, depending on sales, there's a lot of royalties based into there and stuff like that based on performance of the shoe sales. But she makes a lot of money. She has a bunch of other sponsorship deals as well. So she's making plenty of money outside of her contract. Now, the argument is, what is she worth to the WNBA? You could argue that she's worth more than a billion dollars to the league and she gets paid$75 ,000 annually. So in no world is that fair from the league perspective. Now, luckily for her, I don't even think she needs to wear the t-shirt because she's making so much money off the court.

14:29But a lot of the players are using her as sort of a bargaining chip, although they tend to beat her up on the court and not give her any credit off the court. They are obviously using her fame and the attention that the league has gotten as a way to get higher salaries for themselves too. Every time they use her to promote themselves, I think they should pay her a tax, like a licensing fee. It'd be real quick to stop using her name. All right. And then what do you think is actually going to end up being what it takes to get to the first million dollar salary? Like, you know, Meta's out here giving out.

14:57I saw now they've offered billion dollar pay packages to people. They've definitely offered$300 million over four years to a lot of people. What is it going to take for someone in the WNBA just to get a million-dollar salary? Well, I don't think we're far off, right? This is going to be the next CBA. We'll probably get somewhere close to that, maybe halfway or three-quarters of the way there. And then it just depends on when the next CBA is negotiated if the league continues to grow. The way it's trending right now, if it doesn't happen in the CBA, it'll most definitely happen in the next one because they have these large media contracts now.

15:25The expansion fees are certainly helpful. But the league is really growing, and it's got a great foundation. I mean, Caitlin Clark wasn't even in the WNBA finals last year, and it was the highest viewership number in 25 years for the league. So the league has taken huge strides over the last number of years. If that continues over the next two to three to four years when the CBA is up for renegotiation, we're going to see a salary increase where these players are making a million dollars or more. All right. Everyone's making money, which is always good. Joe, thank you so much for taking the time to do this.

15:50Where can we send people to read the daily newsletter that you put out? ReadhelloWild.com. We send it out three days a week. You can go sign up to the website there. Man, that was a real quick pitch. It's excellent. If you want to learn more about this business behind sports, whether it's athletes, sports themselves, the teams, the different players, read it every morning. I don't really pay that much attention to sports now. I got like a big boy job. I got to do real things. But every single time that it comes out, stop everything. Immediately go read Huddle Up. So go to readhuddleup.com. Joe, thanks.

16:18See you soon. Thanks. Man, it's always fun to be able to talk to your brother, but also to learn a couple of things along the way. And like I said, he is the foremost expert when it comes to sports and business. so I appreciate him taking the time to join us today. That's it for today's show. Hope you guys are enjoying it. I'm having a blast putting this together every single morning. Please make sure that you're following us on X and please, please, please make sure that you subscribe on YouTube. I will see you guys live tomorrow from the desk of Anthony Pompliano.