Unstoppable Buying, ETF Inflow Records, Apple at War, Circle’s IPO

27:59And they're not, they're just, oh, Moody's? I don't even know what that is. Here's another$4 ,000 for my VOO. And should I buy one time, two times, 11, or three? Yeah, maybe I'll double it. Oh, there's bad news in the stock market? Maybe I'll double it. Should I buy calls that expire next week or next afternoon? Hang on. Nicole is saying that they should have taken the over on my F-bombs. I actually think that these are asterisk F-bombs because I was just quoting something else. I'm not actually saying them. I said them at another time, and I'm just repeating what had already been said. Those are not F-bombs that are endemic to the content that we're doing tonight.

28:43Do you follow me on this? Sure. What do you think? Asterisk? or because there's like bets. There's money involved. Stop. I'm being dead serious. Okay. I'm being dead serious. I think I was minus 16. This is not a betting platform. Okay. Do you agree that the demography of the stock market is underappreciated or starting to become more appreciated but still underappreciated by the market watchers? I don't know. It's hard to say. I don't know how to gauge their appreciation over or under. Do you think enough attention has been paid by the people who watch the market to the fact that we have so many buyers who don't care?

29:28The demographic tailwind from younger investors. We were talking about this today. Robinhood net deposits was like a big number. Was it$57 billion over the last 12 months,$18 billion in the last quarter? It was like real. But that's like a drop in the bucket. That's not propping up in the market. But remember, we're not talking about the bulk of the money in the market. We're talking about at the margin. The daily buying and selling is a fraction of the money that never moves. But if they're insta-buying, they're not the marginal anymore. They're just there. They're like insensitive. So they're not the marginal buyer or seller.

30:02They're just there. I sort of feel like they get really bullish when the market falls. and the guy from Vanguard just told you they were five to one buyers versus sellers in April. But that's not the kids. You don't think so? That's not kids with 401ks? No, I don't think they're buying VOO. I think they're probably buying SPY or IVV. Okay. I could be wrong. All right, I want to, we go. Do you have anything else? Any more quotes of yourself? I have more, but we'll do them another time.

30:37So last week with Rich, we were talking about, or he was talking about how there's too much liquidity and the next bear market is going to be a doozy for not really market reasons per se, but I just wanted to reframe that conversation a little bit. That was a good show. It was great. Because it's like, oh, even interest rates can't slow us down. What could get this market to just chill? And I want to push back against that. And let me lay out the case and then I'll hear yours, your thoughts. Let's throw this first chart up, John, please. So the 30-year treasury rate and the S &P 500, I don't want to suggest that they're moving together at all, but it's just unusual to see them both at the upper end of their range.

31:18That is not what you would expect. You would expect treasury bonds, particularly at the 10-year and longer, to act as some sort of governor for risk appetite. And it ain't happening at all. Next chart, please. So it's like, oh, interest rates don't matter. Oh, really? All right. Look at this chart that chart kid cooked up. So I had him look at the inside the S &P 500 since the first hiking cycle in March 2022. And if you look at the left-hand side, the bottom three deciles in terms of market cap are getting rocked. only 15 % of companies in the lowest market cap decile, only 15 % are higher. And we're talking about three years removed later, three years later, same thing with the second decile and the third decile, they're up a little bit, but it's only a 50 % win rate.

32:12So certainly companies that are more exposed, that have higher costs of capital are paying the penalty for higher interest rates. The next chart from Torsten Slock shows growth in total employment for the Mag 7. Apple, Microsoft. Yeah, this is Mag 7. Okay. What a coincidence. The Fed started hiking interest rates and boom, you're telling me that people inside of the technology sector, employees, aren't feeling higher interest rates? They sure are. Look at US - The workers. The workers. Yeah, I agree. Look at US existing home sales. Look what happened when the Fed started to hike. Are you kidding me?

32:50Absolute ice age, ice age. And then finally, we have venture capital, particularly the mega rounds, the growth equity, demolished, demolished since the Fed started hiking. So it's very simple in my mind. Chart off, please. I think what happened was it was AI. In 2022, ChatGPT hit the scene and the market bottomed a month later and we never looked back. Had that not happened, we would be singing a much, much different tune about the impact of higher interest rates on the economy and the stock market and the Fed's ability to maneuver the economy and the market. And we are looking at the market today and saying, oh, I guess interest rates don't matter.

33:41They do matter. I think that you and I actually said that in real time. How many? You definitely did. You were the first to say it. We did a video, AI saved the stock market. It literally did. It literally did. Oh, I totally agree with your take, but I do want to, there's only one thing I disagree with, which is in your first chart. This is the 30-year treasury versus the S &P. I don't think what we're saying is that the absolute level of rates doesn't affect the stock market. I think we have a chronology disagreement because look at the end of 21, when it became apparent to everyone, interest rates are going to have to go up.

34:24That's when we start getting these emergency level inflation reports. But Josh, you're right. Look at 22. The stock market got killed. That's exactly right. So it's adjusted. So it's not about the level, it's the surprise. And the big surprise for people who were riding the market up in 2021 was that there was going to be a vicious hiking cycle the next year. Nobody knew it. Some people thought it might be necessary. When it became obvious that it would be necessary, you had a legitimate, although not very long-lived, bear market in the stock, in the S &P. And I do agree with you. the only reason we have enjoyed most of the gains over the last two years is that we got a tech cycle.

35:08All of it. All of it. We got a tech cycle. And we keep acting like 2022 didn't happen. And we keep acting like the first quarter of 2025 didn't happen. Oh, these kids are going to be punished one day. Dumbass. In 2022, Amazon. In 2022, it's like not a million years ago. So Amazon had a 56 % drawdown, 56. I just picked up Amazon and Google. Google fell 44%, okay, in 2022. And just the first quarter, Amazon and Google each fell 30 % after getting cut in half. Like investors have been punished. It hasn't been one way up, oh, easy money. For who? The thing is, it's been a really long time and we had two back-to-back years of 20 % gains.

35:56and this year we had a correction that went on for about four weeks happened in the first quarter amazon fell 30 of the first quarter and how much did infinity fall where i feel like it didn't happen just because i'm talking about annual but i'm talking about like uh calendar returns yeah 23 and 24 were great years but not just great they erased all of the pain of 22 and then some i'm just tired you didn't have to wait long of old people uh yelling at young people they'll have their comeuppance. They have been having it. This hasn't been a straight up line. It just hasn't. Yeah. The young people also, they're taking their lumps in places that you're not aware of.

36:35If they are employee shareholders of venture backed companies, which increasingly young people are, that hurts. A lot of them probably thought they would have had an exit by now. A lot of them were on Zillow picking out the house they were about to buy with their stock option. Companies cannot go public at the same rate that they were. Valuations are getting smashed down. Last week, there was an IPO. We talked about it for a second. What did I tell you it was called? I don't remember. I never heard of it. Okay. MNTN. This is actually an interesting business, and I'm going to start following it.

37:12So MNTN is a company that enables small businesses to buy television commercial airtime via a really easy technology platform. Like you submit your 30 second video to the platform. The AI makes suggestions of like what networks and what shows that that ad might work well in based on the demographic. And it's like a way that you don't have to like call NBC and say, hello, I'd like to run a commercial. MNTN will help you run TV ads. So it's a really, what's the point? The point is the last private round they did was at 2 billion and change and they came public at a billion dollar valuation. Yeah.

37:56Well circle, which we're going to discuss later. So now everybody was, everybody was clapping on the floor and I, you know, I was applauding. I think it's great. Um, but I, my point is it's not like young people in the markets haven't taken their lumps or paid the price or lived through anything they have and they are. Can you imagine somebody who put 10 % of their portfolio in NFTs? You think that person hasn't undergone a correction? So I agree with you. I think the old people want to see like a two-year bear market because that's their experience. We don't do anything but two years anymore i just watched the final we had a two-year bear market 2022 was two years it legitimately was it no it literally was all right i don't know the market bottomed in october 2023 was two years but go ahead didn't didn't feel that way i don't know we i just watched the last season of uh last of us it lasted seven episodes yeah that was weird no spoilers but here's a spoiler it was seven episodes why'd they do that is it a mini series now but this is my point we don't do anything that takes two years anymore mission impossible was like two it was so long you saw it in the theater yeah i saw it last night i think i'm out we'll talk about that another time i think i'm out of that all right let's move on um david solomon is like back he's so hot right now he was in the doghouse oh they thought he was done so to recap before we get to the numbers here David Solomon is the CEO of Goldman Sachs.

39:33He won a power struggle. It was either going to be him or Harvey Schwartz. Solomon got the job. Harvey ended up at Carlisle, where Harvey's a friend of the show. He's good. David Solomon got the gig from Lloyd Blankfein when Blankfein retired. And David Solomon was doing fine. They were double and tripling down on some of the consumer stuff. stuff they were trying to do. They were trying to turn Goldman into more of a household brand. They did a credit card with Apple. They launched Marcus, which was like an online bank slash robo advisor. And they were sort of flirting with Main Street stuff.

40:13And it all went terribly wrong. And the stock paid the price for it. I think Goldman got cut in half. And what happened was all these Goldman Sachs partners who have a lot of sway internally were not liking the bonuses that they were getting and they were calling the press. Like they were - Seven million dollars? How dare you? Like they were doing these three martini lunches with Charlie Gasparino at Pietro's and talking shit. And so every day the New York Post had another story talk, you know, trashing David Solomon, Goldman's in shambles. Why are we in the consumer business? What happened to the profit sharing pool?

40:55Why is this guy in the Hamptons DJing a COVID party when the stock prices, you know, so it was really ugly. And then here's the news that we just got. I guess this is like the inside baseball from the Wall Street Journal. I wanted to share this with you. So David Solomon went to the board of directors and told them he was going to start outing the naysayers who were talking. Rule number one at Goldman is you don't talk to the press. He was going to start outing the people who were responsible for all this negativity and getting rid of them. Why didn't he just fire them? He did. Here, let me read this.

41:37Solomon was going through a brutal stretch in 22 and 23. The consumer lending expansion was generating billions in losses, hurting Goldman stock. Money-making partners were leaving. Solomon had taken flack for his attention-grabbing side gig DJing. Solomon told Goldman's board he was going to take action, pushing out troublemakers who he said were undermining him with their leaks. the board told Solomon he had their support. By last year, longtime executives who had openly criticized his strategy were gone. The departure sent a message inside Goldman. No one is safe if they go up against the CEO.

42:18And Solomon, who is now 63 years old, has cemented control for the foreseeable future. This year, he got a 26 % raise and an$80 million bonus to stay for the next five years. So look how quickly things turned with the stock price and the fundamentals. Let's do some charts. This is a five-year price performance of Goldman Sachs, rocking and rolling, recently made a new high at the end of 24 and is still hanging in there. Stock has annualized at 30 % a year for the past five years No company fires at CEO If the stock price is annualizing at 30 % a year Right? Right Okay That's wild Earnings hit$14.12 for Q1 Which is up from$11.58 a year earlier Net revenue$15 billion 6 % year over year 9 % over last quarter return on equity 16.9%.

43:24Nice. Yeah. Asset management and wealth management on fire. Net revenues 3.68 billion. Authorized up to 40 billion in common stock. So like they're back. The stock is back. Desol is back. And I think the instructive part of this, tell me what your takeaway is for me. It's like, it's so easy to look at a stock price and come up with a narrative where it's just going to keep going up or down. 100%. We have to remind ourselves, nothing lasts forever. No trend, no narrative. Even Tesla, the narrative on Tesla is no one will ever buy a car from this jerk again because everyone's mad at him. Dude, he's back.

44:12He's returned to office. The stock price is ripping because they know the narrative has changed now. He's back. He's innovating at Tesla again. He's not running around the White House with Trump. Like you can't ever get so positive or so negative in response to, I don't know. What do you think? I think that they did a lot of damage to their brand equity. Like that was real. That was a horrendous misstep. Goldman. I'm pretty sure we spoke about it in real time. Like what are they doing? Goldman is like the creme de la creme. They're going down market. That's not Goldman. And they fixed it. They cleaned it up.

44:52They got rid of it. And I guess all's well that ends well. When you're a new CEO, and Solomon is 63. So let's say at the time he's taking the company over his late 50s. But he was an insider though. Yeah, but he's a Gen X. He's a young Gen X. He wants to do something different. they you know they want to make an old gen x old gen x oh is he old he's 63 what was blank fine though is blank fine a boomer he's a young boomer i guess okay fine so it's gen x the first gen x ceo at goldman but he wanted to make his mark i get it wanted to make his mark like they you know they all want kind of want to put their stamp on this is what we're doing with goldman um i totally understand that just was it was wrong it just didn't work all right let's talk about circles potential IPO, not potential, I'm sorry, Circles IPO.

45:43They're going public on and around June 4th, I believe. There was talks that maybe they were sniffing around Coinbase or Ripple for an acquisition. So before we get to Circle proper, I just want to talk about the state of the IPO market. This is from Jeff Richards. Try it on, please. Jeff Richards, excuse me. All right. He says uh the last 20 ipos were up 55 percent six are over 100 so back i mean these are real numbers like these are would you have guessed that um i i don't know i know i knew that it was healthier um but no that's that's real shit so the story with circle let's give somebody let's give some of these names before we go to circle though because it's really interesting um mntn which which we talked about five seconds ago.

46:33Which one is Hinge? Is that the boner pills or is that something else? Oh, that's the virtual. Digital, virtual. Therapy? Physical therapy. Right. eToro is more crypto shit. CoreWeave is like Nvidia's. Hang on, eToro is not crypto shit, it's like Robinhood. Right, so Robinhood is crypto shit, yeah? Where did Robinhood come from? Dude, you wouldn't describe Robinhood as crypto shit. It's a brokerage platform. Sort of just, dude. No, it's a brokerage platform. uh service titan which i also think is a really interesting business i was there the day that came public that's like software for landscapers and pool companies um service companies it's a it's like toast you know how i'm invested in toast yeah it's like the software company for restaurants service titan is sort of the same thing but for like people that have services business really interesting story founded by two brothers i think they were uh they were immigrants or their dad was an immigrant to this country.

47:31It's worth reading. Ingram Micro is a private equity catch and release. Mobileye was spun back out from Intel. Klaviyo is a big one, Instacart Arm. So the average of the last 20, it's basically a billion dollar IPO size at an eight and a half billion dollar valuation. That's great. 55 % returns is phenomenal, honestly. So the mission statement from Circle is to increase global economic prosperity through the frictionless exchange of value. And their whole business is this thing called USDC, which is the second biggest stable coin behind Tether. There's about$60 billion in AUM, I guess they call it.

48:16And there's no yield as far as I can tell. And so their business model is clipping the coupons of short-term treasuries. why would somebody put money into a stable coin with no yield explain like what the purpose of this in the ecosystem so once you are in crypto once you are on the rails you are on the rails and there's no like outside of this there's no like crypto to dollars you'd have to go from coinbase back to jp morgan wherever you want to go so if you are in crypto you're a crypto native or you're a crypto whatever and you've got i don't know whatever thirty thousand dollars in bitcoin and you want to sell five because you want to take profits, well, then you're going to go into a stable coin.

48:55If you're in like real crypto, not crypto ETFs. Because that's where you go. There is no cash. You go from Bitcoin to a stable coin and then you want to get back in, whatever, whatever. And so also like the ability to just transact seamlessly, frictionlessly, instantly without any fees, like it makes sense. It makes sense that this is the future of the financial rails. usdc the which is the circle stable coin that we're talking about is smaller than tether by my understanding is because they are the house solution at coinbase it's growing way faster than assets going into tether there's also been a ton of allegations that tether is up to some shady shit that it's the preferred since day one yeah forever okay um here's the offering New York Stock Exchange, which I found interesting, not NASDAQ.

49:4624 million shares priced between 24 and 26. I'm sure that's going higher. They want to raise 624 million. JP Morgan is the lead. Citi and Goldman as well. Ticker CRCL. It's a$6 billion market cap, six and change, if they get that valuation, that many shares. which I think is also pretty impressive. I don't think this happens if Bitcoin's not 111 ,000, Trump's not president, and Coinbase is not one of the biggest companies in finance right now. Like you needed all those dominoes to fall for people to be excited to invest in a stable coin company, right? Yeah. Okay. And that's how they make money is they're holding cash that people have no expectations on.

50:39and you're earning a yield on it. It's one for one back by dollars. So let's up these two charts. So this is the market cap. It's just the amount of dollars in the system. Got drained during the crypto pullback. Apocalypse. But look at this revenue. It's pretty wild. So in 2022, it was$735 million. And two years later - Hold on. 735 million in revenue? just clipping bond interest off of cash deposits. What a business. And then two years later, boom, 1.6 billion. Can I share a stupid question? Are Schwab and Fidelity asleep? Why would neither of them have bought this company out? They're afraid of the regulatory?

51:27I would assume, yeah. Is that what it is? Because that's the business they're in. They're in the same business. Fidelity is a very conservative business. I just yeah I mean Schwab is in this business We'll hold your cash Up to now And we'll earn on it There was no chance With the Gensler The way that he was behaving They could have done this in January They probably should have Honestly Now that Now this is another Another off ramp Away from TradFi With tons of money in it I would say They could have controlled it So I would I would guess The biggest risk to a company like this is interest rates.

52:05If the Fed cuts twice, that's directly less money. They actually list that as their second biggest risk. So in every company that goes public has to file what's called an S-1. And the S-1 is a document by lawyers for lawyers. Basically, it's just don't sue us. We have no control over the price. And here are the biggest risks that you're taking if you buy the stock, right? And they exaggerate. They'll put in 700 different risks just because when the lawsuits start after the first quarter where the company misses expectations, they're like, we told you this was the risk. Number one, regulatory uncertainty.

52:47I would argue that risk is pretty much gone. But I get why they would put that at number one. Potential legal challenges, blah, blah, blah. Okay. Interest rate sensitivity to circles where revenue is heavenly reliant on interest income from reserves backing USDC. Fluctuations in rates can significantly impact profitability, make the company vulnerable to macroeconomic changes. Okay. That's a risk factor for every publicly traded financial institution, crypto or otherwise. Number three, market volatility. Crypto is known for its volatility. I would argue that is the basis of the popularity of crypto.

53:25Number four, dependence on key partners. All right, this one's big for me. This is what kept me from being interested in CoreWeave, by the way. I don't love investing in businesses that are built on other people's businesses. And I know that's a little bit naive because to some extent, everybody relies on everybody. This one seems acute. Circle's business model relies on partnerships with entities like Coinbase. I don't know what percentage of the money coming into USDC is coming from Coinbase. I guarantee you it's a lot and it's growing faster than other sources. Because what else is there? Who else is funneling money into USDC right now?

54:06Who are their other key customers? I don't know. Probably Kraken. I'm probably, I don't want to. Kraken? Maybe, I have no idea. Is that important? I have no idea. All right. Like in other words, what if Coinbase introduces its own stable coin? I'm sure they already have one and I just don't know about it. And what if people just decide Coke and Pepsi, I don't care, direct my money into this. Or what if somebody says, okay, new feature, here's a stable coin, and we're actually going to pay five basis points. I think that's why they're coming to market at four times earnings. Because people understand that risk?

54:40I would assume, and others. I don't know what the next product is. Well, here's fifth risk, competitive landscape. The digital asset space is highly competitive. Numerous players offering similar services. I mean, it's a token backed by a dollar. Like, I think that we spoke about this. One of the things that you shouldn't say is there's no moat, right? Like, if you invested in companies that you had said that about five years ago, maybe it's anecdotal, but like competitive landscape, they won. That's one of the things people, including myself, have consistently gotten wrong. Yeah. They said Netflix had no moat.

55:13Netflix, right. Yeah. And I've said that shit too. And I was dead wrong. By the way, I was dead, dead, dead wrong on Coinbase. My argument was if we're really going to get ETFs, then why the hell would anybody transact in coins? Yeah. Wrong. Concentrated voting here. So public investors, if they buy the stock of Circle, they're buying the A class, which is one vote per share. That's what's being sold. The three founders control the B shares, which are not currently being sold to the public. They have 30 % of the vote because those B shares are five votes per share. I like that. Founders retain, they don't have total control.

55:56They can be outvoted by the A class, which is very unlikely. If they have a 30 % voting interest, it's hard to picture the rest of the shareholders. Hey, you know what? If you don't like it, you can sell the stock. That's not like a giant risk to me. Net income of$156 million on revenue of$1.68 billion in 2024. That's versus net income of$268 million on$1.45 billion in revenue the previous year. So net income is falling, I guess, because yields on the money. There's levers that they can pull in the expenses. Like that's. All right. Here's my bottom line. I actually think stable coins are the most useful, maybe only useful thing to come out of all this crypto stuff over 16 years of this now.

56:46They actually answer. That's a little bit dismissive. It's a new asset class. That's not nothing. No, I think that this is the most useful part of everything that's been launched. This is the actual thing that works and is needed. If you come out of Bitcoin with a huge gain, you need to go into something else or else it's going into the traditional finance sector. And a lot of the people that are in Bitcoin are there for a reason. They don't want – so this thing actually does its job and it's actually useful. I don't know about a company based around it, but I guess we're all going to find out together.

57:26I think – I don't know. Can you tell me why somebody – if somebody has the choice, if they're on Kraken or Coinbase or anywhere, why would they direct money into Circle versus Tether or another product? I don't want to make things up. There might be a yield component. I really – I don't know. Yeah, that's the answer. I don't know. All right. You're buying the IPO if it opens roughly high 20s where they're pricing it? I am not. There are too many other things for me to invest in right now. Too many fish in the sea. All right. guys let us know if you're buying we want to see in the in the chat and uh let's let's get a let's get a little bit of the gauge of whether or not people are bullish on this thing um all right i'm going to make the case i wrote we wrote up uh sean and i wrote up snowflake um for uh for best stocks in the market at cnbc pro the poster childs of the of the excess in 2021 so funny we were talking about that 2021-2022 comeuppance.

58:28This was it. This was it. A quick recap. Snowflake came public in September 2020, about a year before the top. Was it$100 billion? It was. They raised$3.36 billion,$120 per share. The stock opened at$300 per share. So I think it was worth$100-something billion out of the gate. Nuts. $75 billion right out of the gate. That was a multiple of 75 times its projected full-year revenue. Revenue. Revenue. It was the first time I can remember seeing Berkshire Hathaway on the holders list of a hot new issue. Everyone was like, what? Berkshire sold it way lower than 300. They're out of it. But if you thought that was the top, this is what's interesting.

59:21If you thought 300 was the top on IPO day, it went to 400. Right. A year later, the stock topped, Snowflake topped in September of 21 or November of 21 at 402. And that was it. Then the stock collapsed 70 % to a low of 107. When do you think it made that low? you looking at it now? Probably around like June of 2022. Last September. Oh, my bad. Okay. So was that, in other words, it came public September of 2020, bottom September of 24. It had a three-year period where if you held it, you actually lost money. A funny thing happened though. The CEO stepped back. Like the main CEO was a super popular guy in Silicon Valley, very well respected.

1:00:16But when you have a stock price collapse from 400 to 100, nobody cares. He promoted the company's head of AI to become the new CEO. I forget the guy. I don't know the guy's name. And they started to put together a few quarters in a row of 25 % growth and surprising the street. Like the estimates got pessimistic enough that they started to beat them, which is why Sean and I chose to write this name up. It hit the best stocks in the market list last week. made a new year high. It's still 50 % below its all-time high, but it's a double off the lows. And the argument we're making is like, professionals don't care if it's 100 % off its lows.

1:01:00So long as the fundamentals are improving at a faster rate than the expectations, the stock has room. So we have a chart of this. I don't know if we did a chart. It doesn't matter. We, oh, here it is. I think, look, I think this is like pretty obvious. That 175 level is sort of meaningful. So if you're playing this as a trader, I don't know, that's where I would pivot off of. And if you're a little bit more of a long-term investor, wait for that 200 day to start rising a little bit and maybe use that on a weekly closing basis. What do you think about this as an entry? Here's what I would do. If I was looking through it longer than that.

1:01:43Wait three days. I would see how, if it gets into the gap, see how it behaves at the gap. If it doesn't get into the gap over the next three or four days, it's going way higher. That's what we said. Low volume pullback to see how it handles the bottom of that rally. Yeah. No, but this looks good. Fundamentals. Yeah. You're going to be hearing more about this name as an AI story than you have previously because again, the guy running the company started out on the AI side of the business. And now here are two things, Sean, Paul, that I thought were important. The first is they have over 600 companies paying them more than a million dollars each.

1:02:25That reminded me of CrowdStrike, which I now have, I think, a double or more in the stock. All from high today, right? Yeah. Gross margins are expanding. So they're not at full-year profitability yet. That's why this is not in the S &P. But that's where they're driving toward. And they'll get there. And when they do, this will be an S &P component because market cap-wise, it's too big. But the other one, and I love this stat, Snowflake's net revenue retention rate hit 124 % this quarter. Net revenue retention means the existing customers, not only are they staying, they're upping how much they're spending with Snowflake.

1:03:05And I think that's because of the AI stuff. So you need your data clean, organized, unified. You can't do anything AI if your data is not in good shape. And that's kind of what Snowflake's business is. So if they can get closer and closer to profitability, I think the stock can stay in this area. So that's our make the case. What do you think? I like it. I do like it. Bullish? Bullish. How many shares can I put you down for? Not yet. Not yet. No, go to make the case. I like it. Okay. mystery chart. I sent this to you, John, over the weekend. Okay, here we go. I forgot what it looked like. All right, Josh.

1:03:44So would you buy this stock or would you buy this chart? Excuse me. Does this look bullish? No. Okay. I hate charts like this. It's just sloppy range bound, right? This is a ratio chart? Yeah. Okay. Is it two stocks, two ETFs? What is it? It's a company versus the index. Versus its own sector? versus the S &P. Okay. And so what you could see is that over the last five years, you would have been no better off owning this versus the index. No better off or you'd be downed. Well, yeah, whatever. Same diff. Flat to down. Okay. I'm going to say Apple. Love it. Great call. Look at that. Really good guess.

1:04:32Yeah. I mean, this thing is just - This is a really big story. I think that it's not being discussed. this company is not growing anymore no they hit the it's a replacement cycle business they hit it everyone said it would happen it did it happened and it's it and we were speaking about this a lot last year as it made that run right it was like it was like the anti-deep seek like they were not in the business and they were getting the premium they were getting the benefit for that but it but the multiple never didn't make sense like why was apple trading at 35 times next years or however high it got up to.

1:05:03I'm going to tell you, way worse than their failure to be at the forefront of AI so far. They're getting their ass handed to them in court over this antitrust stuff. They lost to Fortnite. This is actually crazy. I don't even think people know that this is going on. Epic Games sued Apple because Apple would not allow Epic Games to sell things in-game and bypass the App Store. And Apple basically said, these are our terms and conditions. If you want to have an app in our app store, we take a 30 % cut of whatever your sales are if it's an in-app purchase. This applies to every app you can think of, okay?

1:05:47You want a Spotify subscription using the Apple app store? Spotify is going to take a chunk of that money and give it to Apple, even though they compete because of Apple Music. Like, this is just the rules. and Epic said, we don't think that that's fair. And they took them to court. It's been going on for years. And Epic Games, which is the parent company of Fortnite, won. And a judge said, Apple has to allow Fortnite players to be able to buy things from Epic Games in-game that goes around the payment mechanism of the App Store. and Apple refused to allow Fortnite to have an app in its app store.

1:06:38And that is against the judge's order. So after the court case, Epic Games resubmitted its Fortnite app to Apple. Apple took five days and said, f*** you, no Fortnite. Now, most of the gamers don't care because they're on Xbox, they're on PlayStation and that's how they access it. But people do like it's a big deal. And the judge wrote this like fire and brimstone missive back to Apple. Like what gives you the right to defy a court order? You have to reinstate the game and give it permission to. So Apple losing that for the first time ever jeopardizes this cash machine they have. Like they had a stronghold on every app that wants to reach Apple users and now they might not.

1:07:34So no shit. The App Store is their crown jewel. It is the highest margin component. Everything else that they do is hardware. And every business line from AirPods to the watch to the iMac to the iPad to the phone, they're all massive, amazing businesses. But guess what? They're not growing. and not to mention the threat from open AI and Ive, whatever the hell they're building, if they build the next generation of whatever user products we're going to do, that's not at the stock price. And so Apple's the best company in the world, but it's not growing and it might still make money, shareholder yield and all that.

1:08:09They're going to buy back a ton of stock. They're going to pay the dividend. But is Apple going to outperform the S &P over the next five years, over the next 10 years? I'd be not surprised. You know what's so crazy? It's still a 30 multiple. like you can't even come out and say um there's so much pessimism around an apple i'm gonna buy there's none there's not and and and and it hasn't outperformed over the last five years what's to think it will over the next yeah um and then they have the china stuff and they want to pivot some of the they only make one product they only make one hardware product that matters in America.

1:08:46They make the Mac Pro, not the MacBook Pro, not the laptop. The desktop highest end computer is made in Houston. And Trump is like, hey, don't shift the iPhone from China to India because that's not what we talked about. Make the iPhone here. People look at each other like, Like, no way. Cannot make an iPhone here. Maybe you could make more of the computers here. I don't know. I would be the last person that would know. But so they are sitting. So Apple is sitting at this confluence of the absolute worst things. Worries about consumer demand staying up. Worries about tariffs. Worries about China versus US.

1:09:36How about not being an AI and being threatened by it potentially? Failing to implement consumer AI in a meaningful way. No AI on the phones in China. All the Chinese-made phones have AI. And Apple is trying to compete in China without it. And then losing in court something that could literally jeopardize their profit margins from the greatest services business in the history of the world. That's where Apple is right now. And it's not great. That's not great. It's not great. politically, geopolitically. It's all, it's, uh, and, and it's all, and it's expensive. So, so. But other than that, other than that, buy, buy, buy.

1:10:15Yeah, the setup is nice. All right, guys, that's it from us this week. We, uh, we, we appreciate everybody who came out for the live. You guys are hilarious looking at your comments. Uh, you, you, literally, we have the best audience on YouTube. Thank you so much. To those of you listening in podcast land on Spotify and Apple podcasts, we appreciate you. We love you too. please make sure to listen to an all new edition of Animal Spirits tomorrow morning Michael and Ben and then we'll have the usual slate of content here on YouTube across the compound and the Ritholtz cinematic universe we'll do Ask the Compound we'll do the compound and friends and you guys are going to love it thank you so much we'll talk to you soon goodnight

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