00:03:44 · Ryan Detrick
[00:03:44] S1: It is. And you look historically, the strongest two months in the midterm year are October and November. We we say here, Carson, you know, it's not about red, not about blue, it's about green. I mean, that's the stuff you need to think about. Now listen, we can get way in the weeds in this. Those credit default swaps on some of those hyperscalers and the neo clouds. Yeah. There's some concern there, but then you look at like high yield credit spreads and things, they're not blowing out by any means. I say there's a monster under the bed. The credit markets would sense it. We're not seeing that. And then you look at like, maybe I'm getting ahead of the, card here, but look at breadth. I mean, what's happening? Yeah. Tech has a bad day, and then you have, like, 300 or 400 stocks up. I mean, we saw that last week even though, like, Thursday was a down day, but a lot of stocks participating. So it... It's this interesting dichotomy where we're seeing passing the baton around. Right? Life of the life of the bull market is rotation. I mean, if tech blows up, listen, my bullish thesis probably isn't going to play out. Last week, software is up 6%. Software all of a sudden starting to come back. I don't think that's a bad thing. Yeah. You don't want semiconductors to keep, you know, going down and momentum to keep crashing or South Korea crashing. One more thing on this actually. We had a major stock market literally earlier this week crash. Brazil. Brazil was down 20% because of the election. Now they were up like 20% quickly a couple of weeks ago. But Anthony, I'm really encouraged by the fact that major stock market just crashed and literally no one even noticed or no one even seemed to care. Trust me, somebody cared. I don't mean to minimize it. But the fact that US markets are still consolidating after a 15% rally in April and May on the S and P, we've literally gone nowhere for like five months. I know it's frustrating the bulls and the bears. Let's be honest because we haven't gone anywhere, but we're consolidating. And I think again, the the the upward trend, this bull market, which is in its fifth year, you know, we just had his fourth birthday. No bull market that made it to his fourth birthday last fifty years died before the fifth birthday, average of eight years.
00:05:29 · Ryan Detrick, Anthony Pompliano
I've talked with you for a couple years about these cycles that last longer. You think I think the sideways action for five months, it's frustrating. Everybody is a good thing. And we're gonna continue to go higher here before this year is over. [00:05:40] S2: Let's talk about this idea of breadth in, in the market. So, Phil Rosen, who is a friend of yours and I's, he recently put out this chart and blew my mind. Right? Because it's such a narrative violation. What he said was the average stock rose during the dot com bust. And he shows that the S and P 500 during the dot com bust was down almost 20%. But if you take the equal weight S and P 500, it actually was up 5.6% during the same time period. Is that kind of what we're seeing now is everyone is paying attention to tech and kind of sentiment is tied to the AI trade, but actually the rest of the market is still continuing to be strong and and doing well?
00:06:14 · Ryan Detrick
[00:06:14] S1: Yeah. We think so. And shout out to... You've joined Phil a couple times on his podcast. I love listening to that. So you guys need to do that more often. That's really great stuff. And that's very true because of the late 90s, that's when I started getting the bug and all this stuff. I thought tech was all you could own. And then yeah, it crashed and everybody lost a lot of money on leverage and all the trouble that we see. But then you look back and you realize, there were sectors that did really well in 2001, 2002. Now, it was still a bear market. It wasn't like rip roaring, but the rotation was real. I mean, work with a guy named Sonova Gies on our team. He did some really interesting work on this stuff. And again, it's like, yeah, tech was down, but a lot of other groups did well. Now, think still where we are right now, we're not so sure though the tech trade's done, right? I mean, I think tech has taken its break here. The hyper scalars are still spinning. There's still positive things that are taking place out there. And I'm not a huge valuations guy, but I mean, Dan Ives know he's been on with you a couple of times. I mean, NVIDIA is the cheapest has been in a long time. Amazon is cheapest has been since it's been a publicly traded company. I mean, are some really nice valuations on some companies that make a lot of money and are still growing very, very quickly on the tech side of things. Last thing we say tech or bust. I I don't think this tech trade's over, but I still encouraged by the fact that healthcare is ripping, staples are ripping, different areas have taken that baton when tech took a little bit of a step back, but I still think tech is probably gonna lead us into next year.
00:07:35 · Anthony Pompliano
[00:07:35] S2: Now when you look at, NVIDIA being the cheapest it's ever been as a public company, what does that tell you? Is that like the market is pricing in that they're gonna get disrupted? Is that the market saying it was too overvalued before and now this is a healthier valuation? Is that people saying we don't believe your future projections? Like, what do you take away from something like that?
00:07:53 · Ryan Detrick, Anthony Pompliano
[00:07:53] S1: Yeah, think it's a combination of those and it's kind of easy answer. I mean, I will say this much, like when we look at major peaks, right? You tend to get expansion in multiples. And this isn't just this cycle. These are all these different cycles, Anthony. And you look at it, I mean, yes, the valuations on the S and 500 are down like 15%, yet the S and P's ballpark up 12 or 13% the time we're doing this. How in the world is that possible? If you would have told me multiples would be down like this this year, I don't think I would have thought the market would be up this much. It's because earnings growth has grown over 30% this year, is why. And again, you know, then you can think of it like, well, what if more confidence comes back? It's this whole thing I was kind of talking a couple questions ago about. Not a lot of confidence out there and with multiple contraction. Well, listen, with yields doing what they're doing, history tells us higher yields, multiple contraction is how this tends to work. At the same time, you know, earnings are justifying this, and I think with some more good news, multiple expansion. Just imagine last thing on this. Just imagine if earnings stay strong, the bull market keeps going, we start to get multiple expansion, which I think is probably the play next year. Those are all still positives for investors in our opinion. [00:08:58] S2: Now what do you think the bears have right? What is the biggest critique that you're like, you know what? I I actually agree with that, with that issue.
00:09:06 · Ryan Detrick
[00:09:06] S1: Yeah. I mean, I I talked about it a second ago. The credit default swaps on a lot of these hyperscalers, NVIDIA, Amazon, obviously, some of the neo clouds. I mean, those are really, really blowing out. SpaceX. I mean, day you turn around, one of these companies are saying we're gonna spend another 10,000,000,000 here, 50,000,000,000 there. Meta's gonna sell 90,000,000,000 here to go buy... To build more data centers. I'm not saying the bears are right, but when I see all of that, it's like there's a lot of... I'm not saying it's not obvious here. There's a lot of spending going on, like more than we've ever seen, more than the railroads in the 1860s, more than the infrastructure highways in the 1950s, the space race, even more than the Internet bubble boom of the 1990s. So there's a lot of money being put at this. So we saw with Meta last week, they said, things are great. Then you look, it's like, ah, negative cash flow and the stocks down seven or 8% last Thursday. So those are the things that have our attention, but then it comes back to what we just said. Just don't go all in on tech. I mean, there's other areas, they diversified. I mean, what's happened when South Korea just crashed not that long ago, a week or two ago? What happened? Well, every single day Europe was higher. I mean, it's like just keep a diversified portfolio, stay overweight equities is one thing we've been preaching for a long time now. And I still think you're gonna benefit from it. But I don't know. I just don't think this tech wave is over. What's our buddy Dan Ives say? It's like, maybe it's one in the morning. I mean, this party still has some time left to it, think, and tech's probably gonna come back.