The Compound and Friends: Midsummer’s Melt-Up, Robinhood, SpaceX and Palantir Report, Chips Rip, Leopold’s Margin Call

Sourced by podcast-ingest on 2026-08-14. Auto-transcribed via AssemblyAI (universal-2, en). Speakers identified by AssemblyAI Speaker Identification using the per-podcast host/regulars hints; the resulting label→name mapping is in the frontmatter. Duration: 1h06m. Episode page: (not provided). Audio: https://pdst.fm/e/pscrb.fm/rss/p/traffic.megaphone.fm/TCP9933231201.mp3.

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On this episode of What Are Your Thoughts, Join ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Downtown Josh Brown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ as they break down another massive week for the markets, including SpaceX's first public earnings report, Palantir's blockbuster quarter, and what strong Q2 earnings say about corporate America. They also discuss the recent semiconductor selloff, the rise and fall of hedge fund manager Leopold Aschenbrenner, Robinhood, the risks of leveraged investing, and Michael's bull case for Floor & Decor.

Topics include:

SpaceX's first earnings report
Palantir's explosive earnings
Q2 corporate profits
The semiconductor selloff
Leopold Aschenbrenner's hedge fund collapse
Robinhood
Leveraged investing
Michael's bull case for Floor & Decor
Josh's mystery chart

This episode sponsored by Janus Henderson Investors. Visit https://www.janushenderson.com/ for more information.

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Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management.

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Transcript

Josh Brown: Hey, everybody, Chart kid Matt here. If you're a financial advisor and instill copy pasting charts into PowerPoint for clients, we've got a fix. The same charts you've seen all over the compound can now be branded for your firm. Updated daily at exhibit A for advice dot com. That's exhibit A4advice.com to learn.

Michael Batnick: You all right?

Josh Brown: Yeah. Oh, all right, here we are. I'm sorry, I had it. I had a YouTube. I had a YouTube link open and I was looking at us on both. All right. Hey, guys. It's all new edition of what are your thoughts? It's 5pm on a Tuesday night, so you know what, what's about to go down. It's Michael Batnik and myself and all of the biggest topics in the markets that you care about. We're super excited to have everybody who's here for the live chat. Can I give some shout outs, Michael?

Michael Batnick: Go ahead.

Josh Brown: All right. Brian Grill asks, is that Kurt Russell? It might. It might be. Masterpiece says what's up, pounders? Let's say Sodak Jason has the bumblebees up for the Duncan Hive. Yup, Duncan's here. John's here too. By the way, guys, let me say, Matt Evans need a game show version of the compound. How would that work? What would that. What would that be like? I'm open to the. I'm open to the idea. What do you think?

Michael Batnick: I'm great at Wheel of Fortune Elite.

Josh Brown: All right, some shout outs to Nicole is in the chat, guys. Who else is here? Everyone. Everyone's here. And you know what? This has been an incredible turnaround between last week and this week. Like, what a difference.

Michael Batnick: The tape feels a little different, doesn't it?

Josh Brown: What a difference. Seven days and one gigantic margin call make. So pretty, pretty excited for the show tonight. We do have a sponsor, Michael, who's sponsoring the show.

Michael Batnick: Janice Henderson. At Janice Henderson Investors, we believe working together is the way to work better. I believe that too. Like combining your portfolio plans and our in depth strategy. Your valued assets and our valuable insights, your mission and our vision always working in perfect harmony to find the right investment opportunities. Janice Henderson Investors, investing in a brighter future together.

Josh Brown: All right, very nice. Nicely done, sir. Okay, I guess let's, let's do the. The elephant in the room. SpaceX reported its first quarter as a public company about one hour ago. And the conference call started 30 minutes ago. Were you tempted to jump into the conference call live or you want to experience it later?

Michael Batnick: No, I'll do. I'll do it later.

Josh Brown: I Think I'm, I think I'm going to do it tonight, but not yet, not until, not until a few hours goes by.

Michael Batnick: It's playing right this second, right here, right now. Yeah.

Josh Brown: So let's get to the, the expectations very quick. Let's get to the results very quickly. This was, I think, as good of a first quarterly report as you could have possibly asked for. If you're long the stock. We'll talk about the, we'll talk about the, the reaction on price in a second. But I mean, this is what you want right out of the gates. They did 962 million in revenue versus 835 expected. The connectivity segment, which is Starlink and the only profitable part of the business, did 4.4.29 billion versus 3.83 billion. So add that to the billion or so in space and we're talking about some decent money. And then the AI segment, 2.56 billion versus 2.18 billion expected. So between Space Connectivity I, all three were ahead of expectations. They lost a ton of money, which we know the operating loss for space was 542 million. The AI unit lost a billion and a quarter. And Connectivity actually had operating income of 1.66 billion. There's a couple of other things in here that I thought were notable. Based on the IPO, they now have over $90 billion in cash. 100 is a hundred. Okay, 36.8 billion in debt and financial leases that they've committed to, and that's up from 22 billion. So the liabilities are up a lot, but they're sitting on a ton of cash. StarLink subscriber count, 12 million. And we know that they are now signing people up at a smaller dollar amount per user because they're going from like military contracts to consumers and places like Brazil where you're just charging less. But average revenue per user is still $66, the same as last quarter. It was $85 a year ago, but that's been explained. It's not falling because people find it less valuable again. It's falling because the mix shift is changing over from professional users to regular consumers. What jumped out at you besides the things that I just mentioned?

Michael Batnick: Well, right off the bat, the. Whereas Mars, my doc, they said that they demonstrated the power of extreme vertical integration, delivering revenue growth of 92% year over year. Extreme vertical integration sounds. Sounds a little bit sexual, does it not? I've never heard that.

Josh Brown: Yeah, well, vertical integration is like extreme. Well, hear me out. Vertical integration is like farm to table like we grow our own ingredients and then we bring them into the kitchen and we make them. In the case of SpaceX, they're launching their own payloads, which are the Starlink satellites. So this is actually a very key difference between like, what a nut, let's say Amazon, Leo. So they want to do satellite phones also. The thing is they rely on other people to launch those satellites into space. Whereas in the case of Space X, the Starlink satellites are going up on a SpaceX rocket. So that's extreme. And then the AI piece which they're doing in house, so that is the extreme vertical integration of which he speaks.

Michael Batnick: Well said. Two things. Yahoo Finance grabbed this. Elon said on the call, it's not out of the question that at some point Starlink will deliver the majority of the world's Internet. That is, I suppose, nothing's out of the question. But that extremely ambitious statement. Not surprising to hear him say that. He also said, this is interesting. Going forward, we've decided to build exclusively, exclusively on Nvidia because we think the Vera Rubin architecture is the best architecture. We think it's the best AI computer.

Josh Brown: Not the most. And the most expensive.

Michael Batnick: Not. Not good enough. The Stock is at 116 after hours, down about 8% or so.

Josh Brown: Can I just make the point that it had its best day since the day it came public or something.

Michael Batnick: Well, guess what, Took back all the gains.

Josh Brown: No, I know, but like the IT front run, like it's not like it was down 5% and then fell 9%. It went up 9% and gave it back.

Michael Batnick: Okay.

Josh Brown: So I, I actually, I thought that there was a good chance that this thing would rip after the report. I'm not betting on it. I don't have any position here, but I thought they could rip it because it's such a tiny amount of shares outstanding and you already have a lot of hedging in here. A lot of short selling connected to the shareholder unlock Zero Hedge, which we've talked about.

Michael Batnick: Zero Hedge tweeted massive SPX SPC. Excuse me, shorting ahead of earnings. 95% of SpaceX stock available to borrowers out on loan account amounted to 34% short interest as a percentage of the float. Wow. And Elon said, I tried to warn them, but they just doubled down.

Josh Brown: Well, but again, I think that's people that know that they're about to have their shares unlocked and they're kind of hedging the price falling any further. They're locking in a price and I think there's a lot of Professionals in the market that are involved in that particular aspect of the trade. I don't think they're shorting the stock because they think the results were going to be bad.

Michael Batnick: I could be.

Josh Brown: Some people could be.

Michael Batnick: We'll find out. I could be way off here when the unlocks happen. I don't think that people are going to be in a rush to dump the stock at 110 bucks.

Josh Brown: Yeah, you've said that. I don't think they're going to be in a rush to. I just think that people are going to try to get money out and if the price is lower than they had hoped, so be it. Not everyone, of course. And if you're an employee there, you're probably more bullish than you've ever been, given how good the results are and how much they're growing. So those people will probably be able to hold it. But every other investor that was involved pre ipo, are they all like, gonna, gonna be like, oh, no, I'll wait till it goes back to 120? I don't think so. I think people want liquidity and if they couldn't get the top, so be it. So it'll be interesting. We, we, we're gonna see that start within two days. So that's, that's how the, the lockup expiry is written. It's two days after they report the quarter starts the clock, and then it's every five weeks there's another tranche of stock that's available until the first week of December. So I think it's just, it's all year. It's going to be more stock, more stock. And we're talking about like a billion shares at a club. Like, we're talking about a crazy amount of stock. So even if only a small amount of people decide to transact in two days, I still think we're going to get a chance to see this thing. Under 100 bucks. What do you think?

Michael Batnick: Yeah. Yeah, so do I.

Josh Brown: Okay. We should also do Palantir.

Michael Batnick: All right, let me, let me, let me read this to you. This is from Ryan Taylor, the Chief revenue officer. Our Q2 results are unprecedented but entirely unsurprising as the abrupt market shift in limbs that we've been warning you about for years is now here. We delivered 93% year over year revenue growth, our highest ever. Holy shit. The story of this quarter is once again our US business and now comprises over 81% of total revenue and grew 150% year over year and 23% sequentially. Our US commercial revenue growth accelerated to 149% year over year and 28% sequentially. Our US government revenue grew a remarkable 90% year over year and 18, 18% sequentially. Rule of 40 score of 155. Unbelievable. We closed 220 deals worth $1 million or more, of which 98 deals were worth 5 million or more and 73 deals were worth $10 million or more. Record highs across the board. Holy shit. Stock up 30%.

Josh Brown: Yeah. They have 650 something commercial. So non government customers and the whole narrative about like people are just going to hand over their business to anthropic and other LLMs and try to harness the power of AI turn out not to have been true. Palantir is going to be one of the. I think we could say this now with a lot of confidence. Palantir is going to be one of the leading companies that help other companies figure out what is my data actually worth and how can I make more money as a result of using AI like this is going to be this company. You contrast this report with what IBM just told us. It's very clear companies, corporations and governments are going to Palantir and saying help me. And they do not have a traditional salesforce. Alex Karp has gone out of its way to point out they are not. They do not look like a traditional enterprise SaaS business with salespeople covering this person, covering that person. They've got a very nontraditional way of closing business, but it works. I also think that conniption he threw on the air the other day on squawk box, I think that resonated what happened.

Michael Batnick: I missed it.

Josh Brown: So he went on Squawk and just like threw this shit fit about. And I think he said their names OpenAI and Anthropic. He's like, you're just going to give these people the alpha of your business, rely on them to not launch competing products. Like what do you. And he said, I am speaking up for every CEO who's afraid to say this, but this is what they're all saying behind the scenes. We are not just handing over our businesses alpha to the LLMs and waiting for them to disrupt the shit out of us. And that was the gist of what he was saying. He said it in a very high pitched, almost like it was very disorderly whatever he did. But the results that Palantir just put up I think are a testament to this idea that that's, that is not what people want. They actually want help and they want Palantir under. Under the. Under the tent and not necessarily anthropic. So I think that's notable.

Michael Batnick: The stock. The stock is the company, excuse me, has a $390 billion market cap. Is it going to. Is this a trillion dollar company one day?

Josh Brown: I think it's neck and neck with Space X in terms of price to revenue as the two most egregiously overvalued stocks in the market. But I mean, who's to say where this settles out there? There are cases where a company can maintain an extraordinarily high valuation and have it. Grow into it, have the earnings eventually catch up.

Michael Batnick: 67 times sales. Yeah, I mean, that's trailing, but let's see.

Josh Brown: But again, what. But, but why. Why is it 67 times sales? Because they're growing sales 100% a year.

Michael Batnick: Yeah. The market's not dumb. I don't laugh. I don't. I don't laugh at these numbers. The market's not stupid. I listen to the call today.

Josh Brown: No.

Michael Batnick: Okay. On my list, Dan Ives was the first call. I listened to his. The Q and A portion.

Josh Brown: Wait, where does he introduce himself from the new firm that he's at? Right.

Michael Batnick: I think he had some technical difficulty. So I don't even know if he introduced himself.

Josh Brown: York.

Michael Batnick: I listened to. I don't know. It. It. If you're just listening to. To it and you don't know anything about the business, which I think is a lot of people. He didn't really talk about anything other than just galvanizing the troops, which he is. And which he is very talented at.

Josh Brown: Did you watch it or listen to it? I listened because they do this as a video.

Michael Batnick: But you. You heard him like, you heard him, like, beating the pen onto the, the table.

Josh Brown: Yeah, I listen. I know he's very controversial.

Michael Batnick: And, oh, he went up. He went after the DSA a million times.

Josh Brown: And yeah, people. People get mad at him. They don't like him because he's like, unapologetically pro West God, pro America, pro Israel. He's. He's like, he, he's. His attitude is like, very staunchly saying, like, everyone's going to have this technology. I want American companies to have the best version so they win.

Michael Batnick: It's an us against the world mentality.

Josh Brown: Yeah. And our military should have the best AI and blah, blah, blah. And so. Okay, it's not controversial for me, but I understand why it's controversial for others. And I don't. We don't. We don't go there.

Michael Batnick: Let's talk More about the earnings season, more broadly. What is, what's sticking out to me, I think the first thing is the market's reaction to various earnings reports. Like, I don't know that I've ever seen companies gain 30%, fall 30% and not just, not just a few. A lot of companies are making massive moves after reporting earnings.

Josh Brown: Yeah, both directions. Yeah, I agree.

Michael Batnick: Roblox and Reddit. Roblox down 30. Reddit down 20. Palantir today up 30.

Josh Brown: Although. And I, I can't confirm this with data. Another thing that I'm noticing though, in line with what you're saying is that on day two, some of those extreme moves are being retraced.

Michael Batnick: What? Google and Matter.

Josh Brown: Microsoft. Amazon just gave back a whole bunch today.

Michael Batnick: Wait, did Microsoft give some back?

Josh Brown: No, Mike. Microsoft had a horrible reaction and then bounced.

Michael Batnick: Not in it.

Josh Brown: Yes, it did.

Michael Batnick: No, that.

Josh Brown: Up 7%. It's up 7% last week. Yes, Ned.

Michael Batnick: No, it didn't. Microsoft. Microsoft was up like 15% after earnings.

Josh Brown: Oh, no, I'm saying, I'm saying the wrong stock. Meta has come back.

Michael Batnick: Meta came all the way back in two days after falling 7%.

Josh Brown: Yeah. And then, and then Amazon the other way. Like they had, they had an incredible response and then probably related to Jeff Bezos selling another 4 billion worth of stock, but that retraced some of its gain. So you're getting an extreme first day move. But not all these moves are. Not all these moves are sticking.

Michael Batnick: I got some charts. Got some charts. Chart kid.

Josh Brown: We have. We have to do one more. We have to do Toast, Right?

Michael Batnick: Everybody, everybody, everybody is dying to hear what happened with Toast.

Josh Brown: Well, it's down 5% after hours. But we have talked about the stock a lot on the show, so we should at least get into it. Top line beat. Bottom line beat revenue 1.9 billion versus 1.8 for the quarter. Earnings were up 100%. Earnings per share, $0.26 versus $0.20. Expected 9,500 net new locations in the quarter. They're at 180,000. Restaurants are running on toast. That is a 22% year over year increase. GPV, which is like total payment volume on the system. 22% up year over year to 60.7 billion. ARR. Up 25% year over year to 2.4 billion.

Michael Batnick: Wow.

Josh Brown: And they bought back 19 million shares for half a billion dollars year to date. And I. So I took some of my toast off the table at 32, by the

Michael Batnick: way, the stock is flat after hours. Stock looks good.

Josh Brown: Yeah. So I, I bought a Ton of it in the 20s after it got killed. The last earnings report.

Michael Batnick: Good for you.

Josh Brown: It ran right back up into the low 30s. I took some off. Not because I don't want to be in it because I still have a bunch.

Michael Batnick: But you're on top.

Josh Brown: No, I just, I saw how easily one quarter could knock this thing down 40% and I just said, you know what, there's other fish in the sea. And I think I'm gonna have time to accumulate this. So I'm still long for people that care. I'm not going anywhere. It is an investment, but I don't need to own as much as I did. But when they killed this thing last quarter, I had to buy more in the 20s and I'm glad I did it. And. Okay, let's keep going.

Michael Batnick: All right, so corporate profits, I mean, it's been an incredible, it's been an incredible earnings season for a lot of companies. Throw this chart up, please. We're looking at adjusted revenue growth and adjusted EPS growth and of course they're going the same direction for most stocks. Looking pallet here in Micron. I mean Micron, you know, broke the

Josh Brown: chart so like it almost doesn't fit on the chart pretty good.

Michael Batnick: All right. I don't know if you noticed chart off the stock market in an all time high today. I know you noticed. And it's not just one or two stocks. It's a lot of stocks that are doing really well.

Josh Brown: It's a melt up.

Michael Batnick: A melt up. And you know what, we haven't said that phrase in a long time.

Josh Brown: It's a mid summer melt up. The best kind of melt up.

Michael Batnick: It has been a long time.

Josh Brown: It's not your traditional December, you know, Thanksgiving into Christmas run. This is something different. It's a midsummer melt up. And I have very strong views on what that means for the, for the balance of the year.

Michael Batnick: We'll keep going.

Josh Brown: I want to hear, okay, this is my 29th year on Wall Street. I got Series 7 license in 1997. I got a mind like a steel trap. I remember everything as you know, every slight, every horrible thing that's ever happened to me, Every offhanded comment people thought I didn't actually hear what they had to say. But I heard it. I store it all up and my memory of, of market rallies is equally, is equally powerful. I almost, if I close my eyes, I can re experience some of these moments. And I'm going to tell you right now, this particular tape I would say is one of the healthiest tapes I have ever experienced. If, if I wrote down, if you gave me a legal pad and say fill the first page. Yellow, yellow pad. Fill the first page with every characteristic you would want for a market rally in order to feel confident, to stay long. Like write down all the things. Here's what I would write down. Okay. Earnings beats in every sector. I think we have 10 out of 11 companies are on average beating or something like that. So check rotations. Leadership stocks getting killed and other stocks becoming new. Leadership defensive rallying was cyclical growth rallying with value. Large cap rallying with small cap. Revenue growth ahead of expectation. Not just games with earnings or buybacks but like actual sales growth ahead of what's being expected. Analysts raising their expectations for next quarter during this quarter across the entire S&P 500, which is what's going on. International stock Support. Lots of IPOs, but not too many IPOs. Like every single thing that I would write down on the pad to say healthy market. We have all of it.

Michael Batnick: One more ingredient. Economists getting cautious.

Josh Brown: Oh yeah, fuck them. That's perfect. I love that every minute that those people spend analyzing Kevin wash his suit and tie is another minute I have to make money in stocks. But literally you couldn't script it better. Couldn't script it better. And you got bitcoin falling, right? You got like, you can't say it's a speculative mania because you have stocks that went up 100 and then fell 40%.

Michael Batnick: How about the DJ Dow is in a 50 drawdown?

Josh Brown: Yeah, all the, all. I remember what we said. A healthy bull market takes out the trash. Its own trash.

Michael Batnick: Its own trash.

Josh Brown: So we had all those 2x memory people knocked out of the box. We had Leopold Ashton Kutcher margin called into the stone age. Like all of that excess leverage in the Korean psychopaths, like that all cleaned itself up. And you know what the word was today? Out of the street. Is the bull market over? No, the bull market was reset. That momentum crash in July reset the bull market. It gave us a new foundation upon which to build future gains. We got a lot of leverage out, a lot of margin calls, a lot of 24 year old effeminate German boys trading stock for the first time knocked out the box. And now we're in a really good, I think a really good position to enjoy the rest of the year. This is a mid summer melt up. It's not very common but when you get it, I think it says a lot about people chasing the market into year end. They're really going to do it. So I'm very happy.

Michael Batnick: You and me both. All right, here's another one from Truist Wealth Earnings revisions. Look at this shit. This is abnormal, folks. The average year since 2000, you're looking at the calendar year earnings revisions. And the longer the year goes on, analysts are usually too optimistic and they take their, their earnings revisions down. This is the exact opposite. The exact opposite.

Josh Brown: Yeah. I mean how much like are we normalizing this by all the write ups of private market assets like Amazon and Alphabet obviously had big write ups in their positions and things like Anthropic is what you're showing me just straight up operating earnings.

Michael Batnick: I don't know but I think operating earnings look just as good. So there's obviously an asterisk here, but

Josh Brown: just as good but not as extreme.

Michael Batnick: It's all working. And it won't forever obviously, but it's, you know, these are the good times. Enjoy them while they last because they won't last forever.

Josh Brown: Yeah. Chart kid Matt, as of Friday, so this is a little bit out of date, but directionally it's the same. 64% of companies have given results. 29% earnings growth for the second quarter. 137s and P 500 companies will report this week.

Michael Batnick: What's revenue growth? Do we have that?

Josh Brown: It's 14.1% year over year, which is 200 basis points above.

Michael Batnick: That's insane.

Josh Brown: The estimates at the beginning of the season.

Michael Batnick: Why does I know we. Why does Nvidia report in like three weeks or like it's. It's like so anticlimactic at that point.

Josh Brown: I don't even know. Is it, is it late or is it early for next quarter? 10 of 11 sectors posting a year over year increase in profits as I mentioned.

Michael Batnick: Do we know which one was down? I'm curious.

Josh Brown: The lowest growth rates are health care staples in real estate. So let's assume one of those three is negative year over year. But 11 of 11 sectors have beaten beginning of season growth estimates and put up the one day reactions. So Palantir today. No, the chart kid Matt's thing. Palantir today. One day price reactions to earnings from select S&P 500 company was by far the biggest to the upside followed by Zebra Tech, Gartner, EM Core, Lamb Research, Quanta, Garmin, Micron, Microsoft.

Michael Batnick: Those are monster moves.

Josh Brown: Yeah. 29 and a half percent for Palantir. So it's, it's pretty notable. I do have some stuff from Nick and Jessica data track that I wanted to just run by you. 86% had beaten the consensus of Wall Street's analyst earnings expert estimates, which we know the 1:5 and 10 year averages are 80, 78 and 76. Like the, the long, long, long run average is like 76, 77%. And it always is that we're so far above health care 100% beat. Did you hear me? 100% of health care reporters beat industrials, 90%, materials 89%. The worst sector, consumer discretionary, was 75. So Nick and Jessica say the fact that more companies than usual are beating expectations is an unalloyed positive in terms of signaling strong corporate fundamentals. And then he gets into some of the technicalities. But like, just from a big picture standpoint, you can nitpick and you could find examples. But what about this? What about that? If I'm telling you that this is the overall environment, why nitpick? Why not just accept it's one of those moments in time where corporate America is shocking people left and right, Every sector, every industry. Like, why not just say, yeah, that's going on? Oh, hold on, hold on, hold on, hold on.

Michael Batnick: Before you move on, this is very important. If you're listening to us and you're getting nervous because we sound overly bullish or whatever, I understand that impulse. Like, I get it. You have to understand and remember that all time highs are bullish. Statistically, the one year forward return at an all time high is above the average for all other days.

Josh Brown: Very counterintuitive.

Michael Batnick: So you might want to fight it and say, oh, Josh and Mike are so bullish. Ding, ding, ding, ding. I got to get it. Okay, fine, good luck. Statistically, right? Statistically, these are not times to get afraid. What's your last point S and p?

Josh Brown: Net margins 14.7% in the second quarter. Pulling out Amazon and Alphabet. Ridiculous big write ups. The 5 year average is 12.4.

Michael Batnick: Dude, I remember when 10% was as good as it was going to get. That was GMO's whole bearish thesis, which I understood at the time.

Josh Brown: Reversion of profit margins, right?

Michael Batnick: No, no, no, no. Okay, we're going to talk about some of the stuff in semiconductor blow up land that I know we want to get to Leopold later, so we don't need to go there. But let's start with this clip from the second podcast in 45 days or whatever. Patrick O' Shaughnessy and Gavin Baker.

Josh Brown: Have you met anyone in your travels

Michael Batnick: out here that you would say is

Josh Brown: like way more bullish than you? And if so, what do they believe that you don't? I Mean, essentially everyone out here is more bullish than me. Man. You know, I read this thing that Dorkesh wrote. You know, forget my like Bayesian probability space of expected outcomes. That wasn't even in my considered but dismissed his totally unlikely outcomes. I look at what's happening in the stock market and I feel like a foolish optimist. And then when I talk to people, whether it's people at the labs, whether anyone in this ecosystem, like I'm like bearish relative to essentially everyone, which is just a strange state of affairs.

Michael Batnick: All right, so that was so great. So him and Patrick are talking about what's going on. And Gavin Baker is like the fundamentals have never been stronger. They're accelerating. Like I thought I was bullish on the East Coast. I come out here and everybody's psychotically bullish and they're trying. He's trying to wrestle with like why are stocks going down so much? Obviously we understand now this is like probably eight days ago. So it was pre finding out that there was a margin call but the market looked past this because something really weird happened last week. Let's throw up the semis imploded chart. Please skip the first one. So chart kid made this. He showed the Russell 3000 drawdown when 88% of Russell 3000 semiconductors are in a bear market. And most of the time the market is in a bear market. Right. Most of the time there's a complete washout in semiconductors when the rest of the market is falling apart. And in the last week this was happening when the market wasn't just a three and a half percent drawdown from its high. That dynamic had never happened before. So investors, the rest of the market participants were correctly looking past the blow up and they bought. Shot off please. And they bought the ever living out of the dip. Let's use the first chart from. From Goldman Sachs. While the stock. There's Chris Lucas. While the stocks index has faced one of its worst months of performance in nearly two decades, semiconductor ETFs are on track to have their best month of fund flow since the inception of S

Josh Brown: M H. That's debt buying.

Michael Batnick: One final one from Todd. From Todd Sohn. Check this out. Todd is showing that semis were down a good clip in July. Yet the ETF flows. And this is unlevered exposure work. We're content with adding on weakness. I mean this is just what an outlier of a month like we've never seen anything like that. And investors rightly so the butter up, buckle up buttercup crowd who's gonna get their comeuppance one day? They nailed it again.

Josh Brown: Meaning. No, they just got their comeuppance. They're gonna get their revenge one day. The cut the come. They got their comeuppance.

Michael Batnick: Oh, whatever. You know what I meant.

Josh Brown: No, I know. I'm, I'm fixing it. About that second chart. Would an accurate way put, put up the scatter plot one. Okay. Would an accurate way to explain this be that in normal times when a whole sector is selling off, it's being driven by the index ETF or derivatives thereof.

Michael Batnick: No, but, but no, no. What this is showing is that so the, the red dots is showing the 20 day sum the of flows. And normally on the Y axis when you have a 30% decline, obviously people are selling the ETF. They're saying.

Josh Brown: No, no, no, you didn't. Let me ask my question. Hold on. Would a way of explaining this be in a normal sector sell off, like specific to the sector, you would see outflows from the ETF because people are selling off the etf. But in this case, the semiconductor sell off was concentrated more in the individual names than in the ETF because it was being driven by a hedge fund. Margin call specifically.

Michael Batnick: Yes. Okay.

Josh Brown: So that's what's different. That, and that's why you see them buying the ever loving shit out of the dip and plowing into the ETFs. Because they weren't the people selling the stocks. The, the sellers of the stocks were very concentrated. Although it wasn't the whole retail crowd selling semis. They never sold.

Michael Batnick: No, they sold the stocks. This is such a. I'm glad you mentioned this. So Gungeon tweeted last week. So this was on Tuesday of last week, which I think was the bottom. Data from Vander Research. Retail investors sold $285 million worth of individual stocks.

Josh Brown: Oh wow.

Michael Batnick: Which was the largest outflow since I think Liberation day. So individual stocks were sold aggressively. Maybe they sold the stocks for a tax loss and rolled into the etf. Who knows, it doesn't matter. But both of those things, two things could be true. People capitulated on the stocks and they dove headfirst into the etf. So it was an interesting dynamic. All right, this is very, very important. There has been a lot of 1999 comparisons over the years. And I want to make a very important point. This is nothing. The stock market looks nothing like 2000. Nothing at all. This chart is incredible.

Josh Brown: Haven't we been saying we? You and I have been saying that for three years.

Michael Batnick: Now I'm going to say it louder.

Josh Brown: Nobody wants to hear us.

Michael Batnick: It looks nothing like the dot com bubble. The chart on the left is JC's favorite. And all technicians point to this chart. You had ample warning because on top is the S&P 500 advanced decline line. And a lot of stocks peaked in 1998. Financials, materials, industrials, like a lot of stocks peaked two years prior to the tech to the, to the actual index peaking. And look at the chart on the right. Do they look anything alike?

Josh Brown: It's the opposite.

Michael Batnick: Everything is going up into the right.

Josh Brown: It's the opposite. The advanced decline line is making a record high. People are making money in biotechs. People are making money in retailers and making money in health insurance companies making money in REITs. It's, it's, it's oil stocks. It's a literal opposite of 1999. I know it didn't feel that way for a lot of last year, excuse me, for a lot of 2024 when it felt like it was all Mag 7 and, and that was legitimate to talk about that concert. But that was just the first phase of the AI bull market. Now we're like in the third phase and you've got companies involved in the AI trade that are going up. You have companies that have nothing to do with the AI trade also going up. Take a look at JB Hunt. Take a look at Insight which I talked about on the air today on tv. Biogen I deck or we don't call it that anymore. Biogen Inc. They have nothing to do with it at all and they're going straight up into the right. We talked about on the show Casey's General Store. It's, it's fucking gas station pizza in Nebraska. There are so many of those, hundreds of those that I can off the top of my head this idea that the 1999. Oh it's all. Now I am sympathetic to people saying the rally in the financials is based on AI and its concentration and 1999. Ask that part. I will grant you when I looked at the earnings reports from Morgan Stanley and read their commentary after there are 10 trillion in assets and they specifically on the wealth side they added nine. I forget the number on the wealth side. It was some obscene number for the quarter and they were saying yeah, this is companies going public and we have all their shareholders as wealth management clients. And they said there's going to be more of this. So I am sympathetic to the argument that a lot of the market is rallying on the AI theme I would not say that's not true, but I would just make the point. It's not one narrow group of stocks. It is literally the opposite.

Michael Batnick: The best case that I've seen or the best comparison that I've seen recently to the dot com bubble or just bubbles in general. I saw a chart from bank of America Global research that showed the pre, the prior manias, so the Nifty50, the dot com bubble, Japan and now I all peaked at around 40% of market cap. And that's where we are today. So if you want to say that this is a bubble mania, that would be the chart. And is it possible? Of course it's possible. We'll see. All right, let's keep it moving.

Josh Brown: Can we like have one company miss earnings?

Michael Batnick: Right, right, right.

Josh Brown: So, okay, I know AMD reported today after the close. We're not going to, we're not going to, we don't have time to do that one. But like, so Josh, we get one

Michael Batnick: AMD Miss, before you share your thoughts on Leopold, I thought it was so funny listening to. Not hot, just interesting. Listening to Gavin, who is, you know, obviously on the forefront of this entire move. He's, he knows what he's talking about and he was like stress testing all his ideas over the last couple of weeks. Like, what the am I missing? Like everything that I'm hearing and like literally not just seeing from the earnings reports, everybody that I'm talking to, everything is accelerating. What am I missing? And he wasn't missing anything other than a margin call. And they were looking for signal and noise or noise and signal.

Josh Brown: Okay, so this is what I wanted to run by you. I like this kid. He's got a chutzpah. Like, I, I like that he like got fired from Open. I, I didn't even know who this was until 10 minutes ago. So I'm not going to do a whole biography. But basically he got fired from OpenAI, allegedly for sharing information with people that worked at Anthropic. He's dating a girl that works directly for Dario and I think got married over the weekend to the chief of staff for Dario Amadei at Anthropic. And he spent a year or two inside of OpenAI. That's after working at FTX. LOL. So he went from FTX to open AI and maybe there was one stop in between. But he's a child, he's 24 years old, so I give him tons of grace. He's not a Wall street guy, he's a San Francisco guy. And this is not his world. And the problem with mocking him is that even being wiped out on all of these public stock positions, he still somehow managed to blunder his way into a $5 billion position in anthropic, which could be one of the biggest IPOs of all time later this year. And the way he was able to raise money was not because he grew up with this person or his dad is a VP at this place. He wrote something that resonated with really smart people. He wrote a paper after getting fired called Situational Awareness. He stated his intention, he's going to make a big all in bet on the companies that are going to benefit from his thesis. And he was right. He just didn't trade it well. The fundamental issue seems to be he was up 1000% and remained four times leveraged. The other problem is he doesn't know what a hedge fund is. So he had longs and shorts, but they put the same trade, so his longs got killed. And the things he was betting against were the counterbalance to those. And they went up. And you can't have your shorts running up at the software stocks and your semiconductor longs going down simultaneously at 4x leverage.

Michael Batnick: It was a one sided.

Josh Brown: Nobody doesn't know what he's doing.

Michael Batnick: It's a one sided trade with leverage.

Josh Brown: Right. He's a very smart person and he accurately, accurately called almost everything in the right direction. He just doesn't know how to manage money. That part could be fixed. I bet you he's better, I bet you he's a better risk today than a lot of people running money that have not gone through this with fresh cash. And I bet you he could raise himself another $10 billion with his eyes closed. People say, oh, Leopold Ashenburg, I've heard that name. Yeah, I forgot why I know the name. Whatever. What? Like he's fine, People mocking him, He's a billionaire. Shut the fuck up. He, he didn't lose your money. What are you mocking this kid for? And he just learned the most important lesson there is to learn when it comes to managing money. Don't take the knockout punch. He's not going to do it again. So I bet you he's going to have a long and distinguished career going forward. And by the way, the last thing the people he lost money for are all themselves billionaires. They're fine. This is not like Madoff stealing from nurses and teachers. They're billionaires in Silicon Valley. They love this shit. They wear failure as a badge of honor. And where they're Coming from, they probably think it's the most entertaining thing on earth. I'm sure they're not thrilled that they're down $100 million. But again, they're billionaires. And I don't think, I don't think we've heard the last of this young man. Well, what are your thoughts?

Michael Batnick: The fund is not shuttered. He's not going away. All of his, all of his levered positions got sold at a 10% discount. And I'm sure he was down all of it on that levered position. He still is. Yeah, he's gonna be fine. And I agree with you. The impulse to like kick somebody when they're down, especially like a 24 year old.

Josh Brown: What does it say about our casino culture? He just took the largest, I think the largest trading loss in history on dollar. On a dollar basis.

Michael Batnick: The fund.

Josh Brown: Bigger than Bill Wang.

Michael Batnick: The Fund peaked at 45 billion. And what was it after the wipeout?

Josh Brown: Whatever. It's the anthropic stakes. And he had the. Yeah, yeah, it's the anthropic stake, which could be worth 10 for all we know by the time it comes public. But it's the biggest trading loss in history, I think.

Michael Batnick: Wow.

Josh Brown: And it happened in two weeks and he's going to be fine. What does this say about the culture that we're in?

Michael Batnick: I mean, it's a great story. It's a juicy story. So obviously it deserves all the press that it's getting. Mark Rubenstein wrote a substack. He writes a net interest. It's phenomenal. And he said, I forget who he was quoting, but somebody that allocates money said the best investors have blown up once. Right? Like you blow up once. Like that's my point.

Josh Brown: Money.

Michael Batnick: Now you're never gonna do it again

Josh Brown: because what do you think? So if you think this kid is smart and he did this like generational deep dive into the AI rabbit hole to come up with this thesis that once again, let me reiterate, was exactly correct. What do you think he's going to do on risk management now?

Michael Batnick: Well, you know what? What? It doesn't matter. Do it because Sandisk is not going up another 1800%.

Josh Brown: Tough fact to follow. I agree. I don't think having a little bit of situational awareness myself, I don't think it says target rich of an environment as it maybe was in 2024. But again, the question is not is he smart or is he not? We know he's smart.

Michael Batnick: Everybody's smart. What does that matter?

Josh Brown: Well, my point is if he spends 1% of the time learning how to structure trades and do risk management that he spent learning AI. I'm pretty sure this would be a pretty good time to give somebody like that money if you were so, so inclined. I don't like the comparisons to Bill Wang. Yes, he was reckless, but I feel like Bill Wang was running a scam.

Michael Batnick: Bill Wang was tricking the prime brokers.

Josh Brown: Tricking the prime brokers. This kid, I honestly think just believed he was allocated correctly for what he thought was going to happen. He was not shopping prime brokers and pretending that this assets not leveraged yet. Like Bill Wang was a fraud. Like going to jail fraud. This is just a bad trader.

Michael Batnick: Yeah.

Josh Brown: Okay, so I don't love that. I don't love that. I want to share one thing with you. So I mentioned he's from the San Francisco world. There was a funny anecdote in the New York Times piece. I think it was Rob Copeland wrote it. When this star of San Francisco arrived in New York during his fundraising tour around last summer, he received a relatively cool reception, according to three people from whom he tried to raise money. They said they viewed him as a lightweight and a one hit wonder. The asset management colossus Blackstone passed on investing. One wealthy New York investor who did take the meeting welcomed him, gave him a grilling and asked him what, what's your plan if the air revolution doesn't pan out? Quite as hoped, the hedge fund founder had no detailed response. The investor recalled Mr. Aschenbrenner simply truly believed it would all work out. Yeah, that's my, that's my read. And, and I think it's interesting the difference between San Francisco risk taking versus New York. New York is much more hand to hand combat. San Francisco, I think they're a little bit more philosophical about taking losses and swinging big for the fences. I think some of that is cultural and I think some of that is just like this kid speaks their language and doesn't speak ours. That's probably why the primes wrapped him up in a box and threw him in the river so quickly because they just, they looked at each other and said, we extending this credit another second? No, we're not. And he had to go out and find a buyer and he did, fortunately for him. But again, I still think he'll, he'll, he'll be okay. And if I were a betting man, I would bet that he's gonna get really good at risk management going forward.

Michael Batnick: All right, let's talk about Robinhood. This is pretty impressive. They have 13 lines of business that are doing $100 million or more in annualized revenue.

Josh Brown: What are all 13 businesses?

Michael Batnick: Chart on options trading, margin interest, equities trading, crypto trading. I can't read the rest.

Josh Brown: Margin based securities lending, Cash sweep Gold subscriptions, which is like their top tier clients. Instant withdrawals. I don't know how it's a business, but. Okay. I can't believe that's Production markets.

Michael Batnick: Holy. If you want Robin Hood.

Josh Brown: What's Robinhood legend?

Michael Batnick: Robin Legend? That. I don't know.

Josh Brown: Okay. I think that's like their top, top tier.

Michael Batnick: Okay, so next chart, their trading volumes. I mean, unbelievable. The Equity notionals up 85 year over year. 50 quote over quarter options contracts up 50 year over year. Obviously an incredibly lucrative business for them. Crypto down bad. We'll get to that in a second. Next chart. This is so nuts, dude. $215 million of the 389 from margin interest. Holy shit.

Josh Brown: Well, that's what the. That's what the clientele is doing.

Michael Batnick: I mean, I know, I know. We know. And guess how much. How much. How much of this margin interest is in levered ETFs.

Josh Brown: Yeah, but that's not actually the right question. The right question is how much is Robinhood doing culturally to encourage people to use margin in their brokerage accounts?

Michael Batnick: Do it more. I don't know what they're doing now.

Josh Brown: I know there's no regulation anymore. I understand that. And the pendulum will swing back though.

Michael Batnick: But wait, what do you mean? I don't think they're doing anything to encourage you. Don't. What could they be doing? We think Vlad's calling people.

Josh Brown: No, like making it available.

Michael Batnick: Well, it's way button.

Josh Brown: It's prominent.

Michael Batnick: It's way cheaper than other places. I don't think. I don't think anybody really gives a shit what they're paying.

Josh Brown: All right, let's do a thought exercise. You're the CEO of Robinhood and I'm the chairman of the board. And I come to you and say the board is met and we've decided it is not in the long term best interest of. Of Robinhood to have as much margin per account as our users have. We think it risks. In a bear market, it risks blowing us up for a year. So what I want you to do is encourage less margin going forward. And I want you to give me the results at the end of this quarter. What would you do?

Michael Batnick: What would I do?

Josh Brown: Yeah. To stop people from spending minimum account size that can use margin, you would raise Requirements on certain securities. You would take the button and instead of it being bright purple, you would bury it at the bottom of the page.

Michael Batnick: I don't think they have a bright purple button like I.

Josh Brown: You understand what I mean? You can do with the user interface to make it less apparent to people that margin is even available. My point is they're not doing that. So are they going the other way? They are they as soon as you open an account, sending you an email, hey, did you know rather than the $3,000 you put in, you could trade with six? I'm not saying they're doing that either.

Michael Batnick: No. So I am a Robinhood power user. That is my app of choice for seeing what's happening in the stock market. I've got my list. Everything is on Robinhood and I don't feel like I'm being pushed to trade with margin.

Josh Brown: Okay.

Michael Batnick: What also is super notable in here is they are doing. Next chart, please. Actually, they're doing more revenue from events contracts. $156 million in the most recent quarter than they are from freaking crypto.

Josh Brown: Well, there's always a new bubble.

Michael Batnick: Credit to Vlad. I, I told him to his face, I said, I think you're drunk. Like I think you guys are drunk on the prediction market events contract stuff. I said, stipulating. I think it's going to be, I think it's going to grow and I think it's be big. But I think that you're way overestimating how big the market is. And Obviously I was 100 wrong. Poly Market just spoke about raising at a 20 billion dollar valuation. People are eventing their ass off.

Josh Brown: Yeah. And it's extremely profitable. And I don't know if it's a bit ask spread business, but like you could probably drive a truck through where the sellers are, where the buyers are, and it's almost completely unregulated. In fact, there are lawsuits in states all over the country. A lot of people, a lot of states are angry because it's a workaround. They have prohibitions on gambling, on sports. And then you can just buy like, all right, I won't gamble on sports, but will the Chicago, will the Chicago Bears win 12 games this season or

Michael Batnick: it's a total, it's a total workaround. The states make a lot of money from regulated betting. Entities like draftings and FanDuel are paying 50% of the revenue or something like that. And Cashy is paying nothing.

Josh Brown: I, I saw John Mellencamp last weekend and played Jones Beach. Play Jones Beach. Speaking of betting and he opened the show. If you ask, like, is John Mellencamp more likely to be a Democrat or a Republican? I don't. You know, he played at farming.

Michael Batnick: He just fucking rocks. I don't know what his political relationship rocks.

Josh Brown: Right. But he's, like, from Indiana. It's all about the heartland and rural America. So it's like. It's, like, not obvious that he's either one. Okay. Right. He opened the show with a song I've never heard before. It might be an old folk song or something, or maybe it's something he wrote. But the chorus is, my, my, my, these are lawless times. And he put a big sign next to the stage, and that's what. That's what's going on right now. Like, oh, that's illegal. Well, what if I just technologically do it this way? Then I have enough of a loophole that buys me time to get an equity position to Donald Trump Jr. And then, all right, come after me. Now, I bet. I bet you I could. I bet you I can innovate myself into a loophole that you can't do anything about in the time that it takes you to bring an attorney general to sue me.

Michael Batnick: That's.

Josh Brown: That's the markets right now.

Michael Batnick: Tarek from Kashi was on with Sorkin, I believe, talking about, like, the affiliation with Donald Trump Jr. And Tarek was like, he's always been very into technology. And. And Andrew's like, he's a real estate guy. What are you talking about?

Josh Brown: He owns a stake in both Poly Market and Cowshi.

Michael Batnick: Yeah. Diversify, which is.

Josh Brown: Which is bullet. Bulletproof. Bulletproofing. Both businesses, basically, for at least the next two years. And this prediction market stuff, I think it's fascinating. I have a whole bunch of bets. I have a Kalshee account. I'm not anti. But I know, but I know, like, what I'm doing is, like, within reason. I'm not going to blow my life up over it. I know if I were 18, the results would probably be different.

Michael Batnick: Throw up this last chart. June 2026, monthly metrics. Right. Look at the bottom.

Josh Brown: Right.

Michael Batnick: These are event contracts. Now, obviously, a lot. A lot of this is sports. It just is. This is. There's World cup in here, but whatever. There's a lot. I mean, that is a lot of volume. Holy.

Josh Brown: People should be. People should be able to bet on the World Cup. People should. I don't understand, like, I don't understand the mentality of, like, oh, you could bet on the price of oil 10 minutes from now, but you can't bet on a soccer game you want to watch. I'm pro. I like it. I think it's good.

Michael Batnick: Really? Since when?

Josh Brown: I. What I don't love is that it's bundled in with a, an investment account. And I'm not, I'm not saying like, Robinhood shouldn't be allowed to do it. I just, I don't think that that's healthy for a population of, of predominantly young males. Yeah, and I know they're, they're trying to get women to get into prediction markets. They're doing a lot of bets about, like, Bravo shows and the shit that young girls care about, but most of this activity is young boys. And I don't like the bundling of this is your investment portfolio. And then also like, why don't you take, why don't you take a soccer game out of the same pool of money? I just, I'm not saying like, it's illegal or I want to prosecute it. I just don't think it's good. I think it's societally not great. But these are public companies. They have shareholders, they have a profit motive and they're going to do whatever they have to do and get away with whatever they can get away with for as long as they can. And we should not be naive about that. It's what it's going to be. Can I show you one thing?

Michael Batnick: Yeah, go ahead.

Josh Brown: Give me my chart. All in on prediction markets. This is what I want to underline here. The event contracts in. In gray. So that's for the second quarter. Now to your point. Bigger than Crypt, they flipped crypto. So the stock, let's say the stock and options trading is effectively going to be what it's going to be. In a bull market, you're going to see more of it, Right? In a bear market, you'll see less because people lose money and lose interest. But then they always have like this other layer, this like bubble layer. Not bubble in price. Bubble in activity, which sometimes comes along with bubble in price. They lost Bitcoin this year. It's one of the. I think it's the worst asset of the year, but they found something even better and maybe even more profitable. And that's why Robinhood is a hundred dollar stock and not a $60 stock. And is. Does not look as bad as Coinbase looks, which is not in. In these other markets to the same extent.

Michael Batnick: Okay, we're gonna skip the next topic and go straight to make the case.

Josh Brown: Okay.

Michael Batnick: I thought I did this before, but apparently I Haven't. So Florin Decor. Now I've spoken about the stock. Maybe I did it with Ben. So this is a company that came on my radar from a guy, Alex Morris, who has a sub stack called the Science of Fitting that I like to follow. Alex was on TCAF a couple years ago and Alex is a value investor. An actual investor. How about that? I am no such thing. But I read his. I read his work because I like his ideas and I like his writing and whatever. Whatever. So Floor and Decor is a company that is not where you want to be. They are in the home improvement category. And I don't know if you know this, but home activity is at zero.

Josh Brown: It's a bear market. It's a bear market.

Michael Batnick: It's a. It's an ice age mortgage rates are at 7%. It's brutal. So let me tell you the story real quick. Chart on this is from Alex. So I probably read this back in March or something. This is when it came on my radar. So Floor and Decor has taken market share from Home Depot and from Lowe's because they specialize. They are all in on this one category. Not just flooring, but any type of home improvement work. You can go right there. They have a much, much bigger warehouse. They dedicated a lot more square foot to these, to these categories. And Home Depot does. So this is becoming like the place of choice for people that are doing work. My mudroom, for example. My guy went to Florida Core. Okay, chart off. The stock is. Has gotten the shit.

Josh Brown: Knew this was mud. I knew this is mud. Room related.

Michael Batnick: Totally related. Okay. So the stock obviously like, like a lot of other home related stocks has gotten destroyed. The Stock fell almost 70% from its high in 2022. And it's not. And, and the business is not really doing awesome. So they reported earnings the other day and the CFO said our outlook assumes that consumers will remain cautious and project demand will continue to be influenced by the pace and sustainability of any improvement in housing market activity. Following our better than expected second quarter earnings and the anticipated greater impact from the repurchase of common stock, we have increased our fiscal 2026 earnings per share outlook. So why am I presenting the stock to you? A couple of things. I know that this is like 101 type stuff. This is extremely basic. But as we are looking at stocks today, we are reacting to what's in the headlines. But that's not how. Actually that's not how investing works. Stocks are looking forward. So Stanley Druckenmiller said, never ever invest in the present, it doesn't matter what a company's earning, what they have earned. Soros taught me that you have to visualize the situation 18 months from now. And whatever that is, that's where the price will be, but not where it is today. And too many people tend to look at the present, so look at their comparable sales growth. It's bad. Obviously. The Stock didn't fall 70% for no reason, but it's getting a little bit less bad. And the stock just broke violently above the 200 day moving average.

Josh Brown: Now listen, that's the first thing you've shown me that I liked. All right, so now you have my attention.

Michael Batnick: I'm not done. So obviously it's in a shitty, shitty position. The business is not doing well, but that's why the stock was down 70%. So all of the bad news, all of the frozen housing activity, it's all in the price. Now here's the final thing. I will say, obviously this has the. The, the bears are still in control. Technically, I think they still, they still have the benefit of the doubt because the 200 day moving average is firmly sloping downward. But I think this breakout is notable in spite of all the challenges. And I am not selling. I think I'm up 20% or so since I bought it, and I'm sticking with it.

Josh Brown: All right, so the good news is you got the earnings already. So, like that potential landmine is, is out of the picture. So you have 90 days until, until they're going to report, I. I guess, aren't there? There are a lot of stocks like this right now in the market that are waiting for this turnaround in housing volume and, and existing home sales to pick up and new home sales to pick up. Like this is one of many. And I don't know, I don't think

Michael Batnick: you need a massive turnaround for the stock to work. It has already digested. All of the bad news is here. It just needs to get a little bit less catastrophic.

Josh Brown: Yeah, I was looking at one in the same category, which was a good. Mohawk Industries just made a monster move. It went from 100 to 136 in the last two weeks. Same thing. They didn't get a fundamental turnaround.

Michael Batnick: I should buy this instead.

Josh Brown: This looks better than yours. They didn't get a fundamental turnaround. It's just to your point, it's like less bad. We had a conversation with, we had a conversation with. What's his name? Ken. Ken Fisher. And he was saying we did most. Yeah, well, maybe you weren't Part of the conversation it stuck with me is a long time ago, he was saying most of the money. Maybe that's not true anymore, but historically, most of the money is made on less bad. Because when you start making money in a. On less bad, not as bad as expected news, that means you're buying things that have been so utterly sold out by everyone that it almost doesn't even matter. You almost can't lose money anymore. Now, that works against you when you have a company that's literally going to zero, like a JCPenney or a Kmart or Sears. Like, there's a limit to that idea. I don't think that's what this is.

Michael Batnick: No.

Josh Brown: Right. So what you're saying is like, we don't need a housing boom. We just need a little bit of a thaw in the ice age, and nobody's expecting anything good.

Michael Batnick: Correct.

Josh Brown: And yeah, I think there's something to that I have to tell you is the polar opposite of the way that I invest, because I've been caught in a lot of value trap situations or I'm going to get in ahead of the turn, and I just don't have. Good luck with that. I did it recently with Rocket.

Michael Batnick: Well, it's really hard. Most of the time, it doesn't work out.

Josh Brown: Of course, we know I'm still in rocket. It's still $13 a share. It might be $13 a share till I die.

Michael Batnick: Now, Rocket needs. That needs lower mortgage rates.

Josh Brown: Yeah.

Michael Batnick: Like, that is a levered bet on the housing story turning right.

Josh Brown: But it's the same. It's the same group of stocks. And then what will happen with Rocket is they're not going to. They're not gonna grow like it's in video. But, like, not as bad as expected. Starts to turn into okay, actually pretty good. And then, wow, that's really good. And then by the time it gets

Michael Batnick: to great, sell it you.

Josh Brown: But you could have a 400% return on a stock like that. The problem is, like, one of the problems is the timing. When does that process start? So maybe that's already started with fnd, based on that rally that you're showing me. So for that reason, I'm blessing the trade.

Michael Batnick: Thank you.

Josh Brown: Blessing the trade.

Michael Batnick: I'll take. All right.

Josh Brown: No mystery chart tonight, guys. We're running late. I did want to say thank you to everybody who joined us for the live comment section is rocking. As always. We appreciate all of you. Thanks so much. To those of you listening on Spotify, Apple podcasts, please make sure leave a rating and review. It goes a long way. If you're watching us on YouTube, make sure you subscribe to the channel and we love you right back. Tomorrow is Wednesday, which means you'll get an all new Animal Spirits, every podcast platform under the sun, audio, video, Mike and Ben. What? What? What could be bad? We'll do Ask the Compound later this week. And then another all new edition of the Compound and Friends to close things out on Friday. Keep it locked. We'll talk to you soon. Thank you,

Michael Batnick: Sam.

Josh Brown: Hey, everybody. Chart Kid Matt here. If you're a financial advisor and instill copy pasting charts into PowerPoint for clients, we've got a fix. The same charts you've seen all over the Compound can now be branded for your firm. Updated daily at exhibitaforadvice. Com. That's exhibitaforadvice.com to learn more.