What?

I, I just wanna s- I wanna say something.

Last week or a couple weeks ago when we had the run rate OpenAI numbers for revenues drop from 70 to 50, we had a large sell-off.

We have Anthropic today meeting with institutional investors in San Francisco to talk about updated '26 run rate numbers.

When you're moving the market on stuff like that, you should be very nervous, right? As a bull that, that, that, that tells you how fragile this trade is.

And yes, you can look at NLR, you can look at NUKZ, you can look at utilities, you can look at any of these things are all related, and what does it point to? One thing, Dan.

The reliance on this economy for this AI CapEx build-out.

So what does a stagflationary environment look for, uh, look like with equity prices?

Conversely, if the asymmetry occurs when 20% or a high percentage of the float is short, and lo and behold, you do have good news, the stock is going to rocket a lot more than you think it is.

So with the short interest, the next step would be where does it trade on an historical basis on valuation? Where does it trade within its sector? And then what is your catalyst? Why are you shorting this? What do you have? Is it just valuation? Valuation is never a great short thesis over a long period of time.

There's a reason the stock's expensive.

You might not understand it.

To Porter's point, let me flip it on you.

If you're actually looking at a stock from the long side and you're confident in your thesis, I would do two things.

If there's a high short interest on it, ask yourself, what is the short thesis? Don't say, I hate short selling.

I think we've got we got this really right and really

Mm-hmm

... he's gonna intervene in Japan and the yen and all that.

And it really comes down to one thing, and that is, uh, our US Treasury market, right? And our ability to keep yields down because we have so much to issue, and that's really the bottom line here.

And certain things you can control and certain, certain things you can't.

Whatever we're gonna do foreign policy-wise, it cause oil to spike higher and make inflation run, whatever.

But Japan in and of itself, right, as a market, um, had a, had a choice.

They can sell US Treasuries, over 1.2 trillion of them, to defend their own currency and/or buy back their bonds.

Thoughts on that?

Mm-hmm.

They should have rai- raised rates.

They didn't.

So Warsh was put in a bind that if he raised rates and Bank of Japan didn't, the yen would only get weaker, and again, self-fulfilling that US Treasury yields might move higher.

So now you have inflation, you have Bank of Japan as a seller, you have all this stuff.

What does Bessent need to do? Yield curve control.

Call it whatever you want.

What's your read on the signaling and whether or not they have enough firepower?

This guy is not out of central casting.

Well, no.

I mean, he is in, if you want, a, a...

I, I think there's an arrogance about it that, you know, he's not, he doesn't How do I put it? He talks down almost to people in a way that, "Well, you'll never understand how well what I'm doing for you, and I'm looking out for you, and we're gonna be okay." And listen, that's his job, right? He's supposed to...

Jawbone.

But the reality is you can't keep making excuses for inflation pressures arising from, uh, you know, from a war in the Middle East and say that, "Well, we're done with the war now.

Now we're gonna apply economic pressure." Well, what does that mean? That tells me still that oil's gonna remain higher.

... yeah

But help us think about the, you know, how investors are willing to basically give the benefit of the doubt after all of this run and all of these valuations, and it all has to come on the come.

'Cause the narrative, the narrative is intact, and that narrative stretches, you know, touches so many parts of tech right now.

Valuation be damned, and don't let facts get in the way of a good story at this moment.

The truth is, though, they're all correlated.

So for the most part, they're all gonna trade together.

And it's fragile in the, in the sense of what will it take or what will happen? It won't be regulatory probably.

Could ...

... by now.

Mm.

Footsie Russell, that you can come in after a few trading days.

NASDAQ, you can come in.

NASDAQ 100, 3X, the float, which will be around $225 billion or something like that as a percentage.

All that stuff's fine.

That's technical in nature, allowing this stuff to happen.

Whenever I've seen in my career, rules being e- you know, exceptional.

Mm-hmm.

Give us a little preview of, uh, what you guys talked about and who with.

Yeah, so Mike Green, who's chief market strategist and portfolio manager over at, um, Simplify Asset Management, uh, known as ProfPlum99 on X and then on Substack, Yes I Give a Fig.

And his thesis for several years, which has been correct, has been passive outweighs active as far as flows, so if you wanna try to be a stock picker, good luck, but you have to respect it.

And what he's been harping on kind of the last several months is the changes that NASDAQ is making, uh, in order to be admitted into their indices, basically to cater to the IPOs like SpaceX, and now with the S&P 500, what S&P is doing, which is changing their profitability requirements, again, to allow some of these big boys.

And I harken back to, you know, rating agencies' days of the global financial crisis where, you know, just give that triple A rating stamp of approval, let's get paid and go.

And so I asked him, is this kind of the crossing of the Rubicon start- when you start to see the rules changes, you know, within those indices? So he's been on passive.

And then the other part, Dan, is that not people, people don't pay enough attention to the fixed income passive market and what that means for treasuries.

Please help me think about this.

Do you share similar concerns?

Yeah.

All of it.

I, I do.

On all of it.

Listen, if bond yields are going up because of growth in the economy, great.

And I think you're getting enough indication that the economy is pretty strong.

I think in some ways it, it's exactly the same, and it's just making matters worse.

Mm-hmm

... of the supply chain issues, your parts, your pieces.

You've resourced into various areas.

You finally got things rolling again.

Economy's doing fine.

All this stuff's happening, and then bang, tariffs come.

Okay.

Right.

Bubba calls the, potentially the selling opportunity of a lifetime, and here's Bubba with the call.

But, but WTI at $93, what are you doing with oil, first and foremost?

Here's Danny.

I do believe geopolitical risk in general is underpriced in all commodities, you know, gold, and, and we've already seen the move there, and oil in general, and I felt that the energy sector, separately from anything going on in the Middle East, was undervalued because the belief is that oil was gonna go to 45 or 50.

Well, if you just told me that oil would, West Texas would sit at 60, I mean, look at ExxonMobil, which I've been fairly vocal on and bullish on.

They put out a 2030 plan or whatever based on $65 oil.

If those, if [laughs] $65 oil happens, it's the cheapest stock in the S&P 500.

And so I was looking at it more from just where oil is without this because these situations, and we saw already once, um, when we bombed, it was, you know, quick and, and I would say painless is probably the wrong word, but it happened rather quickly, and it kind of got pushed out at least a couple years.

Does that get you thinking that maybe, as to Jamie Dimon's point, maybe there's some other things to fall here?

Sure.

Listen, I don't think that product is suitable for retail investors for the most part, given its mismatch in duration.

Um, so that's obviously gonna be an issue.

I think to Vinnie's point, and then what you just asked on the AI trade in general, like, what impact that might have, I have never seen in my career this amount of private equity valued at this...

Where there's huge companies that we know they're going public.

A lot of companies are going public, so we're not getting a mark to market, speaking of private equity, on these stocks.

I can rattle off a bunch of OIH names, energy trade.

Uh, was that what really happened? What other data points did you look at?

Uh, there was tons of data points.

It actually began in 2004 and 2005.

If you look back, some of these companies, New Century or Predator Home Lenders, without going too deep in the weeds, you know, these companies were, um, funded by Wall Street.

Wall Street gave them lines of credit to go out and produce mortgages, sell them back to Wall Street so they could stick them and package them in CDOs, et cetera, and go on their way.

The cost to originate these loans, let's just keep it simple, let's say it was 102, so 2% over par would be the cost.

And for a while, Wall Street was paying 104, 105 for these loans, so they had a great two to three point type margin.

Well, housing aside, uh, drawing from your previous experiences, uh, do you think there is a big short opportunity in twenty twenty-six?

what's happening and maybe more importantly why it hasn't had an impact here yet

all right so a lot to unpack there so let's start with the with the belief that when the yen is weak it's a positive for risk assets because you quote get the carry trade you borrow in yen and you go put it into okay so that's been the way that people think about it what's different this time what you just pointed out is that their rates are moving higher why because they finally have inflation Their debt to GDP is basically twice of what we have.

So when you think about the fiscal bubble that's kind of out there, we had that Liz Trust moment in the UK a few years ago.

So now what's happening? It all comes down to elections.

So now the party that's in charge, the prime minister, may call for a snap election and take control of the entire parliament.

I don't know enough to be dangerous about that, but here's why it matters.

if you want to call her dovish to a degree.

Am I right to think of it that way? Or is it fact that, you know, this is a Fed chair that's going to come in with obviously a dovish bent to it by definition? I shouldn't be as concerned.

It's all business, right?

Right, what are the players gonna be? My big thing is this, you have the chips that are gonna be used, it's going to take years to build out these data centers.

By the time you can actually use the chips, those are gonna be extinct, and Amazon and Google are making competing chips.

And you have a company like NVIDIA, which I have no position in, with 75, 76% gross margins in a hardware company, that's not a sustainable model long term.

So people think NVIDIA's cheap right now, I would look at it on 27 and 28 and make that decision.

And your take on this trade war at this point? I mean, we're almost on the eve of the Supreme Court making a decision here.

Right, whether that we adhere to what the Supreme Court says or not, you know, I don't know.

Um, but I'm not a big believer in these tariffs in the first place.

So is there hope, I guess, for energy in 2026?

For sure.

Look at Exxon.

I mean, so think about this.

What these companies have been able to survive is probably too dramatic.

these stock prices have held in while oil has literally drifted to the I-50, sorry, over the course of the year.

And now with hopefully some form of peace in Ukraine with Russia, I think that's why we're getting another move down in oil.

Thoughts on that?

So I, now I want you to describe the moment on St. Patrick's Cathedral.

We realized that, like, this is, this is bad.

Like, this is gonna be over.

Like, what, how is this gonna play out? And so, um, literally left the trading desk, gave it to junior trader.

Porter and Vinny walked me out.

You know, St. Patrick's Cathedral was about one avenue over.

And Steve was at a conference down at Goldman Sachs that day, probably raising as much money as he wanted to at that point.

But I was, I was naive.

What's that

threshold? At what point? Well, Kate, I'll pose it to Danny.

Two years ago when this whole thing kind of started, if you had said that these would be the numbers and the margins would hold here, you would think that was pretty bullish here.

I'm probably the last guy that should be talking about tech.

But this is really interesting to me.

So they're on an off-reporting quarter, right? Their quarter ended.

the first month of the third quarter for many of the other companies in the space.

As this red-hot summer for the space comes to a close, Danny Moses looking forward to one big event.

Let's give us the 411, what you heard and why markets are moving your thing.

So I think the press release was as expected.

Didn't change.

you know, data dependent, et cetera, et cetera.

But in the press conference, he got asked questions to be a little bit more specific.

And he's saying that you're starting to see inflation seep in from the tariffs in June and expects to see more in September.

So that's when the market kind of took a dive in Fed Fund futures change.

What did those hundred basis points of cuts last

So let's start with the broader market.

Listen, even during the sell-offs in April, the flows were still coming in from retail.

That was the one thing that didn't obviously break.

So there's still a lot of confidence in either the longer term or even the shorter term outlook.

Peter Bookvar talked about that exactly on the podcast yesterday.

So Peter Bookvar came on and recorded on February 18th and was released on February 19th, literally the high of the S&P.

The title of his report was Are the Mag 7 the Canary in the Coleman? And he was dead right.

Is this similar to what you guys saw in terms of just connecting dots, you know, back in 07, 08, 09?

We saw that in Trump 1.0. You're

not buying that.

No, I mean, listen, they're breaking things, right? So the whole idea of finding waste and fraud in the government and getting rid of it, of course, makes sense, but you do it the right way.

You don't just go in and wreck everything in sight.

Same way with this.

So we want to bring jobs and companies back to U.S. and sent them to bring jobs and reshore them back here.

Great.

It

Is that like a long-term or a philosophical statement or just a short-term tactical thing?

Tactical, I think, is the best way to put it.

And there are ways to express that by being long certain things in the marketplace.

And then I think just being short right now, the overall market at 21 and a half times forward earnings with everything going on doesn't seem like a big risk, in my opinion.

And I think, pal, what he laid out yesterday was, first of all, the tariffs are maybe ruining a soft landing.

But the key to me, which may end up being a positive in the markets, was that he talked about the end of quantitative tightening.

And I'm not sure if people picked up on this, but He's basically going to roll off mortgage-backed securities continuously and potentially reinvest those into treasuries.

And then on betting, which I'd rather talk less about, frankly, but I'm curious why you're so sort of positive on a couple of those stocks.