Coinbase Is the Godfather, the Return of Cathie Wood, Neil Dutta on Jackson Hole

26:12dollars. Well, I think it is a bit of an outdated or outmoded term. Market cap. Yeah, because if you think about it, right, even now under U.S. law, after a lot of struggle and a lot of heartache, we have established that Bitcoin is not a security. It is not an equity. It is properly considered as a commodity. And I think treating it and considering it as a commodity class is probably a better way to think about it. The other point I'll just make in terms of like its potential for growth, I think you're exactly right. We don't need to see compound annual growth in terms of historical norms for Bitcoin to continue to grow and continue to play a much larger role in our system.

26:51And I think that's in large part because now we not only have the ability to buy and acquire and hold Bitcoin in custodial wallets and non-custodial wallets by individuals, but we have a lot of other ways to get at the asset class. There are the digital asset treasuries for sure. Strategy is certainly one way to go about it. But the ETFs you mentioned earlier I think were the catalyst for so much retail and institutional adoption. I actually think in terms of the law, the single most significant event in the history of crypto was the decision of the DC circuit forcing the SEC to grant those ETF applications that have been pending for years.

27:31That was a watershed moment, and that has brought in a whole new class of investor that has access to this market that never was there before. I think it smooths out the flows into the asset class because it's not fully reliant on people who decide every day, I want to place a crypto trade. Now you've got money coming from the asset management world, pensions, insurance companies, wealth management, where it's scheduled. Each month I buy X dollars of, you know, one of these Bitcoin ETFs or every time I rebalance my portfolio or whatever the case may be. I think it kind of that decision to your point, for me, that was a moment where it's like, okay, this is now permanent.

28:14You can't get rid of this now. The game is now on. The game is now on. You guys mentioned stable coins. Stable coins had a big moment this summer. I have to be honest with you. I read the S1 and then I listened to the last earnings conference call. I still don't understand why Coinbase allows Circle to exist. Why isn't it the Coinbase stable coin? Why are you guys taking marketing or distribution fees from a company that you could very easily just replicate overnight? What's the rationale behind doing that? And I know that's a client of yours, but like - It's an important partner of ours. It is.

28:49I understand all that and I know why it is, but why don't you guys just do your own? We really firmly believe that you need to have network effect in stable coins. And we want many distribution partners. We want to have an interoperable stable coin. we want to build stablecoins as a utility layer of the overall crypto ecosystem. And we thought, starting in 2018 when we partnered with Circle to create USDC, that doing this as a multi-party ecosystem was the best way to do that. We have an important role in this through distribution. We were a key catalyst in getting USDC adopted by DeFi, really embedding it into the trading community because we have such a large exchange and distribution capability.

29:31but we are both incentivized to add even more partners. We want to add more people. We want to add more on-ramps and off-ramps, which is why we partnered, for example, with Shopify to embed USDC to Shopify's merchants and why you see Circle going out and bringing their own partnerships to the table as well. This is going to be a utility that we bring to this overall space. Most of the money in Circle, to be clear though, is custody at Coinbase or do I have that wrong? We hold more assets on platform than they do at this time. So at the end of the second quarter, We had over$14 billion on our own platform.

30:01But that's out of the$60 billion in the overall ecosystem. So a large percent are just held in self-custody wallets, held in DeFi protocols, distributed throughout the ecosystem. I think that distribution in 2025 and presumably beyond validates the original vision back in 2018, that more participation, broader distribution, and ecosystem would lead to greater adoption. How important are ETF custody and trading solutions? We referenced this statistic before that about 80 % of the money that's being custodied for the ETFs is at Coinbase. I was dead wrong about this prior to Coinbase coming public.

30:41I said very publicly and incorrectly, I viewed the ETFs as being competitors to people having Coinbase accounts. Why would you even bother opening an account and trading crypto at Coinbase if you can just do it at Fidelity and Schwab? Horrible take. But it takes a big man to admit where you got it wrong. Very big man. And horrible take, but I'm on the record and everyone knows I said it. Okay, so that was wrong. What ended up happening was it was such a hugely beneficial thing to the overall crypto ecosystem that it was a net positive. But also, you guys became a substantial player in the ETF products.

31:19So talk to me about why that's so important to you and what you see happening there these days. I think it just further cements that we are the partner of choice. We have built a platform that is institutional grade, that you've had these large, reputable asset managers kick the tires of our platform and compare us against many other StradFi players, other crypto players, and Overwhelming chose us. But what we are trying to do, as I mentioned in the opening, like we are trying to become an infrastructure supplier to the overall crypto economy. And so that is our deep liquidity on our exchange.

31:52that is our custody platform where we can custody all types of these bare instruments, different protocols with different security considerations. We are unique in this. We've done this for over a decade to safely store these assets. And this is where it enables other banks, other fintechs to build on top of us. And so the custody is the root. We announced in the second quarter, for example, that PNC Bank is a new partner of ours where they have chose us to embed our products underneath their platform so they can offer crypto trading and storage to their customers. So it's just further support for us being the platform of choice of large institutions to turn to when they want to build crypto offerings.

32:30You're the picks and shovels or the arms dealer in that analogy. You don't care if BlackRock garners more Bitcoin assets for their fund this month versus another player or another player. It's just about you can work with everyone and they can all use your systems. We want to see the partners succeed and thrive. And by the way, you were hardly the only one to raise those questions or concerns. A short while ago, I will tell you, I mentioned the DC Circuit's seminal decision ordering the SEC to grant those ETF applications. We actually filed in that particular case that Grayscale brought to achieve that result an amicus brief.

33:09And I can't tell you the number of people who reached out to me afterwards and said, Why are you guys supporting a firm looking to take your lunch? Isn't that going to cannibalize the people trading crypto on your platform if they can just do it in an ETF? But you guys had the forethought to understand the bigger picture. Robinhood would say that they are as large a player in crypto as you guys are. But then they also transcend crypto with a brokerage platform and custody for traditional assets. That's how long before you guys have to acquire interactive brokers or public or eToro or a TradFi brokerage firm so that you also can offer stocks.

33:51Because in the eyes of the consumer, the younger brokerage account holder, they don't see the difference. They would love to be able to do everything all in one place. So you have meetings about that. You're thinking about starting your own. Where does that have to get to? Absolutely. And as we shared on our second quarter earnings call, it is our vision to be the everything exchange. Our vision is to bring every one of those assets on chain. This is a critical difference. Which is the critical difference. So tell me about that. So just like we've been talking about decentralized finance, the ability to self-custody, to own your own assets, we want to bring all of those assets, securities, prediction markets, commodities, real estate, restaurant shares, you name it, assets, broad categories of assets on chain as tradable, ownable, individual assets.

34:37We started with being the easiest place to buy spot commodities, Bitcoin, Ethereum. Recently, we've been diversifying into derivatives. And so we launched futures. We now have 24-7 futures in the US. We just closed our acquisition of Deribit, which is gonna bring options to the platform. So now we have spot, derivatives. The next frontier is equities. And the next frontier is being able to offer tokenized equities. We haven't given the exact roadmap of how we will do that, but we believe that we also need to bring that to our customers. You're going to get a brand new set of competitors. You're going to get Vanguard, Schwab, Fidelity, in addition to all of your crypto competitors.

35:16We are. It'll be a deep frenemy in competition space. Why are spreads still so wide with spot digital assets? Like, why am I paying Robin at 85 basis points in whatever you guys are taking? It's not nothing. Why is that still the case? It's not commoditized yet, quite candidly. So I think that what you see is when things become commoditized, spreads will compress. When things are broadly available, when you can then buy every asset everywhere, you can stake your Ethereum and Solana on every platform, you'll start to see spread compressions. We offer a more differentiated experience today where products and the depth of our products have enabled us to have premium pricing.

35:52We run price experiments all the time, but we absolutely believe when commoditization will come spread compression. Why do you think more people don't use, more traders don't use Coinbase Pro? Are they not familiar that that's an option? Everyone's familiar is an option. It's side-by-side in the app. I think that people enjoy the most simplistic experience. You can miss it. Fair. I'll take the feedback. We also have Coinbase One. So we have tiered pricing where you can now even pay$5 a month and get fee-free trading. So we offer a number of ways. I didn't know that. I would have signed up for that.

36:22I will sign up for that. Brand new. Brand new. Coinbase One. The day is young. Yeah, now we're talking. Okay. Okay. You guys have been striking tons of deals with some really big players. I know Michael wanted to make sure we asked you about the JP Morgan deal, which is fresh, I think, last week or the week before. Two weeks, two weeks. Only the biggest bank in the country. The largest bank in the country, one of the largest financial institutions in the world. And pretty vocal about, like, Jamie Dimon was not shy about his feelings about the industry. They have not been shy in the past, that's for sure.

36:52So this has got to be a huge win for you guys. But their customers want to be in crypto. Customers want to be in crypto. So they're doing the right thing. Yes, exactly. They are. And they've been an important partner of ours. They've provided bank accounts to us for years. And we're really pleased to continue to broaden the partnership. But I just want to underscore partner of choice. Yes, JP Morgan chose to partner with us. We're now enabling more and more on-ramps to crypto by enabling their credit card customers to redeem points into our platform. I mean, who else were they going to choose?

37:17I mean, maybe that's credit to you guys. But this is credit to ours. We've built this space. We are the infrastructure provider of this space. And we've done it in a completely compliant way from day one. I think that has also been a critical element of our appeal to our partners. Another coming unlock is banks. And they spoke about this. The head of the FHA said this is coming. The ability for banks to look at your digital assets as assets that count towards your net worth. That's right. We see you have$100 ,000 in Bitcoin. Sell it. Convert to cash. We'd be happy to loan against it. That's right.

37:48I think we'll unlock collateral to pledge against various loans you're taking. This is all coming. And I think maybe we should go into market structure because I think market structure rules are critically important to us looking at all of these assets as collateral for enabling trading and cross margin as well. So tell our audience what you mean by market structure and why is that relevant to this? Yeah, by market structure, we're referring to maybe the most important piece of the legislative puzzle that the industry as a whole and Coinbase in particular have been working on Capitol Hill now for well over 18 months.

38:19Just recently, you saw Congress pass and the president signed a massive new bill on stable coins. Genius Act, and we're thrilled to have it, and we're grateful to the political leadership for that will. But the market structure legislation that we believe is critical to completing the task at hand remains pending in the Congress and awaits a final vote in the Senate to match the vote in the House so that we can see this thing signed by the president in short order. What a market structure bill will do, among other things, is confirm for the first time a framework for deciding what assets may fall to the federal securities laws and which assets are properly treated as commodities.

38:57What is the appropriate role for the SEC in that world versus the Commodity Futures Trading Commission? What requirements need to be in place for disclosures so that people acquiring digital asset commodities can understand what it is they're buying and what it is they're getting? So these basic standards need to be in place in order to provide full confidence and full clarity, hence the name of the legislation in the House on these issues. But the good news is we think this is coming. The president made it very clear he expects to see a bill passed by the Congress this year that he can sign. And leadership in the Senate is working diligently.

39:32Is there division though in the community amongst the diehard crypto native people who would say, why do we want this? Leave us outside of the financial system. We're decentralized. We don't need rules. We don't need frameworks. What we need is to be left to hell alone. That kind of crypto libertarian mentality still does exist. Or is it sort of dying down as even the hardcore crypto people realize it's a fairy tale to exist in your own bubble. and you have to learn how to play. Yeah, there are still purists out there to be sure. But to them, what I would say is, let's not forget recent history.

40:10We saw what can happen in the absence of legislation when an administration comes into power. Lawfare. Yeah, they're gonna rely upon regulation by enforcement in the future, just as they have in the past, because the current law doesn't provide for guardrails around that. What this market structure bill, this Clarity Act passed in the House, would do is finally enshrine in U.S. law standards that limit the ability of a new administration or new regulators to take a very different view. And I would say even in a world where we have very positive, even visionary leadership from the regulators, like we do right now, just look, for example, at the recent speech that SEC Chair Paul Adkins gave, laying out a vision for crypto that I think could not have been more expansive and welcoming.

40:56Almost as if the industry itself wrote the speech and passed the truth. Well, I can't say any of us picked up the pen, but I certainly didn't have any red lines for them. Can I ask you a personal question? Sure. Okay. You're a veteran of Facebook where you worked with Mark and Cheryl in the endless battles with Congress, various agencies, foreign governments, foreign regulators. You're a wartime consigliere. What do you do now? The industry is at peace. Some would say the industry is more influential over the government than any other industry in the country. I'm not suggesting that that's a negative thing.

41:31It seems like it's constructive. I don't see who the victims are, quite frankly. The more your industry institutionalizes, the better for the retail community. So I'm actually in favor of all of it. So I don't want to sound overly cynical. What does someone like you do now that you're not at war and you're not forced to sue your own regulator and you're not necessarily battling with 50 different states individually. What's the - Well, I appreciate the reference to one of my favorite films of all time, The Godfather. Godfather. So you were definitely a wartime consign in the area at Facebook in 2016.

42:05I think we could all establish that. Well, look, the reality is that even though we are in a much more favorable climate at the federal level today than we were just a short time ago, there are real challenges that remain. I would start with, for example, the states. not all of the states have fallen in line. Several have chosen to continue this senseless. Which are the most anti-crypto right now? Well, I would say that the handful of states that have chosen to pursue litigation even after the SEC withdrew its entire campaign would be at the top of my list. Right now, for example, Coinbase faces a completely meritless lawsuit by the state of Oregon for some reason that doesn't seem to understand that it's 2025, it's not 2023.

42:48But we'll deal with that in short order. And we also have, I think, important issues to resolve outside the United States. We tend to focus only on Washington for obvious reasons here in the U.S. But there are other jurisdictions, I think, that are further behind where the current administration is on crypto policy. And we need to make sure that they catch up. So your work is not quite done. Not quite. Okay. And one for Alicia. Alicia, last one for you. Alicia May. I've listened to you over the years on the quarterly calls. how has that changed from your perspective over the years? What are investors giving you in terms of roadmap, benefit of the doubt, higher multiples, all that sort of stuff versus, say, a couple of years ago?

43:29Well, a couple of years ago, they were worried that we wouldn't exist. After FTX, it was some pretty dark days. Now people are very focused on the future. Everyone's excited about the product roadmap. They are very excited about what we're building next and less focused on what are your expenses quarter to quarter. So I think that we now need to execute. We need to deliver on our roadmap that we have set forth a very exciting vision with everything exchange and continue to show the discipline of managing our expenses and continue to show top line growth. It's a great thing that I get fewer and fewer questions on the quarterly earnings calls than I did just a short while ago.

44:03Yes. Yes. I would agree. The less you're talking, the more positive the environment is. We should all look to hear much more from Alicia than me. That's for sure. Well, guys, I want to tell you, in the relatively short time, this has been a publicly traded company. You guys have done an unbelievable job for investors. Stock has done very well. I know most people would say you've done a great job for the customers of the company as well. And we really appreciate you stopping in and talking with us and sharing your story with our listeners and viewers. Thank you so much. Thank you. Thanks for having us.

44:35All right, guys, make sure to like and subscribe. Go ahead and where should people check out more information about the latest doings at Coinbase? Where can we send them? Well, there's always Coinbase.com, but I am on X and posting frequently at I am Paul Graywall. I'd also encourage everybody to check out our presence on Discord and Telegram and elsewhere where we have a pretty active presence as a company. I like that they're talking. Coinbase talks. Okay, a lot of financial institutions don't really talk, and you guys talk. So, all right, congrats on all your success. We appreciate it, and we hope to talk to you in the future.

45:11Thank you. Thank you.

45:32oh my god you guys look alive i am no i'm furiously closing out tabs i had way too much open, which would affect my resolution. And I want people to get the full effect. Hey, it's five o 'clock on a Tuesday. We are here with an all new edition of What Are Your Thoughts? For those of you checking out the show for the first time, his name is Michael Batnick. My name is Josh Brown. And each week we gather together here with a few thousand of our loyal live pounders and talk about all the biggest developments in the markets and the economy. And we have an absolute blast doing it. So thank you guys for joining us.

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47:39Learn more at betterment.com slash advisors. Investing involves risk, performance not guaranteed. Okay. We have an action-packed show. There's all kinds of - Who could it be? Look who's here. You guys, we are in the presence of absolute greatness. Neil Dutta has rung the doorbell. Yeah, literally. Hi, guys. Neil, thank you so much for stopping by and perfect timing because starting on Friday is another Jackson Hole August weekend. And this is the last one, we think, for Jay Powell. What do you think? I think that's about the safest bet you can make. It's going to be his last. Neil, are you a Jackson Hole truther?

48:28I don't even know what that means, but are you? Well, I think that, what, what is it? So what does that mean? Does he believe that it exists? I mean, I certainly believe that it exists. I think if I had to say what it would mean, it's like that you're going to get some big signal out of it, right? I mean, because this dates back to like the Bernanke era, right? When he basically greenlit QE2, if you remember, at Jackson Hole. And really, ever since then, everyone's always kind of looked at Jackson Hole for some kind of signal. I mean, if you remember last year, Powell basically greenlit a September rate cut.

49:05We didn't really know whether it was going to be 25 or 50, but he greenlit a cut. He said the time to adjust policy was now. So it kind of comes and it goes. I mean, there are times when there's not really much news that comes out of Jackson Hole, and there's times when there's lots of news that comes out of Jackson Hole. So we'll see which one this will be uh last year the speech was 15 minutes long barons uh has a piece uh he's calling they're calling this year um powell's last stand like this is his last chance to cement his legacy is the way that they're taking it like um basically he might end up using this as as like a defense of the independence of the fed might be like a whole thing about that who who really knows um but last Last year, when he greenlit the rate cut, I don't think people thought, OK, we'll do one and done.

49:58But that's how it ended up being, because the economic data just, I guess, in his eyes, didn't justify more. So even if he does signal that they're ready to cut rates in September, nobody should take that to mean anything beyond September. Well, I mean, last year, they greenlit the September cut. then they ended up doing 100 basis points worth of cuts for the year, right? They went 50 in September, and then they went 25 in each of the remaining two meetings. Yeah. You know, it's interesting, like, listen, looking at that Barron's article, and like, what is his legacy? Because obviously, they're framing it in a way of like, okay, he's like this, like, last line of defense against Trump and the Fed's independence, but and like, inflation fighting and so forth, and leaning against tariffs.

50:46But let's not forget, like, before COVID, his legacy was supposed to be the guy that had this inclusive labor market. Remember that? I mean, basically bringing people in at the margins of the workforce and sort of, you know, I guess I can say this as one, like, leave no minority unemployed kind of thing, right? I mean, so that, I mean, it was basically about running the labor markets hotter and sort of, you know, inflation expectations were anchored. And so the Fed had more room to kind of let the labor markets run hot. That's what his legacy was going to be before. What do you think it is? What do you think his legacy is as the chapter is closed on, see it, Josh, as the chapter closes on Jerome Powell?

51:31What do you think the legacy is going to be? I mean, I think if you give it enough time, I think his legacy will be one of, you know, I mean, the Fed basically delivered reasonably good economic outcomes in pretty trying times. That'll be his legacy. I mean, you know, and part of this was stuff that Governor Waller talked about before, which is, you know, I mean, how do you get a soft landing? And, you know, the Fed leaned into this idea that you could, you could essentially trim job openings without seeing much of an increase in unemployment. And, you know, by and large, that bet was a successful one.

52:13And if you look at, I mean, you have to grade on a curve, right? Like, could the Fed? He was coaching the 2017 Warriors.

52:23You have to grade on a curve. That's kind of what I believe. And so, you know, if you grade on a curve, I think the Fed did reasonably well over this period. All right. So zooming in on where we are today, what do you think, where do you think rates should be? And what do you think he's going to tell the world in a few days? Well, I think that he's going to try to give us some meat around the bones of how they kind of think about both sides of their mandate, right? They have one of employment and they have inflation. And the tension right now is that the labor markets are getting worse, but they think inflation might be getting worse too.

53:09And so how they resolve that tension is going to be very important. Now, Powell has a really tough job because this isn't like last year. Back then, everyone was on board for rate cuts, right? It was really just around the timing of when they would do it that year. It wasn't whether they would do it or not. That's not the case this year, right? Right now, it's like a bimodal distribution. You have a bunch of people that think they should cut twice, and you have a bunch of people that don't think they should cut at all. And so it's really his job to kind of find a middle ground. And that's why, you know, Bloomberg has this article, Wager for Half-Point Rate Reduction Faces Test of Powell Remarks.

53:50I don't think he can make a strong signal like that at Jackson Hole. Like there's no way you can do that before the meeting because you have so many people that are out there telling you and they're still out there squawking. I mean, you had a bunch of, you know, regional Fed presidents and so forth coming out and talking about this. There's no way to front run that meeting and kind of lay down the, you know, the pipe for a big upfront move. Tell me if this is a reasonable take. The Fed cannot control tariffs and input prices. The Fed cannot control the labor market, particularly entry-level jobs that are getting smoked.

54:32But what they can control and what they have absolutely wrecked a huge piece of the economy is the housing market. The housing market is all sorts of effed up. and for that alone, rates should be at least 50 basis points lower. Is that reasonable or is that ridiculous or somewhere in between? I would argue that the Fed does have a little bit more. Over the long run, the Fed doesn't have control over the unemployment rate, obviously, but I think there are times where if you provide some lift to the economy by lowering interest rates, you probably will generate some demand for labor. Do you think they will today?

55:12Didn't that environment exist today? Sure. I mean, if you like, for example, you just mentioned housing, right? I mean, I think I agree with you, by the way, on housing. I think housing is an absolute mess. And we saw more evidence of that today, right? I mean, you have, you know, basically the main asset that's used as collateral in the banking system deflating in price for the last five months. That was out from Zillow this morning. And then, you know, look at building permits today. Building permits hit another cycle low. And, you know, I mean, builder sentiment was weak. So we had a raft of housing data this week that were all sort of not great.

55:49And so I would tend to agree that if you have a housing-focused view, that it kind of makes it pretty obvious that you should be cutting. But at the same token, I mean, this is also probably one reason why builders are probably on the verge of cutting construction workers, right? I mean, they just need to rationalize their building model relative to what they're selling. So that means cutting costs, which means cutting people. Oh, who could it be? You have no idea what just happened. There's like a... Power come out? No, there's like a Wi-Fi setup that just crashed off the wall onto the floor.

56:28We're going to blame Hurricane Aaron. Fed's got to cut. Josh, welcome back. But Neil, so for people that are like... No, it's all good. For people that are looking around and saying, the S &P is at an all-time high. Chamath is launching a SPAC. There is speculation in the streets and in the sheets. How could they cut rates? Isn't that such a red herring? Does that matter at all to the conversation, the inputs that - You don't need to take my word for it. You don't need to take my word. You have a very good analyst in your own shop that made that very precise argument. Shout out to Kelly. So shout out.

57:03Yeah, Kelly made that argument. And obviously, I agree with her. I mean, you know, look, I mean, you usually at the time of the look at the time of the rate cuts, the markets are not that far from their highs. That's also true, by the way, of like at the time, if you look historically of like the first negative jobs number, the stock market is not too far from its highs. So I think what's important here is like if you're the Fed, do you care about financial market conditions or do you care about financial conditions in the real economy? Like if financial conditions are this loose, why is it so difficult to buy a home?

57:34Why is, I mean, you look at the Fed's own loan officer survey, lending standards for CNI loans, CRE loans, multifamily residential loans, they're all still tightening. Different parts of the consumer credit space are also tightening. So just because financial market conditions are loose doesn't necessarily mean that financial conditions in the real economy are as well. All right. Last thing for me, as we go into the week, there is a, I think a misunderstanding or miss expectation. I don't know what I'm looking for. People tend to think that Jacksonville is a market moving event. And unfortunately it was in 2022 when we were at future proof.

58:12That was a lot of fun. Not, but bespoke has this chart showing how the market has reacted during these weeks. And it's sort of nothing with nothing. I mean, maybe a little bit elevated, a few outliers, but overall. Well, this goes back to the point that I made earlier, is that there are times when it's a huge signal for what's about to happen. And there are times when it's just sort of an academic discussion among friends about things they're looking at in the future. And this time, it might be a little bit of both, right? I mean, the Fed's going to talk up their framework review, right? I remember back a few years ago, they had this flexible average inflation targeting thing that they put in place.

58:49And that lasted all of about a few weeks because of COVID. it. But, you know, so this is sort of, you know, you're going to have a little bit on the near term, and I think a lot on, you know, how the Fed is thinking about how they're going to deal with supply shocks in the future. My only question is, why don't you get invited to Jackson Hole or have you been and you've opted not to go? because it would be much harder for you to analyze this if you became part of the show itself. I think the primary reason why I'm not invited is because I don't have three letters after my name. Is it as simple as that?

59:29No, I mean, I don't. I mean, it's not. Look, I think some of the bank economists have in the past gotten invited. But really, this is, you know, it's central bankers talking amongst themselves. That's kind of what I'm presenting their research. And, you know, I mean, that's largely what it's been about. I think the Chicago Fed or the Booth School at the University of Chicago does a nice monetary policy forum. I'd like to be invited to that one day. That'd be cool. But not expecting an invitation to Jackson Hole anytime soon. Well, if you do get invited, yours will be the commentary I most look forward to coming out of that event.

1:00:09All right, Neil, thank you for bearing with us. I'm sorry I dipped out for most of that. I will be rewatching it later. Technical difficulties, but awesome to see you and enjoy your end of summer vacation. Thanks, Josh. Thanks, Neil. Later. All right, we're back. You good? Yeah, no, I'm great. You got to take us to the next topic. I'm attempting to get my Wi-Fi back up, but I would not believe the sound that this made when it all came crashing down. We're talking. This is good timing because a couple of weeks ago, was it last week, actually? You and I played the game maybe two weeks ago. It was two weeks ago.

1:00:43Which falling stock would you most want to buy? And I believe - The falling knife game. We love that game. I believe we landed on UnitedHealth. Maybe my memory is faulted, but either way, either way, there was news last week because the 13 Fs came out and a lot of people bought this knife, Berkshire included. So they bought more than 5 million shares throughout the quarter. We don't have an average price. They spent one. Oh no, yeah, my bad. We do have an average price. I could back into it, but I didn't do that. So apologies. They bought 5 million shares for$1.6 billion. Chat, what did they buy it at?

1:01:17Help us out. It is, chart on please. It is their 18th largest holding. So they've got a$1.6 billion position out of, call it 200 and, I don't know, the market's up since then,$280 billion portfolio. Tiny. Yeah. Tiny. But we, all right. So I think it's important to point out that a lot of times they will start out buying something and they're nowhere near finished. They might never buy it again. They might sell the next quarter. They might spend two years adding to it every time they report. Every time they file a 13F, they might add to it. So this is one of those things where it's too early to really assign a hard and fast decision on what they're doing here.

1:02:09but it is classic. It is classic Buffett. I don't know if this is one of his picks or one of the lieutenants. I would imagine they're involved in the conversation, the young guys, because he's retired as of the end of this year. But what,$25 billion in earnings at a$250 billion market cap? This is what they do. I forgot to include, I didn't include this in the image because it was tough to see, but I clipped that from SlickChart. So shout out to them. All right. It's the math. I use this thing. Remember this? $320. That is the average price that they were in at. UnitedHealth traded as low as$235.

1:02:52So, oh my God. They thought they were getting a bargain and maybe they did, but they still had to sit through a nasty drawdown. And mind you, the price today. So it popped on the news, obviously. It wouldn't take much for this rubber band, which is stretched all the way down to pop a little bit. The stock is still at a$304. So still a little bit underwater, but yeah, no, listen, United health is not a company that Berkshire could buy. It's a gigantic company and who knows what their intentions are, but they're not day trading this thing. They're not looking for a quick, you know, five, 10 % pop.

1:03:23That's not what Berkshire. I agree with that take. And I would also point out, it's even more notable that David Tepper, Appaloosa was also buying it at the same time. And I'm sorry, I don't know if there are historical examples of stocks where they got a Dow stock cut in half with both David Pepper and Warren Buffett buying it at the same time. But I have to believe that's going to have a good outcome for the people that. Now, a lot of the people that I do TV with, they were long the stock already. And they were excited because in many cases, they owned the thing from 600. They rode this thing down from 600 to 270.

1:04:04They averaged down the whole way down. They defended it. And now like Buffett coming in, in the low 300s, I feel like it's a get out of jail free card. It's validation. It's validation that like, see, there is value here. Unfortunately, if you loved it at 600, it might be a minute before your investors care. But at least you save a little bit of face on TV. Having defended the stock. Here were some other moves. They took a small stake in steel manufacturer, Nucor, Lamar Advertising, Security from Allegiant. They got back into homebuilders. I think that's notable. You and I are in that corner. They bought Lenar and D.R.

1:04:45Horton. And they did some trimming in Bank of America and Apple. He's got a long history of being in and out of the homebuilding and the housing-related stocks. I thought it was really interesting that Home Depot missed on the top line and the bottom line, and the stock traded higher. that actually helped the Dow buck the bigger trend of down stocks. Home Depot is a$400 name. And I know you don't care about dollars, but the Dow does. And UnitedHealth last week and Home Depot this week, those are two kick-save stocks with high dollar share prices that helped the Dow 30. Oh, shit. So, oh, shit. Was that a misprint?

1:05:28My bad. I just got excited about a stock that was the fat finger trade, I suppose. All right. Anyway, Home Depot is a stock that I own. And I didn't read the report yet today. But obviously, investors don't care about what happened last quarter. Nope. Because it's not relevant. All that they care about is what is the next Fed chairman and rates coming down. And that really is it. So, John, can we throw this chart up? I thought this was interesting. I saw – I couldn't find it. I saw Robert Armstrong, the FT, did a post on Berkshire versus property and casualty companies, and I couldn't find it.

1:06:03So I recreated it. Here's a chart. People have talked about prior to, I guess, the last couple of years, over the last, like remember there was a time not too long ago, over the last one year, five year, 10 year, 15, 20 years, Berkshire had underperformed the market. Not anymore. Not anymore. So the purple line is Berkshire. The blue line is the S &P. and the orange line is, I guess, what you would bucket them into. Although I know they're not really a property casualty company, but certainly they are a giant insurance company. And however you slice it, I mean, they've kicked ass. The stock has worked every which way.

1:06:39Yeah. And what's so great. And what's so crazy about it is that this, the outperformance is persisting through this AI moment and the cloud computing era. And Apple obviously helped them a lot. But then insurance business was great last year. Premiums were high. Not a lot of underwriters were out in the market. And there weren't any massive catastrophes. There was the wildfire episode. But that was a great year, for example, for all the P &C insurers. And that's a huge part of Berkshire's business. I know Geico is doing really well. And then the railroad was doing really well. So there's just so many different ways to make money as a Berkshire shareholder.

1:07:30The exposure to financials that they've largely taken off by now, but they had on. So it's like, I don't know, I need to shudder to refer to any individual company stock as an all season kind of stock. But if ever there were one, I really feel like it's Berkshire. Even when people are disappointed with it, all that usually means is that it went up slower than some other index. So it's definitely having another moment again this year, though. I agree. Last thing before we move on to Josh's topic, if he comes back, Josh, come back, is Michael Burry. Credit to him. This guy has a sense of humor. So his 13F came out, and who knows what positions he still has on, but he famously got mocked and ridiculed on this show as well as others for just tweeting sell, which is a fairly irresponsible thing to do, especially when it doesn't work.

1:08:26If it worked, yeah, hindsight is 20-20. We probably would have spoken differently. but we did he'd be on the cover of yeah no but every everything but anyway he the guy's got a sense of humor he tweeted by exclamation point with all the activity that he did and you know whatever credit to him um he was getting in there and uh he's got some positions that he probably made a lot of money on although those lulu calls that doesn't look that doesn't look like that aged well but uh but whatever he's you know he's laughing at himself so appreciate that all right But what, so I can't, I can't see what I wanted to discuss next.

1:09:00So just tell me what it is. All right, chart on prompt chart on. So we're talking, uh, that there are now 30 ETFs. Our Fred Todd zone did some work here. So Josh, can you see what we're looking at? If not, I'll talk through it and then you could comment. Yeah, no, no, I can. And I love this because it's such a reminder. It's such a powerful reminder that sometimes you can have a theme that's so popular. then everyone knows it's going to work. And like the knee jerk contrarian in people is to be like, sell it. But like, then it just keeps on working. And for me, that's the story of 23, 24. And now the first eight months of 25.

1:09:44AI has been the obvious growth theme for the entirety of the last two and a half years, to the point where there are 20 different pure play ETFs, They're all raising money. They're all buying the same stocks. And then also in Todd's work, there's another 10 ETFs that are like AI infrastructure. They're buying the utilities and the natural gas transmission companies. And it's obvious to everyone and also still a great investment. Not everything has to be mysterious, I think is my point. Not everything has to be like, oh, this is so popular. I'm going to go the other way. It's really important to fight that instinct because the herd is not always wrong.

1:10:31They're wrong at the end. They're wrong at the beginning. In the middle, the herd is the herd because whatever they're doing is working. What are your thoughts? So it's funny. Ben and I spoke about that exactly today, about people wanting to make money the hard way by being contrarian. But yeah, you're right. And I would argue that the obvious trade, and again, hindsight, but even still, was the FAANG stocks. That acronym, I think, was born in 2017. And there's been people that have been fighting this for going on eight years. By the way, I didn't even know that IFRA was a thing. John, throw that chart up, please.

1:11:09So IFRA is the iShares U.S. Infrastructure ETF. and flows are coming in, not surprisingly at all. And let me tell you, I'm looking at the top 10 holdings and it's one, two, three, four. Sorry for counting on air. There's four industrials and six utilities. The largest stocks are CSX, Norfolk Southern, huh, Primorus, which is not a stock that I know, Evergy, and in fact, you know what? I don't know any of these names, if I'm being honest. Hawaiian Electric, Bowman Consulting. So Sean and I did a write-up last, I think it was last week or the week before. First of all, our best stocks in the market list is loaded with utilities.

1:12:01And we're trying to write about them individually because nobody knows anything about any of these companies. And one of the most interesting ones we wrote about was Dominion, which is in Virginia. And it's like, I think we did this as Make the Case maybe last week. But you're talking about a company where all the data centers are within their domain. And you talk about an AI play. All the software, all the chips, all the GPUs, all the data centers are worthless if you don't have electricity coursing through that. that. And the fact that all those data centers are located in Loudoun County, Virginia, of all places, and this just happens to be the regulated utility that's sitting there electrifying everything.

1:12:53And that's obviously a utility stock, but it looks incredible, technically. It does nothing but go up because the estimates keep going up. There are so many stories like that that we don't associate with technology. But the charts are just lower left to upper right and continue to work. So why is that happening? Well, you've got 20 different ETFs that are allocated to these stocks and people are buying these ETFs every single day. And they won't stop until they get some sort of a signal to tell them to stop. So there's iShares US infrastructure ETF that I've never heard of, ticker is IFRA. The thing has$3 billion in assets.

1:13:34And needless to say, it didn't exist three years ago. Okay, like it was just zero to 3 billion in a couple of years. Impressive. Josh, you had Sean make a chart on VGT, which is the Vanguard Information Technology Index Fund. I'm curious, why do you care about this one? And chart on, please. According to Todd, this is the first sector ETF ever to break a hundred billion dollars in AUM. Oh, wow. The Vanguard one. Huh? Huh? How do you like that? More than XLK? No. Wow. No. And I think it's a model portfolio story. Oh yeah. Yeah. There's no other explanation, but still. So this is what I think. I think financial advisors are trying to please their clients, and they're using this as an overweight mechanism to just give them more exposure to the most obvious trade on earth that's been the most obvious trade on earth for the last two years.

1:14:38As we talked about, this is such an easy way to do it. It's like, oh, just slap in 10 % VGT. It's low cost. It's an index. It's Vanguard. So no one's going to yell at you. They're not going to it up. And you'll end up with exposure to these tech stocks that just they will not relent. Like they go down for two weeks and then they go up even more when they recover. Like look at semiconductor stocks. They crushed these stocks this spring. And then now they're up like 30 % from where they started. So I think people are using VGT as that kind of like, let me shut my client the f*** up overlay. And it works.

1:15:19It's doing the job. Now you're an advisor. Look, I talked to Terranova about this. Joe Terranova's got a momentum and quality fund. So he's screening for quality and he's screening for momentum. And he's got whatever it is, 40 names, 50 names. he had advisors tell him like guys at UBS guys at Merrill Lynch, he knows these guys forever. He's been traveling around the country, talking to advisors and they tell him like, Joe, I don't know these stocks. So I use your ETF so that when my clients call up and they're like, why don't I own Palantir? Oh, you do here. You own them in the Joe T. So it's interesting.

1:16:01Like it's, this is like a thing that advisors and portfolio managers are struggling with. And I think the VGT breaking a hundred billion tells you all you need to know. That's advisors shutting their clients up. Here, you happy? Here's your tech overweight. I gave it to you. Okay. Can we talk about funding your grant now or whatever you're working on with the client? So we have more from taught here or that's it? There was one chart that we skipped over. I mean, we've discussed it. The AI-focused ETF inflows going vertical. Listen. The bottom pain is the inflows? I hate to short-term who gives a shit, but it certainly feels like we might be at a pause.

1:16:52It just went everything went parabolic. Everything went vertical. The headlines, it got It's stupid. We're in silly territory. Did you see that Palantir just erased its entire post-earnings gain? I did see that. I shared that. That's a wild chart. It's an Empire State Building chart. Yeah, and Carp and our boy Dan, they were talking a lot of shit on the call. The stock gapped the hell up higher, shut every bear up, went up for a few more days, and then whoosh. I mean, listen, the Bulls have had the last laugh or they're enjoying themselves. Who cares? It's down 60%. It's up a gazillion percent.

1:17:36But yeah, we'll see. All right. 16. It's down 16 % from the high. Yeah, whatever. So yeah. They can announce one contract with like Russia tomorrow or who the hell knows what they could announce and get that all back. Before Bears start getting salty and start flexing, it was at 66 at the April low and went to 190. It's now 155. So we'll see. All right. Last week and every week, we talk about these gigantic tech stocks that are not even tech stocks. They're everything stocks. Amazon being a classic example of what even is it? How do you describe it? It does so many different things. And like a gigantic ocean liner, it's just demolishing anybody in its wake.

1:18:27And this week was Instacart. Now, the shares have since recovered a little bit, but what am I talking about? Here, here's what I'm talking about. This is from Bloomberg. Amazon.com plans to offer same-day grocery delivery in 2 ,300 cities by the end of the year, more than doubling the current number and making it its latest attempt to muscle into the$1 trillion grocery industry led by, of course, Walmart. This is the face blower to me. So US shoppers spend$1 trillion annually on groceries, and yet online grocery sales represent less than 20 % of that. Now, it's still, it's a gigantic number and there is a natural cap at some point.

1:19:05Like people want to go to the grocery store. Not everybody has Prime, et cetera. But still, there's room there. Yeah, and it's not even just that there's room there. It like forces Target and Walmart to play defense And because, you know, those stores have very, very successfully used grocery to drive foot traffic for people to buy other things while they're getting their groceries. And it's been an amazing strategy. But if Amazon starts picking off grocery customers, well, those are less trips to the store, to the physical store. I don't know that Amazon's e-commerce lead is terribly powerful versus Walmart anymore.

1:19:54I think a lot of people just interchangeably will order things from Walmart's e-commerce operation at this point. But Amazon going same day with things like produce and meat and eggs and the kinds of things people don't want to order and wait a day for, the kinds of things like people like, no, I want to make this for dinner tonight. or no, I either, I get the eggs now, or I have to go to the seven 11. I have to go to like a convenience store or a supermarket. Um, Oh, don't worry about it. Amazon will have them here by five o 'clock to me. That's behavior changing. And it's a really big deal. And, um, you know, the maple bear thing with Instacart at first, it's the worst service ever.

1:20:37Have you ever used it? No, Instacart. So I had to, on a couple of vacations, I had to like, uh, order some stuff. because I was coming back from Florida and we just had nothing in our fridge and we were going to land and it was going to be all the stores would be closed or be too tired. So order groceries so that I get off the plane, I get home and there are plastic bags sitting in front of my door waiting for me. I do like that, but like half the items that are listed in the app that they say the store has, they don't have it or they have a different flavor or the wrong size. So then you have to have this back and forth with the driver.

1:21:13Either you have a setting where you say to the driver, pick the closest thing available or the driver has to notify you. So like, oh, you wanted a lemon, Italian ices. They only have chocolate. So now you're having like this back and forth on the app, which sucks. And then they screw it up anyway. And then by the time the fees are taken out and you're adding a reasonable tip, because like you almost feel guilty not tipping someone who just walked through a store for you. It's just so egregiously expensive. Half the items are wrong. The website had it wrong. And it's just a horrendous experience.

1:21:51So I'm not surprised to see an over-the-top reaction, negative reaction for Instacart if Amazon's going to come into this business. Not that they'll do it perfectly, but they definitely can't do it worse. Here's another area that Amazon disrupted. I mean, not Amazon per se, but just everyone. Is there a larger melting ice cube than the linear cable services? So for example, we got news this week that YouTube is now throwing their hat in the ring to get the rights to show the Academy Awards. Last night or two nights ago, I rented. It's not Blockbuster or Netflix. I rented Jurassic World Rebirth.

1:22:39Oh, the new one? Yeah. So anyway, I got it on Prime. Now I'm like, we're buying stuff on Prime. I mean, it's everything. It is everything. I'm sure you could think of things that they don't do, but it does everything. Well, just look at how the cable companies and the media conglomerates are treating their linear TV assets. They can't shed them fast enough. um so um nbc uh comcast comcast which is nbc is getting rid of all the news channels they're going to bundle it into versant which will include cnbc msnbc just announced a name change what's the name uh beyond bizarre but um i no comment for me yeah and that's now yeah but then the nlw stands for news opinion world, which I bet you, I bet you a thousand dollars that'll change between now and the end of the year.

1:23:34Okay. I will not take that. I will not think about it. All right. Speaking of sign of the times and the, the feelings of, of, or the not feelings to risk, who cares, who cares about risk, the bullish IPO. Let's talk about that. Well, my take was this, This is, I don't have all the data in front of me, but I would just say it's billions of dollars in market cap for a company that is based in the Cayman Islands, which already it's three red flags, not a fan. They filed an F1, not an S1 in order to go public. So an F1 is what you file when you intend to be a foreign domiciled company, but you want a listing on a US exchange.

1:24:14So in this case, it's the New York Stock Exchange. Josh, you want me to read some of these things that you put in here? Yeah, give us some of the numbers. All right. So according to the F1, for the period ending in March 31st, 2025, it generated$46.8 million in total revenue, a 22 % increase over the prior year. However, it incurred a pre-tax loss of$348 million. Earlier in March 2022, they reported annualized monthly revenue of$97 million. Uh, analysts have noted that bullish is business relies heavily on trading fees. Okay. Obviously. All right, whatever. Here are the details on the IPO. They raised$1.1 billion via the sale of 30 million shares at an IPO price of$37 per share.

1:24:57Initial valuation,$5.4 billion. Wow. Shares open trading around 90, peaked near 118 before closing around 68. Where did it close today? What's the ticker? Does it follow through to the downside? What's the ticker? It's bullet, uh, BLSH. Um, oh wow. Yeah, that's not good. That's not good. It closed at$58 or$59. Yeah. So this game is not for me. I think they're losing like$40 million a quarter or something. Like basically one of the problems here is that the value of their crypto assets rises and falls. And there's like an accounting treatment of that that can make it seem like it's got like this erratic business, which I don't really think is the case.

1:25:41but it's kind of like a mediocre brokerage. They're pitching this story where they're better for institutional clients than Gemini or Coinbase are. I highly doubt it. I don't believe it. The one thing that I think generated that$100 open though is Peter Thiel's involvement. So I think he, I don't think he's like got a day to day here. He's an investor. He's an investor in a lot of things, but there's a Peter Thiel connection. And, you know, there was with Palantir and people just like, they name associate. And so it's like, oh, this is Peter Thiel's brokerage. Yeah. Let me give you an alley up, Josh.

1:26:23All right. Today, quote, this is a quote from somebody. And you know who it is, Josh. Today, a company called Bullish came public. The deal was more than 20 times oversubscribed. and the stock opened up for trading 143 % from its offering price. Wow. The underwriters actually did their best to tamp enthusiasm. The deal was supposed to be 20.3 million shares priced between 20 to 31, but it was indeed upsized to 30 million, then priced 32, 33. I would have taken that a little bit higher, but you know what I mean? Arguably, they could have upsized it much more and made the price much higher. Josh, who was that quote from?

1:26:56So that's Jim Cramer. And the The irony is the stock that bullish reminds me most of. All right. So I want to say this. Bullish owns Coindesk. So Coindesk is one of the biggest media publishers in the crypto space. And Bullish owns it. I guess they bought it during the tumult of 2022. OK. Coindesk is great. They do a great job. I like those guys. But it's basically it's a media company attached to a brokerage service. So the irony of Kramer commenting on it, this reminds me a lot of the street.com. And I was there for the street.com IPO. I was in the business. And it came public in May of 1999, not right at the top, but like eight months before the top.

1:27:44And this is no fault of Kramer's or anyone else's. This was just the level of enthusiasm for anything related to trading. this the street.com along with market watch were like the two first websites that were dedicated to covering the.com boom in the stock market and um the street.com was great i was a subscriber i almost bought the ipo i'm glad i did it that they upsized that deal several times due to demand i think it opened that like it ended up at 73 on the first day and then spent the next 25 years going to zero. Like literally never had another bull market in that stock ever again. It was just this 25 year odyssey falling from$73 a share where it never belonged in the first place to effectively zero.

1:28:35And then I think the assets ended up just getting handed to somebody else. But that's what this reminds me of. And I'm not saying the businesses are identical. I'm just saying thematically, we're now bringing CoinDesk public effectively and we're saying it's a better brokerage than I don't know Bracken, Binance Coinbase Gemini, how many other Robinhood, come on what is this like the 10th largest brokerage firm in crypto attached to the street.com of the crypto era and this thing is worth billions of dollars Is that what we're doing here? Is that where we're going with this? So that was my impression.

1:29:20I'm not surprised that it was a big IPO day. I'm also not surprised that the stock is getting crowbarred. Okay. Here's what else is happening in the market in case you needed – lest you forget where we are in the temperature check. Social Capital's Chamath Paliapatea is launching a new SPAC, raising$250 million for the American Exceptionalism Acquisition Corp. And QCapital 2020 shared the filing and highlighted this part for us to take a look at. Here's a quote. We believe that retail investors should only participate if, A, this investment is a small part of an otherwise diversified portfolio.

1:30:03B, this investment is a quantum of capital. Who says quantum? They can afford to completely lose. And C, if they do lose their entire capital, they will embody the adage from President Trump that there can be, quote, no crying in the casino, end quote. And you know what? Okay, fine. I like this disclosure. I like it a lot. Yeah. I think the filing should have a fucking spelling crossbones right on the cover. And you know what? Swim at your own risk. I really made a 180. First of all, I'm in the minority of people on Wall Street. I like Chamath. I don't care. I'm not embarrassed. The guy snake charmed me the first time I met him, and I'm still hypnotized by him.

1:30:45Look, I don't invest with him. I'm not putting my money into his deals. His deals were mostly shit on the, what is it, Hadassah Philia or something? He was in the arena. Don't be a baby. Right. No, I don't give a shit. He tried it. It didn't work. Now, there are people that think he's deliberately scamming people. Give me a break, dude. Don't you think he would have loved it more than anything if those stocks worked out and if those companies turned into great companies? He's just not that good at it, it turns out. That's OK. Most people aren't. So I'm not one of these people that knee-jerk everything Shamath does.

1:31:26I have to talk shit about him. I like the guy. I think he's interesting. I don't want to invest with them. I don't like SPACs. I wrote a book where I did a whole chapter that SPACs are poison. I explained all the reasons why, all the f***ed up incentives, and the carry, and all the reasons why it's like the deck is stacked against you. I went on everyone's clubhouse, and I ranted and raved, and nobody listened, and everyone lost all their money. I did the best I could, but I don't hate the player. In that case, I hated the game. Anyway, I'm not buying Chamath's new SPAC either. I do think that this is a sign that we're getting closer to the end of something than the beginning.

1:32:12I do agree with that. And he probably would agree too, which is why you better sell this thing as fast as you can. You might not have another chance to launch this in six months. Another Canadian, Eric Jackson. Is he going to do this? Is this going to work? it's just like such a great heel turn. Tweet on Jackson. Tweet on. Is it, but is it all right? So, uh, what did he, what did he tweet? I can't say it. What did he, it says when the pirates take over the ship and suddenly it starts sailing faster. So for those of you who don't know, and if you're watching the show, you do know, but Eric Jackson took Carvana, not Eric Jackson was very early on Carvana and he thousand extent.

1:32:54I assume that he held for the majority of the time, maybe the whole time. Good for him. And so when he spoke, And when he spoke about the next thousand X, people listened. And I listened. I almost bought it. I didn't. And I regret not buying it, but whatever. So now they got the CEO out of her seat at Open Door. By all accounts, she was doing a terrible job. And Eric thinks this is the next hundred bagger. And he thinks it's going to$82 a share. And the question is, can Eric and the army of retail investors get this thing remotely close? It's a$3, I don't know,$3,$4, whatever it is. Can they do it?

1:33:32The thing is that he started this at like 50 cents. So if you listen to him, you're already up a lot. And he's talking about this thing being worth thousands of percentage points more. He's talking about 82. But then he's like pulling a lot of the tricks out of like the classic playbook for this meme stock shit. where he's like picking fights with people who disagreed with him. And he's doing like the memes. He's all in on this. He's all in on this. And then he's also doing this thing where it's like this. This is like what's good for society. Like, thanks to Open Door, we're going to solve the housing crisis.

1:34:13Like I'm not. So people accused him of manipulating. We didn't accuse him. We asked the question, is this manipulation? And I think if you play back what we said, we said, no, it's not. This is no different than anyone else saying they like a stock. The difference is it was a 50 cent stock. And he's not talking about it going from 50 cents to$5. He's talking about like going to almost 100. So it just like it gets under people's skin when you do that. But he's unapologetically doing it. and he doesn't believe that... I don't believe that the stock needs to go to 82 for him to be right. If this goes to 10, this is one of the biggest winners anyone will have in their portfolio.

1:34:59And it definitely could go... There's a universe where this goes to 10. Show the chart. Show the Eric Jackson effect. John, please. So this is the stock just getting destroyed. It's still down 90%. But show the next one. Well, let's tell people what this... Wait, go back to the other one real quick. So actually this is a Chamath stock, is it not? Wasn't this a Chamath SPAC? It's a Chamath SPAC. So Open Door had this idea that they were going to digitally buy houses, like just on the internet, just bid for houses and then resell them. By the way, by the way, there's an alternate universe, Chardoff.

1:35:32There's an alternate universe where maybe it could have worked. I don't know, but they launched at the absolute worst time possible. 21. Yeah. Well, it went public at the worst time. They launched to a housing mania. Yeah. But I would also point out Zillow tried the same thing, and it failed miserably also. It was horrible. It's not an easy thing to do. It was the worst timing ever. Yes. Now, the difference is Zillow got out of that business, and Opendoor is still at it. And now they have a partnership, I think. But anyway. Okay. But yes, this was one of the Chamath SPACs, And it fell 99%. It is one of the most horrific pieces of paper to have occurred in that 21 to 25 period.

1:36:22And there were a lot of them. But this one was really bad. It's amazing it didn't go to zero, but it didn't. And now they seem to have gotten a handle on the losses at the company. Chamath is gone. And they fired the CEO, which, of course, you have to fire the CEO. The stock is 50 cents. But the average loss over the last four quarters is like$40 million. And they actually have been surprising to the upside, meaning the losses are smaller than expected. The company is claiming on an operating basis, they're actually earning money. The problem is if 2.2 billion in debt, so they're making a lot of interest payments on that debt.

1:37:03And they're barely profitable. But they needed to get the CEO out. Hello, wake up, do an equity offering, raise some money, pay down the debt. Well, so that's what I think is going to happen and it should happen. And if you're along the stock and you truly are an investor and you're not just trading it because it's a meme stock, you should want them to raise money. They should raise equity capital and they should probably be talking about a reverse split. There is no institution that will own this stock at$3 a share. It should be$30 a share. Nah, they don't want the institutional investors. $3 is the point.

1:37:37You know that. You want the retail now, but you probably, as the story matures and the retail loses interest, then you're going to want institutions. So start thinking that way today. Retail was so excited about GameStop when it went to$40. They didn't stop buying it. Yeah, yeah. Show the chart about the year-to-date chart that we have. I mean, look what this guy did. Eric did this and he deserves credit because he probably brought this thing back from the dead. I don't know what would have happened absent him saying, hey guys, there's actually a valuable business here. So he did that. Well, absent that, they would have ran out of money.

1:38:18You love them. They would have ran out of money. If you're short the stock, you hate them. If you're long the stock, you love them. Yeah. Okay. Last topic. Kathy Wood. she's back. I think she's back. What do you think? No, I want to hear what you think. I don't think so. What do you mean? Her ETFs are doing well. They are like not just okay. They're doing really well. Yeah. And our stops are working. We have a, we have a table of what she's buying or what her biggest positions are. So it's, it's Tesla, Roku, Coinbase, Tempest AI. Is that a private stock? I don't know that one. roblox shopify volunteer crisper robin and amd listen she's definitely back in the sense that uh the performance has turned around for sure baltunas tweeted holy noah get it ark is at the top of the one week flow leaderboard with 5.5 billion dollars it's a lot of money it's more than voo in the queue so she's not not back um dude she's back this is her environment this is her market when the$3 stocks are going to six and when the money losing companies are up 40, 50, 60 % off the April lows.

1:39:35And when everyone's talking about robots and AI and flying cars and gene editing and all that shit, this is her market. And that's what's going on. And I'd say less forever. No, I know. Listen, okay, fine. Looking backwards. Absolutely. She was back. Let's throw this, uh, this chart of arc versus S and P versus the queues. So I'm guessing, So this is the last three years. And yeah, listen, I love that she made a comeback. I love it. I love, I love more importantly, forget about her. The investors that stuck with her. I don't like to see people losing money ever. So I very much, I very much am in favor and I hope this continues.

1:40:10And I hope that investors get hold because it was a really, really difficult couple of years for them. So I'm rooting for them. How about this? Here's another person. I don't invest with her, but I root for her and I like her personally. and um it's another like there are a lot of people like that where it's like i don't really agree with the way you view markets but like i like you and i root for you i don't i don't understand all the hatred i guess like people were short stocks that she was long i understand some of it more so for chamath than for her because chamath was kind of a dick when people were chirping at him like he was not he was not very nice to the people that that lost a lot of money with him be a little i have a little bit of self-interest you know what so i'm not on i don't see it i'm not i don't have the twitter thing in front of me but from what i from what i hear that that's what he did um he like kicked the hornet's nest after these stocks blew up and uh that never goes well remember all that stuff i was saying about how people use joe teranova's active etf to like hit that segment of the market the momentum trades like what why not use why not use arc that way say to a client it like look i don't buy shit like this yeah i'm never i'm never gonna buy like uh gene editing stocks for you and um i'm like i'm not gonna be buying you flutter and draft kings and all that stuff it's not it's not what i do but but i recognize that in certain market environments those stocks are going to outperform so rather than me trying to do a kathy wood impression i'm going to give you three percent arc yeah i'm gonna give you five percent or there's not like what's wrong with that no i don't think definitely doing that uh okay so our so to their credit arc arc is outperforming the dj endow year-to-date chart on please so arc is up 83 from the liberation lows and this is a year-to-date chart and uh yeah it's so credit to we we tried to come up with our own index of happy wood ask stocks and she's beating them okay all right so we need to do an active we need to do an active rebounce um josh i'm gonna do a mystery chart real quick i don't know if you could see it but it's instructive just for the purposes of today's show the and then you'll make the case for rocket uh john mystery chart on please josh can you see this chart yes okay so this is showing me the volume on the bottom pane yeah yeah so i'm gonna give it away uh because i don't know how else to give you a clue without giving it away but I just think this is the sort of thing, chart off for a second, this is the sort of thing where you talk a lot of shit, the internet gets up in arms, and then it goes the other way and never gets brought up again.

1:42:44So chart back on. What we're looking at here is a conversation that we had on the show, I guess, two weeks ago, three weeks ago, where I was defending the bankers. This is a new issue. Nobody is trying to misprice the shares, okay? They want to get it right for their clients. Their clients are the people that are paying them. And anyway, the stock popped and now it's just gone nowhere but down ever since that first day. What is it? Sigma? Yes. Yeah. You gave it away because I remember us talking about it. I don't think people are saying that the bankers deliberately. Oh yes, they did. Oh yeah.

1:43:20The company in favor of the shareholders. Yes, they did. No, that is what people were saying. That is what I don't say that. It makes no sense. My comment, well, no, it definitely makes no sense because I guarantee you the corporate issuer of securities who's going to sell stocks and bonds through you for the next 10 years is a way more profitable client. Thank you. than the schmucks that are asking for 100 shares of an IPO. 100 % I agree. My comment is, how is it possible? We're doing this shit since Amsterdam in the 1600s. How can we be so bad at gauging the demand for a stock after 525 years of initial public offerings on exchanges around the world from Europe to New York to San Francisco to Asia.

1:44:18I'll tell you why. I'll tell you why. Why is this like - I'll tell you. Dude, Mike, they're getting it wrong by a factor of 100%. What the f*** kind of business is this? Let me quote our friends. Then we quote our friend, Phil Perlman. I believe this is the tweet. Here's the thing about behavioral finance. People are crazy. Was that the tweet? You can't price mob behavior. I would Jeff that. Dude, they can't do it. They can't do it. There's got to be a better way. I think somebody benefits from the way it is. I don't know. But there's got to be a better way. I'm just asking the questions. I'm not suggesting that I'll come up with it.

1:44:59You're telling me that somebody is not benefiting from this circus? It's just this random thing that we can't get better at. Sometimes they price it high or sometimes they price it low. The average IPO should not open up 100 % higher than the price. It doesn't. The average does not. The average does not. It's literally what's going on all summer. We just talked about bullish. We did circle. We did Figma. We did four weave. Figma went to 150 and now it's 60. By the way, it's 69.69 in the after hours. Very, very nice. It's not the banker's fault that people go nuts when these shares start trading and then they lose interest.

1:45:36How is that a banker problem? People get excited and then they get bored. There's the way the auctioning is working. Whatever. Make the case for Rocket. Probably making the case because we've already done that on this show. We are giving people an update because today there was a very big initiation of coverage on Rocket. And we have people that have listened to us make the case on the stock before. Double disclosure here. Not only do we own the stock personally, but Rocket has a subsidiary called Rocket Money, which is a frequent advertiser on the compound. Classic double disclosure. Double disclosure, but we're very transparent here.

1:46:19Anyway, the stock is working. The stock is up huge from its lows on the year. It is, I think, up in anticipation of rate cuts. When they closed this acquisition of Mr. Cooper, according to the analyst at BTIG, who initiated coverage with a$25 price target today, Rocket will become the largest originator and servicer of mortgages in the United States. Most of the shares outstanding are not in the float, meaning there's a lot of shares that are non-traded. And so it looks like it's got a tiny market cap, but like the reality, the real value of this company is like in the 30-ish billions range. But if rates come down over the next year or two years, and we have another cycle in housing, and we see a lot of transactions in an existing market, and we see refi activity, and we see the young millennials and older Gen Zs start to really participate in the housing market.

1:47:22these guys will have the best mousetrap technologically to grab all that business. Not only did they make this Mr. Cooper acquisition, which is the largest independent portfolio of mortgage servicing, they also bought Redfin, which is a leading lead gen app for realtors and mortgage brokers. So they have built this, like during this time of depressed activity in housing, They have built this vertical empire. And that's what the analyst wrote about today. You heard it here first from us at$11,$12 a share. Now it's$18. The analyst says in the bull case, with both rate cuts and$500 million worth of merger synergy, this could really be a$30 stock.

1:48:08So reason to hang on. And if you can get yourself a copy of that BTIG note and your long list stock, I highly recommend reading it. It was really well done. Alright, that's it from me. Michael, you did an amazing job. I apologize for my technological issues. We didn't miss a beat. And you were there to save us. Guys, thank you so much for listening. Thanks for watching. Special thanks to our friend Neil Dutta for stopping by and filling us in on the Jackson Hole Outlook. Tomorrow is an all new edition of Animal Spirits. First thing in the morning. we'll do another Ask the Compound this week and then at the end of the week it's a very special Compound and Friends with a returning champion, someone whom I know you're all dying to hear from and see so you're not going to want to miss that either.

1:49:00Thanks again, have a great night, we'll talk to you soon.

1:49:13Thank you.

1:49:43the understands us. Steuern completed. Safe. With Viso Steuer. Now to try it out.