TDI Podcast: Urgent Stock Trends (#958)

25:40And I think the government next, you're going to see him taking stakes in uranium companies that are pro-American with mines here. You've got UEC. You've got Encore. Those are two that I think have tremendous upside. They're already up tremendous. What's the symbol on Encore? Encore is, what is the symbol on Encore? So there's Cameco, but that's Canadian, right? No. Yeah, it's Canadian with, yeah. So Encore, because I don't know if it trades. I think it might have. Let's see. Yeah, it seems. I'll look it up as you do it. Yes, Encore. It's so funny because I actually own this for like 10 years and I just never looked at it.

26:15So it's EU is a symbol. EU. Yep. EU. So what about – one of my theories is that – and we just started investing in this for clients, by the way, through our managed growth strategy, TDIMG. And the idea that quantum computing for this reason – let me tell you the reason. The thesis is that if you don't have this under wraps and it actually comes into fruition, if other places have it, especially the black hats and the other guys out there that we don't want to have this, They can basically in a second de-encrypt the entire Pentagon and rip right through all of our stuff. And therefore, from a security standpoint, we need to have companies owned by and not controlled, but pieces of so that the government could really have that protection.

27:09Thoughts? I think that trend is very, very far out. And if you're believing in it, then the biggest beneficiaries are going to be Broadcom, AMD, and NVIDIA who have to supply the chips, which are going to need even faster chips than are available today, which NVIDIA is the king of those. That would be the best way to play it and the best in terms of risk-reward profile. But very far away from that, and a lot of this stuff isn't going to happen. That's actually a safe way to play it, Frank. A safe way to play it. That's a safe way to play it. A safe way to play it. If you want to do it, you have like, yeah, you have D-Wave, you have IonQ, you have you have Rigetti and a few of these other guys that are out there.

27:46Plus, of course, some of the major names also that that kind of are doing this, even IBM for that matter. Right. With some of the systems. And remember, the amount of power that's going to be needed. We have a massive energy crisis right now, more massive than than anybody believes, other than the hyperscalers and the White House. And this is why they're taking stakes in companies, because we need rare earths. We need the energy. We don't have the energy. We're modeling it. All the models are dead wrong. I've been studying this for three years. They're dead wrong. They're modeling on large language models.

28:14And we all know large language models is, you know, takes up much more energy compared to the normal Google search. And they're all modeling out for the next. This isn't modeling out for 10, 15 years. We're talking about three, four years. Right. But they're not modeling out right now. And you can listen to last week of Meta's call of agentic AI is here. Right. It's here. You have bots doing everything for you. And when you have agentic AI, this is autonomous. This isn't large language models where you put in a couple of prompts. That's okay. That takes a lot more energy, but that's what it's being modeled on.

28:43And if you're looking at a Gentic compared to large language models, it's using probably 30 to 60 times more energy. I need to stop you because this is a really important point here. And I don't want to gloss over this. But basically what we have is the – let me just kind of give a little bit and then I want you to fill in some of the blanks here. What we had first was Google search, which is, okay, hey, I'm interested in this recipe for this. Can you tell me this? And you get a billion results. And you've got to search through those to figure out what you want. And then you had the sponsored.

29:11You had to kind of read through those. And then you figured out, okay, and then you have to look through 20 things. You are the person in charge of your own destiny after you get your basic information. Then we have these large language models, which basically sucked up all this stuff. And by the way, I didn't get my thank you letter from Google or Facebook or anybody else for utilizing my data. But anyway, you're welcome. As is anybody else listening. They took all that and they then created this massive process to do what you did, bake it down into usable features. And that's where you just get that answer right in front of you, right?

29:46Next stage is when the computers are able to actually think independently to a degree. Not act, but at this point, that's called inference. Inference is kind of the next thing. We're on the cusp of that right now. Some say we're there, by the way. And inference is that next level of AI, which makes computing or makes the AI a smart, a intelligent, and I don't want to call it sentient because it's not, but an intelligent being, if you will. So it can actually do some thinking, reasoning, and all that. Your next level in the Holy Grail is agentics. Agentics is taking all of that, the reasoning, the thinking, and all that, and then making decisions almost on their own, which you start thinking about Terminator.

30:27You start thinking Terminator. Scary. Yeah, but that's what you're talking about. You're talking about that. So instead of using an ounce of water for a Google search in the cooling down of all the facilities and the large language model search, which is your OpenAI Chat GBT using a cup of water or so of that into next inference, which is maybe a half a gallon to maybe three gallons of water for Egentix kind of activity and action. And all of that requires energy. So you think about the differential between all that. You're talking about something that is multiples and actual factors above, right?

31:05I mean, here's the stats. It's 0.3 watt hours of electricity for a typical Google search. You need 25 times more power for a single chat GPT query. And then if you're using agentic AI, which is the next step, and that's what they're modeling on. They're modeling at 25 times more power. If you go to agentic AI, it's 79 times more power than large language models. So let's put some numbers behind it really quick and make it simple. If you're looking at Goldman Sachs and you're looking at McKinsey to well-respected companies that have forecasts, they're forecasting anywhere from by 2030, around a hundred, 125 gigawatts of electricity, gigawatts of electricity.

31:44If you model it based on a genetic AI, is that per year? No, that's by 2030. So that's the full capacity of what we're going to need to support our requirements. So that's what we're going to need. And that's what we're going to need in facilities to pump out. Yes, to pump out. We have, and this is just the AI, right? So this is, to put it in perspective, we have like 80 right now. And they say it's going to go to, we're going to need, there's estimates up to like 150 to 200. If you include a Gentic AI, it's more like 327. And the difference between that is trillions, tens of trillions of dollars in spend.

32:16And we don't have the capacity on the grid. And that's why you're seeing these deals by hyperscalers that I've never seen anything like it in my life. They could open up Three Mile Island, which is five years away. And hopefully you get state, local, federal approval, which is going to be very, very hard to do. After that, Microsoft is signing a 20-year contract to lock in that energy for 20 years. You have Oklo. It's not generating revenue. They don't have scalable SMRs. Amazon's in there, and there's another deal done, and pump it all into money. I mean, look at Oklo. They're banking on, it's still unproven, by the way.

32:49They have no choice because there's no energy out there. They need portable energy because there's not enough on the grid. And this is where you see, that's why uranium is going through the roof, right? And another alternative. So we need this energy. It's why, if you look at natural gas turbines, this is the first time it's happened in history because I hate alternative energy as an investment. You lose 99 % of the time in alternative energy, right? Whenever you're getting it subsidized, you lose. And we've seen that throughout the years. It's not a long-term strategy. You could trade them all you want.

33:15I'm just saying buying them long-term. We just spent$10 trillion to build solar, the last 10 years, solar and wind. And it's literally the same percentage as fossil fuels that we're using over a 10-year period, but we wasted$10 trillion. Those are facts. When you're looking at solar, this is the first time, not solar panels, right? Because we've seen subsidies come down on those. When it comes to battery storage, solar companies for the first time are economical. These companies are going to be on fire pretty soon. And I've never recommended solar companies, But solar companies have focused on battery storage.

33:47Okay, Scholes is one of them. That's a good company. You can look up a symbol for that. They're doing a lot of research on these things. There's not a lot of them, but those that are focusing, look at their numbers. They're going to pay dividends. They're buying back stock because it's first time it's economical. It's cheaper than natural gas turbines when it comes to electricity because it's disrupting the entire market. Electricity prices are going through the roof. I have great contacts that build these data centers for the hyperscalers. scalers. I got some that are on the boards of electricity telling me the Microsoft deals that they're signing are 15 % increases over the next three years, and they're signing in one second.

34:20So the story with energy - Some of these companies, like if you look at the Invesco Solar ETF, it owns things like First Solar, Enphase, GCL, Sunrun. Are these not the names we're talking about? You're not talking about the generals? Because I mean, First Solar is just down. These are all down a lot. Yeah, they're down a lot because, so if you're looking at some of these companies, Let me see if I can find just a short list for you guys. Let me see. This way I can get, because, you know, the research. Let me bring up the research. I didn't know I was going to go there in this interview. You know, we go deep.

34:49We go deep. No, we go deep. And this is, you know, we don't have like a whole schedule and stuff. So, you know, which is cool. But this is, so there's two companies I would definitely recommend. And let me get to them right now. So you have Scholz, which is one. And NextTracker is another one. So NXT. Yeah, so NXT is in the solar ETF, but that's, you know. Yeah, look at NXT. And I mean, we recommended these companies in September and October, and you know how bad solar is doing. Scholz is up 35%. NextTracker is up 33 % for us. So the differential here, what you're saying, is that these solars have the capacity to actually also store.

35:26Battery storage, yes. They have battery storage technology, and these are two of the leaders. So NextTracker, NXT and SHLS. Those are two companies. And if you could see, look at those compared to the rest of the solar companies. These guys are going to be printing money for decades because now it's actually cheap. Never thought I'd say that about solar. Again, I never really recommend solar in my life, I don't think. But these are two companies that we're doing great on because when the dynamics change, the fundamentals change, you've got to be willing to change. I think also the other thing is that even if there is so much need for energy going to be in the future, assuming we stay on the same trend and track, right?

35:58Assuming this all happens and all of a sudden it doesn't be like one day somebody says, forget the AI, let's move on to the next thing. But assuming we go through this and it continues on the same trend of track, there's going to be a lot of energy needed. And whether that is going to be completed by nuclear, whether it's going to be completed by some other who knows magic, right? You know, fission, fusion, I don't know, whatever. The fact of the matter is that this even as a complement to the other energy sources is going to be beneficial. Solar. Yeah, beneficial. Absolutely. I mean, you have to find, I mean, when you see companies like Oklo that are signing contracts, and this stock is absolutely through the roof, whatever the valuation is.

36:36We had this last year. We had SMR in Oklo for our clients last year. I don't even want to talk about how much money it was made. It was absurd. I mean, and, you know, they're signing deals, right? They got big backings by Peter Thiel and stuff. So, you know, you're looking at some of these companies. What I love is I was able to invest in Bloom Energy in the 20s. That's a company. Oh, I remember that one. Yeah, yeah. Yeah, so Blue Manage has done well. And this is, they're signing deals. They have great, great technology. So, you know, solid oxide, fuel cells. And this is actually, like, they have a model, which they're much far advanced, where they can produce this at scale now.

37:07And now you're seeing them get tons of contracts. They're just under$2 billion in contact with American Electric Power. So, you know, there's some of these names that are incredible. Anybody that owns megawatts, and this even goes for the Bitcoin miners. So Bitcoin miners, that's called tier one. What they're doing is they're transferring from tier one to tier three. Why would they do that? because each megawatt tier one, which is Bitcoin mining, is roughly a million dollars. It's 15 times more when you convert them over to tier three. And you have the biggest companies in the world with the deepest pockets that are in dire need of energy.

37:39So if you have companies like that, you're going to do very well. DGXX is one digit power. They own a ton of electricity. We've been in this since a dollar. It's three, one of its highest six and came down a little bit. And this is a company that's in this transition pretty much ahead of most of these Bitcoin miners. They're sitting with a full capacity of 400 megawatts of power. And they're going to convert a lot of this over. They own the actual power. They have these assets that are probably worth three times the price of the stock right now. This is what I'm looking for in terms of energy in the sector.

38:10Anyone that has megawatts is huge. All right. That's good stuff. Love it. Love it. I want to continue on with this AI that I want to segue into. I want to talk about private credit because I have some things that I just. Some things that make you just go, hmm, what's going on there? And I want to talk about some of the earnings season. But let's continue on with this discussion, this idea of are we in a bubble or not? Now, we saw some earnings come out from various companies. Some are really good, like Facebook is going back on their spend, just for huge amounts of money they're spending. But they're making some real headway.

38:42One of the things that really was interesting in the conference call last week was the discussion about how they're flattening and streamlining their various teams where it took maybe a team of 20 to do something for a while, they're flattening down to one. And there's a whole, I don't know if you've seen this whole undertone in the markets about leaders of companies coming out and talking about and specifically pounding the pavement about that AI is not going to reduce headcount. This whole idea, which makes no sense to me. But I don't know if they're doing it just to make sure people don't freak out and keep working, keep working, don't worry about it.

39:20When we get the machine to do your job that you do exactly right now, don't worry about it. We're not going to fire you. Why would we do such a thing? No, no. Because if they did, people would be like, I'm going to slow roll this. I'm going to make this take 20 years to develop. CapEx spending on companies, we're talking about$60 billion now into open AI from a various bunch of players now. And also we saw the SoftBank is possibly doing$30 billion, which is questionable whether that's included in the$60 billion. Microsoft is going to be spending. Microsoft got hit down about 12 % after their earnings.

39:53People are getting very concerned about spending in some areas, right? The overspend. Do you think we're at a point, an inflection point, that where we were before was, oh, my God, they're spending. That's great. We'll ride the stock up. Now it's like, wait a minute. The spend is now a concern because we don't know how much we're going to recapture. and the big question that came out last quarter or so with OpenAI promising everybody and then the poster child of what was really going on, which was Oracle falling from grace. Is that something or is that all just garbage? I think there's massive separation that we're seeing, right?

40:30So when we look at, this is why Microsoft tanked. Microsoft said, and this is the reason why I tank, purely. They're spending more money and their margins are going lower next year, okay? Okay. That's not a good combination. Meta, on the other hand, remember Meta, they always used to increase spending and the market punished them. They never punish them anymore because those guys spend money and they return more money on their investments than anybody, anything I've ever seen. Right. I mean, they bought, you know, Instagram for two billion. Remember that? I don't know if you remember that. They wanted to crucify Zuckerberg.

41:01Well, that's when he was doing the metaverse. Well, he was doing the metaverse and he was like, okay, where's the payoff here? Not even the metaverse. I'm talking about Instagram. Oh, yeah. He bought Instagram for two billion. Right. And they made fun of him and they said you should kick him off and he's not a good CEO. That's what is an$800 billion asset lease now. I mean it's insane. I mean these guys spend. They know what they're doing. But for people who are saying this, and I think it's a story and people just read stories without looking under the hood like we do, at least what I do. You know when it comes to fundamentals and stuff like that.

41:27I know you do it as well. But to tell me that this isn't benefiting the companies, look at what they're reporting. They're reporting record profits across the board. This is the first time I know. I've been doing this for a long time, 30 years. You've been doing it probably just a little bit longer. Have you ever seen a market at all-time highs where these companies are reporting profits at all-time highs and they're actually laying off employees? Why do you think they're doing that? Because AI is working. Exactly. Exactly. So for them to think about this and the Fed actually to come out last week and Powell will say, well, you know, just like regular, you know, technology and, you know, we see these trends where you lose some jobs and you gain some jobs.

42:00I'm going to put this in simple terms. Doing this for 30 years, I've never seen a trend in my life where you can't see the scalability. Okay, so what does that mean? It means when you scale, you always want to scale. It's great for business. Okay, so you create the iPhone. You're like, oh my God, this is a great product going to scale. Well, you could see the scalability because only everyone who's alive could own an iPhone, right? So you see the end of it. Okay, this is the amount of people. This is your total address of the market. You cannot see the end of the scalability for AI yet. Like the productivity gains that you've seen are almost infinite.

42:31They keep going better and better and better. And that's why you're seeing these companies continue to increase their spending. They were spending$70 billion a year ago. Now they're spending, you know, Medi came out and said we're spending$125 billion on AI, $165 billion total. This next year. Right? And you're looking at probably up to$600, over$600 billion from the top six. You've got the top four, which you guys probably know, but then you throw in, you know, Oracle and Alibaba. You know,$600 billion in a year they're spending on this. Just to put that in perspective, people, to be absolutely clear, that is a butt ton of money.

43:03Seriously, that is an absurd, That is more than some GDPs of countries around the world. It is a huge amount of money. I think it's$125 billion is the cancer market, basically. It's$125 billion a year. So just to show how much, how bigger this is. By the way, this is also money that is not being put in for instant gratification. This is not like we're buying stuff and it's going to give us a X-fold benefit because of this or that. this is kind of, this is just an installment, right? This is an installment plan. That's maybe another bunch coming next year. Well, here's the biggest transition. And this is something else that's, you know, original thesis where everybody wants to get into AI, right?

43:51Like a year ago, two years ago, we need to get into AI. It's the biggest thing ever. And now what you're seeing is companies saying, wait a minute, wait a minute. Okay. Even if we create an AI department, you're going to have Google come by and say, okay, Hey, you guys are really good. we're going to basically poach the whole and spend, you know,$10 million, which is like a penny to us, right? I mean, these companies are generating 80 billion a quarter right now, as Microsoft has generated, right? And they'll poach everyone from you. So what they're doing is they're going to Google and they're saying, hey, we want to use all your AI services.

44:20And Google says that even better, you can use all our cloud services. What we want is the APIs. We want the kings of the kingdom. We want access to all of your list, which is hundreds of thousands, sometimes millions, sometimes hundreds of millions, depending on a retailer and saying, we'll work with you. We'll create models. You can use our whole entire AI system. And every time a search comes up, it comes up immediately. You can use Gemini 3.5. And you're seeing these deals. That's the next wave where I think it's an easy layup to make money in AI. Have you seen the chart of Wayfair? Have you seen the chart of Dollar Trees and Dollar Stores?

44:52Have you seen the chart of Gap? Gap, have you seen it? All those have one thing. They all sign deals with either Google or OpenAI to run their AI services. and look at those charts of those stocks and how much they're up. I mean, granted, you know, the markets come down a little bit last week, but once they did that, they're basically saying, okay, instead of competing, now we're going to partner. And it's almost like the NVIDIA thesis from 10 years ago that no one loved to do in technology. I'm not partnering with anybody. I keep my own IP. And NVIDIA said, look, we're going to partner with everyone in the world, right?

45:22And build our own systems, not just the hardware, but the software around this, right? And that's why they're so big in 4. trillion, whatever, you know, market cap. So you've seen a lot of these companies, like an Under Armour. You look at crappy retailers that want to learn more business. Instead of all these companies building their own AIs, they're partnering with the hyperscalers, which is making them much, much bigger, which is generating more money through their cloud. And now they can offer services where, hey, okay, now someone's going to want something Etsy just to sign a deal. I bet you're going to see Etsy stock go through the roof.

45:53Etsy, right? You're like, really, Etsy? But now, if you look at the deals that they sign, any product that you're going to list or that you go, it automatically, it gives you a one-click buy to Etsy if it sells it. One-click buy right here. Here's how you buy it, boom, in two seconds. No, the whole thing would be not only that. It would be, you know, that you have a party coming up and the system, you know, your birthday coming up, a 50th birthday for somebody, and you get presented with, you know, a very refined Etsy customized plaque, I don't know, for somebody that comes up in your, you know, your AI daily look-see.

46:31Yeah. And then you're clicking like, yeah, that's good. I'll buy that. Or three or four different sites, by the way, that have similar ones that you can buy and check the prices. Like, for example, it'd be very nice to have a really good rideshare comparison tool that can tell me Lyft or Uber so I don't get ripped off by either of them when I order something. Yes, exactly. And listen, I'm not saying, oh my God, everything. I'm just saying AI is not even close to being a bubble. If it's in a bubble, one, we have great contacts that build these data centers. Once we know this isn't an ego thing, this is just a data thing.

47:06Look at how much these companies are spending. They're increasing their spending. It means that this trend is going to continue for a while. It doesn't mean all the stocks are going to go higher. If you look at NVIDIA, NVIDIA, Microsoft, even Meta after its move, all three of those stocks are down over the past three months with Microsoft being down 22%. So people are like, this is going to blow up. I would say Microsoft down 22%. It's kind of like a blow up on you. So you're going to see this rotation. And the rotation, I think, is the layup is one you're seeing AMD do better and catching up a little bit, still not even near NVIDIA, but you're seeing that momentum.

47:39You're seeing great out of Broadcom. So there's just a separation. And as you go along this AI trend, look what's happened to the memory companies, when you're looking at the Western Digitals, the Seagates, the Microns. Like out of nowhere, have you seen those charts? Holy cow. That's the next stage. Oh, my God, these prices going through the roof because of AI. You know, Oracle was late to the party. So Dell was a little bit late to the party, and their stock did well, and some of those are pulling back. So you're going to see separation in this industry. It's going to provide great buying opportunities.

48:05And for me, that's what I love because when anyone can throw a dart and make money, they don't need us. We have to separate through this stuff, and, you know, we have amazing winners. I mean, Celestica is one that we just sold for I believe it's a 500 % gain. You know, just having great contacts in the industry saying there's no switches. I'm like, what the hell is a switch? And they were like, well, it's like PVC pipe, right? Picture you don't have PVC pipe. You can't live in a house if you don't have that. So they didn't have – there was a huge shortage. This is one company that got it right, and once they did, they had incredible pricing power.

48:37And you have the biggest companies in the world with the deepest pockets. I'm like, I'll order 5 million of those because we need them. And this is a company that went from 40 to basically 350. So that's the trends that I want to see. I love the energy part. I still think there's money to be made. I love the retail part of partnering with some of these companies where it's going to benefit them tremendously. And it benefits obviously to Google because now they got access to these clients. They know everything that you got to do every minute for the rest of your life, which is great that they could sell a Fortune Advertisers, which is why Meta and Google are absolutely crushing it.

49:07And yeah, there's just different areas that are going to benefit as this trend continues to go on. And it's very, very strong right now. So let me summarize a few things. Number one, follow this strategy. Invest when governments are investing in something. That's number one. Absolutely. Number two, AI is not in the bubble. Energy is going to be a big issue here. Look for companies that can supply that energy to the industry and to the world over the next number of years because it's not going away. Hold that thought really quick. If you want to see when this bubble is going to end, there's one company you look at.

49:40Very simple. Taiwan Semi. They make all the chips for everyone. You looked at their last quarter, they raised their CAGR, which is a compounded annual growth rate, raised it by another 15 % annually to 2029. So they're expecting instead of 40, they're expecting like 55, 57%. Most companies would be happy with a 12%, 15%. They raised it an extra 15%. These are the companies, this is the company that gets the orders first. So Viddy calls them and says, we need a million chips. Everyone, all the biggest chip companies, right? And then they deliver the chips to NVIDIA. NVIDIA delivers them to the customers.

50:17So you see this chain. That's where it would happen first. If you see Taiwan Semi come out and say, you know what? We're not really seeing the spending as we saw the increase. That's when you know maybe you should take some off the table. Until then, that's the company you need to look at every year. And by the way, this doesn't mean there's not going to be corrections in between. Of course. You know, that's the way markets go. Yeah. So that's two things. We said, you know, the urgent trend of looking at some of the things that are happening now into the future. the capex spending, which is going to translate into revenue over time, the reality check that the AI is going to replace jobs.

50:50I think we kind of for a second touched on that, didn't get into it, but that's okay.

50:57And I want to talk about private credit and then finish up on earnings season, a few different things that are going on. Private credit. All right, so let's kind of discuss this for a second. What is private credit? Well, it's what it sounds like. It's private credit offering. So it would be like you lending money to me, Frank. That's a private credit transaction. That's a private loan. So we've got this – it's gotten enormous. I think it went from – like the last five years went from like a trillion dollars, like$3 to$4 trillion of known private credit that's out there right now. And the banks stepped back.

51:36They didn't want to offer. You know, the rates weren't what they wanted to lend at. The latest shift is in the way lending is getting done. And the question is, is private credit, which we've seen a breakdown, by the way. For example, last week was BlackRock TCP, which is a publicly traded company, symbol TCPC. And it disclosed a 19 % decline in net asset value for Q4, for Q4 2025. Right? Now it's raised at about a 25 % discount to NEV, and the fund is down about 46%. This is BlackRock, by the way. This isn't just like ABC ETF fund something or other, right? This is BlackRock. They would hopefully have good lending standards.

52:21That's the issue that concerns me. As big as this whole private credit environment got, we have a situation with did we once again step out of bounds when it came to lending standards, And is this something that could be – it doesn't have to be problematic like a crash of the system. But is the private credit area something that is putting up antennas and kind of making you a little uncomfortable? It's not making me uncomfortable because it's easy to see this market. And this market is a disaster. So this is – the private credit markets exist because this is like they're going to take on more risky loans, right, with the banks that won't take on these loans.

52:59But the private – even though it comes to private equity and these companies, what they do is they're leveraging. But when they leverage, they'll take these companies and these is private credit, right? So the hope is that, you know, we want to have a liquidity period, which is a company going public or it gets taken over. Now, when you have these private equity funds, which is all about private credit, they usually have a pay period of three, four, five years, and they're sitting on assets on their books that are declining in value, right? So when they're declining in value, they can't get them off the books.

53:27There's no liquidity period in sight. And what it's doing with investors is they're sitting on this dead asset. So what they're doing is I have someone that's one of the biggest in this industry, I've been doing it for 30 years, who's starting funds in the consumer food space, which I love because I'm like consumer food, right? I love when people tell me an idea. I'm like, you're crazy. And he's like, look, they're sitting on companies that they bought that they're selling for 10 cents on the dollar that they need to get off the balance sheet. One, they're going to bring in money, and then they could take that money and leverage it and go into another idea because it's dead money.

53:57They don't have that dry powder. And two, they have to get rid of this because their investors are really ticked off because they're sitting on this as something that they used to be able to sell right away, right? And just take these companies private, fund them, leverage, and then repurpose them, and they IPO at a much higher price, right? And they make fortunes on it. That's not happening now. So it's big. We could see it, though, which is really good. And there's other companies and guys that I know who are very wealthy that are saying, hey, you know what? We're using this as an opportunity to buy these assets dirt cheap.

54:25It frees up money for these companies. But I'm never worried about something that you could see. It's the things that you don't see when you didn't know. Well, that's what I was talking about. I mean, it seems like this is all of a sudden cropping up. We don't see it because we can't see it. That's the problem. The private nature of this. Yeah, for a while. Like I've been, when I say a while, for like the last year, it's really been bad because it's, this went on steroids after, you know, the government was pumping money like crazy. But now a lot of these things in 20, 21, 22, you're looking at 25, 26, 27, what's going on?

54:55What was sitting on these things? And you're seeing the value of these assets actually decline now, right? They were worth a lot more. And they're like, what are we doing with these? We can't sell them. We're going to, you know, so they want to get them off their balance sheets. And there's other funds that are taking this and rolling them up and creating SPACs and throwing out this business. And, you know, it's just like. Well, we'll see what's going to happen. I mean, specifically in home improvement, certain tech adjacent borrowers, e-commerce roll-ups. You know, these are the things that are kind of concerning me.

55:19And when I say concerning me, you know, I have very little if no exposure to this for clients. But the question is, what's the knock-on effects in some of the other credit areas? You know, that's something. I mean, the problem is more of a informational because I think we need to know and have clarity about the functionality of a market and the smooth running of a market in order to make good decisions. I mean, that's the bottom line there. And this is a part, you know,$4 trillion is not a small part of a small thing. It's a pretty good chunk. Yeah. And what makes me nervous, by the way, is really housing.

55:49Like the housing market, the fundamentals are deteriorating very, very quickly right now. You're seeing a ton of supply come in the market. People can't sell the house. last month, was it 16, 17 % of buyers who signed a contract canceled their, canceled the contract. I'd never seen that before, right? And you're seeing it because it's not just the interest rates, which you could see, okay, they're higher. It's the insurance, it's the taxes, it's, you know, this massive inflation going on and people like - It's the fact that your health insurance costs, for me, for example,$1 ,300 a month for the crappiest insurance you could find.

56:20I know. And how, how are you, you know, how do you see this huge economic growth that we can get away with tariffs and just manipulate different things and our exports are better now and we're going to see a strong GDP number of 4 % next quarter. How do you go long term without housing as that catalyst, which is one of the biggest drives of economic growth? Everybody, you know, you buy furniture, you buy everything, you know, and to me, the housing market is frozen right now and it's getting worse. And that's one of the things that does worry me. Let's finish up on the area of earnings and a few other things there.

56:52We saw some earnings come out. Banks, pretty good. I mean, banks and the major money centers, generally speaking, yield curve benefited them, trading benefited them, deal flow benefited them. It was just, I mean, I don't know. There was not a lot of holes there that I saw. There was some tick up in, as we would think, following discussion of private credit, of delinquencies on car and credit, credit cards, short-term revolvers, et cetera. But generally speaking, I didn't find any major holes in the financial sector. holes. Let me put it to you this way. The four largest banks generated $117 billion in revenue and over$31 billion in profits for the quarter.

57:35It is the greatest environment probably in the last 30 years for banks because we all know if interest rates go higher they do better. They have the net interest income. That was supposed to go down like two years ago. It was supposed to be rates much lower and they were all forecasting we're going to see this lower. Or if you're looking at JP Morgan is forecasting next year to generate a hundred billion dollars in NII. It's amazing. Their net interest income. And now what do you have? You have economy that's doing well as well. So now they're able to get the investment banking fees and fees on bonds and trading fees.

58:05It's just every single line of their business. I feel like I'm looking at it. That's what I'm saying. When they report like everything's up 25%, 25%, it was insane. Like the numbers they're reporting are just insane. And usually when I say there was no major holes in all, we can always find something in the financials. I couldn't see much, if anything. The loan loss provisions for every bank have gone down. I get it. They've gone down. Other than I think it was J.P. Morgan because they took over like Goldman's credit card and stuff like that. So then we have industrials. Look at Caterpillar, for example.

58:39And I mean, obviously, they benefit on the mining and construction to a degree. And industrials did pretty well as well. I mean, we're starting to see energy start to tick up a little bit here as prices come up. We're starting to see, you know, benefits. I mean, yeah, some of the consumer areas, restaurants, things like that still, you know, maybe better than expected. I mean, we saw the cruise lines come out last week. Royal Caribbean, wow. You know, guiding up, guiding up. Notice how they're guiding up while Las Vegas, Sands, Vegas is getting crushed. Crushed. Right? Right. Crushed. I mean, I don't know if you went on vacation lately.

59:16I mean, you go to these hotels. Me? Always. You walk in and they're like, oh, by the way, it's, you know,$50 a night extra. For what? For whatever. Just because we're charging you that fee. Because you asked me the question. Now it's$75. Yeah. It's like it's for your car. I don't have a car. It's for the refrigerator. I don't have a refrigerator in the room. Right. No, no, it is nickel and dime. It's gotten terrible. And then you don't get service. You don't get made service unless you beg. Right. I was just in Mexico. Mexico was fine. But, you know, and you got waters. Airbnb, Vrbo fees. I mean, what are they up?

59:4420 %? It's insane. It's absurd. So cruises make sense from a family. I agree. Well, yeah, you know, going to like a Disney, trying to stay on a Disney property. I think we did some number. It was like five grand minimum for a week with a family of four. That's without the tickets. Right, right, right. Tech now. We're talking about tech. I mean, we talked about the CapEx and the opportunity there. Pretty good. I don't think we need to beat that one. 74 % of companies, as is usually the case, beat EPS earnings. And Outlook's relatively good. A lot of guide higher. Interesting, we're seeing some weakness in the SaaS companies, right?

1:00:19The CRMs, the ServiceNow. I mean, AI. Right, well, you know, which they should be utilizing AI. But this goes right back against my entire thesis of AI. So when does Salesforce not do well? Salesforce should be tracking employment. It's a simple strategy, right, to look at this. The more people that are working, the more people using Salesforce, the more people are paying for Salesforce, et cetera. You know, there's some corporate contracts with Unlimiteds, but you know what I'm saying, right? The enterprise contracts. But what's interesting is Salesforce is, but even with that giant deal they got last week, a$5 billion government deal.

1:00:54Did you see that? Stock is still cratered. ServiceNow not doing well. I think there is - ServiceNow, Snowflake, music companies. Writing on the wall, though, that AI is going - I'm not going to stop my belief in this until I see something otherwise, but AI is going to take jobs. And that's okay. Maybe they'll be replaced somewhere else. It's also going to change the education system in the future. People don't necessarily need to, I hate to say what I'm about to say, but think. It's a different situation where you have, you know, if you need to have automated division on something, you know, where you have something and it automatically tells you what the tip should be.

1:01:34You don't have to do multiplication of what my 15, 18, 20 % should be. Which, by the way, somebody put a 30 % suggested tip in front of me last week. I was very aggravated, let's just say that. Oh, the best is when I went to Disney. I went to Disney and ate, there was a conference next to, what is it, the Disney area that has all the restaurants and stuff like that. Downtown, downtown Orlando, downtown Disney? Yeah, basically. So I went there and we got tacos for three, for a couple of my workers. And the guy's like, gives me the tip thing. And it's like, you know, it's just 15, 20%, whatever.

1:02:06And he's like, over my shoulder. I'm like, what the hell? So I gave him like, you know, they gave him 15%. And then I found out, you know how much it cost? $250 for tacos. How is that? Because they charged us 20 % gratuity, which he didn't tell me about. Oh, yeah. And then he put the tip in my face and said, here, 15, 20%. Well, that's your bed. That's your bed, Frank. Yeah, that's my fault. But the first thing was just a credit card with the tip. It didn't even say, like, you know. Oh, that's the new thing too. Right. They just give you that blank, like what I order. I don't know, whatever. Quick thing before I go, which you mentioned.

1:02:35If you're thinking about buying these software companies, one, you might be better because you're looking at the very, very expensive with Snowflake is like trading like 100 times for what earnings you got. ServiceNow trading at like 30. But Salesforce is 17 if you want to try on that one. However, before you do, go and do some research on Anthropic. We talk about Gemini 3.5 right now is the best, right? Based on, you know, these private leaderboards. Anthropic is by far the best when it comes to coding, operating computers, complex tasks, right? So these software developers, this is like financial analysts, consultants, accountants, you know, this is what the CRM systems, right?

1:03:09And very, very expensive. I mean, Salesforce.com is crazy expensive. Anthropic can do this for you now. It does it for you now. What does what? Does what for you? Wait, wait, wait. The coding. You don't need to know how to code anymore. Yeah, that's like lovable. Have you tried lovable.ai? No, I heard of it. My son was in my office. He said, check this out. He put some prompts in. He said, look, I need a website that does this. It has a form on it. It's that, da, da, da, da, da. And I'm like, you've got to be kidding me. Yeah. Like in an instant. I'm like, that is beautiful. There's someone that did three prompts and created a video game.

1:03:38It was like snowflakes coming down. They were jumping over the snow. Three prompts. That's, you know, the coding that it took, what it would take to do something like that, you could just go in and the four-year-old could do it. And Grok, by the way, Grok, the app, if you haven't done this, people, you want to have fun? Download the Grok app, G-R-O-K. That's Elon Musk, X-A-I. The imagery and imagination where you take an image and you just put it into there and it makes it do something. And then you put a prompt like, have these people jump up and down, spin around. It literally takes, I'm not kidding, an image, one image, an image that can turn it into whatever you tell it to do.

1:04:14And within less than a minute, it does this. That's unbelievable. It's unbelievable. That's unbelievable. That's why they're all worried. Do you realize that my computer, are you telling me this is going to take jobs? Our computers in our office, I have a Mac daddy of a laptop and other computers. Do you know how long it would take to generate that kind of five, 10 second clip. And you do that stuff. You create that. Do you know how long that would take? Do you know how long that would take? It's unbelievable. See it. Yeah, that's cool. Unbelievable. My good friend, Frank Curzio, Curzio Research.

1:04:44You can find him at Curzio Research. The comm. He has some free offerings for sample newsletters, all sorts of things. Check it out. We'll have the links, information on the show notes page of episode number 958 on the disciplinedinvestor.com. Frank Curzio, always wonderful being with you. Always love coming on the podcast. Always open for you, man. I'll be there for you. Thanks, buddy. I appreciate it. All right, thanks. And thanks, everybody, for listening. We're going to end the show right there. We ran a little bit over, of course. When Frank and I talk, we do not stop. And thank you for joining me this week and every week.

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1:06:45We'll be right back.