The Compound and Friends
00:30:06 · Daniel Clifton, Josh Brown, Michael Batnick
[00:30:06] S1: How this does this data center benefit you? The property tax rate in Loudoun County has come down ten years in a row. I'm a public finance economist. That's how I started my career thirty years ago. That's not happening anywhere in the country. And so what it does is it creates demand for housing in the data center counties. Yeah. Okay? And it raises property values because the local property tax, the lower tax is capitalizing into home value. The home value differential is like $20,000 per homeowner. It's massive. [00:30:37] S2: So... Okay. But but but the trade off, people don't What? Right. People don't like the idea that the water use Correct. Don't like something humming in the woods Yep. Near where they live. Absolutely. Those are all very legitimate reasons for opposite. So I don't want one on Long Island. [00:30:53] S1: Correct. [00:30:54] S2: I might have one. I don't know about it. But if they were talking about building it, I don't think I'm like, yeah, do it. Yep. So, I understand all of that stuff. [00:31:02] S1: I totally get it. So, I did this study, and I spoke to a union pension conference where all the workers, you know, and I got like a standing ovation. It's the only speech I've ever given in my life. People are like standing ovations. [00:31:12] S0: What were they clapping for?
00:31:12 · Michael Batnick, Daniel Clifton, Josh Brown
[00:31:12] S0: What were they clapping for? [00:31:13] S1: Because I was making a case for data centers, but I wasn't doing it in an advocacy way. I'm like, This is what you need to know if you're into this. And it was a great speech. They, like, booked me for the next year right after that, right? And then I went to Iowa, and I basically did, like, pros and cons, a much more balanced type of presentation. [00:31:31] S2: But wait, who's the audience? [00:31:32] S1: High net worth investors in Oh, [00:31:36] S2: I'm sure they're all clapping. They all want it. [00:31:38] S1: They were pulling... I thought they were going to storm me off the stage and rip me out of there. My Okay? And then I speak about the most controversial political topics, like Donald Trump versus Kamala Harris in San Francisco and say Trump's got a chance to win and nobody got mad. Okay? But I mentioned data centers in Iowa, and I'm answering your question, Well, is it going to give me cancer? Yeah. Well, I have no idea. Well, then I don't want it. Right? I [00:32:03] S2: totally get that. [00:32:03] S1: What about my water? I thought I could solve this through economic issues. And you start to realize the concern is non It's economic [00:32:12] S2: health and the climate. Not the climate, the ecology. Ecology, Yeah. What about the pivots calling them compute campuses? Unbelievable. Is that gonna catch on? Come on. [00:32:21] S1: Come on. Like, going from the estate tax to the debt tax is effective. Compute campuses. [00:32:28] S2: So You don't want a compute campus?
00:32:28 · Josh Brown, Michael Batnick, Daniel Clifton
[00:32:28] S2: So You don't want a compute campus? [00:32:30] S0: I'm curious about your reaction in the stock market. So Yeah. Sunday night Yep. As soon as the Texas gubernatorial race flipped Yep. The market did a nosedive. [00:32:39] S1: Correct. [00:32:39] S0: The Nasdaq was down 3% in the after hours. Alright. I went to bed. I woke up, and futures are ripping. Yep. And I'm just like, LOL, of course. [00:32:45] S1: Yep. [00:32:46] S0: And as I'm sifting through the narrative shift, it made sense. It actually made sense. Almost all the time when prices flip, we'd laugh about the narrative ten hours ago. It made sense. Okay. Democrats won and therefore data center activity is going to go down. Sell the stocks. That made sense in the after hours. Then people woke up and said, Hey, wait a minute. Actually, we hate the AI trade. We hate all the spending. We hate the negative free cash flow. Let's get back to normal. Actually, this is good. Okay. So on Monday, we had a great day in the stock market, but NVIDIA did fall Yeah. Three [00:33:20] S2: The day after the election was Wednesday. [00:33:22] S0: Sorry. Hold on. Let just start by question. John, chart 15. So what's today? Today's Thursday? Okay. So whatever. So this was yesterday. Yeah. So yesterday, we had this really bizarre day where the S and P was up 1.7%, and NVIDIA and the semi stocks got murdered. [00:33:36] S2: Yes. Okay.
00:33:36 · Josh Brown, Michael Batnick
[00:33:36] S2: Yes. Okay. [00:33:36] S0: So that makes But what about... What do you make of today? Yeah. How do you explain today? Because today, the semi stocks are getting killed, but everything is getting killed for the most part. Absolutely. So what what do we make of today?
00:33:47 · Daniel Clifton
[00:33:47] S1: You guys are stock market expert. I'm just a policy guy. So... But I will tell you, we spent a lot of time on Texas. We knew that Texas was going to be where the big change comes. Okay? So, like, we were in the early vote data. The early vote data moved 17 points to the Democrats, a very good leading indicator that you could get change there. Abbott's team really thought that they can pull this thing out. Okay? He doesn't pull it out. We're like, this is a much bigger problem for the market overall. But when you look at that trading, we have 45 AI stocks that we put on our screen, and the only ones that were up were like the hyperscalers and Qualcomm. And remember, this is happening during earnings, so you get multicollinearity, right? It's hard to break this apart. Everything else was getting killed because the data center trade has always been about the parts that go into the data center. Those are gonna be industrial stocks. They're gonna be the data center real estate. Caterpillar has Caterpillar annihilated. Semi equipment stocks Power generation. Power generation. That stuff got destroyed, and that was the right thing. And everybody's like, oh, the equity market's up. No. My election baskets were working perfectly yesterday. They are not working perfectly today. Right? Like... Right? So so what we said was yesterday was buy everything except data centers, a, d, c, any... Right? Anything but data centers.
00:35:09 · Josh Brown, Daniel Clifton
[00:35:09] S2: But... Yes. But your election baskets were working because yesterday, the data center was a sideshow. Yep. What really was being expressed yesterday is, oh, cool. No revolution. Yep. No court battles. No Like, no war. To me, that was like... Because the assumption was Yeah. No matter what happens, Trump will lose some states that he wants to contest. Correct. And it's gonna be supreme court, and it's gonna be six months of this bullshit. And he basically came out and said Yep. I'm not contesting it. And that... Here, check out my ballroom. But that was what set the market on fire. And then today Yep. Was this, we think, like, oh, wait a minute. We might have gotten too excited yesterday. Hangover. Guess what? Dan Ives, the biggest AI ball on the street. We might lose 10% of the projects I'm baking in. Yep. That's what today is about. [00:35:58] S1: But... So let let me... The Democrats won so overwhelming Trump couldn't challenge us. It would be a much different story if it was fifty one-forty nine and Alaska was still hanging out there and the third party candidate is taking 2% of the vote that makes the difference. We would be in a legal disaster right now. The Democratic space is so [00:36:17] S2: big. Okay. [00:36:17] S1: He has to accept it. That's number one. [00:36:19] S2: So yesterday, that was that.