S&P 500은 얼마나 더 오를 수 있을까? 재무부 혼란과 함께

The 8:30 Hosts Julie Hyman, Pras Subramanian, and Jake Conley take on the morning's top economic and market stories, including how SpaceX (SPCX) is seeking $40 billion to fund buying Nvidia (NVDA) chips, the intricate relationship between the AI buildout and inflation, and what's powering the S&P 500 (^GSPC) to new heights. SoWelcome to the 8:30 here this morning where we are coming in at record highs, but futures are indicating a lower open a little bit of a little bit of a pullback, a littlebit of a pullback, but you know we did have and have had the run up that has been going on in stocks. It took the S&P 500 to another record close yesterday. The Nasdaq as well.Even though we've got a little bit of pullback this morning, and you know it depends on your perspective. Either it was a very narrow rally to the top or it was a slightly broadening rally. In other words, if you look at the advanced decline or how many stocks are trading above their 200 day moving averages or shorter whatever moving average you want to pick.It's worse. The breath looks worse than it did 6 months ago, right, but it looks better than it did a week ago, and 10 of the 11 groups in the S&P 500 were higher yesterday. So and utilities did the best. We talked about Constellation Energy and its New Deal with Alphabet yesterday that helped power it higher. It helped other utility stocks higher. So all of that bullishness that's out there, it's not gone this morning.But it is perhaps diminished this morning. I was listening to the Compound podcast recently. Michael Batnick had a good description of the market right now. He said there's not fear in the market necessarily if you look at things like the VIX, but there is doubt in the market, and I thought that was a good way to describe.The way things feel right, we're not seeing the exuberance that some of the returns in tech might suggest. Exactly. Just because to your point of the breadth, yes, it's gotten better over the last week, but if you take a longer timeline, it does look a little weaker. I want to put a finer point on that with some data that we got this morning.So since the prior S&P record, which was last set on August 13th, 7 of the 10 largest constituents in the index rose, that's your Meta, your Micron, and your Tesla, nine of the 10 smallest fell. Norwegian Cruze, MGM, Wynn, Pentair all falling more than 20%.So there's a, there's a really strong concentration of performance, and we've been saying this over and over again in tech, in the sector that's been powering all of this. However, we, we're going to overuse this metaphor at some point, but it's really good. Amy W Silverman over at RBC Capital Markets, her point of the duck. The duck is floating on the water and it looks serene, but as soon as you dip your head below the water, feet are kicking frantically.Cross over it. All right, we'll find a new animal. Yeah, so I'm going to put somebody else, our old friend Josh Schaffer over at Baron's who looked at the equal weight S&P 500 relative to the market cap weighted S&P 500, as we know, there's a lot of different ways to slice breadth of the market equal weight, equal weights, everything, so it's a good way to look at it, he says. So if you look at them relative to each other, the S&P equal weight is making its lowest close relative to the S&P 500 since 2003.On the same day that the S&P 500 is set to make a record, that tells the story again, another way of saying the bread is not great here. There's just not that many stocks participating, and it's tech that has been pulling everything higher. I think you touched on this, you know we talked.Talking about it's not necessarily technicals, but you know, half of the S&P 500 stocks are below their 2008 moving average. That is technical. And also another little nugget here talking about the constituents, right? 59% of constituents are 20% below all-time highs in the S&P. 41% are, are 30% below all-time highs, and 17% of the S&P 500 are 50% below all-time highs. So it really shows you.The disparity there between the top performers and then you know you mentioned it's funny you mentioned the Royal Caribbean right down in the down in the dumps, you know, it's because they're exposed to energy, right? There are things like there's there's different different stock stories and company stories. Tech isn't as exposed to that kind of stuff, so that's also exacerbating some of the moves. I mean the other,you know, and we're going to talk about bond yields a little bit more in depth later in the show, but that's also very true of yields in other.Words we've had, we've talked about this narrative that yields move higher, the Fed is tightening, that that is not as problematic necessarily for the AI buildout because the demand is such it's going to happen anyway. It may be a little more expensive, but it's going to happen anyway. Everything else.I mean, everything, all things being equal, everything is exposed to higher bond yields, and bond yields, by the way, are higher again this morning, once again making this highest in what is it 24 years on the 30 year, but the everything else is getting affected more because it doesn't have that huge upswelling of demand from the AI buildout. So the problem, of course, comes in where like somebody might say, OK, well it doesn't matter. The AI buildout is pulling everything else up. It's propping up the economy. It's fine.The problem is when it if it falters, then it's not then you start seeing the cracks and you were looking at what distressed debt. JPMorgan is flagging distresseddebt, exactly. I wanted to bring that up. So where do you see the uptick? You see it in some of the more distressed parts of the credit market. I want to bring up a few stats from JPMorgan here. The value of leveraged loans below 60 cents on the dollar, so that is firmly in distressed territory, that's totaling $65 billion versus $40 billion a year ago. We're at the highest level since March 2020.Which catalyzed the pandemic right around when that all kicked off, loans at or below 80 cents on the dollar, so slightly better on the value side, totaling $140 billion up nearly 90% in 12 months. Technology, this is the really crushing stat, represents 39% of distressed loans right now.So yes, we are seeing the strength in tech. We're seeing the strength in equities where we're starting to see a few cracks, not cracks, but some signals of some maybe weakness is in the credit market where we're also seeing even in the IG space spreads are really widening out. There's a little more nervousness.To your point, and we're going to talk more about some of her comments later, but San Francisco Fed President Mary Daly made the point in an interview with Axios that technology in the tech sector and the AI boom is largely rate insensitive. These are well capitalized companies. The demand they see is there. They're going to keep borrowing, but to your point, everyone else is getting hurt by the rates. There's some good data out from the Mortgage Bankers Association this morning. The 30-year fixed mortgage rate.Hitting 7.49%. That is a really high level. It's the highest in nearly three years. Freddie Mac puts it a little lower. It's 7.28%, but regardless, directionally, directionally we're going higher, higher, right, and mortgage applications down 4.2% from last week.So you're seeing that little slowdown and we also have, you know, the big Treasury auction later today, 10 year Treasury auction, $109 billion right? That's right. Usually, you know, it's, it's been a while since we had to pay attention. What was the bid to cover it? What's the, uh, you know, like that sort of thing. How many, how many indirect, how much indirect exposure, you know, like, you know, back in those days, and it's like, oh, we're back to that now. All of a sudden that matters again. It matters. I mean, this is gonna be highly watched, I think, um, just real quick, I wanted to talk about, um, Spencer Jacob at the Journal talking about how, why maybe in the US we're somewhat insulated here, right, because the greenback is sort of the least dirty shirt in the, in the whole mix, and he says that there are speaking phrases I haven't heard. I know he mentioned the article, but then also the other, other thing is the US is exorbitant privilege.French term about how you know we're we're sort of uh because of the reserve currency we're able to weather stuff like bad economic data, wars, high energy prices and stocks are back to hitting all time highs, you know, we talk about all this stuff under the surface of really just rough technicals in the market and yet we're still floating higher and that's sort of the.Please say it for me. The privilege exorbitant, theprivilege exorbitant in this country. Yeah, I'll be, uh, very envious, very, oh well, right now France extraordinarily envious with what's going on in the fiscal crisis there. I'll be writing this up for Yahoo Finance later today.But if you want to see what the US economy would look like if we didn't have big tech and we didn't have the AI boom and all the capital going into that, look at Europe. There's a lot of other things. There are a lot of other things. There are a lot of other things that you know the the entrepreneurship, the capital availability, all of that. That said, however, look at a chart of the S&P XAI, so taking out most of the AI names.It's moving basically in parallel with the European Stock 600, while the S&P 500, which does include those AI names, has raced forward. We could probably just look at it equal weighted too. That's right, same thing, similar. Let's stick with this, with the debt stuff, the tech stuff, the AI stuff. So, uh, Bloomberg reporting today that SpaceX is looking to issue 40 billion.Uh, in new debt to buy Nvidia chips for data centers, uh, the split will be $10 billion in bank loans and $30 billion in investment grade debt, uh, per, per Bloomberg again and with PIMCO looking at the deal and our parent Apollo leading the financing. So again this unending desire and need for debt.Probably gonna be satisfied. I don't know. They're saying looking at a 2027 sort of uh date to complete this. I mean, how do we feel about this? It's a lot of money. I mean, if somebody joked online, why doesn't Nvidia just lend them the money like they.Be doing, they've been doing deals like that, right, um, you know, it just again shows the scope of, I, I mean, you know, it's like what, what's today, it's a oh, it's a Wednesday, uh, SpaceX is trying to raise 40 billion. But it, but this is, this has become routine, which is extraordinary, and I know, I want you to bring up that FT thing real quick, but before that, you know, Musk talking about how, you know, we're gonna basically add a ton more of NBA chips to Colossus too? And if you're able to, you know, on a client by client basis, 1.5, 11 billion, 1 every month and compute, so, oh, this is not maybe this is not that big of a bad bad of an investment in the debt, right? It's like.They're clearly, clearly monetizing the AI compute that they have, maybe not the highest numbers, but, uh, that's a positive. But there's also, you know, the funny thing that's mentioned in the, in the prospectus for this debt deal. Did you see this thing? No, maybe not. Oh, the FT basically has a, has a little snapshot with a fun guy talking about.It's a two page document with like, right, we're gonna put I did see this these and the stars pointing with an arrow pointing up to where the chips are going and the guy's like there's not much detail. It's like it's like a child's picture books. The source is like, how can I show this to my investment committee? I can't, this is not something I can use to shorten, you know, so it's that flip side of it. This isn't a real PowerPoint, right, right. So they're.They're seeking to raise this money. We'll see what it actually looks like right when they do raise this money, right? And of course this raises the question, and it's a report that all of this stuff raises, which is OK. So Musk has said Colossus 2, which is the one in Tennessee, has 110,000 Nvidia GB 200 chips. That's the Grace Blackwell, 400.And 40,000 Grace Blackwell 300s, then they're bringing online another 220,000 Grace Blackwell 300s and then another 220,000 expected in November. In other words, like this is an enormous, a colossal amount of compute, colossal amount of chips is that compute being used?And we will it be and will it generate revenue? All of those things, you know, those, and that's the question over and over again for all of these data centers like when does the demand start to meet the supply? Yeah, I also want to step back just for a second. I'm going to sound like a broken record here because I'm going to keep saying it, but the duck it's not the duck. It's not the duck, I promise.The Treasury is planning to auction $39 billion of 10-year notes today. Tomorrow they're trying to auction $22 billion of 30-year bonds. SpaceX is looking for $40 billion. Broadcom is working on a $60 billion chip financing deal. Look at the competition for capital. If you're in the high grade space, where do I put my money? That's becoming a real question and a real problem that we're all going to have to confront of, OK.If you want money, AI, and you need money, Treasury, and you need money somewhere else, at some point there's a finite money supply. So what does that do to where the funding actually ends up going and where the weaknesses show up because there's not capital available, especially at a time when we're seeing tightening,right? Also, when anthropic IPOs, I personally will not be on, right? Well, I will not be surprised if they do what SpaceX did 10 days after SpaceX IPOs. What do they do?They go issue and try to raise more debt, right? I think you could see the same thing out of Anthropic, right, right. One other interesting note today that you flagged, Pras, is that even as they're building out all of this enormous amount of compute.Elon Musk came out with an update about its Grok bot, not to be confused with its Grok.LLM, this is its actual agent that the Grok bot won't necessarily run on Grok. Yes, they really need to rename one of these cities. Also, isn't there's also there's Nvidia Grock. Like there are several Gros with a Q, at least that's spelled different, right, but it's pronounced the same, correct? OK, so he basically said this morning that SpaceX is going to use the best backend model for any given task. He says that includes Claude Opus 5.5, mid-journey, Suno, other leading APIs. So like he's saying we're not going to use our own LLM. Potentially, yeah, yeah, yeah, and you know, like when, when you use stuff like Cloud and it's using plug-ins, it's using other companies' plug-ins, so it's not that, you know, that's fine, but this seems like it's even more of a bigger deal because it's using the foundational models like Cloud, uh, as opposed to just little plug-ins to accomplish these tasks, and you say, what he said, whatever is most likely to give you the best outcome we will do. That's obviously not.You know, in, in stark relief to what, uh, what's Chat GBT is doing, what, what, what Claude is doing. So this is sort of Mu saying we're open, we're open, we're open.You know, and then we have some complaints about it. Well, I don't want, I don't want Gronk to be using other anthropic. I don't, I don't want it running on Claude or something. Yeah. And Musk has always been, I'm open guy, but only when he wants to be an open guy, right? So it's, it's sort of like, how long does this last? What does that mean? Are certain partners excluded, you know, is like Gemini excluded? I don't know. You know, um, he hates Altman, right,right? Will they notuse open it? Exactly, exactly. So it's not, it's not always to be, to be clear, the best outcome, right? We'll see, but.Very interesting nonetheless note today that and we'll see what that looks like going forward. And then there's also news in like the Musk ecosystem with Terra Fab, right, is that he says he's, you know, he's been tweeting like most of what he tweets is not of use to us from an investment perspective and much of it is not gospel from a I could actually get, you know, have exposure to this tweeted about TSMC, right, so there were reports that TSMC would be part of the Terra Fab deal and then we were talking about.Is there, is there sort of concern that TSMC will run the actual Fab itself? Is it gonna be their sort of operation? And then, you know, SpaceX has a little piece of it, and he said, no, we will run the Fab. Let there be no doubt about that. Maybe TSMC subleases part of the Terra Fab if they want. Now this is also kind of the intel inside, right, because it was a big deal with they're having with Intel. Was Intel being shunned? No, actually they're, they're still part of it. TSMC might be part of it too, so.But again, it's what you said. He's just like spouting off responses that are just not probably not cleared through any kind of comms through any kind of PR like just this is what's happening and they're material in some cases very material and moving the stock, right? Yeah, that stock's down 2%. And then what happens when an an actual official confirmation comes out? No more intel, sorry, we're gonna go on TSMC, you know, the stuff.Like that, it just sort of, well, the stock is moving more this morning, I would say on that Bloomberg report about raise than on the stuff, but you know, Intelmoved and we've seen those two stocks, Intel and Taiwan Semi, kind of whiplash in the last few days as it looked like this was going to go one way, then Musk says it goes the other way. It gets to the point of his exposts swing markets, and that's going, you know, that's a liability.Let's say on someone else seeing liabilities in the market. You win the word away. You don't hate it. You don't hate it. I don't. San Francisco Fed President Mary Daly, let's, it's good to keep in mind her district includes Silicon Valley. She's out in San Francisco giving an interview to Axios where she flags really two things. The first of those is that she is preparing and seeing people start to think about a real AI chip fueled squeeze, a real price squeeze and inflation squeeze, and she combines that with the risk.That we get 3 problems all at once AI inflation run up, tariffs, and the energy inflation problems.Her argument is that if all those compound, there is less and less of an argument to be made that this can be seen as transitory, that this is going to pass. She's been talking to people in her district, and she's seeing contracts for memory chips go nowhere but up, more expensive, longer term. She's worried some of that chip squeeze could start flowing into autos, into appliances, into other goods that beyond data centers that you don't think of typically when we talk AI chips because we're always.Data centers, that stuff runs your washing machines we talked about this, your cars, all of that has chips. All of that could push that inflation up, and she's arguing the shock horizon here is not months anymore. This is likely years. And so if you're the Federal Reserve and you've got to think about how do we slow some of this down, the question becomes how much do we have to raise rates before you see some impact on hyper scales that she says right now have been rate insensitive. And she says it's not a foregone conclusion. It's not a foregone conclusion, but she's starting to see some rumbles. Yes, she sees it less as a one-off, as she said. So yes, I mean. And she's very impressive at present and, and really kind of tackling this, and I think that's this is really important stuff, and she's in a tough district to be in right now. Yeah, yeah, uh, hopefully this is working through Kevin Worsh's task forces aswell. Uh, yeah, we're gonna get that in December and then minutes today. Minutes later, minutes, minutes later today, the other thing that she brings up, she says if we have a 2nd round of tariff negotiations that result in more tariffs, then that would be a second shock on top of the first shock. And on the tariff front, while we're talking about inflation from.AI, which is currently inflationary instead of eventually deflationary or at leastdisinflationary, the Kevin Warshch argument that it won't always be inflationary, right, exactly. I don't know when it's going to not be, but I don't think about speaking about the, nobody knows. Speaking about the tariffs, the New York Fed came out with a new study about the effect of tariffs on inflation because there's been this question of like how much does it actually contribute, and they conclude by February of 2026 tariffs had contributed 2%.0.9% points to goods price inflation. Without them, goods prices would have fallen slightly. Wow. So you know this is pretty damning. Like it's hard to prove that, you know, the counterfactual like what if they they went across and did this work and we're talking about some like heavy duty you know economic work here and this is what they found 2/3 of the increases that we saw came from pricier imports which gets passed through quickly.Another third comes from US made goods as producers face higher input costs and less import competition. I wasgoing to say with regards to automobiles, like with regards to Ford, some of the biggest, the biggest input costs are aluminum and steel, right, and we can't make enough of that in the states. We have to import it all from where? Canada, from China.That's just massive, massive cost inputs for the automakers in addition to the chip stuff which we've been seeing, it's still a problem. They still can't get enough memory and chips, the, the smaller ones for, for cars, and it's only, it's only been exacerbated by tariffs, like absolutely insane amount of of cost pressures from tariffs. Uh, now they got those refunds, right, or the IEPA refunds.But again, that's only part of it. There's still sector tariffs on autos, right? And then where does that money go? It's not like they're cutting us checks. They like I bought a, like I say I bought a Mustang. Like, here's your, here's your tariff refund. It's like, no, they're keeping the money. So it just, it just seems like a big mess and inflation, yeah, we're still paying more, has not abated. And so this goes to like the whole, the central question is it transitory and it.It could be tariffs. It could be AI, it could be the war in Iran, oil, but because you're looking at long and variable lags in the effects of all of these things, it's difficult to piece out if it is transitory, and Daily asks the right question, which is like how long isthis all going and when all three of those things combine at once when you're looking at AI-driven inflation, when you'reAlso looking at the war, when you're also looking at tariffs that are not settled and still being litigated in court, where does all this settle in 2 years? Where it settles is probably higher prices for the consumer. And real quick it goes back to the fact that when prices go up, they go up on one escalator, right? They don't come back down very fast either, up like a rocket, down like a feather. All right guys, it is time for the ETF report brought to you by PIMCO, and we have an interesting.Topic this week, it's sports ETFs very much in Julie's lane. Listen, ETFs are in my lane. Can you explain this? I'm sort of confused by this whole thing. That's because it's confusing. So there has been a host of new applications for.ETFs tied to sports teams 402 by the count I believe of the Financial Times, and they're pegged to specific teams individual ice hockey, baseball, and basketball teams. They're being backed in some cases bySome of the teams themselves and how do they work? OK, so there is an index for each of the teams that is based on all kinds of things, including what happens in a single game, and they like assign points to different plays that happen in the game and then they also assign them to the rankings of.The teams and whether they win or lose the entire game. This has confused me a little bit. According to the story, the proposed ETFs would not track the spot levels of these indices, but futures contracts traded on the CME, whose prices would embed market expectations of a team's performance over the remainder of the season. So in other words,It's complicated and I love it. Jason Zweig at the Journal in reacting to all of this, I love this quote. He says, it's OK to gamble a little from time to time if, but only if you know you're gambling, don't think you're investing, right? That's right. So I want to see if I can distill this into like a 22nd version. Good luck, man. So the index tracks stats.You get an RBI in a baseball game, your stat presumably goes up. You, uh, you know, you give the ball away in basketball a turnover, stats go down. The index level starting at 7500 moves based on that, fine. But then what's actually getting traded are futures looking at, OK, if the stats are as such and the index level is here.Then what can we expect further into the season, which is essentially what Vegas does for some stats, but it's embedding, to Zweig's point, it's embedding a fundamental gambling model of where do we expect things to go in a sports season into a product that when the average American hears ETF, that doesn't sound like a gambling investment. Right,so the question is, what will be the demand for these things, and will it siphon demand from gambling? Will it just be additive because we've seen there's huge demand? And why is there no, why is there no NFL? Is, is the reason why they're doing this whole like tracking these whole dervivs is because it's like a regulatory thing from a trading point of view or just because this is how this has to work? It makes no sense to me. I don't know. Hey, you're, you're trading like a.Can order derivative on top of I don't I don't know.I mean, as Zweig says, is this fun the easiest and cheapest way to accomplish my goal? How does it fit with the rest of my portfolio? In other words, like applying rational questions to something that on the face of it is, is very unorthodox. That's right diplomatic and sayunorthodox. Also, the most wonderfully British anecdote from the Financial Times story, which is a British publication for the astute sports fan.There are no plans to introduce cricket at this time. There are no plans for cricket.Welcome back to the 8:30 where we have spent the morning really talking over, um, really fantastic report in The Wall Street Journal from their politics desk in Washington.Looking, taking us inside the Treasury Department into some of the turmoil there, really high level staff turnover, Senate confirmation positions left unfilled. Reports that Scott Besson himself is quite an explosive figure behind closed doors, berates his staff, has been known to throw things, has been known to kind of menace people and yell at them, to dismiss people over really little things. That's reportedly stopped some.Potential Senate appointees from even applying for positions at the Treasury that need to get filled. All that aside, however, there's also some really good tidbits on the economic policy side of the Treasury, and where I wanna maybe start is what Scott Besson has pitched to Trump as his 333 goal, which is deficit 3% of GDP by 2028, 3% GDP growth, and 3 million additional barrels per day of oil production.It is not 2028, but right now the Journal is reporting growth around 2%, and that's also a Wall Street consensus. Oil production up less than a million barrels per day, even as the US industry tries to kick that up for the Iran war, and deficit is running above 6% of GDP. It's a tough financial position for the head of the Treasury who has gone from, what is it, I am I am the house now to most recently.I don't control the bond market, and aswe talked about, there's that $39 billion Treasury auction today which is there is going to be very closely watched.I find this an interesting story in part because of the dysfunction that they sort of uncovered at the Treasury Department, you know, as he's trying to meet those goals, he's also juggling an increasing number of things that the president has thrown at him, including sort of the economic policy towards Iran which Besset reportedly convinced Trump.Time,you know, including increasing his purview around the IRS, which is reportedly quite dysfunctional right now in terms of the amount of its staffing and the audits they're able to conduct. That's right. And then of course you can just look at the grade that the Treasury market itself. That's right, is giving the Secretary, giving the bond trader in chief. What stood out to me is those vacant.that you mentioned 7 Senate confirmed officials have left the department as of the end of August. If you want to compare that to past administrations, you say, oh well, that always happens. It was 0 to 2 in the past 4 administrations during similar times, which includes Trump's first term, right? So this is an unusual level of turnover and only 1 of those has been filled.So you know this, like whether you think government works or not, you want people there doing the jobs that they'resupposed to be doing. One of the things that caught my eye in the story, and they, and they mentioned in the story about how Besson was seen as the adult in the room in this amongst the Linda McMahon's and the, the Howard Lutnicks of the world, right? There was hope among the investment. Yeah, he was a real, real sort of figure in Wall Street.And he comes in and he's doing stuff like throwing binders against the wall, uh, threatening Elon Musk in a meeting about, about the, about the IRS, um, almost, I think getting the physical altercation with, with, with Bill Poulte, right, um, and then he's recently talking about, you know, talking about going after the Iranian, the new oil minister, right, like what are you gonna do? You can't, you can't pump any oil. What are you doing? And it's like.Hey Scott, you have a $40 trillion deficit. You have mortgage rates that are out of control, a bond market that's sort of teetering on the edge here.Maybe the pressure is getting to the guy. I mean, I don't know what's going on because it seems like whatever he's doing is not working well. Thestory said though that he was known as being this guy before. That's right, right, that even when he was working hard leaders and working on Wall Street, that, you know, personally that he had a temper, berate people wouldlose his temper at times. And like, didyou think about the restaurant though?Oh yes, code pink. The code pink people, yes, and then he complained and he spit in his food and walked out, walked away. I'm sorry, that's not, that's beyond the pale. I mean, and this is something yelling guy spitting in food,crazy. That's insane. Yeah, I used to cover hedge funds for a few years. I knew and had talked to a few people who had worked at Key Square, which was Scott Besson's hedge fund.And to the journal's point, this is not a news story that he's a hard leader to work for and that he demands a lot, but demanding a lot out of your people and then spitting in food, throwing things against the wall, you know, physically menacing people, it's a pretty big gap. Yes, I mean, I think, you know, like I do think that there is this view in certain corners of the management universe. Certainly President Trump appears to share this view again, according to the Journal story that like.This guy's tough. He gets stuff done. Like, let's put that to bed, please, because that's a bunch of this is the, you do not need to be nasty to people and yell at people as though they're children and threaten physical in order to be an effective leader. There are a host of different leaders, a long list of people who do not have to resort to those tactics. Imagine to get things done at a board meeting here. Some guy wants to fight some guy. That person's gone. Yes, a normal boardroom politics that doesn't fly.You know, I'll editorialize for a second here. Look at what the White House has become. It's an area of schoolyard bullies. That is all it is. That's what President Trump has created, and what you create when you do that is dysfunction, and we've seen this not just in the Treasury, in the FBI under Kash Patel, in the CIA under John Ratcliffe, in the military under Pete Hegseth. You name every agency across the board that has any kind of sway. We've seen the same story. A bully is in charge and causing realDisorder that's going to be really hard for the next administration to fix. And Trump, what did Trump say? He said, I created amonster, right? Proudly, proudly, which never forget. That's why I said it to you. Soon RPI. He's a monster. his name coming back to the actual economic policy side here, Bloomberg reporting.Basically, what is Scott Besson's response to the economic conditions right now, and his plan is threefold constrain spending, grow the economy, and on tariffs, restore tariff revenue after having to pay out $180 billion in refunds. Now let's come back to Mary Daly, right? Where did she see the stress, the war in Iran? What is that? That is immense government spending.The tariff refunds, getting some of that money back in the door. OK, there's your tariff pressure constraining spending. The global debt, sorry, excuse me, US debt, gross federal debt has just crossed $40 trillion.None of that is happening, and the question is, when you've got the 10 year as high as it is, the 30 year as high as it is, when you've got a war that's not winding down, how do you meet any of those goals? So, OK, so and the budget is going to be a huge fight after the midterm elections, a huge,a small moment of sympathy for Scott Besset. His boss is working at cross purposes with him, to your point, and that.Things you just listed, namely the war, I mean probably the biggest of those the war in Iran being the war, which he can't do anything about he's tried to mitigate by saying let's go at it economically instead of militarily that has come with have sort of gone in waves and met with mixed success. So like the guy does not have an easy job to do but again look at the bond.Market that is telling you the story of how the market thinks that he is doing that tenure from pre-war to now is just it's meteoric. I mean, and youcould argue, OK, it reflects growth prospects, right, but it also reflects inflation prospects, right? And you know, risk is this the idea that inflation is not under control.Yeah, it seems to, at least on the part of some, certainly it seems to reflect that. Let's turn to more debt talk, right, with our friends from Skydan. Oh, not bad, not bad. Skydance taking flight here, right? You know, in addition to seeing various taking flight, you know, in, in addition, in addition to seeing and dancing whileit's doing I'm in the middle of my bit here, OK, so in addition to seeing various employees at, at, at the companies have their Skydance logos appear on their, on their.Company monitors, right, that's happening. Uh, CEO David Elson had, held a press events, press conference outlined the vision of where this entertainment giant's gonna go. He committed, he said he committed to both keeping both the Paramount and the Warner Studio lots in, in Los Angeles. Explained how the work will be split amongst the two CEOs, uh, Enon on the creative end and long-term strategy, Ellison on operations. Uh, it's talk about pacing releases of that 30 film commitment, which is actually pretty audacious. We'll see if that actually happens, and then.As of yet, no plans yet to divest some of the cable networks, uh, or merge the TV studios. So a lot on their plates, um, a lot going on. They had a big sizzle reel they played of all the different, I mean, it, it is an insane library of, of stuff that's underneath one, one, it's a legendary library, and they named some impressive people to the board also, right, right, right. Oh yeah, we can get to that too, but yeah, Laureen Powell Jobs, Bobby Kotick, who had been the CEO of Activision Activision.Tony Blair will be an advisor, advise like an an advisor. OK, come on, Tony Blair, the ex-Prime Minister, what do we talk about Tony Blair. Give me a break with Tony Blair, man. Hey, you know what, if he, if he ran a government budget, he can run a corporate budget, honestly, but that's not what he's doing. No, but that's not what he's doing. Blair, like, uh, but I don't get that. There, there is gonna be one number that's very, very important for Enon Kreutz and David Ellison, and that is the debt this company's gonna have to deal with. I, uh, Needham had a note out this morning, kind of summarizing this up.The company will have an approximately $50 billion market cap. Good, not so good. Nearly $80 billion in pro forma debt. That skew is going to be a big, big problem. We saw David Zazlov trying to tackle this under his own purview, make some progress, but not enough. Now this really is David Ellison's problem and Edon Krez's problem of how do you deal with all of this debt. Andthat note was from Lauren Laura Martin over at Needham, and she has a hold rating on the stock, and she basically says,There is a very little margin for error. That's right is the issue. It's got small float as well, as she points out. You've got that high debt, and that means it's going to be really tough, she says. We argue that public shares of SKYD, that's the new ticker.Are a highly levered call option on the future of the entertainment industry. That is a quote, you know, and she says it is going to again be a hard needle to thread in terms of the amount. Remember they've committed to make what, 32 movies, 30, 30 over it's 27, 28, it's a lot.Of movies that they've a lot of movies to make and she's not the only one who is skeptical. I'm just looking at the analyst ratings here. There are only 3 buys, 12 holds, and this is almost unprecedented in Wall Street. 10 sell ratings, 40% of the analysts who cover the stock rate it. They don't like it. That is very unusual. They don't like it for so many people to have.Sell ratings. I mean $80 billion it is mind boggling. Where's the Nvidia chips for that? No Nvidia chips for that. It's just, it's just what, uh, money tied to the, to the future earnings streams from movies like making the deal, like the Dark Knight series and things like that. Yeah, I mean, we'll see how they, they can, they really got execute in a, in a, in an insane fashion to make this work. But here, here's the problem with that debt. The entertainment industry is not a business that prints money.This is not the semiconductor trade where you know your demand is there and you're going to be making money. I mean, look at, right, so how do you deal with that? You cut costs instead of adding more revenue. This is going to be the big question for Enon Kreutz, kind of known as a cost cutting specialist for his time at Mattel. Where do you start cutting, trimming the fat at the combined Skydance when both of the combined companies, especially Warner Brothers, were already kind of at the bone? Or theother way to raise money, you start shedding assets, right? Like cable networks, which right now no.Plants divest the cable assets, but could that change? Well, and could they shut down like some of the streaming news services that are associated with the channels that they own, like a CNN, for example? That's something that has been talked about. So CNN already, already, they, they shut down their streaming thing and they brought it back. It's like, yep, where have we've seen that before, um, but you know, it's just, it's just a mess over there and you have like a lot of foreign debt there with the Saudis. It's all complicating some of that. Uh, you can't go back to Daddy to get more money because I think Daddy Larry's. Might be a little tapped out, jammed up. Might be a little tapped out, a little jammed up himself was, was reminding me of that, um, David Ellison initially got into the entertainment business because he wanted to be an actor. That's right. He was in a movie called Fly Boys, which I don't think I ever saw. I did actually see that. I do know the movie. This is the first I've ever connected though that David Ellison was in that movie. I saw it years ago of that movie. I, I, I saw it years ago. I couldn't tell you. James Franco says Kayla. Hey Kayla, I wonder how he got his, his, his, uh, his booking for that, for that movie. I wonder.I wonder what would allow it to be on that movie everywhere now. Could it have been you live in a Nepo world. Take the shame out of out of nepotism. Could have been a check. Take the shame out of nepotism, says Julie Hyman. Also, it is, I will note, um, you know, for the business that we, the three of us sit in, Ellison has committed that the news operations will maintain editorial independence, that there are worries that this doesn't mean who's going to be on the board though. We don't know who'll be on the board, and that doesn't necessarily mean there won't be political pressure.Yeah, and so how long is that like, are you going to be doing these stories that are critical of Trump and even Ellison and the Oracle? No, well this is their critique of Barry Weiss over at CBS. How much have scripts been changed or stories held back? We've seen some really marquee name anchors leave because of that. Yeah, yeah. Let us change gears and talk about Muse for a moment. Mehta's AI agent that we know has been popular, what, 5 million, more than 5 million.4 million users and so Time Time magazine or Time.com I guess is now how we refer to it talks about the dossiers that it is building on people as a result of this agent usage, but it's not just the dossier that it's building on you, it includes, you know, there are, there are various parameters you can put around the agents. There have already been reports that it sort of doesn't respect all of those parameters in terms of assets that.To your messages, for example, but now Time says it's not just a dossier on you, it's on everybody that you communicate with effectively and then it updates them every hour on you and the people you've mentioned in chats, messages and emails that Muse has read so it's sort of a map of you um and you know I think we sort of like gave up on any expectation of privacy long ago here in terms of our online identities.But this is going to challenge that a little bit because this is another like yet anotherlayer of that. Well, here's the most shocking thing from that story to me. Take out the dossiers which are, you know, terrifying in their own right for privacy duplications, dossiers, dossiers. Meta has had a long time to figure out how to deal with user data, to keep it safe. They've made some mistakes.But they've had a Zuckerberg has had years to figure this out.An encryption option on Muse preventing Meta itself from accessing the data, which is the kind of thing Apple does. Apple cannot access your data on iPhones, is planned later this year and not yet available. You've been doing this for years. Why would that not be available? When I saw the headline for the story, Julie, and I, it was remarkable, but also like, of course you would sorry.I know it's gonna happen and it happened, it happened. I'm sorry, uh, but I wanted to read a quick little thing from the meta spokesperson. Oh my God, um, as we say in our blog, Muse remembers what matters most to you, including information about others that you choose to share, so it can be a helpful assistance. So they say it's we're trying to be helpful, but yeah, again, they're, you know, what's, if you have Muse, what is it saying about me? Has it created a digital twin of me? And I'm curious what that twin is like, what the skew is much cleaner mouth than. Um, it also just note here that Meta has denied that Muse is feeding information to ad services. This was one of the big critiques with Instagram and Facebook over the years is how much of that your user data is getting used to influence you with ads. They've so far denied that Muse data is going to that program.So there's at least that, yeah, I mean this reminded us too of the Amazon about you profile. So I went and looked up my Amazon about you, which at least you can see it, right, what they say about you. By the way, it's wrong about some things. It thinks I only have one kid. You have two kids. Well, it says has a teen, but then it says has one child, so that's a little confusing, um, and it like some of it is, it's very, it's a very narrow view actually of, of course it is stuff from me, but it does know that I exercise regularly with home equipment because I guess because I've ordered.Equipment to have at home, um, you know, prioritizes organic ingredients for fresh produce, like, you know, but this is stuffthat surfacelevel and it's also things that like of course it knows because I shop on because you're buying history exactly. That's right, exactly right where the agents go further and or you know I saw, I saw a post on, I think it was on X where it was like if you ever want to have a have a bad night.You know, go to your chatbot of choice, chat chat GPT claw, whichever one you use the most, and say like, you know, tell it, give me a completely unvarnished read on everything you know about me and the kind of person I am, and I have not done that, but some of the responses were, you know, like you clearly have some kind of like, you know, disorder that's going untreated, or you, you struggle with anxiety and need to address that, like all these like very pressing things that should be coming from a therapist or a psychotherapist.It's not from a chatbot. I don't think I tell my, right, well, that's, but some people do feed it a lot. Yes, they do. You know, I think, uh, some Jaguar executives have done that in the past because they've taken a lot of heat, uh, recently. But let's just quickly turn to cars here, as you say, shifting gears, right? shifting gears. Whoa, Cross wins today. I think you said earlier, uh, finally revealed the production version of its latest car, the, the, you know, following the copy Nothing rebrand which we can get into, uh, the type 01 sedan, we have some footage here. I think it's pretty stunning from an exterior point of view.Uh, very sort of dramatic. Has it also pretty dramatic interior as well with the floating sort of bar in the middle of it, the bisecting the cabin, uh, very interesting, but it goes kind of, it comes as the company has gone fully electric. It's killed off all its other cars. This is the first one that's gonna come out. They wanna, they want to shoot for a, a wealthier sort of customer, more higher customers, sell fewer cars. This car is gonna start around $130,000 for an EV.It's a pretty, you know, like I say, there's nothing else out there on the road that looks like that. Does it look like a Jaguar to you? It looks like a cat actually. If you look at the front of it, it has sort of a, it looks feline, you know, in predator catkind of, right, right. And, and, and in the past, Jaguars have had the long front and the, the sloping back. It's like this very kind of Cruella de Vile style car, right? No one ever said Jaguar didn't make beautiful cars. Yeah, and they've made, they've maintained that Enzo Ferrari himself said one of the, one of the Jaguars in the past was the.Most gorgeous vehicle ever made, but the big question is, can they sort of right the ship of what's going on with Jaguar as an EV only brand, and this is their first car. I, I, I'm, I'm a little, I like the way the car looks. I'm not so happy about the price. I think that's gonna be a, that's gonna be a tough pill, uh, but also I don't know where the brand goes from here, right? It's also.Interesting to see them going fully into EVs when we've seen other brands struggle with that transition and have to reboost some of their gas-powered car builds because the EV transition didn't happen as fast as we thought it was, and so now all these brands are having to walk back those commitments. Jaguar here is saying, look, maybe we are specialist enough.And, and boutique enough to make this work better than like a Ford can. On the flip side is that they went all in and they're a small, a small company. You can't really reverse that easily. That's right. You can't take like a $20 billion loss. It's like some you can't just eat that, right? And they're saying, OK, we're stuck doing it. Luckily for them, JLR, the corporate has Land Rover, and that company is still doing quite well. So they're gonna try to balance both here and, and then we'll see what happens to future Jaguar. But it's, but this isit right now. I've seen a lot more Land Rovers popping up in my neighborhood. I don't think.correlation is not causation, but I've seen a lot more Land Rovers recently. Vendors, yeah, a lot of the Fenders. Nice looking car, butAtlanta, like beautiful car, but a Land Rover looks like aLand Rover. It does. And, and part of why you buy a Land Rover is because it looks like a LandRover, right? This is another leap, and we didn't talk about the fact that this comes after that really controversial rebrand with the video, the copy nothing video, all the different colors and people walking around. It's like, is this a car company? What is this? And then you have this car comes out, right? Is this even a, I mean, what is this car? So.It's a Jaguar is in a tricky spot right now. So wait, what does Jaguar still sell besides this? They sell nothing. They sold all their old SUVs, so you'd have to get anything used if youwanted something. They didn't sell any cars this year. That's the only car that they're now going to come out with. It's the only car they're going to come out with, huh. And we don't know what demand is going to be like. No. Have they said how many they're planning? Do you have pre-sales or anything? They, they haven't talked about quantity and things like that.They say that the cost response people they talk to clients areare excited. What's the process? maybe you know this off the top of your head, maybe not, but I, I'd be curious because I don't know for the top of the line Tesla.What is the price point for that versusthis? I think, well, there's no longer the Model S and Model X are gone, but I think Model X plaid topped out at 10,110 around there. You have loosens that can easily top 150, right? Uh, so there is a, and there's, there's obviously Porsche Ticon that's at that Bentley's first EV will price at 230dollars. Yeah, yeah. So there is that there is cars at that level that are pure EVs, but there's.Sell in such limited quantities, right, you know, it's hard to say. The Porsche has the Porsche one sold well. Ticon has been doing well, but it's recently been sort of tailing off, uh, and not in a good way, and it looks exactly like the regular one. It does. It has a very similar sort of body style. They've kept a lot of the, the, what is why line as they call it. What does Porsche attribute that down to to? I mean, I think they, they, they've sort of adopted all the people that wanted the car, right? You've saturated your market. Prices are high in the US, at least, and, and we're not getting the tax credit that you could get the tax rate with the lease. That was huge. Can't get that, uh, places like Europe and obviously China is a total disaster for them, right? And that's probably a big part of it too. And meanwhile, the Hyundai Ionic looks like it.Like an old Porsche. It does. Oh, you mean, you mean the Range Rover, the Range Rover? No, the, the Ionic, the, the electric, the EV, the Hyundai EV looks like a Porsche, like if you're squinting at it with one eye closed, or like a Volkswagen or like that, yeah, I 5, right? It has like the GTI look, yeah, yeah, yeah, it's a nice looking car. Yeah. If you squint with one eye closed, blink really rapidly, and then like put some water on your face, maybe you'll get it. Xiaomi made a car that looks like the Ticon and it sells for half the price, not, not less than that car than sell it. It's kind of like when Costanza, you know, the mailboxes were raccoons or Seinfeld did anyway, we're heading towards the bell. We've got futures that are heading lower. It looks like because yields are on the rise, but as we know, yields have not consistently been an obstacle to stocks going higher. So we'll see how that plays outthrough the day and how long that can last, right, exactly, as we've got stocks just coming off the record highs where we saw.The S&P 500 and the Nasdaq closed yesterday, seeing more weakness today, and the Nasdaq, just as it has been a leader, it's not leading the way. I mean, the Dow futures are down more in percentage terms, but the Nasdaq is rolling over a little bit, you know, maybe also this news about SpaceX trying to do this big raise is also contributing to some of that sentiment as we're looking at a world of 24-year highs in yields.And these companies, it's a little reminder these companies are going to need to take out more debt in order to fund their aspirations, and there's a viewer that's exciting for the investor because it says SpaceX sees demand, Broadcom sees demand. That's Mary Daly's point. There is demand for the chips, and so you see the contracts getting bigger, but for an investor looking at the more macro picture, how sustainable is that when yields are at 24-year highs and probably.At least right now it looks like they're just going higher. Well, listen, earnings are gonna start next week and everything's gonna be fine, guys. We've gotta leave it at that. All right, apparently everything's gonna be fine. Thank you guys. I apologize again. Uh, Brian Sazi kicks it off for a training day with Sazi Unleashed.