The Compound and Friends: Stocks Aren't as Expensive as You Think | WAYT?
Join Michael Batnick, Chart Kid Matt and Sean Russo for another episode of What Are Your Thoughts and see what they
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The Compound and Friends: Stocks Aren't as Expensive as You Think | WAYT?
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podcast-ingeston 2026-09-09. Auto-transcribed via AssemblyAI (universal-2,en). Speakers identified by AssemblyAI Speaker Identification using the per-podcasthost/regularshints; the resulting label→name mapping is in the frontmatter. Duration: 46m. Episode page: (not provided). Audio: https://pdst.fm/e/pscrb.fm/rss/p/traffic.megaphone.fm/TCP1360308744.mp3.
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Join Michael Batnick, Chart Kid Matt and Sean Russo for another episode of What Are Your Thoughts and see what they have to say about: the great market re-rating, why falling P/E ratios and record-high price-to-sales multiples can coexist, and whether booming corporate earnings signal a new era for U.S. stocks. We also look at why “invest in what you know” can be terrible advice, where the fraud is hiding in today’s markets, Apple’s latest head-scratcher, unlocking SpaceX for investors, Polymarket, Mark Walter, and more. Plus, Michael brings the mystery chart.
This episode is sponsored by DBMF, the world’s largest managed futures ETF. Discover why DBMF’s liquid, uncorrelated, managed futures strategy could be what your Alts allocation is missing at: http://www.dbmf.com/WAYT
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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
Matt Russo: Foreign.
Michael Batnick: Here we are. There they are. How you boys doing?
Sean Russo: Let's go.
Matt Russo: Fantastic. Excited.
Michael Batnick: All right. It is Tuesday, September 8th. We are live at 5. As always, my name is Michael Batnik and I am joined by Sean Russo. Sean, introduce yourself. Say hello to the audience.
Sean Russo: What's up, guys?
Michael Batnick: And of course, Chart can Matt, who needs no reintroduction Chart. Say hello.
Matt Russo: Hello, everyone.
Michael Batnick: Great to see you guys. Why are they here? Well, Josh is out today with a back. If there was an injury report, get into the NFL. Swing of the things. Josh has a back. Not gonna reveal more than that. I myself dealt with back issues.
Sean Russo: Me too.
Michael Batnick: Not fun. Oh, yeah?
Sean Russo: Yeah.
Michael Batnick: During your playing days?
Sean Russo: All the time last month.
Michael Batnick: Sean, flex a little bit. Where did you. What did you do for. What did you. What you were. You were a sport baller?
Sean Russo: I was a sport baller. I played football at North Dakota, the Hawks.
Matt Russo: You got. You got football guys here? Michael. Yeah.
Michael Batnick: Were you for me? But we'll get to you, Sean. Guard or tackle?
Sean Russo: A little bit of both, but tackle mostly.
Michael Batnick: All right. D, D, what was that? D1.
Sean Russo: Yeah. D1SCS though.
Michael Batnick: Yeah. Chart, where did you play?
Matt Russo: Union College, Division 3, Liberty League.
Michael Batnick: Still?
Sean Russo: Hell, yeah.
Michael Batnick: Still not nothing. All right, so, Josh, I hope you're feeling better. Get well soon. Here's what we're gonna get into tonight. We're gonna talk about. And we've got charts out the ass. You would not believe how these boys cook. Tonight we're gonna going to get into the great RE rating and why some stocks might not be as expensive as people think. We're going to do a little bit of Peter Lynch's old adage, invest in what? You know, why? It's harder than you think. It works sometimes. Sort of. We're going to talk about one, what I think is a sort of missing ingredient from this alleged stock market bubble. And then we'll get into Apple's $2,000 phone, we'll do a mystery chart, and then we'll get out of here. But first, we've got a sponsor tonight. Gentlemen, what do we got?
Matt Russo: This podcast is brought to you by dbmf, the world's largest managed futures etf.
Sean Russo: Feel like the world's changing fast?
Matt Russo: Imagine a strategy built to move when everyone else is standing still, going long
Sean Russo: or short across global markets.
Matt Russo: As the trends shift, DBMF is made to move differently.
Sean Russo: A single low cost ETF offering genuine diversification even when stocks and bonds move together.
Matt Russo: Discover why DBMF's Liquid Uncorrelated managed futures strategy could be what your ALT allocation is missing@www.dbmf.com wat DBMF made to move differently. The IMGP DBI managed future strategy ETFs, investment objectives, risk charges and expenses must be considered carefully before investing.
Sean Russo: The statutory and summary prospectuses contain this and other important information about the investment company. It may be obtained by visiting www.imgp.com.
Matt Russo: the fund is distributed by Alps Distributors Incorporated. DBMF is the world's largest managed futures ETF as of July 31, 2026 with 4.16 billion in AUM.
Michael Batnick: All right, listen, I feel like I make it look easy. You guys are. You guys were lumbering through that chart. You've got a throat. You're coming off a wedding, so you have an excuse. Sean, clear your throat. Mid.
Matt Russo: Mid.
Michael Batnick: Mid.
Sean Russo: My fault, my fault, sorry.
Michael Batnick: All right, good job. Let's get into it with Matt. This is you. We're talk, we're talking about a great rerating. What are we talking about here?
Matt Russo: Yeah, yeah. So we're talking about the Great RE rating. So the beginning of the year, I talked about the great broadening that was happening in the market. And so we had a lot of stocks that were going up that weren't necessarily the Mag 7. And now we have a new phenomenon which is what I'm calling the Great RE rating. So the first chart that I brought today, Duncan, could we throw this up? Is we're looking at the number of S&P 500 stocks with a forward P greater than 40. So these are the stocks that are like the most expensive in the market. And so as this line goes down, it means there's less stocks that are trading above a 4 times 4 PE. And look at today, we have 27 stocks in the S&P 500. Only 27 trading with a 4P greater than 40. That's like marking past bear market lows. And we're within 2% of all time highs. All right, so that's, that's really incredible.
Michael Batnick: All right. This is, you know, I was about to ask you like sort of a gotcha question. Not really. Trot off please, for a second, then we'll come back to it. I was going to say, I wonder if this looked a lot different if you included stocks that were, say, move the forward PE from 40 down to 30. But it doesn't matter. That's not what you're trying to say. Chart back on. What you're saying, I think is, holy shit, we only have 27 stocks in the S&P 500 with the forward PE of 40. We were at these levels just 27 stocks. At the bear market low in 2022 and at the COVID low in 2020. Where is the enthusiasm? We're basically at all time highs and every stock is getting cheaper 100%.
Matt Russo: How can you talk about being in a bubble when you have the number of stocks with a 4P greater than 40? Back to the levels that we saw in March 2020 when the market went down 30%. In October 2022 when we had that grueling bear market. I mean, it just doesn't make sense
Michael Batnick: to me what a killer of a chart this might be. If you were to go in front of the judge, the bubble judge, and you had one piece of evidence. Is this exhibit A, pun intended?
Matt Russo: That's exhibit A right there. I like that one. But I looked at it also. Michael, nice little segue there. On a sector by sector basis. Okay, so John, if we could do this next chart as well. Okay, so I made this valuation heat map. So what you're seeing is within each sector the percent of stocks with various forward within various forward PE buckets. Okay, so like for example, look at utilities. 81% of utility stocks have a forward PE between 10 and 20. Okay, so that's how the chart is constructed. Now first I want you to focus on tech. So John, can we flip to the next one? All right, so focus there. Look at tech. 38% of constituents within tech have a forward PE between 10 and 20. The next most common band is between 20 and 30 times forward. Okay, so that's not crazy expensive for the growth we're seeing within tech. John, one more flip. Okay, now look at the average. So on average across all sectors, 52% of stocks are falling within, within the 10 to 20 bucket in 4P. So that's not crazy expensive. What are your guys thoughts?
Michael Batnick: Go ahead, Sean.
Sean Russo: Maybe this is a silly question to start out with. Is there just no companies with less than 10x earnings?
Matt Russo: Oh, they're in there. But like for example, you know, if you throw the chart back on, these
Michael Batnick: are probably real pieces of sugar.
Matt Russo: You know, like there are some like look at utilities, 10% of those are trading below 10. You know there are some. I was looking, I was going through the data. There's some like 3, 4, 5, 6. Yeah, like Michael said, they're kind of like piece of shit companies, but they're very rare.
Sean Russo: All right, so curious.
Michael Batnick: Go back to the tech one, please. All right, so what this is showing is that 2/3 of all stocks in technology, which is the Epicenter of the stock market mania. Air quotes. Two thirds of that. Of those stocks are trading below 30 times forward and only. Yes, 20. Only one out of four are trading above 30 times earnings. All right, pretty reasonable. Good stuff. What else we got? Oh, all right. A counterpoint. Sean, did you come with this chart?
Sean Russo: Yeah. So I think we see a lot of counterpoints about complaining about the price of earnings and forward earnings and they throw up the price of sales. So John, if you want to throw a price, Sales, sales, this is the trailing price to sales and it's at all time highs. And this is the counter that a lot of people are saying. But in my mind is. This is an inept argument.
Michael Batnick: The counter. The counter to the counter.
Sean Russo: Counter to the counter that I put in. If a company turns more of each sales dollar into profit, its price sales goes up. Even if you're paying the exact same multiple. For example, a business earning $2 on $10 of sales at 15 times earnings trades at 3x sales.
Michael Batnick: Hold on, go slower.
Sean Russo: I don't know.
Michael Batnick: We're doing math here. Go ahead.
Sean Russo: A business. So if you have a company that has $10 in sales and their earnings are $2 and they trade at 15 times earnings, that's three times sales with you. If that, if that $2 of profit turns to $4 on the same $10 of revenue still with the same multiple, the sales multiple doubles but the earnings multiple stays the same, which is what's been happening in this market.
Michael Batnick: There you have it. All right, this next chart that we're looking at from MEB Faber via Deutsche Bank. What are we looking at here? This is the. What is this?
Matt Russo: Yeah, so, all right, so they looked back since. Wow, this is since 1935. And they plotted the S&P 500 quarterly earnings and they did it in a log scale. And so essentially what's shown here is this long term channel that you're seeing and we're starting to break above it. So this is From Deutsche Bank US earnings are breaking out of a 90 year channel on the upside, which is incredible when you consider the high growth periods of the past. The debate will rage on as to whether this is a sustainable new platform plateau or an artificial period of AI related elevated earnings. But if you squint at the chart, you can see the actual earnings are breaking out of the channel. It's not the projections. And my question to you guys is what do you guys think? Like is, are we going to look back in 20 years and say AI marked the beginning of a new paradigm where earnings grow 11% annually. Verse 7. I'm making it up. Like is it, is that too cute or what do you guys think?
Michael Batnick: I think it's a weird way to show earnings. That's what I think. This is a sort of a bizarre chart. All right, let me answer your question. Sean, you answer the question. What do you think?
Sean Russo: I. I don't think it has to be like a whole new paradigm forever. I think it certainly is a theme that we're gonna experience for the next whatever. Like if we're gonna put an ending to it. We did this last time. Like I would think we're in the first half of the innings, but I don't think it's going to continue on forever.
Michael Batnick: Well, you boys know I'm a gaps get filled guy, so I think this is going to come back into the channel.
Matt Russo: Okay.
Michael Batnick: One of the things that's remarkable about the current moment in time is the earnings growth. Now this is the debate that it's getting pretty tiresome if I'm being frank. But the earnings growth is off the charts and the counterpoint would be you. Yes, but debt unsustainable capex build out. This is not going to. Not going to continue. Which is why the market is not rewarding these stocks. This is why the PE is shrinking because these earnings are not sustainable. I think that is probably consensus. That is what, that is what the market is telling you.
Sean Russo: The market multiple is 19x right now. Excuse me. Which is below the five year median multiple. It's right at the average median over the last 10 years. So we're pricing in those fears of circular spending or non stable earnings like that's priced in. That's trading at 19x.
Michael Batnick: We should have came with a PEG ratio long term PEG ratio. Could we do that chart?
Matt Russo: Yeah, we can make that. Yeah, we'll make it.
Michael Batnick: Okay, so who made this chart about this growth?
Sean Russo: This is my earnings growth chart.
Michael Batnick: Walk us through it.
Sean Russo: So this is from Jim Bianca at Bianca Research. Uh, we're looking at quarterly year over year earnings growth.
Michael Batnick: I'm sorry, it's. It's Bianco. He is not. I'm sorry, a lady of the night.
Sean Russo: Bianco. Jim Bianco. Anyway, we're looking at quarterly year over year earnings growth, the s and P500 and we're looking at just operating earnings in the blue and that gray bar, that last Q2, 20, 26 gray bar is what the year over year earnings growth would be if you included the realized investments. All of the other blue bars do not include it. So two things I want to point out here. Thing number one, we're coming off of what is already a pretty high base. Right. One year ago, four quarters ago, earnings were already above average or right at average. Right. So that's one thing. The other thing is the earnings growth is still incredible without the unrealized gains in investments. So like we're just at in a period of time where earnings are incredible.
Michael Batnick: Sean, before we get to your next chart about that, we're already at a high base. Can you just throw it on one more time? Because I think, I think I was confused and I think the viewer might be confused. The labels, the Q2, 2026 earnings growth, X and a Y, those say the same thing. Right. But. Right. My eyes are not deceiving me.
Sean Russo: No, yeah, you're correct.
Michael Batnick: Okay, but what you're. But what, what we're looking at here is the gray bar on top of the blue bar. That's if you include all of the, all of the non operating earnings, all of the increases in the valuations of some of these privately financed companies that Nvidia is investing in, for example. Is that right?
Sean Russo: Yeah, that's, that's correct.
Michael Batnick: Okay. So take that top off that top gray bar and it's still insane growth.
Matt Russo: Yeah.
Michael Batnick: All right, next chart.
Sean Russo: This reminded me of a char kid, Matt hitter from, from charkitmat.com the base matters. So if you look at earnings growth, this is s p500 year over year earnings growth for tech quarterly. And like I mentioned, the base we are we right now coming off of a average to high base. Same thing for tech. Right. So if you look at the, the few quarters from 2020 into 2021, earnest growth was incredible because the base was so low from COVID Right. The comps were very easy. But if you Fast forward to 2025, the earnings growth that we're looking at here, it's not off of a low, low base. It's actually off of a high base, which makes it all the more meaningful.
Michael Batnick: Insanely improbable. All right, we're going to move on to the Peter lynch thing. But before we do, I know what you're thinking. Wow, that's a snazzy shirt. You're right. So we did a collab with Tropical Bros. And we've got a new one dropping for future proof next week. We also have a women's cut, so we made that available for inquiring minds. If you are at the festival and you want a chance to win one of these snazzy looking polos, and they are quite comfy. Come by the booth and we'll see what we can do. All right, so I was thinking about this. There are so many name brand stocks getting sent into outer space. So, Matt, you made me a chart of some of these.
Sean Russo: This is my chart.
Michael Batnick: Oh, hell yeah. All right, so the title is a bit cute. It says, do not invest in what you know. So before we, before we go to this chart. Peter lynch is probably really annoyed at this segment because he's been dealing with this shit his entire career since he retired. And he didn't just say blindly buy what you know. Okay? In fairness, he said maybe think about what you consume on a daily basis. Which I should have done in 2012 when I was eating Chipotle every day and think, oh, like I'm using this product, this service all the time. Maybe there are other people just like me. All right, with that caveat aside, holy smokes. Chart on. There are so many names that we know and love to varying degrees. Getting wrecked. Autozone and a 32% drawdown. Domino's Pizza down 28%. Lululemon down 55%. Uber 28. Nike down 50. By the way, Nike's market cap is down to $56 billion. And it just cannot, cannot get off the mat. No bounce whatsoever. And finally, my beloved Netflix is in a 40% drawdown. When you trot off, please. When you guys see this and digest it, what is the takeaway? Sean, you start when I was in
Sean Russo: high school, I first started looking at this types of stuff because, like, you see Target and you see the ticker and you know it and you're aware of it. You see Nike and you're like, I know this brand. Like, I want to invest in it. I like their products. And like, it's a very simple way to invest in things. And I think with Peter lynch, like, he wrote a lot about it. The first book I read was a Peter lynch book. Invest in what? You know, like, I forget what stock he invested in, but it did. Incredible. And it was something that his wife used. And so it just, it's intuitive, but obviously it doesn't work all the time.
Michael Batnick: Chart.
Matt Russo: I started trying to put money in the market when I was, I think, a sophomore in college.
Michael Batnick: And so like 2024, this is, this
Matt Russo: is like, this is like literally actually December 2019. Okay. And I, I had only bought individual stocks. Okay. I can almost remember it was like Procter and Gamble. I think Apple was in the mix, but you know, Coca Cola, all of these know what you own And I was reading the same books as Sean. I think the best thing that could happen to me is Covid happened, and these things got cut in half. Like, you know, these stocks got crushed and. And I sold like a dumbass. And it was the best thing that happened to me because even I knew these stocks. And then I knew that just because I understood them and I might understand their business models, that didn't give me an edge. And I just started indexing. And for me, as a young person, it's actually been very helpful that some of these know what you own. Stocks have gotten creamed, because these are the things that I did own, and they didn't work. And even though I was going to Chipotle every single weekend after football practice, the stock wouldn't go up. And like you say, Michael, the stock doesn't know you own it. I thought it did for a very long time, and it never did. And it went down, and I sold, and I started indexing, and it actually worked out. That's my take.
Michael Batnick: I don't have this chart made, but McDonald's, for example, probably the ultimate buy. What? You know, stock. If you look at a ratio of McDonald's divided by the S&P 500, which basically shows you, like, how one is performing versus the other. McDonald's hasn't outperformed since 2007. Like, it is crashing relative to the S and P. Unbelievable stuff.
Sean Russo: Nike's at the same price since 2014. Like, it's. It has its own lost decade. Like, it's incredible.
Michael Batnick: So you look at charts like this and say, man, this. This is really, really hard. I'm just gonna not do this anymore. And then you do it anyway. At least I do. Can't help it.
Matt Russo: That's right. Yeah, we all do.
Michael Batnick: All right.
Sean Russo: Wait, can I add one thing, John? Should I throw up the. But also do.
Michael Batnick: Wait, wait, wait. Before we get there, I just want to say one thing on this. There was a. So Michael Burry was buying Lululemon, which seems strange at the time. And then Lulu reported earnings last week, got smoked, and he revealed in a sub stack, which I was curious to read, but I really feel like spending 50 bucks a month for Michael Burry. He said he's going to. It's his biggest position, which seems very curious. And he wanted to aggressively add below $100. It never got below a hundred dollars.
Matt Russo: But wait, wait, wait. I want to jump in here. Yeah. Because I think, like, the general sentiment, you know, people put Michael Burry's tweets to say, sell and they put them on an S&P 500 chart and it just goes up. But, like, I actually do. Like, I do listen when I see something like that, like, it does impact me as an investor. It does. I'm like, hold on a second. Maybe he's right. You know, like, it's very easy to just pass it off, I think. But, you know, I know he was right one time, and it probably impacts the way he thinks about things, but I do think that he's a smart man and probably has, you know, he, he could be right. That's all I'm saying is he could be right.
Michael Batnick: On Lulu or in general?
Matt Russo: On Lulu? No, not in general. On a specific stock. You know, it's like almost like so specific.
Michael Batnick: Well, you should, you should have kept that to yourself. But I'm only teasing. To varying degrees. To varying degrees, we are all influenced by things that we hear other people say, especially people that have done incredibly well. I mean, obviously that's, that's, you know, that's part of the deal. All right, Sean. So on the other side, there's also things that, you know that have worked extraordinarily well. Apple, for example. So what did you bring?
Sean Russo: Yeah, so you didn't ask for this. But I just, this is a whole thing for me is that investing is difficult. Like, we could start with Peter lynch and say, invest in what you know, and then everything that you know doesn't do poorly. And then, so then. Okay, is our new ironclad rule, never invest in anything that you know. And the answer is no. Like, we could have commenters coming in saying, hey, dummies, like, go look at Apple, go look at Airbnb. Right? Go look at Monster. Like some target, like some of the most well known brands are doing incredible. So I think just the, the takeaway for me is that just because you know a brand and use their product does not mean that they're a stock that you should be investing in.
Michael Batnick: Correct. There are no ironclad rules in the stock market.
Matt Russo: Yeah.
Michael Batnick: All right, so I am listening to a new book, 1873, and it was all about the Earl. One of the earliest global economic, truly global economic and stock market booms. And it was about the Rothschilds and financing out the railroad build out. And not just about the railroads, but they, they go like geography by geography. And it's, it's a good, good listen. And one of the key ingredients around every single mania, bubble, bull market, whatever, is fraud. It always happens. And I was talking to Josh about this, and I said, where's the fraud. And he said, what are you talking about? And I said, save it for the show. So I don't know what he was going to say. But one, I think one of the points that he, this is the first point that he made. Then I said that I said the. You find out about the fraud after, which is fair and obvious. But if you think about the last mania that we lived through, which was four years, five years ago, right. Like 2020 was a legit Manny. And I think, you know, we, many people said in real time, this is, you know, this is nuts. Price to sales ratio. How many stocks we're trading with price to sales ratio above. I don't know what the crazy number is above 30. I mean, it was, it was nuts. So as I have this topic in the doc, some new has come to light. All right, forget about the Mark Walter thing, because while that is very, very much in the headlines and it's an incredible story, he bought The Dodgers in 2012. Right? So yes, there's. But, but like his whole empire is not a result of the market environment today. So put that alleged self dealing to the side. What I'm about to present to you is not any fraud per se. It's just things. So to be clear, not fraud. I don't want to say per se is not fraud. Okay. I'm not alleging fraud, but it is certainly things you see that make you maybe tighten your stops or maybe take a little bit less risk or maybe not do the leverage thing. Okay, so the timing on this was really Chef's kiss. I think I saw this over the weekend. I didn't read the article because frankly, who gives a. But Hunter Biden enters the crypto sphere with a new meme coin. Okay, all right, we're doing this. We're doing this again. Then yesterday or when was this? Whatever, Friday, whatever. It was LeBron James doing a deal with Polymarket alongside my beloved Eli Manning. And I think Aaron Judge is involved. Then yesterday I saw Robinhood is playing an official part in the IPO process for the wellness app. The Ring, I think is part of this deal. I don't know, Aura. Now, I actually did read this article and I do like Robin Hood. They're not, they're not like the lead dog here. They're. There's 18 different participants in this IPO, and they are 18 out of 18. But still now in 21, we, we, we saw the fraud in real time. Right? Like, we don't need to, we don't need to dig at old scabs but we saw it in 2026. Do you guys see anything that's outright fraudulent? That if we are on the other side of this is going to be very obvious? And also, does that even matter? Is that like an absolute necessary ingredient for greed? What do you guys think?
Sean Russo: I don't know. I feel like the Hunter Biden thing, like they're kind of just jabbing at the other side, like politically. The other stuff, like, I don't know, like the Poly Market. LeBron James. I'm not sure if that. If I would consider that like, speculation Fraud.
Michael Batnick: I mean, I guess I. Fraud. There's nothing fraudulent about it. It's just we're in a bull market and this is bull market behavior.
Sean Russo: I don't know. I feel. I think it's getting a little cute. Like Robinhood has been doing IPO stuff for a while, right? I think they were doing IPO stuff in 2022.
Michael Batnick: Not, not, not, not like this. They were getting an allocation. They're now. They're now part of the syndicate.
Sean Russo: True. Yeah, I. I think I. I always find the. The magazine article stuff and trying to like, point to these types of things is a little bit cute for me. That's what I think.
Michael Batnick: Chart.
Matt Russo: Yeah. I don't know if I'm like seeing anything that's just like outright fraud, you know. Is it illegal? For, for example, I was in Rhode island over the weekend. There's some sports betting there. You can't do it, but DraftKings flips their UI. So all of a sudden you start seeing things it. Like from the betting odds. But you can bet through DraftKings and instead of +110, it syncs up with like, what the odds would be on something like a poly market. So you're essentially like mimicking the prediction market and like, is that fraudulent? No, no, no, it's not fraudulent. But, you know, it does feel that it's just getting kind of cute and can maybe we look back in a few years and we see some of these headlines and we put them on a chart and say that maybe it marked some sort of like, important turning point. Maybe. But like, that wouldn't be something that I would bet on.
Michael Batnick: All right, I've got fraud for you. I forgot this. Mia Coppola ready Credit to me. Hand up. There was fraud very recently in the. Which. Which IPO. I guess in the SpaceX IPO. Nothing to do with SpaceX on their part, but there was a lot of SPVs on SPVs. These were the Russian egg dolls where people Thought they held shares and they were excited for life changing money. And in fact, they either didn't or there was just, there was some bullshit going on. So that is a. That literally is fraud. And that actually just happened two months ago.
Sean Russo: And that probably, that type of stuff probably only happens during massive bull markets when there's incredible IPOs happening.
Michael Batnick: Right?
Sean Russo: Yeah.
Michael Batnick: Okay. So, all right, let's do this. You know, sure, take it away.
Matt Russo: All right, here we go. So on June 20, 2025, we did an episode on TCAF with myself, Michael, Todd Sohn, and Josh. And Michael, you said, we are at an absolutely critical juncture for Apple. So, John, can we put this chart on setting the table? Here we go. So this is a ratio chart that Michael, you had shared during the podcast prior. And I put a dot when that episode aired. And this is just looking at Apple divided by Spy. And your point was, look, there's a very critical line in the sand that we were at where it said, okay, Apple's either going to break down and it's going to be very bad, or it's going to be. Or we'll just see, or this is going to be a rebounding point. And that's exactly what it was. It was a rebounding point. Which, you know, I guess this is also just a marking of the importance of technical analysis. Right. Like, you saw a very important level that it had touched multiple times and it held that, that line. And then if you want to go to the next chart, John. All right, so now this is showing Apple correlation and correlation with the NASDAQ 100. So Apple's coming, becoming extremely uncorrelated with the remaining other 99 NASDAQ 100 stocks. And this is going back to 2003. This is a very long time.
Michael Batnick: Wait, it's not just uncorrelated, it's negatively correlated.
Matt Russo: Completely. Yeah. Negatively uncorrelated. So if you just go back 30 trading days and look at the S and look at the NASDAQ 100 versus Apple, they're doing completely the opposite things. And so it looks like this is just a function of the market picking other winners. Or maybe this is a function of the other stocks in the NASDAQ performing well. And it's a function of broadening, but it's. They're quite moving the opposite directions.
Michael Batnick: There's a lot of ingredients going on in the story and the chart that you opened with for Apple Spy. This is why we respect technicals. Anybody could have looked at this chart and said, all right, like, clearly there is something happening here for reasons that don't matter. But this was, that was a critical point in time and the market did what it did. As far as what's happening right now today, Josh was early on this, a credit to him. Apple is so divorced from the current news flow. As far as AI is everything. No, it's too much like they are the only ones. We made this chart earlier showing capex spend and we did this like a year or 2 ago maybe capex spend as a percent of revenue. And we said what the hell is Apple doing? What is Tim Cook thinking? They're just not in the game at all. And Josh made the case last week on why Tim Cook deserves to be in the Mount Rushmore. Maybe for some of the things, some of the decisions that he didn't make that he very deliberately not decisions that he didn't make, decisions that he chose things that he chose not to do deliberately to avoid. And he could have definitely steered them in this direction of doing what everybody else is doing, but he went the other way. And now you have it with a negative correlation. Negative to its constituents. And the other part of the story is is just the overall market correlation is extraordinarily low. So Zero Hedge tweeted. This is from Goldman. We just traded through the lowest realized correlation period in recent history in the last 25 years. Only two periods have seen this correlation before and they weren't great. Whatever. For whatever it's worth, which is in my opinion is not much, but 2007 and 2018. Now this is not sustainable. Sean or chart you asked like are we going to see earnings come back into the channel? Is AI going to make earnings after a new paradigm? You know, whatever. Who, who knows? I know for a fact that this relationship is not sustainable. Now it doesn't mean that you're. That the crisis is coming or anything. You know, I'm not suggesting that, but this will change because all it takes is one risk off event when correlation spiked to one. Right. What do you guys think is going on with Apple and the broader correlation story?
Sean Russo: I wish I had this chart in here. Excuse me. My. My voice. My God.
Michael Batnick: It's okay.
Sean Russo: Momentum and the Mag 7 has been as uncorrelated in history since the MTM ETF launched, which is kind of wild. So in other words, the Mag 7 is no longer momentum and it had been for a very long time.
Michael Batnick: Well, because how much of. Of MPUM was.
Sean Russo: Was the Mag 7? Exactly. Yeah. So I think that's a part of it is like we're getting rotation Which I know this. The chart that you just laid out is not. Those dates aren't great when, when these stocks aren't, aren't correlated with each other. But I think it's great. Right, like health care and all of the other sectors energy are kind of holding us up, holding the index up as these other sectors kind of, you know, feel the pain I guess.
Michael Batnick: I think, I think you're right. It's wonderful right now at this moment in time I feel like the, the. The news cycle, the things that I'm talking about every week it's getting really repetitive and I wish something would happen. That was the. But that was the market for 2023 and so many years where it's like I have nothing else to say about the Mag 7. I don't know what else to do. So I think this is great. Matt, anything from you like show me this?
Matt Russo: No, I do. I just do you know if you showed me this chart without knowing anything else on what's happening in the market. Right. This, the realized, the realized correlation chart. That sounds like there's a lot of chart. There's a lot of stocks within the index that are performing opposite to one another and that's to me great. I mean you're seeing rotation out of certain areas and into others and you're seeing like very intentional selling of certain pockets to buy others. There's no.
Michael Batnick: Yes, I would say it's confused intentional selling because people don't know because we're in such a uncertain environment which I know is cliche but we really are that it's either this basket or that basket or this basket or that basket or no software is actually back and right like the, the news flow is changing on a daily and weekly basis.
Matt Russo: So 100% right. The conditions are different this time versus the past ones too. Which also means that there's probably no signal in this versus like looking back at February 2007.
Michael Batnick: I agree with your conclusion. All right. Before we leave this topic tomorrow is John Ternus first big reveal. They are going to be showing the world I think the foldable iPhone which they were saying like well, hang on like other companies this is not like a new thing. Samsung's had the foldable iPhone forever. I think in order for Apple to do it at least this is what I read in the article. In order for them to do that they acknowledge this technology has been around. It would have been prohibitively expensive. Alright, fine, whatever. It's still fucking expensive. So this new phone is going to debut at over $2,000 I'm excited about it, though. So I want, I want to ask you guys, is this going to be a flop or is this going to be yet another smash from Apple? Chart, you're nodding. What do you think?
Matt Russo: I think this is so smart. I can. I. So I wrote that blog post about how, like, there's sort of like this increase in nostalgia now and like going back to a previous period in time and kind of like the boom of analog. And I think that this is a play on that. Like, I do think that. I think people are just. It's nauseating to open up your phone and be inundated with Instagram reel notifications and for the younger folks, Snapchat. And I think that people just don't need the interface of having a screen in front of you all the time. And so just the process of folding it open, it's going to be. I think a lot of people are going to ditch. I really do think it's going to be a great, a great product release. Like, I think people are going to say, ditch their current iPhones and switch.
Michael Batnick: Sean, what do you think?
Sean Russo: I'm going to go the other way. I want it to work because I like Apple and I like their products and I like innovation. And I think it's interesting that they're putting something new out, which they haven't done in what feels like a long time. However, $2,000 for a phone feels like a lot. Matt, you, you said this, but people are trying to be on their phones less, like, with more screen. I feel like this is for people who are watching movies or shows on their phone. Like, I don't know, Like, I feel like people aren't gonna want to pay $2,000 for something that's just like they, they're already getting tired of, you know, but who knows? I'd be happy to be wrong.
Michael Batnick: I am firmly on the fence on this one. I really do see both sides. I really do see this as like a come on. Looking back, like, you thought that they were going to be able to charge people $2,000 for their phone, but the way that it's financed these days, people have no governor anymore what they pay for. And it's like you have to give them, you know, give them your credit card. I mean, it's, it's in the, it's in the, it's in the bill.
Sean Russo: Who would ever buy the, the, the Apple VR things, right? Like, who would ever do that?
Michael Batnick: Morons. Morons. I say, yeah, when you close the phone, does it, whatever we'll find out tomorrow. Okay. All right, I want to talk about this. We and others spent a whole lot of time when SpaceX was $110 saying, oh, how low is it going to go when the unlock actually happens? And credit to me, I believe that I was like, it's on the calendar. Who has the ability to sell shares is going to sell them at $110 when they IPOed at 150 and it was 200 bucks five hours ago. Right. Like, who's just going to dump. I understand. Yeah, sure, some people will, but there's also going to be buyers and there's index funds involved. So chart, walk us through the Google search chart that you made.
Matt Russo: Yes. So, John, could we throw up the chart that shows SpaceX price for search interest? Okay. So Michael was just looking at Google search interest today, and we saw that the peak in Google search interest for SpaceX correlated to the bottom in the actual SpaceX price. That's what you're looking at. So look, people got a lot less interested in SpaceX at the same time that the actual stock bottomed and it went from $108 to $154 today. Markets are so difficult. And this is just another example of taking the other side actually working out.
Michael Batnick: So up 50% since then. And you know, it's funny. Matt, turn off, please. I actually, so I sent you the data. The, the thing that I put into the search history, into Google Search. It's the exact same chart I put in SpaceX unlock, but it's, it's the exact same shape. This is all that anybody was talking about. So we had the unlock and it's a staggered unlock and there's going to be more coming, but I think it was like 900 million shares. I mean, it was a lot. It was a lot that came to the market and guess what? The market freaking absorbed it and we just moved on. I haven't seen anybody say, hey, all those fears, all those articles, all that time that we spent talk about the unlock. The. That was the bottom. Funny how markets work. All right, so not. Our friend Dave Nadi tweeted an article from, from Bloomberg and it's basically saying that the, the weighting of SpaceX right now is one and a quarter percent. That's the 19th tweet off for one second. Let me just set this up. I know it's hard to like read the tweet. We. Listen to me. All right, so it was 1.25 of the NASDAQ, which was the 19th biggest weighting despite the fact that it had the 6th largest market cap in the world at $2 trillion. So Bloomberg is saying that the weighting could hit 1.5% after the rebalance. Now there's a rebalance that's going to bring on more buying pressure. So maybe some of the unlock is being soaked up by the index rebalance. Okay, back to Dave's tweet. So Dave said while the article ignores that the NASDAQ rewrote the rules just for this event. Okay. Worth noting that the SpaceX lockup coincides with a massive, massive cues and related buy order as their weighting increases. But the bottom line is this. Dave said good luck figuring out whether supply is more than demand in a few weeks.
Matt Russo: Yeah, so like I, my take here is like there are like known risks and then there's unknown risks and the known risks are priced in the second that we all, we all know them.
Michael Batnick: Well, it's on the calendar.
Matt Russo: Yeah, it's on the calendar. It's a different thing. It's in the prospectus. You can go and read it. It's already priced in. And so it's like how can that information that's priced in, how can that information change? And that will move the needle on the stock. Like if we all expect Apple to have a really great announcement tomorrow and they have a great announcement, it doesn't really matter for the stock price. But if they under deliver just slightly, then it matters. And it's like here, like how is the actual news and information that we know today going to change over the next few months? I think Dave's point is like we
Sean Russo: know this information and there's still more shares to be unlocked. Michael, I think you put in a chart of Bloomberg that there's like billions of shares left to be unlocked and the price is near its IPO high. So in my mind like I'm just in a blunder as to like how you could ever think that this is signal. Like this is just all noise to me. I really do think so.
Michael Batnick: I actually will take the other side of that at this point.
Sean Russo: Okay.
Michael Batnick: Even though I just made the case that like all of the talk marked the bottom because it was on the calendar chart back on. This is a lot of supply. This is a lot, a lot, a lot of supply. And I would love. Go ahead.
Sean Russo: I, I mean kid you, we just said it was priced in.
Michael Batnick: But there's a difference between 900 million shares unlocking and 5 billion. You can only price in so much.
Sean Russo: Big Sean, this is my meme this is my meme that I thought of with. With the astronaut, which is. Which is funny saying, wait, it's all priced in. And the guy with the gun saying, always has been shout out, John.
Matt Russo: That was great placement by you, John.
Sean Russo: Well done.
Matt Russo: It. Well done, man.
Michael Batnick: All right, before we get to the mystery chart, any. Any final thoughts, anything you want to leave the audience with?
Sean Russo: I think that the next podcast I do. I'm not going to do math on it.
Michael Batnick: Yeah, it doesn't work.
Sean Russo: Yeah. So just for next time.
Matt Russo: Yeah, yeah. If you can't really hear me, I was at a wedding all weekend for my brother. So shout out to my brother. He got married. Love you, Carolina. Michael. And, yeah, I don't know if I'll be following Michael Burry's stock picks, but, yeah, they influenced me a little bit is what it is.
Michael Batnick: You're human. So am I. All right, the chart that we're looking at today is. Let me start. Let me just start harder than. I'll give you guys more clues as needed. It's the theme of 2026. And before we start to guess, are you buying this chart?
Matt Russo: I am.
Michael Batnick: You're not.
Matt Russo: I wouldn't buy this chart yet. I'm not buying this yet.
Michael Batnick: No.
Matt Russo: No.
Michael Batnick: There is no evidence whatsoever. Whatsoever that this downtrend has been extinguished. I mean, there's a. But if you zoom in, there are a bunch of higher lows.
Sean Russo: But I know what this is.
Michael Batnick: Longer term, I think you do. What is it?
Sean Russo: Biotech?
Michael Batnick: Not even close. Love you, though.
Matt Russo: So. Okay. Michael, would you buy this chart? I know we have to guess.
Michael Batnick: Wait, hold on, hold on. Chart off. Sean, I gotta look at you. I said this has been the biggest theme of the year, and I meant it.
Sean Russo: That wasn't AI Felt like too obvious.
Michael Batnick: That wasn't a rope. A dope. This is truly. This is.
Sean Russo: It doesn't look like any AI chart that I've ever seen.
Michael Batnick: All right, let me give. Before I give you one more clue. Chart. Do you want to weigh in?
Matt Russo: I mean, the theme of the year is broadening.
Michael Batnick: Okay. It's a ratio chart.
Matt Russo: Yeah, it's a ratio. Of course it's a ratio. A ratio chart. I see that. It's been going down since 2021. It's something that sucks. It's probably like a household name. Is it like. But it's gone up recently. I mean, Nike looks horrible.
Michael Batnick: All right, hold on. Just think about. Shot off, please.
Matt Russo: Clues.
Michael Batnick: Think about what happened inside the market. We've been talking about it a lot over the last 45 days. That's a random number. But
Sean Russo: it's health care divided by tech.
Michael Batnick: No, but you're going to be. You're going to be mad when I. When you. When you. All right. Any. Anything else?
Sean Russo: There's. I feel bad for Josh. This is horrible.
Matt Russo: Yeah, yeah. This is. Yeah. Sorry, man. I. Yeah, no clue. Just go. Michael. I was gonna say, like, real estate divided by spy or something.
Michael Batnick: All right. That is software divided by semis.
Matt Russo: Oh, geez, man, we're bad.
Michael Batnick: Come on, boys.
Matt Russo: You make it look pretty easy, Michael. You know, like you.
Michael Batnick: I mean, I'm very good at this. But. So. But you guys. You guys look at charts all day, too.
Sean Russo: Hold on. You should have admitted that it was a ratio chart from the start. I didn't see the ratio thing.
Matt Russo: I knew. That's the only thing I knew.
Michael Batnick: And Matt said it was a ratio chart, so you can't. You can't plead ignorance.
Sean Russo: I'm pleading the Fifth.
Michael Batnick: All right, you guys want to, like, apologize or.
Sean Russo: All right, I'm sorry.
Matt Russo: Look, we love all. We love all the viewers and listeners. We apologize.
Michael Batnick: All right, thank you, everybody who tuned in for the live. Let's wish Josh well. Hopefully he is in good health for the event next week out in California. Hope everybody is enjoying the early stages of fall. This is my favorite time of the year. We've got football on Wednesday and Thursday and Sunday and Monday and. All right, starting. Thank you very much for listening.
Matt Russo: See you guys.
Michael Batnick: See you next time.
Matt Russo: Thank you. Bye.
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