Markets continue to reach new highs, even as headlines remain filled with concerns about inflation, interest rates, geopolitical tensions, and questions about whether today’s rally can continue.
For many investors, the disconnect can feel confusing. If there are still so many risks in the market, why do stocks keep moving higher?
The S&P 500 recently reached another all-time high, continuing a rally that has pushed stocks significantly higher from their lows. While many investors have spent the past year waiting for a major pullback, the market has largely rewarded those who stayed invested.
As Noah points out, markets often “climb the wall of worry.” Investors rarely get a period where everything feels perfect. Instead, markets tend to advance despite uncertainty, as long as earnings, economic growth, and business fundamentals remain supportive.
One of the biggest themes discussed during the episode is the continued expansion of artificial intelligence.
While much of the early excitement focused on chip manufacturers, the conversation has expanded to include memory producers, data center operators, fiber-optic infrastructure providers, and energy companies helping power the next generation of computing.
Unlike previous technology booms, today’s AI investments are being supported by immediate demand. Companies are actively using new computing capacity as quickly as it becomes available, creating significant opportunities across multiple industries.
While valuations in some areas have risen sharply, Noah and Chris note that many companies are also delivering the earnings growth needed to support those higher prices.
Economic data remains one of the most important drivers of investor sentiment.
Recent reports have shown mixed signals. Job openings remain strong, indicating continued demand for workers, while inflation measures continue to run above the Federal Reserve’s long-term target.
As a result, investors may need to adjust expectations for interest rate cuts. While many had hoped for lower rates sooner, the current economic environment may lead policymakers to remain patient.
For long-term investors, however, market performance is often driven more by earnings growth and business fundamentals than short-term interest rate predictions.
Another major topic of discussion was the anticipated SpaceX IPO.
The company has become one of the most closely watched private businesses in the world thanks to its leadership in space exploration, satellite communications, and launch services.
While questions remain about valuation, Noah and Chris highlight that investor demand will likely be significant. SpaceX’s unique position across multiple industries has many investors eager to see how the public offering unfolds.
One of the more interesting parts of the conversation focused on competitive advantages and how industries evolve over time.
History is filled with examples of dominant companies that appeared unstoppable, only to be overtaken by changing technology or consumer preferences. From Kodak to Blockbuster to Sears, market leadership is never guaranteed.
For investors, that serves as an important reminder to focus not only on today’s winners, but also on whether those businesses can continue adapting to tomorrow’s challenges.
Markets rarely move higher because uncertainty disappears. Instead, they move higher when businesses continue to innovate, earnings continue to grow, and investors remain focused on the long term.
While risks remain, the current rally continues to be supported by strong corporate fundamentals, growing demand for AI infrastructure, and a resilient economy.
As Noah and Chris discuss throughout the episode, staying invested during periods of uncertainty is often easier said than done. However, history has repeatedly shown that some of the strongest market advances occur when many investors are still looking for reasons to stay on the sidelines.
Hey, welcome back to another installment of the Market Enthusiast. I’m Noah Brooks, and obviously this is Chris Needs.
Hello, hello. Here we are, third day in June. Anything interesting going on in the markets, maybe. There’s some stuff happening. Yeah. Got some big IPOs coming or a big IPO. Yeah. Some later in the year. Yeah, absolutely. What about price levels? all time highs. Have you ever heard that before? It’s like it’s like a record that just keeps going around.
And it skips a little bit here and there, but we keep having it. Momentum begets momentum. Yeah. SP five hundred closed yesterday for the first time ever, over seventy six hundred. if we closed where we are today, right now, it would be I think last week was nine street wake street straight weeks of gains. This week would be another one, make it 10 if we ended where we are today. everything’s great, right?
Feels good. Feels good in the market. you know, you have everybody who thinks there’s a top in or a bubble forming and all these things that you hear out there. We’ve got a little break in the ceasefire a little bit over there in Iran. some missiles being sent around. Most have been deflected, I think. But oil moving up a little bit again, you know, there’s unease, but
Earnings and fundamentals of I mean, the old adage is right, the market climbs the wall of worry. Yep. And here we are, early June. S P is up 10.5% for the year. We’re up 20% since those March lows, right? So massive rally off those lows. mid-caps are up 14%, small caps are up over 15%. Emerging markets, the winner here on the big indexes, up 27% for the year.
developed not quite as as good up eight and a half percent. value up 14, growth up seven. So value is beating growth, you know, almost almost doubling the returns for growth. But there’s been some big stories in chips and memory lately. Yeah. That’s where things look a frothy in the short term. But if you look at the fundamentals of what they’re doing and how they’ve revised upwards in terms of the guidance on their earnings.
Noah Brooks (04:30.838)
It kind of makes sense what they’re doing. I mean, anytime something goes up five hundred, eight hundred percent, and then you see re-ratings of analysts going up another two hundred percent, you start to doubt it just because it doesn’t seem like it makes sense to our monkey brains, right? But I mean, the stories here, we’re we’re short on memory, we’re we’re short on compute, capacity every capacity wise capacity wise.
And everything that’s being bought up is being used immediately. It’s not just sitting there. we like to, you know, compare things to what we’ve seen in our memory. We like to relate things together. Going back to dot com, think about all that fiber that was laid that wasn’t used to capacity until just recently. You know, that wasn’t making money immediately. Every time they build a data center or buy a server rack full of chips, it’s being utilized immediately. Yeah. Because we’re behind. So
Fundamentally it makes sense seeing these things. Again, you know, a a yellow flag gets raised when you see something up five hundred percent, you know, having an analyst target double. But it kind of makes sense in this scenario. Well, I mean, I think from a memory standpoint, all of the computing power requires this memory. For some reason, people weren’t really thinking about that, you know, two years ago.
Right. It it was about the chip guys, not about the memory guys two years ago, 18 months ago. I mean, realistically, it’s sit been since September of last year, where these memory manufacturers have just been, you know, through the roof. It’s almost like it was a proof of concept. Like they had to prove the chips and the LLMs, large language models could do what we said they could do. And then that story, you know, you had Cloud, you had Google, you have all these chat GBT.
All these things, well, they’re proven now that they can do what they said they could do. And now it’s like, holy crap, well, then we have to look at all these other things, the energy play, electrical components. You even see Corning, GLW, you see them going crazy because Nvidia’s like, ooh, we can make them even faster. Instead of copper, we’re gonna use optic fiber. Yeah, yeah. And all these things are launching. Well, Glassworks GLW was a a darling of the internet bubble.
Noah Brooks (06:51.34)
Yeah. I mean I I owned that on and off in the in the late nineties. Yeah. And it sat and went nowhere for about eighteen years. What’s it done the last year? man. I don’t know, up three, four, five, seven hundred percent. Yeah. And you just see all of these other things that are now super relevant and and popping and and to point is all right, they the chips that are in demand, they’ve had their run up. the LLMs.
got their attention and anthropic and open AI have their crazy large valuations. And now you have the memory stories, the energy stories, all these other stories that are catching up and they’re catching up quick. Yeah. you know what hasn’t been catching up? Healthcare, financials, right? I mean they’re actually down for the year, discretionary down for the year. it’s energy’s up, you know, thirty because oil prices have gone, you know,
catast astronomical, I guess you could say. I mean, it’s maybe not not as much as the chip guys, but when I last looked here, oil was just shy of a hundred rent crude at at ninety-eight a barrel. And, you know, we have this back and forth, this ping pong tennis, if you will, in in Iran. And I I don’t think anybody really knows how it’s gonna play out. It it does seem, I guess, that
In the end, it’ll probably get better before it gets worse, but I could be eating those words. Yeah. I I have nothing to add there. I have no clue what’s gonna happen. I’m just gonna stick with my opinion that this doesn’t make it to 2027. you know, stray of hormoose price of oil in the short term, anybody’s guess. Yeah. Sorry, can’t add value on that one. No, I I don’t know that anybody can. I just I think in the long term oil goes lower, but you know.
Short term, shoot. I don’t know. It it it is rough. gas prices have come down a little bit. I think that’ll provide a relief, but that’s only been in the last, I don’t know, four or five business days or four or five days. so we’ll we’ll see what happens there. I guess that’s to be determined, if you will. But I mean, like I said, markets up twenty percent since those lows in March. And then if you look at the one year numbers, I mean
Noah Brooks (09:09.058)
energy’s up 40% for the year. The the Dow’s up 20% on a one year number. The NASDAQ’s up 41% on a one year number. you know, SP’s up 30% on a one year number. I said this in the past, but if you’ve missed this, if you got scared out during Liberation Day in 2025 and you’ve been sitting on the sidelines, you just missed I I don’t want to say it’s a once in a lifetime rally, but
It might be you know, too much to come back from for anybody that’s looking for long-term performance. Yeah, it’s just gotta take your medicine a little bit. If you missed it, you didn’t swing at that pitch, you know. Take your medicine and if you try and catch up, you might make an even worse mistake and end up lacking by even more. Get whipsawed, right? you know, so we had some economic stuff this week. yesterday we had Jolts, which is the job opening opening labor turnover survey.
which lists the number of job openings out there, it went up dramatically, went up by about 800,000. and I think everybody was questioning whether well, I think the expectation was for significantly lower or pr pretty stable. So eight hundred thousand new job openings, that bodes well for the economy. It does. And it’s also upward pressure on
Not the inflation story, but it that generally would go into the corner of you know, you’re not gonna cut rates into that stat and inflation we know is elevated right now with everything going on abroad and how that s affects, you know, logistics and supply chains and things like that. I don’t think the Fed is gonna hike this year, but the the case that they’re gonna have to try and make for cuts is is even harder now. I d I it doesn’t seem like they’re gonna move.
Yeah. Right. I would say neutral to the end of the year. Kevin Morse officially installed as the the president of the Fed. does that change the trajectory of rates at all? I’m sure the discussions and the minutes will reflect differently than they did under the Powell Fed. Powell, the first obviously chairman to remain on as a governor, going back to the guy the building’s named after Mariner Eckley’s.
Noah Brooks (11:28.217)
1948 he stayed on, I believe. so yeah, truly a once-in-a-generation thing having a chairman stay on the Fed as a governor. Absolutely. The the other thing that is interesting is that Kevin Walsh is talking about redefining the metrics for inflation. Right. So when they’re not going in your favor, what do you do is you change the data set. And that to me doesn’t seem right. Now I haven’t heard
the exact proposal. I don’t know that anybody’s heard the exact proposal, but he but he keeps re replaying this that they want to change the metrics to gauge inflation. And that to me seems a little bit I don’t know. It it doesn’t seem kosher. Just funny, funny play with the numbers. It was like going back to 2022 when inflation was really high. They’re like, well shouldn’t we be these discussing supercore where we take
Basically everything out except what’s going up. Yeah. Or everything out except the, you know, what’s left there. So it’s not showing bad numbers. So like, yeah, supercore is a a thing again in a different way under this Fed. Yeah. Well, we had some inflationary data that came out. We had CPI that came out this month. it showed top line inflation point six.
Which is very high. core was significantly cooler at point four, but it’s still not great. I mean, inflation is headed in the wrong direction. And now I don’t go through the minutes of the of the Fed line by line, but you know, I certainly look at the summary. And there are people on on the Fed that are are, you know, actively looking at higher rates, not lower rates.
And so it seems to me there’s going to be some significant infighting in the future. and and of course f Kevin Walsh is now in there. And but he’s he can’t just wave a magic wand and lower rates. I mean, it’s gotta be voted on by all all of the governors. Yeah. So I don’t know that the administration is gonna get their way in the short term with the data that is is currently there.
Noah Brooks (13:43.307)
Yeah. Now they change it and I I don’t know what they’re gonna look at, but they just forget about CPI. Yeah. I mean you mentioned CPI and and PC, sort of in the same breadth. that was up three point eight below the three point nine expectations. So market took that in stride just because of the crazy expectation number, and then I think core on PC was three point three, so still very hot. still moving up. Yeah. Well, we all know
The Fed in the past has had a target of 2% inflation. And so one of the things that that I think to myself is, well, what if they just change the target? So instead of targeting two percent, they’re gonna target three percent. I mean a fifty percent increase in their target. And then they’d be like, okay, everything’s fine. Right. To me, that seems like the the logical response for someone, you know, change the benchmark. Yeah.
Well, that that changes the whole equation. Discount that will affect dollar valuation, bond valuation, that’ll change everything. I’d prefer they don’t do that. I would prefer they don’t do that. I’d prefer we just get this stuff under control and call it a day. Yeah. we’ve been out. We missed a a a a week here, because I was I was away, right? And I forgot my laptop. I don’t know how that’s possible.
Where’d you forget it, Noah? yeah, I forgot it right here. In this room. Yeah, in the in this very room. so we didn’t do one. I was in Portugal for a few days with my wife and family. And yeah, I was planning on planning on doing it there, but the cards did not fall in line with I wanted what I wanted to do. So I came back I wanted a real scenic view. Yeah. I thought it was gonna be great. And an ocean view or a or river view in Porto.
Yeah, so that didn’t work out as well. So we come back and it’s like trying to absorb all of this data because I I, you know, I mean I’m paying attention. but realistically, you’re on vacation and you want to kind of just veg for a little bit. And we were we were able to do that for a while. Portugal’s an interesting place. Over the last 10 years, there have been a lot of expats that are moving to Portugal. so we were there in in mid May, obviously.
Noah Brooks (16:05.058)
And it was crowded. You know, I I can’t tell you about other countries in mid May, but it seems like, you know, weather is warming up and people just want to be out and about. And if for for people that haven’t been to Portugal or don’t know anything about it, what a wonderful, you know, historical culture they have. I eat seafood every single day. I I didn’t have a single piece of red meat the entire time. I don’t know why I keep What did they call the grilled fish you had? That it was just a f or
Dorado. Dorado. Was was the fish. I had five whole grilled fish out of nine nights. amazing. But a lot of American expats have been moving to Portugal, and I can completely understand why. It’s just the the culture there is amazing. The food there is amazing. If you’re a wine drinker, certainly amazing. They’re they’re famous for port wine. I’m not a port wine guy, it’s really sweet and high alcohol content.
but no not not for me. But they have this Vino Verde, which is what they call green wine or new wine, and that was our drink of choice when we were there. Seafood and green wine. rained a little bit, but overall, amazing time. I did fall, cobblestone streets everywhere, and walking down. I mean, Porto is similar to Lisbon, yeah, everything goes down to the river and
Man, I wiped out pretty hard. Really? Yeah. I messed up I know you’re in pain now. I I messed up my knee a little bit. It didn’t really start hurting until I came back. But yeah, I don’t know what I’m gonna do about that. Yeah. I don’t know what I’m gonna do about that. But you know, you start thinking to yourself, you know, for me, I start thinking, well, where do I want to retire? Do want to go to the beach? Do I want to go to Portugal? I mean, I’m talking 17, 18 years from now. but one of the reasons that we went there, I shouldn’t say one of the reasons.
We’ve heard a lot about Portugal and there’s been a lot of Americans moving there because the cost of living. We had a a representative from one of the fun companies that we used to use. Court West, he moved there about five years ago, right after COVID. Loves it, says it’s the greatest place since sliced bread. not in one of those big towns, but a little bit south. you know, we hit Nazareth. Did you see the hundred foot wave?
Noah Brooks (18:29.522)
On on Prime or Netflix? I didn’t see it, but I looked it up after you were there. Is that where you were on the big cliff? Yeah, Giant looked awesome. Yeah. largest waves in the world. And there’s these crazy surfers. There was no large waves when we were there because it only happens in the in the winter. waves were like, you know, five feet or something like that. but just an amazing town, gorgeous, lots of history, a small fishing village.
I would go back just to see those hundred foot waves. Yeah. And to see people try to surf them. boy. Yeah. It was great. That would be wild. You know, I isn’t isn’t it doesn’t have to be because there’s like rocks and stuff though. So isn’t it very dangerous? The yeah. It’s well, I mean, first off, it’s a hundred foot wave, right? Besides that point. But like does is it rocky? The way the the way the shelf comes in with the current.
It just makes for them the biggest waves. I don’t know if they’re the biggest waves in the world, but they hold the record for the largest surfed wave ever, a hundred and sixteen feet. Wow. You gotta get drugged out there by a jet ski and then they gotta pick you up when you fall. And I’m I’m not a surfer. Did you ever surf? No. I don’t think I’m either. If I fell if I fell walking down the cobblestone street, I don’t I don’t think I’m a candidate. I always thought the skim boarders or whatever were cool.
Seeing them do cool things. Yeah. Yeah. Nope. Not I. I’m not I’m not a trick sport guy like that. Like a ball sport guy. Ball sport. Okay. I got it. we met a very interesting cat character, Javier. the place that we we rented came with like a two-hour yacht cruise just for the four of us. And turns out Javier is he’s a Portuguese citizen from up north, and he used to own some
auto dealers. It was like a Hyundai dealer, a Suzuki, and Opal, which is you know, the European brand, I think, of General Motors. he sold them right around COVID. He bought this boat and he was, you know, kind of doing some things. And then he decided that he was going to make a living out of it because he was bored. So he took his boat down to Porto.
Noah Brooks (20:49.524)
And he started renting it with a company. And now this guy’s life is essentially just taking stupid Americans out on out on his yacht every day. you know, two hours You had to yourself though, didn’t you? Yeah, it was pretty cool. Yeah, it was great. but it just made me think like he was in this hustle and bustle all these years as a as an auto dealership owner and then just what a better life he has now. Right. Yeah.
And just enjoying the sun, meeting lots of people. And you know, it got me thinking about, you know, what to do after retirement. And I I think to myself a lot, well, I don’t really want to retire. I love what I do. But at some point I’m gonna want to do something different. You know, maybe it’s 15 years, maybe it’s 25 years. A A Lish was like, No, it’s not gonna be 25 years. How about how about 15? but yeah, I mean, you know, to to up and just change your career.
And to to do something like that, you know, later in life, I think he was about 63 or 64. it takes a lot of takes a lot of Hutzbudder to be able to do that. But living the life. if you have an opportunity to to check Porto out, maybe not as an expat, but just you know, as a visitor, great spot, highly recommend it. you you would love it. Cobblestone streets, don’t slip and fall.
great seafood, great culture. You know, we learned a lot from our our guides and our our the tours that we took. Obviously, Portugal used to be one of the leaders in seafaring, right? They opened up lots of trade routes over the years, to Africa and even Asia in some cases. And then Macau, right? Yeah, Macau. one of the first people to get there from from Europe or first
countries to get there from Europe. Henry the Navigator, very, very proud people about him. They have a big statue there in in Porto from him. they essentially don’t do any navigating anymore. No one thinks about Portugal as a powerful sea force. You know, kind of like Britain. No one really thinks about Britain. I think they’re down to one one carrier where they used to run
Noah Brooks (23:14.242)
run the Atlantic. They would go everywhere. And it got me thinking about, you know, that the moat, if you will. So they had maybe and to to parse this right, moat, water, all that stuff. But they really had the best navigators. they were able to go, you know, celestial navigation. They had the best captains, they had the best boat builders. And then the, you know,
Everybody got wise to it and they started doing their own thing. And Portugal essentially went by the wayside by middle sixteen hundreds. Amsterdam and and Britain obviously. even Italy had some some good navies in there at at one point. Dutch trading, yeah, Dutch East India, right? and so it makes me think like, you know, what companies today have this moat.
That’s climbable. if you go back to Windows and Microsoft in the 90s, right? It was like it w everybody had a Microsoft computer. There were some Apple computers, but not really. And then it was like, we’ve already sold enough. You know, I mean, how many times can you upgrade your PC in a matter of, you know, two years? You don’t need to. just kind of got me thinking on some of that. So here let me let me pose a question. What companies out there today that are the leaders?
and what they do are gonna be gone in fifteen years. Ooh. Gone. I didn’t prep I didn’t prep them on question. That that’s tough because many of the biggest companies are right now are conglomerates and they have so many different lines of business. Think of Google who has like five business units yielding over thirty billion, you know, y with crazy revenue, crazy earnings. it’s hard to say. I don’t know. I think
You already mentioned Microsoft in terms of their power in the industry has come down a lot and we know software’s been getting hit with everything in AI. A little bumped back in software recently. I think it’s something like that. I mean, NVIDIA showed Jensen the announcement last week, I think, where they’re trying to expand their options. They came into CPUs. Obviously, their skill has been that led to this run up, has been more like GPUs. Sure, graphics.
Noah Brooks (25:40.075)
so yeah, it was like a Shah across about to maybe like would be Dell and Intel doing CPUs kind of Dell’s more servers. Servers. they had a massive jump last week, right? Jumped a hundred points. Thirty percent. Yeah, in one day. I I think it’s companies that don’t diversify that will have issues that just rest on their laurels and rely on one thing.
So I don’t know. That’s hard to say. That’s a great question. What we should certainly be on the lookout for. I you know, prior three, four years ago I would have said intel. Yeah. But we all know an injection of cash from the government and now I don’t know, maybe some deals that people have done with them to garner favor a little bit, save them and now the stock price has been incredible in terms of the movement this year. yeah, that’s that’s a great thought exercise to run is
Sort of those large idea things like what’s going to be gone, what’s going to decrease largely in value, or and then the alternative, the other side of it. Well, you you see those those graphics that go through time and it lists the you know, the top ten companies in the S P five hundred. I mean you remember Exxon and Coke, yeah. No, I was gonna say Kodak. Kodak gone. Yeah. I think they still try I was like a case study they did in college. It was like Kodak, what not to do.
Right. Yeah. One trick pony. Mm-hmm. not getting diversified enough. So something interesting that happened over the last Blockbuster. boy. Well, you know, they could have been the best streamer in the world. They just either you know, for for whatever reason, they they didn’t do it. how about Sears? Yep. They had a catalog in the early nineteen hundreds, late eighteen hundreds, and they should have been the next Amazon, right?
Yeah, that was a management mess up where I think they put themselves in a bad place with of obviously they didn’t move to internet like you you s clearly said there with the Amazon, but the pension issues ultimately are what sunk them. Yeah. And they didn’t they didn’t their management team didn’t calculate things outright. That’s another benefit we have to the companies around right now is I really think the management teams that are in place at these S P five hundred companies are just so much more capable than maybe they were in the past, where maybe
Noah Brooks (28:03.458)
They were experts in what they knew in the past, but they didn’t have the whole picture and didn’t have all the teams in place to do it now. There’s just so there’s such a consideration for every part of the business and everything is accounted for. Everything’s under a microscope. And I think the management teams are the biggest blessing to a lot of these big companies. So one other thing that happened in the last few weeks, Ford, I don’t know if you remember them.
They jumped about fifty percent and not on autos. It had nothing to do with autos. It had to do with energy, where they’re starting to get into batteries and you know, home batteries and just bat battery and energy storage in general. I don’t know how that’s gonna play out. Stock moves have their own gigafactories, is that what you’re saying? Right? Yeah. I mean, that’s kind of interesting because y you know, they’re not gonna they’re not gonna double, triple, quadruple on autos. Mm-hmm.
Right. I mean, it’s it’s a it’s a race to zero in manufacturing and margins. The margins on these these cars have been shrinking and shrinking and shrinking. We now have the potential threat of Chinese cars coming into play. And obviously we’ve talked about Tesla a million times on here, and and electric cars in general. Ford is not having a lot of success in the electric vehicle range realm.
They just retired their F one fifty lightning, right? The the electric car. To me, in ten or fifteen years, most everything is gonna be electric. And the big gas guzzlers or even the the highly efficient gas engines, they’re gonna be a thing of the past and they’re only gonna be on big you know, indust industrial vehicles. speaking of industrial vehicles, who was the c what was the company
That was it Rivier, the they man they were doing the big trucks, the electric trucks. The fraudulent one? Yeah. gosh. Well, that’s funny because Citron and Andrew Left who exposed them. Yeah. Andrew Left just got I guess he’s getting sentenced. He was found guilty of manipulation. he was a noted short seller, Citron Research, right? Yeah. And
Noah Brooks (30:27.564)
Yeah, his court case just came down. Up to twenty-five years. It was Nicola. Yes, that’s right. Right. So so Tesla where they were rolling it down and they they did an investor video where it’s on a down climb and made it look like it could actually run. But really they just use gravity. They you know, you should have known. I mean, Nikola Tesla, very very famous inventor, died penniless, probably had, you know, some disease or something. But Tesla is named after him. And then they’re like, Well Tesla’s already taken, we can’t make Tesla two.
So let’s just call it Nicola. and they they didn’t have any products and they burnt through, you know, hundreds of billion hundreds of millions, if not billions of dollars of of investor capital and they didn’t have a working product. Yeah. Yeah. But and and Andrew left was spot on with that criticism and that short sell, short research. You don’t get a pardon. maybe.
I don’t know. There’s been a lot of crazy. The president’s old buddy Elon doesn’t like shorts, as you know. Remember, remember the Tesla shorts that he did? They’re really short shorts because he didn’t like the people who were shorting Tesla. Good times. Speaking on on that same breath, talking about Ford branching out and trying not to become a dinosaur. Google, huge conglomerate, partnering with Blackstone, and they’re basically going to use Google’s TPUs. They’re going to try and create their own data centers effectively in their
AI their own AI cloud server business. think of like a core weave or like a Nebius, something like that. And they’re like, Well, why would we rely on them to buy our chips and to run this? And why don’t we just create the demand? We have all the connections in the world. We can just sort of skip them in this loop and you know, they’re integrating vertically now even far even farther. Sure. Well, I it’s kind of like FedEx buying their own planes. Yeah. Right. Why wouldn’t they?
Or or ups buying their own planes. I mean, why would we pay someone else to all this stuff and we can do it ourselves? And and and that to your point though, is that management style is like, well, where can we pick up 50 basis points of margin? Where can we pick up you know 10, 20, 100? And I I just want to go back to this because I hear lots of people saying that, you know, this is reminiscent of the bubble in internet stocks.
Noah Brooks (32:48.429)
in in the two in the late nineties and early two thousands. And to see some of these memory manufacturers jump so much in such a quick period, it does give me a little bit of consternation. Certainly, you know, people are like, should I buy it now? And I’m like, man, that is a that is a tough call. You know, if if you liked sand disk at 800, do you like it at 1800, right? I mean that that is really a tough one.
The fact of the matter is that these companies are making money hand over fist and the earnings are growing at astronomical rates that we have not seen before from such you know established companies. It’s one thing to start out with $20 million in sales and double, triple, quadruple that, but it’s another where you have, you know, hundreds of millions of and billions of dollars of sales and then to be able to compound on that dramatically. And so
You know, I looking at some of the the forward PEs, and I I know people get hung up, well, that’s not the right way to value it, but when you look at the S P five hundred for two thousand twenty-seven, right, which is next year, we’re under twenty on the S P five hundred PE for next year. I mean, is it higher than it’s been? A little bit, but you know, 10 year average, it’s just a it’s just a tad higher than that. it doesn’t seem bubblish to me.
Yeah. That’s because those earnings are so good that it’s, you know, making those forward valuations not too bad. Yeah. Even the NASDAQ trading at twenty-three almost almost twenty-four for two thousand and twenty-seven. I mean, it’s higher than I’d like it to be, but it’s not bubble. Yeah. And they’re counting on these massive increases in earnings over over time.
And I think if you going back to 2000, March of 2000, I think was the high. we made it back up in September of 2000. But realistically, the the whole premise kind of fell apart because they w the growth just slowed down. And I think people are waiting for that metric that says, well, we’re gonna be able to do what what we’re doing now with a lot less capacity.
Noah Brooks (35:10.347)
Right. And and to me, that could probably be the only thing that would in the short term to slow this market down, or at least in in the chips and AI computing power. I doesn’t seem like it’s gonna happen otherwise. Yeah. Now I I don’t I don’t know that any company can grow exponentially indefinitely, right? Like that’s that’s not a thing. It doesn’t happen. there’s always boom and bust cycles, and there’s a lot of cyclicality of the entire thing.
but it doesn’t seem like we’re in the eighth inning. It seems like we’re in like the third inning or fourth inning here. I agree with that. Yeah, this is a CapEx wave. Ex and it’s not without reason. Like you said earlier. Like every data center out there is being fully utilized. All the chips, all the server racks are in use. They’re not just like turned off, conserving energy waiting to be run. They’re being run. That’s why there is
fifty hundred different major data center projects across the country that are awaiting to be approved and awaiting parts and components to get up and running. It’s because everyone’s profitable right now and everything is being utilized. We’re short on compute. So so going back to a few data points that we have coming out recently and I should say that later this week we’re gonna have a jobs report. So we’re really gonna see you know what happened obviously the jolts.
was up eight hundred thousand, but we’re gonna see how many people actually got employed. That’ll be pretty pretty healthy for us. but we had a personal savings rate that came down in the most recent report. historically, since nineteen fifty nine, personal savings rate was about eight point four percent, meaning how much of of your net are you putting away or are is in aggregate everybody putting away? do four one K contributions count towards that? You would think they would. How’s
How does the number get so low? You know, I don’t I don’t know. That is that is one question that I I I don’t know. Maybe we can come back to that. Yeah. You would think that it would, but yeah, I don’t know. And personal savings rates kind of like the shock absorber. You know, how much can people, I mean, if they’re putting a lot into savings, that means if if something happens that they don’t have to put in a savings, and that’s the shock absorber, they can they can utilize it. pre-COVID average was about 7%.
Noah Brooks (37:30.315)
The pandemic peak was over 30%. I mean, it was only for a few months. and then, you know, January’s number was 4.3, which is reasonably healthy. And then the April number was 2.6%. So this is something that is is a little bit concerning for me. It’s on my mind. but if you start to see that well, I mean, it it is definitely trended down in the last five years or so. But if you start to see that continue to go down.
Or possibly turn negative, which it has on occasion, that to me would be a pretty poor economic indicator. Yeah. Just prior to COVID, I know had gotten down to this range as well. I think it was a tad lower at one point. And then we had one spike after, I think, which was a bit lower after COVID as well.
COVID and and those stimulus payments, huge outlier because not only did they close everywhere where you could go spend, go restaurants, go have drinks, things like that, but then they gave you thousands of dollars potentially. Yeah. Depending on your income level. So you see the huge spike upwards to what do you say? Thirty percent it was? Over thirty. Yeah. Over thirty. but yeah, if you take out that blip in the data,
It’s we’re low. It’s been yeah, it’s been trending lower for for a long time. Even if you take out that blip upwards. Yeah. Yeah. That to me is a little bit disconcerting. I I would definitely say that. So that’s something that we keep our eyes on. what else happened when I was away? there was a White House summit in China. So I have to imagine that everybody’s all good, everything’s worked out, right? What happened? Not too much. I mean, I guess we’ve backed off Taiwan support a little bit.
at least, you know, in the papers and the talkies on, you know, at least on T V and everything, we’re not being so outspoken support of Taiwan. I’m sure that’s a major thing. other than that, I don’t know. They promised they weren’t going to sell weapons to Iran or weren’t But Iran we had a report this week that Iran was utilizing Chinese drones.
Noah Brooks (39:45.638)
Isn’t that like a red line? Yeah. No? No. Are there any red lines anymore, Chris? I don’t think so. Everything’s like, we didn’t know. We thought they were gonna do one of those firework drone shows with it. We didn’t know they retrofitted it for war. Mm-hmm. Mm-hmm. Okay. speaking of giving money, you said in in COVID we we were giving money. tariffs are back, right? Not in the sense that they’re adding tariffs, in the sense that.
they were ruled you know illegal and the government now has this tariff portal and they have to give the money back. There were about three hundred companies that joined a class action lawsuit against the government. And the current administration is saying, well, we only need to give back the money to the companies that filed the lawsuit. Federal recourt, federal court says a little bit different.
They said no, everybody’s got to get their money back. Anybody who requested it has got to get their money back. So we collected about a hundred and sixty-six billion dollars in tariff revenue. We’ve paid back another twenty-two billion of that one sixty-six, and there’s a lot more to go. so that is that is leaving the coffers. I bring that up because I saw a report yesterday that said the interest on.
The national debt is now three counted one, two, three billion dollars a day.
Ha da. It’s getting heavy. Yeah. How are we going to work our way out of that, Chris? We gotta pray for some productivity boosts. I mean, we’re going through the biggest product productivity gains that we’ve seen since the 90s. In theory, productivity gains in the future should be completely substantial. Yeah. Right now, I think if you look at the economic science, the productivity numbers haven’t been as robust as we would think they should be. in the future, a lot of
Noah Brooks (41:47.106)
manufacturing we would anticipate probably done and assisted with humanoid robots, things like that, at the expense of us though, humans, laborers. we’ll see. I I mean we we need more productivity, you know, continued earnings, obviously strength. That’s the only thing that’s going to get us out from this in the end. And I don’t know if there’s any level that can truly
Ever get our debt to zero, but all we need is for it to stop going up at the rate it’s going up. If we can get like a little hockey stick action where it starts going. Do you know what would be helpful for that? Is is if we had a balanced budget. Right. That would help. And we weren’t running a deficit. Yeah. I mean, we have been running deficit deficits in the US budget essentially since Clinton. Well, no, Clinton Clinton balanced it. I said since Clinton. yeah, since Clinton. But
nine eleven, right? That’s that’s where it all fell apart. And you know, for for defense and coming together, it was like it doesn’t matter if it’s if it’s a budget deficit or not. And then that transpired into global financial crisis. And we’ve been running these deficits really since 2001, since 2002. sometimes they’ve gotten a little bit bigger, sometimes they’ve gotten a little bit smaller, depending on the overall situation. but the first step
in in you know making that that hockey stick for that number not to go up is stop overspending yeah and collect some more revenue. Now I I I think people hate to hear the collect more revenue part, right? Because that really means taxes. but we are, you know, we’re not in a spot where it’s unsustainable at the moment, but we certainly could get to a spot that it’s unsustainable. Mm-hmm.
I don’t have kids. Your kids are gonna be paying that debt for a long, long time. Yeah. I mean, I’m thinking about the social security cliff at twenty thirty-four or whenever it is. See what we’ll do then. They screwed the pooch on that. We’ve talked about that many times before. speaking of someone sort of having to face the music a little bit. boy. Michael Saylor and Strategy.
Noah Brooks (44:05.299)
Selling some Bitcoin for the first time since 2022. First time ever? Yeah. Well, since twenty twenty two. And yeah, Bitcoin’s fallen below seventy thousand. So if you have your life savings in Bitcoin, we will say a prayer for you. Well, I mean, listen, if you have your life savings in Bitcoin, you probably didn’t buy it at a hundred thousand. Hope not. Right. You probably bought it at twenty thousand or ten thousand or something.
So it’s just going down a little bit. Those there’s those are drawdowns that happen. But since the ETFs came out and whatnot, people have piled in since the ETFs have come out. You know, most likely underwater. I I would say, yeah, the a lot of retail investors that bought it through ETFs are probably underwater. Yeah, that doesn’t that doesn’t bode well. what do you what do you think’s gonna happen with that? Is there a use case for Bitcoin that it’s gonna make make make it rally?
I don’t I don’t think we’ll ever use our like Apple phone like we use Apple Pay or something like that or like like we use our credit card. I don’t think there’s a scenario where we use Bitcoin like that for like a transfer of value. I think it has to be a store of value, a scarcity thing. And despite the debt doing like what you just said, it’s not going up in value right now. I know gold has topped out kind of, obviously. We saw that.
Historic little run. It was a very quick run for gold, moved up substantially, and now it’s sort of topped out. Not surprised at that. Went a little too far too fast, in my opinion. And but Bitcoin struggled, you know, even more. Yeah. Well, it seems to me, I mean, if I had to guess, I would say people are selling Bitcoin to get into semis and and the the memory. It’s the new hot thing. Yeah. The hot flows are yeah, out of those style Bitcoin type things.
into Sammy’s AI story, memory. Memory, right. Yeah. Absolutely. I don’t necessarily think that’s bad. I don’t think Bitcoin’s going to zero anything. I just not sure. It’s down to about sixty five thousand. The eighteen month low, year and a half low was right around sixty two eight. So that would be the line in the sand from a technical perspective. If it drops below that, like kind of look out below. Yeah, for sure.
Noah Brooks (46:22.209)
Thankfully, there hasn’t been a lookout below scenario with SpaceX. Obviously, that’s the big news coming up right now. SpaceX. Yeah. And the valuation obviously under scrutiny. Makes sense. We’ve talked about before. They have several business units, some very profitable, some with no competitors. And then like the Twitter X segment that is not profitable. Right, right. Totally replicable. but hey.
The thing I’ve been seeing on social media, which drives me nuts, is people saying, like, this valuation’s insane. It’s going to bring down the market. You know, $1.75 trillion, $2 trillion valuation that has to come from somewhere. They’re going to sell out of all the big guys and it’s going to bring down the market. They’re going to sell out of Tesla. Tesla’s going to go down 50% because of this. And it’s the most ridiculous thing I’ve ever heard because they’re doing three to five percent of the float.
So only three to five percent of the SpaceX shares are coming out in the IPO, which is barely anything. It’s depending on the valuation you give it, forty-five billion to a hundred billion, that’s one quarter of Berkshire Hathaway’s cash pile. Yeah. That’s not even talking about retail the seven, eight trillion we have in money markets, all that. So the fact that you think forty five billion
To a hundred billion of liquidity is gonna bring down the big guys because you have to sell from something to go into it is the most ridiculous thing I’ve ever heard. We we can debate the valuation all day. Happy to do that. Sure. But the IPO, the liquidity provided that’s gonna be necessary to buy those shares is minimal compared to, you know, historic IPOs, which are I think more in like the fifteen to twenty percent range. And think about like the massive companies like Amazon and Google, you know.
Their current floats like 90% plus. So yeah, much ado about nothing. Don’t listen to those random accounts on Facebook or TikTok that are telling you this is gonna bring down the market because we need to somehow find 45 billion of liquidity to buy these shares. So there’s such a small amount coming on. that’s by design, of course, right? And I would imagine that that is to, you know, because there’s so much demand for it.
Noah Brooks (48:42.529)
To make sure that it goes up the first day. Like if they had put too much out, you you don’t know what’s gonna happen. Yep. So I you know, I I have had lots of people ask me about SpaceX over the last few weeks and and months. I just don’t know what to think. You know, for because of the valuation side, like from the cult side, yeah, I mean three to five percent is saying people up for a short squeeze. Anybody who’s like, no way, this is worth two trillion, I’m going short on day two.
They could get blown out of the water because there’s only three to five percent float. I mean, Elon could buy that like twenty times over just to blow out the shorts. As we know, he doesn’t like shorts. Could he could he do that? yeah. Well collateralized all those other shares he has. I don’t know. I don’t know about that. He he would try. Yeah. He w he would definitely try. well that’s coming. What’s the date of that? The twelfth is the IPO. Yeah. So next week. Next week.
so we’ll we’re not gonna be back here until after that. So we’ll we’ll have some dialogue about that. I imagine that CNBC and Bloomberg and and all the financial comp media outlets are gonna have a day with that and bunch of engineers and rocket scientists about to become billionaires, I think. Yeah, absolutely. I mean, if you work there for the last five or ten years, you are gonna get a payout and it’s gonna be And that blue origin test fire explosion, I mean
Not good for the industry or anything, but like I’m sure Elon was just like, hmm, darn, I’m the only person who can reliably send out rockets. I’m sure he’s really upset over it. you know, Blue Origin is interesting because they they don’t really have a lot of other things. They’re one trick phone, kind of yeah. They have space orbit and you know go into space, but they don’t really have anything else. there’s no Starlink or anything like that.
Just Starlink audience. No Twitter. No, no Twitter. No XAI. No grok. No XAI. None of that stuff. and they’ve had they’ve had some setbacks. And I I don’t know what Jeff is thinking about that, Mr. Bezos. Space is hard. That’s a line from Elon, isn’t it? Yeah. He’s not wrong. He’s not wrong. He’s not wrong. All right, everybody. we appreciate your time. Thanks for listening, listening to us today. as Mr. Buffett says, don’t
Noah Brooks (51:03.009)
Bet against America, everybody. We will see you next time on The Market Enthusiast. Thanks so much.
Have questions about how this impacts your investment strategy? Reach out to your advisor or email us at marketenthusiast@goodlifefa.com.
The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you consult the appropriate qualified professional prior to making a decision. Economic forecast set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
The Rally Rolls On: Why Markets Keep Climbing the Wall of Worry
Markets continue to reach new highs, even as headlines remain filled with concerns about inflation, interest rates, geopolitical tensions, and questions about whether today’s rally can continue.
For many investors, the disconnect can feel confusing. If there are still so many risks in the market, why do stocks keep moving higher?
In the latest episode of The Market Enthusiast, Noah Brooks and Chris Needs explore the forces driving the current market environment and why strong fundamentals continue to outweigh many of the concerns making headlines.
Table of Contents
Markets Continue Their Climb
The S&P 500 recently reached another all-time high, continuing a rally that has pushed stocks significantly higher from their lows. While many investors have spent the past year waiting for a major pullback, the market has largely rewarded those who stayed invested.
As Noah points out, markets often “climb the wall of worry.” Investors rarely get a period where everything feels perfect. Instead, markets tend to advance despite uncertainty, as long as earnings, economic growth, and business fundamentals remain supportive.
AI Continues to Drive Investment
One of the biggest themes discussed during the episode is the continued expansion of artificial intelligence.
While much of the early excitement focused on chip manufacturers, the conversation has expanded to include memory producers, data center operators, fiber-optic infrastructure providers, and energy companies helping power the next generation of computing.
Unlike previous technology booms, today’s AI investments are being supported by immediate demand. Companies are actively using new computing capacity as quickly as it becomes available, creating significant opportunities across multiple industries.
While valuations in some areas have risen sharply, Noah and Chris note that many companies are also delivering the earnings growth needed to support those higher prices.
Inflation and Interest Rates Remain Key Factors
Economic data remains one of the most important drivers of investor sentiment.
Recent reports have shown mixed signals. Job openings remain strong, indicating continued demand for workers, while inflation measures continue to run above the Federal Reserve’s long-term target.
As a result, investors may need to adjust expectations for interest rate cuts. While many had hoped for lower rates sooner, the current economic environment may lead policymakers to remain patient.
For long-term investors, however, market performance is often driven more by earnings growth and business fundamentals than short-term interest rate predictions.
The SpaceX IPO Is Generating Attention
Another major topic of discussion was the anticipated SpaceX IPO.
The company has become one of the most closely watched private businesses in the world thanks to its leadership in space exploration, satellite communications, and launch services.
While questions remain about valuation, Noah and Chris highlight that investor demand will likely be significant. SpaceX’s unique position across multiple industries has many investors eager to see how the public offering unfolds.
Lessons from Market History
One of the more interesting parts of the conversation focused on competitive advantages and how industries evolve over time.
History is filled with examples of dominant companies that appeared unstoppable, only to be overtaken by changing technology or consumer preferences. From Kodak to Blockbuster to Sears, market leadership is never guaranteed.
For investors, that serves as an important reminder to focus not only on today’s winners, but also on whether those businesses can continue adapting to tomorrow’s challenges.
The Bottom Line
Markets rarely move higher because uncertainty disappears. Instead, they move higher when businesses continue to innovate, earnings continue to grow, and investors remain focused on the long term.
While risks remain, the current rally continues to be supported by strong corporate fundamentals, growing demand for AI infrastructure, and a resilient economy.
As Noah and Chris discuss throughout the episode, staying invested during periods of uncertainty is often easier said than done. However, history has repeatedly shown that some of the strongest market advances occur when many investors are still looking for reasons to stay on the sidelines.
Listen to the full episode of The Market Enthusiast for additional insights on market trends, inflation, artificial intelligence, SpaceX, and the economic forces shaping today’s investment landscape.
Listen to the Full Episode
Full Episode Transcript
Hey, welcome back to another installment of the Market Enthusiast. I’m Noah Brooks, and obviously this is Chris Needs.
Hello, hello. Here we are, third day in June. Anything interesting going on in the markets, maybe. There’s some stuff happening. Yeah. Got some big IPOs coming or a big IPO. Yeah. Some later in the year. Yeah, absolutely. What about price levels? all time highs. Have you ever heard that before? It’s like it’s like a record that just keeps going around.
And it skips a little bit here and there, but we keep having it. Momentum begets momentum. Yeah. SP five hundred closed yesterday for the first time ever, over seventy six hundred. if we closed where we are today, right now, it would be I think last week was nine street wake street straight weeks of gains. This week would be another one, make it 10 if we ended where we are today. everything’s great, right?
Feels good. Feels good in the market. you know, you have everybody who thinks there’s a top in or a bubble forming and all these things that you hear out there. We’ve got a little break in the ceasefire a little bit over there in Iran. some missiles being sent around. Most have been deflected, I think. But oil moving up a little bit again, you know, there’s unease, but
Earnings and fundamentals of I mean, the old adage is right, the market climbs the wall of worry. Yep. And here we are, early June. S P is up 10.5% for the year. We’re up 20% since those March lows, right? So massive rally off those lows. mid-caps are up 14%, small caps are up over 15%. Emerging markets, the winner here on the big indexes, up 27% for the year.
developed not quite as as good up eight and a half percent. value up 14, growth up seven. So value is beating growth, you know, almost almost doubling the returns for growth. But there’s been some big stories in chips and memory lately. Yeah. That’s where things look a frothy in the short term. But if you look at the fundamentals of what they’re doing and how they’ve revised upwards in terms of the guidance on their earnings.
Noah Brooks (04:30.838)
It kind of makes sense what they’re doing. I mean, anytime something goes up five hundred, eight hundred percent, and then you see re-ratings of analysts going up another two hundred percent, you start to doubt it just because it doesn’t seem like it makes sense to our monkey brains, right? But I mean, the stories here, we’re we’re short on memory, we’re we’re short on compute, capacity every capacity wise capacity wise.
And everything that’s being bought up is being used immediately. It’s not just sitting there. we like to, you know, compare things to what we’ve seen in our memory. We like to relate things together. Going back to dot com, think about all that fiber that was laid that wasn’t used to capacity until just recently. You know, that wasn’t making money immediately. Every time they build a data center or buy a server rack full of chips, it’s being utilized immediately. Yeah. Because we’re behind. So
Fundamentally it makes sense seeing these things. Again, you know, a a yellow flag gets raised when you see something up five hundred percent, you know, having an analyst target double. But it kind of makes sense in this scenario. Well, I mean, I think from a memory standpoint, all of the computing power requires this memory. For some reason, people weren’t really thinking about that, you know, two years ago.
Right. It it was about the chip guys, not about the memory guys two years ago, 18 months ago. I mean, realistically, it’s sit been since September of last year, where these memory manufacturers have just been, you know, through the roof. It’s almost like it was a proof of concept. Like they had to prove the chips and the LLMs, large language models could do what we said they could do. And then that story, you know, you had Cloud, you had Google, you have all these chat GBT.
All these things, well, they’re proven now that they can do what they said they could do. And now it’s like, holy crap, well, then we have to look at all these other things, the energy play, electrical components. You even see Corning, GLW, you see them going crazy because Nvidia’s like, ooh, we can make them even faster. Instead of copper, we’re gonna use optic fiber. Yeah, yeah. And all these things are launching. Well, Glassworks GLW was a a darling of the internet bubble.
Noah Brooks (06:51.34)
Yeah. I mean I I owned that on and off in the in the late nineties. Yeah. And it sat and went nowhere for about eighteen years. What’s it done the last year? man. I don’t know, up three, four, five, seven hundred percent. Yeah. And you just see all of these other things that are now super relevant and and popping and and to point is all right, they the chips that are in demand, they’ve had their run up. the LLMs.
got their attention and anthropic and open AI have their crazy large valuations. And now you have the memory stories, the energy stories, all these other stories that are catching up and they’re catching up quick. Yeah. you know what hasn’t been catching up? Healthcare, financials, right? I mean they’re actually down for the year, discretionary down for the year. it’s energy’s up, you know, thirty because oil prices have gone, you know,
catast astronomical, I guess you could say. I mean, it’s maybe not not as much as the chip guys, but when I last looked here, oil was just shy of a hundred rent crude at at ninety-eight a barrel. And, you know, we have this back and forth, this ping pong tennis, if you will, in in Iran. And I I don’t think anybody really knows how it’s gonna play out. It it does seem, I guess, that
In the end, it’ll probably get better before it gets worse, but I could be eating those words. Yeah. I I have nothing to add there. I have no clue what’s gonna happen. I’m just gonna stick with my opinion that this doesn’t make it to 2027. you know, stray of hormoose price of oil in the short term, anybody’s guess. Yeah. Sorry, can’t add value on that one. No, I I don’t know that anybody can. I just I think in the long term oil goes lower, but you know.
Short term, shoot. I don’t know. It it it is rough. gas prices have come down a little bit. I think that’ll provide a relief, but that’s only been in the last, I don’t know, four or five business days or four or five days. so we’ll we’ll see what happens there. I guess that’s to be determined, if you will. But I mean, like I said, markets up twenty percent since those lows in March. And then if you look at the one year numbers, I mean
Noah Brooks (09:09.058)
energy’s up 40% for the year. The the Dow’s up 20% on a one year number. The NASDAQ’s up 41% on a one year number. you know, SP’s up 30% on a one year number. I said this in the past, but if you’ve missed this, if you got scared out during Liberation Day in 2025 and you’ve been sitting on the sidelines, you just missed I I don’t want to say it’s a once in a lifetime rally, but
It might be you know, too much to come back from for anybody that’s looking for long-term performance. Yeah, it’s just gotta take your medicine a little bit. If you missed it, you didn’t swing at that pitch, you know. Take your medicine and if you try and catch up, you might make an even worse mistake and end up lacking by even more. Get whipsawed, right? you know, so we had some economic stuff this week. yesterday we had Jolts, which is the job opening opening labor turnover survey.
which lists the number of job openings out there, it went up dramatically, went up by about 800,000. and I think everybody was questioning whether well, I think the expectation was for significantly lower or pr pretty stable. So eight hundred thousand new job openings, that bodes well for the economy. It does. And it’s also upward pressure on
Not the inflation story, but it that generally would go into the corner of you know, you’re not gonna cut rates into that stat and inflation we know is elevated right now with everything going on abroad and how that s affects, you know, logistics and supply chains and things like that. I don’t think the Fed is gonna hike this year, but the the case that they’re gonna have to try and make for cuts is is even harder now. I d I it doesn’t seem like they’re gonna move.
Yeah. Right. I would say neutral to the end of the year. Kevin Morse officially installed as the the president of the Fed. does that change the trajectory of rates at all? I’m sure the discussions and the minutes will reflect differently than they did under the Powell Fed. Powell, the first obviously chairman to remain on as a governor, going back to the guy the building’s named after Mariner Eckley’s.
Noah Brooks (11:28.217)
1948 he stayed on, I believe. so yeah, truly a once-in-a-generation thing having a chairman stay on the Fed as a governor. Absolutely. The the other thing that is interesting is that Kevin Walsh is talking about redefining the metrics for inflation. Right. So when they’re not going in your favor, what do you do is you change the data set. And that to me doesn’t seem right. Now I haven’t heard
the exact proposal. I don’t know that anybody’s heard the exact proposal, but he but he keeps re replaying this that they want to change the metrics to gauge inflation. And that to me seems a little bit I don’t know. It it doesn’t seem kosher. Just funny, funny play with the numbers. It was like going back to 2022 when inflation was really high. They’re like, well shouldn’t we be these discussing supercore where we take
Basically everything out except what’s going up. Yeah. Or everything out except the, you know, what’s left there. So it’s not showing bad numbers. So like, yeah, supercore is a a thing again in a different way under this Fed. Yeah. Well, we had some inflationary data that came out. We had CPI that came out this month. it showed top line inflation point six.
Which is very high. core was significantly cooler at point four, but it’s still not great. I mean, inflation is headed in the wrong direction. And now I don’t go through the minutes of the of the Fed line by line, but you know, I certainly look at the summary. And there are people on on the Fed that are are, you know, actively looking at higher rates, not lower rates.
And so it seems to me there’s going to be some significant infighting in the future. and and of course f Kevin Walsh is now in there. And but he’s he can’t just wave a magic wand and lower rates. I mean, it’s gotta be voted on by all all of the governors. Yeah. So I don’t know that the administration is gonna get their way in the short term with the data that is is currently there.
Noah Brooks (13:43.307)
Yeah. Now they change it and I I don’t know what they’re gonna look at, but they just forget about CPI. Yeah. I mean you mentioned CPI and and PC, sort of in the same breadth. that was up three point eight below the three point nine expectations. So market took that in stride just because of the crazy expectation number, and then I think core on PC was three point three, so still very hot. still moving up. Yeah. Well, we all know
The Fed in the past has had a target of 2% inflation. And so one of the things that that I think to myself is, well, what if they just change the target? So instead of targeting two percent, they’re gonna target three percent. I mean a fifty percent increase in their target. And then they’d be like, okay, everything’s fine. Right. To me, that seems like the the logical response for someone, you know, change the benchmark. Yeah.
Well, that that changes the whole equation. Discount that will affect dollar valuation, bond valuation, that’ll change everything. I’d prefer they don’t do that. I would prefer they don’t do that. I’d prefer we just get this stuff under control and call it a day. Yeah. we’ve been out. We missed a a a a week here, because I was I was away, right? And I forgot my laptop. I don’t know how that’s possible.
Where’d you forget it, Noah? yeah, I forgot it right here. In this room. Yeah, in the in this very room. so we didn’t do one. I was in Portugal for a few days with my wife and family. And yeah, I was planning on planning on doing it there, but the cards did not fall in line with I wanted what I wanted to do. So I came back I wanted a real scenic view. Yeah. I thought it was gonna be great. And an ocean view or a or river view in Porto.
Yeah, so that didn’t work out as well. So we come back and it’s like trying to absorb all of this data because I I, you know, I mean I’m paying attention. but realistically, you’re on vacation and you want to kind of just veg for a little bit. And we were we were able to do that for a while. Portugal’s an interesting place. Over the last 10 years, there have been a lot of expats that are moving to Portugal. so we were there in in mid May, obviously.
Noah Brooks (16:05.058)
And it was crowded. You know, I I can’t tell you about other countries in mid May, but it seems like, you know, weather is warming up and people just want to be out and about. And if for for people that haven’t been to Portugal or don’t know anything about it, what a wonderful, you know, historical culture they have. I eat seafood every single day. I I didn’t have a single piece of red meat the entire time. I don’t know why I keep What did they call the grilled fish you had? That it was just a f or
Dorado. Dorado. Was was the fish. I had five whole grilled fish out of nine nights. amazing. But a lot of American expats have been moving to Portugal, and I can completely understand why. It’s just the the culture there is amazing. The food there is amazing. If you’re a wine drinker, certainly amazing. They’re they’re famous for port wine. I’m not a port wine guy, it’s really sweet and high alcohol content.
but no not not for me. But they have this Vino Verde, which is what they call green wine or new wine, and that was our drink of choice when we were there. Seafood and green wine. rained a little bit, but overall, amazing time. I did fall, cobblestone streets everywhere, and walking down. I mean, Porto is similar to Lisbon, yeah, everything goes down to the river and
Man, I wiped out pretty hard. Really? Yeah. I messed up I know you’re in pain now. I I messed up my knee a little bit. It didn’t really start hurting until I came back. But yeah, I don’t know what I’m gonna do about that. Yeah. I don’t know what I’m gonna do about that. But you know, you start thinking to yourself, you know, for me, I start thinking, well, where do I want to retire? Do want to go to the beach? Do I want to go to Portugal? I mean, I’m talking 17, 18 years from now. but one of the reasons that we went there, I shouldn’t say one of the reasons.
We’ve heard a lot about Portugal and there’s been a lot of Americans moving there because the cost of living. We had a a representative from one of the fun companies that we used to use. Court West, he moved there about five years ago, right after COVID. Loves it, says it’s the greatest place since sliced bread. not in one of those big towns, but a little bit south. you know, we hit Nazareth. Did you see the hundred foot wave?
Noah Brooks (18:29.522)
On on Prime or Netflix? I didn’t see it, but I looked it up after you were there. Is that where you were on the big cliff? Yeah, Giant looked awesome. Yeah. largest waves in the world. And there’s these crazy surfers. There was no large waves when we were there because it only happens in the in the winter. waves were like, you know, five feet or something like that. but just an amazing town, gorgeous, lots of history, a small fishing village.
I would go back just to see those hundred foot waves. Yeah. And to see people try to surf them. boy. Yeah. It was great. That would be wild. You know, I isn’t isn’t it doesn’t have to be because there’s like rocks and stuff though. So isn’t it very dangerous? The yeah. It’s well, I mean, first off, it’s a hundred foot wave, right? Besides that point. But like does is it rocky? The way the the way the shelf comes in with the current.
It just makes for them the biggest waves. I don’t know if they’re the biggest waves in the world, but they hold the record for the largest surfed wave ever, a hundred and sixteen feet. Wow. You gotta get drugged out there by a jet ski and then they gotta pick you up when you fall. And I’m I’m not a surfer. Did you ever surf? No. I don’t think I’m either. If I fell if I fell walking down the cobblestone street, I don’t I don’t think I’m a candidate. I always thought the skim boarders or whatever were cool.
Seeing them do cool things. Yeah. Yeah. Nope. Not I. I’m not I’m not a trick sport guy like that. Like a ball sport guy. Ball sport. Okay. I got it. we met a very interesting cat character, Javier. the place that we we rented came with like a two-hour yacht cruise just for the four of us. And turns out Javier is he’s a Portuguese citizen from up north, and he used to own some
auto dealers. It was like a Hyundai dealer, a Suzuki, and Opal, which is you know, the European brand, I think, of General Motors. he sold them right around COVID. He bought this boat and he was, you know, kind of doing some things. And then he decided that he was going to make a living out of it because he was bored. So he took his boat down to Porto.
Noah Brooks (20:49.524)
And he started renting it with a company. And now this guy’s life is essentially just taking stupid Americans out on out on his yacht every day. you know, two hours You had to yourself though, didn’t you? Yeah, it was pretty cool. Yeah, it was great. but it just made me think like he was in this hustle and bustle all these years as a as an auto dealership owner and then just what a better life he has now. Right. Yeah.
And just enjoying the sun, meeting lots of people. And you know, it got me thinking about, you know, what to do after retirement. And I I think to myself a lot, well, I don’t really want to retire. I love what I do. But at some point I’m gonna want to do something different. You know, maybe it’s 15 years, maybe it’s 25 years. A A Lish was like, No, it’s not gonna be 25 years. How about how about 15? but yeah, I mean, you know, to to up and just change your career.
And to to do something like that, you know, later in life, I think he was about 63 or 64. it takes a lot of takes a lot of Hutzbudder to be able to do that. But living the life. if you have an opportunity to to check Porto out, maybe not as an expat, but just you know, as a visitor, great spot, highly recommend it. you you would love it. Cobblestone streets, don’t slip and fall.
great seafood, great culture. You know, we learned a lot from our our guides and our our the tours that we took. Obviously, Portugal used to be one of the leaders in seafaring, right? They opened up lots of trade routes over the years, to Africa and even Asia in some cases. And then Macau, right? Yeah, Macau. one of the first people to get there from from Europe or first
countries to get there from Europe. Henry the Navigator, very, very proud people about him. They have a big statue there in in Porto from him. they essentially don’t do any navigating anymore. No one thinks about Portugal as a powerful sea force. You know, kind of like Britain. No one really thinks about Britain. I think they’re down to one one carrier where they used to run
Noah Brooks (23:14.242)
run the Atlantic. They would go everywhere. And it got me thinking about, you know, that the moat, if you will. So they had maybe and to to parse this right, moat, water, all that stuff. But they really had the best navigators. they were able to go, you know, celestial navigation. They had the best captains, they had the best boat builders. And then the, you know,
Everybody got wise to it and they started doing their own thing. And Portugal essentially went by the wayside by middle sixteen hundreds. Amsterdam and and Britain obviously. even Italy had some some good navies in there at at one point. Dutch trading, yeah, Dutch East India, right? and so it makes me think like, you know, what companies today have this moat.
That’s climbable. if you go back to Windows and Microsoft in the 90s, right? It was like it w everybody had a Microsoft computer. There were some Apple computers, but not really. And then it was like, we’ve already sold enough. You know, I mean, how many times can you upgrade your PC in a matter of, you know, two years? You don’t need to. just kind of got me thinking on some of that. So here let me let me pose a question. What companies out there today that are the leaders?
and what they do are gonna be gone in fifteen years. Ooh. Gone. I didn’t prep I didn’t prep them on question. That that’s tough because many of the biggest companies are right now are conglomerates and they have so many different lines of business. Think of Google who has like five business units yielding over thirty billion, you know, y with crazy revenue, crazy earnings. it’s hard to say. I don’t know. I think
You already mentioned Microsoft in terms of their power in the industry has come down a lot and we know software’s been getting hit with everything in AI. A little bumped back in software recently. I think it’s something like that. I mean, NVIDIA showed Jensen the announcement last week, I think, where they’re trying to expand their options. They came into CPUs. Obviously, their skill has been that led to this run up, has been more like GPUs. Sure, graphics.
Noah Brooks (25:40.075)
so yeah, it was like a Shah across about to maybe like would be Dell and Intel doing CPUs kind of Dell’s more servers. Servers. they had a massive jump last week, right? Jumped a hundred points. Thirty percent. Yeah, in one day. I I think it’s companies that don’t diversify that will have issues that just rest on their laurels and rely on one thing.
So I don’t know. That’s hard to say. That’s a great question. What we should certainly be on the lookout for. I you know, prior three, four years ago I would have said intel. Yeah. But we all know an injection of cash from the government and now I don’t know, maybe some deals that people have done with them to garner favor a little bit, save them and now the stock price has been incredible in terms of the movement this year. yeah, that’s that’s a great thought exercise to run is
Sort of those large idea things like what’s going to be gone, what’s going to decrease largely in value, or and then the alternative, the other side of it. Well, you you see those those graphics that go through time and it lists the you know, the top ten companies in the S P five hundred. I mean you remember Exxon and Coke, yeah. No, I was gonna say Kodak. Kodak gone. Yeah. I think they still try I was like a case study they did in college. It was like Kodak, what not to do.
Right. Yeah. One trick pony. Mm-hmm. not getting diversified enough. So something interesting that happened over the last Blockbuster. boy. Well, you know, they could have been the best streamer in the world. They just either you know, for for whatever reason, they they didn’t do it. how about Sears? Yep. They had a catalog in the early nineteen hundreds, late eighteen hundreds, and they should have been the next Amazon, right?
Yeah, that was a management mess up where I think they put themselves in a bad place with of obviously they didn’t move to internet like you you s clearly said there with the Amazon, but the pension issues ultimately are what sunk them. Yeah. And they didn’t they didn’t their management team didn’t calculate things outright. That’s another benefit we have to the companies around right now is I really think the management teams that are in place at these S P five hundred companies are just so much more capable than maybe they were in the past, where maybe
Noah Brooks (28:03.458)
They were experts in what they knew in the past, but they didn’t have the whole picture and didn’t have all the teams in place to do it now. There’s just so there’s such a consideration for every part of the business and everything is accounted for. Everything’s under a microscope. And I think the management teams are the biggest blessing to a lot of these big companies. So one other thing that happened in the last few weeks, Ford, I don’t know if you remember them.
They jumped about fifty percent and not on autos. It had nothing to do with autos. It had to do with energy, where they’re starting to get into batteries and you know, home batteries and just bat battery and energy storage in general. I don’t know how that’s gonna play out. Stock moves have their own gigafactories, is that what you’re saying? Right? Yeah. I mean, that’s kind of interesting because y you know, they’re not gonna they’re not gonna double, triple, quadruple on autos. Mm-hmm.
Right. I mean, it’s it’s a it’s a race to zero in manufacturing and margins. The margins on these these cars have been shrinking and shrinking and shrinking. We now have the potential threat of Chinese cars coming into play. And obviously we’ve talked about Tesla a million times on here, and and electric cars in general. Ford is not having a lot of success in the electric vehicle range realm.
They just retired their F one fifty lightning, right? The the electric car. To me, in ten or fifteen years, most everything is gonna be electric. And the big gas guzzlers or even the the highly efficient gas engines, they’re gonna be a thing of the past and they’re only gonna be on big you know, indust industrial vehicles. speaking of industrial vehicles, who was the c what was the company
That was it Rivier, the they man they were doing the big trucks, the electric trucks. The fraudulent one? Yeah. gosh. Well, that’s funny because Citron and Andrew Left who exposed them. Yeah. Andrew Left just got I guess he’s getting sentenced. He was found guilty of manipulation. he was a noted short seller, Citron Research, right? Yeah. And
Noah Brooks (30:27.564)
Yeah, his court case just came down. Up to twenty-five years. It was Nicola. Yes, that’s right. Right. So so Tesla where they were rolling it down and they they did an investor video where it’s on a down climb and made it look like it could actually run. But really they just use gravity. They you know, you should have known. I mean, Nikola Tesla, very very famous inventor, died penniless, probably had, you know, some disease or something. But Tesla is named after him. And then they’re like, Well Tesla’s already taken, we can’t make Tesla two.
So let’s just call it Nicola. and they they didn’t have any products and they burnt through, you know, hundreds of billion hundreds of millions, if not billions of dollars of of investor capital and they didn’t have a working product. Yeah. Yeah. But and and Andrew left was spot on with that criticism and that short sell, short research. You don’t get a pardon. maybe.
I don’t know. There’s been a lot of crazy. The president’s old buddy Elon doesn’t like shorts, as you know. Remember, remember the Tesla shorts that he did? They’re really short shorts because he didn’t like the people who were shorting Tesla. Good times. Speaking on on that same breath, talking about Ford branching out and trying not to become a dinosaur. Google, huge conglomerate, partnering with Blackstone, and they’re basically going to use Google’s TPUs. They’re going to try and create their own data centers effectively in their
AI their own AI cloud server business. think of like a core weave or like a Nebius, something like that. And they’re like, Well, why would we rely on them to buy our chips and to run this? And why don’t we just create the demand? We have all the connections in the world. We can just sort of skip them in this loop and you know, they’re integrating vertically now even far even farther. Sure. Well, I it’s kind of like FedEx buying their own planes. Yeah. Right. Why wouldn’t they?
Or or ups buying their own planes. I mean, why would we pay someone else to all this stuff and we can do it ourselves? And and and that to your point though, is that management style is like, well, where can we pick up 50 basis points of margin? Where can we pick up you know 10, 20, 100? And I I just want to go back to this because I hear lots of people saying that, you know, this is reminiscent of the bubble in internet stocks.
Noah Brooks (32:48.429)
in in the two in the late nineties and early two thousands. And to see some of these memory manufacturers jump so much in such a quick period, it does give me a little bit of consternation. Certainly, you know, people are like, should I buy it now? And I’m like, man, that is a that is a tough call. You know, if if you liked sand disk at 800, do you like it at 1800, right? I mean that that is really a tough one.
The fact of the matter is that these companies are making money hand over fist and the earnings are growing at astronomical rates that we have not seen before from such you know established companies. It’s one thing to start out with $20 million in sales and double, triple, quadruple that, but it’s another where you have, you know, hundreds of millions of and billions of dollars of sales and then to be able to compound on that dramatically. And so
You know, I looking at some of the the forward PEs, and I I know people get hung up, well, that’s not the right way to value it, but when you look at the S P five hundred for two thousand twenty-seven, right, which is next year, we’re under twenty on the S P five hundred PE for next year. I mean, is it higher than it’s been? A little bit, but you know, 10 year average, it’s just a it’s just a tad higher than that. it doesn’t seem bubblish to me.
Yeah. That’s because those earnings are so good that it’s, you know, making those forward valuations not too bad. Yeah. Even the NASDAQ trading at twenty-three almost almost twenty-four for two thousand and twenty-seven. I mean, it’s higher than I’d like it to be, but it’s not bubble. Yeah. And they’re counting on these massive increases in earnings over over time.
And I think if you going back to 2000, March of 2000, I think was the high. we made it back up in September of 2000. But realistically, the the whole premise kind of fell apart because they w the growth just slowed down. And I think people are waiting for that metric that says, well, we’re gonna be able to do what what we’re doing now with a lot less capacity.
Noah Brooks (35:10.347)
Right. And and to me, that could probably be the only thing that would in the short term to slow this market down, or at least in in the chips and AI computing power. I doesn’t seem like it’s gonna happen otherwise. Yeah. Now I I don’t I don’t know that any company can grow exponentially indefinitely, right? Like that’s that’s not a thing. It doesn’t happen. there’s always boom and bust cycles, and there’s a lot of cyclicality of the entire thing.
but it doesn’t seem like we’re in the eighth inning. It seems like we’re in like the third inning or fourth inning here. I agree with that. Yeah, this is a CapEx wave. Ex and it’s not without reason. Like you said earlier. Like every data center out there is being fully utilized. All the chips, all the server racks are in use. They’re not just like turned off, conserving energy waiting to be run. They’re being run. That’s why there is
fifty hundred different major data center projects across the country that are awaiting to be approved and awaiting parts and components to get up and running. It’s because everyone’s profitable right now and everything is being utilized. We’re short on compute. So so going back to a few data points that we have coming out recently and I should say that later this week we’re gonna have a jobs report. So we’re really gonna see you know what happened obviously the jolts.
was up eight hundred thousand, but we’re gonna see how many people actually got employed. That’ll be pretty pretty healthy for us. but we had a personal savings rate that came down in the most recent report. historically, since nineteen fifty nine, personal savings rate was about eight point four percent, meaning how much of of your net are you putting away or are is in aggregate everybody putting away? do four one K contributions count towards that? You would think they would. How’s
How does the number get so low? You know, I don’t I don’t know. That is that is one question that I I I don’t know. Maybe we can come back to that. Yeah. You would think that it would, but yeah, I don’t know. And personal savings rates kind of like the shock absorber. You know, how much can people, I mean, if they’re putting a lot into savings, that means if if something happens that they don’t have to put in a savings, and that’s the shock absorber, they can they can utilize it. pre-COVID average was about 7%.
Noah Brooks (37:30.315)
The pandemic peak was over 30%. I mean, it was only for a few months. and then, you know, January’s number was 4.3, which is reasonably healthy. And then the April number was 2.6%. So this is something that is is a little bit concerning for me. It’s on my mind. but if you start to see that well, I mean, it it is definitely trended down in the last five years or so. But if you start to see that continue to go down.
Or possibly turn negative, which it has on occasion, that to me would be a pretty poor economic indicator. Yeah. Just prior to COVID, I know had gotten down to this range as well. I think it was a tad lower at one point. And then we had one spike after, I think, which was a bit lower after COVID as well.
COVID and and those stimulus payments, huge outlier because not only did they close everywhere where you could go spend, go restaurants, go have drinks, things like that, but then they gave you thousands of dollars potentially. Yeah. Depending on your income level. So you see the huge spike upwards to what do you say? Thirty percent it was? Over thirty. Yeah. Over thirty. but yeah, if you take out that blip in the data,
It’s we’re low. It’s been yeah, it’s been trending lower for for a long time. Even if you take out that blip upwards. Yeah. Yeah. That to me is a little bit disconcerting. I I would definitely say that. So that’s something that we keep our eyes on. what else happened when I was away? there was a White House summit in China. So I have to imagine that everybody’s all good, everything’s worked out, right? What happened? Not too much. I mean, I guess we’ve backed off Taiwan support a little bit.
at least, you know, in the papers and the talkies on, you know, at least on T V and everything, we’re not being so outspoken support of Taiwan. I’m sure that’s a major thing. other than that, I don’t know. They promised they weren’t going to sell weapons to Iran or weren’t But Iran we had a report this week that Iran was utilizing Chinese drones.
Noah Brooks (39:45.638)
Isn’t that like a red line? Yeah. No? No. Are there any red lines anymore, Chris? I don’t think so. Everything’s like, we didn’t know. We thought they were gonna do one of those firework drone shows with it. We didn’t know they retrofitted it for war. Mm-hmm. Mm-hmm. Okay. speaking of giving money, you said in in COVID we we were giving money. tariffs are back, right? Not in the sense that they’re adding tariffs, in the sense that.
they were ruled you know illegal and the government now has this tariff portal and they have to give the money back. There were about three hundred companies that joined a class action lawsuit against the government. And the current administration is saying, well, we only need to give back the money to the companies that filed the lawsuit. Federal recourt, federal court says a little bit different.
They said no, everybody’s got to get their money back. Anybody who requested it has got to get their money back. So we collected about a hundred and sixty-six billion dollars in tariff revenue. We’ve paid back another twenty-two billion of that one sixty-six, and there’s a lot more to go. so that is that is leaving the coffers. I bring that up because I saw a report yesterday that said the interest on.
The national debt is now three counted one, two, three billion dollars a day.
Ha da. It’s getting heavy. Yeah. How are we going to work our way out of that, Chris? We gotta pray for some productivity boosts. I mean, we’re going through the biggest product productivity gains that we’ve seen since the 90s. In theory, productivity gains in the future should be completely substantial. Yeah. Right now, I think if you look at the economic science, the productivity numbers haven’t been as robust as we would think they should be. in the future, a lot of
Noah Brooks (41:47.106)
manufacturing we would anticipate probably done and assisted with humanoid robots, things like that, at the expense of us though, humans, laborers. we’ll see. I I mean we we need more productivity, you know, continued earnings, obviously strength. That’s the only thing that’s going to get us out from this in the end. And I don’t know if there’s any level that can truly
Ever get our debt to zero, but all we need is for it to stop going up at the rate it’s going up. If we can get like a little hockey stick action where it starts going. Do you know what would be helpful for that? Is is if we had a balanced budget. Right. That would help. And we weren’t running a deficit. Yeah. I mean, we have been running deficit deficits in the US budget essentially since Clinton. Well, no, Clinton Clinton balanced it. I said since Clinton. yeah, since Clinton. But
nine eleven, right? That’s that’s where it all fell apart. And you know, for for defense and coming together, it was like it doesn’t matter if it’s if it’s a budget deficit or not. And then that transpired into global financial crisis. And we’ve been running these deficits really since 2001, since 2002. sometimes they’ve gotten a little bit bigger, sometimes they’ve gotten a little bit smaller, depending on the overall situation. but the first step
in in you know making that that hockey stick for that number not to go up is stop overspending yeah and collect some more revenue. Now I I I think people hate to hear the collect more revenue part, right? Because that really means taxes. but we are, you know, we’re not in a spot where it’s unsustainable at the moment, but we certainly could get to a spot that it’s unsustainable. Mm-hmm.
I don’t have kids. Your kids are gonna be paying that debt for a long, long time. Yeah. I mean, I’m thinking about the social security cliff at twenty thirty-four or whenever it is. See what we’ll do then. They screwed the pooch on that. We’ve talked about that many times before. speaking of someone sort of having to face the music a little bit. boy. Michael Saylor and Strategy.
Noah Brooks (44:05.299)
Selling some Bitcoin for the first time since 2022. First time ever? Yeah. Well, since twenty twenty two. And yeah, Bitcoin’s fallen below seventy thousand. So if you have your life savings in Bitcoin, we will say a prayer for you. Well, I mean, listen, if you have your life savings in Bitcoin, you probably didn’t buy it at a hundred thousand. Hope not. Right. You probably bought it at twenty thousand or ten thousand or something.
So it’s just going down a little bit. Those there’s those are drawdowns that happen. But since the ETFs came out and whatnot, people have piled in since the ETFs have come out. You know, most likely underwater. I I would say, yeah, the a lot of retail investors that bought it through ETFs are probably underwater. Yeah, that doesn’t that doesn’t bode well. what do you what do you think’s gonna happen with that? Is there a use case for Bitcoin that it’s gonna make make make it rally?
I don’t I don’t think we’ll ever use our like Apple phone like we use Apple Pay or something like that or like like we use our credit card. I don’t think there’s a scenario where we use Bitcoin like that for like a transfer of value. I think it has to be a store of value, a scarcity thing. And despite the debt doing like what you just said, it’s not going up in value right now. I know gold has topped out kind of, obviously. We saw that.
Historic little run. It was a very quick run for gold, moved up substantially, and now it’s sort of topped out. Not surprised at that. Went a little too far too fast, in my opinion. And but Bitcoin struggled, you know, even more. Yeah. Well, it seems to me, I mean, if I had to guess, I would say people are selling Bitcoin to get into semis and and the the memory. It’s the new hot thing. Yeah. The hot flows are yeah, out of those style Bitcoin type things.
into Sammy’s AI story, memory. Memory, right. Yeah. Absolutely. I don’t necessarily think that’s bad. I don’t think Bitcoin’s going to zero anything. I just not sure. It’s down to about sixty five thousand. The eighteen month low, year and a half low was right around sixty two eight. So that would be the line in the sand from a technical perspective. If it drops below that, like kind of look out below. Yeah, for sure.
Noah Brooks (46:22.209)
Thankfully, there hasn’t been a lookout below scenario with SpaceX. Obviously, that’s the big news coming up right now. SpaceX. Yeah. And the valuation obviously under scrutiny. Makes sense. We’ve talked about before. They have several business units, some very profitable, some with no competitors. And then like the Twitter X segment that is not profitable. Right, right. Totally replicable. but hey.
The thing I’ve been seeing on social media, which drives me nuts, is people saying, like, this valuation’s insane. It’s going to bring down the market. You know, $1.75 trillion, $2 trillion valuation that has to come from somewhere. They’re going to sell out of all the big guys and it’s going to bring down the market. They’re going to sell out of Tesla. Tesla’s going to go down 50% because of this. And it’s the most ridiculous thing I’ve ever heard because they’re doing three to five percent of the float.
So only three to five percent of the SpaceX shares are coming out in the IPO, which is barely anything. It’s depending on the valuation you give it, forty-five billion to a hundred billion, that’s one quarter of Berkshire Hathaway’s cash pile. Yeah. That’s not even talking about retail the seven, eight trillion we have in money markets, all that. So the fact that you think forty five billion
To a hundred billion of liquidity is gonna bring down the big guys because you have to sell from something to go into it is the most ridiculous thing I’ve ever heard. We we can debate the valuation all day. Happy to do that. Sure. But the IPO, the liquidity provided that’s gonna be necessary to buy those shares is minimal compared to, you know, historic IPOs, which are I think more in like the fifteen to twenty percent range. And think about like the massive companies like Amazon and Google, you know.
Their current floats like 90% plus. So yeah, much ado about nothing. Don’t listen to those random accounts on Facebook or TikTok that are telling you this is gonna bring down the market because we need to somehow find 45 billion of liquidity to buy these shares. So there’s such a small amount coming on. that’s by design, of course, right? And I would imagine that that is to, you know, because there’s so much demand for it.
Noah Brooks (48:42.529)
To make sure that it goes up the first day. Like if they had put too much out, you you don’t know what’s gonna happen. Yep. So I you know, I I have had lots of people ask me about SpaceX over the last few weeks and and months. I just don’t know what to think. You know, for because of the valuation side, like from the cult side, yeah, I mean three to five percent is saying people up for a short squeeze. Anybody who’s like, no way, this is worth two trillion, I’m going short on day two.
They could get blown out of the water because there’s only three to five percent float. I mean, Elon could buy that like twenty times over just to blow out the shorts. As we know, he doesn’t like shorts. Could he could he do that? yeah. Well collateralized all those other shares he has. I don’t know. I don’t know about that. He he would try. Yeah. He w he would definitely try. well that’s coming. What’s the date of that? The twelfth is the IPO. Yeah. So next week. Next week.
so we’ll we’re not gonna be back here until after that. So we’ll we’ll have some dialogue about that. I imagine that CNBC and Bloomberg and and all the financial comp media outlets are gonna have a day with that and bunch of engineers and rocket scientists about to become billionaires, I think. Yeah, absolutely. I mean, if you work there for the last five or ten years, you are gonna get a payout and it’s gonna be And that blue origin test fire explosion, I mean
Not good for the industry or anything, but like I’m sure Elon was just like, hmm, darn, I’m the only person who can reliably send out rockets. I’m sure he’s really upset over it. you know, Blue Origin is interesting because they they don’t really have a lot of other things. They’re one trick phone, kind of yeah. They have space orbit and you know go into space, but they don’t really have anything else. there’s no Starlink or anything like that.
Just Starlink audience. No Twitter. No, no Twitter. No XAI. No grok. No XAI. None of that stuff. and they’ve had they’ve had some setbacks. And I I don’t know what Jeff is thinking about that, Mr. Bezos. Space is hard. That’s a line from Elon, isn’t it? Yeah. He’s not wrong. He’s not wrong. He’s not wrong. All right, everybody. we appreciate your time. Thanks for listening, listening to us today. as Mr. Buffett says, don’t
Noah Brooks (51:03.009)
Bet against America, everybody. We will see you next time on The Market Enthusiast. Thanks so much.
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