Hey everybody, welcome back to the channel. We are back on another episode of the daily recap. I hope everyone had a great Thanksgiving. You know, I legitimately did not think about the markets and quite frankly anything over the past couple days. It's the longest 4-day break that I've had from even streaming or making videos in a while. And so, uh, I think it was a need a refresher. Spent some time with family. Hopefully, you guys got to enjoy. As you can see, the beard is continuing to grow out. I legit have gray hair. Like, I like I don't even know how to feel about it. I'm 28. I don't know if that's the age you're supposed to get gray hair. I don't know if the market has aged me. I'm not going to shave my beard just cuz I have gray hair. But it's like it's obvious. It's very visible. It's like freaking Santa Claus. Like [laughter] this is I told you guys I'm becoming an you guys say I'm still young. I'm getting older. But lot to talk about today.

I told you guys I'm becoming an you guys say I'm still young. I'm getting older. But lot to talk about today. Jensen finally addressing the issues with Google's TPUs versus Nvidia. So we'll get into what's going on in the world of AI and what Jensen had to say. uh state of the consumer, lots of new updates in regards to the retailer companies, Kohl's, Best Buy, Abocram, etc. that have put up some really good earnings and the Black Friday analytics that we got over the past two days are looking pretty strong for the consumer. So, we'll talk more about that. Uh and then crypto, what the hell is happening in crypto? Got some issues with Japan. I know people have heard about the yen carry trade. We're going to have to talk about it again today because it's affecting the crypto markets and quite frankly, it might affect the stock market. Let's get into it.

All right, let's get started with Nvidia. Uh, big announcement today from Jensen, $2 billion investment into Synopsis. Going to be honest, I don't know everything about that company. However, it is one of the more important companies when it comes to semiconductor manufacturing for chip design. They're a leading provider of electronic design automation, which is EDA software. Uh, basically, it's essential for designing and verifying integrated circuits for the creation of complex chips and systems. Nvidia put in two billion. and the stock was up 7% on the day. Why did Nvidia invest? Well, uh they've got a lot of cash. They need to put that cash to use. And as a result, Jensen continued to make another investment into Nvidia or into synopsis.

Real quick before we get into what he said about Google and the TPUs because I know that's the more interesting comment here. A lot of people once again today are talking about this circular financing argument and again it really just doesn't make a lot of sense to me. Jensen made [clears throat] a comment on the investment in Synopsis by saying Synopsis is helping design the architecture of very complex chip systems. Nvidia is a chip company. So yes, will Nvidia benefit from uh a company like Synopsis procuring the services from Nvidia and buying chips? Of course, but there's also something very very special to CUDA, which is one would argue Nvidia software mode that synopsis is uniquely intertwined in.

So, the idea that Nvidia is giving them $2 billion and participating in the upside of their stock going up and Synopsis potentially buying products from Nvidia, which also helps Nvidia's revenue growth being circular to me doesn't make a lot of sense if Synopsis has an actual business outside of just buying from Nvidia, selling to Nvidia, which is where the sort of circular loop comes in. Same thing with Enthropic, same thing with OpenAI. If these companies have actual business models, even if they get an investment from an Nvidia like an Intel, which got a $5 billion investment from from Nvidia, which is now eight billion, so Jensen's up 70% on that. If they make money on other things outside of the investment from the investor and the entity that that that is creating the the the share price appreciation aka in this case Nvidia and that's not circular. That's Nvidia making an investment in a company that happens to be a client but that company going out providing products and services to the world and then increasing their earnings and then Nvidia sharing the upside of the price appreciation if the company is able to use that investment to grow their actual earnings.

So I really don't think this is circular. I think the circular argument is starting to be a bit stale. Uh you've got Michael Bur putting out more substacks. I think his latest substack now was about Nvidia stockbased compensation being bearish. I mean, it's just more and more arguments that are being thrown out there. Genuinely, I am starting to sleep like a baby at night holding my Nvidia. I mean, last week I really thought about this TPU Google thing and I'm still doing more research on it, but I don't think it's a big deal. Like, I really don't. You had the Google Deep Mind research guy last week say the market selling off Nvidia is stupid and he's a guy who helps design TPUs. And then you have the growth of the overall AI data center market that we're about to talk about continuing to just be tremendous. Which makes me think even if Google was able to take some market share, Nvidia training at 25 times earnings with a quarter that they're likely going to beat on $65 billion in revenue in Q4 is stupid. And I think eventually the market will catch up to that. Catch up to that as well.

Here's what Jensen said about Google today.

You know, listen, we've been uh we've been competing with AS6 now for quite a long time and Google has A6 for a long time. Nvidia's Nvidia and they did a great job as you know and I've always been complimentary >> always. >> What NVIDIA does is much more versatile. Our technology is much more funible. Notice the announcement today. Accelerating synopsis design tools, the EDA, the SDA, the CAE tools requires a computer architecture like CUDA. It's not available for AS6. And so NVIDIA can address markets that are much much broader, not just chatbots. We are also everywhere. We're in every cloud. We're in every single OEM. We're on prem and we're also at the edge. And so the NVIDIA opportunity is much much larger. And you're now seeing a real tangible experience example of an opportunity that we could do with our platform that nobody else can. And so this is a very big opportunity for us, huge opportunity to reinvent the EDA industry, the design and engineering industry for Synopsis and the rest of the industry and a growth opportunity for us because this is so computationally intensive.

So pretty nice response from Jensen. He uh you know respectful to Google congratulates them on the on their success but he says Google's had them for a long time when he's talking about them he means A6 and what Nvidia does is much more versatile. We are everywhere. We are in every cloud. The Nvidia opportunity is just much larger. I think Jensen's basically making the argument that yes these TPUs are awesome and yes we're happy that Google is successful but this is not the death of Nvidia and people saying it's the death of Nvidia is a bit premature. Morgan Stanley put out a report today as well saying that they forecast if Google sells approximately 12 million TPUs over the next two years, which would be double their estimate of 6.2 million. Every 500,000 TPUs could add 13 billion in revenue and 40 cents to Google earnings per share in 2027 alone. Bullish, very bullish Google, not bearish Nvidia.

And so I didn't buy more Nvidia today. It dipped for a little bit and then it kind of rebounded, closed at around 179. Uh last time I bought was at 170. If we go below 170, I will be buying more. I don't know if the Santa Claus rally is necessarily going to happen this year. We'll talk more about what's going on in the macro, but if it does happen or, you know, we get any level of broad-based market momentum, two and a half% away from the S&P 500 getting to 7,000, which by the way, since 1950, 75% of the time, the S&P 500 has averaged a 1.5% move in the month of December. So maybe that happens this time as well. Then I think Nvidia probably is closer to that 190 range standout of the year. Maybe even higher if we're able to have a broad-based rally.

Last thing on Nvidia right here, I saw this note from Morgan Stanley that I thought was also very interesting. So again, they Morgan Stanley super bullish on Alphabet and their TPUs, but once again, they said, "We're not bearish Nvidia. We continue to see Nvidia maintaining dominant market shares as threats are becoming overstated, though we aren't exactly sure what will turn sentiment around. Our belief informed by industry contracts is that Nvidia will have the best economics for most applications, and that is unwavering. And here's the sentence that I thought was the most important. company's biggest anxiety for the next 12 months is their ability to procure enough Nvidia product generally and Vera Rubin specifically."

So you've got the market saying that this is all a um all a bubble and Morgan Stanley is like well the customers we're talking to their biggest concern is anxiety that they don't have enough chips or that they won't be next up in line to get the latest chip not that there's a bubble in too many chips or too many data centers. And so I think when you look at it from that perspective, and we'll keep covering it every single day on this show because that is the side of the argument that the data is leading me to believe. And I'm trying to be super objective here, if I've got a bad investment in Nvidia, I would want to know first before anyone else so I could sell it, right? Like I'm trying to be very objective and say, is this real or is it not? And based on all the data we're looking at, based on the numbers that I'm looking at, it seems very, very real. And as a result, it does not seem like it's going anywhere. And it seems like Nvidia is going to continue to grow and maintain this moment.

Last quick thing on Nvidia. This is what their 13F looks like now. Synopsis, $2 billion valuation or $2 billion stake. Coreweave was worth 3.3 billion. Now it's 1.8 billion and then Intel at about eight and a half billion. So I think Nvid is also becoming a little bit of a Birkshire Hathaway, you know, kind of a holding company for a lot of these equity stakes. And it makes sense. They have too much cash. Buying back the stock's not going to help. Giving a dividend is not going to help. they need to put that money back into the ecosystem and not get that money back in terms of chip sales, but get these companies to be able to really use that money to grow their own earnings. And I think if Nvidia continues to do that, that's another angle on how they can grow earnings per share without having to do anything, just letting those companies continue to grow as the equity stakes will uh influence Nvidia's earnings a decade from now. And that's another way to think that this stock continues to be at 25 times earnings next year, pretty cheap.

All right, next topic. Let's get into it. We got Japan. So, what happened last night? Bitcoin fell from 91,000 to 85,000. That carnage has continued to affect Bitcoin today. Uh Micro Strategy, BMR, Ethereum, all those stocks getting hit badly. Bitcoin right now at 86,000. So why is Bitcoin selling off and why is it having as much pain as it has been having over the past basically 24 hours?

Well, Japanese bond yields are rising again. Now, Japanese bond yields were rising last week after the announcement of all the stimulus. And basically, when bond yields go up, that means the value of bonds go down. Uh investors are um selling off those bonds because they are afraid of something. In this case, bond yields tend to be signaling afraid of uh well, I mean, when you're selling off bonds, it tends to be signaling you're afraid either of inflation, you're afraid of the credit situation in a country. You're afraid of the ability for a country to pay back its debt. I mean, there's a variety of reasons, but the number one reason is you're not fully sure that the monetary policy that the government is engaging in is effective.

So, what really sparked a lot of excitement last night, and that excitement ended up being not as exciting for the price action of Bitcoin, is that the 10-year Japanese yield, 10-year bond, uh, ended up yielding its highest percentage since April of 2008. Folks, the 10-year on Japanese markets ended up going up to 1.8%. So, this was not good to see. And and the reason this was not good to see is because you cannot have these yields spiking at astronomical levels. The more they spike, the more investor confidence gets scared about what the heck is going on in the country of the yield or the bond that is spiking.

And and and and part of the reason why the um country is having some issues right now from a macro perspective is that Japan is one of the largest owners of US treasuries. So, if people aren't trusting Japanese debt and and and saying, "We're going to sell off your bonds because we don't, you know, we don't think what you're doing is right when it comes to monetary policy." Well, that country has to get the money to finance their obligations in some capacity. Obviously, most countries are financing it through debt. Uh, the United States obviously issues a lot of debt. The reason we usually get a market for our debt is because people know that we're the United States and everyone's going to buy our debt or we're at least going to be good for our debt, so people want to buy it.

um you are starting to get some fears that Japan might not be good for the interest that they owe on the debt or at least investors are saying, "Hey, if you're going to take our money, we need a lot more interest. We need a lot more yield on these bonds. So, we're going to sell these bonds until you give us this yield, aka these rates go higher for us to be more excited to buy your bonds." Uh, now if Japan had to sell the 1.1 trillion of US bonds that they have on their balance sheet to be able to finance whatever they're doing, that would also not be the best thing in the world for our bond markets because then our bond yields would spike and then that would create issues in a variety of uh assets in the United States.

Now, how does this affect the stock market? It goes back to the yen carry trade. I think people have heard about this by now. April 2020 or August 2024 is when this kind of first started. But the yen and shorting the yen, which is the Japanese currency, has been one of the best ways for hedge funds in particular to go long US tech stocks because the arbitrage between the yen and the dollar is something that could easily be exploited because Japan always has tried to make sure their yen depreciated against the dollar. Now, the yen is appreciating because not only are they uh issuing stimulus in the country, which is getting the bond market to be like, "What the hell is going on here?" Like, you guys can't afford to do this. Um, but Japan's also raised rates and they're likely going to raise rates again on December 19th.

And I I've tried to understand why they're doing this because it kind of seems counterintuitive. Why would you print money and then raise rates at the same time? Uh, but there's a unique relationship Japan Japan has between deflation, interest rates, their labor market, their stagnant wages over the past 20 years and the rising inflation that has started to happen after basically 20 years of deflation. And so they kind of got to do multiple things at once. I'm not fully, you know, an expert on exactly how they're navigating it, but the market's obviously not the happiest about what they're doing.

On top of that, Japan has a massive population crisis. The reason the Japanese prime minister, by the way, even is the current prime minister right now, the the first woman prime minister, is because the previous prime minister tried to increase immigration because he was like, "People are getting older. Young people don't want to do these jobs. We're going to need some immigration to to to bolster up the working class of Japan." So he wanted to import 500,000 Nigerians and Indians into the country. Country got really mad. Japan people revolted. The prime minister had to resign out of disgrace. That's like a real thing. He like was disgraced. He had to apologize to the country. And you had a new prime minister that promised no massive crazy immigration and lots of stimulus. So the market's not really buying exactly what's going on right now in Japan.

If the yen continues to appreciate against the dollar, hedge funds that were short the yen long something like Bitcoin because the cost of borrowing is significantly cheaper than the cost of borrowing in the United States, they have to sell their Bitcoin or sell their Nvidia or sell whatever tech stock they're long on and buy back their short, cover their short position if rates go higher. And that arbitrage is what's potentially creating the decline in very heavy risk on assets like a Bitcoin. Now, the one thing Nvidia has going for it is that Nvidia is cheap on a in my opinion fundamental basis. If you look at the earnings, Bitcoin is pure speculation. Now, I don't say that as someone who's bearish Bitcoin. In fact, quite the opposite. But, um, quite lit legitimately, you don't have any earnings to say Bitcoin's cheap compared to Nvidia or Bitcoin's cheap compared to like Apple. It's like, no, it's just like it's pure gut emotion and how people feel.

And if the number one thing they need to do to get liquidity, which it's a very liquid market open 24 hours, is sell a risk-on asset versus Nvidia, which is also a risk on asset. But if you think Nvidia is cheap, then maybe people are holding on to their video and they're selling their most speculative positions like a Bitcoin or Ethereum or Salana. That is what's creating the carnage in the crypto market. that along with the deleveraging uh thesis that Tom Lee has had. I know you put those two together, maybe that thesis is fully correct, maybe it's not fully correct, but there's definitely margin and leverage on these crypto assets that's now not as easily accessible based on what's happening in Japan.

Is this going to blow up the US stock market? I don't think so. But I don't fully know. Well, I mean, I I I definitely don't think the yen carry trade is something that can unwind to the point where the entire United States S&P 500 stock market takes a meaningful draw down. Has it affected kind of the investor sentiment around a lot of these risk on assets? Sure. But the S&P 500 is less than 1% away from high. So, so, so to me it's it's it's something that's an issue for particularly risk on assets that have global liquidity like a Bitcoin. Not necessarily a stock market that is putting up record earnings that's getting a Fed that's ready to cut. Like, you have a lot of different things going on for why I think the US is going to be okay in terms of our stock market, but I think that's creating the carnage in crypto. Hopefully, that doesn't bleed into the stock market. And if it does, we're going to have to see how the United States deals with this when it comes to

All right, last thing we're going to talk about is some macro updates in terms of headlines. First of all, JPA is speaking today. In fact, he's probably speaking right now as I'm recording this. Um, I doubt he's going to say anything that meaningful around the markets. I mean, maybe he will. If he does, we'll talk about it tomorrow on the market open, but uh if he doesn't, then it's probably not going to be something that's going to be that important. The Fed meeting is on February 10th. I will February 10th. Maybe there is a Fed meeting on February 10th as well. December 10th, which is a week from now. Um, there is actually no Fed meeting in February. It's January, March, and then April. So, uh, 87.6 6% chance, highest it's been in weeks. It looks like we are going to get this rate cut, which is super bullish because again, if Japan's hiking, then we definitely need to be cutting. And in general, I think this market is not priced for us not getting the rate cut. So, we're going to need to get that rate cut in a meaningful way.

Uh, so rate cuts on the way. QT, by the way, quantitative tightening officially stops today, December 1st, which is the Fed selling off mortgage back securities on their balance sheet. more liquidity entering the system from rate cuts hopefully and from the end of QT which is also going to be very very important for assets like Bitcoin that need to do better. By the way, last thing I got to say, I I forgot to mention this on Japan. Um they're moving to a 20% flat tax on crypto. So again, you got even more nuance to kind of how they're navigating the the stimulus in the country. But that could theoretically be bearish crypto because then people are selling because they know they don't have to pay a lot of taxes or that's bullish because you get a lot more money coming into the system knowing that they're not going to have to pay massive taxes whenever they do sell for a profit.

And so you've got that happening in crypto. Vanguard is also allowing people as of tomorrow to start buying the Bitcoin ETF. The Vanguard CEO said a couple months ago or a year ago, they would never let people buy Bitcoin on the platform. They've had to adapt and that adaptation is starting to be very helpful for an asset like Bitcoin. Other macro stats, VO monthly record flows in November 20.8 8 billion, second highest in the last four years, fifth consecutive monthly inflow. And year to date, VO net inflows are now up 17% to 124 billion on track for its biggest yearly inflow since inception.

As the market worries about an AI bubble, you have investors that continue to buy essentially America betting on the biggest tech companies in the world and that these tech companies will continue to do what they need to do. So, I think a lot of noise is out there around AI bubble. I listen to Jensen speak. I look at the earnings. I look at where the money is being allocated to. Hedge funds. By the way, Goldman Sachs said last week that they bought the dip at the highest record over the past couple years in the in the last two days, which was like the last two days of the week where the S&P hit like 650. Um, so I think that was that Thursday and Friday of two weeks ago. They bought the dip. I mean, you're just starting to see more and more data come out saying that these opportunities end up being opportunities that people want to take advantage of.

This is a chart from Ryan Dietrich right here. I also thought was really important. A lot of people have been asking, "Hey Emit, when does the Santa Claus rally happen?" First of all, don't know if the Santa Claus rally is definitely going to happen. One thing to remember about that piece of data is that usually the Santa Claus rally, which is a 1.4% rally the month of December, uh, happening 75% of the time since 1950, historically is based on September and October sucking. So you get a lot of the sort of reversal of September and October sucking going into the end of the year. You also have fund managers chasing. There's a bunch of different other arguments. Um maybe that doesn't happen because September, October, and November were all green. Even November inched out a 03% green month with all the pain that we had to go through. So I I do think people should just remember December this time might not be a Santa Claus rally because we had three green months in a row.

Now granted, there's a lot of reasons why I think it could happen. The rate cut, earnings, etc., But historically, it's been the volatility around September through November that creates that December momentum. If we were to get a set and close rally, it should happen by the last two weeks of the year. So, as you can see, December 1st to December 15th, relatively flat. And then December 15th to the 31st is when you get your real move. So, if it does happen, we should be expecting it over the next couple weeks.

And then we get into 2026, which I think is going to be something that is, I think, nuanced, has a lot of variables. I'm going to be making a lot more videos soon on uh navigating 2026 and kind of just portfolio construction, my ideas for where 2026 is going, uh positions I have going into the year. I I think I give you guys a little preview right now. I think Meta, Microsoft, Amazon, and Nvidia. And if I had to pick three of those, Meta, Amazon, and Nvidia, I think those are easy in 2026. And we'll we'll we'll talk a lot more about it. I don't even think it's controversial saying that. Amazon being my favorite of them because Nvidia already have a big position and Meta have a position, not a massive position. Amazon, I just think AWS growth plus robotics increasing operating margins. It's it's it's the next one to go to 300. We saw Google do it. I think Amazon's going to do it next year. So, I think those three are going to be some obvious longs going into 2026.

Uh, last thing, Cyber Monday, Black Friday, absolutely monster monster results from the consumer. I mean, I didn't expect it to be this good, but it's pretty freaking good. So, take a look at this for Black Friday. Uh, Toby Luke, the CEO of Shopify. Shopify, by the way, it was down 5% today. I think because they had a little bit of an outage, which means actually kind of bullish because it means that they have so much demand on their platform. 25% yearover-year growth for merchants on Black Friday. 6.2 billion in sales. Edge peaked at 480 million requests per minute. Peak database queries 53 million per second. API process over 31 million requests per minute at the peak. I mean, where is this weak consumer? Because you had Abberrombi, Kohl's, Best Buy, Burlington. We'll see Urban Outfitters last week. We'll see tomorrow with American Eagle what ends up happening. But I did not expect these clothing companies to have these record Q3s. I mean, it really it's just like where is this stuff coming from? But it continues to be strong.

And if all these companies are coming out and they're showing the types of earnings growth that is very very important for them to continue proving that the consumer is not as weak as some people think, even though the consumer might not be perfect, which 100% the consumer is obviously not perfect. If the consumer is better than expected, well, and we're easing and corporate earnings are good. And as you can see right here, Black Friday sales hit a record high 11.8 billion as per Adobe Analytics. Salesforce reported 18 billion in total Black Friday spending. We'll get Amazon's numbers probably tomorrow.

And by the way, Amazon did come out and say that Rufus, their LLM, has actually influenced how their Black Friday sales have gone and just made it more efficient for customers. So that's AI being a tailwind for their e-commerce sales. Um it it it does feel like if the consumer is not as bad as we think, maybe we're not going to get that many rate cuts going into next year, although once Trump replaces power, get a lot more rate cuts. But if the consumer is not that bad, it's bad, but it's not that bad. There's this nuance of okay, we can cut rates, the labor market doesn't collapse. We can probably save the labor market from collapsing. If we cut rates, the consumer is not horrible. So, they can keep spending. Company earnings can keep showing uh momentum and growth. And then you've got rates coming down which should overall create more liquidity and easing in the financial system. And then if this AI stuff increases productivity, margins, maybe we have to worry about deflation, not inflation. I mean, there's a lot of things that can happen in 2026, but this consumer's week narrative is being challenged.

Chipotle and Starbucks told us the consumer is weak. Urban Outfitters and Abbercrombrian Fish, which sells $75 hoodies, are telling us the consumer is fine. Now, maybe it's one part of the consumer that's subsidizing the other part of the consumer. That's a fair point, but it was like seven companies last week. XRT, the retailer ETF, had its best two-day stretch since May of 2025. ISM PMI data this morning was not necessarily the best. We we missed on expectations, but these retailer earnings are pretty good. So, I think we're going to need more data to see what's happening in the world of retail, but if we're challenging this consumer's week narrative, that's not the worst thing for corporate.

All right, that's it for me. Thank you everybody for listening and watching. We are back with the daily recaps. Happy to be back. Uh, I think it was a much needed break for everyone to kind of just relax and spend time with their family, but we're back. We got one month left of the year. We got a lot of stuff to plan, a lot of new updates coming in terms of um this YouTube channel as well going to 2026. And I'll give more details about that over the weeks. but excited to be back and got one month left. We're entering 2026 and we're going to see how we can all navigate 2026. I'll be here every single day and uh do my part to help in whatever way I can, but I think there are some good ideas and opportunities going into 2026 and we'll continue to nab you as we can every single Thank you everybody. I'll see you guys on the next