Next Trillion Dollar Stock, Why US Is Still Exceptional, Trump vs Powell

30:16it's also difficult when to cut rates when you have inflation expectations spiking. I think he should be looking past that. Because he's not right. The Fed is not the Fed cutting is not the source of the spike in inflation rates. And he knows it. Yeah, everyone knows it. So I think I think Trump's right about this. Like the rates should be lower. I think the message of calling him a loser is probably not the best way to do it. But OK, so I think Trump I think Trump is right. that rates should be lower, but Trump is the reason why the inflation expectations are rising. So like it's, look, what I want to say is not political.

30:59And if this upsets people, it's because they're unable to hold two opposing thoughts in their head at the same time. It's called cognitive dissonance. When you are forced to weigh two opposing ideas and you can't reach a resolution between the two. It makes people really uncomfortable and they get emotional. And so you could love Trump, but acknowledge that what's happening in the economy right now is 100 % not being caused by the Fed. It's not Powell being too late on rates. So it's hard, like, because people think, oh, so you're saying Biden would have been better? Nope. You're saying Kamala would have been, nope, definitely not saying that.

31:40Not a fan. but I think what's going on here is that Trump is setting Powell up as his scapegoat if things get materially worse this summer and into the second half. And it reminds me of the way he used Dr. Fauci. Like every time there were negative headlines about the disease or the death count or something that was reopened having to close again, he got Fox News people all day long to say Fauci, Fauci. He basically turned Dr. Fauci into like America's foremost villain. And it feels like he's been using Powell that way. I'm glad to hear that. He's not going to keep doing it. I think most people understand that if we have a recession in the second half, Trump 100 % owns it and Powell doesn't.

32:30Do you think like 90 % of reasonable people would agree with that statement? Whether they think it's justified or not is not what we're debating. Dude, I think most people are reasonable. Like 90 % of people would say, yes, Trump's trade policy caused a recession. Now, half of them would say, but he had no choice because it was a fake economy under Biden or because he has to get the debt down or whatever they concoct. But like I think most people would not say Jay Powell did this. Like 90 % of people would say Jay Powell is not at fault if we have a recession in the second half. What do you think about that?

33:05Yeah. Okay. to Powell's credit he just orchestrated a soft landing that most people said was impossible. No he didn't. Well he caused the problem but he fixed it. Come on no he didn't. We got a soft landing. Dude he tried to crash the economy couldn't do it. Okay what would you describe the situation we were in as recently as December January February. You had balance sheets healthy record low unemployment corporate earnings at all-time highs, extremely low credit market volatility, financial markets that were the envy of the world. This is not three years ago. This is like a couple of weeks ago.

33:49And that's a soft landing. He does not deserve credit for it. We agree that a lot of mistakes were made leading us up to the 9 % inflation spikes of 2022. We all are on the same page there. I think the point that I'm making is he did figure it out and orchestrate a soft landing when most people thought a recession was the only way, including the Fed. But like it didn't happen that way. So he didn't orchestrate anything. We did. Our companies and our people orchestrated it. Fine. But he was the Fed chair at the time. He was calling the shots on policy. He was deciding on cutting rates or not cutting rates.

34:32And whatever you want to say is we had a soft landing. We had a soft landing. We had a soft landing. And the more important point is that if we do go into a recession, this will have had little to do with Jerome Powell. The conversation last week shifted from recession or no recession to the question of like, is America still going to be America? It was a different conversation. And I think people are getting in his ear now and saying the Powell stuff on Twitter is f***ing suicidal. Yeah. So what would lower rates even do? I mean, certainly they would help the housing market, which is still in a deep freeze.

35:11I could fix the economy in 10 minutes. Please. I told you, a federal interest rate for just first-time homebuyers. You've never bought a home before. You're starting a family. Here's a 3 % mortgage. Don't worry about interest rates. Don't worry about it. We're not giving you free money. You're borrowing it and you're paying interest on it. You're just not paying 7 % on it. You're paying 3%. Here's, it's not a giveaway. It's not a handout. It's not welfare. You're still borrowing the money. Fannie and Freddie are enabling you via pass-through with the banks to have an ultra low interest rate or what we would call the normal interest rate five years ago.

35:54Here's what that does. It immediately changes the conversation for the entirety of the millennial generation who have really been screwed around by a lot of financial crises and a lot of volatility in rates and boomers living longer than ever and not selling their homes, lack of supply. It's just been a horrendous experience. Sure. Let's give them the opportunity. The second thing that accomplishes is it unlocks this freeze in the housing market. people that aren't selling their homes because nobody wants to take out a 7 % mortgage to buy their home, we can alleviate part of that distress as well.

36:33How? If it's just for first-time home buyers, how do you do that? Because if you're the seller, you have a first-time home buyer who is now more active than they ordinarily would be. You have more potential buyers for your home. So if you're trying to get out - But if you own your home, why would you, or if you have a 3 % mortgage, you're going to go into a 7 % mortgage? No, you might go into a rental. If you're a boomer, it's very likely that you will. I like the sentiment, but like, come on. What about people? No, no, no. Mike, you talk to realtors. I can't sell my house. Nobody wants to take out a 7 % mortgage to buy it.

37:06I know. Now, all of a sudden, oh, I can sell my house because there are young couples in the neighborhood with lower priced mortgages and they're willing to come in and buy. What about all the people that just got 6 % mortgages? Do you make them whole? Do you give them a 3 %? I think we're going to have a recession in the second half, and they're all going to be refinancing lower anyway. Because I don't know if we get four interest rate cuts. I don't know if we get 100 basis points lower this year. How confident are you that a recession is happening, going to happen? 45%. All right. So I'm not really that confident.

37:35I mean, I would have said 10 % two months ago. Yeah. I know I sound like everybody else. Yeah. I'm not saying anything that's out of consensus. I don't think I can predict the future. I think most people think it's almost even odds at this point. Yeah. So that's where I am. Yeah. Anyway, look, I don't know what lower rates do, but I tell you what they don't do. If we're going to have a recession, lower rates are not going to make the inflation problem worse. Demand is going to fall off a cliff. Yeah, I agree. So you're going to have trade-related inflation that has nothing to do with Fed funds rate.

38:09So I can't imagine why he's not moving immediately toward doing that. It seems weird to me. The next meeting is in 14 days. Yeah. He'll cut.

38:23It's not looking likely. Yeah, he'll do it. Okay. Well, the market's saying there's a 96 % chance of no cut. How do you think things are going to go in the next 14 days? If you had to guess. Only 68 % of companies this earnings season are beating. It's usually like 75%. Earnings season has not been bad. What do you think the tone of the markets will be from here on out for the next 14 days? I have no idea. Neither do you. No, I don't. What do you think, though? If you had to guess. Higher or lower? I don't know. I really don't know. I don't know. Who's to say? Hard to say. Absent a deal on trade, I think you're going to – I think you – No, lower, obviously.

39:05But it's not just stock prices I'm talking about. The dislocations and volatility in the bond market and in the dollar, I think are going to force him to get easier. Like I think he's – Hang on one second.

39:21and I'll also say, Josh, I think he's going to have no choice. The, uh, the bond market has settled down. Uh, yes. So we settled on the 10 year at about what? Four, four, four spot, three, five to four, four, a much tighter range than what we had before. Yeah. Okay. Um, let's do gold. So this first chart is gold in us dollars as of today. It's a new all time record high. So 3 ,500 per troy ounce. As you can see, we are up, I don't know, what is that? 65 % from where we were a year ago at this time, early 2024. We were about 2 ,000, breaking out for the first time in a long time. And now we're already in the mid 3 ,000s and no end in sight.

40:10I don't know. Doesn't this feel like 5 ,000-y to you? 5 ,000-y.

40:17historic gold, historic gold bull markets, the price at least doubles. There's it's hard to say anything bad about gold. You know, it's interesting. If you look at like golden euros, for example, way different chart. Yes. Like this is a, this is a dollar story. Yes. But gold is in a bull market all over the world. Just not to this extent, for sure. Not to this extent. I think the fear that's driving money into gold is people wanting to get out of a lot of US assets and then people following that on as a momentum trade. I think it's like both things. Yeah, it's working, obviously. So people don't like the idea that the president basically is setting himself up to upend the dollar as a reserve currency.

41:02Or maybe he deliberately is trying to wreck the post-World War II status quo world order. Whatever your pet theory is, all roads lead to gold. The minute you start worrying about the United States as the world's reserve currency, that's like the only game in town. You're not going into yen because the yen is backed by the United States implicit military guarantee. You're not going into euros because that's still dysfunctional. Well, if you're thinking about like mutually assured destruction with tariffs, which are attacks on everybody and, you know, escalation. Yeah. Gold is immune from all of that.

41:42Yeah. Now, there are people asking about Bitcoin recently acting more like gold than like tech stocks. I kind of find that interesting. I don't know. What are people in the Bitcoin world saying? Told you so? You know, I don't know. I am very much not as online as I used to be. So I don't know. But it is interesting. I was debating this with Ben yesterday. the S &P at one point was down 3 % on the day and Bitcoin was up 4%. Very unusual because to date, Bitcoin has been a levered risk on play. It just has been. The narrative about digital gold has not materially taken hold in price action until yesterday and today.

42:28So the question is, is Bitcoin acting more like gold as a safe haven? That's the answer. Or is it front running and eventually an eventual surge higher in stock prices? And we'll find out. Oh, I see. Like are people jumping in that because they think the NASDAQ is going to turn? Yes. And risk appetite is going to come back? And this happens quicker. I don't know. I think it's the former though. If I had to guess. So if it is the former, that is a big deal. Yeah, because that's the point. Right. Because that's the whole point of it. Right. It's getting your money out of USD, getting your money away from government control, blah, blah, blah.

43:08All the fairy tales that these people have been telling each other for, I don't know, 20 years of this shit now. Like if they finally come true and Bitcoin trades with gold while everything else continues to sell off, it's notable. It's a mic drop for the Bitcoiners. Not only that, it attracts a lot of attention from traditional investors and ultimately attracts flows. And then that kind of thing could feed on itself. 100%. Okay. And Bitcoin is still so, so, so, so under-owned. Like nobody really owns Bitcoin. Nobody in traditional finance owns it in size. You hear people talking about a 1 % sleeve in their asset allocation.

43:48Put up the one-year performance of GLD. So it's up 43 % in the last year. That's a pretty big one-year rally. And a lot of it is like recent. In the last month. It's been up and to the right, and then it just exploded. Total return over the last six months, Bitcoin plus 34%. GLD plus 24. ACWI XUS plus one. Barclays aggregate bond index 0.7%, so barely positive. um nobl which is is this dividend the aristocrats nobl noble noble i forgot okay well whatever that is it's negative eight percent whatever not a safe haven whatever that is uh yeah aristocrats yeah s &p 500 negative nine q's negative 9.5 i would have thought it was worse this is just the last six months russell negative 15 so you've got basically two assets that have worked this a year.

44:50One is Bitcoin. The other one's GLD. I find that really interesting. I saw a tweet maybe last week that Bitcoin has outperformed the S &P on like every single year, one through 15. I mean, it's a penny stock. No, I know. But one, two, three, four, five. Put that in your investor deck. And smoke it. Let me show you a chart from Ari Wald. Ari is one of our favorite technicians of Oppenheimer. He is talking about the gold miners are cheaper than gold. I'll just quote him while you look at this chart. We've maintained a bullish outlook on the price of gold since the start of 2024 and have preferred the commodity over the equities that mine for the commodity, meaning the publicly traded gold miners.

45:35Our relative preference has now shifted toward the gold miners. GDX is the ETF for gold miners based on a decade long base position to inflect higher versus spot gold. Of course, both the yellow metal and the miners have become tactically overbought with each trading 20 % above their 200-day average. For a shopping list, our top buy ideas within GDX are those that have also cleared their year 2011 peak. And I'm going to show you the stocks Ari likes. But I'll go back to the first chart. So what you're basically looking at here is the GDX in the top pane, which is breaking out. That's the gold miner index ETF.

46:18And then on the bottom, he's showing that relative to gold, which you can see is almost it's a basing pattern that goes back a really long time. And it's almost a breakout. What do you think of this chart? What do you think of the concept? I like it. I don't know. Gold miners suck. I mean, I know, but there's a time and place. Okay. I agree. Everyone agrees. The worst stocks there are. Yeah. All right. Next chart. Here are some of Ari's names. Agnico Eagles. Agnico Eagle Mines. He put this out over the weekend. So I don't know what happened yesterday and today. I assume these stocks are higher.

46:55I mean, this is as clear. All-time high breakouts. They look great. What are you going to say? Wheaton, WPM, huge breakout after a really long consolidation. Franco Nevada, which I've never heard of. And Royal Gold, RGLD. All right. But I'm looking at – these are so ridiculously – overbought, which is a good thing, right? Like an over - Short term, he's saying it. An overwhelming amount of demand for anything is never bad. But in the short term, I would just maybe let me say - Yeah. Overbought means like if you want a more constructive opportunity - Let it breathe a little bit. Let it pull back to where it broke out and spend a few days cleaning up sellers.

47:36Yeah. That's always good advice. And the downside of taking that advice is you miss the trade. That can happen. So what? Yeah. New trade. Let me show you Newmont. So this one hit me and Sean's list of the best stocks in the market. This is not one of RE's favorite names. And I think I understand why. This has not broken out yet, technically. It's awful. It could double top here. Our longer-term chart, it looks better. But this stock is within 5 % of 52-week highs. RSI is not yet overbought. And you just got, within the last two days, You just got a golden cross. You're 50-day breaking above the 200-day.

48:17Meaningless. That level is 56 or 57 back to last fall. But this name has not cleared its 2011. This is the largest gold miner in the world. It's the only one in the S &P, right? Is it still in the S &P? It's in the Russell 1000. I think it's also in the S &P, and it might be the only. Dude, if you zoom out, this chart is a piece of dog shit. It looks terrible. like in a good way like in a good way no not in a good way like bad dog shit it looks terrible as what though as like for a long-term investment just zoom all the way out let's say like you will not find the technician that says like yeah this chart looks no no because look at because look at look at the 20 look at the 22 highs uh i think i think there's a tactical trade to 75 in this stock i mean i don't think it's a long-term investment i think i think if it can clear last fall's highs, the narrative around the stock will shift and it'll look like the other ones.

49:15You'd bet against that? I mean, I would, if I had to buy one of these, I'd buy the ones that are already working. Right. Agnico and Franco look much, much, much better. There's already buyers there. Oh yeah. Agnico looks like an animal, but it's the true, you know, I think he missed it. Like when, when it broke out above 85, you had to buy it. All right, listen it's enough it's one it's 120 it's enough gold miner talk sorry it's enough all right let's do this next trillion dollar stock thing all right um so netflix we're both long we're both long nope i sold it you sold it i sold it about six months ago i was gonna say this has become a consensus long on the compound yeah now you're out okay i i think i was up i made 100 or more so I took my, I sold too early, but that's fine.

50:06All right. So, chart on. Look at this wildebeest. I'm showing for listeners, I'm showing Netflix compared to the other streamers, including Disney. This is over the last three years. Netflix is up 180%, 10Xing the market, up 18%, the S &P. Disney is down 35 % over the same time. Warner Brothers is down 67%. And Paramount, not nice, is down 69%. So it is absolutely demolishing the competition. And you could have said, chart off, listen to me. A skeptic, a no skin in the game skeptic could have easily said, this stock is priced for perfection. Oh, yeah? Oh, yeah? Well, it's perfect. So look what the company is delivering.

50:50Chart on, please. Revenue, 12.5 % growth. the most important thing is the operating income, operating margin exploding higher. Throw up this next wide charts chart. Long-term look at revenue and the operating margin, the leverage in here is massive, massive, massive, massive. They are absolutely killing it. And this next chart from Alex Morris is the chef's kiss of all chef's kiss. Josh, do you remember years ago when Netflix was spending like$7 billion a year on content? Unsustainable. Hemorrhaging money. People were apoplectic. So this chart from Alex Morris shows the Netflix cash content spend as a percentage of revenues.

51:32And yes, they used to spend 80 % of their revenue on content. And now much more of it has flown to the bottom line. It's under 40 % and trending lower. They are absolutely killing it. Right. And what ends up happening is as revenues grow, but content costs grow at a slower rate or stay the same, the leverage here is like, it's just a, it becomes a better business model, the bigger it gets, which makes it a better investment. So a lot of people look at a stock that's just tripled and said, it's not a good investment anymore. Wrong. It's a great investment. When the fundamentals are doing in the comments, Edward Dornblazer reminds us it's streaming with no theme parks and no theater exposure.

52:18None of those discussed in cruise ships either. which means it should do better in a recession. I think it's, I don't want to say recession proof. We did, we said it's recession resilient. You and I did a show at the beginning of April, I think, where we were saying like, what is the best stock to hold through this kind of volatility? And I think Netflix was the name that we picked. I went long the stock soon after we talked about it that way. I should have, but wait, hold on. But here's the thing. It's a stock and in a bear market, it will get killed like every other stock, but it is not, it is not.

52:50First to recover. It is not. I agree. But also, a lot of their growth, a lot of their growth is coming from the ad platform. And ads are the first thing to get yanked in a recession. So it will absolutely get hit. Now, people won't cancel, but the signups will slow, and the ads will pull back, and the company, the stock will get hit. I disagree. Okay. Which part? The ads will pull back. I think they get a bigger piece of the overall ad spending that offsets weakness in the ad market, and they are tiny. This is not meta or alphabet. This is a tiny, tiny, tiny player in ads. It's very possible they continue to take market share in ads because they have the attention.

53:34Maybe. And they don't experience a cyclical ad spending slowdown the way they would if they were Facebook. Oh, I mean, certainly. They're not big enough. Yeah, yeah. No, that's definitely spot. So if you're an advertiser, you might say we're cutting our ad budget for next quarter by 25%, but we're upping our Netflix budget by 100 % because the engagement on Netflix is stronger than it's ever been. And I can't say that about, I don't know where else they spend money, CBS. Yeah. So I don't know that I believe that that's true. That's one. to actually on the ad supported tier, it's actually turns out to be more profitable, get somebody to pay$7.99 a month and be advertised to.

54:18Yeah, yeah. That's a better customer than the family plan, full boat,$21.99 premium sub. So in a recession, as people pull back their spending, they might drop down from premium Netflix to save$70 that year into the ad supported. They don't go to no Netflix. They drop down. So having that strategically, I think, is what makes it recession resilient. I'd also point out highly international business. Two-thirds of the users are in other countries. And it's got a premium valuation now. 40 times earnings. Yeah, it deserved. Yeah, it earned it. Who else is executing like this? It earned it. They are clearly – they won.

55:02I mean, they won. So the question is, is Netflix a trillion-dollar stock? It's$400 billion right now. A trillion sounds like a lot, but. They had an annual business review last week, and the journal picked this up, where they were actively talking about being a trillion-dollar company, like being the next Mag 7 company. They were, like, that's, they think by the end, they think they're going to, what did they say, double revenue? They said executives have a goal of tripling Netflix's operating income by 2030. Tripling operating income. From$10 billion last year. By the way, they addressed this on the call, Ted and Greg.

55:37Well, if they – so if they go from$10 billion to$30 billion in operating income, if it trades 30 times that, it's a trillion-dollar stock. Now, this is not even yet a return cash to shareholders story. It could definitely turn into that. I mean I don't think they should be buying back stock. I think they should be making more content. I think they are. They are, but not in a meaningful way. Right. What they really should be doing is putting their boot on everyone else's neck on the content side and just doing things that no one else can do, like overpaying for live events, more Jake Paul, Mike Tyson fiascos, because that's what drives new signups.

56:19So Ultimate Fighting, WWE, now they're in football. like they should keep doing that because that is just absolutely crushing their competitors. They're forcing competing services to spend even more than they ever have on live events in sports. And Netflix can afford it. They should open a theme park. Warner Brothers can't. Like Paramount can't. I understand they have Larry Ellison money, but they don't have Netflix money. So this is the game now. I think there's a really strong argument that the only problem with Netflix is nobody will let them buy anybody. Like if Peacock ends up being up for sale, for example, or HBO Max, I don't think like regulatorily, I don't think they could be the buyer.

57:09But I think they also have, they have access to almost every library anyway. They don't even need it. They don't need it. Okay, last thing. Finfluencers. Did you read this article in the journal? I did. I almost went into a rage about it, But then I calmed myself down. Really? Yeah. Why do I get so mad about this? I was so unbothered by it. I thought this was such a fluff article. It was just like, it was a nothing burger to me. What part of it enraged you? I think it's people who don't know what the f*** they're talking about. Hijacking the market volatility to quote unquote influence their peers and ultimately sell them high interest rate credit cards as they amass their following.

57:52I just don't like when people make hay because of the market volatility in a deceptive way. Like, oh, hey, I'm your friend. Here's like the Fed had a meeting today. Let me break it down for you and do a little f***ing dance and blah, blah, blah. And they get impressionable people in their 20s who think, oh, this must be an expert. They're using words I've never heard before. And then two months later, they're selling whatever sponsor. you know i just i don't know for me it's it's not great but there are some really i think caring thoughtful people doing this kind of thing it's not all of them like douglas who was mentioned um doug had a quote in here i guess here's the first question i wanted to ask you are we influencers am i am i one are you one i think we sort of are um i guess but not in the same vein as as the people that they were quoting because they were talking because we're older because we're old yeah so i would draw the line somewhere else i would say because we're licensed we're registered like we we have we have boundaries that we can't cross without getting into trouble and most of these people don't they can say whatever they want right so i would say that's that's a a pretty important line of demarcation uh put this chart up this is where people go for advice by generation.

59:17So it's interesting to me, like Gen Z, over 70 % say they go to social media and the internet, not to the exclusion of friends and family, which is at 70%, or financial professional 50%. For all the other generations, they rely on social media significantly less. Millennials, social media, 56%, it looks like. Gen X, under 40. Boomers, under 20. Now, some of this is because going to a financial professional as a Gen Z, there are less professionals who actually want to talk to you. So you kind of get pushed into looking for advice on social media because where else are you going to get it? You think there's some truth to that?

1:00:10yes you want to elaborate or yes you think there's truth to it i i mean are you trying to be like diplomatic right now is that you worried about uh you worried about somebody getting upset with you let me be honest i don't want to i don't want to start any wars i don't yeah i don't want to Like, I don't want to ruffle too many feathers. All right. This is what I'll say. I think it's great that there are finfluencers on TikTok and Instagram reaching people where they are and trying their best to help them understand what's happening. I think where it crosses the line for me is when they start giving advice and they're not licensed.

1:00:50I think that's the part that like needs to be cleaned up a little bit. And there's nobody watching. There's no regulator. or anybody could say anything. But is your premise that these people are purposely, they're being scumbags? No, not all of them. But if it's 20 % of them, shouldn't there be regulation? I guess if you're not licensed or registered, should you be able to say, oh guys, this is just entertainment, but wait, here's the part where I tell you what to do. And like, I feel like if you're giving advice, then say I'm giving advice and get registered. So here's the thing. I'm so far disconnected from what these people are doing.

1:01:31Like, I don't know what sort of advice they're giving. I'm not on TikTok. Some of them aren't giving any advice. And some of them are shuffling people into chat rooms and charging a monthly fee to like continue to influence them as like a club or a membership. And they're like, they're effectively selling financial advice in some cases without a license. Not, not everyone. So they're selling insurance. there's a lot of iul sales happening so uh index universal life like there's a whole there's a whole subculture of people selling insurance policies to each other um but they might not be selling them they might just be influencing on behalf of a company that ends up selling them all right well this will never get like regulated or police because you know the state of not now not now they're firing the regulators it's not enough for them it's not enough of them to actually police real finance.

1:02:26So are there enough regulators to police TikTok finance? I don't think so. So look, I think there's like everything else, there's nuance. There are people that are good at this who are actually helping people. And then there's people just taking advantage of the volatility and doing and saying, God knows what. And for the regular person, I don't think they know how to stop it. I don't think they know how to gauge whether or not they should stop listening to somebody. I think it's really hard to be able to tell who's legit, who's not, which is why we have licensing in this country to begin with.

1:03:02Like licensed people are not telling you to buy crypto coin A. It's just they never would do it. But people don't know that if they don't understand the way our laws are written. So I think it's a mess and I don't know what you do about it. tell people to be tell people to be vigilant but they don't even know what to watch out for yeah so anyway they're not going away you made it through the segment without offending anybody so you're good now you're good now um i'm gonna make the case and then we'll do a mystery chart we'll get out of here okay uh robin hood long at first blush what do you think of this idea you see the way the stock acted today um so i did see the way it acted today okay uh robin hood this is my thesis it's on the best stocks in the market list technically it looks okay it doesn't look great it looked it looked much better it looked much better uh when the market was higher but it's hanging in there better than a lot of stocks i think anything that draws more attention to the stock market for Gen Y and Gen Z is a net positive for the company.

1:04:17I think they don't get hurt by a bear market the way a traditional brokerage stock would, because young people, their customer base sees volatility as more of an opportunity or like recreation, like it's fun, than they see it as something that's like to be run from. So they see it as a game and the game drives more bets when it's a heated game and not the opposite way. That's different from boomers at legacy brokerage firms that really don't like seeing volatility and volatility does not convince them to take more action and do more trades. So Robinhood almost acts in the reverse way, I think, the Robinhood customer than customers at a traditional brokerage firm.

1:05:06So I think this is actually a great moment for them, even though the stock price is off its high. I want to show you the chart. It held the 200-day, did not close below. So if we were to zoom in on those candles from the last two weeks, probably one of the only financial stocks that didn't close below. So I wouldn't say it's in a bull market right this second, but that's a really good sign, yeah? It's in an uptrend, for sure. Yeah. Well, depending on the time frame, I guess. So it's bouncing right off that 200-day. And look, I think if you look at this company versus the other companies in its peer group, they really have no peers.

1:05:50I asked Sean to take a look at this. There are nine companies in the capital markets industry group that trade on the NASDAQ or the New York Stock Exchange with a market cap over$10 billion. The median return for all those companies is negative 6%. Only three of them are up on the year. Robinhood is up 15%. Schwab is up 3%. And TW, which is a bond market broker. TW? Yeah, TradeWeb. Oh. So TradeWeb is also on best stocks in the market list, I think. Anyway, Robinhood, last thing. Robinhood reports on April 30th, which is really soon. Put this graphic up. The estimate is for$909 million in revenue.

1:06:35that would be over the 618 million they did a year ago in the same quarter. If they hit that number or better, that's 47 % revenue growth. EBITDA is supposed to be up 100 % over the last year. That's right. Earnings should be up 52%, 37 cents. What if they do a billion dollars in revenue this quarter? Like this stock is going much higher if they can. So my thesis is that this has been good for them, not bad for them, this bear market. I think it's driven a ton of activity. And I think that this is a company that could blow their numbers out. They report eight days from now. So how do you like when I make the case?

1:07:19All right. So I don't hate it. I have a few things to say. Number one, interestingly, I'm looking, it used to trade at a similar, I don't know why I'm looking at price of sales, whatever. It used to trade a similar price of sales as Schwab, both like six to eight times, try pretty closely actually. And then it just exploded into the stratosphere. Now at 13 times sales. Is Schwab ever, as long as you live, going to grow its earnings by 52 %? Of course not. One quarter over another? Of course not. Right. I think if I wanted exposure, this is not the exact same exposure to, let's call it the aggressive trader.

1:07:58I'd rather be in CMA. But I don't hate it. But that worked already. CMA looks so good. It won't let me in. That's my point. You want CMA? No, but it's on our list. I didn't take the trade. I should have. But that already looks great. It looks unbelievable. So does TradeWeb. All the exchanges that have exposure to volatility trading. look good. And Robinhood is off a tie. You're not paying a 52-week high for the stock right now. Well, I guess, let me ask you this. How big do we think this company can be? Well, if they get to a billion-dollar run rate quarterly revenue, they become a company that does 5 billion in revenue a year.

1:08:45I don't know. Wouldn't you guess that's like a$30 billion market cap,$40 billion market cap? All right. So it's already there. What's the market? It's already$37 billion. Yeah. All right. So maybe they're already pricing in this company as a$5 billion annual run rate. The company is getting the benefit of the explosive growth. Like they are getting the benefit. Schwab's$1.40, for example. And I know it's different, but Schwab's also a bank and Schwab is fucking Schwab. All right. So here's the bull case here. It's 30 million users. We had Steve Quirk on the show. It's 30 million users now. Those users are probably within 5 to 15 years of their peak earnings years.

1:09:26Like they're not there yet. How many other things can you sell them now that they're already on platform and you don't have to spend$30 to acquire them as customers like Schwab and Fidelity have to? The customer acquisition costs for the legacy brokerage firms, don't ask. Yeah. You have no idea how expensive it is to acquire a new customer. Robinhood just gets them because it's like in the ether amongst that age group. They're all sharing the app with each other. They have like this organic customer acquisition strategy that works really well. And none of these people have spent a lot of money yet on financial services.

1:10:04That's the bull case is like there's 30 million of them there. They probably get to 40 or 50 million. And now you've got this population of people who are going to need mortgages, going to need life insurance, going to need wealth management, going to need all types of services and support. And this is a company that they've grown up with. So, I mean, you can't say that about any other publicly traded financial services company. Like what other publicly traded financial services company could you say the average age of the customer is 29? Yeah. I can't think of any. I would just say the stock has more than quadrupled because of everything that you just laid out in the last year.

1:10:45So, all right. Well, we shall watch with great interest when they report. Oh, yeah. I mean, I love covering the stock. We'll revisit. Okay. I have a mystery chart. Surprise me. I mean, I think this is obvious. This is percentage return chart. It's year to date. But is that what it's showing, gains and losses? or in this case, two losses? It's year-to-date returns that we have discussed. We discuss this on the show today. On the show today? Yes. Year-to-date losses on the show today. You could call it a – All right. You want me to give you a layup or not? No. No. Just give me one more hint. Okay.

1:11:32I'm going to give you too good of a hint. You could call it a decoupling. I would call it a decoupling. Yeah. Okay. NASDAQ is orange. and Bitcoin is purple. Yes. Look at me. So I don't know. All right. I got distracted earlier. I looked at my screen. I saw that Bitcoin was 93 ,000. I'm like, wait, what just happened? Yeah. And ETH is up 11 % today. Like was there, and it's just. I heard the Bitcoin Fed cut interest rates by 25 Satoshis. Yeah. I don't know if you, I don't know if you saw that announcement. That was enough to do it. But yeah, I think it's one of the most interesting things to develop over the last week or two is Bitcoin acting risk off.

1:12:17I think it's fascinating. Really for the first time. Like really, I mean, as far as I can remember. I think it's fascinating. All right, we're going to leave it there. I want to say thank you to everybody who joined us in the live chat. I know I didn't do shout outs earlier. Brent, we see you. Alvaro, Cliff, Jason Chen, George, Arthur Munier, JMI, Adam, Joe Vanelli. Thank you guys. Thank you so much for joining us, all the regulars. We love you too. Guys, tomorrow's Wednesday, which means an all-new edition of Animal Spirits. Don't forget to subscribe to our channel, as the koala bear on screen says.

1:12:52Also, a reminder, get your tickets. We'll be at the Chop Shop, which is a really cool theater in Chicago, on June 3rd, 2025, in case you didn't know. But we'll be there, and we're going to have a great night with our fans and friends. and we'd love to see you. That's it from us tonight. We'll see you next time. Thanks so much for listening.

1:13:20Whether 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.