Good morning everybody. Welcome back to another episode of the market open. We are live. It is Wednesday, November 12th. Thank you everybody for being here. We got a lot to talk about, folks. We got a green pre-market. And when I mean green, I mean we are less than half a percent away from all-time highs on this S&P 500 in the pre-market, which is very exciting to see. Nvidia right here at 195, S&P 500 at 685. Folks, we were at 661 last Friday and we were at 647 in the depths of October when things were getting rough. So, the fact that we are at 685, couple bucks away from 689, which is all-time highs, very exciting to see.

There's some macro reasons why we're getting there. I also think we are getting close to this Santa Claus rally. I don't know exactly what it's going to look like. I don't know if it's even going to happen, but if it were to happen, it probably would take place at the end of a shutdown. The Republicans in the Senate and the Democrats are going to be voting today and that vote will likely culminate into the end of the shutdown.

We have Nvidia earnings next week. So you have the end of the shutdown, Nvidia earnings and then general sort of end-of-year chasing that could lead to this type of rally. Now granted, we've had a ton of whipsaws across the entire board. Yesterday we had Veterans Day, so the bond markets were closed, so there wasn't that much liquidity. So we're going to see how the market ends up opening up today.

But overall, I think the most exciting thing about yesterday is that Nvidia was down. You had a bunch of data center plays down. Amazon, Apple were kind of green. The S&P 500 was green. So, you had a large part of the market that was red. Data centers, tech, semiconductors, and you had financials that were up. Lily hit all-time highs. Pharmaceuticals, defensives, you had a little bit of a broadening, and I don't think that's the worst thing for us to see. As of this idea of actually being able to broaden out the bull market, the fact that it did happen yesterday is very positive signs. I mean, if that can compound and continue today, even if you don't have a massive move in tech, which you are seeing in the pre-market, then that would not be the worst thing in the world.

So, we got a lot to talk about, a lot to get into. 13Fs, I think, will start to get disclosed today. We don't have them yet. Either today or tomorrow after the close, we should get a decent amount of these 13Fs and 13Gs, and we're going to see what a lot of these super investors did over the past 90 days.

We do have a new tweet from Mr. Michael Burry, which was quite surprising last night when I saw his tweet. So, we'll talk about that. He disclosed it early, but latest Friday, we should get a lot of details and then we're going to see what are the top three stocks that people bought and sold. Remember, last quarter it was UNH, Amazon, and Google.

So far, we got like seven out of the 82 13Fs that we're looking for. And the top three buys were Fiserv, Baxter International, and UNH, which actually is not the best thing because Fiserv got hit really bad. UNH continues to be there. And then Met is number four. Then you have Berkshire, TSM, Applied Materials, Adobe, and then FIS, Fidelity, National Information Services. So, we have a lot more data to come to see what that looks like. But right now, those are the top three. And we'll see coming soon, probably in literally the next 48 hours, what these 13Fs look like.

All right, so let's get into it. Thank you everybody for being here. I think we'll get started with the kind of core headline that I'm seeing this morning and then we'll get into AMD. That was a big piece of news last night, which continued to help the data center players.

Here's what was said this morning, which again, we've been talking about, hey, is this $2,000 stimulus check actually coming through? It was said, quote, "A $2,000 rebate would be for those making less than $100,000, but it has not yet been decided." So, you got confirmation this morning, we are legitimately thinking of a $2,000 rebate. That would be, I imagine, a form of stimulus, right? Whether it's a direct check or whether it's a tax refund, if you're going to get an extra $2,000 cash, if you make less than $100,000 in this country, then there you go.

He also said, "We are going to unveil substantial tariff reductions over the coming days on coffee, bananas, and several other items." And that is consistent with what President Trump has said last night. Here's a clip of him talking about reducing tariffs, which in my opinion is based on either they're seeing less demand, so they need to reduce tariffs, or they are genuinely seeing higher costs, therefore they need to reduce tariffs. But it is consistent with what the president has been thinking about over the past couple of days.

So, you got a couple key points here that is really interesting from Trump. Number one, he is saying the same thing that was said this morning, which is that we are going to be focusing on lowering some tariffs. Obviously, there's some certain prices on goods like coffee, bananas, etc. that are starting to potentially get too high and maybe that's why they're thinking of lowering tariffs. And number two, again, this $2,000 dividend, it all goes back down to this question of affordability, whether it's a rebate, a stimulus check, or what it looks like.

The other thing said this morning is that expect American people will start feeling better about the economy in Q1 and Q2 of 2026. And then number two, the administration wants to bring in skilled workers for 3 to seven years to train Americans and then they can go home. So, they're attacking a lot of different issues around the labor market, tariffs, affordability, and then the overall stimulus that Americans will eventually feel.

I think this all comes down to the fear that Trump has around the Supreme Court case, which we talked about yesterday, not looking like it's going to go in his favor. I don't know what's going to be the economic impact of it. The big update yesterday was that the importers of goods told the Supreme Court in an oral hearing that if you were to reverse the tariffs, it would be quote unquote very easy for us to pay back the tariffs that we have collected. Aka they took one of the biggest concerns from the Supreme Court off the table. That could again significantly influence the way they're thinking about the overall decision.

The government shutdown will be voted on tonight at 7 p.m. at least that's what Bloomberg is reporting and so by around I would say 9 or 10 p.m. US House majority leader said that the House will vote on the bill to the shutdown by Wednesday 7 p.m. Eastern. We should know probably around 9 or 10 p.m. Eastern if this shutdown is done. That is why I think the market is also running right now. And then quite frankly, what are the implications of what is being said on the market? It's bullish. I mean, if you're going to lower tariffs, the market never liked tariffs. That's bullish. And then if you're actually going to give a $2,000 rebate to people, even if it's inflationary, that's a problem for another day. But in the short term, it'd be pretty damn bullish if a bunch of people making under $100,000 got an extra 2,000 bucks that they can spend and it obviously would stimulate the economy.

So I think if people are thinking that this is a sell or this is a bull trap or you want to get out of the market, obviously taking profits going into the end of the year tax loss harvesting all that stuff is a personal decision but I think there is a shot that we end up getting this rally. Given the macro trade round AI that we're about to talk about and some of this tariff dividend details around the shutdown ending I don't think it's the most bearish to kind of be long this market right now.

Having said that, let's get into AI. So, Lisa Su really got people excited yesterday. Four things she said. Demand for AI computing infrastructure remains high. Customers are not reducing their investments. They're projecting annual revenue growth of 35% over the next 5 years and data center growth exceeding 80%.

Now, the reason why the stock is up in the pre-market is not because of the revenue targets, which are really substantial and nice to see that they're thinking of growing 35% over the next 5 years. The main reason is their gross margins apparently. And this was disclosed yesterday after hours, which is why you saw that 4% bump and it helped a lot of the other data center plays. They're guiding for some pretty strong gross margin growth. I believe it's around 55 to 58%. The street thought it was going to be 51 to 53%. That extra three and a half% on gross margins is substantial given the amount of hardware that AMD is selling.

And as a result, you got people excited. Melius 380 by AMD. The margin guide was the real positive surprise. 35% revenue growth cracks a double digit share in AI semis and networking. AMD seems to clearly be targeting a $1 trillion market cap with these aspirations. That would be more than a 2x from here. We are raising our estimates and target 380 from 300.

Here's Lisa Su this morning speaking about those projections she gave yesterday at the analyst day. "We're in just an amazing cycle for technology and specifically around AI. The market is accelerating at a pace that we just did not understand until over the last few years. I think we started a couple of years ago we thought the AI accelerator town might be $300 billion and that sounded like a really big number. And then each year we took it up and now when we take a step back, we see this massive opportunity, really over a trillion dollar overall market as we get through 2030."

"Well, we spend a lot of time in the ecosystem. We work with all of the largest hyperscalers in the world, all of the largest enterprises. And if I tell you what we've seen in the last 12 months, we've seen every one of our largest customers say we can see the inflection point now Lisa. Like we can see demand is accelerating because people are now starting to get real productivity out of the AI use cases and you know we have all of the largest hyperscalers in the world saying they're investing more in capex because they can see the return on the other side of it. So the signals in the market right now say that we're still at the very beginning of the technology but you're starting to see significant productivity."

Now who is calling BS on all of this who is saying that everything Lisa Sue just said is nonsense none of it's real and it's not going to pan out in the way that they're projecting? It is none other than Mr. Michael Burry. Last night I said, "You know what? I want to watch the big short." And then I see this tweet pop up and this is a picture of Christian Bale from The Big Short who played Michael Burry. The caption is me then, me now. Oh well, it worked out. It will work out.

This is a picture when Burry basically in the middle of his short on the housing bubble kind of just decided to lay down because he was so annoyed that the market didn't understand what was about to happen. And again, he had to have that short on for two he was down like 130% of the short before it finally worked out. The fact that he posted this to imply that it will work out, like, oh, it worked out in the past. I was seen as the idiot for two years and then eventually I was seen as the genius and now it's probably the same thing but eventually it's going to work out.

The fact that he posted that picture with that caption to me means that he's getting scared of this trade. Because if you are so confident that shorting Nvidia and shorting Palantir and doubting Lisa Su and Jensen Huang about everything that's going on, then you would just not say anything. You would have your short position and you would go about your day. For you to want to get attention for being short means that you think there's a chance it goes against you and you are trying to get other people to pile into the trade with you.

Even his bio, he's like, "Cassandra Unchained launches November 25th." Dude, tell me that's not a book. So, the broader point is here. I think he's crashing out. He's upset about the way the short is going. Or he's launching a book. Again, I think it's bullish. You need a wall of worry. Burry making more people bearish I think is actually really good. And the more bearishness you get likely means the higher we can go if earnings can keep up with that picture.

Let's do our segment on the bifurcated economy. First of all, take a look at this. Searches for second job have reached an all-time high as of two days ago, as per Google trends.

The second thing that's really important to understand around this bifurcated economy is what Fannie Mae is thinking about. Fannie Mae is set to drop its 620 credit score minimum. The mortgage giant will use its own analysis of risk factors. You know what caused 2008? Giving faulty mortgages to people that couldn't afford them. And then you get into the whole financial engineering of these synthetically designed CDOs that had bonds inside of bonds inside of bonds, and that ended up leading to just one of the biggest bubbles we've ever seen.

Having said that, what's the bifurcation? Well, the bifurcation is that US corporate earnings growth is booming. The S&P 500 so far has put up earnings that are the highest since Q3 of 2021. The medium profit growth in the Russell 3000 hit 11% year-over-year, that's the highest from Q3 2021. Almost 80% of the companies that have reported so far have beat earnings by an average of 8%.

So, you're seeing Fannie Mae think that we need to give loans to people that can't qualify for loans because their credit rating is bad. You're seeing searches for a second job at an all-time high on Google. But then you're seeing corporate earnings being the best it's ever been. The dichotomy here, the bifurcation here is what's going to happen when these earnings decline potentially based on the labor market? Or if we do get a really bad economy, will the rate cuts be enough to save the stock market?

Here is one of the analysts at Bank of America that takes a hard look at a lot of the credit and debit spending through 70 million consumers. It's the higher income households that are really driving the spending. At the lower end, spending is still growing. Last month it was up 7/10. Higher income spending though was up almost four times that at 2.7. Where we're seeing the biggest gaps are in bigger ticket items in airlines in lodging in furniture. It's not that the higher income is really spending a lot more. It's that lower income is pulling back.

The takeaway for investors, I know a lot of people might be saying, what does it mean for my investments? I think two things. Number one, the reason we talk about it is just to make sure people understand that not everything is perfect. But number two, does it mean you sell? In my opinion, no. What it more broadly means to me is when we start to see the trend on corporate earnings go the opposite direction, that's when it should be the a first sign that the actual economy is affecting the stock market.

Quite frankly, the bifurcated economy might be the new normal for a very long time. I personally believe that the way AI is transforming industries is something that we've never seen before. There's a startup call it AI for PowerPoints name is Glean. They just raised at a $2.1 billion market cap. They're doing a hundred million in ARR and they have 50 employees. I mean, we are living in a time where a company can have 50 people employed have $2 million average per employee and go from zero to 100 million in less than a year. Like that is happening because of AI.

Here's another one of Karp speaking about why he's in a war with these short sellers. "I'm currently in a battle with, you know, short sellers primarily because they could go short some carcinogenic company, but they have to short arguably the best company in this country and in the world by any metric. And by the way, judge us by our enemies. Look who hates us."

One of the things I love about Karp is that he takes it personally dude. He takes it personally. Look at what he said. He said I am in a personal battle with short sellers right now. I love that a CEO that I'm invested in takes it so seriously and actually wants to prove everyone wrong because I think it just goes to show how much he's invested in the company and how much he emotionally cares about the process of winning.

Wednesday, November 12th, 9:30 a.m. Thank you everybody for being here. The stock market is now open. All right, we are open. S&P 500 684. We're green. AMD, wow, AMD making a hell of a move right here. Again, their gross margin guidance was very, very strong. At least stronger than expectations. Up 7.25% on the day with AMD. That goes green. Nvidia right there, that's up 1%. Grab just went green. Amazon, that's green. Meta is green.