We're going to do a year-end review. We're going to talk about next year because there's just not that much to talk about. Dan Ives of Wedbush, Chris Verrone of Strategas. Right after Liberation Day, April 7th, we were down 20 plus percent relatively quickly on all the major averages. And just think of how the narratives have shifted so many times.
I think this is like a top two or three crazy year that I've had in my career.
When you're talking to investors on the tech trade, what are the big concerns?
The big concern is just when's monetization of AI going to happen? Is it going to be quick enough that investors are not going to be like, white flag, you got to stop spending, and become a self-fulfilling prophecy to have a view that this is an AI bubble? We're just in the early days of the demand cycle. But given China, given where they are from an energy perspective, it is an arms race what we need to do.
Whatever rates have done hasn't helped housing at all.
No, just housing is just dead. I think it's a very important, frankly, next couple weeks for these housing stocks.
What's your prediction for next year?
Bitcoin's weakness, kind of the first hint of the first tell that '26 is not about owning purely liquidity-driven, high-beta, speculative assets. It's about owning real stuff.
I'm not interested in predicting the end of the world anymore because believe me, it was no fun the first time around.
Get the popcorn out. It's going to be, you know, obviously a lot of ups and downs.
Hi, this is Steve Eisman and welcome to the Real Eisman Playbook. And here we have two great guests today: Dan Ives of Wedbush, Chris Verrone of Strategas, who is the market strategist. And we're going to do a year-end review. We're going to talk about next year because there's just not that much to talk about.
So, let me give you each an opportunity. Let's, we'll do predictions later. Let's just... Chris, you're the market strategist. Give us your view of this absolutely insane, exhausting year.
Before we get to just how insane and the ups and downs and the twists and turns of the year were, let's also first start by just saying how consistent a few things were throughout the course of the year and really have been so consistent for two or three years. The premise of our call for two years has been so long as banks are involved and so long as credit is calm, the trend of the market's probably still up. And if you look at what's continued this year, all the bank stocks have continued to work. Credit conditions have remained remarkably calm. I think until those change, we would be reluctant to kind of move away from the bull call here.
Now, put this in context of what was a very nuanced year from point to point. You know, you entered 2025, expectations were high. Trump had just won. Animal spirits were running wild. The bar of expectations was set high and that kind of moved us into the April tariff disaster. I'll never forget we held a conference call that Sunday night after the big down move that Thursday and Friday, right after Liberation Day, April 7th. We think about what could go right from this condition. I mean, we were down 20 plus percent relatively quickly on all the major averages, point to point.
I mean, sentiment went from euphoric in January to absolutely rock bottom. And our own sentiment composite, you were in the second percentile historically. You think about what can go right from that condition. And I remember being on your show, Steve, in June or July talking about, you know, a market that was up 25% over three months yet bullishness was still hard to find. So here we are now three, four, five months on from it and just think of how the narratives have shifted so many times. And Dan, this is certainly in your world, but from January of DeepSeek to April of tariffs to, you know, ChatGPT going to eat Google's lunch to Google's eating everybody's lunch, think how the narrative has changed.
And then in my world, what hasn't changed: banks have been involved, credit's been calm, ten-year yields have been really stable.
Remarkably stable. Remarkably stable.
Okay, Dan, take it away. Give us the year from your perspective because it's been so boring for you.
Oh my god. It's like, you know, it's funny, like, you know, doing this since like late '90s, you know, there have been certain years where they're just, you know, that you feel like they're just much more crazy than others. I think this is like a top two or three crazy year that I've had in my career. Part of it goes back to like on one hand the AI revolution, where it's year three of a ten-year buildout capex. You start off in the beginning of the year, everyone's at the DeepSeek moment, which ultimately ended up really being essentially, if you know, you got to add two commas to what they spend and those are essentially stolen Nvidia chips. But the reality is that...
Say that again. I think everybody's...
If you go back to DeepSeek, because a lot of times people be like, how come no one talks DeepSeek? Because instead of spending six million, they were spending 600 million in reality, and the chips they were using were essentially stolen Nvidia chips through Singapore. I mean, that's the reality, right? So when everyone's like, how could DeepSeek do it with two matches, a dollar, and like a bag of McDonald's, and why would these companies be spending 300 billion? Like, dude, that's because that's a Cinderella. I mean, if you want to believe that.
So I think the thing is like that took time to manifest. Big tech then had a double down. Capex, Nadella, Davos, we're good for our 80 billion, the whole thing. Then obviously like the spending, I mean the spending was, you know, I'd say probably 20 to 30% more than we expected. You go to Liberation Day, I'd say the same thing. That was probably like maybe a handful of times in my career that was like a moment of like potentially economic Armageddon just because knowing that that was going to cut the tech trade to its knees.
And for the first time in 30 years, the US is ahead of China when it comes to tech. And it was almost like an emotional time because for me, so many times you're in Taiwan, China, see 18 hours in a fab, all the innovation, technology, land in New York airport, there's a fist fight at the Dunkin' Donuts, and then you're like, dude, there's a reason, like how far behind we are. The reality is, first time we're ahead in terms of US tech, circular financing going from good to bad. Google, New York City cab drivers bearish on the stock going into this year.
Oracle good. It's the only MAG7 stock actually outperforming the S&P this year, I believe, is Google, right?
But go back. If we sit here a year...
Remember a year ago, they're going to get broken up by DOJ. Better chance of me playing for the Knicks. Then the reality is like AI...
Yeah, you never know. Possible. Who knows? Then all of a sudden, AI eating their lunch. Search is going to be done. They're behind. Now you look at Gemini. So it's get the popcorn out. But it's going to be, you know, obviously a lot of ups and downs.
So, right now, what would you say are, when you're talking to investors on the tech trade, what are the big concerns that you're hearing from people?
The big concerns, and you know, and you hit on some of them, but the big concern is just, you know, the spending's there, the capex is there. The question is like, when's monetization of AI going to happen? Is it going to be quick enough that investors are not going to be like, white flag, you got to stop spending, and become a self-fulfilling prophecy? The data center buildout, the OpenAI too-big-to-fail trade, is that almost like a centerpiece, and are they good for their bills or whatever?
And that's why I think the reality is like, it's easy to get fearful if you're on the 30th floor of a New York City office building or Metro-North. But for someone like myself, three and a half million air miles last 25 years, seeing it front and center, you have a much different view in demand and supply for Nvidia chips are 12 to 1 in Taiwan.
And Dan, I think two things can be true at the same time, right? Some of these stocks that had remarkable runs over the last couple years can have 20, 30, 40% drawdowns and everything you're saying could still be true.
And I think we need to separate that a little bit. Agree.
You know, there are some names that I would say are on the periphery of the AI story which were once viewed as AI darlings which actually, as you know, Steve, have not made any progress now all year. I'm thinking of a name like Eaton, right? That was viewed as very much in this infrastructure buildout. It was up sharply off the April lows, but it's actually point-to-point unchanged since I think April of '24, right? That's a long time for something that you would consider one of these darlings to be uninvolved.
Well, the problem with Eaton, just a little bit of pushback, is they have other businesses, of course, and so it's not as pure an AI trade. They've got legacy businesses that aren't doing as well.
But when they're viewed as part of that AI trade, all the other stuff, right?
And to your point, part of the problem too is that just because you say AI 30 times in a conference call doesn't make you an AI play. So investors too are trying to decipher who are the winners, who are the frauds, the fake ones. And I think that's...
So let me push back a little bit on the AI trade because I'm pushing back more academically than reality because I own all these stocks. But it seems to me, I completely accept what you're saying about the demand. There's no question the demand is there. There's no question the capex is there. It seems to me that there are two potential pitfalls to the whole AI trade and I'd like your feedback on it. So the first one is just...
You're building all these data centers. Are you going to have power? Now, there are two data centers in Santa Clara, California, which were on the drawing board in 2019 that are fully functional and they only have one problem: they can't plug in because the utility out in California can't supply the power. So it takes, as you all know, it takes time to build all this stuff. So I think there's a legitimate argument to be made that some of this stuff may take longer than people think and that would cause a delay. That doesn't mean that the AI trade is wrong. It's just that maybe it gets pushed out, we have a correction, etc.
I think the more interesting critique is the argument that you find on Twitter, which was very much like a minority opinion and now is gaining some credence, which is that continuously scaling LLM models is now hitting diminishing returns. Now, there used to be a guy, Gary Marcus, who was like the only person on Twitter that I could even find that had this argument. So I just read him, not knowing anything. Okay, this guy's just saying something nobody else is saying. I got to read this guy. A couple weeks ago, one of the co-founders of OpenAI adopted exactly the same position.
So I'd be curious what you're hearing because if it turns out that you're getting diminishing returns now in scaling LLM models, then maybe you're going to see maybe six to nine months from now orders start to pull back because the thing that eats the chips is these LLM models. I'd be curious what you're hearing.
Look, 3% of US companies have gone down the AI path today. In Europe, zero. They're basically trying to build Blockbuster Videos. Asia, ex-China, it's less than 1%. Middle East just starting, sovereigns are starting. So, just to take a step back, like where we are, how early days we are in the AI buildout, I would say like from the Palantirs to the Mongos to the Snowflakes to everything we see on hyperscalers...
Look, use cases are accelerating on the enterprise. So even though like that whole argument on LLMs, my view is like that is just the tip of the spear relative to where this is going as an enterprise consumer trade. Next few years it's all about enterprise. But my also view is like humanoid robotics is going to be real in the next three to four years, autonomous is going to be real in the... we're not talking just in our lifetime, we're talking about the next three, four, five years.
So my view on a data center perspective is there's more data centers under construction today than active data centers in the United States. I do agree with you. The biggest constraint is energy. So I'm a huge believer in nuclear energy and you know where we need to take it.
By the way, even if you're a believer, which I am a believer too, you know, you don't just wave a magic wand and build a nuclear power plant. I mean, it takes time.
But given China, given where they are from an energy perspective, it is an arms race what we need to do.
Well, the language you've been using, Steve, is, you know, so much of this maybe 2.0 or 3.0 AI trade might be the war beneath our feet, right? All the resources and the commodities and the metals and the rare earths and the energy that's necessary to do what Dan believes is coming to fruition here.
So, you know, I look at maybe what was the more important or one of the more important developments of the last four or five months is this turn in commodities, right? This may not be a cyclical signal. This may very well be a reflection of AI 2.0, of the raw material necessary to make this happen. I mean, look around the world, whether it's GE Vernova in the US, whether it's Siemens Energy in Europe, whether it's Mitsubishi Heavy in Japan, right? You could kind of go geography by geography and say this power theme really transcends national borders here. This is a really, really prevalent theme.
No, those are great thoughts. And I think also, like you, you know, I think you do particularly an awesome job where sometimes like from a macro and commodities, summarizing it in a way that also dovetails into the themes too.
Well, like what are the super themes, right? So we could look at this move in commodities and you could come up with three very different answers. By the way, I was watching CNBC today and they were talking commodities and the commentator was, all he was talking about was that this is a contrarian currency trade, like the debasement of the dollar by commodities, and with absolutely nothing about AI involved with it.
So let's think about why here for a moment. So you could say commodities are turning up here because there's some cyclical signal the real economy is getting better. I'm okay with that answer. You could say commodities are turning up here because we're in this geopolitical resource nationalism. Okay, that sounds reasonable as well. You could say commodities are turning up here because of this debasement trade. Maybe, maybe not. You could say they're turning up here because they're the raw material necessary for a lot of the stuff that you focus on, Dan.
And I don't particularly care which is the correct answer. I think the stocks are blunt instruments. Any one of those could be right. I don't think Rio or BHP or Freeport is going to distinguish what is the correct reason why. Do you view like Rio as like an AI... like a third... yeah. Do you view like some of those as like third, fourth derivative AI trades?
Yeah, I do. And I think you could actually start to view some of the energies in that capacity as well. I had a fascinating conversation last week with a gentleman who's one of the biggest players in the physical delivery of crude world, and I was pressing him a little bit on, you know, help me understand why the oil chart looks so bad but actually the E&P names are all getting better. And he's like, well, it's simple. AI is making the geological survey so good that the break-even of crude is falling, so that's good for the stocks, not bad for the stocks. So, you know, there's this really...
I have not heard that. Yeah. So, you know, that's crazy.
And I think, Dan, like, you know, maybe 2.0 or 3.0 here. If we're talking about a general purpose technology, the winners of AI are who all the benefits occur to, and that's probably what's on the come here. Then there's a whole trade about that.
Like, see, my whole view is like, our whole thing is like in our ETF, we talk it's like the second, third, fourth derivatives of AI because it's not just about in 2020, 2020. It's like own the godfather of AI, own Microsoft, Palantir. Now it's about how do you play the derivatives, infrastructure, Nebius, some other names like that.
So give us some derivative trades that you're focusing on now.
I mean, to me, like derivatives, first off, like in software now, Palantir being our number one, but I think I look at names like Snowflake and MongoDB that are really the use case software names. As these use cases get deployed on the enterprise, I think those are going to be huge plays. The protection of it, I think the area that's getting overlooked is cybersecurity. I look at CrowdStrike, Palo Alto as huge derivative trades on the cybersecurity side of the AI piece.
And then from an infrastructure perspective, like Nebius is a name that we're super bullish on. You know, IREN in terms of a name that's a power play. It's also on crypto, but that's a name I think's going to be a data center power play. GE Vernova is one of our favorites. I mean, we're now at a point now where it's like all we're doing, we're trying to spend our time figuring out whether it's the Microns, whether it's semis, whether it's software to play the AI revolution.
Chris, what are you thinking?
You know, it's funny when I look at what we've owned in our own ETF. It's kind of evolved from the traditional pure play AI stocks again to more of the derivatives. Could banks be a derivative here of... right, like when you think about...
Okay, this one I got to hear.
When you think about banks going to be the organizational efficiency that some of this stuff in an industry that's been organizationally inefficient for much of the last 20 or 30 years. So you just start going industry by industry and you begin to wonder, you know, who are the benefits really occurring to right now. I mean, look at the strength you're beginning to see. Now, it's nascent, but I think it's beginning to happen in some of these consumer stocks, right? Again, the users, not the producers.
I have found it notable all year kind of some of the analog semis that frankly outperformed a lot of the traditional AI ones. I mean, look at the Micron numbers today. We sit here on this, is a stock that's already doubled from where it was a couple months ago. But we've seen what Samsung has done this year. We've seen what SK Hynix has done this year.
And it's amazing when you meet with like, when you're in Korea, like SK, and like especially like in Asia, so many of them are like, it's a memory play. I think this is a memory super cycle.
No, I think the tricky part here is trying to get an understanding of when the bar is being raised too high on the speculative side of the economy. At the same time, when you look at some of the parts of the real economy, whether it's consumer sentiment that are very, very depressed, it's this very odd environment where...
I've been saying it's a K-shaped economy.
Yeah. Your area is like rock and roll exciting, and then you talk to people who cover consumer staples, housing, you know, your traditional consumer stuff. And it's depressing.
Oh, it's depressing. And you see, I think the Michigan consumer sentiment survey is in the second percentile of the 40-year range or something like that. Now, ironically, that's actually where you should be buying consumer stocks. As silly as that sounds, you know, the excess returns from that condition are generally pretty good, but it's this very, very bizarre sentiment framework where, you know, the speculative fever has been there for much of the year. At the same time, all the real economy stocks, which I think are getting better here, is where sentiment's probably most depressed.
We'll come to that.
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Let's go to Oracle because Oracle seems to me is almost like the poster child for the debate. So give us your thinking on Oracle. What are you hearing from people on both sides as you talk to investors?
So first off, like, look, Oracle is not a hyperscaler. So the reality is like Microsoft, Amazon, Google, like they are hyperscalers, they build data centers. Oracle doesn't build data centers. So the reality is like when you think about OpenAI coming to them, the 300 billion, and they basically have about 500 billion of revenue combined, 300 of that being OpenAI that now they have to fulfill over the next two, three years...
By building. So when you look at where Oracle plays, my view is like, okay, are they taking on debt? Is there quote unquote, like, is that out of the realm? Free cash flow going down. Is that typical Oracle? Of course it's not. But the reality is that Ellison, the whole team at Oracle understands they have the opportunity. It's there. They see the numbers that if they take on some debt, build these data centers.
I'm not going to say you're not going to have like headlines and, you know, and we could talk about thinly traded CDS and everything like that, but my view is that this has gotten way overdone. I mean, I'll compare it to like Google earlier this year. I could compare it to like other times at Meta going back to 2022, times where everyone's like questioning the business model. The reality is that Oracle is going to play a huge role in this data center build, and I actually think on large cap, if there's a table-pounder name where we sit here today going into next year, it's Oracle. I mean, that's...
Before you jump in. So when you're talking to investors who are negative on Oracle, what are they saying to you?
They're like, you're telling me OpenAI is good for their bills. That's revenue that they're going to be able to fulfill. OpenAI is doing whatever X amount of revenue and they have a trillion dollars of opportunity that they're trying to go after. And my whole point is it's year three of an eight to ten-year buildout. And the reality is OpenAI is building out essentially a new economy from a consumer and enterprise perspective.
And I just view it as the fact that that's viewed as bad today in terms of being associated with OpenAI. I couldn't disagree more and I think that continues to be the trade, right? Like anyone that's associated, those stocks ever since the Altman sort of podcast interview with, you know, with Brad and others have gone down.
You know, it's, I say it kind of somewhat jokingly, but it's true. I've gotten more questions on Oracle CDS in the last two or three weeks than I did on Citigroup CDS in...
Not all our viewers. So let me give an explanation. So, CDS is credit default swaps and it's a measure of risk. So if you wanted to basically short Oracle debt, what you could do instead is buy credit default swaps. And so what would happen is spreads would blow out and right now Oracle debt is trading like junk.
And so people look at that and they say, well, it's not just the equity markets that think something's wrong with Oracle, it's the debt markets. And we all know the debt markets are much more intelligent than the equity market. That's a typical argument.
And what people don't understand is that the credit default swap market is not what it was pre-Great Financial Crisis. It's much more illiquid. So if somebody wants to go out and short Oracle debt or buy credit default swaps, that stuff moves on very, very, very little. So the fact that Oracle's credit default swaps have blown out, it ain't great, trust me, you know, for Oracle if they want to raise some debt, but it's not necessarily really indicative of what the fixed income markets really seriously think.
It's also a reminder, I think the Oracle example here in particular is hold your narratives very, very lightly. I mean, think about what was it, January, February, kind of into the April lows. Nvidia at one point was an $86 stock, right? In that correction, was it really?
Yeah, it got down to about 86, 88. I think that was right about the low because, you know, our view going into the year was, hey, semis go down 50% every three years and all Nvidia's friends had already gone down 50% last summer, summer of '24. I thought Nvidia would be next. I didn't think it would happen in six days as it did in April of '25, but, you know, you kind of got to the mid-80s on Nvidia. I think the low was 88 and the previous high was 160. That's kind of close enough.
So we're kind of in that ballpark of Oracle here. What's it, 40-ish from the highs?
Would have more than that. So you're kind of in the zone where again you might want to think about, okay...
But by the way, it's actually shocking when you think about how in such a short period of time from the moment that they announced their backlog, when they reported third quarter, to today, it's only two or three months. You would think it's a different world.
But also, one of the narratives that's also important for like viewers is like 75 to 80% of spending that's going to happen in tech over the next 12 to 18 months is being driven by, that's funded by free cash flow from... they're not taking on debt for AI spend. So I think there's a perception like companies taking on debt and debt to fund this, that's actually wrong. Relatively funded just from true cash flow from big tech.
Can I propose a theory? I'm curious your view on this. I've been thinking about this. I think one of the things people got wrong in late '22 going into '23 was when bond yields started to go up, kind of the view was, oh, tech's in trouble in that environment. But I think they missed the idea that these were self-funders, right? So higher rates penalized other parts of the market much more. Now, well, here we are now three years later and they're not self-funders anymore, or they're not to the same extent they were self-funders. So is the risk here actually higher long-term interest rates over the next year or so because of the debt load that these companies are now taking on?
I think, but it's still, outside of Oracle, the debt load's been diminished. I think Google has taken on maybe 15 billion more in long-term debt for...
When you look at a percentage of market cap.
Yeah. And even on the convert now, you can make an argument like as Fed cuts, depending on whoever gets in Fed chair, that like mid-cap names, do they start to do more converts, converts like that they need. So you can make an argument that that could happen, but in terms of large cap, it goes back, it's still so small.
Well, like, let's not forget on the rate side, you go back to '99, 2000. I think what people forget is that final six months where I think NASDAQ doubled in the fourth quarter of '99. Ten-year yields went from four to almost seven, right? That's a big move. Into the Nikkei peak in 1989, JGB yields went four to eight in 1989. So I mean, ten-year yields have just gone 390 to 415. So, like, let's take it easy a little bit on the rate concerns.
But by the way, just to switch gears for a second, whatever rates have done hasn't helped housing at all.
No, just housing is just dead.
Yeah. I mean, I think it's a very important, frankly, next couple weeks for these housing stocks, right? So you've had what were very good rallies in D.R. Horton, etc., over the course of the summer...
Gave back by half of it, right? D.R. kind of hanging out right at very, very critical support here. If housing has a shot in '26, I think the stocks have to be anticipatory of that right now and have to turn up.
Let me say something about that because I'll tell you what, when I'll know. The Trump administration is serious. You know, if you go back to the campaign, you had the Democrats talking about giving, you know, helping first-time home buyers by giving them money.
And that wasn't going to help anything because that would just cause housing prices to go up. And then you have this administration talking about...
Same thing. You know, it's just going to cause housing prices to go up. The problem with affordability in the United States is local.
It's impact fees that communities put on that add 10 to 15% to the cost. It's regulations that prevent home builders from building smaller homes. So I'll know when the politicians of this country are serious about tackling real affordability if they start to withhold money from states, literally withhold money from states unless they start to hurry up the process of approving things. Until then...
It's pure interest rates. I have no long-term prediction about rates. I think rates would have to, you know, the ten-year would have to go to like three and a half for there to be really a real good bump in housing.
I think the problem with ten-year yields going to three and a half is then you begin to wonder why. Like what are we missing on the economy side? What's weakened here? Like, I mean, the reality is ten-year yields have been in a range for three years. They've, you know, 375 on the low side, maybe 460 on the high side. I can't think of good reasons why we escape that range on either side.
That's so interesting. It's like, but you do see so many investors going into '26, you're either on, especially in tech, you're either on this side or this side. I'm saying like bull or bear. It's a very divisive bull-bear debate in terms of what's happened on the...
So let's talk about something divisive: Tesla.
Okay, so here I have no skin in this game, okay? And I never have. I shorted the stock years ago, got my head handed to me. But my problem is I just don't trust Elon. I don't trust what he says. I mean, example, he said a couple of conference calls ago that he was going to have 500 autonomous vehicles in Austin. He's got 80.
So, you know, the basic business, the electronic vehicle business, that's not doing well because the credits, all the government subsidies have gone away. That's bad. Robotics is on the come. EV, you know, electronic vehicle, autonomous driving is on the come. To me, it's all hype. And until I actually see that his robotaxis really work autonomously, I'm on the sidelines. You tell me what you think.
So look, and obviously, like for me, you know, knowing Musk, you know, from the early days and being such a believer in there, there were so many times where like things like they were a year and a half late, 2018, like you could argue like, you know, they were on the verge of like a bankruptcy or pseudo bankruptcy. My view is like Musk right now is a wartime CEO. Like what does that mean? What that basically means is that he's so laser-focused, almost like in a wartime, but wartime being the battle versus other tech and, you know, the competition, that he understands that this autonomous chapter, robotaxis, it's going to be the most important chapter ever in Tesla's history.
And to your point, I understand the skepticism, but I believe we sit here a year from now, you're in 30 cities, the geofenced area significantly expands, you're basically at level four.
Okay, so let me push back. Imagine that that does not happen, that a year from now, within the time frame that it's important, we're basically where we are today. What do you think then?
Then that would be, I mean, that's like a bear thesis. Like that would be one way that stock's like a whatever sub-$300 stock if that happens. I think it's six to eight hundred because they...
Because you think it happens. It's binary.
That's my target too. And Steve, I think the problem here is you lay out this very elegant reasoning, which may very well be true, of why none of this stuff plays out. Yet, one problem...
The chart looks great, and it's probably the best chart of the Mag 7 at this point. So if I'm going to kind of lean on narrative or lean on price action, I'm always going to choose price action. So the price action is encouraging me to be more imaginative about what could happen over the next year or two years. And whether it's 600 or 800, I'll take either. But I think the direction's higher just because of the way the chart looks.
Yeah, it is emerging as the leader in the Mag 7. And I would just add to your point, like when it comes to physical AI plays in the world, in my view, there's Nvidia and Tesla. Those are the two best physical AI plays. What I'm saying, like instead of when you talk about just traditional AI, like software use cases, LLMs, physical AI being like robotics, cars, I mean physical actual AI. And you look at what everything like Nvidia is going after, like the robotics, the...
Look at FANUC in Japan. That's...
What's... I don't even know what that is.
Japanese robotics. I mean, you want to see a pretty chart, go look at a 20-year chart of FANUC. Like this is the real deal.
Humanoid robotics in Japan and in China is ahead of where we are in the US.
Let's switch gears for a sec. Let's go to financials for a bit.
Tell me what you're thinking. I mean, the charts look great, so...
Here's what I'm thinking. By the way, what's very interesting about the whole financials group. The banks are great.
I mean, it ain't great. Payments looks awful.
Payments have been terrible for a while.
And so it's real. I mean, when people are focusing on financials right now, it's Goldman, it's Morgan Stanley, and maybe some of the regionals because maybe there's M&A. But tell me what you're hearing.
I mean, Goldman Sachs is behaving as the old Goldman Sachs, certainly what the chart implies. I mean, this has been the leader in financial services now for two years. I want to focus on Bank of America.
Spent 20 years in the confessional booth, right? BAC last...
And the whole time, many sins to repent.
The last high in Bank of America was November of 2006 until this week.
This week. November 2006.
By the way, Citigroup will never get there.
Because of the dilution. By the way, do you know this?
It's unachievable. Never say never in our lifetime. Never say never, but it's like... and that's because of the dilution. I want to think about this. For 20 years, these money center banks have had their hands tied behind their back as they repented of the sins of the financial crisis. I think that's over. We are in a deregulatory regime here.
To a degree. I mean, we're not going anywhere close to back to where we were in 2006 in terms of the leverage, but nor should we, and we should not. But it's good, but some of the handcuffs are being taken off. And these companies, by the way, these companies are much, much better run than they were. That's not even a comparison.
Let's remember something though. It can't just be a deregulatory story because it's happened in Europe, it's happened in Japan, it's happened in LATAM. Find me a bank stock in the world that hasn't made a new 52-week high in the last couple days. Good luck. You're not going to find any. So there's something global here. It's been the case for two years. It's largely gone unnoticed, unobserved, unembraced. The financials are still very much leadership. Now, talk about some of the laggards within the sector. I actually think insurance might be inflecting back up here. You had Chubb break out this week. You have AIG acting better, but focus on some of these alternative private capital stocks. You had very deep corrections, huge, huge, huge corrections in Apollo and Blackstone. And...
By the way, it's so unusual in a bull market for these companies like Blackstone and Apollo to be down on the year. They're down 10, 15% on the year.
After an incredible run, down even more now. I think from peak to trough they might be down 30 or 40. Those are pretty deep corrections for stocks in long-term uptrends. So if you wanted to kind of poke around and say what could be a surprise next year relative to consensus, I mean, people got very bearish on these names in that October-November growth scare. Remember all the credit... Jeff...
People got so hysterical. I got calls over one of those weekends that Jeff was filing for bankruptcy, you know.
It was crazy. The irony here is Steve is probably partly to blame that everyone in this business thinks anything idiosyncratic has the potential of being systemic.
Oh, people want to predict the end of the world. Most things remain idiosyncratic. By the way, I have a joke about that. The problem is that there's so many people in this world who want to be me.
And you know what? The position is taken.
Yeah. The position, there's only one.
There's only one. And you know what? I'm not interested in predicting the end of the world anymore because believe me, it was no fun the first time around.
Yeah. I know that's... Oh my god.
But you look at these global financials and you know what's remarkable? Wells Fargo, which is often considered like the weakest of the bunch, actually made new highs before most of them a year ago, right? Goldman and Morgan Stanley two years ago made new highs. Bank of America finally in on the act. This is a $55 stock today. I don't think it's a $55 stock next year.
