The Compound and Friends: How to Play the Money Game with Michael Santoli
On episode 256 of The Compound and Friends, Downtown Josh Brown and Michael Batnick are joined by
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The Compound and Friends: How to Play the Money Game with Michael Santoli
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On episode 256 of The Compound and Friends, Downtown Josh Brown and Michael Batnick are joined by Michael Santoli to discuss: the surprising strength of the stock market, what’s keeping the bull market alive, interest rates and the growing U.S. debt load, why corporate earnings remain so powerful, and whether today’s valuations can keep climbing. They also get into AI spending and the return on massive tech capex, market breadth and rotation, the rise of retail investors, options-income ETFs, why bears keep moving the goalposts, and what decades of market history can teach investors about adapting when the old rules stop working.
This episode is sponsored by DBMF and Vanguard.
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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: Yankees won a few in a row.
Michael Santoli: They did. They're squeaking them out.
Josh Brown: You go to the stadium a lot?
Michael Santoli: I don't go a lot. I used to go. I used to have like a little mini plan. I'm so old I can't warm up to the new stadium. I know it's been there like 17 years or whatever, but it's like not the place I walked into when I was.
Josh Brown: Oh, you should have come with me to Jay Z. You would have loved it that night.
Michael Santoli: Oh, yeah.
Josh Brown: Oh, my God. So they didn't have Yankee security there. They had an outsourced security and I think there's like 50,000 tickets sold and then maybe another 50,000 people who thought either somehow they'd get in or I'm on the list.
Michael Santoli: Yeah.
Josh Brown: Or if you're right outside the stadium, you can listen and just hang out. And it's in one of the most popular, like population dense neighborhoods maybe in the world.
Michael Santoli: Yeah.
Josh Brown: And it was just like, it was impossible. And I went Saturday night, so it wasn't quite as bad as the next night, Sunday night, where he didn't go on stage till 12:30.
Michael Santoli: Oh, my God.
Josh Brown: But it took us two hours to get in. We planned for that. And then it took us two hours to leave.
Michael Santoli: No kidding.
Josh Brown: Which is the worst.
Michael Santoli: Yes.
Josh Brown: And everybody's like standing shoulder to shoulder. They just. Yeah, they had two. It's six gates. Yankee Stadium, they had two gates open, which I don't understand.
Michael Santoli: Nightmare. I know.
Josh Brown: I think what they thought is that they'd be able to better control the
Michael Santoli: flow out of points. Yeah.
Josh Brown: But it did.
Michael Santoli: So this is the thing where they like cut it into a dock or something. The four nights or whatever it was.
Josh Brown: They're going to have to make a movie.
Michael Santoli: I think they did.
Josh Brown: Yeah, they're going to have to because it was an. It was a true, like, milestone event.
Michael Batnick: Oasis is coming out on imax. Their. Their tour.
Michael Santoli: There you go. Probably the sphere. Who knows? That'd be sick.
Michael Batnick: I saw them at the Rose bowl last year before Future Proof.
Michael Santoli: Amazing.
Michael Batnick: Amazing.
Josh Brown: You know who's at Yankee Stadium a lot? Taranova is there. I know it like almost every game.
Michael Santoli: I know.
Josh Brown: He just loves it so much.
Michael Santoli: He has a plan. I'm going with him.
Josh Brown: You go to the 9 11.
Michael Santoli: Oh, with you?
Josh Brown: Yeah, I was going to go, yeah.
Michael Santoli: Oh, you're not gone.
Josh Brown: It's Jewish holiday.
Michael Santoli: Oh, what does it fall on?
Josh Brown: What's 9, 11, September 11th, probably Rosh Hashanah.
Michael Batnick: Roche.
Josh Brown: Roche.
Michael Batnick: Do you consider yourself the greatest financial journalist of all time.
Michael Santoli: Oh, my God. No, I don't. I try not to consider myself at all.
Josh Brown: You're just asking, why are you so awesome?
Michael Santoli: I mean, come on.
Josh Brown: We are going to make you. We are going to make you blush.
Michael Santoli: I've aged into it.
Michael Batnick: No, but you know what? I. I feel this way, and I think I speak for the fans.
Michael Santoli: Yeah.
Michael Batnick: You feel as much like a practitioner as anybody in modern times that has reported on the financial markets.
Michael Santoli: I guess I'll take that as a compliment.
Josh Brown: You're saying you feel that way about him or he feels that way?
Michael Batnick: That's how I feel.
Josh Brown: Oh. Cause you said you.
Michael Batnick: Whatever I said, I said how I said.
Michael Santoli: I know what you meant. I was there.
Michael Batnick: That's how I feel.
Josh Brown: You'll take it or you take that confidence?
Michael Santoli: I will take that. Although you feel like you're more than just an observer.
Michael Batnick: I'm saying I feel that I just said it again. Go ahead.
Michael Santoli: I feel like I always view it as, like, kind of color commentator, but maybe sounding a little more like the color commentator who has a good feel for how the game is played as opposed to just, like, covering it in a neutral way.
Michael Batnick: Mike Green.
Michael Santoli: But the funny thing about it is I have zero interest and never have had an interest in actually doing this stuff. Like, I've never wanted to trade. I've. Multiple times they've been like, hey, come on over. Sell side, buy side, Try it out. And I've never been tempted.
Josh Brown: You've never been so right on something that ends up happening where you are, like, you know, in an alternate universe, I'm a 2 and 20, and I capitalize on this thing that I saw coming before anyone else, only in the
Michael Santoli: most abstract, hypothetical way. Not in a way where I legitimately, like, crave that feeling. Okay. And I just think it's honestly a temperament thing. Like, I don't have the gambling thing. And the more I've kind of covered
Josh Brown: markets and learned about it, you don't get the satisfaction out of a winning bet.
Michael Santoli: Not really.
Josh Brown: Is that what you mean when you say I don't have a bet?
Michael Batnick: You know what? Because you're an umpire, you call balls and strikes. You don't really make predictions.
Michael Santoli: It could be that. Yeah, that's true. I don't actually go out and say this stock's going to here, or I think the market's gonna have a 15% drop or anything like that, but I just feel like. And by the way, I love the research on gamblers where they. I don't know if it's Been debunked yet. But they say the thing that gamblers are chasing is not the winning. It's the moment right before you find out whether you won or lost. Really, it's like that suspense of, like, it might happen.
Josh Brown: It's like Christmas morning right before you pull the wrapping paper off the gift.
Michael Batnick: No, you're right.
Josh Brown: It might be when you're happy.
Michael Batnick: I remember last year I bet again. I moneylined the Lions in game. I think that's the Giants last year. And when Gibbs broke that run and you knew that you were about to hit the bed. It's the best feeling.
Michael Santoli: Yeah, well, yeah, exactly. Right before. But I mean, in terms of being a practitioner, like, I never would pretend that I could actually, you know, I could, like, fake it.
Josh Brown: I could have people come along, have people come along and said, why don't you join? Why don't you join my firm? We need a smart guy that understands markets, who could communicate to clients.
Michael Santoli: I'm sure you've been tempted over the years that's happened.
D: Yeah.
Michael Santoli: And, you know, I'm not going to say that I haven't in a contract negotiation, floated that prospect out there as a stalking horse.
Michael Batnick: Smart, smart.
Michael Santoli: They didn't bite. But, you know, I do think that it's a analogous role to be kind of a strategist as you guys, you know, anything like you guys are. But for me, it's been much more about, like, I didn't come into this with some innate love or interest in financial stuff. Like, my first job out of college was at this financial trade rag, this publisher of, like, a lot of newsletters and a trade magazine called Investment Dealers Digest. And when I was going for the interviews, I was pretty sure, but not 100% certain that the stock tables in the newspaper were in dollars. I was pretty sure. But they don't put the dollar sign. Maybe it's points of some sort and plus the fractions and everything at the time. So I kind of came into it, and then I realized that it's a great forum for all the things you would ever want to write about and talk about, which is like, winners and losers and these complex systems and trying to explain how the world works. And, you know, I think I also have looked up to people who've done this type of thing, whether it's a strategist or a writer who they utilize everything they know. Right. I mean, what kind of job?
Josh Brown: So, wait, I totally identify with that. Like, yesterday, I don't know anything about science.
Michael Santoli: Yeah.
Josh Brown: Yesterday I just happened to have personally found the news about Moderna effectively being able to in six weeks create a personalized cancer vaccine specifically tuned in to like your type of tumor and thereby injecting that MRNA into a person and having it go to work on any potential risks because it's. And then, and then the Stock went up 170% or something on the day. I just went down this whole rabbit hole of like, why is this such huge news? Because I'm not like a biotech trader. But I agree with you. Every day you get an opportunity to learn something new and talk about something completely new. And maybe people in other disciplines can say that, but finance touches money, touches everything in the whole world. So sports, anything that you could possibly be interested in there is a monetary angle.
Michael Santoli: I was a history major. I was like a liberal arts guy and I always joke that I majored in history because it included everything.
D: Right.
Michael Santoli: Like, you know, and so it's like the decision of not making a decision. So like, if we're talking about oil, you want to know about the history of Russia, wanting to have some kind of a domain over that part of the world, throughout Ukraine. That's relevant.
Josh Brown: But so it's not. But so where do you get your most satisfaction from then? It's so it's obviously not about being right. And most of the time you're not like make writing predictions anyway, is it? I wrote this beautifully. Like I did a 600 word column. I perfectly explained everything the reader could need. It was a little bit literary and it's just. It was like a flawless piece.
Michael Santoli: Is that for you something close to
Josh Brown: that more so than being right about something or being.
Michael Santoli: Yeah, I mean, obviously both are great, but it's much more the former. It's much more. I captured what's happening or what seems to be happening in a way that is efficient, eloquent, and it actually illuminates it for somebody reading it. It was looking at it from a way where it feels like, yeah, that feels right.
Josh Brown: So I think that's why you're my favorite investment writer, markets columnist, because you're
Michael Batnick: the best at that.
Josh Brown: You're the best at that, I think ever. And I could cite specific columns that you've done with the history thing that you're like, you must have written this 25 years ago. You're talking about the Hartford Insurance Group.
Michael Santoli: Oh yeah.
Josh Brown: And you do a column and you explain why are the insurance companies in Hartford? It turns out it's the highest elevation in New England.
Michael Batnick: That's where you got that.
Josh Brown: I found out I found out because he's told us.
Michael Batnick: He never gave you credit. I've heard that story a million times.
Michael Santoli: I never give credit to the person I heard it from. And what it really actually was, I believe it's like a very wide part of the river, so I almost misstated it, but.
Josh Brown: But you've done that. Yeah, every week for 30 years. It's unbelievable. You give people more than. The stock went up 5%. The CEO said this.
Michael Santoli: Yeah.
Josh Brown: Here's what you need to look out for in the earnings next week. You're doing, you're doing pros. It's, it stands out. And I just, I think it's brilliant.
Michael Santoli: Well, thanks. I mean. And you know, look, a lot of it goes back to. I came out of. I always say, people do what I do, roughly, financial journalism, any kind of journalism. Some people come at it because they're writers and they're good at articulating a thing or they feel like that's their edge. Other people are just like newshounds. They just want scoops. They just want to crack heads and find the information first. And I like to speak authoritatively about things and all that, but I kind of got off the scoop treadmill at a very young age and was like, let me just try and described. But also that goes back to Barron's where I spent 15 years. And you had a whole week of kind of like absorbing, digesting what's going on, seeing all the other short term storylines play out in a given week.
Josh Brown: You're filing on Friday night, filing on
Michael Santoli: Friday night and then on Saturday morning. At the time, you know, physical newspaper arriving on Saturday morning, you had a way of trying to just distill it into what mattered most or was most entertaining to read about the market.
Josh Brown: So now you're on TV, Michael. Why did the Dow just go up 25 points in the last 10 minutes?
Michael Santoli: Not a joke.
D: I got you.
Michael Santoli: That's exactly what it is.
Josh Brown: Well, I think you do both equally well and. All right. Did we do the show?
Michael Batnick: The show's over.
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Josh Brown: Inc. DBMF is the world's largest managed futures ETF as of July 31, 2026 with 4.16 billion a Today's show is brought to you by Vanguard. To all the financial advisors listening, let's talk bonds for a minute.
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Josh Brown: That's vanguard.com/audio. All investing is subject to risk. Vanguard Marketing Corporation Distributor. Okay, what's with the glasses? Is that paparazzi around? Are we laying low? Nicole all right, ladies and gentlemen, welcome to the world's greatest investing podcast. My name is Downtown Josh Brown. First time listeners, welcome. You're in for a treat Last time listeners. I'm sorry we tried. Did our best with me today as always, my co host, Mr. Michael Batnik. Michael, say hello.
Michael Batnick: Hello hello.
Josh Brown: We have financial media royalty in the house. Michael Santoli is co anchor of CNBC's Closing Bell overtime and serves as the network's senior markets commentator. He also writes regular columns and produces original video for CNBC.com, and CNBC PRO. Santoli joined CNBC in October 2015 from Yahoo Finance, where he was a senior columnist and before that of course, a legendary Ron at Barron's. Fifteen years as a columnist and feature writer, having begun his career in the early 90s covering the securities industry for Dow Jones Newswires. Mr. Santoli, thank you so much for being here.
Michael Santoli: So great to be here.
Josh Brown: I the crowd is going absolutely bananas.
Michael Santoli: Thanks for accepting my invitation to be invited.
Michael Batnick: All Right.
Josh Brown: I'm telling you that. I'm telling you that I have always wanted to have you on. But you're on closing bell overtime, and we taped the show exactly at 3:00'.
Michael Batnick: Clock. Josh is too nice. I've asked for you a million times and he always says he can't do it.
Josh Brown: I always say, that guy every time.
Michael Santoli: I appreciate being. Being considered and just left in the waiting room.
Josh Brown: I was a little nervous to ask you because I know you're. You're on tv, but I did want to tell you. You taught me the stock market. This is a true story, and I've told you this before, but I want the audience to understand.
Michael Santoli: You have. And you make it sound like I'm 30 years older than you, which is fine, but it's okay.
Josh Brown: But you really did because. So I started my career at Lou Lieberbaum blue chip firm. It was a bucket shop on Long Island. But my parents didn't know better. They knew somebody that worked there and they're like, go work for him. I was a aimless idiot. But I was smart enough to realize that the people I worked for didn't know anything. Like literally nothing. Except one guy. And I'll never forget this. I went up to him after 4 o'. Clock. All the brokers were doing cocaine or whatever they were doing. The room was empty. And I walked up to him and I said, you are the only person I see reading the Wall Street Journal. You seem to sort of know what's going on. How do I learn about stocks? And I'm a cold caller. I'm not even licensed. And he said, exactly. He said, very important. The C section of the Wall Street Journal every single day. Was that the money and investing?
Michael Santoli: Money investing?
Josh Brown: Yeah, money investing. Read the C section. Don't worry about B. It's politics. Don't worry about A. It's like New York Times. Read the C section. Okay, I'll do that. What else? If you wanna learn how to. If you wanna learn why the market's doing what it's doing every Saturday, read Barron's. Except for Abelson.
Michael Santoli: Yeah, exactly.
Josh Brown: He said, abelson, you will leave the business. Everybody else, he didn't say you, he. But you are the best columnist at Barron's at that time. And then the third thing he said, which is maybe where I learned the second most from, he said, business Week. Gene Marshall.
Michael Santoli: Yeah.
Josh Brown: If you want to learn how to pitch stocks, Gene Marshall is the best stock, individual stock storyteller in the world.
Michael Santoli: Yeah.
Josh Brown: And his column was called Inside Wall street and so I did it. I listened to this guy, and that's how I learned the stock market. And yours was the first column I'd read because of everything that we just talked about. I just felt like this guy's not just saying what's happening. He's a writer. And I read novels. I read literature. So it just. It resonated with me. Anyway, that's how I learned the stock market. So thank you. So thank you for that.
Michael Santoli: I'll take a tiny slice of the credit for that. Thank you. I mean, obviously, Barron's was a great place to just, like, find a voice. And also, you know, you're being read by people who know a whole lot more than you.
Josh Brown: Oh, I agree.
Michael Santoli: And you have to therefore rise to. In fact, one of the reasons I stepped off, you know, a lot of reasons, I felt like I wanted to move on from there, but one was I had got myself in this trap on this treadmill of, like, you know, this is, like, early 2010s, and it's like, I'm trying to stay one step ahead of these guys who stay two steps ahead of the overall market for a living, and they have all the resources. And, you know, and it was just exhausting. And you kind of think yourself into circles. And to be honest, a lot of times, what it did, being at Barron's was part of this, is it backed you into a kind of reflexive contrarianism, or, let me just say, the provocative thing that goes against the prevailing trend or whatever it is. And I kind of bristled at doing that all the time because, you know, you have to have a certain tolerance, like Alan did Abelson, of just, like, screaming into the darkness and saying, why does the market go down?
Josh Brown: So he was like, this feared there back then. Don't you feel like his columns now versus, like, what else is out there is pretty quaint? I don't even think it would get noticed on Twitter these days. But back then, it was like, oh, Abelson's about to go to town on Microsoft. Now it's like, it would just be
Michael Santoli: this florid way of saying, like, oh, there the crowd goes again, doing its silly herd like things. And once in a while, there would be a targeted takedown of a. Of a company or whatever. And, you know, I don't know if this is. If. If this is true, but I've had people come to me and. And point to the crash of 87, that period of time where the. That was close a Monday. And the weekend before that, Alan, who was Bearish leading up to that. But if you remember, the market peaked in that August, and it was down huge into the crash. Yeah, like, it was already kind of. Kind of a mess. And I think he was kind of saying, like, aha, look at this. Finally the world's coming around. To my way of thinking, there's some good stocks that are cheap now. Whatever. Next day, mark goes down 22%, and it was like, never again.
Josh Brown: It was. He had his moment.
Michael Santoli: I have no idea if that's true, but that's.
Josh Brown: So then he couldn't ever be bullish again. Just in case.
Michael Santoli: I mean, I think temperamentally, he wasn't geared to.
Josh Brown: Anyway, nobody ever expects the crash of 87. Right, right. It's like. It's like a Monty Python sketch.
Michael Santoli: Exactly.
Josh Brown: All right. And then I taught Michael the stock market. After you taught me that.
Michael Batnick: Yeah, sure. Who taught you the stock market?
Michael Santoli: Nobody really taught me anything. I think it's really just like, pulling from every direction and just like reading smart people and. Is that Barton Biggs book up there?
Michael Batnick: Yeah.
Michael Santoli: Cause Barton's a great example of what I'm talking about. It's like an English major, but you
Josh Brown: talked to a lot. The thing about what's different about you versus what Michael and I do. Michael and I, when we write, we're bloggers, we've written books, but, like, we're not sourced. We're just reading other people, synthesizing, looking at charts, looking at some data, coming up with our own opinions. You were talking to real people behind the scenes that were managing real money. And I think that's where your part of your edge probably came from.
Michael Santoli: That is true. And especially the people who are a little bit more tactical, willing to kind of stray away from, you know, the kind of standard playbook a little bit. Or not the in the closet indexer types. But you know what? These days, it's more what you do than not. Like I do still keep in touch with people and try to have a read on what they're thinking and saying, but they don't know any. They don't know anything anyway.
Josh Brown: Nobody knows.
Michael Santoli: That's almost comforting, though.
Michael Batnick: But you think it's the opposite now. Everyone knows everything because there's so much information.
Michael Santoli: I think, yeah, everyone knows a certain level of what's going on. I've always said that that was what I found valuable about, you know, when I first took to Twitter and, you know, you know, I was in. I was a news. I've been a newswire reader in real time my whole career. But it was just like, let me just keep it up with this to make sure I'm not missing anything. Right. And it is all there. Like, you sort of see the crescendo of attention in certain things, and. Yeah. So I don't know if anybody is any more saying, you know, in a broad sense on the overall market. I have an edge, and I'm gonna.
Josh Brown: But I think to your question, I think everyone is now so up to speed and is everyone is like, drinking from the fire hose.
Michael Santoli: Yeah.
Josh Brown: The skill is, like, figuring out what to really pay attention to, what not to. Which, of course, you can do it sometimes. You can't always do it all the time.
Michael Batnick: But that's what makes you so valuable. Still is, because there's almost too much now that people need somebody to synthesize.
Michael Santoli: Focus it down. Yeah.
Michael Batnick: Give me 800 words. What matters.
Michael Santoli: Right. Focus it down. What theme is either misunderstood? Look, a lot of this comes down. You guys know, it's like, what version of history applies today? Because you can find an analogous period or something that looks like this type of market behavior, and you could infer what you want from it, but nothing is.
Josh Brown: We're the. It's always different guys.
Michael Santoli: Yeah.
Josh Brown: Like, unapologetically.
Michael Santoli: Right.
Josh Brown: No, this time it is different. And last time, it was different, too. And the time before, like, that's our Michael.
Michael Batnick: I'm so curious. You just reminded me of this about, like, different interpretations.
Michael Santoli: Yeah.
Michael Batnick: So I was talking with Ben this week, and we've had this argument a billion different times. When does a bear market end? When does a bull market start?
Michael Santoli: Yeah.
Michael Batnick: So the analogy that I gave to Ben is you could look at a player like Vin Baker just as his box. Right. Basketball references like, oh, he was a great player. Like, whatever. He was. Okay. It's not the same thing to look back as to live through it.
Michael Santoli: Right.
Michael Batnick: So you can look back to 2009 as the start of the bull market, which is what Ben was arguing for. And I said, dude, no way was that a bull market. No way. I know. It was the end of the bear market, I suppose, like, on the chart.
Michael Santoli: Yeah.
Michael Batnick: But the bear market didn't actually end until 2012, 2013. Like, you were there.
Michael Santoli: Sure.
Michael Batnick: Who was talking about a bull market in 2011 during the double dip, the Euro stuff. When did people even start to say
Josh Brown: the word, I'm on yours, I'm on your market. I'm on your. Ben. You describe it. Ben's describing a rally. A rally is not a bull market.
Michael Batnick: But I think what matters is what People were saying in real time, and nobody was dumb enough to say.
Michael Santoli: I would say nobody was saying that. But I do think that the end of a bear market and the beginning of a bull market are really only defined in retrospect. So you're in this nether zone of like, we don't know how it's going to break from here and it's going to look very similar. A bear market rally. I can remember one of the most highest hit rate pieces that Barry Ritholtz ever wrote. It must be because it was called Bear Market Rally.
Josh Brown: Okay.
Michael Santoli: And it was like, I used to just stumble on it all the time for some reason.
Josh Brown: On the. Oh, on the big picture block.
Michael Santoli: On the big picture block. Yeah. And it was probably in late 2009.
Josh Brown: And it's like rage bait at that period of time. But that's the point that Michael's making. I know, saying bear market rally, or dare I say new secular bull market in 09, insane. People would think that you should be arrested.
Michael Santoli: Well, that brings me to my mystery broker guy, because that's kind of what he did in late 09. He says the financial crisis is over. We don't want.
Josh Brown: Should we clear up once and for all that it's not me.
Michael Santoli: Well, we had a little bit of vagueness about that up until last December when it actually was identified.
Josh Brown: Right.
Michael Santoli: But I wouldn't ever. I would always say it's nobody you've
Josh Brown: ever heard of, which is what makes sense.
Michael Batnick: Tell the story for people.
Michael Santoli: I was at Barron's and there was a guy who was a financial advisor, a broker who would occasionally write. He would send me his kind of client letter. And he had done so. He had written 1 in 07 that was really close to the top of the market. And he was like, this is going to fall apart. Not saying. He caught every beat. This was not March of 09 that he wrote me back. But he did later that year. I think it might have been August, September that year.
Michael Batnick: Close enough.
Michael Santoli: And he was like, it's done, it's over. Financial crisis is over. You have to be playing it like it's a new bull market. And I wrote about it without naming him because he did not want to be named. He didn't want credit. But you said mystery broker eventually. Not in the first. Not in the first time. The first time I was like, so there's this guy who writes me. Literally, that's how the thing started. And for me, it was a lesson of people's psychology of why they just fixated on this guy and they wanted it. Would ask for updates all the time on Twitter. I would update when he had a change of view. I would never call him and ask him what he thought because I felt like that was a little artificial. I want to make sure he's kind of got a new take before I highlight. And it became this weird franchise. It kind of got away from me. I didn't really want it to become a major thing. Over the years, he. He kind of flirted with the idea of being identified.
Josh Brown: The mystery broker etf.
Michael Santoli: And I would always tell you, I would always say. I would always say to everybody, you'll be disappointed when you find out because
Josh Brown: it's nobody from nowhere.
Michael Santoli: Nobody you heard of.
Josh Brown: Yeah.
Michael Santoli: And it's. You know, and then they would say, like, oh, I think it's Tepper. It's like Tepper talks about. Tepper goes on TV when he has something to say. Right.
Josh Brown: He talks through a mystery broker.
Michael Santoli: Why is that? What's.
Josh Brown: Or what do you mean by that? The psych. It speaks to the psychology of people.
Michael Santoli: Like, people think there's a secret person who knows the answer.
Josh Brown: I was going to say, I read somewhere 31% of US adults believe in magic.
Michael Santoli: Yeah.
Josh Brown: So that's like, they believe there's a man who can divine the future course of the stock market based on whatever signals he's looking at.
Michael Batnick: Michael, you have a bit in here from Adam Smith's the Money Game, which is my favorite investing book of all time. Like, by far. And I'm pretty sure it was him, but it could have been somebody else. Maybe it's Peter Bernstein, I can't remember, who said, like, nobody can see the future. We're all so bad at predicting what happens next, then why. Surely the public, like, must be onto it after a while. Like, all right, I get it. No, the quote was like, the demand being there. The predictions must be supplied.
Michael Santoli: That's right.
Michael Batnick: And it's demand from the public. People like, no, I know you can't really see the future. But like, so a family member of mine asked what Josh is Josh still bullish on CrowdStrike?
Michael Santoli: Okay.
Michael Batnick: And I was like, listen, yes, Josh has Uncle Morty.
Josh Brown: I'm still bullish.
Michael Batnick: Yes, I said. But he, you know, he would.
D: He.
Michael Batnick: This is what Josh would say. You probably know as much about the stock as I do. I'm bullish long term on cyber. I like the CEO. I like what they're doing, but what do I know? And he said, no, I know. But, like, does he still like the stock yeah. Like you can't convince people that you don't know the future.
Michael Santoli: That's exactly right. And people come to me all the time like, wow, I'd really love to get you, you know, across the table and you could tell me what, you know, what's really good, what's really going to happen.
Josh Brown: Can I tell you a thing that I've noticed in that regard, and I wonder if you've noticed it too. I have spent. I've done TV 14, 15 years. I've spent the entire time complaining that stock people are being held to a different standard than NFL commentators on Sunday, where they go around the table. Terry, what do you think? What do you think? I like the Steelers. And like, nobody. Nobody's like, you son of a bitch, you said the Dolphins. It's just like they made a prediction somehow.
Michael Santoli: They're worse than a coin flip against the spread.
Josh Brown: Fine. But they're right. They're wrong. They have biases. They like the player, they like the coach, they used to play for the team. It doesn't matter.
Michael Santoli: That's right.
Josh Brown: That's one standard. I go on cnbc.
Michael Santoli: Yeah.
Josh Brown: I'm right on three stocks in a row. The fourth one's not good. This scumbag Josh Brown. Okay, So I always like, whatever. I don't complain too much. I'm doing fine. But like, that was always. I've noticed that that's changing. In the era of everybody gambling, those guys are getting hell. I don't know if I want to be Howie Long right now. I might rather be Jim Cramer than Howie Long.
Michael Batnick: I want to pick those guys. Sixteen games, those guys get that thrust. They must all the fantasy.
Josh Brown: Because now that's almost being looked at as financial now that you put. Put gambling into Robinhood.
Michael Santoli: Yeah.
Josh Brown: And prediction markets into the broker, into interactive brokers. Now all of a sudden those guys are like being treated like. Like Kramer.
Michael Santoli: Right. And I don't know, Kramer is like real sophisticated seeming tip sheet type, you know, program. It's like, I.
Josh Brown: Have you noticed this?
Michael Santoli: Definitely.
Josh Brown: Okay.
Michael Santoli: I'll never forget this kind of came into a little more clarity for me when dirt right in the pandemic meme stock craze. And of course, we could look at Hertz being bought up when it was in bankruptcy or the whole thing. And there was a quote, I believe it's in the FT story about this. And they went to a guy who's a golf pro at some club and he's been playing these stocks and they asked him about it. And it's like you don't really know anything about this. What's the story? He's like, no, look, I mean, it's better than sports gambling because if I'm wrong on a game, I lose everything.
Josh Brown: Zero. Yeah, yeah.
Michael Santoli: If I buy Hertz, it goes down 30%. I still have 70%. I'm like, I guess, yeah.
Josh Brown: That's why you got to do the 10 team parlay bird cage that Michael does. Then you get to be wrong on multiple legs.
D: Right.
Josh Brown: Okay.
Michael Santoli: You send somebody up to Fox woods to place the bets for you in a helicopter. Yeah, I know about it.
Josh Brown: I want to play a video for you. Okay.
Michael Santoli: Yeah.
Josh Brown: All right. We have that clip from Michael's birthday party.
D: 1989, 25 years ago, when the country announced good numbers, interest rates went down because we had a stronger country. Now when we announce good numbers, the better they are, the worse it is for interest rates. So we could be. We could have a GDP of 10 times. You know, they say, oh, it's going to be three times or 4.1. We could have a GDP of 10, 12, 15 times. If they just leave us alone, let us let the rates go down, we should pay the lowest interest rates. You know, every point of interest is 600 billion. Think of that. Every point of interest is 600 billion. Two points means we make a fortune, but we keep driving it up. It's a very unfair system. And I've said it now for a long time, when our country does well, interest rates should go down. I mean, every time I hear our country's doing well, I say, oh, it's too bad, because they lift up interest rates. They should drop interest rates because. Because it means we have a strong country and it's all based on credit, meaning good credit, and we have the best credit, and we'd pay off the debt very easily, very quickly. But if somebody is paying a half a point, we should be paying a half a point, not somebody else. Right now, I think it's Switzerland has the lowest again. And I don't want to single them out, but if you take our business away from Switzerland, they have problems. So why are they paying a half a point and we're paying much more than that? Does that make sense?
Josh Brown: No, no, no. It does. No, no, it does make sense. All right, so I actually agree with everything he said, other than the numbers. The first thing he said was, right, the premise. But it occurred to me. It occurred to me Trump thinks like a borrower. Of course, he's a real estate guy and a casino guy.
Michael Santoli: A borrower who was repeatedly cut off and who repeatedly went bankrupt and who therefore did not have credit or access to it.
Josh Brown: Yes. But as a real estate guy, he's like, if my business is going great.
Michael Santoli: Exactly.
Josh Brown: I'm gonna pay a lower interest rate. Traders don't think that way. Traders think if things keep going this well, they're gonna have to tighten the money supply.
Michael Santoli: Yeah.
Josh Brown: And that's why the rates go up.
Michael Santoli: Of course.
Josh Brown: Okay, but I'm making this point. People were mocking him. He's like, sort of. Right. I don't know where to go.
Michael Santoli: I mean, he's not at all right in talking about interest rates.
D: No.
Michael Santoli: But he's right that we should be
Josh Brown: the United States and the economy is going great.
Michael Santoli: Yeah.
Josh Brown: And I think that's fairly true.
Michael Santoli: Yes.
Josh Brown: Not for every single person in the economy, but right now there's a ton of activity. People are making money, consumers are spending. It's like, it's good businesses spending. He sort of has a point like, wait, the news is good and they raise our interest rate. I understand the disconnect, but I just thought that was an interesting way of phrasing it.
Michael Santoli: And I think he has said things like this for years. And it's very clear it's exactly where it's coming from, which is what you said. But also he's not talking about the country, it's the government. And the government has to sell trillions of dollars worth of paper every year. And next year it's gonna be $2 trillion more than it was this year. And so obviously global markets set those rates. We don't pay a premium because of bad credit. Right. It's because of the macro conditions. By the way, we've been so fixated this week on where treasury yields are.
Josh Brown: It's not the credit worthiness that's driving the yields.
Michael Santoli: No, exactly.
Josh Brown: Which is what he's experienced.
Michael Santoli: That's right. It's definitely not directly creditworthiness. Now, I think there's a lot of debate as to why rates are where they are. If you look longer term. I don't want to get too wonky about it, but how low do we think 10 year yield should be when nominal GDP is like close to 6% and we have all this borrowing going on to invest from the private sector and everywhere else. It's not weird. It's like it's kind of in the range of where you'd expect it to be.
Josh Brown: So here are the things. I want to hear your response to them. Thing one is political dysfunction. As if like three years ago, everything Was like not politically dysfunctional. Okay, fine, throw that out. Maybe that's an issue, but it's like a forever issue.
Michael Batnick: It's global yields.
Josh Brown: Okay. Thing two, to Michael's point, this is happening everywhere with long bonds in every country. Thing three, $1.7 trillion worth of corporate debt, which is like 30% more than the same time last year. Competition for, you know, it's AAA debt for the most part on top of
Michael Santoli: at least sticky inflation, if not rising.
Michael Batnick: Yeah. The war and higher prices.
Josh Brown: So to you, this is where the rates should be.
Michael Santoli: Multiple weather systems all interacting in a way that are pushing in the direction of higher, not lower rates. It's everything you said. It's basically the world is demanding so much capital, the bond market has to reprice and ration it. Right. You have to just find the clearing price through higher yields. The fiscal concerns, which arguably you could say long term are kind of a credit worthiness thing in a vague way. I always feel like that's, it's kind of like the, the underlying autoimmune condition where it's like under high stress, all of a sudden that starts to flare up and it starts to create symptoms and people start to get really worried about it. But it's not really.
Josh Brown: You're describing the difference between the weather and the climate.
Michael Batnick: Yeah.
Michael Santoli: And I think. And so the fiscal concerns are always going to be there. But like you say $40 trillion in U.S. debt today, we could have had the same panic at 30. I don't think there's a magic hard trigger level where all of a sudden the world changes. What I will say, you talk about political dysfunction. So we're basically at 3% of GDP goes to paying interest on the debt. Okay. We were last there in the early 90s. So in the early 90s what it did create was a single issue. Third party presidential candidate Ross Perot, like literally that's all he cared about was gotta bring down the debt trade and the debt.
Josh Brown: Right.
Michael Santoli: And you know, right or wrong, it did. You know, maybe just because the pendulum swung and you had gridlock between Congress and the President in the 90s you actually did get fiscal discipline. Even though nobody really kind of planned for it or expected or wanted it.
Josh Brown: Right.
Michael Santoli: And I also think that's one of the reasons and you know, reason that you know, the kind of hoped for AI productivity miracle might have a harder time happening in exactly the way it happened in the 90s. Because in the 90s you had, you know, debt to GDP coming steadily down the entire time to the point where you had a surplus on paper by the end of the 90s. The other piece of it is the demographics. You had, you know, very few retired people per working person, which is not the case. Not the case now. So I just feel like those are a little bit of headwinds to some kind of huge productivity boost. But as you guys are saying, it's
Josh Brown: always different up the chart, guys, can we do that? What is this? What is this saying?
Michael Santoli: This is.
Josh Brown: Yeah, public debt outstanding. We've got two colors. The light color is debt held by the public, which Michael and I have said like, yeah, we owe ourselves money. Yeah, we are the investors in the debt and the debtors robbing Peter to pay Paul. And then the other is intra governmental debt, which I don't know what is it?
Michael Santoli: It's like a accounting plug factor for like Social Security, trust funds and other things that we say, you know, they have a surplus now, but. And so we say that they own Treasuries.
Josh Brown: But is it too convenient for us, me and Michael, anyone else to say, hey, we're the people that hold the Treasuries, we own them in our money market funds, we own them in our 401ks, we own them like we're, we're the whole. Is that too convenient and simple to just say, ah, 40 trillion, we own 30 of it.
Michael Santoli: I mean, I don't, I don't know that you can dismiss it. Like, in other words, any level will be defined because we owe it to ourselves. Because at some point, like total turtles all the way down.
Josh Brown: Turtles all the way down.
Michael Santoli: Yeah, it crowds out other productive uses of capital.
Michael Batnick: Let me ask this, but I don't know, are you surprised how strong the stock market is? So you have basically every index at or near an all time high. We are still involved with the war. The straight is still closed. That should have been or could have been or would have been predicted to have been a black swan event. Energy limit up, stocks limit down.
Michael Santoli: Right.
Michael Batnick: That didn't happen. The AI trade is not really that hot. Yes, the memory stocks and the chips had a moment, but Nvidia is flat, Meta is down, Microsoft is down. Google, whatever, Apple's up. But it's not like the Mag 7 are powering the stock market higher. All their free cash flow is down. You had a report earlier this week that OpenAI's revenue numbers look kind of shitty. I would have thought just. And with interest rates where they are, given all this, that the market would be, I don't know, in a normal 12% drawdown considering how long the bull market has lasted.
Michael Santoli: Yeah, I wouldn't say I'm outright surprised. I do think all the things you mentioned could easily have served as a handy excuse easily for something much more on the downside we have now. On the one hand, I don't know how much trouble the economy or the market can get into with 6% nominal growth, deficits, 6% of GDP corporate earnings. Absolutely flying to the point where I'm more worried about over earning and overstating of earnings than anything else. But they're doing earnings are just supporting things. And I think this is massive swing from, you know, labor to capital. That's all going on. And that's to the benefit of what the s and P500 captures, which is mostly a business to business capital goods kind of wholesale economy. And so for those reasons, I'm not super surprised. I guess like it wouldn't also surprise me to be down a bit. It's a bull market that to me that means 3 to 7% drops happen for almost random reasons.
Josh Brown: You make such a great point. Like micron is 10 times bigger than Disney.
D: Yeah.
Josh Brown: People think about how's the economy doing? They think about, by the way, Disney's doing okay. It's like $107 stock again. But like people when they think about how's the economy doing, their minds go to Disney. Maybe a hotel chain, Target or something. Target. I mean, I guess Apple. But like their minds don't go to Micron. But that's what's in the earnings.
Michael Santoli: That's what's, that's what's driving it. I mean, look, I was saying this in June back when, you know, semis could, you know, we're just vertical to the upside is so many approaches and strategies got you to the same place. It's like, oh, I buy the best earnings revision stocks. I buy the best price momentum stocks. I buy growth at a reasonable in the same stocks. Congrats. You own semis and value.
Michael Batnick: Micron's the biggest value.
Michael Santoli: Yeah, exactly. Very true. And so you had a situation where it's like 18% of the S&P is semis. Another 16% is the four hyperscalers. They kind of were a zero something trading against each other for a while. I think another part of the answer, and I know you guys have kind of tried to puzzle out this, this whole dynamic of this immaculate rotation, as I call it, where it's just like on a given day, oh, semis are down 2%. That has to mean Apple's up a percent and a half and healthcare's flying. Like it's just almost like programmatic. It feels programmatic, it's very mechanical and it kind of is. Right. It's like there's these big trays on where the incremental dollar, at least tactically, is all about trading one factor against the other, essentially trying to stay neutral across all these different variables and also not be out of the market. Like you kind of, you know, all the signals say you should probably have exposure to equities, but on the other hand, nobody has to buy.
Josh Brown: But when you talk to traders about the modern market, most likely you're not talking to a trader who's trading news. You're most likely talking to somebody that works at a hedge fund that's acting as a market maker. So if you talk to somebody at Jane street or Susquehanna or Citadel, like they don't give a shit what the news is. So that mechanical thing that you're describing, that rotation, we just look at headlines and say, oh, that's why this is happening. But it's not that way. It's machines with machines and every once in a while there'll be like a moderna esque moment where the news actually is the thing that the traders are reacting to. I think a lot of intraday trading, it's senseless, it's mindless.
Michael Santoli: Intraday for sure. I do think, look, there's news, there's economic data that gets released, it creates a bit of a flutter, something moves on it and then everything else we're talking about sort of like reacts counter moves against it.
Josh Brown: Yes.
Michael Batnick: I feel like this year more than any in recent memory. John, Charlotte on please. It does feel like it's basket trading.
Michael Santoli: Yeah.
Michael Batnick: Where it's like so predictable that one is going to happen and one thing will get taken up or down by it to the point where Bespoke said we haven't seen an all or nothing day when the advance when basically every stock went up or every stock went down. We haven't had that since December 31, 2025. That's the longest streak since 2001. Now a huge part of this is March and the energy stocks not being all or nothing. So that sort of distorts us a little bit. But it's also been like AI is going to kill everything. Oh shit. AI is actually not what we thought it was. So it's the AI, semi, the AI software stuff. It's just been a very interesting year.
Michael Santoli: It has. So there are all these offset trades and the other piece of it is you mentioned Energy. And you know, everybody is on this idea of like this. This group of stocks that act as negative.
Michael Batnick: Negative beta. Yeah.
Michael Santoli: So now that's just an outgrowth of this current situation, by the way. So much of this stuff was like, oh, how many days have we had negative breath when the index was up? And vice versa. That's all downstream of the concentration.
Michael Batnick: Correct.
Michael Santoli: I mean, that mathematically only happens.
Michael Batnick: Oh, this has never happened. Yeah, it never looked like this.
Michael Santoli: Exactly. But the negative beta thing is really fascinating to me because I think it became really consensus y in the industry that energy is your diversifier because bonds can't be owned at least in the way they used to be.
Michael Batnick: So describe this factor that we're talking about.
Michael Santoli: So it means stocks that have a tendency to move in the opposite direction of the s and P500 on a given day or even longer than a day. And therefore that used to be diversified,
Josh Brown: that used to be utilities. That doesn't work anymore.
Michael Santoli: Exactly.
Josh Brown: Those are AI trades.
Michael Santoli: Now they're AI trades. A lot of trades are a little more rate sensitive than they used to be, like, you know, tech, hardware and all that. So I think that's definitely part of it. What I want to hesitate to actually suggest is it's not the same as saying like, the machines are mindless and the machines run the market and therefore, you know, it doesn't make any sense and it's not connected to fundamentals. Because if there was a macro shock, if there was something that came along that really did change the underlying equation,
Michael Batnick: another Covid, every stock would drop.
Josh Brown: Of course, the machines in that scenario, the first move they make is they turn off, right? And then they might trade.
Michael Santoli: But I've been dealing with this my whole career where it's like, you know, HFT was a huge thing 15 years ago, as if it was just like, you know, and I was like, yeah, fine, hft, they're market makers, you know, they're kind of trading these little like flow models.
Michael Batnick: Flash bros.
D: Flash boys.
Josh Brown: Flash boys era.
Michael Santoli: Exactly. And it's like, oh, you know what these models are, right? Like 51% of all trades and they're making a sliver. It's not like they're racking up the big gains. And it's funny, when I also first got into it, I get into the business in 92. It's really psychologically still in the hangover of the 87 crash and like the 1990 real estate crash and the LBO crash, savings, loan, all that's a. Financial markets really had it bad. And so if you remember, after the E7 crash, they did this forensic thing. What caused it? Oh, program trading.
Michael Batnick: Portfolio insurance.
Josh Brown: Portfolio insurance.
Michael Santoli: So from that moment on, they mandated every single week, there was something that came out. New York Stock Exchange. That was the program trading activity report on Thursday after the close. And I used to look at it every week. It was in the wires, and it would be kind of meaningless, but it'd show you, like, volumes. Each firm executed by index arb. Strategy or other strategies. And it's like, what are we doing here? I don't know what to do with this information, but somebody decided that that was the tail that wagged the dog once. Let's make sure it doesn't wag it again. And so years later, this is probably mid 2000s, I was in with the head of equity capital markets at one of the big firms, and he said, yeah, he's like, that wasn't really a scientific thing. Program trading. It was like his definition of at least 20 stocks traded as part of a strategy. I'm working in order of multiple stuff. But it was open to interpretation. And he said back in the day, the stock exchange, the examiners would be like, if there's a gray area, just say, it's not a program. We don't want to make it look like this is all bots doing this stuff. And then at some point in the early 2000s, it changed. And New York stock chain is like, no, no. We want to seem high tech. We want to seem like we're off with it. More program trading.
Josh Brown: Good.
Michael Santoli: Yeah. Loaded into program trading.
Josh Brown: So I sort of see flows that way. I don't know what to do with it exactly. Is it contrarian? Do I always? Do I?
Michael Batnick: It's just interesting.
Josh Brown: So it's for. It's for content. Yeah, but do I need to know? At Merrill Lynch,
Michael Santoli: I know, like, we have a weekly report is what you're getting.
Josh Brown: It's institutions, hedge funds, retail. Retail bought the most tech stocks in five weeks.
Michael Santoli: Okay, good, Bad.
Michael Batnick: How about this? That data is probably valuable to somebody.
Michael Santoli: I do think there's a way to actually make a mod. Look, you guys had Todd Sohn on from Strategus. He does good work with ETF Flows insectors.
Josh Brown: As a sentiment. As a sentiment, you create bands that
Michael Santoli: say, this is normal, this is extreme. And then you can trade it. I will say that. You know, one thing that has been consistent is people now track retail net buying obsessively.
Michael Batnick: Vanda does that.
Michael Santoli: Vanda does that. It's been happening especially since the meme Stock got crazy and definitely retail is much more of a force, much more active. They push and push. They stampede in some directions and they're just. They buy like that's what they mostly do. But Scott Rubner at Citadel, who's this flow guy used to be at Goldman, you know you have retail net selling. It's not happened often. Last week of March, guess what? The market bottom there and the last week of July.
Josh Brown: It's just another way of saying the vix. Exactly.
Michael Santoli: It's another way of saying like yeah, stocks go down.
Josh Brown: We could arrive at that answer in 50 different ways. I could look at RSI at 30. I could look at advanced decline washed out like it's, it's all the same.
Michael Santoli: My only take on that is I kind of bristle at the. What's happened more recently which is to lionize retail traders as actually they're the ones that are the smart money because they always buy the diploma. They buy the dip until it gets a little scary or goes on a few weeks and then they sell not in 401ks.
Josh Brown: That's the exemption that proves the rule.
Michael Santoli: But that's different. But that's like.
Josh Brown: That's the best investing of course anywhere in the country. Better than any hedge fund they will buy. Vanguard talked about how they reacted to Covid. Yeah, the answer is they didn't. I know they literally bought every, every print on the way down.
Michael Santoli: Well, Vanguard also fire a client that trades too much and gets too over excited. But that's good.
Josh Brown: I'm just, you know they don't act like retail investors. But they are. Yeah, it's the same people.
Michael Batnick: Here's another great example of just it's. It's great stuff to talk about. Is it actionable? I don't know. But what we're looking at. John authors shared this chart. DRAM etf, total assets. So he's comparing it with the SOX index. And we know semiconductors got the shit kicked out of them during the situational unwind and then individual investors didn't care. They just kept piling in. Yeah and Michael, you're right. I think there's maybe too much of them. They're now the smart money. It's a reflection of the market environment that we're in. So it's not to disparage them.
Michael Santoli: 100% credit to them.
Michael Batnick: They've had the boss to continue to pile in. It's. And it's a reflection of the market that we're in.
Michael Santoli: Yeah, there's no doubt about it. And they have the tools now. And you know, I also think there's a, there's a thing with retail is they don't crystallize losses.
Michael Batnick: What do you mean?
Michael Santoli: If, if something's down, they don't. They're not quick to sell it. It's like that'll come back. And so therefore there always seem to be. The next move is always to buy or it's more often to buy than not. I know that this isn't borne out by like when Interactive Brokers says what their people are doing. They're quasi hedge funds, they're kind of semi professional traders, a lot of that flow. But I do, yeah, I totally agree with that. I mean now you have.
Josh Brown: They don't sell unless it's a margin call.
Michael Santoli: I don't get obsessed with zero dated maturity options and all that stuff. It's kind of just noise and if anything it creates a little more of a mean reversion effect throughout the day. It's kind of like, it kind of keeps things in a range over the course of a day because it's kind of like the public buys the calls in the morning, the street sells them to them and then by the end of the day you have all this decay in the options values and then they buy them.
Michael Batnick: But it's so true. There's this push and pull because Citadel millennium, they're down 5%. Sell. Don't care. Sell.
Michael Santoli: Yes.
Michael Batnick: And the retail's like, great, we're sold to us. Thank you.
Michael Santoli: Totally. And I think there's so much of that going on. I've been working on this thing where the options income funds are like private Social Security because it's like the young people, they, they pay for Juice Call premium to play the upside in these stocks and you have all these people who just want income out of options and they're just like, let's sell the juice calls, covered calls, somebody's.
Michael Batnick: I never thought about that.
Michael Santoli: Yeah, you know, it's kind of, you know, it's sort of overstated that it's actually like, you know, funding the retirements of people. But I know people own those.
D: Oh, you're right.
Josh Brown: And look at the most popular ETFs this year. A lot of like a lot of the names in the winner's circle are selling calls.
Michael Batnick: So Neos and Innovator, the ones that Goldman just bought, both of them, big time options ETFs.
Josh Brown: I find it somewhat ironic transfer from traders to investors.
Michael Santoli: I find it slightly ironic because I understood why that stuff became popular. At 0% interest rates, money markets Weren't yielding anything, but I guess people just like it.
Michael Batnick: So Ben and I interviewed Bruce bond in 2018 or 19 and I immediately said, holy shit, this could be a huge category. And the reason why I was so confident, because there is, there was never, there's never been anything for the everyday investor where they can guarantee their range of outcomes. Yeah, with a 6040 portfolio, all right, you're shrinking the range a little bit. But then 22 comes along. Like you don't. Right. So it's offset a little bit. But when you could say negative 10 up to plus 12, now that doesn't work for me. Okay, fine. Negative 5 plus up to plus 7. Oh, that's, that's more my flavor. Yeah, there's never been anything like that with the stock market where you can say, this is the risk I want.
Michael Santoli: I totally agree. And you know, there's a reason that annuities have been around forever. People, psychologically, some people just want the certainty of outcome.
Josh Brown: You put this in the doc, I guess, about the current bull market. Prudent to assume that the valuation peak is in, then be open to pleasant surprise. If not. What do you mean?
Michael Batnick: Yeah, what's your problem?
Michael Santoli: So at least on a PE basis,
Josh Brown: why are you trying to confuse everyone?
Michael Santoli: Santoli, I know we get to 23 times last October forward, you know, you were there in the pandemic, but that was depressed earnings. So you're on 23 times kind of peak earnings at the time. And since then it's compressed. Right. Earnings have grown a lot faster than stocks have gone up, even though stocks are up since that. And I just feel like a few things are mitigating the rebuilding of that PE premium. One of them is, and I know you guys talk about this the whole like, well, we don't have free cash flow anymore. Right. This is all kind of like capex heavy capital intensive type drivers of the growth right now actually on a forward price to free cash flow basis, we're at 30 in the S and P. Don't love that. And so.
Josh Brown: But it's voluntary. They're doing it on purpose.
Michael Santoli: Yes, I agree.
Josh Brown: And everyone knows it's not against their will.
Michael Santoli: I totally agree with that. And that's the fascinating element to me, which is it's funny because you know, you have like Google does their earnings call and like, you know, they get out there and they're like, no, it's early. Trust me, it's still early. I'm not sure investors want to still hear it's early. Like they want to get to a destination.
Josh Brown: People running these companies, they're, they grew up worshiping Jeff Bezos.
Michael Santoli: Totally.
Josh Brown: That's what they studied when they, when they were in business school or when they were at Stanford. That's what they studied.
Michael Santoli: No, the shareholder letter from the S1 is like in their crib.
Josh Brown: That's right. So these aren't Amazon cover bands.
Michael Santoli: Totally.
Josh Brown: And Wall Street's not stupid. They get it like, oh, you're doing this on purpose. Okay, in that case we can live with it. I mean, to a point.
Michael Santoli: Well, look, and I also totally agree with the other bull case of these companies are responding to genuine demand signals. It's not like totally speculative that we're gonna build it and maybe somebody's gonna use this stuff. I still think it's a little bit of a threat. Like capitalism shouldn't work that everyone all at once decides to spend all the free cash flow on the same thing to build the same thing and everybody gets a great return off of it. But maybe that's not today.
Michael Batnick: This is what Kadraski is saying. He's saying, I get the fundamental evolutionary technology. We're not spending because we're dumbasses.
Josh Brown: Exactly.
Michael Batnick: But the ROI is just not going to be there.
Michael Santoli: And maybe that's okay. I don't know. The longer I do this, the more I sort of doubt that there are any of these ironclad rules of like what creates value and what does stocks need to like I was always pushing back against the oh, buybacks, jack up the market.
Josh Brown: Yeah, well we don't have any anymore. So you don't have any?
Michael Santoli: Well, you have a trillion dollars worth, but it's not as much relative to the size of the market cap. But it just didn't really hold up. Like it was just. It didn't goose the stocks that were doing the biggest buybacks in certain circumstances. They work. I do think that the economy runs on stock based compensation to a degree most people don't appreciate. And so you have these huge companies that their buybacks are effectively soaking up the equity compensation that they give to their employees. And that's great, cuz those people have the money.
Josh Brown: Who's more disingenuous generally, bulls or bears? You know what I mean by that?
Michael Santoli: I do, I do.
Josh Brown: I would say because I think it's a landslide.
Michael Santoli: I think bears are probably more opportunistic in terms of the information that they
Josh Brown: will change the argument but maintain the stance almost no matter what. Here's why I don't think bulls do that.
Michael Batnick: Here's why you're right. Bulls will always concede that there is a bearish case out there, almost universally that's like, yeah, we know. Like, I understand the risk. I'm not naive. Bears never said that there's upside risk. It's just they just keep digging and digging and digging and then changing the story.
Josh Brown: So here's why I'm asking you that question, because I know you. I know you respect the bulls and the bears at all times. And that's, that's, I think, why you, you have almost universal approval on Wall Street. People say, like people, you have credibility. Let's, let's, let's put it that way. You have credibility on both sides. It's not that you're like catering to the bulls this week and then the bears, you just, you, you recognize the risks, you write about them, you don't pretend they don't exist, but you're also not one of them. Just for clicks. You're not gonna say the scariest shit you can in the headline to get people to click the way I do on YouTube. Okay, wait a minute. But here's my point. Two years ago, 20, 24, we were in a bull market, extremely concentrated, definitely led by Mag 7. Can't argue it. And the bears said, this is bad. Here's what happens to concentration. Look what happened at the end of the 50s, NIF 1960, this time, that time. And then all of a sudden the market broadened out over like two years later to the point where we had multiple Mag 7 names in 20% drawdowns, and the S and P was at all time highs.
D: Right.
Josh Brown: Did one of those people come along and say, okay, I was bearish about that thing, that thing has been cured.
Michael Santoli: Right.
Josh Brown: Therefore. Therefore, I'm not bearish anymore? No. They move on to the national debt. No, it's the dissent, the disingenuous thing that I'm referring to.
Michael Santoli: I agree with that. And look, I start with the premise, as everybody should, that market goes up 70% of all years. It goes up 55% of all days. You're fighting the tide. If you really think that you're going to be down a lot and on a sustained basis.
Josh Brown: Conspiracy now.
Michael Santoli: Yeah. I mean, every incentive moves in that direction. Why wouldn't it? You know, that being said, I do find myself just like temperamentally, not always wanting to play along. Like in this recent period where. And it's funny because I sit there in front of the wires, in front of the screens, listening to CNBC and all the guests all day, and you start to hear the mantra, you start to hear the echoes everyone starts to sound. And once the market came back after the July sell off, it was like earnings. Earnings on my North Star. Earnings are the lifeblood of a bull market. And everyone is very self congratulatory about having stayed the course because it feels virtuous and it was all fundamentals all along and it's a foolish game to bet against it. I told you not to panic and that's fine. But I start to bristle at that a little bit. Not because I think they're wrong, but because I wrote about it this week in my column where I said In Mad Men, Dr. Fay Miller says to Don Draper, you only like the beginnings of things. And I only like the beginnings of things. I like when a. When a rally feels like it's in the face of challenges or it's not just extending it.
Josh Brown: By the time everyone agrees earnings were amazing, you're like, yeah, I know.
Michael Santoli: But what I don't do anymore is say that's why it's over. Because it probably isn't over.
Josh Brown: Yeah.
Michael Batnick: I still feel like there is a wall of worry. There is a lot of disbelief out there. But I would be moderately surprised if a year from now we're having the same conversations with the continued negative free cash flow, the continued, like, it's coming, it's coming, it's going to pay off. I would be surprised if the market is giving is cool with that a year from now.
Michael Santoli: Yeah, I think that's right. Or at least if there's not some kind of intervening jolt, some kind of gut check, some kind of. Because honestly, I sometimes feel like that's what the market needs. It's like if it goes along on the same storyline for a while, it needs a scare and a scare and relief cycle is often what can kind of cleanse.
Michael Batnick: You need that. I love it.
Josh Brown: So we had that. We had situational awareness. We had a leverage average unwind in Korea, and then the earnings bailed us out. What else would you want to be bailed out?
Michael Santoli: No, I don't think that that's wrong. I think that the extraordinary part of it was you never have more than the 3% pullback in the S&P 500. So you had the choreography work so well, the rotation, choreography. You mentioned the broadening. I'm known for not necessarily thinking that a broader market is by definition a more stable or rewarding market.
Michael Batnick: Mauboussin empirically proved that. He said Mauboussin has a piece with Kylan. He said actually bull Markets are where concentration happens. Be careful what, beware what you wish for.
Michael Santoli: I agree with that. But, but they can be like these interludes, these phases where when the big stuff is correcting. It's good if, if, if, if the rest of the market kind of, you know rises to take up the slack. I mean that's what's happened multiple times.
Josh Brown: The other thing though that I think has been a hallmark of the last 15 years. Everyone assumes everything's going to be a catch down.
Michael Santoli: Yeah.
Josh Brown: So they assume anytime there's a negative divergence, small caps are lagging.
Michael Santoli: Yeah.
Josh Brown: Or value stocks are in a 20% drawdown while growth is at all time highs. They assume the cure is going to be the whole market succumbs.
Michael Santoli: Sure.
Josh Brown: And I know that does happen, but almost never what actually happens is it's a catch up.
Michael Santoli: Yeah.
Josh Brown: And that's got to drive the bears absolutely insane.
Michael Santoli: Probably they even are aware of it. Yeah, probably so. I mean look, the flip side of that is, you know this, this chart that I just, I, I'm not going to expect anyone to see it but it basically shows like.
Josh Brown: Did you hand draw that? That looks like a, that looks like a.
Michael Santoli: From somebody who had hand drawn it.
Josh Brown: Okay.
Michael Santoli: Percentage of S p stocks above 70% above the 200 average exceeding 70%. So 70 of all stocks above the 200 day. And these are all periods when you had a 15 to 20% drop from that level. Like in other words it's not like a get out of jail free card. Oh, it's a broad line.
Michael Batnick: So basically is this as good as it gets? Which brings me to this was situated awareness a tremor. The same way that LTCM was, the same way that the quant quick was like are we a year two years away from.
Josh Brown: Is it the canary in the coal mine?
Michael Santoli: I don't know how to answer it. I don't think it has to be like for example, I don't think long term capital was a tremor that somehow you could draw a direct line from there to March had nothing to do with it.
Michael Batnick: You're right.
Michael Santoli: If anything the only thing you could say is it creates this huge global tightening of financial conditions. Recession scare. Fed has to cut gun the economy into 99 and then you create the excesses. So in that way maybe. But it wasn't the long term capital. The imbalances themselves.
Michael Batnick: Where are you on this? People say and I'm sympathetic to this. This is a service based economy. There is so much money. Something seriously bad needs to happen for that train to be slowed. Down.
Michael Santoli: Sure. I mean I think that adds a stability to the macro. I think so many of those rules of thumb like we were talking about, like oh, market 15 times earnings is the long term multiple.
Michael Batnick: Not now it's not.
Michael Santoli: Et cetera. No, I know. I'm saying that when I came up made sense. That's where it was. Well, that's because you used to be like trapped in this manufacturing business cycle.
Michael Batnick: Margins, every three years, margins used to mean revert.
Josh Brown: Right.
Michael Santoli: And now that doesn't mean. I don't think people are over earning right now because I. John, we're going
Josh Brown: to title the show Earnings Can Never Fall. Dash Michael Santoli.
D: Yeah.
Josh Brown: I mean with his Twitter account in the headline.
Michael Santoli: Plus, you know, it's, there's all. I mean, you want to have bears. Like there used to be a big thing of like, I can't believe that people bless operating earnings as the standard.
Josh Brown: Yeah.
Michael Santoli: You think about that. Like it used to be gap earnings.
Josh Brown: What about this one? This, the current crop of CEOs and CFOs might be the most battle tested group of executives collectively ever to run the s and P500 companies. Look at what the last 10 years has been like for these people. And you could start 10 years ago, you could start five years ago, but let's just say Trump won Trump term one. Literally being screamed at on Twitter by the President. Threatened roll right into the original tariff and all the issues with soybeans and whatever we were dealing with in 2018 manufacturing, blah, blah, blah. Roll right into Covid. January 6th, gay pride issues at the retailers, like how dare you put that display up. Disney having fights, culture war, stuff in the parks, blah blah, blah, blah, blah, blah. Right. Right into like the next Trump term, The new tariffs, Liberation Day, the Iran war record, high inflation, work from home. Like these people running these companies. And I know some, there's been some turnover, but by and large can you think of another era like without going to World War II.
Michael Santoli: Yeah.
Josh Brown: Of people running companies through this shit that never ends and seems to get crazier with every passing year. Like these are ninjas at this point.
Michael Santoli: Yeah. I mean I think you can definitely credit the kind of institutional margins.
D: Right.
Josh Brown: 15%.
Michael Santoli: Yeah.
Josh Brown: Take everything I just listed and profit margins are 15% revenue growth this quarter was plus 14.
Michael Santoli: I mean so much of that is, I had to say, so much of it is compositional.
Josh Brown: Right.
Michael Santoli: It's like the kinds of companies that are that big in the index.
Michael Batnick: Yeah. Starbucks and Chipotle can't get out of their own way and they're not running.
Michael Santoli: UPS's earnings are going to be what they were like three years ago. And Nike's where they were 15 years ago. And you know, I was just looking at Thermo Fisher. Great growth company over the years. It's been flattish earnings for a couple of years. But I agree with you in general. I mean you probably have to go back to like maybe 6,872, like hyperinflation. Oil crisis.
Josh Brown: Vietnam.
Michael Santoli: Vietnam. But you know, look, I think it always seems like we've just been through the worst or the most or the most extreme. I always go back to Byron Wein, the Morgan Stanley and later Blackstone strategist,
Josh Brown: one of the greats. He is he one of the greats?
Michael Santoli: Absolutely. Sweet guy as well. I remember hearing him speak at this event and he said that he came into the business in like 1958 or something like that.
D: Right.
Michael Santoli: Kim said a business school gets a job at an asset manager. And he says it was at exactly the moment when stock dividend yields crossed below treasury yields, which was supposed to
Josh Brown: be a market top.
Michael Santoli: Supposed to be a market top. Never happened sustainably before that. It was supposed to mean you were massively overvalued market. And then it stayed there for 50 years until the global financial crisis.
Josh Brown: Right.
Michael Santoli: And he said he saw what it did to the people at the firm.
Michael Batnick: The older guys broke their brains.
Michael Santoli: Yeah. He said they couldn't adapt because they
Josh Brown: set their watch by it.
Michael Santoli: Yeah.
Josh Brown: Any. Anytime the dividend. Anytime the dividend on the stock market goes below the Treasury. That means stocks are too expensive. Buy box, sell.
Michael Santoli: Yeah, sell stocks.
Josh Brown: And then the market quadruples even more.
Michael Santoli: And so he said it kind of taught him. He said he used to have a funny way of saying, like, you know, these guys, like they obviously are wrong for a while and they kind of lose some of their clients and you know, he said eventually they go from a corner office to an interior office and all they got to do is call their college roommate for new money, you know, whatever. And I think that he said that it fed into his idea to do the 10 surprises list every year because
Josh Brown: that was a big surprise.
Michael Santoli: Let me test myself to figure out blind spots and where things might go different.
Josh Brown: Okay, so you like Wein, you like Barton Biggs?
Michael Santoli: Sure.
Josh Brown: What would Barton Biggs or Byron Wien be saying right now?
Michael Santoli: I think they would for one thing be celebrating the long term economic and sort of societal benefits that we're probably building with AI. Whatever you think about how the equity market's Going to metabolize all this. And whether it's overdone in the short term, if all this gets built the way that, like, it just increases capacity so much, whether it means that, you know, we accelerate the renewable energy thing it's going to create, you know, I think that they would embrace that while also being nervous about, I think, pockets of, you know, unthinking excess. I don't know how they would think about, you know, three times leverage, single stock ETFs. You know what I mean? They probably wouldn't love them.
Josh Brown: What's this money game anecdote from Adam Smith. Let's do this.
Michael Santoli: Yes. So, Adam Smith.
Josh Brown: Do you want to read it?
Michael Santoli: Sure, let me read it. Adam Smith, of course, was a pen name. I believe his name was George Goodman. Jerry Goodman, maybe. Okay, you might be right.
Josh Brown: So there's the money game in 1968.
Michael Santoli: And this was like a classic, kind of a real, like slice of life of Wall street at that time. It was, of course, a real booming bull market. And so he's kind of talking about how the younger people in the business were so excited about mostly the mainframe computer craze and how it was printing money. So this is in the voice of one of the younger people saying, computer leasing stocks, sir, he said, like a cadet quiz by an upperclassman. The need for computers is practically infinite, said Billy the Kid. Leasing has proved the only way to sell them. And computer companies themselves do not have the capital. Therefore, earnings will be up 100% this year, will double next year, will double again the year after that. The surface has barely been scratched. The rise has scarcely begun.
Michael Batnick: Core weave.
Michael Santoli: Yeah, exactly. I mean, that's obviously why I chose it, because, you know, but you know what? The mainframe revolution was real. And it's just about like, I mean, so here's another premise, here's another long standing principle of mine. And everything ends in a boring place. Whatever company you're excited about right now, if everything goes beautifully, like it ends up being kind of a utility or a mature company or some parts of the guts and operations of the economy, and it slows down. Like, ebay was a moonshot, exciting stock.
Josh Brown: Yeah, it was hot.
Michael Santoli: And, you know, I even think this about things like, oh, circle comes public, it's a stablecoin company. It's like, congrats, you know, you're a custodian, you earn money market bills. Bank of New York Mellon has trillions of dollars, trades at 12 times earnings. You know, so I do think that you have to be Aware of that. And you kind of ride the exciting phase and then figure out how it. How it decelerates off of that.
Josh Brown: I just. I think that's true. Except if Elon is involved.
Michael Santoli: Right.
Josh Brown: Because he will cannibalize his own company. He will reinvent. He just shut down. No more Model S. Yeah. No more. I forget which other. No more Model X. We're gonna make robots instead.
Michael Santoli: Nobody has the license to do that.
Josh Brown: I think he's the exception. But generally I agree with you. And actually, one of them, one of the most fun parts of the rally this year and late last year, how many throwback stocks have become their former selves? And I'm thinking about Sienna and Dell and Cisco. And I love that so much because those were the momentum stocks that I grew up with.
Michael Santoli: Yep.
Josh Brown: And they all became moment. Whichever ones are left all became Cisco Corning.
Michael Santoli: Yeah, exactly.
Josh Brown: Can I look at for MF and X? I couldn't find it. I said I would buy that if that was still around.
Michael Batnick: Let me read something. Another thing from the money game that always stuck with me. And I think this is so important for individual investors to heed this statement because it's so true, especially when momentum breaks. All right, here we go. A stock is for all again, 1968. A stock is, for all practical purposes, a piece of paper that sits in a bank vault. Most likely, you will never see it. It may or may not have an intrinsic value. What it is worth on any given day depends on the confluence of buyers and sellers that day. The most important thing to realize is simplistic. The stock doesn't know you own it. All those marvelous things or those terrible things that you feel about a stock or a list of stocks or an amount of money represented by a list of stocks, all of these things are unreciprocated by the stock or group of stocks. You can be in love if you want to, but that piece of paper doesn't love you. And unreciprocated love can turn into masochism, narcissism, or even worse, market losses and unreciprocated hate. How good is that?
Michael Santoli: That's beautiful. Yeah. And of course, the corollary, as people always say, is, like, it doesn't know what price you paid for. Like, if you think there's something magic about your cost basis that it has to gravitate back there or anything like that.
Josh Brown: I fall in love with.
Michael Batnick: I still do that.
Michael Santoli: No, of course, it's the natural way. But by the way, one quick thing.
Josh Brown: I don't revenge trade Though of my.
Michael Santoli: One of my. One of my favorite observations right now is if you look at Tesla relative to the S&P 500 in its history. Go back, however, when you. How far you want. It's outperformed the S P by like whatever, 3600%. It's massive. Every. Every basis point of the outperformance happened in calendar year 2020.
Michael Batnick: It went up 10x.
Josh Brown: Wow.
Michael Santoli: Right? So it's like. But it held it. I'm not saying it's like a disaster. Since then, it basically has mostly held it, but it's just fascinating that it's just like so many things hit perfectly
Michael Batnick: well for that moment and people love their Tesla.
Josh Brown: So one of the other features of this bull market is I find myself on a weekly basis, maybe daily, asking myself out loud, am I dumb or are they dumb? And I don't know the answer, but I want to run this one by you just as a. Not that this particular story is that important. Open Router, it's basically a harness. So it's like you used to go to Google as a search engine and it indexed all the links. So you went to Google first because it would take you to where you eventually wanted to go. Okay, so Open Router is the same. You have a project you want to use for AI, you go to Open Router, you'll select from hundreds of different LLMs and you'll pick one. Or it'll be a combination of multiple. It's a great idea. Yeah, it's sort of like the Google for the age, except it's tiny, but it's. So they're calling it like the harness, like the AI harness. Rather than going directly to Claude or directly to. Okay, fine. This, this is the news on Open Router this week. Stripe is going to buy this company, which is, quote, this is the information, like a retail store that sells access to hundreds of AI models. Most they say, including Anthropic, but I would assume it's a lot of anthropic. They're gonna buy this company that just had revenue triple to 13 million with an M13 million. Stripe is gonna pay seven to seven and a half billion dollars. The valuation on Open Router in May, which was three months ago, was 1.3 billion. So in three months, and I don't know what the user growth, all I know is it's 13 million in revenue valued at 1.3 billion three months ago. It's gonna get acquired for seven and a half billion. Am I an asshole? I mean, like, am I dumb? Are they dumb. I don't know.
Michael Santoli: Do the numbers really mean much? I don't know how they're paying for this.
Josh Brown: Might be a brilliant. Who am I?
Michael Santoli: Right?
Josh Brown: Like, I don't know.
Michael Batnick: Remember When Zuckerberg bought WhatsApp for 11 billion? We were like, what?
Michael Santoli: You can go back to Google with
Michael Batnick: YouTube, Instagram, Instagram, billion dollars. Eleven people, a billion dollars. Like, who knows?
Michael Santoli: I mean, people freaked out that Apple paid $3 billion for Beats and they, like, you don't even notice that you
Josh Brown: find yourself asking to do that.
Michael Santoli: Absolutely, 100%. And to me, if nothing else, it's a measure of, you know, the desperation of the buyers to play in a certain area or to kind of find,
Josh Brown: make sure somebody else doesn't get it.
Michael Santoli: Skeleton key to the next thing we need to do. I did hear somebody just talking about open router as one of the. The thing that makes it valuable is it has all of this data for, like, all these agents that are flooding into it. So, like, there's a way, I'm sure you could use it to exploit and map other things and have access to other information, but I am actively ignorant about a lot of the details of what's going on right now in AI and everything else. And I know everyone tries to pretend that they know everything about this kind of wafer and what tokens are going to cost down the road. I try not to pretend I have a shop.
Michael Batnick: Dude. It's impossible. I listened to Ben Thompson.
Michael Santoli: Yeah.
Michael Batnick: Who I love. I read his stuff. He was on with Patrick for an hour and 15 minutes. Listen to the whole thing. I can't tell you a word of what he said.
Michael Santoli: Yeah.
Michael Batnick: I have no idea.
Josh Brown: I mean, I'm a lady by. But this is another thing that I think is going to stop. And we. We were talking about this last week. There's such an intense focus by traders, people that if they tripped over a wafer, couldn't tell you what it's used for. They think it's a waffle iron.
D: Yeah.
Josh Brown: Now all of a sudden, they're talking about, like, they're talking about, like, chip yields. And that's not gonna persist for more than I would guess the next correction that'll stop. But right now, I've never heard so many Wall street money guys talk more about the intricacies of manufacturing a memory chip.
Michael Santoli: Right.
Josh Brown: I can't remember a time where people were this comfortable spouting terms. They have no idea what it even means.
Michael Santoli: Yeah. I was at a dinner where there was a lot of that talk. Small group and one, but one guy
Josh Brown: too was like, parker, dinner. No, picture it. All right, go on.
Michael Santoli: Every, you know, every single thing about like the, the kind of repurposing of jet engines into, you know, gas turbine generators.
Josh Brown: Oh sure, sure, sure.
Michael Santoli: And I mean look, I, he, he obviously did the work. He's up huge in the stock. He was talking about like it's not that it was for nothing, but I was like, you know, the other probably two years ago. He's trying to figure out like Lululemon comps.
Josh Brown: You know, that's my, I think that's my point. And it's not as though I'm not guilty of it. Everyone's not guilty. We're all to some extent now forced to learn this new language because this is what the stocks that we care about are trading on. But I'm just amazed at how far it's gone. And now they're launching ETFs that will build a basket of the companies that are in a specific AI companies ecosystem.
Michael Santoli: Yeah.
Josh Brown: And I just, I have no problem with it. And I bet there will be people trading it successfully. My, I guess my point was that's got to be toward the end is one and two people are going to lose interest in that shit real fast because I remember when they were taking apart the iPhone.
Michael Santoli: Yeah, right.
Josh Brown: And building baskets of whatever components makers. How long did that go on for? A year.
Michael Santoli: True.
Josh Brown: Okay.
Michael Santoli: Or like the LIDAR companies and the EVs or whatever. Yeah.
Josh Brown: Right. So that's, that's toppy behavior.
Michael Santoli: I think it feels like it. I mean it also is, I mean to your point about the old kind of guard of companies that are coming back, I mean they obviously have a durable know how and they are going to be in the middle of whatever these trends are and the Microns and you know, the Western Digital, all that stuff. Great. Let's see. Have this renaissance. But never forget Western Digital spun off SanDisk a year and a half ago.
Josh Brown: Nobody.
Michael Santoli: Because you couldn't care about.
Michael Batnick: So crazy.
Michael Santoli: It's so crazy. And so, and SanDisk would have how many thousands of percent.
Josh Brown: I think their shareholders demanded that they
Michael Santoli: get rid of this albatross.
Michael Batnick: It's an anchor.
Josh Brown: It's unbelievable. Right?
Michael Santoli: So. So no. So even the people in the business aren't quite sure what the next move is going to be.
Josh Brown: Do you have fun on the show today?
Michael Santoli: I loved it.
Josh Brown: We had so much fun. So we're going to do a quick intermission. We'll do dinner.
Michael Santoli: Sure, of course.
Josh Brown: Can we talk?
Michael Santoli: You need me to Cook or what's going.
Josh Brown: So I want to do two things before I let you out of here.
Michael Santoli: Yeah.
Josh Brown: I want to do. I want you to tell everybody about Closing Bell Overtime.
Michael Santoli: Yeah.
Josh Brown: So you're the. You're the anchor.
Michael Santoli: Co anchor with Melissa Lee.
Josh Brown: Fine.
Michael Santoli: Of course.
Josh Brown: Love Melissa. So you haven't had your. You've been the anchor on every show on the network.
Michael Santoli: Yes. As a fill in.
Josh Brown: As a fill in. But you've done squawk. You've done. You've done it all.
Michael Santoli: Pretty much.
Josh Brown: You and I had a show together.
Michael Santoli: We did.
Josh Brown: We got canceled after six weeks, but I knew we would.
Michael Santoli: It was a planned cancel.
Michael Batnick: It was temporary.
Josh Brown: They told us it was canceled before it started.
Michael Santoli: And Netflix calls it a limited series.
Josh Brown: That's why we did a limited series.
Michael Santoli: Yeah.
Josh Brown: Tell us about Closing Bell Overtime, what you love about it and how it differs from what's elsewhere on the network.
Michael Santoli: Four o' clock every day, four to five. And you know the simplistic analogy, but it's an accurate one is the post game show the immediate like here's what happened but also just pulling the themes out that matter. I mean it's not just like the numbers and here's the up and down. We keep it pretty close to the markets.
Josh Brown: It's an amazing time slot because you
Michael Santoli: get earnings and we get earnings and so like the best and which feels like, you know, it's basically seven months out of the year.
Josh Brown: Yeah.
Michael Santoli: Pretty much is like pretty full of.
Josh Brown: I can't believe Wapner let you have that real estate. And he took three.
Michael Santoli: He does get to. He does get.
Josh Brown: I think he wants kick out a little early.
Michael Santoli: Okay. It's great.
Josh Brown: Real.
Michael Santoli: The earnings are great. I mean look, it's always tricky to figure out exactly how to execute that trade off between speed and depth.
Michael Batnick: That's really hard.
Michael Santoli: It's hard. You know, it's always kind of a moving target on that. Like you're never going to be faster
Josh Brown: than you have to do that with the right guest selection than the headline reading.
Michael Santoli: Algos like to trade these things but you want to be fresh. You want to make sure you have an urgency about getting these numbers. And so yeah, that's. It's been great so far. Started in January and having fun with it.
Josh Brown: And you are still writing.
Michael Santoli: Yeah.
Josh Brown: Okay, so tell, tell us about the writing and where people can find your stuff.
Michael Santoli: Sure. So yeah, I've written a weekly column for CNBC Pro since I, since I got there. Now it's kind of being repackaged in a way into a newsletter. It's called Market Memo. Most of it is just the body of it is kind of like my column, my market comp. Maybe a little more targeted, a little bit less. Like, here's the whole state of play for the market. And then maybe just stray observation stuff like you guys would do. Like, here's a chart that's fascinating. Here's a point of conversation that really kind of got escape velocity during the week. And what are people saying? And then a little bit of pop culture nonsense and Gen X complaining that
Josh Brown: that's the part I'm looking most forward to. That I know what happened in the
Michael Santoli: market I've been suppressing all the. All these years. Yes.
Josh Brown: Why don't they brand that as like the Michael Santoli column you have?
Michael Santoli: I think it's Mike's Market Memo. Mike Santoli's Market Memo.
Josh Brown: Can I pitch you a different version?
Michael Santoli: Go ahead.
Josh Brown: Okay. San told me it's not bad. It's better than John.
Michael Santoli: You know, people have tried nicknames over my course of my life. They haven't stuck. Except for the kid in fifth grade. Right. My name on the board. He misspelled it. And so it became Sand Toilet for a little while.
Josh Brown: Nice.
Michael Santoli: But I'm glad that didn't hang around.
Josh Brown: All right, and then the last thing we're going to settle, a beef. The Long Island's eternal North Shore versus South Shore beef.
Michael Batnick: Well, where are you from?
Michael Santoli: Well, here's the thing.
Josh Brown: I'm talking down the street.
Michael Santoli: I'm sort of. I was originally from the North Shore.
Michael Batnick: You from Plainview?
Michael Santoli: That's not the original Fort Washington. Okay, That's North Shore, but my whole, like, extended family had lived there for a long time.
Josh Brown: Look, I like the hills, but what's the beef, though?
Michael Santoli: I'm Joe. I'm making that.
Josh Brown: I think there's good. Good and bad on both.
Michael Santoli: No, absolutely. You guys got the ocean, you have restaurants.
Josh Brown: You have more of the good restaurants.
Michael Santoli: No, I live in the city. Let's be sure.
Josh Brown: No, no, no, I'm saying that's a North Shore better, obviously. Better school districts, but not crazily better. No, slightly.
Michael Santoli: It's preference. It's preference.
Josh Brown: I do like the woods and the hills.
Michael Batnick: The North Shore is obviously way prettier.
Michael Santoli: The woods and the hills and the whole, like, you know, if you go down a certain area, it's Gatsby and all the rest.
Josh Brown: Yeah, but the coast sucks. Like, we have better beaches, of course. Right?
Michael Santoli: Yeah. The Long Island Sound Beach.
Josh Brown: I wouldn't jet ski off the North Shore. You'll hit a rock. Like where I. Where I am, I have, like, white sand beaches, which. So it is. You're right. It is preference.
Michael Santoli: It's 100% preference. Yeah.
Josh Brown: So if you live on. In middle island, you get the best of both worlds.
Michael Santoli: I kind of grew up. Yeah, more like in the middle.
Josh Brown: Yeah.
Michael Santoli: I could ride my bike to either. Either north shore or south shore.
Josh Brown: All right, so I guess we settled that with no answer.
Michael Santoli: I now live on a different island. So.
Josh Brown: Michael, we're obviously huge, huge fans of yours.
Michael Santoli: Thanks so much.
Josh Brown: You did an amazing job on the show. You did not disappoint. We're going to encourage everybody to check out closing bell overtime, 4pm Eastern, five days a week. Check out Mike's market memo@cnbc.com Definitely subscribe to that. And just thank you so much for everything that you've done, everything you've taught us.
Michael Santoli: You guys are the best. Really appreciate it.
Josh Brown: You hear that? He said we're the best.
Michael Batnick: Like that.
Michael Santoli: The kids really love that playhouse, huh?
Josh Brown: You know, it's not just a child's playhouse. It's a rental property, kids.
Michael Batnick: Off Gary's roof. Someone lives in there.
Josh Brown: Lives, works and thrives.
Michael Santoli: Your WI fi reaches all the way to the playhouse.
Josh Brown: We're gagillionaires.
Michael Santoli: It reaches everywhere. Can I check it out?
Michael Batnick: Sorry, but solid.
Josh Brown: But the treehouse just opened up.
Michael Santoli: Live without limits. Get home Internet from @t&cover your whole house, even your playhouse. Turned rental property at&t. Extended Wi Fi covered service required. Limited availability. Visit att.comforward/Internet to learn more.