0:02 You got to be flipping my flapjacks.
0:06 $3.9 million plus public right back to
0:08 unbelievable the move on Friday.
0:09 Obviously, a lot of things I want to
0:11 react to in this video. One of the first
0:14 things I'll react to is do I believe in
0:16 the rally we had on Friday. Do I believe
0:18 that's sticking? Do I believe this is
0:19 going to continue for quite a while?
0:21 Those sorts of things. Okay. So, I want
0:22 to speak about right that right off the
0:24 top. I mean, the moves were were insane,
0:26 right? Honest stock was up over 11% on
0:29 the day. SoFi was up over 7%. Revolve
0:31 RVLV was up over 6%. Estee Lauder up
0:34 over 4% and I had ton of stocks up 2,
0:36 3%. And everything was going so perfect.
0:39 Even Dolingo put options made me money.
0:40 Duolingo stock must have been probably
0:42 the only dang stock in the whole market
0:44 that crashed while every other stock was
0:46 going up. Like literally like everything
0:48 was working in my favor, right? Duelingo
0:51 stock down 4% on the day when everything
0:53 else was um blasting higher, right? And
0:55 so I also want to talk in this video uh
0:57 toward the beginning about kind of this
0:59 sort of notion out there, right? Rising
1:00 subscriber numbers are one of the
1:01 clearest signals that a platform is
1:03 improving and becoming more relevant. Um
1:05 you know Duelingo, the numbers, the
1:07 growth they've shown there like is it
1:09 real, right? Is it lasting? Uh I want to
1:10 speak about that in this video and kind
1:12 of give a little bit of a warning out
1:13 there as somebody that's been in this
1:14 market for a long time. It's not saying
1:17 a lot of companies come become the big
1:19 things and then uh falter, right? Tom
1:21 Lee. Tom Lee was on CNBC yesterday
1:23 speaking about his views on the market.
1:24 So looking very forward to react to that
1:29 one. The professor Jeremy Seagull, he
1:31 was on CNBC yesterday speaking about uh
1:33 his views on where the market's headed
1:34 from here. So looking forward to
1:36 reacting that one. Oh man, we got the
1:40 Dean Evaluation Ashwath talking about
1:42 markets will move higher until risk show
1:43 up in earnings in the economy. Looking
1:45 forward to reacting that one. Share my
1:47 pins and perspectives there. So yeah,
1:48 action-packed video folks. Only one
1:50 thing I need from you guys. Hit the like
1:52 button. If you could just please hit
1:53 that thumbs up button. That's all I need
1:55 from you. Please do that for me.
1:56 Additionally, if you want to be
1:57 subscribed to the channel, you can
1:58 certainly subscribe. I think we're over
2:01 106,000 subscribers on the sub reaction
2:02 channel. And I'm back home back in
2:05 Vegas. Thank goodness. I don't want to
2:07 go anywhere for a while, man. I I've
2:09 been doing so much traveling. I was in
2:12 Mexico, then I was in Georgia, then I
2:14 was in North Carolina, I was in New York
2:16 City for quite a while, then I was in
2:19 Arizona. I'm just happy to be home.
2:20 Okay, listen guys. The first time I'm
2:22 going to announce this big deal we got
2:24 coming up eight days from now, September
2:26 1st, Labor Day, we're going to do do a
2:29 one-day sale for my highest end Patreon
2:32 tier. That Patreon tier is usually $125
2:34 for access to that one. That's access to
2:36 my become a master stock market course
2:38 as well as the moves I'm making in my
2:40 Patreon portfolio each week. Plus, you
2:41 get access to that particular Discord
2:44 chat there, the Stockhub uh Discord
2:45 chat. So yeah, if you want access to
2:47 that, that will be the pin comment down
2:49 there here today and we'll send over the
2:51 deal when it drops 8 days from now.
2:53 Okay. So, you know, before we get
2:55 rolling here, what's my feeling on the
2:57 market? Do I think Friday's move was
3:00 lasting? Here's my take.
3:04 I distrust it. I distrust it
3:09 meaningfully. Here's why. Many times,
3:10 I've been in this market 17 years,
3:12 watched so many of these Fed presidents
3:14 speak, right?
3:18 What I see a lot is Fed president will
3:20 come out say blah blah blah market will
3:22 make a move big move many times up or
3:25 down. Okay.
3:29 And then a day you know a trading day
3:31 later or two all a sudden you get like
3:34 the real reaction. And so a lot of times
3:37 you cannot trust the initial reaction.
3:39 Same way as if the market went down big.
3:42 I wouldn't have trusted that either.
3:43 Like if the market was down big, I
3:44 wouldn't have trust that. I' been like,
3:46 "This market might come snapping right
3:49 right back." And so when I see the
3:52 market have that insane rally day on
3:53 Friday, I'm like, I don't know if I
3:55 trust it, man. I'll just be completely
3:58 honest with you guys, right? And but I
4:00 also kind of a little worried about us
4:02 having like a meltup rally all the way
4:04 into that first rate cut and because
4:06 everybody thinks it's going to like be
4:07 skyrocketing after the first rate cut
4:09 comes and then I'm like watch all a
4:10 sudden after that we get a major down
4:12 cycle in the market, right? So, you
4:15 know, I don't trust the whole I don't
4:16 ever trust when the stock market's
4:20 moving upon what somebody in the Fed is
4:24 doing. Never trust it. Never trust it,
4:26 man. because I've seen it before where
4:28 you know they signal this or and the
4:30 other part I don't trust about this
4:33 whole thing is I I've listened to so
4:35 many Fed presidents over the years what
4:38 Janet Yellen uh Ben Bernaki
4:40 uh Jerome Pal I listened to so many of
4:48 I what I witnessed with Jerome Pow on
4:52 Friday was not a super dovish Jerome Pow
4:53 like I just walked away feeling
4:55 differently than I guess Wall Street was
4:57 feeling like they made out like he's
4:58 like the most doubbish man ever. He's
5:01 about to cut 100 basis points here. I
5:02 just walked away not feeling that. I
5:04 felt like that was a man still weighing
5:07 all his options, right? He left the door
5:10 open to rate cuts, but I I don't know,
5:11 man. It wasn't as dovish as the market
5:12 took it in, at least in my personal
5:14 opinion. So, the whole situation's
5:17 weird. I I don't really trust it. Um
5:19 would it be shocked if the market got
5:22 hit this upcoming week? I wouldn't be
5:23 surprised. Like a lot of times the the
5:26 the market does the opposite of whatever
5:29 that initial move was. And so like if
5:30 the market faltered this week, I
5:32 wouldn't be surprised at all. On the on
5:34 the flip side, if we rally all the way
5:36 into the September cut, I'm going to
5:38 grow very skeptical. I'll grow very very
5:40 skeptical. I'll need to, you know, hedge
5:43 up a little bit more. Okay. Now, do
5:45 little dingo. What's going on here with
5:47 this stock, right? There's clearly an
5:51 issue when you got like it seems like
5:53 every stock in the market going up and
5:57 then Dolingo little dingo goes down 4%.
5:59 I would be a little concerned about
6:02 that. Anytime a stocks that weak when
6:03 the market's that strong and be like
6:06 what's going on here? Okay, so here's a
6:08 important factor that you got to take
6:09 into account as somebody that's been
6:11 doing this for 17 years. How many people
6:14 you know been picking stocks for 17
6:16 freaking years? It's ridiculous, right?
6:18 Listen, I watched a lot of companies
6:22 grow and become big in in a very niche
6:25 space. Okay, GoPro was a good example of
6:29 this. GoPro was growing revenues. 2, you
6:31 know, $230 million, then they grew to
6:34 $52 million, $98 million, you know,
6:38 $1.39 billion of revenue, 1.62 billion,
6:40 and then they peaked, right? And at this
6:42 time it was like, oh, everybody's going
6:44 to want an action camera. This market is
6:46 just so huge. Everybody wants an action
6:47 camera. Everybody wants an action
6:48 camera, right? No different than the
6:49 Dolingo, little dingo thing. It's like,
6:51 everybody wants to learn a language. No,
6:53 they don't. No, they don't. Okay. And so
6:55 eventually, you reach a saturation point
6:57 even in these niche markets. And you
6:59 know, you just have trouble growing your
7:01 business anymore after that. Uh look at
7:03 what happened to GoPro's annual
7:05 revenues. Right today, they do $800
7:06 million. It's not like the business
7:10 disappeared. It didn't go bye-bye. It
7:11 wasn't like they went bankrupt and they
7:14 went out of business. No, no, no. just
7:16 it's a very small business. It's a very
7:18 niche business, right? Fitbit, another
7:20 great example. Like look at the Fitbit
7:22 users, monthly active users over time.
7:25 They went from 6.7 million, 14.9
7:28 million, 23.6 million, 29 million, 33.8
7:31 million, 38.3 million, 40.2 million,
7:34 41.5 million. And Fitbit, that was a
7:35 device that, you know, people were
7:36 making an argument back in these days
7:39 when they had that insane growth. People
7:40 were saying like everybody's gonna have
7:42 a Fitbit because it's, you know, it
7:44 tracks all your health and like why
7:45 wouldn't you have a Fitbit? Every person
7:47 on this planet's gonna have a Fitbit
7:48 eventually, right? And that was an
7:50 argument that was being made. And when
7:51 it had these insane growth rates, like
7:52 people believed it. Like, dang. Yeah.
7:54 Yeah. Yeah. They only have 15 million
7:56 users. Everybody should have a Fitbit.
7:57 They're going to go to a billion users
7:59 or billions of users, right? And what do
8:01 we know? Fitbit peaked. It peaked in a
8:03 major major way. Now, what happened to
8:05 Fitbit's valuation? Well, back in the
8:07 days when people were of the belief like
8:09 everybody's going to have a Fitbit or a
8:10 huge amount of people are going to have
8:12 a Fitbit, right? Fitbit's valuation was
8:15 around $10 billion market cap on
8:17 Fitbit's company, right? And fast
8:19 forward a couple years later, $1.4
8:22 billion market cap.
8:25 $1.4 billion market cap. Went from 10,
8:27 you know, stock fell 80 plus%. People
8:30 like it peaked, right? It peaked. And it
8:32 wasn't like actually users peaked at
8:33 that particular time because users
8:35 actually kept going up for quite some
8:37 years after that but people were
8:40 realizing like oh this niche market is
8:41 you know it doesn't have much growth
8:44 left and that's when you get a major
8:46 valuation you know kind of rerating in a
8:48 stock and it is brutal to go through
8:51 that because the issue is you never come
8:53 back. That's the thing like Fitbit never
8:55 came back to that $10 billion plus
8:57 valuation. If Fitbit was a public
8:59 company today, a standalone public
9:00 company, they ended up getting bought
9:01 out by Google. But if they were a
9:03 standalone company today, they might
9:06 still be around honestly, but what would
9:08 their market cap be? 1 2 3 billion,
9:09 something like that. It never would have
9:11 gotten back to that 10 billion plus
9:12 dollar valuation it used to have back in
9:14 the day, right? So that leads us to
9:18 Dolingo little dingo here. Okay, the
9:19 stock's already been hit. The stock was
9:21 at 500 something. We got the first
9:24 initial scare, right? that sent the
9:26 market cap down to where it is now in
9:28 this $15 billion range. Here's a deal,
9:30 okay? When we get the second scare with
9:32 the stock, the valuation will fall in my
9:34 opinion to $10 billion. And then when
9:36 the third scare comes, $5 billion.
9:38 That's my opinion. No, maybe I'm
9:40 completely wrong. Maybe that never
9:42 happens, right? Maybe it never gets
9:44 scares. Dolingo dingo just grows to
9:46 become a big dingo and it just, you
9:48 know, everybody in the world wants to
9:49 learn a language and everybody in the
9:51 world wants to learn chess, right? And
9:53 by the way, from what I've heard, I've
9:54 looked at a lot of reviews of Dualingo.
9:56 It doesn't actually teach you very well
9:58 um how to actually learn a language.
10:00 From the reviews I've looked at, reviews
10:02 I've looked at, people are like, "It
10:03 doesn't like if you want to actually
10:05 learn a language for real, don't don't
10:07 do Dualingo. Do something else." Right?
10:09 Now, in regards to this, I used to own a
10:12 company named King Digital, right? King
10:15 Digital was a game company. They made a
10:17 fortune of money. Oh my gosh, did they
10:19 make so much money. And they had all
10:21 these very addictive all kind of like
10:23 Dualingo Little Dingo. All these very
10:26 addictive games, right? Which Duelingo
10:27 is kind of more of a game than actually
10:30 learning, right? And Candy Crush, Candy
10:32 Crush, Soda Saga, and all these other
10:34 games they had. Oh my gosh, Paradise
10:35 Bay. And they had a bunch of these
10:36 different games. They were so popular
10:38 and their user growth was just
10:42 astronomical, right? And then like all
10:45 companies, they started to reach a peak,
10:46 right? And then they just started to
10:47 slowly go down, slowly go down. and they
10:50 can never recover over time, right? And
10:52 you know, today King Digital, it's owned
10:55 uh by Activision Blizzard, which is now
10:58 owned by Microsoft, right? And like it's
11:01 still money-m like, you know, it's not
11:03 like it went under. It's not like it
11:04 disappeared. And that's the same exact
11:06 thing I see happening with Duelingo here
11:08 is I don't think they're going to
11:08 disappear. I don't think they're going
11:10 to go bankrupt. I just think we're going
11:13 to find out very shortly here that this
11:17 company's in a peaking process in 2025.
11:19 and it will never come back to these
11:21 sorts of prices. Now, with my put
11:22 options, I don't actually need that to
11:26 come true. That's the best part, right?
11:28 I that's just a hedge for my portfolio.
11:30 Like, if the market gets hit at all, if
11:31 Duelingo continues to get hit here, I
11:33 make a bunch of money. I'm out my put
11:35 options, cashes into long shares of
11:38 other stocks, right? But I think the
11:41 risk I'm telling you about here needs to
11:42 be considered because I see a lot of
11:44 retail investors buying Dualingo stock
11:47 heavily in 2025 this year, right? And
11:49 I'm like I I you know I'm just looking
11:51 at the company. I'm like this has all
11:53 the markings of being another one of
11:55 these type of companies. Now the the
11:56 argument I've already made in regards to
11:59 kind of like Fitbit and and GoPro is
12:01 those companies sold hardware products,
12:03 right? I already made this argument and
12:04 it kind of frustrated me because
12:05 somebody tried to debate my point. And
12:07 I'm like I already made this point about
12:09 like hardware companies are even extra
12:11 hard because you know like software is
12:12 just easier. Like Dualingo has all these
12:14 people on subscription plans. It takes a
12:16 lot hard longer for you know their
12:18 revenue to falter and things like that.
12:19 And so that's why I think Dualingo is in
12:21 a better position than GoPro and Fitbit.
12:22 But that doesn't mean their stock's not
12:24 going to go down 50 or 70% over the next
12:26 few years. So do keep that in mind.
12:28 Right now,
12:31 here's the thing with Duolingo and and
12:32 this should be like no one's talking
12:34 about this on the bull side and I think
12:37 like this you've got to take this
12:39 extremely seriously. Their monthly
12:42 active user number has started to
12:46 decline decline. That's like the I in my
12:49 opinion that's the first signal of like
12:52 uhoh like this ship could be going down.
12:54 Okay, they went down to 128 million
12:56 monthly active users from the previous
12:58 quarter. They were at 130 million
13:00 monthly active users.
13:02 that that's the first sign I believe and
13:04 I think this is also why the stock fell
13:06 from the 500 range down to the 300 range
13:10 now of like oh boy I think this insane
13:12 high valuation name is starting to peak
13:15 here right and that's why people are
13:16 already jumping ship on this one because
13:18 they realize the best days are likely
13:21 behind little dingo here but the sign
13:24 number two that we just got everybody
13:26 should be freaking out about this if
13:28 you're long and you're just like acting
13:30 like this doesn't exist I can't see it like
13:33 like
13:35 this. This next part is in even bigger
13:38 in my opinion. Okay, the social media
13:42 guru of the company, the senior global
13:44 social media manager, the one who really
13:46 built this company into like why do they
13:47 have all these users? It's because of
13:50 this lady. This lady, right? Yeah, they
13:52 got the product, but at the end of the
13:53 day, the product's only going to do so
13:55 much for you. You've got to go viral on
13:57 Instagram, Tik Tok, all the social
14:01 medias. And this lady did
14:03 one of the best jobs in modern history
14:05 for marketing of a company. Absolutely
14:08 historic job. And she's gone now. Right.
14:10 She posted this 5 days ago on her
14:12 LinkedIn page. So I'm leaving leaving
14:15 Duolingo after five unforgettable years.
14:17 8 billion impressions and even more jaw
14:20 drop more jaw drops. It's time to take
14:22 off the suit. Fresh out of college in
14:25 2020. I led Duingo's evolution into a
14:27 social first brand. turning organic
14:30 social into a growth engine that drove
14:32 waves of new users.
14:34 Yeah, we can't debate that she drove
14:36 waves of new users. Like the reason this
14:38 company is so massive because of her.
14:41 Dualingo social helped catapult the
14:44 company's market cap to nearly 7x in
14:47 just 5 years by breaking into culture as
14:50 an unexpected disruptor. It's been a
14:52 privilege working alongside a phenomenal
14:53 team that lifted me up and made the
14:56 impossible feel routine. You all taught
15:00 me how to fly and and own my power every
15:04 single day. As for what, why, who, when,
15:06 and how, I'm saving all that for the
15:07 book. I guess she's going to write a
15:09 book someday, right? So, yes, I'm no
15:13 longer Zarya from Duingo. It's I'll
15:14 mourn that for a while. For now, I'm
15:17 just Zarya. But then again, maybe
15:20 there's nothing just about it. Adios,
15:24 she says. Why would she leave?
15:27 Why would this woman leave? You got to
15:29 ask yourself that.
15:30 I'm going only come up with one
15:31 conclusion on why she would leave
15:35 Dualingo. It's that she feels, which is
15:38 my opinion, she feels like growth has
15:41 peaked with the company in that user
15:44 numbers are going to be an absolute
15:47 near impossible thing to have keep going
15:51 up. I believe she thinks the user growth
15:53 is peaked and it doesn't matter what she
15:54 does on Instagram, Tik Tok, she's not
15:56 going to be able to, you know, keep the
15:58 up these sorts of numbers and she wants
16:01 to get out while the company's on top.
16:03 That's my belief. I could be completely
16:05 wrong on that, but I have been paying
16:08 attention to stocks for 17 years and
16:09 watching all these executives leave
16:11 companies, come back to companies,
16:14 right? Get hired, get fired. I've been
16:16 watching all this. And so like a woman
16:18 like that, I'm like I don't see her
16:20 leaving. If she really, in my opinion,
16:22 if she really thought this company could
16:25 grow to 200 million users, 300 million
16:27 monthly active users, 400 million
16:29 monthly active users, I don't think she
16:30 would have left. I think she would have
16:33 kept on the ship and been like, we're
16:35 just going to keep pushing. And
16:36 remember, she she, you know, just
16:39 departed. Was it August 15th? That's not
16:41 like a usually a rash decision. Usually
16:42 you're going to plot that out over
16:44 several months. If you're somebody like
16:46 her that's a senior, you know, manager
16:48 of of all the social media marketing and
16:49 all the marketing for the company,
16:50 you're not just going to like wake up
16:52 one day and be like, I'm out of here.
16:53 No, no, no. That's going to be a
16:55 calculated decision that you'd likely
16:57 consider for a few months. She probably
16:59 let my guess is she probably let the
17:02 executive team know in July that she was
17:04 likely going to end up departing and
17:06 then maybe she had a two week or maybe a
17:08 longer than a two week uh thing and then
17:10 eventually she left. Right? So my
17:12 opinion is here that woman probably sees
17:15 that user growth is in a peaking process
17:18 and you know she doesn't want to the
17:20 last thing she she's got this insanely
17:23 great reputation right of like she grew
17:25 Dolingo to the moon. She grew it from
17:27 you know such a small user base into
17:30 this thing that had 130 million monthly
17:32 active users.
17:34 If they start going down on users it's
17:36 going to stain her reputation in a major
17:37 way. Hey, if all a sudden they go down
17:40 to 120 million monthly activives, 110
17:41 million, 100 million and she can't
17:45 recover, that totally damages her brand
17:47 and that totally damages like what she
17:48 can do like longterm and the type of
17:51 company she can work for now that she's
17:54 going out on top. Dude, this lady's
17:56 going to be able to get a job anywhere.
17:58 If you're Apple, how many millions you
18:00 want to pay her? If you're Meta, it
18:02 doesn't matter who you are. If you're
18:05 any brand in the world, you would pay
18:07 this lady millions of dollars to come
18:10 over to your company. Any startup that
18:11 like she's going to be one of the
18:19 offers she has right now. But you got to
18:22 go out on top. If things are going to
18:23 start to decline and you stay around on
18:25 that sink and ship, then you're the one
18:27 that looks like, oh, you got lucky or
18:30 you, you know, whatever. So, she's got
18:32 to go out on top. So that's my opinion
18:34 and the the longs are acting like
18:36 they're not paying attention to this. Oh
18:37 no, no, it doesn't exist. And I'm like,
18:40 dude, I mean, you should pay a little
18:41 attention to this. Okay. All righty.
18:43 Next up here, Tom Lee at
18:45 >> Funstrat, chief investment officer of
18:49 Funstrap Capital. Good day to be a bull
18:50 like yourself, Tom.
18:51 >> Yes, it is.
18:52 >> What how do you process what we just
18:54 heard? Well, I I think that it's the Fed
18:57 acknowledging that the risks now are
18:59 tilted for the labor market to be
19:00 softening and they want to head that
19:02 off, especially because they don't think
19:04 that tight labor markets are going to
19:05 necessary create inflation. That that's
19:07 a very good sign and I think it means we
19:09 have a dovish Fed again and that's kind
19:11 of a green light for small caps.
19:13 >> Small capsities are there. I mean, they
19:14 are working. Last I looked, small caps
19:17 were up three%. So, this is is this what
19:19 we need to really confirm the sort of
19:20 broadening that comes and goes in the
19:23 market? Uh yeah, because I think that
19:24 one of the things we should watch for is
19:25 what happens to mortgage rates, but
19:29 mortgage spreads are right now 360 basis
19:30 points higher than the 10-year.
19:32 Historically, it's 1.6 percentage
19:34 points. So, you could see a huge drop in
19:36 mortgage rates. That's going to help
19:38 housing, helps the financials, small
19:41 caps, and I think already the ISM, which
19:43 has been below 50 for almost 30 months
19:45 now, could finally go back above 50. And
19:46 that's a good sign for industrials.
19:48 Although we had a discussion right on
19:50 the heels of the speech about a little
19:52 steepening in the curve. Is there a
19:53 sense that the vigilantes are at least
19:56 present if not being necessarily vocal?
19:58 >> Uh yeah, and but we could also be
19:59 steepening because growth expectations
20:02 are improving as well. So this could be
20:04 like what I'd call a bull steepening.
20:06 I'm not really sure what the fixed
20:07 income terms are, but I think it's
20:09 actually a positive sign for growth.
20:11 >> The only real losers today are going to
20:12 be some of the yielders and some
20:15 staples. Would you be cautious on those?
20:17 >> That's right. I think that that markets
20:18 have been holding their breath. They've
20:19 been getting defensive. That's why we've
20:21 been bleeding for 5 days. And so now I
20:23 think there's a relief and some capital
20:24 gets put to work and it's, you know,
20:27 it's good for equities and risk assets.
20:28 >> So, all right, we need to make some news
20:30 here, Tom. Everyone listens to you.
20:32 We're at record highs now for the S&P
20:34 and the Dow. How much more can these
20:34 stocks rally?
20:37 >> Uh, I think there's a lot of upside. Uh,
20:38 especially because, you know, once you
20:41 get an ISM back above 50, it really does
20:43 argue for a broadening of markets. And I
20:45 think one of the leaders probably comes
20:47 from the financial sector. So I think
20:49 you know towards the end of the year
20:51 6,800 7,000's possible
20:54 >> led by tech still.
20:56 >> Yeah. So I think you still want to play
20:57 this week.
20:59 >> Yeah. You want to be long AI and the
21:00 crypto trade because those have been the
21:03 market leaders. So the MAG 7, Bitcoin,
21:04 Ethereum, but the broadening is really
21:06 the financials, industrials and small caps.
21:08 caps.
21:09 >> So you like them all.
21:12 Yeah, it's kind of cyclicals AI and
21:15 crypto, but not the defensives.
21:16 >> Your crypto calls have been getting a
21:18 lot of attention lately, especially on
21:19 on ether. Yes.
21:21 >> Where we were talking earlier, we were
21:22 debating whether it's the future of the
21:23 financial system.
21:26 >> A lot of people are thinking people like
21:27 you have said that.
21:29 >> Yeah. I mean, I think it's a it's a
21:30 really important moment happening this
21:33 year with, you know, the Genius Act, you
21:34 know, really greenlighting stable coins
21:36 and then project crypto, which is Wall
21:39 Street moving on to the blockchain. I
21:41 think it's a lot like 1971
21:43 when the US dollar went off the gold
21:46 standard that created the innovation of
21:48 Wall Street because they had to sort of
21:50 essentially create the synthetic dollar.
21:53 Wall Street moving on to the blockchain
21:56 is a bigger moment and I think that's
21:59 why Ethereum is essentially having its
22:01 1971 moment equivalent.
22:02 >> But a lot of people just see it as wild
22:05 speculation and fraud.
22:09 >> Yeah. You know, here's the thing.
22:10 What if I told you guys you can't get a
22:12 true peak in the market until you get what?
22:14 what?
22:16 Until you get the small caps to rally
22:18 hard and you get that blowoff topping
22:21 crypto, right? Once you get that, then
22:24 you could actually mark uh you know a a
22:26 you know topping in the market and and
22:28 potentially some pain for many quarters
22:30 or many, you know, even a year or two in
22:32 the market, right? But you got to get
22:34 like small caps just been too sleepy.
22:36 Even during this whole bull run we've
22:38 had for almost 3 years now at this point
22:40 in time. You got to get a small cap
22:42 rally. And the small cap rally, you
22:43 know, you never know how long it could
22:45 last. It could last like 3 months. It
22:47 could last like 6 months. It could last
22:49 like a year or two, right? It could be
22:51 an on andoff thing where it lasts like a
22:52 year or two, right? Where it's like
22:55 maybe we have initial like insane small
22:57 cap rally, then it takes a breather,
22:58 then we have another big bull run,
23:00 right? Um, and then maybe it falters
23:03 after that. But it's a process, you
23:05 know, like like you know that that you
23:08 you it's hard to call a major top in
23:09 them. And that's why I didn't get that
23:11 scared in April, right? You saw me
23:13 buying stocks left and right March and
23:15 April. You didn't see me like you, oh
23:16 crap, I got to get out all my positions.
23:19 Like, no, you saw me buying heavily. I
23:22 wasn't scared at all. 0% scared when all
23:24 that tariff stuff was going on. Like,
23:25 you watch all those videos from back
23:27 then, right? And I'm sure a lot of you
23:28 guys that are watching this right now,
23:29 you were watching my videos back then
23:31 and you know, hopefully you were able to
23:33 take advantage of great deals. But I
23:34 looked and I'm like, I wasn't scared at
23:35 all cuz I'm like, we hadn't even had the
23:38 signs of like an actual major topping
23:40 process, which you've got to get small
23:43 caps to roll heavy into a top. And we
23:46 hadn't even had that. So, it didn't even
23:47 feel like, oh, this is some multi-year
23:49 top and we're going to go down in the
23:51 market for a year or two. Didn't feel
23:52 like that at all. All it felt was like
23:54 was short-term drama. Everybody's caught
23:56 up in the tariff drama. Trump blah blah
23:59 blah boom right back up. Right. So
24:00 anyways, uh next one up here, the
24:04 professor Jeremy Seagull, it's great to
24:06 have you here. What do you make of just
24:09 the emphatic nature of the the market
24:12 response both equities and bonds and you
24:14 know especially I mean I look at this I
24:16 look at the the massive breath I look at
24:17 the moves in the cyclical parts of the
24:19 market and the lower quality stuff. It's
24:21 almost as if this is early cycle and
24:23 we've been in, you know, a growth scare
24:25 or something as opposed to we've already
24:26 been at all-time highs. So, how do you
24:28 read it?
24:29 >> Well, first of all, I thought it was
24:32 very dovish and I think the market
24:35 reaction is is perfectly right. Uh,
24:39 listen, a small stocks doing so well is
24:43 textbook. Small companies borrow at the
24:46 Fed rate at the Fed funds plus one plus
24:48 two. They are very sensitive to those
24:51 short-term rates, which now we're going
24:54 to go down. I wouldn't be surprised to
24:56 see a 25 basis point at each of the next
25:01 three meetings um down to the low 3s by
25:03 the beginning of next year. I I think
25:06 it's appropriate. U I've been saying
25:09 that for quite a while on CNBC that the
25:10 short rate should be about 100 basis
25:13 points below the long rate and that does
25:16 put it in the the low 3s. And um I'm not
25:18 surprised at the reaction and I I think
25:22 this means more upside for for equities.
25:23 >> Yeah. In terms of where the Fed funds
25:25 rate should be, in my opinion, the Fed
25:28 funds rate should always be around where
25:33 CPI is trending. And so let's say CPI on
25:35 a three-month trend, four month trend is
25:39 trending 3%. Fed funds 3%. Let's say
25:42 we've got a CPI trending, you know, for
25:44 three or four months straight, you know,
25:46 right around 2%. Fed funds rate should
25:48 be right around 2%. We got a CPI, you
25:52 know, um, at zero, which is rare for it
25:54 to be a zero. Fed funds rate should be
25:55 at zero. We actually had that in the
25:57 great financial crisis. I think that was
25:58 a good uh, time period to have the Fed
26:00 funds rate at zero because we had CPI
26:02 that was around zero at that particular
26:04 time, right? um if you had C if you had
26:06 CPI at 5% put the Fed funds rate right
26:10 around 5%. So that's the way the Fed but
26:12 the Fed doesn't do this. The Fed like
26:14 you know had us at five you know four
26:16 and 5% for the longest time. Fed funds
26:18 rate still does when we have a CPI in
26:21 the twos and it's just like why like and
26:23 then you know they had interest rates on
26:24 the floor for the longest time. We had a
26:27 CPI go three four five six and then they
26:28 finally started reacting. It's like oh
26:30 my gosh like how long are you guys going
26:32 to wait here? So now in regards to the
26:36 Russell Wilson here, the uh IWM, let me
26:36 show you this. I think this is
26:38 important. Everybody sees this. Okay,
26:41 look at the Russell Wilson is lower
26:43 today than it was in the fourth quarter
26:47 of 2021, right? So we haven't had that
26:49 major rally. We got to have a blowoff
26:50 top in the Russell. We got to have this
26:53 Russell go like 3,000 or so before I can
26:56 become like confident, if not 4,000.
26:58 before I become confident that oh we're
27:00 going to have like a year or two like
27:02 down cycle in the market you got to have
27:05 a major major blowoff top
27:08 >> I guess the question is I mean you say
27:09 you thought it that pal was more
27:12 doubbish than maybe we were led to
27:15 believe he would be a lot of folks felt
27:17 like he would not want to close off
27:19 various options right you have Morgan
27:21 Stanley Bank of America a lot of these
27:23 big firms do not have a forecast for
27:26 rate cuts this year which says to me
27:29 that there is a a relatively robust
27:31 counter case to the idea that we should
27:33 be cutting right now. I mean, I realize
27:34 it's at inflection points you're going
27:37 to get this disagreement. Um, but the
27:39 idea that Powell is perhaps going to
27:41 tolerate, you know, cosmetically high
27:44 headline inflation numbers uh for the
27:45 next few months, uh, you think the
27:47 market can continue to be good with that
27:48 even if, let's say, long rates were to
27:50 leak higher?
27:52 >> Well, first of all, the Fed never
27:55 forecloses anything for sure. um it
27:58 always does leave that option open, but
28:00 it's the first time I really heard him
28:04 say that the tariffs are a onetime
28:07 increase and implying that as long as
28:10 that doesn't spread to other sectors
28:13 just you know as as Steve mentioned that
28:16 we should not be looking at that
28:19 inflation and uh saying that that's one
28:21 reason to tighten credit. I've often
28:23 said, you know, tariffs are like a tax
28:25 increase. Monetary policy says you
28:29 should not tighten credit when increased
28:32 prices is caused by a tax increase. And
28:34 it seems like pretty much he was on
28:37 board with that notion. He hasn't seen
28:41 inflationary expectations uh go up. Um
28:44 you know my belief is that you know the
28:48 inflation data um in the future may not
28:50 be as important particularly if it comes
28:54 from core goods and from tariffs and
28:56 imports. He'll be looking at the service
28:59 side of it and by the way we know
29:01 housing is a big part of that service
29:04 side and that's been very soft. we see
29:06 that you know prices on on in homes
29:09 across the country are finally softened
29:11 to the point of going down I think in a
29:13 majority of states right now. So housing
29:15 even though it does get in a lag in the
29:18 CPI and the PC deflator doesn't seem
29:21 like that big component is going to be a
29:24 core a source of that service inflation.
29:26 So, I think that, you know, pretty much
29:29 that opens the door for those lower
29:32 rates and um uh I I think that's pretty
29:35 much the way it should be and um I mean
29:39 obviously anything can happen, but uh uh
29:42 the market wanted it and uh they got it
29:44 and it was it was more clear than I
29:48 thought uh he would be u like he was a
29:51 year ago. The pivot a year ago,
29:52 >> we saw a rate now. I don't know if it's
29:54 going to be 50. I think 50 depends
29:57 pretty much on what the uh August
29:58 payrolls are going to be. If we got a
30:01 negative print, it might be 50, but I
30:03 think that 25 is certainly in a bag bar
30:05 barring, you know, some sort of crisis
30:08 we we don't foresee at the present time.
30:09 >> Yeah, that seems like the safe
30:10 assumption. And I guess the other
30:13 >> I got to be honest with you guys, I'm
30:14 rooting for the market to go down this
30:17 week. I would love the market to go down
30:20 big this week. Here's why. So many of
30:21 these Wall Streeters, you know, were
30:23 coming on and just being like so bullish
30:26 and oh, you know, Pal's so dobbish and
30:27 the market loves it and all this stuff.
30:30 And I just I just I think it'd be great
30:31 if the market was down huge this week
30:34 and everybody's just like then has to go
30:36 on and like why is the market down so
30:39 big? Um well uh cuz it would they would
30:41 not know what to say. Like literally,
30:42 what are they going to flip now and say,
30:46 "Oh, maybe POW was more uh, you know,
30:47 hawkish than we thought when we
30:49 initially listened to it." You know,
30:51 it's just, oh man, it'd be so good. So,
30:53 yeah, I'm kind of secretly hoping the
30:54 market goes down big this week. I would
30:55 love that.
30:58 >> Element of of why we're seeing this
31:00 spring-loaded market response, aside
31:02 from it being a somewhat more clear
31:04 message about uh the likely rate cut, is
31:06 the setup, right? We spent, you know,
31:08 several days with the leadership parts
31:10 of this market selling off, rotating
31:13 around a little bit of uh perhaps a
31:15 reason to rethink things like the AI
31:18 trade and and whether in fact uh policy
31:22 was going to remain as uh as restricted
31:24 as it is right now. So, how do you think
31:26 the stock market continues to digest
31:27 this in terms of what parts of the
31:29 market do better?
31:31 >> Yeah. And and by the way, you know, when
31:34 when we got those PMIs from, you know,
31:36 S&P Global, that surprise on the upside,
31:39 I think a lot of people said, "Whoa,
31:41 >> Pal does have some nation to say things
31:43 are not falling apart. I'm going to be
31:46 data dependent." That did not deter him.
31:48 I think that that that was that put a
31:50 little bit more question. I think coming
31:51 into the week, we thought, yeah, he's
31:53 he's he's going to pivot. And some of
31:56 the data actually was not that weak. We
31:59 do not see the economy falling apart. We
32:02 don't see crazy strength by any means.
32:04 Uh you know I think that uh you know
32:08 Goldman Sachs and others uh uh think one
32:10 and a half to 2%. I think the Atlanta
32:13 Fed thinks 2 and a half two two and a
32:15 half% for this third quarter. That's not
32:20 a runaway economy. Uh and with the uh uh
32:24 supply of labor being restricted so much
32:27 by immigration and other policies, as
32:30 pal mentioned, any dimmunition in demand
32:33 is going to result in negative payrolls
32:36 and and rising unemployment. >> Yeah.
32:37 >> Yeah.
32:40 >> Yeah. Um
32:42 I mean, people are under the assumption
32:44 that all the time the Fed lowering
32:46 interest rates is always good for the
32:47 market. It's not always, you know, you
32:49 can even look at last year, you know,
32:51 they start lowering interest rates and
32:52 the market actually starting to falter
32:55 uh right after that, right? Uh you can
32:57 look at, you know, the great financial
32:58 crisis. They're lowering rates, lowering
33:00 rates, and the market just kept going
33:01 down and down and down and down and
33:02 down. The economy kept going down and
33:04 down down as they kept lowering rates,
33:07 right? So, you know, it's
33:09 I understand like people always assume
33:10 like the market's going to have to go up
33:12 huge when they are cutting interest
33:13 rate. It doesn't always work that way.
33:15 Many times the market can go go down
33:17 when they're actually cutting the
33:18 interest rates. It might get excited
33:20 before the interest rates cuts come, but
33:22 many times it actually falters when when
33:23 they're actually doing the interest
33:25 rates cuts. So that's something to
33:26 consider. And we've had a massive move
33:28 up in the market, you know, without them
33:30 cutting interest rates anytime recently,
33:33 right? Something to think about. Markets
33:34 will move higher until risks show up in
33:37 the earnings and economy. The NYU School
33:39 of Business, they call him the dean of
33:42 valuations for a reason. Osw great to
33:45 have you on. Perfect day for it. Have
33:48 valuations gotten a little bit stupid or
33:50 are we okay?
33:52 >> I think for the last 10 years, we've had
33:54 this conversation over and over again.
33:56 Markets reach a new high.
33:59 >> We say a market's crazy and experts like
34:01 me come on and we say, "Markets are too
34:03 rich. You got to sell." And two years
34:05 later, we repeat the whole process. Over
34:07 the last 3 or four years, I've decided
34:10 that markets maybe are more trustworthy
34:12 on this than experts are that the
34:14 markets seem to figure things out. When
34:16 you look through this year, there have
34:17 been two faces to the market. Through
34:21 April 8th, tech especially was beaten
34:24 up. The Mag 7 collectively lost I think
34:26 $2 trillion in market cap just in that
34:29 in that first 3 months. Between April
34:32 8th and today, you look at tech, it's
34:34 come back. not just come back but it's
34:35 become one of the strongest sectors
34:38 again the S&P so this is a longstanding
34:40 story and the story has legs is the
34:42 market rich absolutely is it
34:44 underestimating some of the risks that
34:47 are probably around the corner maybe but
34:49 given that these risks have to show up
34:51 in the numbers which should be in the
34:54 economy and in earnings until that
34:56 happens I think markets are holding on
34:58 and saying hey we don't know what's
35:00 going to happen so we're going to price
35:02 in the expectation that things are going
35:03 to be Okay.
35:05 >> Do you think the market is overreacting
35:08 to the Federal Reserve news today?
35:09 >> I think so. I mean, I think the, you
35:11 know, I've written extensively about the
35:14 Fed and and Fed rate cuts not really
35:16 conveying much to the market other than
35:18 something for us to all talk about. I
35:20 mean, they don't even affect the one
35:21 thing they're supposed to affect, which
35:23 is interest rates, traded rates. They
35:24 might affect the Fed funds rate, but
35:26 Treasury rates themselves have a life of
35:28 their own. So, it'll be interesting to
35:30 see if there's a Fed rate cut whether
35:33 the T-bond rate drops below 4%. My guess
35:35 is it will not because as long as
35:39 inflation stays at 2.5, 2.6, 2.7%.
35:42 The T-bond rate is destined for 4% plus.
35:43 So, it'll be interesting to see what
35:46 what the bond market does if there's a
35:48 Fed cut. My guess is it won't do much
35:50 and stocks will have to retrace some of
35:51 the upswing you saw.
35:53 >> So, what do you Okay, fair enough. And I
35:54 by the way, I wouldn't necessarily
35:56 disagree as you might have heard the top
35:57 of the show. So what do you attribute
35:59 today to then?
36:01 >> Hey, you know what? The game of
36:02 expectations keeps getting reset for
36:04 this market and sometimes just
36:06 delivering what was expected becomes an
36:08 unexpected plus. I mean happened with
36:10 tariffs. The same thing with rates. I
36:12 think for a period there in the middle
36:13 there was worry that inflation would continue.
36:14 continue.
36:16 >> Listen listen listen.
36:19 How could we forget? Did we not pay
36:20 attention to what happened to the market
36:22 before Pal's speech? Market was down
36:24 like five or six straight days. The
36:26 market kept going down. NASDAQ kept
36:29 drifting down and so we had a market
36:31 just kept drifting down. It was fearful
36:33 of what and remember what I talked about
36:34 it was either this channel or the main
36:35 channel I talked about a few days ago
36:37 and I talked about the market now has
36:40 the storm before the storm.
36:43 So the event is supposed to be the storm
36:45 but the market nowadays has a storm
36:47 before you get to the storm. And I was
36:48 explaining this days ago on the channel,
36:50 right? Either either this channel or the
36:51 main channel. And I was explaining
36:53 essentially, you know, POW's speech
36:55 that's supposed to be the big scary
36:57 storm, right? Meanwhile, the market just
36:58 kept going down. A lot of stocks are
37:00 getting hammered because it was already
37:02 in the storm. Just people didn't realize
37:03 it yet. And then by the time you
37:04 actually get to the storm, it's not even
37:06 scary anymore. We're already at the
37:07 event. It's like, oh, it's not it's not
37:09 scary anymore. So, you know, it's it's
37:10 fascinating, but that's just what the
37:11 market does nowadays.
37:14 >> Go up and rates might continue to go up.
37:16 I think part of it is expectations keep
37:19 getting reset and markets be and you
37:21 beat those expectations. Market viewed
37:23 as a positive surprise. It's a very
37:25 strange twist on the expectations game.
37:27 But it is what I think is driving the
37:28 market today.
37:31 >> Yeah. And you know we talked earlier in
37:32 the show about next week we get the
37:35 Fed's preferred measure of inflation PC.
37:37 What if that were to come in hot? I mean
37:41 I read Pal's speech three times. Pass. I
37:43 >> I'm not Listen, the market's going to do
37:44 what the market's going to do. I'm not
37:45 here to tell the market it's it's
37:47 incorrect. It's not my job. It's
37:50 obviously interpreting it one way. I I
37:52 don't read
37:53 the speech the same way the market
37:56 appears to be. Do you?
37:58 >> I No, I don't either. But in a sense, in
38:00 this case, I think the market views
38:02 absence of bad news is good news. That
38:04 the Fed that Paul did not come in and
38:06 say anything explicitly about not
38:08 cutting rates. So I think in many ways
38:10 the market is reading in whatever it
38:13 wants to read into this process. I think
38:15 um the feeling the market
38:18 >> exactly in that folks that ladies and
38:21 gentlemen is why you can never trust the
38:24 initial move the market makes cuz it
38:26 will read however it wants on that
38:27 particular day and then it can
38:30 completely flip. And so maybe this isn't
38:31 one of those situations. Maybe we just
38:33 rally hard this whole week and
38:35 everybody's just flood money into the
38:36 whole market this whole week. Maybe that
38:39 is the case. Or maybe this is like many
38:41 of these other time periods when we're
38:43 going to look at the market at this time
38:45 next week and it'll be quite a bit lower
38:47 than where it is when it comes to NASDAQ
38:49 and SP500, the Dow. Like, we'll have to
38:51 see. As a long-term investor, the great
38:53 news for us is we don't have to stress
38:55 about all that, right? We, you know, we
38:57 get great deals in the market. Sweet.
39:00 We're going to be buying, right? we have
39:01 our stocks appreciate and the market
39:02 just keeps going risk on. We're going to
39:05 make, you know, it depends on how much
39:06 money you got. Maybe hundreds of
39:07 thousands of dollars in the next week,
39:09 millions of dollars, like depends,
39:11 right? Maybe for some folks few hundred
39:12 bucks here and there. All righty, guys.
39:13 Appreciate you joining me as always.
39:14 Thanks so much for being here. If you're
39:17 looking to get that Patreon sale in 8
39:19 days from now on, September 1st, pin
39:20 comment down there. Click on that, put
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