Finance Daily: the daily show continues

great return for those who didn't panic. Let's remember that when you're a big fund like a BlackRock or a Vanguard, or even that's two trillion dollar Norway fund, you cannot liquidate all your position when the market goes down. You kind of have to hold down to them. There's only some subsection that you can perhaps sell some things and whatnot. When you have sub funds, like a Vanguard has a lot of sub funds and whatnot, some of them for particular risk management reasons, and that they may have to liquidate part of their positions. But when you're so huge, you just can't liquidate. You have to keep a lot of your investments and then slowly, slowly shifts them over time. Because when you're that big and you want to sell something, you need to have somebody else to buy on the other side. And if you do it too fast, it just drives the whole market down for that particular instrument or stock that you're using. So that's why, you know, if you have a hundred million dollar fund, you probably have the liquidating just about everything that you invest in as one of their big companies. So you can in one day turn your whole set of stocks into something else that will liquidate all of them by something else. It's possible. But when you're on a hundred billion already, you can't do that that fast. I mean, even Warren Buffett with his, how much did he have now? 700 billion, whatever it is? He cannot liquidate everything in one day. So what they do, they do it over a month, over two months. They slowly gradually sell their stock. They can't even liquidate the treasuries in one day. If they were to sell their treasuries too quickly, that would even have an effect. Yes. And they wanted to buy stuff. So they literally they have to do things slowly, slowly. Yeah. And for big companies, which have big holdings, that's the case. That's why we have the whole debate with the yen and whether government wants to, wanted to intervene because if the Japanese sell too many treasuries in one day or in one week, then the price of the bond goes down, which means the interest rates go up for those in the audience who do not know the relationship between the two. Just a finance 101. When the price of the bond goes up, the interest rates, sorry, the price of the bond goes down, the interest rates goes up and vice versa. So when people bid the bond, they want to buy the bond as a refuge, then the interest rates, that is being paid on that, was a bit lower and lower and lower. It's just how the bond was created as an instrument. Okay, so that's for the nowhere fund. Then core weave stocks did well yesterday, after posting earnings that essentially met expectations so they're reducing their loss. So it looks like they're on track to whether what was being expected of them from Wall Street. So I guess that's a good, even though the operating income is still like $100 million, but okay, that's better than the consensus. And they're putting a lot of money into data centers, essentially for the AI. I think everybody has the buy now realizes that a lot of the data centers is to service AI. And it's going to continue to do so. We had a bank of America who pledged to give $250 billion for essentially by next year, $250 billion to support US Digital and Infrastructure projects. They say it's going to boost the economic growth of the country. Just like everybody else, essentially we've been hearing over and over again that everybody's investing more and more. Morgan Stanley had announced a few days ago that they would have $1.5 trillion over the next decade to finance tech and infrastructure projects. So again, because of AI, so it's been the recurring theme for the banks. They're betting that this is going to work. So the bank is willing to finance it. So somebody else has to come and create the company or ask for the financing. It could be a Google, it could be whoever it is. But they come and ask for the financing and then the bank gives it to them. They all have different conditions. Jensen Wong did the same thing we remember yesterday with the news where he had a lot of these banks and big funds who came to say, yes, we will partner with Nvidia. The Nvidia deal was a bit different because he said that he would backstop maybe like 25% I think it was of what they're having. So they would act as a guarantor. So essentially, Nvidia is trying to tell that whoever is going to rent or buy that infrastructure will be partly financed by NVIDIA itself. So it's a bit circular financing that creates a bit of a risk in the AI economy. But we have seen this guy since last year on the year before. But since last year has become more and more prevalent. I mean, Nvidia even has positions in the open AI, probably netheropic, and so on and so forth. So it becomes, the risks becomes a bit more global as they own each other. Any comment on that, Brendan, or the rest of the panel? I cannot see any hand if you guys have any hands up. Just a little feel free to. I think it's kind of like in every ecosystem that a lot of the large competition do go out and buy part of their supply chain. And in every industry. But in the AI industry has become quite fascinating because they are so interconnected and into weven that I think it's kind of like they rely on each other now. Yes. And should something go south and may have a domino effect. Depending on how much they continue to invest in each other, if it's 10%, maybe you can tick the hit. If it becomes 40%, 50%, then it becomes a big domino effect. So many times we'll tell over the next few years what will happen. But we do know is that now the market really sees the market meaning all the participants and all the finance companies, the CAI as the future as well, not only the tech world, which is developing that because they understand that this is the biggest technologies of the future. But the whole financial side of it has also joined the party. And their interest is to make money, as David says very often. And I think it's to continue for some time. It does make a kind of dichotomy in the economy. And I wanted to talk about that, especially with the panel, because I read the note that I posted yesterday is that because on the one hand, we have an AI boom, which is pumping the stock market at highs and investment commitment are at highs as well. And that requires tremendous amount of new energy. But this is where all the money is going, all the stocks are pumping. We see the money flows in that sector at a crazy rate. On the other hand, that requires a lot of energy. But on the other hand, you have an energy crisis in home moves. And the real Russian refineries are being hit as well. So you have a negative ripple effect on the world economies, especially many economies outside the US and Canada, outside the US and Canada, let's say, who depend a lot on that energy. So there is a disadvantage a bit for their AI. And even for the economic group of questions on that, we have companies with record profits, but also record high multiples in the stock market. So the stock market is going up, up, up, up. And we get nominal record profits because of inflation and because of some health of some companies in the economy. But while the stock market is pumping at highs, the bond market is starting to flash red. We're having bond markets, interest rates rising and rising with the Japanese jazz crisis, also, which is forcing the hand of the Fed and the Treasury Department to send some liquidity for the reasons we had just mentioned a few minutes ago. And so it's a way to start the QE with an excuse abroad, rather than at home. And I think the US government has realized how much they were dependent on Japanese liquidity and they want to keep them afloat. Because they see that there's too much potential for ripple effect. And so we have these dichotomy where the stock market might tell you that things are going fine. The bond market is telling you no. Some energy stocks and some things in the US are telling you. Everything's fine. Let's go boom, boom, boom, boom AI all the way. Other side of the world saying, no, no, no, no, we're in the red. And just like Anas had to underline, I think, yesterday or the day before, a lot of economies are in severe negative. Because of that, because of the almost crisis. And so we have kind of a shape effect where before it was only the income gap between the wealthy and the mass, which was increasing with money printing during the pandemic. And now essentially since the financial crisis even of 2009. But now you have a dichotomy between countries and their energy need and dependencies and how much almost affects them. And you also have dichotomy inside an economy between sectors, between the AI tech sector and the other sectors of the economy. So we're going to have a big gap, rising gap panel. Please your comments on that. What do you think? How do we make the holistic vision or where we go for the future? Because we talk from day to day and add some comments from the audience that we say one day one thing is great. And the other side was the things are not great. How do we all put this together? How do we get a sense of direction going to the future beyond what I just said? Niki Nikoski, Brendan, any comments? Yeah. The divergence that you've seen between tech and the rest of the market has closed considerably. I mean, I don't know of one sector just off the top of my mind, maybe utilities are underperforming it. But every sector is outperforming the socks and techs and 622. So you are seeing money flow outside into other sectors. And I think that's a good sign. I think if you went looked at semis and asked the question, how many semis are making relative strength highs going back to mid-June? It's actually very few. Against the S&P 500. So you are seeing money move into areas that were oversold. And I've said it many times that everything that everyone sold in the last three, four months with that rise out of that bottom back in March, April, everything else is humming along. So the areas I see significant weakness to give you an idea of what relative strength does. XLRE, which is the RE index. Just about five, six days ago hit a 52-week high. It's also at a 52-week relative strength low. Okay, you can make money and underperform. Look at the divergence in Walmart in Costco. Target's at new highs. You are seeing money rotate out of some very expensive names where everyone hid. And it's going and finding bottoms. I mean, you look at the fast food restaurant industry. It's abysmal when you look at names like McDonald's. Look at the casual dining restaurants. Cheesecake Factory. Has been absolutely on fire. I mean, it's just to give you an idea on a relative strength basis in the last 52 weeks. Cheesecake in since June. Since the first week of June is up 51% over the S&P 500. Now we know where David Towel took his way for their anniversary. Right? Okay, I'm talking about that. I don't know. I'm sure he took her somewhere a lot nicer. But the amount of movement outside of tech is absolutely astounding when you look across the spectrum of the market. And it's this K shape, as I talked about, the lower end is certainly suffering. And when you have casual dining doing better, you might have a large amount of people or maybe not going to the steakhouse, the fishplaces, but are going to, the entire group of casual dining has been doing it very well. Kaba obviously hasn't. Sweet greens had a meltdown. Some of that might be due to the bug that was out there. But everything seems to me to be humming along. I'm finding way too many things to do outside of tech. And it doesn't mean I don't like tech, right? So afterwards, been absolutely stellar. You've seen that rotation out of the hardware into the software, a lot of names in there to do as well. So just a different perspective from a guy that plays with crayons and eats them once in a while. All right, thanks back to you. How much, Dave? Do me a hand up? Yeah, I was gonna book about some... News which has come out today. And then something about yesterday with the chips which I wanted to just finish up with because if I don't say this, it's gonna irritate me because it's really important that people understand and know it. But the first thing is breaking news today is that Bank of America announced that it's today. It's gonna invest, I mean, part of this is already invested, but $250 billion into new infrastructure in America, a part of the 250-year anniversary kind of fund package thing. And that actually sounds funny, but it's actually very important because a lot of bridges, a lot of things in America do need fixing and we did do this project a few years ago as well, where they spend a lot of money on infrastructure. And that was around the time when we had bridges collapse in and issues with various other things. So I think that's really good initiative. And then back to this thing which was yesterday, which is really important. In the UK, no one would have seen this, but the elite forces in the UK did basically an order of their drones. And they found that in one of their drones, which is most likely working right now in the Australia of Hamus, one type which was source, the cameras in it were basically doing this heartbeat signal and phoning China basically, and peeing their IP address and sending information. This became a huge story where if you're looking at it, but if you want looking at it, they...