Good morning everybody. Welcome back to another episode of the market open. It is Thursday, November 13th. We are live and I am happy to be here. Thank you all for being here. We got some red like literally five minutes before before I was ready to go live. I mean like it was it was pretty much green in the pre-markets and then I mean you got the S&P 500 right there 68121 down.32% and that's causing everything to pretty much go red with it. CoreWeave down, Iren down, Nvidia just went red, PayPal went red. We were green. We were trying. We were really trying, but um yeah, we ended up going red.

There's a lot of things to talk about. Bunch of things to get through. We got a bunch of earnings this morning that we'll talk about. So, we'll get into those earnings. Yesterday, we actually had a really good day. broader markets were relatively flat to red, but uh the S&P 500 was actually green yesterday, which was important because it showed this broad broadening trade start to really play out uh as money rotated from tech into other sectors, which I think is relatively bullish. But as you can see, we are a bit red in the pre-markets.

The government is now reopen and that is a very big deal. Trump did sign a bill yesterday to reopen the government officially. Uh and we'll talk about the implications of what it means for the government being open. Is this the start of the Santa Claus rally or does it at least create a framework for an end of year rally? We'll talk about that.

We're going to have macro Thursday with Chris today on the market close. I know we haven't been able to do it for the past couple weeks because we've had a lot of earnings, but uh he'll be on and we'll get through all of our thoughts on what's going on in the macro.

I think we'll start off with uh this government shutdown officially ending. Here is Trump yesterday talking about the government shutdown being over. And I I want people to pay attention to the choice of words that he uses as he's talking about the shutdown officially being done.

>> With my signature, the federal government will now resume normal operations and my administration and our partners in Congress will continue our work to lower the cost of living, restore public safety, grow our economy, and make America affordable again for all Americans. Again, costs are way down. Energy is way down. Gasoline is at $2.50 a gallon versus $4.7.

>> He goes on for the next four minutes to talk about affordability. I mean, notice what he said. We are not going to make America great again. We are going to make America affordable again. I think this is the role that the administration is starting to take a more active pursuit on in terms of figuring out how they can frame the narrative around affordability. Uh he didn't take any questions during that uh meeting. It was it was about 11 minutes of him talking about the concept of affordability, blaming the Democrats for the shutdown.

uh which Carolyn Levit the press secretary yesterday said it will take away two points from the Q4 GDP which means instead of getting 3.5% we might get 1.5% which is obviously not the best for the markets if the growth is not that strong. Uh and then she said October CPI and jobs numbers are not going to be coming out. So for those saying that we have CPI data today, we do not have CPI data today.

We are not getting CPI data because the press secretary yesterday said that based on the shutdown, the ability to get any of that CPI data or jobs data, not only for October but in the future, has now been compromised. >> Shutdown could end up decreasing fourth quarter economic growth by two whole percentage points. The Democrat shutdown made it extraordinarily difficult for economics uh economists, investors, and policy makers at the Federal Reserve to receive critical government data. The Democrats may have permanently damaged the Federal statistical system with October CPI and jobs reports likely never being released, and all of that economic data released will be permanently impaired, leaving our policy makers at the Fed flying lines at a critical period.

So, we're not getting October data, which obviously isn't the best for markets. And then, as you can see, based on what Trump said, uh, we want to make America affordable again. I mean, that was obviously written by his speech writers, they are noticing the temperature of the country that is really focused on this concept of affordability. I've never heard Trump say, "We're going to make America affordable again." But that seems to be the new narrative. That also is consistent with the reporting that we had yesterday that Trump is planning to do a lot of these campaign rallies over the next couple of months speaking about the economy and affordability.

So, what does this mean for investors? Well, I think it means a couple things. Number one, the implications of that $2,000 dividend, which Trump reconfirmed yesterday, might be very real, even if it's in the form of not a stem check, but a form of a tax rebate uh for people that are making under 100,000. That could be obviously stimulative to the broader economy and to the market, but there is a necessity that the administration is seeing that they need to be able to put that money out there into the ecosystem, especially if they think affordability is an issue.

Number two is this tariff argument. So Trump did confirm a couple days ago, we watched that clip of him saying that tariffs are going to come down substantially. The scent also started to uh confirm that as well on coffee, bananas, etc. They might be thinking that either demand's going down and they need to reduce tariffs to reduce prices or they may be thinking that prices are getting too high, which could also be affecting demand and that's why tariffs need to be coming down. The question is what does this mean for the economics of the stock market? And I think right now it doesn't mean anything that's too different from what we've been seeing over the past couple of months.

Uh Fed rate cut probabilities, even with this shutdown ending, are still the lowest they've been. Wow. I'm just looking at the updated one. It's legitimately a cost right now. 53.4%. 53. It was 65 yesterday. This is after a couple of Fed presidents came out and said that um they don't support a rate cut. It's not a majority of the Fed, but it's it's a decent chunk of it's it's enough to get close to a majority. The Fed President Collins yesterday came out yesterday and said, "Hey, like I think we are not restrictive enough." And so that I mean, I don't know, man. If they don't want to give us this rate cut in December, I think we're going to have some issues, but that is something we're gonna have to keep up with.

I think that's the internal nuances that the Fed is going to have to grapple with over the coming months. And you know, hopefully that goes in the direction of a rate cut in December. But as of now, it is looking a little bleak. I mean, it's literally 50/50 based on these new probabilities that we're seeing right here. And the administration's f focus on affordability is only kind of reinforcing that point that the labor market could be struggling. Inflation could be inching higher. People definitely are not feeling that prices are coming down. And hopefully the Fed reacts to that in a more positive way or in a more constructive way with rate cuts, but obviously it's going to take another month and a half to figure out how that played out.

Uh, and then the really big news that broke as of last night is a bit more information on this put that Michael Burry put on Palantir. He ended up clarifying exactly what the numbers look like and also uh there's an update on his fund which seems to not exist anymore. So, we got a lot to talk about, a lot to get into. Thank you everybody for being here and let's officially get into it.

All right, so he clarified a lot yesterday and uh I think it was really important that he clarified, but here's what he said. He bought 50,000 puts on Palantir for a $1.84 around September and uh August. He spent $9.2 million, not $912 million. Why did the media report 912? I was doing some math on this last night and from my understanding if you take 50,000 which is the the the amount of puts you he bought on Palantir. Multiply that by a 100 shares per contract because one contract is 100 shares. You get 5 million shares, right? And then you multiply that by the stock price of Palantir at the time which is 18.2, you get 912 million, right?

But I think the notional value that the media kept reporting was if you were to exercise all those puts and multiply them by the current price of the stock, that's where you get 912. it was not the right way to calculate that to be able to describe the actual bet that he took uh or like you know the notional value just needed to be better communicated by the media because he was not taking a billion dollar bet on Palantir puts. He was taking a bet like there's hedge funds down the street in New York City that probably have more puts on Palantir than Burry has.

So the fact that he's been getting all this attention on being short Palantir and Nvidia and for Nvidia it's 10,000 puts. So, it's it's not the sort of billion dollar bet on Palantir and Nvidia. It's less than a $20 million bet. And by the way, based on reporting that we're looking at, seems like he sold most of them or at least he sold half of them for about break even or a slight profit after the dip over the past couple of weeks.

So, then begs the question, why is he disclosing it, right? Why is he putting this out? And it seems like for the reason that he is doing something new on November 25th, this was his updated bio yesterday. Uh, now Unchained blog launches November 25th. It seems like he's giving up money management to become a content creator. That's what I think is happening.

And and how do we have more confirmation on that? Well, if you take a look at this letter that's been going viral, and from my understanding, this letter is real, especially because Burry even tweeted a picture of his SEC registration status for Scion Asset Management. As you can see right there, this is from Burry's tweet. It says, "Registration status terminated. Effective date 11/10/2025."

And then you have this letter that's going around that says, "Dear investors, with a heavy heart, I will liquidate the funds and return capital, but for a small audit tax hold back by year's end, my estimation of value in securities is not now and has not been for some time in sync with the markets. With heartfelt thanks, but also with apologies, I wish you well in your future investments. Sincerely, Michael Burry."

And I thought this was fake when I saw this letter going around, but now that I see his registration statement with the SEC being terminated again, Burry tweeted this picture, it it feels very real that he's done managing money. So then the question becomes, what is he doing on November 25th? And if he's really starting a blog, that's fine. But I wonder what the blog is about. Because if the blog is about how AI is fake or how to find the next big bubble or whatever, he's not putting his money where his mouth is. At least not from a institutional perspective of managing money. Maybe his personal money is short everything AI. Uh but again, if it's only like $10 million on Palantir, it's just not a big short.

So that's what we had for Disney also had earnings. It was okay. I wouldn't say it was the best. They beat EPS by 9% 1.11 versus 1.02 missed revenue by 1%. 22.4 versus 22.7 billion. In terms of the specifics on their numbers, um they had Disney Plus and Hulu subscriptions 196 million subscribers. Disney Plus was 132 million. They gave a cash dividend of 1.50 a share. And they're expecting doubledigit adjusted EPS growth in fiscal year 2026 and 2027.

So, you know, I I I wouldn't say I've been bearish Disney since like 2023, but I remember talking about it years ago, and my biggest concern Disney's right here down 5% was just I just don't think they're exciting anymore. The parks business is capital intensive, and the IP is just not interesting compared to what Netflix is doing. The IP is timeless. It's just are my kids kids really going to care about Mickey Mouse, you know? So, it's like I've always kind of felt iffy on the brand. It's a amazing quality business. business just over the past five years it hasn't done much but the numbers continue to grow stock right here is down about 5% for what we have on Disney.

Cisco joining the party. I mean Cisco up 6% right here. Cisco does not move the way that it's moving right here. It was up 3% yesterday, up 6% today. So up 9% again. This is Cisco. CIS Cisco doesn't move 9% in a day, but it did. And so uh they had a good earnings. They are seeing a lot more demand for networking and AI. So obviously, you know, the streets were boarding it.

The data center trade obviously is getting hit as well. Nebius did close above 94 yesterday. It's at 91.60 as the broader market takes a hit. A lot of these data center plays are going to take a hit as well. CoreWeave right here down about 1%. Iren down about 4.3%. So, today's going to be an important day to see can these guys kind of rebound? Is there any level of rebound or are they falling knives? And if they are falling knives, then I think there's going to be some very attractive opportunities if they continue to get hit.

I really do think these data center plays deserve a correction. A lot of them are running like crazy and a lot of them haven't even really proven their business models. they've just made a pivot and that includes a Nebius and of course even though Nebius has phenomenal earnings and you know they've definitely proved out what they're doing but you know Nebius even if it goes down to 75 will be up 150% year to date.

Oracle issuing $40 billion worth of debt, I think, has spooked the market for the data center trade. If you look at Oracle's credit default swaps, they are trending higher than Oracle stock price, aka more investors are buying protection on Oracle going bankrupt or at least their their bonds uh defaulting, which is unlikely, but nonetheless, you know, that's the reason for protection. Uh versus betting on Oracle stock itself.

>> behavior. Microsoft, Amazon and Google have all the customers have cash on hand and have tremendous cash flow. So when they build a data center they're it's already sold three years in advance. So and they just told us two weeks ago that just over the last 90 days they've seen a positive inflection point in demand for AI from their customers which is everybody. So that's healthy responsible investment. The irresponsible investment as you've been talking about is when you start borrowing to provide capacity for startups and that's what Oracle did. Oracle originally told us on their earnings, oh, we just won $300 billion of backlog from several companies. The next day, we found out it was only OpenAI. Then we subsequently found out that OpenAI has committed $1.4 trillion and has no intention of living up to those obligations. it considers it a flexible arrangement that they can

>> So again, I think that's why the market's hurting Nebius, CoreWeave, of all these other guys. these data center plays are continuing to get hit based on the idea of the debt that is coming due from Oracle.

Do you think we don't get a Santa Claus rally? I think that the ability for Santa Claus to actually come down the chimney and eat the cookies and drink the milk has in terms of probabilities gone down. JD by the way beating 27% % on EPS beating 2% on revenue.

Do I still think you should leave the cookies and milk out for Santa Claus? Yes. Aka, you should still be in the market. But do I think he's definitely going to eat the cookies and milk? Well, I mean, a big portion of that depends on how you cook the cookies. And JPOW is not cooking these cookies with a high probability of the cookies tasting good. aka us getting a rate cut.

So the shutdown is over. One of the things I've heard from the Democratic party or at least the the the further left wing of the Democratic party uh is that the eight Democrats that voted with the Republicans completely voted for no reason with the Republicans. And the reason for why those uh why that's the case or at least why they think that's the case is over the past 43 days the number one issue was healthcare as Mike Johnson was talking about um they are not guaranteeing that health care is going to be voted on again in any meaningful way.

You just heard Mike Johnson basically say we are not going back to the types of subsidies we were doing years ago on healthcare which is what from his perspective the Democrats want. So the Chuck Schumers of the world, the Pelosis, all those other people that voted, I mean, all the Democrats that voted against this in the House and the Senate, they are really pissed off.

And that also going back to this Santa Claus rally is something we can't ignore. I mean, at the end of the day, do we really get a Santa Claus rally in the face of a government shutdown that will be renegotiated again in two months with a healthc are vote happening in December that potentially might not lead to any progress. Having said that, we talked about the bull case yesterday. So, there's plenty of things to be bullish about, which is why I think you stay net long. But if we're, you know, putting a probability on the Santa Claus rally right now, I really do think it's 50/50.

**Jose:** Uh I I mean, just the financial numbers that they gave were insane. just the uh by within the next three to five years the $20 at least they they mentioned over $20 of earnings per share uh within the next three to five years. So uh I mean if it it kind of makes sense because I I don't know if we remember the Sam Altman Open AAI and AMD deal where um AMD um the last trench of of stock price that they would give would be at roughly a $600 stock price. Now, if you kind of give a $20 earnings per share and the typical PE ratio semiconductor stocks is usually around 30, that would give you that stock price of of $600 within the next five years. So, it seems like both parties are agreeing that this stock within the at least the next five years could see $600 and we now have that financial number with historical PE ratios to kind of correlate together.

**Jose:** So, um AMD, I think that was the biggest takeaway. The second biggest takeaway was for me was they expect um to get over 50% of server CPU market share. Um and that's expected to continue to grow with AI GPUs as well.

topline revenue growth of 35% over the next 5 years. Here's the big question. If if if AMD is going to grow 35% over the next 5 years, which I thought I didn't know they were going to put out those numbers, that seems to me like it's pretty damn incredible. Does that mean Nvidia is going to grow at least 35% in your opinion over the next 5 years?

**Jose:** I don't think so. Um the reason being is luckily for AMD has the opportunity from starting from a small base. I do believe still Nvidia will grow at a faster rate than the overall market. Remember that was 35% compounded annual growth rate. So maybe one year might be like 100% and another year might be like 15% or whatever. But overall the the compounded annual growth rate within the next three to five years is going to be 35.

Um, you got low of days, folks. I think we're getting some Fed speak that's causing this low of day. Kashkari, our boy from the Minnesota Fed, he Fed, he's speaking right now. And based on the quotes I'm seeing, Inflation is still too high at 3%. Did all these Fed presidents get in a room and disagree to go on a media blitz talking about how they don't want to do a rate cut? Cuz that's what it feels like.

Verizon cutting 15,000 jobs. Oh my goodness. Wall Street Journal Verizon cutting 15,000. Bro, Verizon job cuts are the largest ever for the carrier Verizon to transition to about 200 stores in their franchise business. Well, this is why we pay attention to the labor market.

>> So, our our base case is 7,300 by by June of 2026. We could see it go as high as 8,000, but really you have a situation where you have um fiscal responsibility as a key key tenant of this administration. Next week, there's there there's a news story that people aren't focusing on. There's a new CFTC chair that is being confirmed next week. And the idea that we're going to have regulation that that encourages growth in the context of this technological innovation and fiscal ideas that are on the table that are new, that this could really help America become the technology leader of the world and also shore up our balance sheet and have a much better treasury picture going forward.

>> I mean, everything you're saying is why the market has rallied so much this year already, the whole technology revolution and AI. I guess the question, Alan, becomes at at what price? You could be excited about it, but at some point does it just get frothy?

>> Well, yeah, I think that it could get frothy, but I don't think we're there yet because remember during the course of this rally this year, we've had the restraints of fears about tariffs. those those fears have gone away to a certain extent and I don't think that we fully have processed what it's going to mean to have a new fiscal picture for this country.