Stocks, Economy Will Keep Climbing The Wall Of Recession Fears

0:00My goal every day is to help people make money. There's a lot of people who got feelings, they got opinions, but what I try to do is I try to bring data to every conversation. The data will lead me to water. It doesn't matter what all the common narratives are. It doesn't matter what the mainstream media is blabbing about. All that matters is show me the data and that'll tell me where everything's going. That's why today we're sitting down with Phil Rosen. Phil's the co-founder of Opening Bell, but he also oversees the ProCap Insights system. It's an agentic AI system that we feed tons and tons of data, different data pipelines from equities to prediction markets, etc.

0:32And then the AI system goes and finds undiscovered brand new insights that you're not going to find anywhere else. And then it gives us the investment ideas on how to monetize those insights so we can make money. You, me, and anyone watching. Here's my conversation with Phil Rosen.

0:58All right, Phil, we got this AI system that's digging through mountains and mountains of data, has found all kinds of unique insights. Let's start with the Cauchy data. Cauchy, obviously, the largest prediction market in the world. Now we're able to go and see what is Cauchy saying, what is the economic data saying, what's the equity data saying. And the recession odds on Cauchy, I think are pretty interesting. So what are you finding there? Right now, the Cauchy odds say 26 % for a recession in 2026. I disagree. I don't think we're going to see anything this year. But that's what the prediction markets are saying.

1:27And what's interesting is that Wall Street sees almost a 49 % recession odds for this year. There's a range and it's probably from 30 to 49. So Wall Street thinks that jump ball like 50-50. Pretty much. And they're usually more bearish than prediction markets have been in the last couple of years. And prediction markets have actually been correct, by the way, for two years. Because they're smart. you know the wisdom of crowds is pretty smart and the last uh the 26 on cal sheet that actually measures up very closely according to our ai analysis with credit spreads and equity implied options so that's really interesting to me because if you look at the wisdom of crowds vote that is what aligns with actual markets and market implied odds for a recession i don't know what wall street's really looking at when they make all these forecasts and see a coin flip for recession but I'm taking the crowd right now.

2:20Well, I think it's hilarious that the Wall Street analysts sit there and they're like, you know, licking their fingers, sticking in the air and hoping that they're right. But 50-50 odds basically means I don't know. Right. That's one of the things I always go back to is when you say 50-50, you're just saying, I don't know what the answer is. You can't get fired for that too. You cannot get fired because, you know, it was 50-50 and you were 50 % right. But I do think that the like death of the American economy, very exaggerated, The next Great Depression, greatly exaggerated. And so ultimately, the market is just realizing there's a persistent bid that is going to continue to push the economy and stocks higher.

2:54And I think that it's very hard to fool a lot of people. And that's where the wisdom of crowds comes in. It's pretty interesting, right? Yeah. And the Calci markets, we've been looking at them for a long time for what we're writing about, what we're talking about. But I think integrating them with different layers of market data, that's when it gets really interesting, because then you can see, okay, what do maybe traders on these platforms say versus traders in more traditional markets or conventional indicators? And when you start stacking all these variables on top of each other, I think the signal is much more interesting as far as making investment decisions.

3:27So that's why I think it's a pretty interesting product and research we're working on. Well, one of the pieces to me is AI is not very good at going and doing simple tasks, right? There's always the example of there are AI systems that you just ask, what's the date? It messes up. It hallucinates and all this stuff. If you then go ask AI, hey, go through these mountains and mountains of data from all these different data sources and find me the correlation, AI is amazing at doing that. And so in a weird way, you want to create complexity in terms of the number of data sources, the amount of things that it can dig through.

3:58And also, it doesn't have to be agentically friendly data sources. You can upload PDFs. You can upload all kinds of different formats. And I think that's where AI shines. And so part of ProCap Insights and what you're overseeing and you're like the boss of the AI, take that robots. That's a huge piece of it. It's just like, just keep getting proprietary or unique data sets into the actual engine and let the engine start to do what AI is great at. It's like sift through all this stuff and find insights or investment ideas. Yeah. And the magic of all of this, I think, is that one, it's the kind of the first time we're seeing this type of research put together with all these different data sources plugged into it.

4:38I'm learning a lot by studying these calcium markets really closely and then also seeing where they fit into different investment theses. And, you know, another one that's really interesting, we had a report out on this was the S &P 500 year end target for 7000. That's way mispriced right now, because we've already hit that within a couple months starting the year, but the odds actually aren't that favorable for us to end the year that way. So that was another pretty interesting finding. Got it. So like, it's not so much, will we hit 7 ,000 before this date? It's at the end of the year, will we be above or below 7 ,000?

5:11Closing price. Yeah. Interesting. And so really they're quite bearish is they think there's low odds of recession, but they think that there's potential rate hikes rather than rate cuts this year on CalSheet. And they also believe that we're probably going to close below 7 ,000 is what it's pricing in right now? It looks close to that. Yeah. Interesting. Yeah. I disagree. But hey, you know what? Let's see. Let's see what happens. I do agree low recession odds. I think that we get rate cuts. Kevin Warshain going in there to raise rates. He's got a job. He's a man on a mission. You know, talk about a missionary versus a mercenary.

5:41That guy's a mercenary going in. Let's cut these things down. And then if you cut rates and you don't get a recession, 7 ,000, you know, why is that number so low looking down from up here? That's an easy number. Yeah. I think that's an easy number. All right. So options trading, this is another thing. I knew options trading had exploded in popularity. I did not know that it 3X'd since 2020. So options trading has tripled, which is a pretty big number. What are the ramifications for this? So right now we have retail investors accounting for 25 % of US equity volume. And I believe that's up from like 11 % 10 years ago.

6:13So retail has suddenly - Doubled. Yeah. It's a huge force in the market. And the proliferation of zero-day options and volatility is really good for the exchanges. And what our AI agents found that a few stock picks come to mind as far as what this trend means for investors as far as an expression, SIBO Global Markets, Robinhood and NASDAQ. So a lot of people think of, if we put Robinhood aside, the other two exchanges where stocks and assets are trading on, but you can actually buy them as individual holdings. And these stocks have done very well in recent years with the options boom, volatility boom.

6:56And according to this analysis, they should continue to outperform as individual stock picks. Got it. And when you look at this, one of the things in these reports is you get the thesis, the data, and then you get a counter argument. When you look through the counter argument, are there things that stood out to you or do you kind of feel like, okay, it's good to understand the counter argument, but you're more in the camp of the actual thesis here is probably pretty solid. For me, I'm actually very bullish on the exchanges. And again, I think Robinhood is sort of a contrarian pick in this report because I think it's down 20 % this year.

7:28And it ran up a lot last year. I'm not necessarily a super bull on Robinhood. I think the product is great. And I think it's a great business. But there are a lot of other assets I would rather own than Robinhood. I think it's a little frothy still. But the exchanges, I mean, they're great businesses. Their earnings are ridiculous and no one pays attention to them. Volatility is only going to increase in these markets over time. Options are going to increase. We're going to get more and more younger participants in markets, and they usually seek volatility compared to older demographics. So to me, I'm pretty bullish on these exchanges, and I think the report is pretty spot on.

8:04Got it. Now, you have another report here, three stocks that will win as Latin America continues to shift to the right on the political spectrum. Describe this a little bit, because interestingly, if those are students of history, Colombia pretty much had the only president that was leaning Republican years ago. And instead, everyone else was enjoying socialism and communism and all kinds of crazy things. Now it's flipping, though. There is much, much more kind of right-leaning leadership throughout Latin America. And so as that happens, how does the system think stocks can perform? So we saw this first with Argentina's Malay, right?

8:40He came in and he had more, let's say, buzzsaw policies that were more right-leaning. Chainsaw. He was walking through the street with a chainsaw. Exactly. And Argentina markets have done very well. So if we see all the major economies in Latin America start to follow in that lead, maybe not as extreme, but even the rightward shift in sentiment that could introduce more market-friendly policies, a lot of foreign capital into local markets. And the three stock picks are essentially all state-connected or state-owned oil giants. So that's really interesting finding their PetroBoss, EcoPetrol, and YPF.

9:20And these are the stock picks that were surfaced from our AI system. And right now, they're trading at about half the Ford multiples of Exxon and Chevron, which have been really popular picks this year with just the energy trade. so to me uh i've been talking quite a bit this year actually about this latin america etf called ilf that's the ticker for it but these are three specific stocks rather than a basket of latin america exposure which is what i've been writing about but from this report i learned that there are three companies that might even be a better expression uh on the bullish latin america trade this goes back to like the ai system is okay latin america is interesting because of the shift to the right and kind of more corporate and economic policies that tend to lead to stocks doing well in general.

10:05So that's like one way to express it as via an ETF of the whole kind of region. But then it's saying, okay, another theme is energy. And then another theme is state connected energy and it's kind of layering on multiple trends or themes on top of each other. And it's almost like kind of torquing down to be able to find, okay, these are the three that fit within the overlap between all these different themes. And that's where the system really is saying, hey, pay attention to this. Yeah. And we've gotten a lot of great feedback that most people have not heard of these companies. And I certainly, I read the market every day.

10:40I'm in it full time. I hadn't heard of these companies either, really. So I think the, again, the magic of a system like this is that it will put things on your radar, not necessarily for you to go out and buy immediately, but suddenly your remit is much wider of what you have on your radar as far as potential opportunities in the market. Yeah, it makes sense. Talk a little bit about as you've been having these reports generated, you're looking through it, et cetera. Are there any themes that you've been able to pull out yet or anything that you see the system starting to hit on that you're really excited about in terms of the current environment?

11:15It does a really good job of not picking names that show up in the news a lot. Oh, interesting. Undiscovered talent. It's pretty much it's looking for things that you wouldn't see on CNBC. And I don't know if that's and maybe I'm just not paying attention to the right news headlines. So they're not occurring to me. But when I read a lot of these reports and I go through and sort of check certain things, you know, a stock pick like YPF, I have not heard of that, but it's done extremely well already. And according to the thesis, it's set to continue to do much better. and even a stock like SIBO, most people would not pick an exchange to own.

11:55They would own the assets that are trading on that exchange. So it's almost like you buy the house, the casino house, instead of trading at the gambling tables. So those are pretty interesting picks. And as far as the system itself, the fact that it can generate these reports with such high volume, you pretty much never run out of investment ideas. So again, it's not something that gives you specific buy and sell recommendations, but it's surfacing these, I think, very amazing, specific, actual ideas that come in at such a high rate that you can never get to the bottom of... You'll never run out of things to trade if you really were looking for them.

12:34Yeah. What's interesting to me is if somebody is talking about something on TV over and over, like the media in general, then it is likely priced well or high. It is very rare that something is heavily covered in the news unless there's some catastrophic going on. But usually, if people are talking about it, that means people are interested in it. If people are interested in it, then it should be trading well. And so you kind of want a system that goes and finds things that are not yet talked about. Even better, which we don't know yet, but would be finding things that are not talked about today, but are going to be talked about in six months, right?

13:04Or in three months. And so being able to kind of identify that is always pretty good. It's like do something different and be right. Well, look at Bitcoin. Doing something different for a long time was great, but you then need the consensus to change. And that's really where that contrarian ends up, quote unquote, getting paid is because they were there early and able to benefit as it goes up. Well, even if you just look at these Latin America stocks, the timeline that the system laid out in the report, it's like a six or eight month timeline this is playing into. So some of these elections are rolling out this year and there's some political shifts that are highlighted in this timeline in the chart.

13:42So this is sort of an early bet in many ways on the political results falling in favor of the thesis. So that's also pretty interesting. Makes sense to me. All right, where can we send people to get these reports? ProCapInsights.com, where we're publishing a lot of research every single morning. He said that like, yo, it's a lot. All right, ProCapInsights.com. People can go there, sign up, and we'll see you guys next time. like I told you Phil's got a ton of data that AI system is rocking it is showing us tons of interesting insights that you're not going to hear anywhere else so hopefully you found that valuable please remember to subscribe on YouTube and I'll see all of you live from the desk of Anthony Pompliano tomorrow