Good morning everybody. Welcome back to another episode of the market open. We are alive and well, we got a green pre-market and we have a green pre-market for one simple reason. Quite literally we went green about 20 minutes ago as you can see right here. S&P 500 is green right here up about 0.56%. A little bit of a source of relief. We were at 649 at one point in the pre-market on the S&P 500. We got to 647 on October 10th. So very close to those October 10th lows.

ended at 652 yesterday. Yesterday we had one of the largest reversals we've seen in over a year. We were up two and a half percent and then we went down 1.5%. So 3.5% intraday on the reversal. But we are a big green right here. And the reason for the green quite frankly we're just going to get straight into it. And then we got BMR earnings. So we'll talk about that as well.

You know yesterday we said what is the reason why we had that reversal? How did Nvidia go up 450 billion then go down 450 billion? Quite literally, the futures went higher after one of the Fed presidents signaled that they might want to get a rate cut. Fed President Williams said there is room for further adjustment to rates and noted easing inflation risks. Traders lifted the odds of a December cut to over 50% up from 37%. Williams also said that inflation has stalled near 2.75% partly due to trade policies, but he expected to move back towards 2% by 2027.

It's kind of crazy, dude. I mean, we were looking for a lot of different reasons for why the markets reacted the way they reacted yesterday. Again, everyone was so excited and then everyone was not excited just because things completely collapsed. I mean, look at the rate cut probabilities right now, guys. Yesterday, we were at 30%. We're at 70% right now.

So, we'll talk more about what's going on with the rate cut scenario, but but for those just joining that, that is exactly why futures have flipped. And now, will we sustain any of this? I have no idea. I mean, maybe, maybe not. Uh, but this is quite incredible that we are over 50% for a rate cut chance now that Williams signaled that yeah, I think we should cover rates. I believe William has a vote in December, which is why the market's also like leaning towards, hey, maybe Williams is going to be one of the deciding votes that gets us the cut.

But the fact that the market is this hung up on just the rate cut, proves, at least to an extent, it proves that maybe it has nothing to do with AI bubble, GPU depreciation, crypto glitches. Maybe it's just literally about if we get a rate cut or not. I feel like that's too simple of an explanation, but if that is the explanation, then, you know, that could be the logic for why we are trading the way we're trading.

So, that's what we got there. We'll we'll get deeper into what's going on with rate cuts in a second, but BMR earnings, let's get right into it. We do have the report right here. Yes, they have declared a dividend. For those that are asking, they declared a dividend. Yeah, Fed President Collins said the opposite. So, it's also just like, you know, it's weird because the market is so excited that one president said uh to do a rake up, but then the other president said to not. So, we're going to have to see how the market ultimately interprets it.

Uh fiscal year 2025 gap EPS of $13.39 a share. Uh they are going to start staking in Q1 of 2026. Uh and they declared a dividend of 1 cent of 1 cent. Tom Lee, Bitine continues to execute at the highest level. The company is well positioned in 2026 and we look forward to commencing ETH staking with our Maven or uh made in America validator network in early calendar 2026.

Uh so they're launching their own validator network for staking on the continued weakness in ETH prices states Mr. Lee. Crypto prices continue to suffer as the drop in market liquidity and function since October 10th which was the largest ever single day liquidation event in the history of crypto in 2022. The post FTX liquidity shock took eight weeks to clear, but similar to prior draw downs, crypto prices quickly recovered. History shows crypto prices stages V-shaped recoveries after a lingering and drawn out decline, and we expect this to be the case in this current draw down.

Uh they had net income of 328 million. They're declaring a dividend of 1 cent a share. Uh they're the first large cap crypto company to declare a dividend and they will have their annual shareholder meeting in Las Vegas at the win January 2026.

Now, Maven, the made in America validator network, is going to have safe and secure operations, performance and reward yield generation, ability to run dedicated infrastructure, overall service quality and support, and they plans to go live in the calendar year or the first quarter of 2026. Tom Lee says, "We plan to partner with one or more of these pilot partners, plus worldclass infrastructure providers to scale our made in America validator network over the coming quarter. Although many off-the-shelf offerings exist, we believe in building the premier destination for our natively stake ether and are proud to build with the best partners. At scale, we believe our strategy will best serve the long-term best interests of our shareholders.

Uh, and that's what you got. That is what you got. I have nothing on the amount of shares outstanding. Uh maybe that'll be disclosed in a different um piece of news, but I'm looking at their their presentation online as well, and I don't see outstanding shares, so I don't know if we have that information. Um I mean, it's not like easily available to see.

The dividend is kind of weird. I'm not going to lie. I don't know what's the point of 1 cent a share. I I kind of would rather them use that and buy more Ethereum. So, I I don't know what the one cent a share really does, but I don't know. I I guess that's their strategy of enticing shareholders to stay or to incentivize shareholders to to to come in,

but I don't have the share. If anyone has it, let me know. Um maybe the 10 Q is not out yet, but it should be out like relatively soon. I I I don't see it on their website, but I tried looking in the morning. I didn't see any of the other SEC filings outside of this like PowerPoint presentation that I'm scrolling through right now.

So, you have a dividend, you have a declaration to start ST, at least we know why they're not staking now. They're building their own validator network to stake. So, for anyone asking why they're not staking, it's because I guess they're doing it in their own proprietary way in 2026 in the beginning. and they made about $330 million of net income.

To us 284 million shares. Yeah. The problem is the brokerages have no idea. Like Robin says something, Weeble says something. So, you can't really use the brokerages to kind of define the accuracy of it. We They really just need to show us on the 10Q. And so, I believe we should get the information soon, like today. But we're going to have to see ultimately when that comes out.

Um, so there you go. That's what you got on BMR earnings. Not really moving the stock for for those that I mean were awake at least at all last night at crypto just went through a blood bath. I mean absolute blood bath, guys. Crypto got to Bitcoin got to 80,500 at one point. This was at like 2 a.m. Ethereum got to 2620.

So I mean I this is I I don't know. This is quite incredible right here. I mean, we have an obvious deleveraging and disgusting sort of withdrawal on the crypto markets. The only reason they're getting a rebound, I believe, is because of these future probabilities going higher based on one Fed president saying that futures uh or that that the rate cut is more likely than not. Bit mine right there is up 1.64%.

But Ethereum and Bitcoin still getting hit, getting a bit more of a rebound. S&P 500 up about 0.55%. Robin Hood's up 1.7. Meta's up a little bit. Nvidia's up a little bit. Today is going to be a really interesting day. I'll put the green or red poll in the chat. I mean, do we think we get even a sympathy rebound after a basically six to 7% decline we saw in the S&P 500 today or over the past week? Or does the bottom fall out? And it felt like the bottom fell out yesterday. I mean, it really did because, you know, there was just no bottom in sight.

But um on a Friday where options are expiring, do you get any level of rebound? I don't know. I really don't know. But we're going to find out here today.

You said the slide deck says 234 million shares outstanding. Does it? Um I don't see it on the slide deck. Oh wait, hold on. I think I do. No, but that makes no sense. Okay, I'm gonna have to go through this stuff a little bit more in depth to get the exact number. I'm sure we'll get it today. I I'm I'm pretty sure we'll get it today. We're just going to need to look through some of these numbers.

Yeah. So, when we get it, we'll be able to have a better calculation of the MNAB, especially because we have the EPS as well. But regardless, the dividend is the most confusing to me. I'm not sure why they're giving a dividend. That is like that's the confusing part to me. I I don't know if the dividend is going to be attractive enough to get people to stay, but nonetheless, you do have that dividend.

So, that's what we have on BMR earnings, and I think that's the only real earnings that we have this morning. Fear and greed index, we are at eighth, guys. We got to six yesterday on fear and greed. So, it's obviously been very close to the liberation. Liberation lows, we got to three. So, I mean, I don't know. I guess we uh I guess we're just that close to to getting to the absolute lows. But uh the problem with buying here is that everything has been a falling knife.

So I mean maybe Fear and Greed literally has to get back to those liberation day lows for us to bottom. But we have been in falling knife territory. Every dip has been a tough dip to buy. So now the question is just going to be when we do end up bottom and how this fully plays out.

Yes, Karp Schult sold shares yesterday. Shaman sold shares yesterday. That those were all scheduled sales. 10 B51s. So regardless of what the share price was yesterday, you were going to have insider selling a pound share and because that's how kind of their scheduled sales work. Also, November is I mean if you've just you know been around Pounder for the past couple years, November is when they tend to sell around this time going into Thanksgiving. So they sold for the past couple years of this time.

I don't think Pounder got hit because insiders sold a couple hundred thousand shares yesterday. I mean, what happened yesterday was one of those days where fundamentally we saw a rerating in the overall equity markets. Um, and we'll talk about some of the reasons for why, but I I don't think it was because retail decided to panic sell or insiders decided to sell. I really think it was because the market basically decided if we're not getting a rate cut, we're going lower.

And at 11:00 a.m. after having a bright green morning and you had two Fed presidents come out and say, "We don't think we need to have a rate cut." It just kind of flipped, in my opinion, the market from thinking, "Oh, the Fed's not going to be on our side. Why are we trying to fight the Fed? We need to get out of risk on assets until the Fed is ready to give us more liquidity."

And unfortunately, that seems to be how this is playing out, which is, you know, pretty ugly to live through. But nonetheless, this is what's happening.

Um, now the other thing that happened yesterday is also the idea of this Japanese yen carry trade that I've been looking more deep into. So, Japan officially unveiled a decent level of stimulus this morning. It's going to be double what some people thought it was going to be. It's going to be around um 21.3 trillion yen that they're going to be putting out. The plan includes 11.7 trillion in price relief like gas and electricity subsidies and 20,000 per child cash handout. I mean, you talk about Japan printing. They are printing.

The government says the measures could pull down headline inflation by around 0.7 percentage point early next year and lift GDP by roughly 1.4 percentage points per year for three years. The package also boosts defense and crisis management spending, taking total new bond issuance close to last year's levels.

The problem with the Japanese stimulus is that given they're printing all this money, the market is afraid uh of obviously bond yields because the bonds become a lot less enticing which means people sell off the bonds causing the yields to rise if people believe the rate of inflation is going to go higher or they believe that the government is debasing the currency. So, if you were borrowing yen short to be able to uh buy US assets and now the yen is going higher, which the yen has gone much higher over the past couple of days after this um this stimulus has been unveiled, then you might have to sell your US assets to cover your short on the yen. And then that is the sort of basics of the year, the yen carry trade.

Now, what's really interesting about this is I think Bitcoin could be one of the lynch pins of how this entire ecosystem is playing out or how Bitcoin is kind of pegged to the yen. And as a result, I mean, like it's it it feels kind of obvious that a lot of the Japanese markets were using Bitcoin as a form of either collateral or leverage in the face of their short or you could just say hedge funds were doing the same as well, even if they are not in Japan. And that's why Bitcoin was the first to suffer or at least it feels like that's why the Bitcoin was the first to suffer. Maybe that's not true, but nonetheless, that's that that could be an argument.

I mean, it's either that explanation or Tom Lee's glitch explanation that crypto has a glitch in the system and that's why things have been so bad for crypto and that's why we've had those oldest deleveraging. Or you could say it's, you know, the lack of breaks, but one or the other has been kind of why we've seen some pain.

be very important to hear. Yeah, here we go. All right. So, we got Moran. Moran is our dove. Let's see if he's going to kind of combat what some of his other colleagues have been saying about cuts

excess is a mirage. It's not indicative of supply demand imbalances. And so, for example, if you look at the housing market, right, market rents have been running at about 1% for a couple years. Measured inflation in the index is actually much higher than that because it takes a really long time for the index to converge down to where market rents are. That's a statistical artifact, right? That's an artifact of the statistical measurement process. It's indicative of a supply demand imbalance that was there in 2022 2023.

Monetary policy works with lags. It has to be set now for 2027. So when you look at the housing data, right, you see market rents running about 1% for a couple years, there's no supply demand imbalance there. We should not be setting policy for 2027 based on a supply demand imbalance that existed in 2022 or 2023. That doesn't make any sense. There's other things too like portfolio management services which confuse quantities for prices. This stuff is all well known. If you look at market-based measures of inflation, they're much closer to to two than they are to three. So I think that the excess, the overage is a mirage and it's a mistake to ask people to lose their jobs because of quirks of the statistical measurement process.

Yeah. So, as I said a moment ago, monetary policy works with lags. It would be much easier if it hit the economy immediately, but it doesn't. It works with lags. So, you have to set policy based on the forecast. So, the data matter in so far as they affect your forecast. It doesn't make sense to be setting policy for where the economy was 3 or 6 months ago. We we should be setting policy based for where the economy is going to be 12 to 18 months from now.

And so if we have data, it gives us the ability to update our forecast. But the lack of data doesn't mean that we don't have a forecast. We did have a forecast. And all it gives us is opportunities to falsify our forecast. And there hasn't been anything in the data, in the news, in media stories, in private sector data, alternative data that's available to us that would make us think that the forecast is somehow nullified and and there's been a big shock to it. So if anything, all the information that we've gotten the interim since since the since September FOMC has inclined to the other side. you know, we got weaker uh inflation than people expected and we got uh a higher unemployment rate than than folks were expecting. So, all of that information should push one in the dovish direction.

Again, Moran is a dove and also Fed President Williams came out today and was dovish. As you can see, the probabilities right here, 71 per one. This doesn't really even make sense to me. I don't know how one Fed president coming out saying that we need a cut when three of them yesterday said we didn't need a cut and another one this morning said we didn't need a cut pushes the probabilities to 71%. I mean, I'm happy because that's giving us a little bit of relief. But the only reason futures are green right now, folks, is because you have this rate cut probability U-turn.

And I think yesterday's reversal at 11 a.m. was more systemic than just a rate cut story. I I I want to believe it was more than that. But if it was just the rate cut story and you know there's a chance to stabilize and maybe we don't go to 7,000 but we also maybe don't have to dump back to 6,000 if we get the rate cut then it would behoove the markets to get a rate cut. The question is are we going to get it? But if that's the reason for the pivot then uh the market obviously really cares about getting this rate cut.

this ultimately comes down to the question of data dependence is what you do when you don't have a forecast or when you don't have any confidence in your forecast. Right? We should be forecast dependent, not data dependent. Being excessively data dependent is to be too backward-looking. And if you're too backward-looking, you necessarily are going to have the wrong policies.

Yeah. So, ABS, absolutely not. Uh, I would absolutely vote for for a 25 basis point cut if my vote were the marginal vote. Uh, there's there's no there's no question about that. I I you know to to to to do otherwise would be to cause real harm uh to to the economy uh for for purposes of vanity and and that's not who I am

I I know sometimes we criticize Moran because he's very verbose but you see how we just answered the question compared to the to the hammock lady yesterday when she was asked specifically and she just could not answer the question of how she's thinking of jobs and inflation yada she like you know trying to stay middle of the road he's just like no I'm going to vote yes like he's just telling the American people what he's going to do and that I deeply appreciate because everyone deserves to know how the Fed is going to vote and how they're going to govern monetary policy.

We had some news on Open AI yesterday. So, this is also not helping the sort of AI narrative, but Open AI uh the information got a leaked memo from Sam Alman in an email that he sent to the company. And Sam Alman told colleagues that Google could quote create temporary economic headwinds for OpenAI as per the email that was seen by the information.

Um, number one, if you're a Google shareholder, bullish, right? Because you can see Sam Alman is potentially getting a little bit of afraid of uh Gemini as it continues to ramp up. But unfortunately for the AI trade, like OpenAI cannot have temporary economic headwinds. Open AI needs to like execute. They need to grow. They need to be doing hundreds of billions of revenue in the next four or five years in order to allow their spending commitments to be as legitimate as the market thinks they're going to be.

So, as much as people hate OpenAI, I do think they need to do well. They don't have to become the biggest company in the world, but they definitely have to do well. It also muddies their ability to go public. I mean, like, dude, I don't know if Open is worth a trillion dollars anymore. Not after what's happened over the past couple weeks. And uh I think eventually they will obviously go public. Probably they're going to go public at a trillion or close to a trillion. Question is today if they want it to go public, could they get a trillion dollars of value from the market and raise like 60 70 billion? Might not be that easy to do. So I think the market's going to keep watching deeply what happens for uh for OpenAI.

Yeah, rate probabilities continue to go higher. We are now at wow 75%. Okay. So, look, if if if if I was a betting man and I had to say, is the market going up or down today? This would be the stat I look at to say maybe the market, even if it's a relief rally, gets a little bit of reprieve for thinking that we're going to get this right. 75% is higher than we've had in three weeks. So, I mean, that's quite incredible

just based on Williams comments. Again, William Moore being a proxy for Powell. S&P is not going crazy pre-markets. We'll see when it opens up in about 10 minutes if that actually reflects it. If the market So here's the thing. If the market goes down and we keep those 75% chances, then we definitely know this is something else.

Jensen making the same argument around where he thinks this entire ecosystem is going. And again, I mean, like you can't you couldn't ask for a better quarter from Nvidia. You just couldn't. So I really do I agree with De Doug right here. the entire market doesn't reverse at the same second, which is what we saw yesterday at 11 a.m.

And it's not like again, Nvidia gained 450 billion and lost 450 billion in the same day. I mean, Nvidia's had some crazy intraday swings, but I don't think we've ever seen something like that. And and that also made honestly like that also, we talked about this yesterday, that also made the selling feel fake.

Like really, you go up 450, then you go down 450. like it it really made it feel like it wasn't real. It was just something that was happening and you just had to stay solvent to to navigate it. But it did not feel like oh this is the end of Nvidia, the end of AI. It's like no, it just felt like okay so we ramped up then we ramped down. There has to be some reason but it's not because of those Nvidia earnings.

Yes, manipulation could definitely feel like one of the reasons. Now Kathy did buy the dip yesterday. Cathy went to town buying uh yesterday. So she bought Nvidia, Coinbase, Bitmine, Circle, Bullish, Robin Hood, Archer, Tempest, Crisper, um and some of the heard genomics plays like Beam and Pacific Biosciences.

Very little selling, but a lot a lot of buying. Bought more Bitmine, bought more bullish, and sold just a little bit. So, I mean, yeah, you had some institutional investors say, "No, these are stupid prices, especially after these earnings, and we're going to be buying more."

there's I think this was Bloomberg or this is one of these sources saying there was a leaked memo from Jensen. Um, uh, yeah. Okay. So, this is this is the quote. I don't know if it's fully accurate, but I I think there are some good sources saying this. So, this is what Jensen apparently said at an all hands meeting after the earnings. Uh, if we delivered a bad quarter, it is evidence there's an AI bubble. If we delivered a great quarter, we are fueling the AI bubble. Jensen said, "The expectations for Nvidia were so sky-high that the company was in somewhat of a no-win situation." He nodded to online chatter about the company's massive economic sway. And then he had another quote. If we delivered a bad quarter, if we're off by just a hair, if it just looked like a bit creaky, the whole world would have fallen apart. There's no question about that. You should have seen some of the memes that are on the internet. Have you guys seen some of them? We're basically holding the planet together, and it's not untrue.

So, I mean, you do have some quotes potentially floating around from Jensen where he's acknowledging how like serious the market is taking their earnings and how he knows the responsibility of them delivering a good quarter, but he also knows that like it's a catch 22. If it's a bad quarter, it's an AI bubble. If it's a great quarter, it's fueling the bubble, which, you know, there's not much he can do about that at that point.

All right we got Tom Lee here. Just posted a video on his channel. Let's see what Mr. Lee is saying.

peaked and staged a pretty sizable decline with a three and a half% decline into the close and that took us down 1.6 for the day. Now again, I think many people are disappointed because Nvidia had great numbers. So what caused this reversal? Well, it's not always clear why stocks fall, but we do think there are five possible explanations for this.

First, I think one factor behind the meltdown was that there were some tweets that that created a little bit of outrage on social media and it was President Trump responding to some Democratic uh veterans suggesting that they can ignore orders from Congress. And uh and that first tweet was at 9:17 a.m. The second one came at 10:21 a.m. He said, "Sedicious behavior punishable by death." Now, notice the time stamp. That's 10:21. And the market turned down just a few minutes later.

That tweet led to Democratic Congress members and uh leaders protesting the death threats against Democratic members. Now, the second thing that I think did contribute to the decline is the Epstein files. So, President Trump signed the Epstein Files Transparency Act into law and now has ordered uh these files to be released. There's going to be a lot of people in those files. In fact, um for instance, here's someone pointing out that it could even uh embarrass uh many donors, billionaire donors. So, you can imagine there might be investors who are just nervous who's going to be on that list and it's revealed does it do something to markets. I think that contributed to some of the nervousness today.

The third factor is crypto. Um, Bitcoin has been selling off recently, uh, and generally has led the equities, but you can see at the open, Bitcoin peaked and began to to weaken at 9:30 and the S&P followed basically an hour later. This has been the case for some time. It's something I've pointed out that Bitcoin has been leading the S&P. For instance, Bitcoin peaked on October 10th. Um, that's right before we had that liquidity shock, which ended up being the biggest liquidity shock in the history of crypto, wiping out more than 2 million accounts. and and Bitcoin's been falling since. But as you can see here, this has led to um the S&P spider peaking on October 29th.

The fourth factor is Oracle um and CDS because there was quite a lot of chatter about this. As you know, there's many skeptics of AI, people even questioning Nvidia's numbers, but what's catching people's eyes is Oracle's credit default swaps are rising. This could be investors hedging against um

So Matt's going the opposite direction of Tom. I mean, he basically said he doesn't agree with Tom. He's like, "Yeah, Tom was making a point about October 10th, but that's a small reason for why." I mean, like, you're getting other people who are pretty influential in the crypto space, like Matt Hogan, um, again, CEO of Bitwise, saying, "I don't agree with Tom. I don't I don't think that this glitch is the reason he he's he's blaming it on global liquidity, which quite frankly I think is a much better explanation, not a software glitch. So you're getting some real divergence there of thought leaders in the crypto space that are that are not um sort of uh underscoring Tom Lee's argument.

I I I me and Steve were talking about this last night. It is so contingent on your individual personal life, right? Like and your bills that you have to pay your family, etc. For me, I'm holding a lot of these names. I got in at a lot cheaper than the prices that they are today, even though they're down significantly because those are positions you've been building for years. Um, I think covered calls are way to at least generate some level of cushion during a time like this.

And second of all, it's just like I don't know if I like, again, Nvidia, I'm at 122 on an average. Am I selling Nvidia 178 after the best quarter they ever had to try to buy it lower than 122? It's like I just find that very hard to. And if I'm wrong about that, I'll just be wrong. But the idea that I'm going to get Nvidia below 122 after all the work I spent this year building out a position, it's like, no, I just like I'm just letting it stay. I'm like, yeah, it's not going up to 200, but it's also still way above 122.

And I think a lot of us are in that same position. If you load it up on Rocket Lab at 20, it's like, okay, it's not at 70 anymore, but you really sell at 39 because you think it goes back to 20. No. So now if you need the money, if you need to delever, if you're on margin, like those are all different things where you might not have a choice. You might have to get out of some of these positions.

And I think the most important thing is to stay solvent in these times because if this really is just some nonsense liquidity, Fed rate cut, crypto glitch, yada yada, and we're reversing over the next six months, maybe even sooner than that, then you just you got to stay solvent and not get margin called so that you at least have the capital and the ability for the portfolio to get back to those levels.

But if you don't need the money and you're happy with just letting these positions ride out and you're not actively trading it, then no, I think I think holding is not the I think at this again the time to sell was just like a month ago, right? So it's like do you really sell after a 30 to 40% decline on a lot of these names? It's hard to imagine that unless you fully lost conviction, then it's then it's a different question.

Yeah, this could be just an early Black Friday sale. That could also that could also be the case. I will catch a following knife as long as they're max seven. Others I won't touch. That's also very fair. I mean, if you buy Amazon at 217 and it goes to 200, like at the end of the day, it's Amazon. But some of these other names, you know, they might have a lot farther down to go and their moes are not as strong as Amazon, which is why, you know, people might be wanting to wait.

Could we go back down to 4,800? That's a great question. I personally would say no. I don't think I mean that would be that's not just giving up this year's of gains. That's giving up 2024 and 2023 and all of 2022 even though 2022 was a down year. So about last time we were at 4,800 was January 2022.

So I mean we're talking about four years of G. That's why 4800 was so stupid in April because like really do we deserve to lose four years of gains? But then again, what caused the reversal? It wasn't the market thinking that it was stupid. It was Trump reversing the tariffs. Like, as soon as Trump said buy and that we're going to like give a 90-day pause to negotiate reciprocal tariffs or whatever, that's when we rally 10% intraday.

So, could the markets go down, you know, without an excuse? And and if they don't have a sort of uh catalyst like a Trump tweet that says buy, could they stay down? I mean, yeah, that's what we've been experiencing. Would that be 4,800 again? I don't think so. But nonetheless, this is more tricky because last time we knew why we were down. This time it's not as easy to understand.