There's Never Just One Cockroach

24:24I mean, the most of the buying is coming from central banks and they're putting on their balance sheet and it's a move away from the dollar. And there's, there's, you know, we think there's proof that China is understated their, their gold reserves by 20%. You think they're quietly accumulating gold? Oh yeah, certainly. And so I, I think if gold and I've sat, I've sat down with a, with a CEO and the gold mining space and he asked me, Bill, what would make this, what would, what would, what would ruin this? What, what could make it go down? What would ruin this uptrend in gold. Yeah. And I said at the end of the day, I don't know what would because the massive selling that would take this away would have to come from central banks and they're not selling.

25:01What we could get though, I mean, we could certainly get a 10%. And this at the time, gold was at 3 ,500 to 3 ,700 or so. It was just breaking out. And yeah, we'd get a 10 % move, you know, probably if just deleveraging, maybe at this point it could be a 20 % move. I was going to tell you, the only thing that ruins this is a global recession where these central banks are forced to sell gold in order to do stimulus in their own countries because that is literally what ended the gold bull market in 2011 european sovereigns asians or they all so like but how does that change if it's a tier one asset now on their balance sheet it is as good as cash yes but if you need the money you need the money yeah the other thing that could end it is if people get too excited about gold yeah like big leverage coming in on alongside i don't know phil phil probably has like better better guesses than i do but like it it eventually does end but it doesn't have to end for 10 years like there's no it could be a big cycle here right now it could be a big deal right it definitely and i and i think what could end it i mean there could obviously be a number of things and you look back even covid and i remember that it was like the first week of march and whenever that monday coming out of the oil saudi arabia and Russia Oil News and oil is down 10 bucks.

26:12Gold made a high that morning, but then within weeks in the COVID shutdowns, it was, I think, 300 bucks. I think it was 1 ,700 to 1 ,400. And so gold really sniffs out inflation. And it may not react how you would expect during the inflation. Like in 2022, Fed's hiking rates, the dollar is strengthening. Gold was whacked, but it smells inflation. So it's going to see it and it's going to react prior to the inflation. So I would say what we're seeing right now potentially could be more inflation. But then you're also getting the GDPs of Germany and Japan and things like that. That's why the dollar is actually rising over this last week, last couple of weeks, when gold has been breaking out, which is a pretty interesting phenomenon.

26:55That's rare. Yeah. I wanted to ask you, why is silver rallying so hard? And then I'll ask you the same on copper. What's happening there? What's borrowing rates, lease rates? You can't get the physical silver. and they're trying to - So explain, we don't have like a hardcore commodity trading audience. Explain what you mean by that. Well, I guess the best way to put it would be, you know, lease rates. So in order to move silver around, it caught, in order to get the physical silver, you can't move it from spot to spot in order to get it to London. And in order to, and there's lease rates that in order for borrowing costs, they're surging because you can't get the physical silver.

27:30So - Why do, who needs the physical silver? uh in order you know it's in order for processing industrial uses and and then you're also getting demand for buying i mean it's more than 50 percent of the use of silver now is industrial use i thought you were gonna say jared yeah okay well i thought you i thought you're gonna say teenage boys in mass apicla all right go on yeah i mean so i i think it was a little unique that china went into its autumn festival um two weeks ago and and you know they they are a supplier of silver they're not exporting necessarily that could that could be a driver if they decide to export silver put it down but um you know there was a lot there's definitely an alignment where those lease rates surge it costs more money to get your hands on silver but i guess best way to put it uh around the time of the autumn festival festival there's a scare there's a scarcity scarcity of silver for sure right and tons of demand because silver typically rallies with gold but has higher beta it usually follows gold more yeah usually follows gold too so it's this has been sort of bubbling under the surface.

28:32And I think once it got above$40, there's always the conspiracy theories that the banks are selling silver, selling paper silver against the physical, things like that. But I think once it got above 40, the ceiling was lifted. And I think it changed the dynamic. Silver just made its first inflation adjusted high since the Hunt brothers failed attempt to corner the silver market in 1980. I thought that was remarkable. Like what a moment. Just to let you guys know, it's the physical back ETFs over in London. Those are the ones that need to secure the silver. So as they get more investors in those ETFs, the demand that they the amount that they got to show on investment demand turning into physical demand.

29:15Yes. Wow. Duncan, I'm impressed. That of course was Paul Tudor Jones. Thank you so much for being here, PTJ. We appreciate that. um how how do you play the upside in the metals i know because i know you're you're both commodities and futures guy but then i know you own newmonts and you're involved in the mining stocks too yeah so let's start with the futures i mean it's i mean the interesting the cme group has done a really great job of making micro contracts over the years so um because futures trading is of notional value and you know so the main contract of silver is a 5 000 ounce contract of silver you know so at 20 bucks it was a hundred thousand dollar contract now at 40 bucks it's a two hundred thousand dollar contract at 60 you know so you know it you get it the the actual the value of the contract's larger so you're the the volatility you're withstanding is larger oh in dollar terms the swings are huge yeah they're huge so now there's a micro contract that's been around for for a few years now and it's a thousand ounce contract of silver even at that point you've got the thousand ounce contract of silver now is is what is the notional value of what silver was I mean, so options, volatility has surged.

30:24You know, one of the ways, I mean, again, we were invested, and I run a metals called Metals Alpha. It's a CTA. It's an investable program. I mean, we've been in this pressing the gas on this most of the year. And right now, we've lifted off the gas because of the volatility. We run our strategy with looking at the average true range, and the ranges have just been massive. So we - The longer the rally continues, the larger that ATR becomes, which raises your potential risk for when it reverses. You think there's a blow off top? It's going vertical. I mean, I think we go to 70. I mean, we can, we can, I mean, there's calls for a hundred.

30:59I think it was Bank of America. What's that on silver? Yeah, silver. Yeah. So we put on, when we got out of the futures and we're just kind of, we are tiptoeing in the futures because the ranges are two to$4 a day. And we don't want, we don't want to get caught in a big downdraft if it does happen. and we, you know, call options. We did some call spreads a couple of months, about a month ago. They got the January 65, 75 call spreads. And the diagonal Caterpillar box book? But no, something simple that we could capture if it does have that. Why a call spread? Because if it has that bananas move where it just goes up to five to$10 over what it has been, if it keeps this pace up, we're able to capitalize on it and know what our risk is to be invested in it.

31:37Oh, so you can put yourself in a box and get the upside, but not be fully exposed. Yeah, a$10 wide spread,$65.75, goes out to expiration end of December. And initially, we're buying those from$0.10 to$0.20. Who else is doing that trade along with you? Are you seeing a lot of funds doing that? I mean, I think a lot of funds may use options to manage the risks in this type of environment. That's where my expectation would be. So we look to protect our downside as well. So we're doing different proprietary strategies, managing delta and tail risks. Now, is it true that only silver can kill a werewolf?

32:14That in a, what is it? Or vampire. Vampire is a wooden stake. Yeah. All right. I want to ask you about copper. What the hell is that about now? That's its own thing that's going on. People are shocked by this. That it's lagging? Yeah. Yeah. Well, just like, wait, I don't understand. The rest of the world's stocks are outperforming the S &P 500. China's stock market's up 38 % this year. Why are gold and silver rallying this hard and copper is not reacting to better than expected everything overseas like it normally does? Well, copper was up over five and a half. And if you remember, it was like the July 30th Fed meeting.

32:54And that was when Trump was really going after Powell a lot. And so right when that Fed meeting was dropped, the White House announced that the copper tariffs, but they're exempting the cathode. And the cathode goes in the refining process to make the copper. And so that actually copper fell historically 20 % that day. So it really hasn't. And there's a lot of damage in the chart. But, you know, and then most recently, like yesterday, you're hearing about more exports from China. And they're going to ramp up their copper. You just don't have the same scarcity profile with copper. And I think you will over time.

33:30But when you have a 20 % drop the way it did, there's a lot of damage to that chart. Even somebody like myself that wants to invest in it, I've only tiptoed in it because it just feels like there's a lot of damage to the upside. And it's going to – a lot of dead bodies overhead. Look at it that way. There's a lot of supply technically overhead. So I think it has to chew through that. I mean, if the metals in general keep going higher, I think copper is going to have to join the party. But physically, I mean, you look at the data center investment. You're looking at other things that are going on here, the infrastructure spending that's going on here in the U.S.

34:02or around the world. The emerging market economies, they're stepping their game up and investing in their economies. Copper is going to continue to be on high demand. But you're not really getting that growth out of China either as that demand. I think just early in the week, it was a negative CPI number, again, surprisingly in China. So you're not getting that growth. And that's been a headwind as well for copper. You still like gold and silver here? Am I putting new positions on in gold and silver here? So you're letting it ride, but you're not pressing the bet. Yeah, rolling up some stops. But I mean, in our metals, our mining alpha portfolio that you mentioned, we own Newmont, we own Core, we own Barrick.

34:44No more than 10 names is the idea in that portfolio that's concentrated. We launched that portfolio in July. And I mean, they were already up only half as much as they are now, which was already a lot at that time of year. We didn't have time to get all that cash to work. I was going to say, they're not letting anyone in. Yeah. So we got about two-thirds of the cash to work. And so any pullbacks, we do want to be buying. Are you telling people that you intend to hold those forever, like be invested forever? Or would you say to the people, look, this is a gold bull market, and it's one for the record.

35:17It's an amazing one. But if it ends, we don't want to own these companies. Well, if you look at it— They're not good companies. They never have been. Well, I mean, right now, there's going to be tons of free cash flow. Free cash flow. Yes. Doesn't last. And yeah, but then the phenomenon here is you have gold prices higher, and you have input costs, energy that they have to purchase and use. Oil prices lower. Oil prices are lower. And so that's a tailwind to the business. I think that's something that makes it a longer cycle. And I think we could be a year and a half into what could be a five-year cycle.

35:50Just wait until the copper miners discover quantum computing, and then boom, just easy, extract the copper off and running. You haven't really thought about AI in the gold market yet. What's this purple chart? What are we doing here? What we're doing here is we're talking stocks. All right, let's go. What do you got? All right, Vanda has some great data showing retail activity in the stock market. And what they're showing is that the highest amount of one-day inflows was last Friday. Wait, where is that? Josh, this is called a chart. Oh, I see. And the black line is the stocks. I'm looking at the - And the purple line is the volume.

36:30This is very - I'm looking at the bars. Yeah, there you go. You got it. You got it. Wait, but we went down. They bought - Okay, so - They bought the debt. He's new here. They bought the debt. So the stock market went down a lot on Friday. And retail buyers went all the way in. And it worked. And it already worked until today. So let's talk about the stock market. Chartkin Matt did this thing for us. when the S &P is up 7.8%, drawing the line to make it work, I suppose, going into the fourth quarter, the average return for Q4 is 7.7%. And in fact, going back to 1950, there's never been a down quarter when the market is up this much going to three quarters.

37:11Now, N equals, I don't know, enough, 15 or so. Thoughts? Well, I think one of the tailwinds took a fourth quarter rally is the seasonality that you get in August and September. And we never pulled back in August and September. So, you know, if we start October lower, yeah, it's easier to finish higher. I do think we're going to have a strong finish the year. And I think, I think the mag seven can really, can really, uh, I mean, some of those names are not done much this year and I expect strong earnings reports. And I think they're going to be a leader to finish out quarter four, but you know, the, the tough thing is, you know, it would be, you know, we're seeing a lot of volatility right now.

37:49The VIX is above 20. It's a 24, 25 here today. And that leads to further volatility. I'm surprised we haven't seen more downside this week. And we may. So there's going to be a little bit of a, you know, rebuild a little bit potentially. But at the same time, every time this market is sold off, it hasn't been down for more than one day or two days. So I think it's going to, we're in this little vacuum of there's no government data. There's, you know, we're waiting on earnings and there, you know, no one, everybody's kind of waiting. earnings start next week. Yeah, no one's blinking yet. We sort of need it.

38:20We sort of need a Microsoft report to get us to stop looking at regional bank charge-offs. How much more did they spend on AI, right? Yeah, I'm going to guess a lot more. This is a good one. We could skip the next seasonal one. The bottom line is, absent some news that knocks us off course, and maybe it's the cockroaches, the managers are going to chase, right? The people that are under-invested chasing to your end. It happens every year. This is some good stuff from Warren Pies. So we are in a, I guess, a blackout period where companies cannot purchase their own stock. So Warren Pies has a chart that shows the typical annual cycle for S &P 500 buyback volume.

39:00And of course, there are blackout periods and we're in one right now. But they have to report earnings and then it's came back on. But what he's showing is that once the buying picks back up, he breaks it down. And statistically, you do see pretty significant positive returns for the S &P 500 companies. Oh, it's noticeable. Right. Stocks have a better period of time during the buyback phase. I mean, I think it's obvious, but the point is we're coming up to it. Continuing bid. I like that idea. Nobody's like really talking about buybacks anymore. I don't know if we're making a record this year.

39:36You know why? Because AI is just sucking the oxygen out of it. That's all anybody wants to talk about. And every earnings report, they're talking about raising their buybacks too. So the buybacks are there for sure. Yeah. So Bill, does this make you nervous? We are obviously in a retail is having a moment. You can call it a mania. Some of the returns at some of their favorite stocks, quantum computing, nuclear, uranium, just scary charts. Flying cars. All that shit. Yeah. So TradingThomas3 on Twitter shared that retail has been buying calls for 24 consecutive weeks, which reached a record high last week.

40:17I mean, there's just no chill. You know, I think there's certainly, and that's what's made me nervous this summer a little bit. I thought we'd get that seasonal pullback. And, you know, I love what we were able to accomplish in our portfolio into July and August. And so it made sense for us to trim a little bit and kind of wait and watch a couple rounds, have some flexibility. And the situation hasn't deteriorated at all. And I mean, September just kept going. Kept going. And so I think that's the interesting thing. You get these retail flows that keep pushing it higher. But at the same time, I mean, look at what you buy those many calls.

40:52I mean, there's the put call ratio has hit a level that it does cap the upside returns in the near term. So I think that's something that – what we're going through this week, it could be timely. And I don't think it's going to be seismic. I don't think it's like a – I mean even go back to March of 23 when these literally banks were not – the doors were closed and shut down the next day. AI rallied us out of that and – Can I ask you a crazy question? I don't even understand where people are getting the money to do this. Look at this chart. Can we go back to that though? No, look at this. Look at this.

41:29What is it? This is showing mega cap tech. So for all the talk of like we're in a bubble, the mega cap tech are significantly underperforming the crazy names. So it's mega cap tech divided by non-profitable tech. And if you invert this, it is, the ratio here is wild. Mega cap tech is no longer exciting enough to attract retail trading. These names are going sideways a lot of them, the mega cap tech. That's the frothiness. They want that oak low. Yeah, that's the stuff. That's what they want. It makes me nervous. But where – so put this chart back up, the retail options trading. What is this? Like out of people's f***ing paychecks?

42:06What are they doing? What are the dollar amounts involved in this? You know what really got it? Because how do you keep losing unless they keep winning? What do you mean you keep losing? They're making money. Dude, they're killing it. The retail call buyers continue to make money. They're crushing it. And you know what really got it going? And I know from talking to people firsthand, I was a little bit in the first one. I haven't done much more after that. but Eric Jackson on that open call. And I think that was the big start. That was a spark. You're right. That was a spark. And we've seen a number.

42:33He's had a couple other calls since then. But that's what really got people super excited. He came out with the stock at a dollar, said it's going to$80. It did go to$10. I don't know where it is now. Looks pretty vulnerable. It's at 7-11. Yeah, don't try charting. Don't try charting. I know you can't chart the$6. No, I know. It could be a$15 next week. He might get Drake to buy a million dollars worth of stock. It'll go to$50. You really don't want to chart that. I agree with you. That seemed like it was a moment. Yeah. And then ever since, people are just like, what's the craziest thing I could do?

43:03Yeah, it's like, what am I buying today to make money? It's like an assumption that you're going to make money today if you just buy something. See those open. Yeah. But that's such a good point. Where's the money coming from? Because it's not only retail and it's not only options. So last week, Bank of America showed that single stock inflows were the fifth largest in history. So single stocks and the biggest ever for a week that the market was down at least 1%. I mean, it's like the firepower is endless. That like, they don't react negatively to headlines anymore, really. The dips are bought the same day.

43:37They don't even wait a day. Well, somebody had a great take on Oclo and you could use this for a lot of these companies. There's no exposure. There's no revenue. They're not sensitive to interest. It's just whatever. There's nothing tethering it to fundamentals. I mean, a lot of these names, I mean, they're unprofitable. They're not making money. I mean, it's a story. They're equity financed. They're not subject to borrowing rates. A lot of tech always is. It's not what you're doing for me now. It's what you're going to do for me in the future. And this is really extending that narrative and saying, and it's pulling that cash in there.

44:08You're buying a story. I mean, these are a lot of people, I'm sure people that have made money in Bitcoin, people have made money in other things, and they're moving that money around. But they've made money hodling. They've made money doing things. And I'm not dogging it at all. Making money is not dumb. Making money is not dumb. I mean, these people are doing their thing. I'm sure that there will be – listen, it is a mania. These are pre-revenue names. I would guess that there's going to be a handful of winners over the long term. Yeah. Maybe at lower valuations. But a lot of these are going to just be completely whitebacks.

44:40The companies, though, are not stupid. They're all selling equity. They're all doing second things. Allegedly, the CEO of one of these companies, I don't know if it's Akla or Ionic. I don't want to – I forget which one it was. Allegedly, like, sold all of his stock. Really? I mean, we're getting, and we've gotten multiple calls into us at Blue Line Capital, like clients like, why can't you buy this name in my portfolio? Listen, I mean, the music's going to stop at some point. It's going to be done. As a fiduciary, we can't do that. Why don't we own this piece of shit that everyone else just made 400 % on?

45:08Yeah. Right. So those are the conversations that some of my team has had. Some have come to me. And it's, I mean, I'm not talking dozens, but maybe, you know, nearly a dozen. It's hard. You have to just send them a link to, you have to send them a link to Robinhood. Tell them, download the app, do whatever you want. We're not doing that. But let's just bring it back to, because I really think it's important that people that are listening don't hear us talking about this pocket of mania, which it is, and say, oh, the whole thing's in bubble. The whole thing's in house cards, because it's important that we zoom out.

45:35So Yuri and Timmer has a great chart that shows the good news is that the earnings are doing the heavy lifting as we enter year four of this bull market. The PE ratio is only up 1 % year over year, while earnings are up 11%. That is critically important. The PE is only up, this is for the S &P, I'm guessing, only 1 % year over year. So all of this expansion that we've seen, it's earnings. So it is fundamentals. Companies are growing. Margin's are at all-time highs. Like there is good reason why stocks are going up. Absolutely. Despite a lot of the nonsense. NVIDIA is underperforming its earnings growth.

46:09We see NVIDIA as almost relative to other pockets in tech of value buy. There's some great names out there. It's wild, but it is that way. Yeah. I mean, look at like a name like Micron. I mean, we own that in portfolios. It's like a number nine holding. We have a 3 % holding of it. And I mean, I've trimmed it a couple times. But there's names that are really growing earnings substantially. I'm not sitting here calling this a bubble or anything. I mean, I think when you look at some of those non-profitable, frothy tech, it's kind of a little bit of its own pocket. It's out there. But the names that we're all investing in, the names that are driving the S &P, the names that are really driving the Nasdaq 100, I mean, there's a lot of money being made by those companies.

46:49And I think they're going to continue to grow very well. I want to go back to one of your charts. John, can you put up chart seven? So Bill, this is yours. You mentioned the put call ratio. Walk us through why you think positioning makes it as such that we might sort of see capped upside from here. Well, it's with everybody's, you know, it's the boats invested on one side. I mean, so if everybody's invested in that downside protection, whatever it might be, You know, it also has an impact on gamma dealers and really what we've seen a lot of this year where, you know, earlier on coming out of April, it really helped the market move.

47:29But at the same time, historically, if everybody's extremely negative in buying puts, you know, you're not – the move is not going to play out. It's so weird. Everybody has one foot out the door, right? Like as soon as there's some bad news, people are – What is it showing? This is the inverted put call ratio. Not puts are not being bought enough right now. Hoods are not being bought enough, which is like, that's what you want to see. That's April. That's what you want to see. We have the opposite of that. Yeah, you see the April move. Oh, so you think we are susceptible to a downside whoosh. Yeah.

48:00Got it, got it, got it. Yeah, this is what – so when the put-call ratio is at this level, it typically caps the upside a bit. It's toward the end of a big rally, not early in the game. And there has been false signals. You can see like quarter four of 24, second half of 24, false signals that came out of April. Because remember, coming out of April, I mean, everybody got so bullish so quickly. And so no one's buying puts anymore. The coast is clear. And it kept going. So there is false signals. It's not. It's just one of the things to look at. You have another one, John. Chart 10. You say, since the Fed cut rates on September 17th, markets have responded as if it were a meaningful pivot.

48:41with precious metals and small caps outperforming. The small cap rally deserves, I mean, today it reversed because you got a lot of regional banks in there. But like, what do you think it was about what happened on September 17th? I think you get this Fed rate cut. You get the Fed rate cut last September. I mean, the economy is, I mean, 3 % plus GDP, credit spreads, I mean, this is before, as of September, very, you know, There may be a little wiggle, nothing to worry about. Consumers cooking. Consumers inflation is, you know, it's not where they fed once it, but it's not, you know, not a headwind too much.

49:20So, I mean, everything is sort of almost in that Goldilocks form and you get a rate cut. I mean, they're just juicing the economy, basically. So they did a rate cut they didn't have to do on September 17th. Essentially, that Fed pivot. And it's essentially, it's investors are saying, you know, buy me whatever's not going to be devalued because it's better than if they're going to go in this trump has stacked the fed or will stack the fed over the next couple next year so there it's in that he's going to get his cuts they're saying they're going to get the fed rates down to two percent maybe if he gets his way over the next year well if he installs the fed chair by by the end of may which is what's going to happen it may be bet it may be besant it may be eric i don't know whatever he whatever he wants there's nobody left to stop him.

50:05Rates are not staying where they are now. And it almost doesn't matter what the economic data says because he's got an opinion that low rates good for me, low rates good for the economy. Don't care what the data is, lower the rates. So the labor market is low hiring, low firing. Consumers are absolutely fine. Bank of America just reported they serve almost everyone, nothing to see there. Everyone is saying the same thing. Hyperscalers continue to spend and the Fed is cutting. Yeah. Hard to be bearish in that scenario. On the other hand, if the cockroaches come out and as always, risk is what we're not talking about here.

50:41So yeah, you have to, you never know. But if you zoom out and you just place those two things, it's hard to, I think bulls have the upper hand. Yeah. You have to give them the benefit of the doubt. A little scare here would be healthy. Great. Let's do it. I mean, it would be great to see if we get a full 5%. A full 5%. A full 5%. Maybe 7%. But is that a while though? A full 5%. A full 5%. full five. Wow. Whoa. Yeah. What's this S &P consumer staples sector chart? All right. I want to talk about this. Our Fred Todd Sohn and others at Ned Davis Research do great work. So let's start with chart 16.

51:17And we're talking about, man, it's kind of wild. The staples have never been a lower percentage of market cap. Well, guess what? Ned Davis shows that the market's not dumb. The percentage of earnings that the staples are producing is also at an all-time low. It just don't matter anymore. But listen, so John, throw up chart 12. So this is from Todd. Consumer staples and energy and healthcare and utilities are lower in the S &P than technology. Now you might see this and understandably conclude, and I love Todd, that this doesn't make sense. Bubble, bubble, bubble, bubble. I'm out. Okay, you have to look at the earnings.

52:00So check out this chart that Matt did. So similar to Ned Davis, I was inspired by them. I asked Matt to look at this. On the left hand, we're looking at the market cap of staples and healthcare. And we're looking at their net income. And guess what's happening? They're moving together to the lower right. The market cap is 14.8%. The net income is 14.8%. Net income share meaning percentage of the whole market. And they're the same exact thing. 14.8 and 14.7. It's almost like the market is a dumb. And on the other side of the coin, you have Apple and NVIDIA. They make up 8.3 % of the total income, up from 4 % in 2020, doubled.

52:37And yes, the market cap is higher. It's 13.2 % because obviously the market's going to get excited and over-extrapolate and overdo it. So maybe we're seeing that, but the market is getting it right by and large. So this is an answer to the people that are like, the whole thing is dominated by tech. Yeah, because the earnings are. The multiple, I mean, the multiple of Staples relative over the last 10 years is at the upper end of its band. Crazy. Crazy. Imagine if it goes low. Yeah, well, I mean, I think the situation could be different. It may be driving some of the money, you know, right now, potentially.

53:12I mean, obviously. What's the multiple on Staples? 21. So we got as high as 22 and a half, but 20 over the mid range is just under 20 over the last 10 years. So you're paying 20 times for Procter & Gamble that's growing 1 % a year. Or 50 for Costco, which you want. Costco, Estee Lauder. Walmart. Walmart's 39. Costco's 48. Estee Lauder, 46. I mean. Let's do utilities. This is a fun one. First of all, year-to-date, John, 18. Year-to-date returns by sector. This is eye candy. This is crazy, right? Okay. So utilities are the best performing sector year-to-date, up 23.7%. But they're so small as a sector.

53:55Even after that, their contribution to the S &P's year-to-date total return is less than a half of 1%. Think about how insane that is. That's how tiny the utility sector is relative to the whole market. That it could be up as much as it is and not even move the needle for the market. This is where we're in uncharted territory now. I mean, and these stocks have decent sized market caps at this point because they've gone up a lot. But like in comparison to the Microns, the Netflixes, they don't even matter. Yeah. So I thought that was interesting. Let's just equal weight utilities, equal weight S &P 500.

54:41Look at this divergence. March 2024. 24, basically people that thought utilities were like grandpa's stocks. Nope. That's not what's going on anymore. Now you have record breaking electricity demand all over the country, all over the economy. And guess what? They're going to treat these stocks like they're alphabet and meta now. That's the huge thing is, I mean, if you're going to drive AI and power AI, the power demand, we have a slide for that too. The power demand is incredible. I mean, you can see some of the forecasts here, natural gas. So in our portfolios, we don't own a traditional utility.

55:18It kind of happened quick when these things just started going. But we're also, I mean, we own KMI, we own LNG, we own CCJ, the utility, I mean, uranium. You know, some of this, but the natural gas is going to be a massive player. Look at the forecast on this chart from 2025 down to 2035, what natural gas in the yellow is going to do as empowering. Why are natural gas stocks so terrible then? I own them. I mean the explorers, the producers. I don't mean their transmissions. LNG is breaking down hard. Yeah. It's not responded to it. I mean, the price of natural gas has not moved much. And they don't really – there's legal things to it now.

56:02But basically, you can just say hypothetically, they just burn it. They just burn it away. It's just endless supply. Like we're like the Saudi Arabia of natural gas. So the transporters of natural gas are what's going to need the people that own the pipelines, like a Kendra Morgan. And then, I mean, LNG, there could be more geopolitical things because they're not making money on the churnier, on the movement of, I mean, of the price of natural gas. They're making money on the movement of natural gas. So if it's going to, if they're going to bring natural gas to. If they're going to export it. Yeah.

56:29That's the play with that stock. Okay. I don't know. Can you buy? Can you buy the utilities here? We have some names on our watch list, like NEE, a couple of others, but that's a name. New Era. Yeah. Okay. I mean, it's some of the high-quality stuff that can drive with it, but I would like to see a pullback in general. Well, you're seeing a potential outside day in XLU today. We'll see where it closes, bud. Those stocks are basically AI stocks now. Yeah. None of the volume that's coming into those stocks has anything to do with dividends and the way that it used to. Absolutely. I mean, the other thing I'd be careful out for us too, is, I mean, our top holdings are NVIDIA and Alphabet and Broadcom and Micron.

57:14It's like, how much more AI exposure? It's the same trade. Yeah. So if you get a deep seek moment or something like that, your whole portfolio is going to get smoked. So we have a lot, we look at more ballasts within our portfolio and how we - Listen to this stat. The utility sector is expected to report at the second highest Q3 earnings growth rate, 17.1 % of all 11 S &P 500 sectors, second only to tech. I can't, how many other years historically have there been where utilities were putting up high teens growth? None, maybe none, it's possible. I mean, you can't imagine many. It's a pretty exciting time to be in the market and have things like that going on.

57:57So, I mean, at least I think so. You have a MAG7 take going into earnings? Like, where are you most confident? What are the names that we should watch and what are you watching for? I think the bar is high. But I think the bar is in the right spot for some of the names that have not done much this year. Amazon. You know, I think the communication around cloud at the last earnings call, was, you know, it really hurt Amazon. It kind of pushed them away. And you had these just amazing numbers from others. And I think that's something that if Amazon can deliver the results and communicate well. That stock has done shit this year.

58:42I think it's could finish the year very strong. It's pissing me off, actually. It was one of our higher conviction plays coming into the year. But, you know, as you move and when you raise a little bit of cash here and then you put that cash back into something else, We haven't been adding to it. It's still up there. If we get the good results, I mean, it could be something that could really run into the year. I mean, I can't talk about Micron enough. There could be a real repricing. Is that your favorite chip stock right now? It trades like a commodity. Because it is. It is. It always has been.

59:17I thought the interesting thing, I mean, the high bandwidth memory is making it more efficient and power efficient to run this. run these chips the morgan stanley i think it was upgraded and they they have they upgraded the story of d-ram and so i think there's there is some interesting stuff going with micron and if it you're seeing price targets go to 220 to 240 but there could be a real full repricing in this name if if if it all things are clicking and and then the more the four multiple what it's like it's it's seven yeah or no it's 11 11 and a half it's it gets valued like a commodity yeah is the way they've always done it.

59:56I mean, imagine that, imagine a 20 multiple on that. What if it becomes a less cyclical business? Yeah. I mean, that would be the dream come true for longstanding micron shareholders at long last. No, no. I think a pullback into earnings is, is a good thing. Yeah. Right. I'd rather as a, as a shareholder, you want to see like a little bit of doubt creeping. You don't want to see this thing, these things flying into earnings. To that point too, you also remember last august and when we were getting that pullback from the highs and if you miss if they're missing you know it's going to hurt them more so instead of being down three to five percent of that in a up market you're gonna be down five to ten it is asymmetric yes yeah the losers are punished more than the winners are rewarded correct what do you think of the setup on tesla going into earnings it's rallied hard this uh summer and fall and it's not as though the fundamentals right away are about to get any better.

1:00:48So strong to quite strong. Has it reacted to earnings? So, I mean, when's the last time it's really reacted to the earnings report? It just doesn't matter. I guess the auto earnings on the auto business, it just, it doesn't seem to matter anymore. I mean, it is a breakout. I mean, it really could be if it keeps moving higher from here over the end of last year high before it fell out. I think it's more of a momentum play in how Elon communicates and what's the next event. More than the earnings. What do you do with NVIDIA here? They're not going to report until the end, end, end of earnings season.

1:01:22Stock just made a new record high the other day. See, it was green today with everything else red. Is it the least volatile stock out there? It's become very unvolatile. Yeah. I feel like this can't end until this is over 200. Yeah, it's got to do it. I think, I mean, we've actually seen volatility of NVIDIA kind of come out ahead of its earnings report often. But you'll also, going into its earnings, when it gets its earnings, we know what all those big names have already set. How much spending is Microsoft and Meta? And you get those numbers and that's going to correlate to what you think. I said that to Josh last quarter.

1:01:58It's anticlimactic because you already heard from all their suppliers. You know what I think this ends? When OpenAI comes public at a trillion dollar valuation, the biggest IPO ever. Yeah. And it's a flop out of the gates. And it's not because there's anything wrong with open AI. It's just because at a certain point, enough is enough. I don't think the market can withstand a meteor of that size hitting the surface of the planet. It's a trillion dollars. It'll soak that money out of all these other public companies. People don't understand when a company comes public - Josh is a big money come out guy.

1:02:36When a company comes public, the people who own it privately are selling it to new people who don't own it. Yeah. They need to pull money from somewhere to buy it. That's by, that's, but it's a tautology, but it's the actual fact that you're selling stock to the public. Unless Jensen's going to get paid on the IPO. 7 trillion comes out of the money market funds and boom, problem solved. If it's a trillion dollar IPO, the valuation, and they need to raise$200 billion to facilitate the offering, people are going to sell other shit. All right, so what do you think about this theory? People are, I feel like bulls and bears.

1:03:14Everybody's waiting for this to end, for it to burst. Is that not, wait, is that not a good framework? That would be, that would, that would make the most sense. The opening AI IPO in 2026 is the end. What if the most frustrating outcome is the most likely where this just keeps, we just plot along and there is no - That is not the most likely. No, no, no, no, no. That's not what I said. I said the most frustrating outcome is the most likely. Like in an LOL world, where the most frustrating outcome is there's no bust and maybe there is no boom and maybe we just plot along and we grow into these valuations and there is no kablooey.

1:03:49Other than the fact that it's never happened that way. I know. Okay, a lot of things happen that have never happened. With 2 % interest rates at the end of 2026 and continued AI spending. I mean, money is going to be forced into everything that has to be invested into things that are not going to depreciate. Invest your money somewhere. And that's what's driving gold. It's driving silver. It's driving commodities, but it's driving AI investment. It's driving these call options into all these non-profitable tech names. So it does seem like a scramble for people to get their money out of dollars and do anything else.

1:04:24Pretty much. Except the dollars aren't crashing. Dollars aren't crashing, but the inflation never went away. It is crashing. Dollar is crashing. It's crashing to gold. Oh, stop it. Oh, my God. One of those. So I got – no, I got a text from Sprinkles the other day. Should we be doing more gold? Shut up. You want to see it? I'm on my phone, but wait. Should we be doing more gold? Should we be doing more gold? Hold on. All right. Bill's like, all right, on secondhand. I'm giving the sign to Phil here. Why? Phil's going to step out. Are you saying Sprinkles is not a sophisticated investor? here want to see it dead ass wait she sent me a whole bunch of nudes so i gotta be careful scrolling through this with you here hold on i want to give you the i want to give you the exact words oh here she is yelling at me what did you say i'm curious here your response i was like shut the up or something no uh no i told her we have gold we're fine we have everything we're invested in everything we never stop investing i can't find it right now but it was to the fact of i I heard it's doing really good.

1:05:24Now, where the hell did she hear that? Below decks? CNBC commercials. Good morning, America. She's not watching CNBC. No offense. There's always a gold commercial somewhere. She must be. They must have been talking about it on either like she doesn't watch The View. Costco. Like a Bethany Frankel podcast or she listens to Scott Galloway and Kara Swisher. She likes that one. I got to find out from her where she heard this. If I hear it's The View, I'm bearish. No offense to anyone. but I don't think it's quite I don't think it's quite there gold at 5 ,000 will be a huge deal and will become mainstream news well congratulations to everybody that bought as much Costco gold as they could last year yeah oh yeah they were right there's another example where the crowd was right the herd the herd was not the herd is not always stupid all those things we just never bring up that at the time this is the top oh yeah Jensen Wang signed a bra yeah two years ago yeah half the price he did That should have been the top Remember the watch party?

1:06:25The Invitic watch parties? Yeah Why wasn't that the top? The earnings call Happy hours Bill, did you have fun on the show today? I had a great time Dude, we love you I have to tell you something I get the list of who's going to be on the show with me every morning And when I see your name I know it's going to be a good show So I hope you feel that way about me Would you like to say some nice things about me now? Of course This is a good space to do that Hey, we always end the show asking people what they're most excited about. You got a lot going on. What's out on the horizon for you? Well, outside of markets, I'm excited.

1:07:04We're going to – my family, we're going to Cancun next week. Okay. And I got three daughters and another family that we are really close with. They have four daughters. They're all like best friends. The kids don't know that they're going together. Oh, they're going to be so excited. When are they going to see each other at the airport? Different flights. Different flights. So we land at the same time. Unreal. And they're going to see each other at the airport, and it's going to be exciting. Oh, very cool. Oh, so you're going to run into each other at the Cancun Airport. Yes. Probably in the line at Customs.

1:07:33Yeah. Okay. Awesome. That's going to be cool. How long are you going for? I think just four days. Okay, good enough. With kids, that's plenty. Four days is plenty. You plan it. It's late October, Chicago. You don't know how the weather is going to be, and if we get into holiday season and stuff. Okay, I have a plot twist for you. it's Michael's family that's meeting you there what do you got what do you got going on what are you excited about I'm excited for the Knicks I'm excited for what's the first regular season game it's like is it Friday against the Celtics yeah this coming Friday yeah I think we win that one I think we win that one too I mean I hope so they are depleted coming in strong coming in hot you a big Bulls guy not so much Bulls stink no he's from Maryland he's a Wizards guy well they're even worse Did you grow up watching the Bullets?

1:08:20I did. Okay. I did. Jawan and Weber and Sheed? Oh, yeah. What a horrible franchise. No offense. I mean. I think Jordan played his last couple years there. That was just brutal. I mean, I did go see him play. It was great, you know. But you had the 80s, early 90s Redskins to make up for it. That wasn't terrible. That was awesome. It wasn't all bad. The Mark Rippon Super Bowl. That was fun. That was a fun one, too. All right, dude. We want to tell people where they could follow you for more. I have a whole bunch of links here. I have bluelinefutures.com slash bill dash Baruch. We'll just tell people blue line futures, right?

1:08:56I have your Twitter, x.com slash bill underscore Baruch. And social, what's a good social for you? That's a social. Twitter and then bluelinecapitalwealth.com. Bluelinecapitalwealth.com. Okay. And you're on LinkedIn too. Yeah. Dude, you're everywhere. Yeah. All right. You having fun doing halftime report? I love it. Yeah. It's been such a great, I'll tell you, It's just, it's so great being able to go to the New York Stock Exchange to do it. It's like humbling to walk into that. Dude, it's pretty epic, right? It still is. It's still like a magical building. I agree. Well, I love being on with you, as I said.

1:09:28So thanks for everything. Thank you for being on the show. We appreciate you. Thank you. All right. Bill Baruch, ladies and gentlemen. You guys, thank you so much for buying out all the tickets for the live compound and friends that we're doing. We appreciate you guys. We're super excited to see you all. That's coming up very soon, October 24th. and man, what a night we have in store for the compound fans. Huge thanks to Duncan and John who are in the room with us today. Rob, Nicole, Graham, Keith, the whole team. We appreciate all of you. Thank you guys so much. And thanks to you. Like and subscribe.

1:10:02We'll see you soon.

1:10:09You got it? Yeah? You want to get this out one more time?

1:10:24Thank you.