The Compound and Friends
00:41:23 · Daniel Clifton, Michael Batnick, Josh Brown
[00:41:23] S1: 5%. [00:41:24] S0: The problem is so NVIDIA is in a... So NVIDIA's in a bear market. It's down 21%. Problem is everybody's like, oh, NVIDIA's 14 times earnings. Well, is it really? Yeah. Mike won us three times four earnings. [00:41:34] S2: Is it still? Michael it and I were just talking about that. We've witnessed over twelve months now of multiple compression for all of, not all, most of the large companies like the Broadcoms and the NVIDIAs of the world that are selling into this boom. The multiple compression has been severe. The only reason the stocks haven't really suffered is because they're growing earnings faster than the rate that we're compressing their multiple on the street. But like, I don't know. The market probably didn't see this election coming, but the market never believed that the pace of this level of earnings growth was gonna continue into '27 and '28. Interesting. It never believed it. [00:42:18] S0: I know [00:42:19] S1: it right. So that was right. [00:42:20] S0: If NVIDIA's earnings are 5% lower over the next twelve months than we expected them, the stock could fall 40%. Wow. Wow. I mean, I'm making that up, but it really can. Yeah. Yeah.
00:42:20 · Michael Batnick, Josh Brown, Daniel Clifton
[00:42:20] S0: If NVIDIA's earnings are 5% lower over the next twelve months than we expected them, the stock could fall 40%. Wow. Wow. I mean, I'm making that up, but it really can. Yeah. Yeah. [00:42:29] S2: Yeah. Five biggest losers from last... I was thinking about this. Like, who are the real who are the real losers? I have just mentally, venture capitalists. Like, we'll see with Anthropic, but whatever they thought they were gonna sell these things to the public for as much. It's gonna be lower, and their business is gonna be more complicated at a minimum. I'm gonna say complicated. It's a euphemism for have fun in congress. Yep. Okay. So that's one group. Israel Yep. Obviously. Yep. Okay. We're not gonna get into that today, but that's an obvious loser. When I make that list, and I'm trying to think who is the number one loser that's not Donald Trump, it's Elon. Yeah. His companies combined. Yep. He has had more dollar amount losses in the last two days than any human being who has ever lived until now and who may yet ever live. What's the number? [00:43:25] S0: It's 110,000,000,000 [00:43:27] S2: in personal losses tied to just- Just Elon. SpaceX and Tesla. [00:43:31] S0: And he spent 400,000,000 on the election? [00:43:35] S1: He knew that the stakes were pretty binary, so there no dollar amount that was going be too small. [00:43:41] S2: So he had to. He had to. There was no choice. And it still didn't work. [00:43:45] S1: And it didn't work. This wasn't about money. Most of these people won without money.
00:43:45 · Daniel Clifton, Josh Brown, Michael Batnick
[00:43:45] S1: And it didn't work. This wasn't about money. Most of these people won without money. [00:43:49] S2: That's another interesting aspect. So I've conditioned myself to believe, like between social media networks, whoever controls them, and super PACs. Yep. Like, basically, it doesn't matter what anyone wants. That's not true anymore. [00:44:04] S0: So that's a win for everybody. [00:44:06] S1: Yeah. It's [00:44:06] S2: So I like that. [00:44:07] S1: Yeah. It's a... And that... But he doesn't. His stocks were not moving. Like, we literally have stocks that can tell you what's gonna happen in the election. The market is just so much smarter about the election than the polling and the and the betting odds, And his stocks never reflected that. Then all of a sudden, Texas went, which again was unexpected in the consensus, and it just dropped because Starbase is now being controlled by Democrats. Okay? And there's going to be fewer data centers. [00:44:34] S2: I think the Starlink problem is going be a big one, too. [00:44:37] S1: So, if we know that, the President knows that, Elon knows that, Elon is way ahead of me in terms of thinking through, there's got to be a reaction function. Trump believes that these data centers are needed to compete with China. And it's a national security issue. My guess is the president's going to figure out how to find federal land. And I don't mean Yellowstone or, you know, the Grand Canyon, but finding federal land where he could start putting some of these data centers. Where? You you got to do an inventory of it. Like, worked in the
00:44:37 · Daniel Clifton, Josh Brown, Michael Batnick
[00:44:37] S1: So, if we know that, the President knows that, Elon knows that, Elon is way ahead of me in terms of thinking through, there's got to be a reaction function. Trump believes that these data centers are needed to compete with China. And it's a national security issue. My guess is the president's going to figure out how to find federal land. And I don't mean Yellowstone or, you know, the Grand Canyon, but finding federal land where he could start putting some of these data centers. Where? You you got to do an inventory of it. Like, worked in the [00:45:06] S2: Oh, like, in the next two years, like, outrun the clock? Yeah. Like, why would [00:45:10] S1: you not do that? Like, if you got open land, they were going to do it for housing. So I think they've already mapped this out. They were going to create these land places to increase the supply cost. [00:45:19] S2: So there are no there are no voters. There's no voters there. [00:45:21] S1: Right? And that's the transition to what Elon really wants, and that's put them [00:45:25] S0: in space. [00:45:25] S1: Right? He he's basically No. [00:45:27] S2: They're saying underwater now. [00:45:28] S1: Oh, underwater. Yeah. [00:45:29] S2: Yeah. Put them deep deep underwater. [00:45:31] S0: The xenomorphs hate data centers. [00:45:33] S2: Hate them. All right. So you would agree though. This is like... You go back to three hundred years of American history. We've never seen a single person take this much of a nosedive financially as a result of one midterm election. Yeah, absolutely.
00:45:33 · Josh Brown, Daniel Clifton, Michael Batnick
[00:45:33] S2: Hate them. All right. So you would agree though. This is like... You go back to three hundred years of American history. We've never seen a single person take this much of a nosedive financially as a result of one midterm election. Yeah, absolutely. [00:45:50] S1: Okay. Right? Mean, else would you see it? [00:45:52] S0: 110,000,000,000 in space. Let's [00:45:54] S2: do chart, John. Let's do chart two. This is Daniel's. This is S and P 500 corrections and one year following correction performance by presidential cycle. What jumps out? Or what are you showing Yeah. The people that you talk to about [00:46:08] S1: I the wake up January 1 of a midterm election year nervous because I know something always happens in a midterm election year. 2022 was the Russia Ukraine war. 2018 was Trump's tariff war. And like two days in, Trump was like invading Venezuela. By the way, went excellent. But what you see here is that the average inter year decline is usually much lower in these other years. I don't know why that says '17. [00:46:32] S2: Would've done... So I would've done red bars on the bottom to represent the decline and do green. I gotcha. Okay. [00:46:39] S1: I will I will visually change that. But what this shows you is the sharper the decline, the bigger the bigger
00:46:39 · Daniel Clifton, Josh Brown, Michael Batnick
[00:46:39] S1: I will I will visually change that. But what this shows you is the sharper the decline, the bigger the bigger [00:46:45] S2: way up. This is super... I think this is super helpful. I think we we should, like, rerun a version of this and and show this to people because this is what everyone who's in the throes of... I don't know. We don't know how deep this is gonna go. It always feels bad. But people wanna have some sense that, like, there's a way out of this. Absolutely. Okay. I love I love this chart. [00:47:03] S1: It's lots of examples of you... Like, in in August 2010 during that midterm election year, people were literally talking about the second coming of the financial crisis. Of course, that never happened, but it felt really bad. And of course, by Labor Day, the equity market had already turned. [00:47:21] S0: But can't there be a world where in a week or two from now, we're like, wait a minute, guys. The free cash flow that we were getting all upset about with Meta and Microsoft and Google, it's going to go right back up. [00:47:31] S2: Still coming back. [00:47:32] S0: So think about Whether they like