Guy and Dan discuss the chart of the S&P 500 (2:26), how investors could be offsides in this market (6:13), homebuilder stocks bouncing (12:53), where the S&P could bottom (22:52), gold and crude oil (20:46). Dan sits down with Gene Munster of Loup Ventures to recap Tesla’s quarter (31:15), and preview mega-cap tech earnings from Apple (37:40), Microsoft (43:41), Amazon (47:10), Alphabet (51:00), and Meta (54:00).
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00:01:20 So welcome back to On the Tape, folks.
00:01:23 So this is gonna be an interesting one.
00:01:25 Dan's gonna sit down with Gene Munster,
00:01:28 fast money fave, Gene Munster of Loop Venture fame.
00:01:32 They're gonna talk everything FMAGA.
00:01:35 Probably a lot of F, a little MAGA,
00:01:37 but it's gonna be great.
00:01:38 But we don't really have a rundown.
00:01:40 - No rundown. - No rundown, Dan.
00:01:41 And you know why?
00:01:42 Because Danny Moses is not here.
00:01:44 It was Danny-- - No Danny Moses
00:01:46 and no rundown.
00:01:47 - No Danny Moses and no rundown.
00:01:48 And listen, we like to build the show around Danny.
00:01:51 Danny is the epicenter of On the Tape.
00:01:54 And with him not here,
00:01:55 that proves to be a bit problematic.
00:01:57 - Really? - That's okay.
00:01:57 We're gonna figure this out.
00:01:59 But by the way, for Danny's birthday,
00:02:01 I actually did go back and watch his movie.
00:02:04 And what I took away from it was Tom Berenger's genius.
00:02:08 I mean, he doesn't get enough credit.
00:02:09 I gotta tell you, Jo Beth Williams in her day was smoking.
00:02:13 So I got a chance to see it. - The big chill.
00:02:16 The big chill.
00:02:16 - That's the movie.
00:02:17 - Yeah, no, it's the big short.
00:02:19 You know that. - Still haven't seen it.
00:02:20 - All right, fair enough. - Still haven't seen it,
00:02:21 people.
00:02:22 Tough shit, Danny, but happy.
00:02:23 How old was Danny, by the way?
00:02:25 - You tweeted that he was 63.
00:02:27 That's not cool. - That's not cool.
00:02:28 - Because a lot of people actually believe
00:02:29 what they read on the internet.
00:02:30 I don't know if you do. - Danny's younger.
00:02:31 - Do you know that?
00:02:32 Do you know that guy?
00:02:33 - Danny's younger than I am.
00:02:35 You know what's amazing?
00:02:35 I'm coming into this little bit of traffic in New York City.
00:02:38 - Little bit. - And somebody said,
00:02:40 do you still, they didn't say it in a nice fashion.
00:02:43 They said it in like an F-you way.
00:02:45 You still think the S&P is going to 3200?
00:02:47 What we've said for a while here, Dan,
00:02:50 is yes, we think the S&P 500 is headed there.
00:02:55 But before it was gonna get there,
00:02:56 we thought it would go to 4100.
00:02:58 As we sit here now, you have an S&P 500
00:03:01 that's either side of 4000,
00:03:03 and that's been pretty much not a straight line higher,
00:03:06 but a step higher, lower from that June 15th Fed meeting low.
00:03:11 - Any Johnson who would tweet at you,
00:03:14 who would tweet at you and say that,
00:03:16 first of all, they must know you well enough
00:03:18 if they've been watching on Fast Money for 27 years
00:03:21 and listening to the podcast for a year and a half.
00:03:23 They know you're gonna respond.
00:03:25 They know you're gonna get annoyed,
00:03:27 but it's, and I call them a Johnson
00:03:29 because they just don't get how the game is played.
00:03:32 Things don't go to certain levels in straight lines.
00:03:35 - No straight lines.
00:03:36 - No, I mean, but that's the thing.
00:03:38 And you know what, Guy,
00:03:39 we also reserve the right to change our minds near term.
00:03:42 I think that, again,
00:03:44 I'm just looking at the chart of the S&P 500.
00:03:46 On January 2nd of this year,
00:03:48 it ticked briefly above 4800.
00:03:52 You and I and Danny have been decidedly bearish
00:03:55 for fundamental reasons.
00:03:57 Not just for shits and giggles or anything like that.
00:04:01 We had a very sharp decline in January.
00:04:03 We had a little bounce in February.
00:04:06 We made a new low in late February.
00:04:09 We had a very sharp bounce
00:04:11 after the Fed raised interest rates in March
00:04:13 for the first time since 2018.
00:04:16 And then we had a 4,600,
00:04:19 nearly a straight line over the next two months,
00:04:21 down to 3,800.
00:04:22 So you're kind of directionally, you're getting it right.
00:04:24 If you're getting it right for the right reasons,
00:04:27 but not in a straight line,
00:04:28 I mean, it still works, right, Guy?
00:04:29 - It is very difficult to navigate these markets.
00:04:32 We never say with certainty anything.
00:04:35 We have opinions.
00:04:36 By the way, the person's name is Mini Hex from Minnesota,
00:04:41 just in case anybody cares.
00:04:42 They actually tweeted it.
00:04:44 They actually tweeted it,
00:04:45 Market Call and five other people.
00:04:47 I think EY from SoFi.
00:04:48 Listen, I'll stand by our work without question.
00:04:52 I'll stand by our work
00:04:53 in terms of what we've done on the tape.
00:04:54 Market Call, all those things.
00:04:56 And we don't speak with certainty about anything.
00:04:58 What I will say is this.
00:04:59 I still think the market is headed to 4,100.
00:05:02 Do we see an overshoot?
00:05:03 Maybe, but I think 3,200 is in the cards.
00:05:05 And it's for all the reasons that we said.
00:05:07 And since last Market Call,
00:05:09 nothing's really changed except the market.
00:05:12 And oh, by the way, now you have Ford saying
00:05:15 they're gonna lay people off.
00:05:16 Now you have seven of the biggest NASDAQ companies
00:05:20 laying people off.
00:05:21 And when we start hearing from the FMAGA Complexity
00:05:24 you talked to Gene Munster about,
00:05:26 we're really gonna have a pretty clear picture
00:05:28 of what's going on here, Dan.
00:05:29 - All right, so let's talk about this
00:05:30 because let's separate the stock market from the economy.
00:05:34 And so again, when the Fed raised interest rates
00:05:36 75 basis points in June, I think it's really interesting.
00:05:39 Remember that trial balloon that was floated,
00:05:42 I think it was like June 8th or 9th,
00:05:44 that the Fed was gonna actually do 75.
00:05:47 Fed funds had been pricing a 50 basis point increase
00:05:51 for June, July, and September.
00:05:53 So what did it mean?
00:05:54 It meant that the Fed meant business
00:05:56 about obviously battling inflation.
00:05:58 They admitted that they were wrong.
00:05:59 You remember that they did that apology tour?
00:06:01 And what did the stock market do
00:06:02 from the time that that journal article dropped?
00:06:05 It dropped 10% in a week.
00:06:07 It bottomed in a couple days after that June Fed meeting.
00:06:11 We had a rally, it wasn't great.
00:06:13 We came back into quarter end.
00:06:15 And now we're up about 6.5% in the S&P 500
00:06:18 over the last, let's call it week and a half or so.
00:06:20 We have that Fed meeting next week.
00:06:22 It's near certainty they're gonna do 75 basis points.
00:06:24 And so the question now, Guy, is what is the thing
00:06:28 that causes investors to be off sides
00:06:31 after we've had this rally?
00:06:32 We're about 10% off of the lows in the S&P 500.
00:06:35 We still have a dollar index, the Dixie at 107.
00:06:39 We have crude oil, which has come in a good bit.
00:06:41 It's trading about 96.
00:06:43 We have the 10-year US Treasury yield at 2.9%.
00:06:47 And we have the two-year yield at about 3.1%, okay?
00:06:52 So talk to me about putting those kind of major macro
00:06:56 inputs together.
00:06:57 What does it mean for the stock market?
00:06:58 A lot's unraveled there.
00:06:59 So 10-year yields today as we're taping, this is Thursday,
00:07:02 moved 12 basis points to the downside.
00:07:05 A little much?
00:07:06 Well, I mean, we typically are now seeing 10 to 15 basis point
00:07:10 intraday move in the 10-year like it's not a big deal.
00:07:14 It happens to be a big deal.
00:07:15 So what is that saying?
00:07:17 I think effectively what it's saying
00:07:18 is people see growth slowing and it's manifesting itself
00:07:23 in 10-year yields.
00:07:24 You mentioned two-year yields, which I've said for a while,
00:07:27 are gonna be sticky north of 3%,
00:07:29 inverted by about 20 or so basis points.
00:07:31 I think that can get to 50 basis points.
00:07:33 How does it get there?
00:07:34 I don't know.
00:07:35 I think two and a half into 10-year,
00:07:37 3% into two-year or thereabouts.
00:07:39 How can people be off sides?
00:07:41 Well, people start believing that, oh shit,
00:07:44 the bottom is in.
00:07:45 We gotta chase this thing,
00:07:46 which we've done for the last decade or so.
00:07:49 And I think that's gonna be a lot of the thought around
00:07:51 where are people wrong?
00:07:52 How is this thing gonna continue to sort of grind higher?
00:07:55 But I think people have to take a good look and say,
00:07:57 well, wait a second.
00:07:58 If you believe that the Fed is gonna somehow
00:08:00 take its foot off the pedal because to your point,
00:08:03 commodities have come in 30 to 35%
00:08:06 and that 9.1% print we saw a couple of weeks ago
00:08:10 will in fact be the high print,
00:08:13 people will say, well, maybe the Fed can back off.
00:08:15 Here's what I'll say to that.
00:08:16 9.1 may be the high print.
00:08:18 I won't back away from that.
00:08:19 It probably will be.
00:08:21 But if commodities have come off 35%,
00:08:23 let's just do the math.
00:08:24 If that CPI number comes off 35%-ish,
00:08:28 you're still talking about an inflation rate north of 6%,
00:08:32 which is still three times higher
00:08:35 than where the Fed wants it to be.
00:08:36 And that's with commodities selling off the way they have.
00:08:39 - Yeah, Jamie Dimon, he was quoted a couple of weeks ago
00:08:41 right before JP Morgan reported their Q2 earnings
00:08:44 by saying that he thinks that the Fed's inflation target
00:08:47 of 4%, that's to the downside,
00:08:49 they used to pray for 2% to the upside pre-pandemic.
00:08:53 - They were wishing.
00:08:54 You know, the thing that pisses me off,
00:08:55 you're getting me. - I just did it.
00:08:57 - Because for years and years, literally,
00:09:00 they want inflation.
00:09:01 We need it, we want inflation.
00:09:03 And I would push back and say, be careful, Dan.
00:09:06 Be careful what you wish for. - I heard it.
00:09:07 I heard it, like probably once a week on fast money.
00:09:09 - But the hubris to think they can control it
00:09:11 once they have it. - Oh, that's not what
00:09:12 I was trying to start here. - That's what pisses me off.
00:09:14 The fact that these geniuses think that they somehow
00:09:17 could control something that they have no control over
00:09:20 is what pisses me off.
00:09:21 And we talked about this with Vinny,
00:09:22 and we talked about it with Porter,
00:09:24 and we talk about it with Danny all the time.
00:09:26 That's what infuriates me.
00:09:28 Sorry, you did it on purpose.
00:09:30 - I kind of did. - You did.
00:09:31 - I think the people love it.
00:09:32 Amanda knows. - No, it's just--
00:09:34 - She gets lots of tweeted, she gets lots of emails.
00:09:36 - Because people say, oh, you're so smart,
00:09:37 why don't you do it?
00:09:38 No, I'm not suggesting I could do it,
00:09:40 but I'm not, I don't have the--
00:09:41 - You're not humorless enough.
00:09:43 - Oh, that's gonna be an economist.
00:09:44 - I am not humorless enough or smart enough
00:09:46 to be a Fed official. - Can I bring it back
00:09:47 to my comment, though? - Yeah, please, sorry.
00:09:48 - So interestingly enough-- - You did it.
00:09:49 - So what I was saying is that Diamond was saying
00:09:52 that he thinks that they're pretty aggressive
00:09:54 on their downside target for inflation, okay?
00:09:55 So he's in your camp.
00:09:57 He's in the camp saying that it's gonna be pesky
00:09:59 and persistent at much higher levels.
00:10:01 Now, also at higher levels of interest rates
00:10:04 that are not turning on a dime.
00:10:06 They are not gonna go from the fastest increase
00:10:10 of, let's say, 2.5% in Fed funds probably ever
00:10:13 and taking their foot off the pedal
00:10:15 as it relates to QE to QT,
00:10:17 the way in which they have done it
00:10:18 in such a short period of time.
00:10:20 And all of that's gonna take a while
00:10:21 to work itself into the economy.
00:10:23 And you just mentioned a couple of things
00:10:25 that I think are really important.
00:10:26 So if major corporations are starting to slow hiring--
00:10:29 - Which they are. - Or actually cut jobs--
00:10:31 - Which we're seeing. - Okay.
00:10:32 So that's likely to accelerate.
00:10:34 So all of a sudden now, even if inflation comes in, right,
00:10:37 you have rates that are not going down meaningfully,
00:10:39 you're having growth slowing,
00:10:41 and that's what you're seeing in the 10-year.
00:10:42 We know that Europe is gonna be a bit of a problem
00:10:45 for some time to come here.
00:10:46 - And quickly, we also saw the ECB raise interest rates
00:10:50 by 50 basis points.
00:10:51 Now, think about that.
00:10:53 Europe is maybe in recession.
00:10:55 It doesn't really matter.
00:10:56 I mean, Europe has issues.
00:10:57 Clearly across the continent, Europe has issues.
00:11:00 Yet they feel it necessary, Dan, to raise interest rates.
00:11:04 Not because they want to,
00:11:05 because inflation's out of control there.
00:11:07 And you think net gas and your prices are high here?
00:11:10 Look what's going on in Europe.
00:11:11 Anyway, please continue.
00:11:12 - So the last piece of the puzzle here,
00:11:14 and this obviously is the thing
00:11:16 that probably causes the Fed to pivot
00:11:18 at some point later this year, much later this year,
00:11:21 after this meeting or something like that.
00:11:23 And really, the pause starts with,
00:11:24 we've done a lot of heavy lifting.
00:11:26 Let's see how the transmission is into the real economy.
00:11:30 We now are gonna be very data-dependent here.
00:11:33 But if unemployment ticks up, it's at 3.6%.
00:11:36 - Which it's going to.
00:11:37 - So it's at 3.6% right now.
00:11:40 We're seeing some of the data, the job openings,
00:11:42 we're seeing that kind of turn the opposite way here.
00:11:45 Then the Fed will have to,
00:11:47 because if you throw on 4% unemployment,
00:11:49 you know what I mean?
00:11:50 Even David Rosenberg, who's been on our podcast,
00:11:52 is actually coming on next week after the Fed meeting.
00:11:55 Rosie, Rosie is coming back on.
00:11:57 - By the way, there's a GDP, I think,
00:11:59 on that Thursday or Friday.
00:12:01 I'd have to go-- - I think it's the 28th.
00:12:02 - Yeah, please continue.
00:12:04 - So we're gonna cover all that with him,
00:12:05 but he's shown us some data
00:12:07 that when you see unemployment tick up,
00:12:10 even 3/10 of a percent off of a multi-year low
00:12:13 or something like that,
00:12:14 the impact on the economy can be devastating.
00:12:17 We're already starting to see some of these hints
00:12:19 in subprime in a whole host of different levels,
00:12:21 as far as lending is concerned.
00:12:23 We're starting to see defaults, pushouts,
00:12:25 AT&T, what they had to say about bills.
00:12:27 Okay, so all this is kind of happening
00:12:29 in the backdrop of horrible housing data.
00:12:31 So if housing has been a bedrock
00:12:34 of the US consumer of their kind of balance sheet,
00:12:38 all of a sudden with mortgage rates where they are,
00:12:40 with maybe taking out second loans and stuff
00:12:42 because people were refinancing the hell out of 'em
00:12:44 when they could and valuations were skipping up
00:12:46 year over year, now if we were to see housing
00:12:49 to come in, let's say 20, 25%, give back, I don't know,
00:12:52 a third of the gains over the last six or seven years
00:12:55 because of the easy, we got a problem with the economy here.
00:12:57 - No question about it, and I'm gonna throw this in here
00:12:59 'cause that's my want to do.
00:13:01 Here on Thursday, the market is what it is,
00:13:03 but look at what's sort of grinding higher
00:13:07 in a meaningful way. - Don't say gold.
00:13:08 Don't say gold. - No, I don't wanna say gold.
00:13:09 Go to your little Google machine and type in the symbol,
00:13:12 for example, a DHI or a PHM. - Oh, home builders, okay.
00:13:15 - And it's interesting, they shouldn't be trading higher,
00:13:17 and one of the things that I've said is,
00:13:19 listen, I understand that, but if rates are gonna come down,
00:13:22 these are sensitive, the stocks are sensitive to rates,
00:13:25 and you have a decent little bounce off the bottom
00:13:28 that we made maybe a month or so ago,
00:13:29 and these home builders, that can continue,
00:13:32 as counterintuitive as that stands.
00:13:33 With that said, Dan, I'm gonna say this.
00:13:35 You're 100% right, and in the US economy, again,
00:13:38 73% driven by people buying shit.
00:13:42 People are gonna start to get scared,
00:13:43 and don't think for a minute this heat wave
00:13:45 we have around the country, people are not going out
00:13:48 and spending when it's 100 fricking degrees out
00:13:50 across the country.
00:13:52 That's gonna curtail spending as well.
00:13:54 - That's interesting.
00:13:54 I will say this, that our friend Steven,
00:13:56 who works with us here-- - Is that Steven Rafis?
00:13:58 - That is Rafis. - I gotta tell you something.
00:14:01 He plays men's lacrosse.
00:14:02 He really has gotta work on his weak hand.
00:14:04 That's really-- - Oh, that is gonna fight.
00:14:06 - No, I'm just saying, if I just had to critique his game--
00:14:10 - Just so you know, that would be his right hand,
00:14:11 is his weak hand.
00:14:12 - I am, yeah, I understand that.
00:14:14 And he thinks by going left, he's gonna catch people off guard.
00:14:18 - So I'm gonna make a bid. - Maybe in high school
00:14:19 that shit works.
00:14:20 It ain't working in the LL Junior.
00:14:21 - So obviously we wish Danny were here.
00:14:23 (humming)
00:14:26 You know that song, right, Wish You Were Here?
00:14:28 - Oh!
00:14:29 - Isn't that Chicago, no, that's Wishing You Were Here.
00:14:31 That's Pink Floyd, Wish You Were Here.
00:14:33 - The fact that Pink Floyd is not,
00:14:35 and we spent some time on your list last--
00:14:35 - I do wish Danny were here.
00:14:37 Not that I don't love doing this with you.
00:14:38 You and I can go back and forth for hours.
00:14:40 - We're kinda sick of each other's voices at this point.
00:14:42 - I'm not sick of you, I'm sick of my voice.
00:14:45 I'm not sick of your voice.
00:14:46 But I'll say, I do wish Danny was here.
00:14:47 I hope he's enjoying himself.
00:14:48 He's probably smoking the Mary Jane somewhere.
00:14:50 - Oh, you can't do that. - It's illegal.
00:14:53 - It's legal maybe probably where he is.
00:14:55 - It's legal in the whole country.
00:14:56 - You know what the funny thing is about that?
00:14:57 It's still kinda taboo.
00:14:58 My twin brother lives in Boulder, Colorado.
00:15:01 And it's been legal, no, but it's been legal
00:15:03 in Colorado for years.
00:15:04 And I often ask the question,
00:15:06 you could be at a backyard barbecue, right?
00:15:08 And you could have families there,
00:15:10 little kids on the trampolines,
00:15:12 throwing the lax ball around.
00:15:13 And the dads are just kinda getting sloshed,
00:15:15 you know what I mean, on bud lights and grilling meat
00:15:17 and all that sort of stuff.
00:15:18 - Which has always been accepted.
00:15:19 - It's always been accepted.
00:15:20 But if you now, even with it legal,
00:15:22 if you pulled out a joint and just started ripping it,
00:15:25 right, in front of the kids or whatever.
00:15:27 - People would look at you cross-eyed.
00:15:28 - Yeah, it's very interesting.
00:15:29 - Well, having never smoked a marijuana cigarette.
00:15:33 - The magic dragon.
00:15:34 - I wouldn't, I can't really say.
00:15:36 Oh, I gotta tell you, my friends did it in high school.
00:15:38 I was around, I just never really wanted to do it.
00:15:40 But that's not--
00:15:41 - It was popular in the late '60s
00:15:42 when you were in high school, right?
00:15:43 - Yeah, late '50s, early '60s, you know,
00:15:46 people sort of discovered it.
00:15:47 - You were like a beatnik.
00:15:48 Weren't you kind of a bit of a beatnik?
00:15:49 No, we totally got off our top.
00:15:52 - No, you were saying if Danny Moses were here--
00:15:55 - Oh, this going back to "Raphaeus" actually.
00:15:56 So I was gonna say, I was gonna make a sports prediction.
00:15:59 The one in four cannons in the PLL,
00:16:01 which "Raphaeus" is a starting midfielder on,
00:16:04 I think he's gonna have a breakout game this season.
00:16:07 I think it's gonna turn the tide for the cannons.
00:16:09 - Now, listen, I'm sure--
00:16:10 - I'm gonna say two and two.
00:16:11 He's gonna go two and two this season.
00:16:12 - Two goals, two assists.
00:16:13 So in college, a breakout game is like six goals, three.
00:16:16 That's not uncommon to see some cat--
00:16:18 - He was an All-American at Syracuse.
00:16:21 - He was up for that T. Wharton Award.
00:16:23 - Yes, he was.
00:16:24 - Did I say that correctly?
00:16:25 - Yeah, yeah.
00:16:25 - So good for, I'm just messing with "Raphaeus."
00:16:27 I love "Raphaeus."
00:16:28 I mean, we'll get off the subject.
00:16:29 - No, but that was, that was, listen, we have no rundown.
00:16:33 You got me all sidetracked on this "Raphaeus" stuff.
00:16:35 I wasn't bringing his name up
00:16:36 to talk about his lacrosse game.
00:16:37 I was bringing it up
00:16:38 because he mentioned something to me earlier today.
00:16:41 He graduated college a year ago.
00:16:42 He said a bunch of his friends who are recently graduated
00:16:45 or graduated college in the last year or two,
00:16:48 they had basically,
00:16:49 they didn't have to pay back their student debt for a while.
00:16:51 So think about this age group of consumer.
00:16:54 They're new to the jobs market.
00:16:56 They had the luxury of not paying back their student loans.
00:16:59 They were flush with cash.
00:17:00 They were trading in crypto and meme stocks
00:17:01 and SPACs and this and that, whatever.
00:17:02 I'm not saying all of them were doing it,
00:17:04 but a lot of them were doing it.
00:17:05 They lost money and all that.
00:17:06 And now all of a sudden,
00:17:07 they have to start paying back their student debts.
00:17:09 That means less cash to buy other things,
00:17:12 to do experiences, do whatever.
00:17:14 So I just think that's a really important point.
00:17:16 And let's start to track that
00:17:17 because that might be something
00:17:18 that we hear a whole heck of a lot more of.
00:17:20 - The point about the US economy driven by the consumer,
00:17:25 what does the consumer look like in the fall?
00:17:27 What are we talking about with unemployment ticking higher?
00:17:30 What are we talking about
00:17:31 with inflation continue to be persistent?
00:17:33 You know, I'm not convinced
00:17:36 that the US consumer is gonna be as robust
00:17:38 as this recovery seems to indicate,
00:17:40 and that's gonna manifest itself in stocks.
00:17:43 And we have companies talking about that, Dan.
00:17:45 Just go across a spectrum of companies
00:17:47 and you're talking about now,
00:17:49 you're starting to hear demand destruction.
00:17:51 - Yeah, so bringing it back to the stock market,
00:17:54 again, you and I are not wishing for a horrible economy,
00:17:57 a weak consumer.
00:17:58 - By the way, there's a great, in the "Phantom of the Opera,"
00:18:01 I think the best song in that musical
00:18:03 is "Wishing You Were Somehow Here Again."
00:18:06 If you remember, it's sort of towards the end of it.
00:18:08 Beautiful song.
00:18:10 I think they're by like a cemetery or something in the,
00:18:13 oh, you don't care.
00:18:14 - Yeah, eyes glazing over here.
00:18:15 - By the way, I think it was Emma Rossum.
00:18:18 Is that right?
00:18:19 Is that her name?
00:18:20 She did a great job in the movie.
00:18:21 - Yeah, so what I was gonna say-
00:18:22 - See, that's, by the way, you can't see this, folks,
00:18:26 but that's Dan completely dismissing it.
00:18:28 What were you gonna say?
00:18:28 - I will say this, that I can't do this.
00:18:30 One of my favorite podcasts is
00:18:32 it's the "Always Sunny in Philadelphia" podcast.
00:18:34 It's a show that's still on FX.
00:18:35 - I thought you liked that, the, what's-
00:18:37 - I love the Pod Save America guys.
00:18:39 Our buddy Tommy Vitor has been on it.
00:18:40 - Tommy Vitor listens to this, by the way.
00:18:43 Tommy is scared shitless of the market.
00:18:45 I shouldn't say that.
00:18:46 - No, no, no, no, no, no, he's not scared shitless.
00:18:48 He loves the market.
00:18:49 He loves trade.
00:18:51 The way we're, I'm a bit of a political junkie.
00:18:53 He's a market junkie.
00:18:54 - Well, I hope he's listened to us
00:18:56 'cause I think he's done reasonably well in certain areas.
00:18:59 - He's done fine.
00:19:00 Now we just need to do reasonably well
00:19:01 in the areas that he covers.
00:19:02 That's all I care about.
00:19:04 So- - Well, it's, okay.
00:19:05 But we will, by the way.
00:19:06 - The Vitor, you're not talking about Vitor.
00:19:08 - That's gonna, you know why we shouldn't,
00:19:10 historically, so we've done fast money.
00:19:12 You know, I started about 28 years ago doing fast money.
00:19:15 And you've done it, obviously, for the last 11, 12 years.
00:19:17 Maybe 13 almost.
00:19:19 And politics never came into it.
00:19:20 Unfortunately, politics has found its way into the market.
00:19:24 And that started during the Trump administration
00:19:26 and now it's carried over.
00:19:27 And that's just is what it is.
00:19:28 We have to talk about it
00:19:30 in the context of what it means for the market.
00:19:32 You think about here, Thursday,
00:19:34 the market sold off early in the day
00:19:36 on the headline that President Biden
00:19:38 tested positive for COVID.
00:19:40 It came back, but not that that is politics,
00:19:42 but my point is- - No, but policy is a very-
00:19:45 - Yes, and the two are now intertwined.
00:19:47 And that's not going away anytime soon.
00:19:49 - Well, stick around for my conversation with Gene
00:19:51 because he had a pretty good prognostication-
00:19:53 - I love Gene, by the way.
00:19:54 - About some sort of regulatory action in his space
00:19:57 that I think you're actually, you know, you're on this camp.
00:20:00 But bringing it back to the market here, Guy,
00:20:01 I just say is that like, given all the macro headwinds,
00:20:04 given all the geopolitical uncertainty,
00:20:06 given that we still have high valuations,
00:20:08 given that we just talked about rates versus inflation
00:20:11 versus the potential for unemployment to tick up,
00:20:14 housing to tick lower, all those sorts of things.
00:20:16 You know, the S&P 500 right here down about,
00:20:20 I don't know, 16% and the NASDAQ down about 23 or so percent
00:20:25 it just doesn't encapsulate.
00:20:26 Again, I've said this a lot on this podcast,
00:20:28 I've said it on "Market Call" and "Fast Money."
00:20:30 I just don't think that that's how this bear market ends.
00:20:32 And I get it, man.
00:20:33 There were pockets of over-exuberance,
00:20:36 whether it be new IPOs of tech or SPACs or crypto,
00:20:40 and they've crashed.
00:20:41 They've literally, literally crashed.
00:20:43 But I don't think until we have a bit of a capitulation
00:20:46 in the broader market,
00:20:47 the stuff that is the widest owned sorts of things,
00:20:50 that this bear market can be over
00:20:52 because the reset, the sentiment reset hasn't happened.
00:20:55 People still think that the Fed has their back.
00:20:57 When they don't, they're doing the exact opposite
00:20:59 of the thing that they got really comfortable with
00:21:01 over the prior 10 years of the pandemic.
00:21:02 - I think you will see panic over the next couple of weeks.
00:21:07 I think the panic you see will be panic to the upside
00:21:09 because this week, for the first time in a while,
00:21:12 we saw a lot of people, a lot of headlines,
00:21:15 people trying to call the bottom,
00:21:17 trying to be the next Mark Haines
00:21:18 because they find that to be interesting.
00:21:21 I mean, Mark Haines made that call.
00:21:22 God bless Mark Haines.
00:21:24 It was historic, but that's not what we're here to do.
00:21:26 As you say all the time,
00:21:27 nobody rings the bell at the bottom of the top
00:21:29 and we're not gonna be those people.
00:21:31 I happen to think that you're gonna see
00:21:33 by side capitulation, people throwing in the towel,
00:21:35 "Holy shit, I missed it again."
00:21:37 That fear of missing out,
00:21:38 and that's gonna manifest itself around 4,100 or so
00:21:41 in the S&P 500.
00:21:43 And then I think the next leg lower makes sense.
00:21:45 Why?
00:21:46 Because slowing growth, slowing earnings,
00:21:49 valuations that are still too high
00:21:51 in a lot of different places,
00:21:52 and you talk about an S&P 500
00:21:54 historically traded around 17.
00:21:57 Again, Dan, you put a 200 or so earnings,
00:22:00 which I think is where we're gonna come out,
00:22:02 talking about 3,400 S&P.
00:22:03 - Can I tell you where I think this could happen?
00:22:04 - And maybe we'd see the overshoot to 3,200.
00:22:06 - So I think the new lows in the S&P,
00:22:08 I don't know where they bottom out.
00:22:09 The new lows in the S&P could happen
00:22:12 sometime in September when you have the realization
00:22:15 of a unemployment ticking up.
00:22:17 So we get that kind of August jobs data,
00:22:19 and then we get some other economic data
00:22:21 as it relates to housing.
00:22:22 In that period in between the next Fed meeting,
00:22:25 that's when I think people might start to panic
00:22:27 to the downside, and we could see some new lows.
00:22:30 I wanna say one thing,
00:22:31 and I wanna get this in while Danny is not here,
00:22:33 and this is something--
00:22:34 - And we do wish he was here.
00:22:35 Great song by Pink Floyd.
00:22:37 By the way, I have 748 songs on my playlist.
00:22:41 - Legit.
00:22:42 - And Pink Floyd's not one?
00:22:43 - Shine On You Crazy Diamond is the only Pink Floyd.
00:22:47 To me, that's the only little, the only Pink Floyd.
00:22:49 - I love Pink Floyd.
00:22:50 I saw them in David Gilmour's 1987.
00:22:53 - At the Wall.
00:22:54 - I saw the momentary lapse of reason.
00:22:55 No, Danny saw them at the Wall, I think in '90 or something.
00:22:58 - I don't, I just never get--
00:23:00 - All right, well that's fine, you're a ZEP guy.
00:23:02 You know, we're Floyd guys, you're a ZEP guy.
00:23:04 Listen, I could love them both.
00:23:05 - They're not mutually exclusive.
00:23:06 - Really quickly, because we gotta get out of here
00:23:07 in a minute.
00:23:08 So Danny and I, when you were out a couple weeks ago,
00:23:10 we were going back and forth on gold, okay?
00:23:12 Gold had a really, gold made a new 52 week low today.
00:23:17 - I know.
00:23:17 - Okay, guy, it traded--
00:23:18 - Did the reversal?
00:23:19 - 1680, and now it's trading at 1718.
00:23:22 And let me tell you something.
00:23:22 - Did the reversal?
00:23:23 - It literally stopped almost to the penny
00:23:26 of its early August 2021 lows.
00:23:29 I mean, if you wanna get back on this train,
00:23:30 this is when, this is it.
00:23:31 - And you got some moving averages, I think, correlated.
00:23:33 If you're looking at your--
00:23:34 - I'm looking at my fax set machine.
00:23:36 - Your fax set machine.
00:23:37 - Yeah.
00:23:37 - Today will be one of those days in gold
00:23:39 where you just have to bookmark.
00:23:41 I say it all the time.
00:23:42 Every once in a while you get days
00:23:43 you have to put those little tabs in the day.
00:23:44 Today, I think, is gonna be one of those days
00:23:46 specifically for gold.
00:23:47 It's gonna be interesting to see what happens
00:23:50 with crude oil, the commodity.
00:23:52 Obviously, it had the bounce, subsequent sell off
00:23:54 on the back, Russian Open, Nord Stream, I get it.
00:23:56 That doesn't make a lot of sense to me.
00:23:58 We'll see.
00:23:59 I still think there's another chapter,
00:24:00 higher in crude, I've said it for a while,
00:24:02 incorrectly now, for the last couple weeks.
00:24:04 But gold today, I don't know what happened.
00:24:07 Very interesting, Danny.
00:24:08 - All right, fair enough.
00:24:09 - And Danny Moses is, I'm sure, somewhere right now
00:24:12 licking a spleef, looking at that gold chart
00:24:14 and saying this was the day.
00:24:16 - Oh, man.
00:24:16 - Did I say that right, by the way?
00:24:17 - This is the day.
00:24:18 Gold looks like a--
00:24:19 - Did I rush that?
00:24:20 - Gold looks like a straight shot to 1800.
00:24:21 You just mentioned the moving averages,
00:24:23 the 50-day moving averages.
00:24:24 - Do people say that?
00:24:25 No, but hold on a second.
00:24:26 Do people still say that or is that very '80s?
00:24:28 - That's very '80s.
00:24:29 - Sorry.
00:24:30 - But that's very you.
00:24:31 - You know, I do like, it's funny,
00:24:33 I mentioned Pink Floyd, which I actually have
00:24:36 a couple Peter Tosh songs, I think.
00:24:38 - Not Pink Floyd.
00:24:39 - No, he's not.
00:24:41 And a couple Bob Marley songs.
00:24:42 - All right, so Amanda just texted me,
00:24:43 she said, "Wrap it up."
00:24:44 See, I don't think she liked what we were doing here today.
00:24:48 - Well, because the producer in her,
00:24:50 because she wants to bring everything back under rails,
00:24:53 bring it back to the market.
00:24:54 I think we've been extraordinarily positive
00:24:57 over the last couple weeks.
00:24:58 I think we've outlined what we think is gonna happen.
00:25:01 I think we will continue to do that.
00:25:03 I will say this, the VIX going down to 22.5, 23,
00:25:07 which I think is where it currently is,
00:25:09 people will say that's bullish.
00:25:10 I actually think that's gonna be sort of bearish.
00:25:12 I think that will bottom out around 21.5,
00:25:15 that's gonna be your signal as well.
00:25:17 The HYG found a home around 73.5, 74.
00:25:20 That's been sort of moving sideways.
00:25:22 That's a good sign.
00:25:23 We'll see how that plays itself out.
00:25:24 And to your point, the dollar,
00:25:26 which had been ripping higher, has put the brakes on.
00:25:28 So we'll see again, a lot of things to talk about here.
00:25:31 - Yeah, I think, listen, I think my conversation with Gene
00:25:33 was kind of enlightening to me
00:25:35 because $7.5 trillion in market cap of five stocks
00:25:39 are all gonna report next week.
00:25:40 They may all cancel themselves out.
00:25:42 You know what I mean?
00:25:43 But I think taking some of the data points out of there
00:25:45 might give us a sense that maybe enterprise
00:25:47 is about to weak.
00:25:48 We know that a lot of consumer ad-supported stuff
00:25:50 was weak prior to this.
00:25:51 So I don't like to do a lot of things
00:25:53 prior to earnings season.
00:25:55 I like to kind of come out of it with a broader thesis
00:25:57 for some individual names and kind of work bottoms up,
00:26:00 tops down, meet in the middle.
00:26:01 All right, listen, guy, we gotta--
00:26:02 - Hold on, I don't wanna leave yet
00:26:04 because I will say this,
00:26:05 Enlightenment is a great song by Van Morrison,
00:26:08 Enlightenment, the album, tremendous album.
00:26:11 What's the sound of one hand clapping?
00:26:13 There is no sound.
00:26:15 So if you wanna use another title, Enlightenment,
00:26:17 'cause I think that's what we're here to do.
00:26:18 We have to bring up Tesla 'cause we'd be remiss
00:26:21 if we'd, no, only because people say,
00:26:22 oh, when Tesla goes higher, you guys don't talk about it.
00:26:25 As we sit here right now,
00:26:26 Tesla's trading 810, 814 thereabouts.
00:26:30 I will tell you, I thought Tesla would rally into earnings
00:26:33 and I thought you'd see an overshoot after earnings.
00:26:35 I did not think it would get this high.
00:26:37 I thought it would sort of fizzle out around 775 or so,
00:26:40 and here we are $40 higher.
00:26:41 But I'll say this,
00:26:43 as much as people wanna champion this Tesla quarter,
00:26:45 this Tesla quarter was not nearly as robust
00:26:48 or as strong as the quarter we saw on April 20th.
00:26:51 - We'll stick around, Gene and I talk about it.
00:26:53 I thought it was a shitty quarter.
00:26:54 - All right, well, listen, we got Danny back next week.
00:26:56 - Oh, you're talking about it with Gene?
00:26:56 - Yeah, we got Danny back next week.
00:26:58 - But I had to bring it up because people say,
00:26:59 oh, asshole. - Dude, we covered it.
00:27:01 I lost money in it.
00:27:02 My puts are gonna expire worthless.
00:27:04 I'm back, Danny's back.
00:27:05 We'll get his take. - A little older,
00:27:05 a little wiser.
00:27:07 - All right, and we'll have Rosie on the Fed.
00:27:08 We'll have Rosie on GDP.
00:27:09 So stick around for--
00:27:11 - By the way, I have to say, we gave away books.
00:27:14 A lot of people, right?
00:27:16 We gave away a lot of Jason Kander books.
00:27:16 - Yeah, so listen, people, leave us a review
00:27:18 on any of the podcast stores.
00:27:20 Take a screenshot of it, send it to contact@riskreversal,
00:27:24 and you will get a copy of Jason Kander's book.
00:27:27 He was our guest last week.
00:27:28 - Yes. - Fascinating book,
00:27:28 "Invisible Storm."
00:27:29 - People are loving it. - A soldier's story
00:27:32 of politics and PTSD. - And PTSD, yeah.
00:27:35 And you know what?
00:27:36 By doing that, you make Amanda Diaz--
00:27:39 - Do extra work. - I mean, she's gotta put,
00:27:41 she's gotta put stuff at a FedEx package.
00:27:43 - People already got 'em, and they were tweeting it.
00:27:44 - I saw!
00:27:45 - All right, listen, I gotta get out.
00:27:46 I gotta go on TV. - By the way, can I,
00:27:47 hold on, I gotta go on the-- - I gotta go on the--
00:27:47 - Dan Marcus show. - I love Raphis.
00:27:48 I'm sorry, Stephen Raphis.
00:27:50 I love Amanda Diaz.
00:27:51 She's doing a crack job.
00:27:52 Nick Robertson, killing it. - Shout out.
00:27:54 - And Danny, if you're listening,
00:27:56 we do wish you were here.
00:27:57 - Happy birthday, buddy.
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00:30:10 And we're back.
00:30:11 I'm here with Loop Ventures' Gene Munster.
00:30:14 I think our listeners know Gene.
00:30:16 He has been a prolific technology analyst for decades.
00:30:20 He started Loop Ventures a few years ago.
00:30:22 Gene and I did a really great podcast on OK Computer
00:30:25 a few weeks ago just on his background,
00:30:27 some of the things that he's seeing and thinking
00:30:29 in public and private tech markets.
00:30:31 But we really wanted to focus this week on the pod here
00:30:35 on On the Tape, just kind of get in front of next week.
00:30:38 We have basically $7.5 trillion in market cap
00:30:41 among five massive tech names.
00:30:43 You know what they are.
00:30:44 They're Microsoft, they're Apple, Google, Amazon, and Meta.
00:30:46 Gene covers them all.
00:30:47 He's covered them all either for decades
00:30:50 or from their inception in the case of like a Meta
00:30:52 or something.
00:30:53 So Gene, thank you for joining us On the Tape.
00:30:55 - Thank you.
00:30:56 - All right, man.
00:30:57 You and I had a really good conversation, like I said,
00:30:59 on OK Computer, and we just kind of went back and forth,
00:31:02 ping ponged it a little bit.
00:31:04 What I really enjoyed about that conversation
00:31:06 is that you and I have spent a lot of time together
00:31:08 over, let's say, the last 10 years on CNBC,
00:31:11 but really doing it in a very soundbite-y sort of way, right?
00:31:14 You're there, you're reacting,
00:31:15 you're either responding to something that's going on
00:31:18 in a company that's in your coverage
00:31:20 and you're doing it real time.
00:31:21 And I will tell you this, you and that red phone,
00:31:23 there's nobody better at processing that stuff.
00:31:26 You know that, let's be frank.
00:31:27 - Yeah, and there may be no red phones in use anymore.
00:31:30 That might be a pretty small hurdle,
00:31:32 but I appreciate the thought there.
00:31:34 - No, but your ability to just kind of react
00:31:35 kind of quickly, you're always very prepared.
00:31:37 You know exactly what to expect,
00:31:39 but you also know what investors are expecting.
00:31:40 And I think that's really important.
00:31:42 And we're gonna hit a bunch of that
00:31:43 as we kind of think about next week's earnings.
00:31:45 But like I said, lots of soundbites.
00:31:47 We don't have to do that.
00:31:48 What's it feel like when you are talking to companies,
00:31:51 talking to investors, talking to other analysts,
00:31:53 just the ability to kind of decompress
00:31:55 and just chat a little bit
00:31:56 versus the soundbite nature on TV?
00:31:59 - It's a pure bliss,
00:32:00 especially it's a mutual admiration society here.
00:32:03 Big fan of your work and your thoughts too.
00:32:05 And so it's fun not only to catch up
00:32:07 and this is kind of what we do all day long
00:32:10 is talk to companies and talk to investors.
00:32:12 And of course it's not in soundbites.
00:32:14 - Yeah, no, the soundbite thing is interesting.
00:32:16 I think it's a great skillset
00:32:18 because it makes you synthesize information really quickly
00:32:21 and kind of get to the crux of it.
00:32:23 And so let's just say this is Thursday into the close.
00:32:26 Tesla reported last night
00:32:27 and you have been a steadfast bull in the story
00:32:31 for a whole host of really big thematic reasons.
00:32:33 And one of the things that I really appreciate
00:32:36 a lot of your commentary and your work,
00:32:38 whether I agree with it or not,
00:32:40 I know that you're doing much more deep fundamental work.
00:32:42 You haven't shied away from being critical
00:32:46 of the story of Elon, of some of the dalliances that he has,
00:32:50 whether it be with crypto or with Twitter.
00:32:51 Where are you right now?
00:32:53 You were on Fast Money with us
00:32:54 as the news was breaking last night.
00:32:56 The stock had originally gapped higher in the aftermarket,
00:32:59 then it kind of sold off and got unchanged.
00:33:01 And here we are today.
00:33:03 The stock is massively, I think,
00:33:04 outperforming what a lot of people thought
00:33:07 would have been the case,
00:33:08 given the fact that automotive gross margin was down.
00:33:11 If they hadn't taken the gain
00:33:12 from the conversion of Bitcoin into fiat,
00:33:16 there would have been negative free cashflow,
00:33:18 but the stock's up 10%.
00:33:19 So talk to me a little bit about what you think's going on,
00:33:22 because I think you probably had said a week ago,
00:33:24 you would not have been surprised
00:33:26 if this stock sold off after such an epic quarter in Q1,
00:33:30 and really the sentiment coming into the quarter.
00:33:32 - So I'm surprised that it's up today.
00:33:33 I had expected that that auto gross margin number
00:33:36 would have kind of spooked investors,
00:33:38 and especially the commentary from the CFO
00:33:41 about the component environment
00:33:42 in the back half of the year,
00:33:44 continuing to pressure investors.
00:33:46 And so I am surprised to see that,
00:33:48 and ultimately is that I think what it is,
00:33:50 is the market is clearly looking into 2023.
00:33:54 That seems to be the X factor here,
00:33:56 is that they're looking beyond the near term.
00:33:59 That's my view, is the market's just simply looking forward.
00:34:02 What's your view on it?
00:34:04 - It's funny that you say that.
00:34:05 So the market, or at least investors in this name,
00:34:08 I've long thought, now, right now,
00:34:09 it's got an $800 billion market cap.
00:34:12 It's down from 1.2 trillion
00:34:14 just, I don't know, three or four months ago.
00:34:16 And there aren't too many investors in other growth stories
00:34:21 or other big secular tech stories
00:34:24 that are actually looking into 2023 right now.
00:34:26 Does that make sense?
00:34:27 Because think about it.
00:34:28 There's a lot of great stories
00:34:30 that you think have much better visibility
00:34:32 than let's say Tesla does,
00:34:34 that are trading at huge discounts to themselves,
00:34:37 to where they were trading just nine months ago,
00:34:39 so again, this story remains massively disconnected,
00:34:43 in my opinion, from the fundamentals in the here and now,
00:34:46 and even out into 2023.
00:34:48 So I think I said this to you a couple of weeks ago.
00:34:51 I've never seen a cult story in my 25 years in the business
00:34:55 or a cult leader like Elon,
00:34:57 not have the story come unwound at some point
00:35:01 as a bear market is working out.
00:35:02 And I just don't think the bear market's over,
00:35:04 so I just think that this one has legs to the doubt.
00:35:06 I'm just curious, what was some of the feedback
00:35:08 that you got from some investors
00:35:09 just kind of responding to this up 10% move in one day?
00:35:13 - They were spooked as well.
00:35:14 I think in the candid moments, they were equally as concerned.
00:35:17 I think that ultimately,
00:35:18 I think they're a little bit surprised too here.
00:35:19 And I think this view that investors,
00:35:22 what is the scope that investors are looking at
00:35:24 at this point?
00:35:25 And I would suggest that Micron's results,
00:35:28 I think what we saw with Tesla today is evidence,
00:35:31 'cause I wanna just quickly play us forward to 2023,
00:35:34 the back half of the year,
00:35:35 I believe that there is risk to the delivery numbers.
00:35:38 You've talked about that risk.
00:35:39 They say they're at an all-time high in production,
00:35:41 but we're still in a pretty wonky environment
00:35:44 and all the enthusiasm,
00:35:45 this is simply stuff that's out of their control.
00:35:47 I think the investors are recognizing
00:35:49 that it's out of their control and we're looking at 2023.
00:35:52 At that point, we should have expanding gross margins.
00:35:55 And Elon talked about the commodity market.
00:35:57 He is not an economist.
00:35:59 However, he does see what's happening
00:36:01 with carbon and steel prices and lithium prices.
00:36:04 Lithium went up 8X over the last year,
00:36:07 and that's probably gonna be coming down.
00:36:09 So when you play this forward
00:36:11 and start to think about next year,
00:36:12 it seems to set up to be pretty favorable.
00:36:15 One other piece that I think I underappreciated
00:36:18 right when the numbers came out,
00:36:19 and it's just kind of sunk into me today,
00:36:21 is this idea of how enthusiastic they were.
00:36:24 I've been expecting that on this earnings report,
00:36:27 most companies were gonna be pretty pessimistic
00:36:29 about the September quarter.
00:36:30 I would say Elon was pounding the table,
00:36:33 that demand was strong
00:36:34 and that they were gonna have a strong back half of the year.
00:36:37 And it shouldn't have been a surprise to me
00:36:39 because ultimately is that they see their backlog.
00:36:41 They know they have a year of pent up demand,
00:36:43 essentially, for these vehicles.
00:36:45 So really it's not a read.
00:36:47 If you can follow this line of thinking here,
00:36:49 that their optimism,
00:36:50 Tesla's optimism about the back half of the year
00:36:52 isn't a read for other companies
00:36:54 because they, I think,
00:36:55 are riding a little bit of a different wave.
00:36:57 But to bring it together here,
00:36:59 let me just address the cult side of this.
00:37:01 It's something that really concerns me.
00:37:04 I think just before Fast Money,
00:37:06 closing bell there was a poll that was,
00:37:08 a percentage of people that thought
00:37:09 that Tesla was gonna be $1,000 by the end of the year.
00:37:11 And as I was waiting for the poll results,
00:37:13 I was thinking to myself,
00:37:13 please let that number be low
00:37:15 because I'm positive on Tesla
00:37:17 and please let it be low
00:37:18 because the lower it is,
00:37:19 I think that, of course, that's the psychology.
00:37:21 And it came out like 45% of people
00:37:23 thought it would be up to 1,000 by the end of the year.
00:37:26 And that's like a return,
00:37:27 I don't know what it comes out to,
00:37:28 like a 60% return towards the end of the year,
00:37:29 which is incredible.
00:37:30 Like a 7% return is a great return.
00:37:33 So I still think this kind of cult mentality
00:37:35 is gonna be a big part of the stock.
00:37:37 I don't think it's going anywhere
00:37:38 because ultimately I think they're gonna continue
00:37:41 to grow deliveries at a rapid pace
00:37:44 and continue to innovate around the edges,
00:37:46 which gets people excited.
00:37:48 And so when I play this forward,
00:37:49 I believe that this is a $2,500 stock
00:37:51 over the next few years.
00:37:53 And I realize it seems disconnected
00:37:55 from traditional valuation related to auto companies.
00:37:59 So this pot is dropping on Friday.
00:38:01 We have already had Snap's earnings.
00:38:03 And for the most part, who gives a crap about Snap?
00:38:05 It's a $20, what, $2 billion market cap company,
00:38:07 expect to do $5 billion in sales this year.
00:38:10 But it really did set some investor antennas
00:38:13 going up last fall into the start of this year.
00:38:16 And even before some of these other larger competitors
00:38:20 topped out and turned lower,
00:38:21 I think a lot of what Snap was seeing,
00:38:22 and I know there was a lot of stuff about Apple privacy
00:38:25 and all that sort of stuff.
00:38:26 So we're gonna definitely keep an eye on Snap.
00:38:28 I think that might be a good indicator
00:38:29 for what we see next week.
00:38:30 But let's talk about the five big ones
00:38:33 that we're gonna have here.
00:38:34 And when you think about Apple, Microsoft, Google,
00:38:37 Amazon, Meta, about $7.5 trillion in market cap here,
00:38:41 let's just kind of break it down.
00:38:43 Let's start with Apple.
00:38:43 What do you think in here?
00:38:45 And what do you think expectations are?
00:38:46 And how would you be positioned in this
00:38:48 after such a big run?
00:38:49 - Well, they've kind of taken a little bit of the bullet
00:38:51 from Mark Gurman and his Bloomberg reporting
00:38:53 about some of the small tweaks.
00:38:55 It's not big reductions in headcount,
00:38:57 but just I think teasing that out,
00:38:59 spooked investors in the stock is of course rebounded.
00:39:03 And I think in general,
00:39:04 I suspect that the June quarter is gonna be very strong.
00:39:06 I suspect that their guidance, they do give guidance.
00:39:08 It's not formal, but they do give guidance.
00:39:10 I suspect that that's gonna be somewhat muted.
00:39:13 And as analysts and investors start to triangulate
00:39:15 what their guidance is,
00:39:16 I suspect that it will be below where the street is
00:39:19 for the September quarter.
00:39:21 And the reason it's just a simple game theory
00:39:23 is that I think Apple's business is doing strong,
00:39:25 but the risk reward for them to be optimistic
00:39:28 given what's going on is relatively low.
00:39:31 And of course, Apple loves exceeding expectations.
00:39:34 So my belief is that they are going to be cautious.
00:39:37 I suspect that the street's gonna be mixed on that.
00:39:39 It won't be directionally negative
00:39:41 because some investors will say
00:39:42 they're just playing the game
00:39:43 and kind of giving a little bit of a low bar.
00:39:46 Kind of going back to that view of investors' minds
00:39:48 are starting to think about the next iPhone cycle
00:39:50 and what's gonna happen in 2023.
00:39:52 And 2023 is a tough setup relative to the Mac and iPad.
00:39:56 Most businesses have been, of course,
00:39:58 doing exceptionally well,
00:39:59 20, 30, 40% growth over the last couple of years,
00:40:02 and they're coming up against some tough comps.
00:40:04 And if you look at how investors,
00:40:05 that's where I think most of the mind space
00:40:07 is gonna be around is just trying to figure out 2023
00:40:09 and what's going on with Mac and iPad.
00:40:12 And most investors have that down, that business down,
00:40:15 call it that's 25% of sales down, about 6% next year.
00:40:18 Overall, Apple revenue is supposed to be up 5%.
00:40:21 So where I'm at, I think it's just essentially
00:40:23 what is the length, the strength,
00:40:24 the legs into those two products?
00:40:27 Historically, they don't get as much attention,
00:40:28 of course, as the iPhone,
00:40:30 but I think they're gonna get more attention
00:40:31 because of the benefit they've had.
00:40:33 And just to finish the thought is I believe
00:40:35 that they're gonna ultimately exceed those expectations
00:40:37 because I think that the new Macs they have
00:40:39 are being well-received.
00:40:40 And I think what's going on related to hybrid,
00:40:42 either work or learning is gonna be more sustainable.
00:40:45 So when you put it together,
00:40:46 I think this just takes a step back on the earnings report
00:40:49 and slowly moves higher.
00:40:51 Take on valuation here 25 times this year, 24 times next,
00:40:54 we're supposed to have mid to high single digits.
00:40:56 Earnings growth for the next couple of years,
00:40:58 we're supposed to see revenues probably low
00:41:01 to big single digits growth.
00:41:03 And you've been all over this.
00:41:04 This has been, I think, a pillar of your bull case
00:41:07 for Apple for years is just the margin expansion
00:41:10 that we're gonna see over a better mixed shift
00:41:12 from a move from hardware into services.
00:41:15 And we're seeing that.
00:41:15 We've seen margins move up two, three percentage points
00:41:19 over the last few years or so.
00:41:21 So I'm just curious, how are you thinking about valuation
00:41:23 and will services, I know that Morgan Stanley
00:41:25 was out with a call.
00:41:26 I'm curious what you thought about that.
00:41:28 They see the greater percentage of services
00:41:31 as a huge boon for the company.
00:41:32 Do you think this is like something that continues
00:41:34 over the next few years and really justifies a mid 25
00:41:37 multiple for low single digits or mid single digits
00:41:39 earnings growth?
00:41:40 - This is gonna fall under the category of seeming
00:41:42 disconnected from the market reality right now.
00:41:45 But I think that Apple can actually see
00:41:47 some multiple expansion.
00:41:49 And part of the reason is that I think that,
00:41:51 at least in the near term, near term being the next
00:41:53 six months, I don't expect margin expansion.
00:41:55 I see that at the high end of where big tech is trading
00:41:58 in terms of a multiple.
00:41:59 It is at the high end and it's a statement of fact.
00:42:01 But the piece that intrigues me is, again,
00:42:04 playing forward to 2023.
00:42:06 What's gonna be the conversation in 2023?
00:42:08 We talked about the Mac and I'm getting to answer
00:42:09 your question about valuation and why I think
00:42:11 they have a chance for multiple expansion.
00:42:13 Is in 2023, we're gonna be talking about the Mac
00:42:16 and the iPad and the tough comps and see how that does.
00:42:18 The second negative is going to be related to
00:42:21 what's gonna happen with greater regulation,
00:42:23 potentially some changes that they may have to make
00:42:25 with app store take rates, which eats into that
00:42:27 profitable piece that you're just referring to.
00:42:29 And then on the positive side, I am optimistic
00:42:33 that there's gonna be, there's not gonna be any
00:42:35 announcements, but I think that they will start to drip.
00:42:38 At least there'll be reporting on them getting into
00:42:40 more into healthcare.
00:42:41 They've just dropped that big report we saw at Amazon
00:42:43 has recently done with their acquisition of OneMed.
00:42:46 And I think that there's opportunity in healthcare,
00:42:49 big market.
00:42:50 Second is this auto.
00:42:51 I keep kind of coming right up to the edge of the cliff here
00:42:54 and talking about it, but not wanting to jump in
00:42:57 and say that they're gonna do it.
00:42:58 There's history to that.
00:42:59 And I think that either way, whatever they ultimately
00:43:02 end up doing in the car, whether it's something
00:43:04 through CarPlay or through a car themselves,
00:43:07 I think that that CarPlay isn't gonna be multiple expansion,
00:43:09 but I think if they do ultimately get into a car,
00:43:11 I think that that would be a huge deal.
00:43:12 And so there's still, to put it together,
00:43:14 you have a stable business, great cash flow,
00:43:16 and you still have these carrots out there
00:43:18 and investors love to have something to look forward to.
00:43:22 And as long as they keep dangling the carrots
00:43:24 around these big Tams, I think the multiple can go up.
00:43:28 - Just so you know, I mean, I always kind of played the heel
00:43:30 with Apple on Fast Money because it was a universally
00:43:32 bullish name.
00:43:33 Almost every analyst who had come on was bullish on it.
00:43:36 Most investors were very bullish on it.
00:43:38 And a lot of the people on our panel have been very bullish
00:43:41 and rightfully so, let's just be really clear, okay?
00:43:44 So I always like to try to pick out what could go wrong.
00:43:46 But when I start thinking about like a Tam,
00:43:48 like you're talking about, if there's analysts and investors
00:43:50 like you who think the EV market could be this,
00:43:53 the full self-driving market could be this,
00:43:55 Apple is clearly in a position where they could benefit
00:43:58 to the tune of hundreds of billions of dollars,
00:44:01 not even making a car.
00:44:02 I'll just kind of come back to the fact that off the lows
00:44:05 in June, Apple's rallied 20% now,
00:44:07 it's trading at $155 as we speak.
00:44:10 The S&P's up 10% from that same point.
00:44:12 So I think expectations are kind of building here.
00:44:15 And if there were to be something of a guide
00:44:18 that is a little bit more than them just being cautious
00:44:21 for the sake of it,
00:44:22 then I do think that's the sort of thing that might turn
00:44:24 the kind of tech tide here.
00:44:26 - Let me say it a slightly different way.
00:44:27 I wasn't clear.
00:44:29 I think that there is risk to this quarter.
00:44:31 My sense is that their guidance is gonna be conservative
00:44:34 and usually it's all not priced in.
00:44:35 And so, and it's held in, I mean, it's pretty simple.
00:44:37 It's held in there exceptionally well
00:44:39 and they've probably are gonna say something cautionary.
00:44:43 So I think that risk reward, at least in this quarter,
00:44:46 is more negative.
00:44:47 I think that, you know, I feel about the long-term.
00:44:49 - I think the near-term setup makes it kind of hard.
00:44:51 And I agree with you, everything that you just said.
00:44:53 All right, let's shift over to an enterprise name.
00:44:55 Let's talk about Microsoft.
00:44:56 So obviously a lot of that Apple story is consumer led.
00:45:00 They have obviously issues as it relates to supply chain
00:45:03 and demand issues, whether it be in China,
00:45:05 that's been locked down, Europe, that sort of thing.
00:45:07 You know, Microsoft's kind of a different story here
00:45:09 and the relative, let's say underperformance of Microsoft
00:45:13 versus an Apple is notable.
00:45:15 The valuations are pretty similar.
00:45:17 The expectations for earnings and sales growth
00:45:19 are much higher this year and next.
00:45:21 So trading about 27 times this year,
00:45:23 maybe a little over 25 times next.
00:45:25 Given the expected growth there,
00:45:27 it seems pretty reasonable,
00:45:29 especially if you're looking at Apple
00:45:31 and you're positively predisposed
00:45:33 for the back half of this year into 2023.
00:45:36 Curious how you're thinking about enterprise
00:45:38 'cause I think Bill McDermott's comments to Jim Cramer,
00:45:40 I think early last week on his show
00:45:43 about just kind of maybe some softening enterprise demand
00:45:45 and some of the headwinds that are starting to emerge
00:45:48 after just a fabulous couple of years
00:45:50 for kind of SaaS based models.
00:45:52 Thoughts on the enterprise here
00:45:54 and is this something that it's not likely,
00:45:56 if we see some issues here,
00:45:58 they're not likely to be one quarter issues.
00:46:00 We're starting to see lots of layoffs
00:46:02 at lots of different tech firms.
00:46:03 And you remember the old thing 20 years ago,
00:46:05 if you were a startup selling to startups,
00:46:07 you're kind of toast here.
00:46:08 We're seeing a lot of tech companies
00:46:11 scale back on hiring, reduce headcount,
00:46:13 but even at companies like Ford
00:46:15 that just announced 8,000 job cuts.
00:46:17 These are companies like all these industrial companies,
00:46:19 every company, they're all using these SaaS products, right?
00:46:21 That's the secular story.
00:46:23 Are we likely to see a meaningful pullback
00:46:25 in the back half of this year,
00:46:26 maybe that lasts into 2023?
00:46:28 - I think the headwinds for the setup
00:46:31 is more negative for Microsoft relative to other big tech.
00:46:34 For me, it's the difficult comps, that piece to it,
00:46:36 and a little bit of a lack of enthusiasm
00:46:39 about areas that they can grow into.
00:46:41 Of course, cloud is being one of their big areas of growth,
00:46:44 but ultimately when you put it together,
00:46:46 it just is a somewhat uninspiring story.
00:46:49 It's been a place of safety.
00:46:50 It's been a place of victory with growth
00:46:52 in our last couple of years.
00:46:54 As far as the enterprise is concerned,
00:46:56 I suspect we're gonna see pullbacks
00:46:58 and spinning across the board.
00:47:00 I think the consumer is gonna pull back.
00:47:01 I think that enterprises are gonna pull back.
00:47:03 I think it's gonna be a pretty consistent pullback
00:47:05 between the two.
00:47:06 And if you look across all tech companies,
00:47:08 they have different exposure in different pockets.
00:47:10 So I would caution that the safety in enterprise,
00:47:15 the enterprise can power through a recession
00:47:17 a little bit better.
00:47:18 I just am not a big believer.
00:47:19 It's not that people are gonna turn off their office suite,
00:47:22 but I think just some of the incremental hiring,
00:47:24 when you hear people losing their jobs,
00:47:26 like you said, the supplier piece.
00:47:28 I remember doing that exercise back in the dot-com days
00:47:30 when you look at a company go under
00:47:32 and then look at all their vendors
00:47:33 and you could just kind of almost like triangulate.
00:47:36 When you hear companies talking about cutting back
00:47:39 an office information workers, that does have an impact.
00:47:43 At a minimum, it takes away some of the growth.
00:47:45 And I think that that's something
00:47:46 that's gonna have an impact on Microsoft
00:47:48 more than any other big tech companies.
00:47:50 - But is it one that you view as kind of growth
00:47:52 at a reasonable price?
00:47:53 Obviously it's kind of fat multiple 27-ish times this year,
00:47:57 25 times next, like you said,
00:47:58 but with double-digit expected earnings and sales growth,
00:48:01 let's just say even if it decelerates a little bit,
00:48:04 you're not gonna see this thing trading
00:48:05 at like 18, 19 times.
00:48:07 - No, I don't think it trades 18, 19 times,
00:48:09 but I just think they have the setup,
00:48:11 they have more headwinds relative to the other tech.
00:48:13 And I think that you can do better someplace else.
00:48:16 - Let's talk about Amazon here,
00:48:17 because this is one I think at its recent lows,
00:48:19 the stock just kind of rocketed a little bit.
00:48:22 It had that, what was it, 24-1 split or something.
00:48:24 I think at its recent lows last month,
00:48:27 it was trading as low as like a 102 and a half.
00:48:29 Here it is right now at 124 and a quarter here.
00:48:33 That's one heck of a rally.
00:48:34 It did rally like that off of its lows in May.
00:48:37 And off of its lows in May, the stock was down,
00:48:40 I think 45% or so from its July 2021 highs.
00:48:44 Those highs came in the week
00:48:46 that Andy Jazzy took over for Jeff Bezos.
00:48:49 I mean, talk about getting tagged with a big headline there.
00:48:53 Thoughts here, forget valuation,
00:48:55 you just mentioned this acquisition,
00:48:57 a $4 billion acquisition today.
00:48:59 Andy Jazzy's clearly gonna put his own stamp
00:49:03 on this company going forward.
00:49:04 But what does the buy of one medical,
00:49:06 or $3.5 billion, what does it mean to you
00:49:09 about the direction in which he wants to take this company?
00:49:12 - We own Amazon.
00:49:13 I'm very excited, not only about the logistics piece,
00:49:16 mostly about the logistics piece,
00:49:18 about where commerce is at.
00:49:19 In fact, there's still open-ended growth with that.
00:49:22 And the piece, what we're starting to see develop
00:49:24 around health and wellness, healthcare,
00:49:27 I think it is encouraging.
00:49:29 It kind of helps the multiple,
00:49:30 because you always need to have something out there
00:49:32 for investors to get enthusiastic about,
00:49:34 to kind of keep the dream alive,
00:49:36 to keep the multiple up there.
00:49:37 And ultimately, I think that that's one thing
00:49:39 that they've done today with that acquisition.
00:49:41 So I don't know where it ultimately goes.
00:49:44 Wall Street Journal was doing some reporting today.
00:49:46 I think it was Joanne Stern,
00:49:47 and I liked her comment about Amazon primary,
00:49:50 like primary care, that idea of,
00:49:53 and maybe that's ultimately where they want to go.
00:49:55 I don't really see how the products fit together.
00:49:57 I've never really understood why Prime Video is part of it.
00:50:00 I kind of get it.
00:50:01 Families want to use it, therefore.
00:50:03 But this kind of fits into, I think,
00:50:05 Amazon and some of the other big tech companies.
00:50:07 The core issue that they have is growth.
00:50:11 And that's what keeps them up at night.
00:50:13 You have to go after large markets.
00:50:14 And I think that I'm encouraged as an investor in Amazon,
00:50:17 encouraged that they're starting to go there.
00:50:19 Don't expect anything, of course,
00:50:21 for a long time in that segment.
00:50:23 But they've got the resources to go after it.
00:50:25 And I think investors are gonna probably give them
00:50:28 the benefit of the doubt,
00:50:29 because two out of three things
00:50:31 that they touch actually works.
00:50:33 - I agree with that.
00:50:33 I mean, I would have liked to have seen
00:50:35 some of these names get a little bit more beaten up.
00:50:37 - I would too.
00:50:38 - I don't think this Dash for Trash move
00:50:40 that we've seen over the last month,
00:50:41 it's actually not that bullish to me.
00:50:43 And we're gonna talk about some of the names
00:50:45 that I've kind of been picking at
00:50:46 over the last month and a half or so
00:50:48 that were down 60, 70, 80% in some instances.
00:50:51 And these things are not gonna be bottom, right?
00:50:53 And so I suspect that you're gonna see Amazon
00:50:56 at some point in the next few months,
00:50:57 maybe retesting those recent lows.
00:51:00 But I just say this about,
00:51:01 like if you think about mega cap tech succession,
00:51:03 going back to Cook for Jobs,
00:51:06 Satya obviously was the third CEO
00:51:08 at Microsoft, Sundar at Google.
00:51:10 I mean, these have all been really great second or third acts
00:51:13 and I see no reason to believe
00:51:14 that Jazzy shouldn't be able to do the same,
00:51:17 especially if he's able to kind of put his stamp
00:51:19 on a few things and really leverage that experience
00:51:21 like from turning AWS into what it is.
00:51:24 So it seems like positively predisposed to Amazon.
00:51:26 You're probably like me, you don't love the rally
00:51:28 it just had, just to reset here a little bit.
00:51:30 Apple, very positively predisposed,
00:51:32 but this outperformance of late
00:51:34 probably doesn't make it a great setup
00:51:36 into next week's earnings,
00:51:37 especially if the guidance is a bit worse
00:51:40 than maybe that people expect.
00:51:41 And then Microsoft, you definitely sound a bit lukewarm
00:51:44 and that you're expecting maybe a bit of malaise
00:51:47 in the enterprise and maybe the valuation
00:51:49 is a bit rich here and maybe a couple quarters
00:51:51 of, I don't know, banging around with lower expectations
00:51:54 would probably set this thing up a bit better
00:51:56 for kind of leading out for whatever you want to call
00:51:59 the next bull run that we're in or something like that.
00:52:00 Is that fair assessment so far?
00:52:02 - Spot on.
00:52:03 - All right, let's do this.
00:52:04 Let's finish off with this.
00:52:05 So we have Alphabet, okay?
00:52:08 And this is one, I'm just going to take a guess here.
00:52:10 You think from a valuation standpoint,
00:52:13 maybe this one is the most defensible,
00:52:15 but possibly we haven't kind of seen the worst
00:52:19 of what's likely to come in a consumer-led,
00:52:22 let's say, if we have unemployment take up
00:52:24 and we really are in a recession at some point
00:52:27 in the back half of this year
00:52:28 that maybe leads into the next year,
00:52:29 we see some of the trends that we saw
00:52:31 towards ad-based models decelerate,
00:52:34 but it's kind of got a defensible multiple.
00:52:36 What are you most focused on with Alphabet here
00:52:38 and what do you think the risks are near term?
00:52:40 And then where do you get interested in this thing?
00:52:42 - We own it.
00:52:43 I would put it in the category
00:52:44 of just a great stable business long-term.
00:52:46 A lot of people could kind of frame that that piece in,
00:52:48 there's not much new there.
00:52:50 The setup here is pretty unique.
00:52:51 It has some dynamics similar to what's going on with meta,
00:52:55 with the advertising, the search piece of it,
00:52:57 obviously if consumer spending slows,
00:53:00 that's going to have a negative impact on it.
00:53:01 And the growth rates that the street's looking for next year
00:53:04 are similar to what they are this year.
00:53:06 And so the way I see this playing out
00:53:09 is I see some softness in the numbers
00:53:11 in the back half of this year.
00:53:12 And I think that the numbers next year
00:53:14 are actually the growth rates at least,
00:53:16 the absolute numbers might come down,
00:53:17 but I think that the growth rates are in good shape.
00:53:20 So this kind of falls in a camp similar to Apple,
00:53:23 well, more cautious than positive going into the print,
00:53:27 just because I think that the only card
00:53:29 that kind of gets them out of this tight spot,
00:53:31 at least regarding the September guide
00:53:33 or any commentary on September, is just expectations.
00:53:36 Like who doesn't know that you can make that argument
00:53:38 on a lot of companies at this point.
00:53:40 So, but I'm taking the playbook that 80% of the time
00:53:43 it's actually not priced in.
00:53:45 So long-term, this is another great company.
00:53:48 The fact that they're open to breaking up the company,
00:53:51 I mean, this has been reported,
00:53:52 the sign that they understand
00:53:54 that there is some regulatory heat around them,
00:53:57 they won't even suggest that.
00:53:59 And by the way, whatever that Google first gives,
00:54:01 regulators are going to say, we want more.
00:54:03 And what they've offered up would have an impact on them.
00:54:05 It's basically their old ad network
00:54:07 that they're willing to give up, the old double-click.
00:54:08 And that's about 3% of revenue.
00:54:10 So when you put it all together,
00:54:12 I still believe this is the auction on the internet.
00:54:14 Think how many times you touch a Google product every day
00:54:16 and they continue to find ways to monetize those better.
00:54:20 And they still have other bets that for the most part
00:54:22 haven't really added up anything into the valuation.
00:54:24 So I think that the setup long-term
00:54:27 is really good for Google.
00:54:28 - Yeah, I think there's more better monetization
00:54:30 going forward.
00:54:31 That's a little inside joke here.
00:54:32 All right, so just kind of looking at the estimates
00:54:34 for next year, again, you said the absolute number
00:54:36 may come down, but the growth might stick around here.
00:54:39 Expected earnings growth of about 20% after a flat year
00:54:43 and 18% sales growth, trading about what, 18, 19 times.
00:54:48 That's probably about as good as it gets
00:54:49 or if you've ever been able to kind of buy this thing
00:54:52 on the out year, if that makes some sense.
00:54:54 - We own it, we've bought it recently,
00:54:56 even in front of what we think is going to be a messy guy.
00:54:59 - All right, so this is the last one.
00:55:00 And I bought a little of this in May
00:55:02 and I'm up on it, surprisingly, but this is the meta.
00:55:04 And this is a company that I think
00:55:06 the only time I bought the stock in the last 10 years
00:55:08 was to cover a short.
00:55:09 It's just not a company that I've really enjoyed
00:55:11 their products or feel that good about.
00:55:13 But on a valuation basis, and you think about
00:55:16 where the stock's trading this year, it got cut in half.
00:55:18 There's just few companies of this size
00:55:20 with the sort of revenue base and the margin that they have
00:55:24 and the dominance they have, just the installed base
00:55:26 or whatever you want to call them,
00:55:27 the 3 billion monthly active users.
00:55:30 I mean, the thing trades really cheap.
00:55:32 I mean, it trades like some really bad shit's gonna happen.
00:55:35 So I'm just curious, what's your take here?
00:55:37 I'm fully prepared to buy on another gap here
00:55:41 and I'm looking with like a one, two, three
00:55:43 year time horizon, possibly.
00:55:45 I just don't think this stock is going much below,
00:55:47 let's call it 160 anytime soon.
00:55:50 - We are in a little bit of meta too.
00:55:52 Bought it recently and think that this is one,
00:55:54 when you're gonna ask which of the big techs
00:55:56 is gonna do best, I think that it's gonna be meta.
00:55:59 Of course, they have the negative impact
00:56:00 around advertising just like Google does.
00:56:02 But I think the difference here is that
00:56:04 there is this negative pendulum that's going on.
00:56:07 It's three different things.
00:56:08 It's IDFA, it is related to TikTok and potential competition
00:56:12 and the health of the advertisers and all of those.
00:56:14 This is one where I'd say that the bad news
00:56:16 is largely priced in.
00:56:18 Again, this isn't investment advice we're giving here,
00:56:20 but just making predictions on how it's gonna play out.
00:56:22 And I think that the risk reward is that it goes higher.
00:56:26 But the piece that I think gets missed
00:56:27 is something that's very obvious.
00:56:29 It's just over 30% of global internet population
00:56:32 use a Facebook property every day.
00:56:34 That is incredible.
00:56:35 Second is that this idea that they're gonna spend
00:56:37 in a perpetuity around the metaverse, I think is incorrect.
00:56:41 Zuckerberg, he's competitive and he's hinted
00:56:44 about the time that it's gonna take
00:56:45 to build out the metaverse monetization, five to 10 years.
00:56:48 He's talked about potentially making changes
00:56:50 to the pace that they're adding people,
00:56:52 even letting people go,
00:56:53 comes in the wake of Sheryl Sandberg leaving.
00:56:55 And I think that that is comforting to me
00:56:58 that he's looking at the bottom line.
00:57:00 Last, I think TikTok's gonna get banned.
00:57:02 This is not a political comment here, simply a prediction.
00:57:05 - You can make a political comment, I make them.
00:57:07 - Pendulum is gonna go back to the right
00:57:09 for the next president.
00:57:10 And there's gonna be more pressure from regulators to ban.
00:57:13 TikTok's banned in India.
00:57:15 Why would it be banned is the question.
00:57:16 - 'Cause my kids would freak the fuck out.
00:57:18 - They'll find some other place to medicate, no worries.
00:57:21 I think the reason, it's not about like China spying
00:57:24 on some teenager about what funny video they're watching
00:57:26 about what it is, is about their ability to influence
00:57:30 and to change the algorithm to influence how we think.
00:57:33 And I believe that social media has the power to do that.
00:57:36 And so I think that that's the reason why,
00:57:39 ultimately I think that it does get banned.
00:57:40 And I think that that's a plus.
00:57:42 - I agree with that.
00:57:43 Just real quickly on OK Computer earlier this week,
00:57:45 we had a guy named Kevin Wheel.
00:57:47 Kevin is the president at Planet Labs.
00:57:50 He was the head of product at Twitter for seven years
00:57:52 prior to Planet, and he worked on senior product roles
00:57:55 at Instagram and on DM, working for Marcus
00:57:58 and on their digital wallet.
00:58:00 Literally probably one of the foremost product gurus
00:58:02 of the last 10 years.
00:58:04 And we were talking about Zuckerberg,
00:58:07 and just something you just said about him
00:58:09 is really interesting.
00:58:10 He said he was not a well-liked peacetime CEO,
00:58:15 but let me tell you something, do not bet against this guy
00:58:17 as a wartime CEO.
00:58:18 And I thought that was really interesting.
00:58:20 And so I find your confidence in their ability
00:58:23 to turn down the spend, focus on the things that they think
00:58:27 are gonna be really important to kind of help monetize
00:58:29 that three billion monthly active users,
00:58:32 monetize WhatsApp for the first time.
00:58:34 I'm sure they'll circle back to a digital currency
00:58:37 once there's a better regulatory framework, right?
00:58:39 And they'll make their own metaverse.
00:58:41 It won't be the metaverse.
00:58:42 Zuckerberg's not gonna be the overlord of the metaverse
00:58:45 'cause there won't be one metaverse, right?
00:58:47 So, all right, Gene, before we get out of here,
00:58:50 let's just kind of put our Fast Money hats on.
00:58:52 We're gonna see a whole heck of a lot of you next week
00:58:54 on Fast Money as these mega cap tech earnings
00:58:56 are coming out.
00:58:57 Which names, we just covered five
00:58:59 and they're all reporting,
00:59:00 which do you think have the biggest potential
00:59:03 for gap risk lower?
00:59:04 You could choose one or two and which gap risk higher?
00:59:07 And let's call it the implied move in the options market
00:59:09 for each one of these names,
00:59:11 let's say give or take 5% on the next day.
00:59:13 - Not investment advice.
00:59:14 I think Microsoft on lower, Apple on lower.
00:59:18 And I think in order, highest upside is Meta followed
00:59:22 by Google.
00:59:23 - I kind of agree with all that.
00:59:24 And I will tell you the names that I own,
00:59:25 I'd love to see kind of a gap lower back to levels
00:59:28 where they were a few weeks ago
00:59:29 and see how they act at those levels
00:59:31 based on the new information.
00:59:33 Because really, if you wanna come out
00:59:35 of a bear market like this,
00:59:36 and some of these names have crashed,
00:59:38 let's just call it what it is.
00:59:39 Snap has crashed, PayPal has crashed, Meta has crashed,
00:59:43 Apple corrected in a bear market,
00:59:44 and those are really different things.
00:59:46 You need to see the sort of price action
00:59:48 like you're seeing in Tesla today.
00:59:50 I didn't think it was good news.
00:59:51 Stock's trading very well
00:59:53 and you have to reprocess your thoughts,
00:59:55 you know what I mean, about how these work.
00:59:56 So to me, I wanna see how some of these good stories
00:59:59 act on bad news.
01:00:00 I wanna see how some of the bad,
01:00:02 if it's just incrementally good news,
01:00:03 a little green shoot.
01:00:04 So that's what I find so fun about earnings.
01:00:07 Listen, Gene, I really appreciate your time.
01:00:09 We covered a lot of ground.
01:00:11 You are a brilliant tech prognosticator.
01:00:12 We really appreciate you having on here.
01:00:14 - Thank you.
01:00:15 I enjoy it tremendously
01:00:17 and look forward to seeing you talking soundbites.
01:00:20 - All right, man, I'll see you next week.
01:00:21 Thanks, Gene.
01:00:22 - Over and out.
01:00:23 - Thanks once again to CME Group
01:00:25 for sponsoring this episode of On the Tape.
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