Liberation Day, Goldman Gets Bearish, Falling Knives

28:42I feel very good about this. You think a lot of people came in and started shorting this like right off the bat? I don't know how that works, if that was available to be shorted like that. Who's buying the stock of 27 % today? People that are selling Google. Duh. No, I don't know. I know we're going to talk about CoreWeave, but also like Newsmax. What in the world? The stock's up like 2 ,000%. It opened at 10. It's at like 120 or 210 or something. I mean, that's a great – if you can feed conservative people red meat around the clock, like you can take meaningful revenue from Fox News and that's a great business.

29:13So anyway, I think – That's just – This CoreWeave stuff is very – I mean very. I think it's important for the market. If this thing bombed, it would have been pretty concerning. Yeah, I said that I thought this was a big risk factor if it didn't go well, and it didn't on the first day. But apparently there's some sponsorship for this thing out there. And then the next thing that will happen is analyst coverage. And that used to take like 90 days or something. That'll happen very quickly. And maybe that's – I haven't looked at the news today, but maybe that's what's coming now. you'll see a lot of the underwriting banks.

29:56And the top three underwriters were like JP Morgan, Morgan Stanley, Goldman Sachs or something. So they're all going to have accumulate ratings and overweight ratings. That's why I bought the day of. I saw a couple of smart people that I follow on Twitter. Like you dumb assholes. You think that they're going to let this fall below 40, like get hammered on the first day? You know how much money is behind this name? Yeah. And you know what else? It's a smaller, It's a smaller share count because they downsized the offering. And that works in your favor if there's a lot of buying and there are less shares to go around.

30:32I see an article from The Motley Fool connecting the earnings results. This seems like a stretch. There's a company called Progress Software that is an AI software infrastructure provider. and they had a really strong report and the stock is rallying and the author is connecting that to the rally in CoreWeave. Not sure if I buy that. How did you describe CoreWeave? Sometimes there's nobody left to sell. Infrastructure as a service? Well, that's what it is. It's I-A-S. I-A-A-S. It's like, you know what it is? It's a great dude. It's a brilliant idea. If I am not ready to build my own data center because I'm unsure of the amount of demand I might have, I rent theirs.

31:18And that gives me flex capacity. That's what Microsoft is doing with them. Microsoft is two thirds of their revenue because first of all, it takes time to build a data center. It takes time to accumulate GPUs. You can just, if you have a surge in demand for something like, for example, a chat GPT feature, and all of a sudden everyone's using it, you can plug directly into CoreWeave and those users are not going to experience a disruption. Maybe this is a bad cop. It's a good business. Is it like Airbnb for data centers? I don't think I, I don't, no, because they own the data center. This isn't, they're not renting out other people's data centers.

32:02They own this. So I think the better way to put it is the same way software as a service allows an organization to flex how many licenses they need, how many seats, like this company is like standing by to provide excess capacity for when any of the major AI platforms need it. And in some cases, companies will never build their own. They'll just rely wholly on CoreWeave. And it's why the cloud was so successful, not just for itself, not just for AWS and Azure and Google Cloud, but the reason the cloud was so important to the rest of the economy, it made it so that you could start a business and not plunk down $20 million worth of your own servers.

32:49You just said like, all right, we don't know what this business is going to be, but we're going to be in the Amazon cloud and it will flex how much we're using it based on how much actual demand we have. So that's the concept here, but for AI, it's not a bad idea. I just, it's not my cup of tea. I don't like all the red flags on it that we talked about last week. So the news has been so noisy this week that I didn't even see this OpenAI announcement. Okay, so there was a Wall Street Journal story in January about how badly Masayoshi Son wanted to buy a big stake in OpenAI. I think SoftBank put in$500 million early, early, early, and was mad that there wasn't more room.

33:36So these negotiations have been going on for years. And that$40 billion number was floated in January. That's like roughly what SoftBank wanted to invest. They made it official. This is from CNBC. OpenAI closes$40 billion funding round. Largest private tech deal on record. Never before has an investment of this size been made into a private technology company. Who participated? I don't know, but I think this is mostly SoftBank's money. Jesus. And then their end investors, which is like Saudi royalty and God knows who else. This is so emblematic of the current environment. Like CoreWeave, the hottest AI IPO in ever, raised$1.5 billion in public investors.

34:25Yeah. And this thing did 40 in private? Well, importantly. No, I know, but still. Right. Right. Importantly, this is the company that has the most traction of all the user facing LLMs. Like people are using this all day, every day. All right. The valuation,$40 billion financing values, chat GPT at 300 billion when you include the fresh capital. So that's what they call post money. Microsoft is probably like, all right, thank God it's not just us. SoftBank's in. The valuation puts this only behind SpaceX, which is now worth$350 billion, and TikTok parent ByteDance among the world's most richly valued private companies.

35:17Oh, SoftBank's putting in$30, and the other$10 billion is a syndicate, including Microsoft. I know it doesn't matter for today's purposes of raising$40 billion, but I'm just curious. Do we have any sense of what the revenue is? No, but a lot of the money is coming in to finance the Stargate project, which is like very heavily supported by the president and the White House and Oracle's in that. And like a lot of people are involved in that. And that bill, it's an$18 billion funding for Stargate. That's OpenAI's commitment. So basically like SoftBank is saying like, here, we're going to fund your commitment to this Stargate project.

36:01I had a couple of thoughts. If the price was$60 billion rather than$40 billion, Sun would have just written the check. He strikes me as somebody that's very capable, very comfortable with massive swings, taking huge risks. Something tells me he's not a price-sensitive buyer. No, I don't think he cares. And sometimes that works out well. He was a huge splash into Alibaba early, early, early. And at his size, you have to make huge deals. You have to invest in huge private companies and take big swings. So Alibaba was great. Arm Holdings was a huge winner. This guy has huge balls. And then WeWork, I think he put$16 billion into WeWork, which was a zero.

36:45Not as good. But that's his – he's a riverboat gambler. He's a really, really unique investor. And he swings for the fences. So this is maybe the biggest swing he's ever taken. It is the biggest swing he's ever taken. wild. So Josh, you asked me if I would pull the trigger on meta. I did buy Nvidia yesterday at the puke open. I've never owned Nvidia before, but I'm in it. 110? No, I'm in lower. I bought yesterday at like, I think 104. Okay. This is the lowest forward PE ratio for Nvidia in 10 years. Look at this. Yeah. Crazy. You know what's so weird about the stock market? you would have been willing to buy this at 30 times earnings, 40 times earnings.

37:37On the way up, who cares? But before they had proven anything, now that they've proven, hey, AI is real. GPU is the dominant technology of the era. We are the greatest manufacturer of GPUs and we are the most important company in AI. Now it's worth half that valuation. It's just a weird quirk. because investors only care about future earnings growth. They don't care about anything else. Correct. And that's just like, it's really hard to wrap your head around. Let me get this straight. In 2022, now this is what the stock's selling off. That's why the forward PE shot up. But forget about that idea.

38:16You're like, yeah, NVIDIA, 50 times earnings. I'll take a shot here. Now that they've done everything they said they were going to do, you're only going to pay 22 because probably it's going to be hard for them to quintuple revenue again. I would think. Yeah. I would think. So we don't pay for proof is my point because right now you have proof. Holy shit. This company is 90 % market share. They did it. That doesn't get reflected in a multiple, in a PE ratio. It just doesn't. Yeah. The proof is not the thing. It's the potential. Equity markets are based on potential. Well said. Elon Musk put some money from his left pocket into his right pocket and merged Twitter or X with XAI.

39:06Smart move. This is like – this is – the X was a problem. X is problematic. It's really important to Musk in terms of like getting his message out and he's effectively become like the shadow president of the United States utilizing it. So it's like super strategically important. And for XAI, it's important. And for XAI, it's one of the most important, unique sources of data to train on. And Grok, which is the output of XAI, the consumer-facing output, is building its user base on the back of the user base of X. So all of these things are highly interrelated. And he owns the majority of both of them.

39:54so why not smash it together? What's the holdup? Right. I think this solves multiple problems for him. What do you think? Matt Levine said, in any case, it's barely an M &A deal, question mark? He said - No, it's not an M &A deal. Two companies that were owned by the same person and shared employees and data and revenue and, you know, a name, are now one company. They were informally one company before and they are formally one company now. And no money changed hands. It feels like a silly technicality to call this a big M &A deal. Yeah. Bill Cohen wrote about this at Puck. Back in November, Elon raised a fresh$5 billion for XAI at a$50 billion valuation.

40:32Now, four months later, this stealth deal values XAI at$80 billion, a 60 % increase during the same time period where the S &P 500 has been down nearly 6%. Nice work if you can get it. You just make up valuation. It doesn't matter. Then Elon raised a billion of equity for X at a valuation of$32 billion. And now you just like smash them together. Two weeks later, that equity value has miraculously increased on paper to$33 billion. So when you are the majority owner of both and you control all the money and you decide who gets to invest and at what price, it's not M &A. it's like it's just like it's fungible equity value blah blah blah whatever he did this with solar city in the public markets and that's the moment when the shorts should have covered because they should have realized holy shit this guy gets to do whatever he wants with no consequences why am i betting against this people were that's when the shorts should have run from tesla so matt levine just said what you said better he said um so matt levine is like the Elon whisperer.

41:42I don't know if that's a great phrase, but he's covers Elon better than anybody else. Would you agree? With great drollery, I might add. So he said, but my heart isn't in any of this. Nobody cares. Musk has absolute control of XAI, X, and US government regulators. If he wants to smush X and XAI together, no one will complain. And it doesn't mean anything. Surely Musk isn't required to file forms and get regulatory approvals anymore. So Matt just goes on, but nobody cares. It's over. He did it. He does. What are you going to do? He basically lives in, he's in charge of everything. Delaware just changed their state constitution to make sure they don't lose another company like Tesla.

42:21Okay. And he is now, his businesses are now located in Texas. He basically inhabits a sovereign nation, in Elon land can basically do whatever he wants, as long as the shareholders and the investors who are funding all this stuff are still into it. And they are, they are, they are. So like what, all right, now this is interesting though. So another number that everyone's going to be watching, and this is going to come out tomorrow. So we talked about the jobs number Friday. Everyone's going to be watching this quarterly Tesla deliveries number. I don't know what it does to the stock. I just think from a standpoint of like, How bad is the image of Tesla in the eyes of potential car buyers?

43:07Forget about investors. This is an interesting story. This is Reuters. Investors are bracing for a drop in first quarter vehicle deliveries as a backlash against CEO Elon Musk's politics exacerbates weakening demand for the electric vehicle makers aging lineup. Musk promised Tesla would return to growth this year after its annual deliveries fell for the first time in 2024. Wall Street will be watching to see how a refreshed Model Y SUV and incentives made a difference. So the Model Y Juniper is like a refresh of the Model Y line. That's probably their best car, like most all-around popular car.

43:46I don't think the Model 3 outsells it even though it's cheaper. Most people I know who have a Tesla have a Model Y. So it's the refreshed Model Y, which hadn't come yet in time for last quarter, versus the political backlash. crash and uh that's a number we're going to get tomorrow morning i think and i think people are going to be really into what that number is and they're going to extrapolate that in terms of like how much longer elon's going to stay at the white house versus return back to tesla what do you think i don't know man i just throw up my hands like honestly i have no idea like i would guess i would guess the stock goes up 12 no matter what but like i don't know all right the expectation is 373 ,000 vehicles delivered March through January, according to 15 analysts who have refreshed their estimate in the last month.

44:35That would be a 3.6 % drop from this quarter last year when it delivered 386 ,000. If that number is closer to 300 than 373, there's another leg down in Tesla. Yeah, I don't know where the line is. You're right. If it's like a bomb, now I don't know if a bomb is 320 or 260, but if it bombs bombs, yeah, probably go lower. They got a shareholder quoted saying, quote, I think the numbers are going to come in below 400 ,000 and maybe as low as 350. Deutsche Bank is saying 340 to 350. But dude, this is the thing. The stock's getting killed. Nobody's optimistic. No, I know, but I don't think the stock is pricing in a 300 ,000 number.

45:17Yeah, we'll see. Listen, say what you want about Elon and obviously not the biggest fan over here, but man, he makes a cool car. Let's, let's throw up this tweet. Uh, all right. So what does this say? I'm sorry. I can't see it. Josh, read this. I took delivery of my new Tesla model Y on Thursday. Today. I tried full self-driving and it flawlessly drove a 32 minute trip from my home to my kid's school. I'm absolutely blown away. How long has this been possible? And why isn't everyone talking about it? That tweet, of course, um, written, but no, Who is that? Matt Van Swole? Is that a fake name? Just press play for a sec.

45:53Just look at this thing. Like this is the world that we're about to live in, and I'm here for that. This is what put the stock at a trillion-dollar valuation. He is – I mean this is true magic. Yeah. He's changed the world several times, and this is why – look, it's not in a vacuum that he's able to do all these things. and do whatever he wants. He put himself here with the technology he's built. And you don't have to like him to accept that that's the case. And a lot of people, like they're cognitive dissonance. They hate his politics and therefore they hate his car. It's like, dude, these cars are among the most popular cars on earth and they're doing crazy shit.

46:39So, you know, say what you will. Like you never see somebody tweet anything from General Motors that they're blown away by. It just doesn't happen. All right, Josh, this one's for you, buddy. The Gen X career meltdown. Let's go on screen, please, Josh. I have a career meltdown daily, so. All right, so this is the New York Times. It's the end of work as we know it. And I feel powerless to fight the technology that we pioneered and nostalgic for a world that moved on without us after decades of playing our dues for a payday that never came. So yeah, not exactly fine. Of course, that's REM. And Josh, I feel like you wrote about this like a couple of years ago as it relates to the finance world.

47:24It was like, I did everything I was supposed to. Yeah, I think what the article speaks to is exactly that. There's like a few million people, tens of millions of people who played by the rules. And in our childhood, I'm like the latest Gen X. I think it ends in 78 and I was born in 77 or it ends in 77. But like, there was this idea, like you go to school, you get good grades, go to college, get a good job, move up, maybe switch companies, maybe get promoted, show up every day, pay your dues. And now you're, you've reached, you're in your 50s. I'm not there yet, but you're in your 50s. You've reached what should be the pinnacle of your career.

48:08And now you wake up in the morning worried about, or you struggle more, more realistically, you struggle to fall asleep at night, worried about this AI onslaught that's about to stop you dead in your tracks. I get it. It's like a little bit cry me a river, but it's a real feeling people have. Wow. I think it's more than cry me a river. Everybody hurts, Michael. Sometimes. Every generation has its burdens. Their particular plight of Gen X is to have grown up in one world only to hit middle age in a strange new land. It's as if they were making candlesticks when electricity came in. The market value of their skills plummeted.

48:46So here's one data point, and it's true. I mean, obviously. By 2030, ad agencies in the United States will lose 32 ,000 jobs or 7.5 % of the industry's workforce to the technology. And this is not just ad agencies. I mean, it's ubiquitous. It's coming. Yeah. I think the millennials and Gen Z, to a greater extent, prized the idea of entrepreneurship. Yeah, we can adapt. You guys are f***ed. No, I just, I think the Gen Zs are like, why would I work anywhere? I'm like, I just got to build my own thing. And maybe it's because they're younger and they're ready to take risk and they don't have kids yet.

49:27Maybe I'm just reading that wrong. But I do think Gen X is the last generation from that analog world where like you're the length and breadth of your ambition was to get a great job and just earn a salary that could provide for a family. And I, and, and, and I think the reason why is they saw that, that it worked really well for their parents. And I don't think the, the Gen Z's who are the children of the Gen X's by the way, the Gen Z's are not the millennials children or the boomers children. The Gen Zs are my kids, my kids, uh, or my kids might be Gen A depending on where you draw the line.

50:07But like, I think this new generation is not like thinking like, how, how can I go work for a great company for the rest of my life? I think there's going to be a much more hardcore entrepreneurial bent. Anyway, I, uh, I don't like the tone of what I just said, you guys are so I apologize. That sounded nasty. And it was because I really do feel for people that are like in their 50s and should be in their peak earning years and are now just completely screwed. Like it's bad. You know what? You got to remember that the people writing this article are going to be biased to find other people who agree with them for the poll quotes.

50:43All right. No, I know. But it's not not true. It's not not true, but it's not universally true. And if you look at the top founders, technology founders right now, and a lot of the executive ranks at these companies, they're Xers. All the people I look up to are Xers. They're doing great. Yeah, but it's just – that's like a sample. No, I know. I know. Listen, I completely understand it. And there are industries that are just going to be run through by AI and journalism and media and ad agencies. Yeah. Like maybe arguably on the front lines of this and maybe other industries will feel it later.

51:25so i get it um but there's a glass half full part where it's never been easier to be an entrepreneur to start a business um to get people to fund an idea like it's never been easier well for for future business creation it's never been better so that's the silver lining right now that doesn't suit everyone right so you know so not everybody could be a chief you need indians too like you need people to work at at other people's companies and it's uh there's a ton of uncertainty because companies are going to use AI to spend less money on human labor. And, you know, we talked to Joe Lonsdale the other day about this.

52:03Of course, new jobs will come along that haven't even been envisioned today. Yeah, we get it. Yeah. Just not for everyone. Yeah. So, all right, let's do this thing. This is low vol and momentum. So Ari Wald, who is among my favorite technicians, is talking about like, where do you hide out right now? And he demonstrates the following, top ETF idea, momentum plus low volatility in terms of selection, our attempt at this later stage of the equity cyclist to identify long ideas that have shown relative strength, that's momentum, and our position to at least keep pace with the market during a relief rally.

52:45We think that Dorsey Wright momentum and low volatility ETF or DVOL strikes this balance. We're encouraged this ETF has upheld its 200-day average and completed a multi-year base versus the S &P. And then he takes some of the individual stocks that comprise the Dorsey Wright momentum and low vol ETF and shows you breakouts on all the charts. But just glancing at this, Michael, what do you think of the concept? It looks great. Really smart, right? It looks great and I love it. And these are boring names. A lot of financials, industrials, insurance companies, Costco, TJX, for example, Visa. Yeah.

53:25These are the stocks that are working big time. All right. So this list is the best stocks in the market. I had Sean pull the holdings from that Deval ETF that overlap with the list that we keep of the best stocks. And there's a lot of companies that are both in the DVOL ETF and on my list. Brown and Brown, which is an insurance broker. Well Tower, which is a healthcare REIT. T-Mobile. Republic Services, which is garbage collection. Cardinal Health. Trade Web. Wait till you see a chart of Trade Web, TW. Visa, MasterCard, Walmart. So this makes intuitive sense to me. With the exception of Walmart.

54:09Walmart doesn't make sense. All of these stocks are up year to date. But wait a minute. If you saw, you know what else? Like Visa, MasterCard, if you thought the consumer was going to really soften, why would these be rocking and rolling? They're not exactly rocking and rolling. They're on my best stocks in the market list. They look pretty good. They look pretty good. Because momentum is okay and they're above some important moving averages. Dude, they look good. They're within reach of record highs. They look way better than I would have assumed. All right. What's this next? here we go. Okay.

54:40So we spoke earlier about like, where's the money going? What's working? Throw this up, please. So this is S &P 500 performance for the first quarter and a lot of red and the largest names as we know. But dude, I see a lot of green, a lot of green. Money's got to go somewhere, Mike. A lot of green. No, it doesn't, but I see a lot of green. Yes, it does. Look at Exxon and Chevron. Beasts. Beasts. Okay, I want to talk about yesterday's reversal and talk about Monday. This is my favorite data. Stuff like this. This is from Sentiment Trader, Jason Gepfert. He tweeted, today's reversal in the S &P 500 looks bullish.

55:23It should be bullish. And yet, it really isn't. And what are we looking at? So Jason plotted the S &P 500 after a 1.5 % loss to a six-month low and then close up 25 basis points. So you're talking about a washout, a nasty open that reverses and closes bullish. And if you look out one week, two week, one month, three months later, mixed to negative, a lot of red. So if it was yesterday a durable bottom, we will see. They asked this question on CNBC today of me, Stephanie Link, and Jim Labenthal. Is Liberation Day a market-clearing event? Meaning like, is that the moment where the tariff news comes out and everybody sells and finally people have sold enough, de-risked enough, taken down margin enough that like we could say we've hammered out a bottom?

56:22And I said, I don't think so. It seems early. So to that point, I don't have this chart for today, but a chart can make me – S &P 500 stocks hitting a 52-week low. And we are nowhere near, unfortunately, nowhere near prior capitulations, not even close. I don't think this is over. But wait, hold on. You don't need to have capitulation. But my point is to say is this capitulation, like if that's – Well, that was the question. When you say like a market-clearing event, that's capitulation. No, no, no. Definitively no. I don't think so. Definitely not One of the things that we've referenced Back to Ren Mac and Neil Dada Their house view Is that the tariffs are not an on off switch It's a dial And Trump is going to fiddle with the dial Way beyond this April 2nd Liberation day The dial is going to be Just this constant Tariffs higher I can't take it I had a beautiful call With the Germans Tariffs lower So there is no market clearing event if that's what this is going to be.

57:25And maybe it's not. And I want to be optimistic. The question is, if it's on again, off again, does the market just say, F this, I'm out. I can't take it. Or is it like, this is a charade. We're looking through to 2026 earnings. Forget about all this noise. You know what it is? The problem is that it has real impacts on earnings expectations. It does. And that's the part that, I wish it was just theater. It's not, though. The problem is, if there's no clarity, people pull back. I can't plan for the future in a world like this. I'm glad you said that. I'm glad you said that because that's what the surveys are reflecting.

58:00Yeah, they are. Gross. The surveys are reflecting that noncommittal, like that kind of wave of uncertainty where people are just like, I don't know. That's not the environment we were in two months ago. No. That's the environment. Now, could Trump wave a wand? could he come out tomorrow and say, all right, I told you I was going to be tough. It's 20 % across the board, all imported goods, period. But I'm done. No negotiation. This is just a new world order and everyone has to get used to it. I think the market could rally on that. Oh, no way. No way. They'll adjust earnings growth down from 7 % to 3 % and stocks will bottom.

58:49Maybe you're right, but that would be so bad. He's not going to do it. He's not going to do it. That would be so bad for the economy. Because he needs the twists. He needs – because you know what he really wants to do? Oh. No. He wants this drumbeat of announcements. He wants the guy from Hyundai and the guy from Volkswagen and the guy – he wants – and Volvo and Porsche. He wants them saying, we are going to break ground on a 400 ,000 square foot facility in Arizona. That's what he wants. And they might give it to him, to be honest. And then all of a sudden, it's tariffs are coming off. They're playing ball.

59:30Like that process is probably not playing out all within the context of April 2nd. Yeah. So that's the dial nature of it. And that's why I don't think it's a clearing event to answer your original question. Josh, would you allow me to cook for a second? Mm-hmm. All right. You know, I kind of wanted to choose something from the long side to make the case for it because there's so many better entries today than there had been. Like 24 was tough to make the case because everything was just going straight up. Then I was like, oh, let me tell you, the stock is up 30 % in the last 12 months. Like, all right.

1:00:02So today - We don't have that problem anymore. No. So I want to make the case, and it's a lesson that I unfortunately have had to relearn and and relearn again on why you don't buy falling knives. Or if you should, there are rules to follow. And the simple rules are as such, keep it small. Don't try and go all in and think that you're going to catch the bottom. And wait for stocks to stop crashing. That's probably like the easiest one. If you're going to buy a stock that's a falling knife, wait for some stabilization. I don't just mean like a week. Like wait for it to develop a base. Okay. Pay up for it.

1:00:35Pay up for it. Sure. Yeah, absolutely. Don't, yeah. So anyway, with that said, I want to talk about Nike. John, shout on, please. This stock has been a falling knife for quite some - You used this as a make the case recently, and I think I blessed it. No, I didn't. I don't think I did. I thought you did. No, I'm pretty sure I didn't. Sean is keeping track, so I don't know. But okay, go on. So anyway, Nike has had a shitty time, and all you had to do was say, no, it's below it's 200 moving average. It's not stabilizing. I'm not going to participate. So I want to play a video from the last time we spoke about Nike.

1:01:16I think it was July 2nd. I owned the stock at the time. Video on, please, John. And since then, this is worse than the GFC in terms of drawdown. This is as bad as Nike has ever gotten. You're buying? Not only am I not buying, I'm selling. Shorting? No, no, no. No, no. So I own the stock. It was, thank God, my second smallest position, but I sold it at the open. Now it's your smallest? Yeah, no. No, no, no. I sold it at the open, whatever day it was, Thursday. I have a 60 % loss in the stock. Listen, it happens. So on the one hand - I think you did the right thing. Well, listen, on the one hand, do I want to buy a global iconic name brand company that's in one of its deepest drawdowns ever.

1:02:07Yeah, it sounds enticing. On the other hand, it's not cheap and they're getting steamrolled. So it's still trading at 24 times forward earnings. So it's not like the stock is cheap and they're not growing and it's going to be a long turnaround story. So you don't need to buy it now. Is it going to be higher in a couple of years? I don't know. I don't care. It's my second smallest position. I'm not married to this thing. Took a loss and I'm out. So I sold the stock for a loss. I lost 16, not 60. I lost 16%. And importantly, turnaround stories most of the time, especially something like this, don't always turn around.

1:02:43So their most recent report was equally as shitty. Wasteland Capital tweeted, zero signs of a turnaround at Nike. Genuine dog shit numbers just getting shittier. Shit growth down 9%. Shit margins, gross margins down 326 basis points year over year. An even shittier guide down 12 % to 15 % next quarter. China down 17%. Jordans are dying. So let's just chart this on, please, for the quarter. On top of all of that, they said, quote, the progress we made against the win-now strategic priorities we committed to 90 days ago reinforces my confidence that we are on the right path. To which this person says, huh?

1:03:26I mean, just really, really nasty stuff here. A lot of funny stuff in here, but the bottom line is this has been a piece of junk. Yes, it's a global – chart off, please. Yes, it's a global iconic brand that's down 56%. You don't ask questions. You just buy. But actually, you don't just buy because Alex Morris shows their EPS still shrinking. Horrible. Horrible, horrible. Margins, next chart, getting squeezed to a kablooey. So bad. Alex says, five years ago in 2019, the collective revenues of four notable competitors, next chart, please, OnCloud, Hoka, Anta, and Li Ning were equal to 20 % of annual revenues.

1:04:14In 2024, the collective revenues of those four companies will approach 50 % of Nike's annual revenues. The stock, the business. They're just another company now. They're just another company. And since I sold it, the stock is down another 13%. And it's hard to buy turnaround stories. It really is. They're going to teach this in business schools. This is, I think Nike just closed down three consecutive years, the stock, which has never happened before since they came public in the early 80s. So this is arguably the worst condition Nike as a company and as a stock has ever been in. the list of things that they personally did to shoot themselves in the foot.

1:04:57So there's always macro, there's always trends and fashion, and that's a perennial challenge for apparel companies. At the height of their power, I think in 2018 or 2019 - They got greedy. They told their retailers to go f*** themselves. And they said, we're going direct to consumer. Yeah, so dicks were gone. And Dick said, oh yeah? on Cloud, Hoka, please. We have shelf space. Come on in. Foot Locker. F*** you, Foot Locker. Can you imagine? It's your biggest distribution channel. They went from giving limited edition sneakers to Foot Locker just for their shelf space so Foot Locker would have something that you couldn't get online to like, we don't care about you.

1:05:42We launched the sneakers app. We're doing Nike.com and we're building our own store on Amazon to box out all the third-party sellers who were selling Nikes on Amazon. And that trifecta of what they thought at the time were strategically power moves literally turned their entire distribution funnel against them. Yeah. Now you've got this aging lineup. Nobody gives a shit. Michael Jordan, fucking 70 years old. Nobody cares. The people that grew up idolizing Michael Jordan are shopping for assisted living situations. okay they're wearing new balance it's over they're not playing basketball i think is the important thing right so so you've got that the last dance aired five years ago that's it the jordan the like the jordan um worship is so far in our past lebron james is 40 years old you know what i mean like it's just it's so over with and then they haven't really they're doing new colorways for the for dunks and air force ones and air max 95s and i suppose you can keep doing that forever but that's not going to grow that's just replacement value of people who are nostalgic for 2002 no they're still shrinking they're still shrinking it's all still shrinking so my point my point is uh and they lost the runners and they lost the runners and into the breach.

1:07:11New Balance came back. A6 is coming in hard. Hoka and OnCloud are serious competitors. And now they're just another flavor. By the way, I asked earlier, where's the overreactions of the market? It's in Decker Outdoors, which is Hoka. That is the most discretionary spending is Ugg boots and hokas. Guess what? That stock is getting pounded. Lululemon, again, there's macro stories there and micro stories pounded. A lot of these consumer discretionary names are getting destroyed. Oh, I'm glad you brought that up. The athleisure thing. Nike never really had it. Lulu had it. Viore is taking it. Aloe.

1:07:53And Aloe is like, if you go to any class A mall in America, I don't care what city you're in, the hottest girls and women are in Aloe. They're not in Lulu. Like, the hot moms, like, that's where they are spending hundreds of dollars at a clip. They're not in Athleta. They're not even really in Lulu. Like, that's the vibe right now. Nike is not part of it. In conclusion, our late friend said it best. John Borman said, if you want to buy a stock because you want it to go up, buy one that's already going up. Now, again, I keep relearning that lesson, but it's so easy and we make it so hard. I mean, that's the church that I'm a card-carrying member of.

1:08:40I want the best stocks in the market. I don't want the puzzles to be figured out. There's no style points, and I don't buy falling knives. I bought one over the last three years. It's Pfizer. I'm still stuck in it. There you go. I do not. This is not what I do. All right, mystery chart, and then we're out of here. This was a supersized edition, by the way. This is a great show. This is six months. It's not a stock. It's not an ETF, but it's very important to the global economy. What do you think this is? Go. The 10-year. Look at you. Look at you. Four spot, two seven, as of yesterday's close. I don't know where it is right this second.

1:09:20Dude, don't with me. I know my charts. I know you do. But do you see this double bottom? And I know it's an interest rate, but do you see that people – all right, let me ask it this way. Do you see that in December of 24, we got down to it looks like 410, and then all of a sudden they sold bonds and started buying stocks back? Well, we're getting back into that region, and this time, if the economic data materially worsens and we don't have another inflation scare, this is probably going to visit 4%. Oh, yeah. I'm really surprised with all of the legitimate economic slowdowns. Not fears. We are seeing economic slowdowns.

1:10:03And with all of the recession worries, I'm surprised it still got a forehandle. It still has a forehandle because the inflation data is keeping the Fed from being like, yeah, four cuts. That's why. That could stop on a dime. one bad NFP, one bad read on wage growth or one unexpected spike on initial claims, that you're going to see four. You're right. And then that's going to be a moment. And so keep you on the tenure. All right. That's it from us today. Guys, thank you so much for tuning in. We really appreciate it. Shout out to our sponsor, public.com and the public trading app. Tomorrow is Wednesday, which means an all new edition of Animal Spirits with Michael and Ben.

1:10:49There's also an Ask the Compound Wednesday afternoon live on YouTube. And we'll be back with another Compound and Friends at the end of the week. Keep it locked. We appreciate you. Have a good night.

1:11:05Whether you're just getting started as an investor or you're managing a multi-million dollar portfolio, Ritholtz Wealth Management has the solution for you. It all starts with building the right financial plan. to speak with a certified financial planner today, visit RitholtzWealth.com. Don't forget to check us out at youtube.com slash the compound RWM. Make sure to leave a rating and review on your favorite podcasting app. If you love investing podcasts, check out Michael and Ben every Wednesday morning on Animal Spirits. Thanks for listening.