Democrats Will Sweep: Which Stocks Will Win & Lose?

If the Democrats sweep, what happens? I think the first two things that we have been seeing already in the markets is that healthcare stocks could rise. Defense stocks as well could fall. Maybe you see a rise in clean energy stocks. Maybe there is a slowdown in the AI boom. Maybe it could be the Democrats are going to get a bit more stringent on data centers. That could be one of the directions they go. So, I think those are some of the things that we might see. But again, the fact that we're already beginning to see it in the stock market is indication further that investors really believe that come Tuesday, Democrats are going to win this thing. What do you think?

I think it's already been priced in. Today's number, 73. That's the percentage of US adults who have a favorable view of the National Park Service, making it the most favorable federal agency in America. Ed, true story. I went to a national park recently and I bitched about it the whole time, and soon after I was cancelled for making anti-Yosemite remarks.

Uh, how are you doing? I see you're wearing your Virginia shirt.

I am. I went to the football game last weekend. Parents' weekend, I think we talked about it. I'm super excited. Um, my son's thriving and it's like a huge source of joy for me. You always worry, there's always like this non-zero probability your kid's going to head off to college and like not like it, and then the whole house freaks out.

Is he about the frat life? Is that, is that, is that calling him or no?

I think he's pretty social, but I don't know if he's what I'd call a big partyer, but he likes, you know, he likes being social and he's not like his dad who's trying to like fill a hole that can never be filled and wallpaper over his depression and anger with substances. Um,

Well, that's good. That's great.

Speaking of which, Halloween. How's your Halloween going?

This will be out just after Halloween, but uh, it's going to be good.

Let's hope I'm still around. This is, we are one night into Halloween and I am already hurting.

Yeah. Wow.

I've actually, I've got five friends from London who, who are visiting for the weekend. So, I've got to go take them out, have a good time.

Oh, wow. What are you going to do with them?

We're going to go, we're going to have dinner and then we're going to go to one of my friends whose party is having a big Halloween party. It's going to go all night. Um, so we'll do that, and then I think they want to do like a pub crawl on Saturday, which I'm probably not going to join them for because it sounds terrible. Um, and then I'm heading off to London to join the Mooch and Katty K for midterm elections for their live stream for the rest of politics. So I leave on Saturday night, which is a shame.

I'm still stuck on the notion that you have five friends. Um, I kind of had the sneaky suspicion that you're the Vivek Ramaswamy of whatever high school you went to, like super smart and everyone hates you. Is that not right? Is that not accurate?

Terrible.

Wow.

Is that not accurate? I don't think so. Is that unfair?

Maybe we'll take a poll, see what they think.

That's going to be great. You're going to show them a great time.

I hope so. I think we're going to have a good time. More importantly, what are you going as? It's always, it's always an important question.

Oh god, I had real trouble with the costume last night. Oh, I got a great costume, Larry David. It looked impeccable. It was hilarious.

Do you have like the hair? Are you doing something with the hair or no?

Yeah, I had the wig. I had the glasses. I had the khakis. I looked exactly like Larry David. It was genius. And I'm like, I just can't do this. It makes me even more unfuckable than I am anyways. I just can't do this. I'm just too vain. Uh, and so then I put on Darth Vader and it was like this blousy thing and I looked like Delta Burke from Designing Women. I just looked ridiculous. And then, oh, I, I, I was really excited. I bought this amazing Spider-Man outfit and I've been working out and I want to show off my body and that thing was too tight. I guess I've been gaining weight and not only that, I'm like, anyway, so zippers were flying and buttons were flying.

Sounds quite stressful.

I'm glad you recognize that. So, I did what I always did, that I've done the last, that I did last Halloween. I put on my, I put on my Deadpool outfit. Huge crowd-pleaser. Except young people keep saying, 'Oh my god, I love Iron Man.' And I want to choke them. I'm like, 'I am not Iron Man.' God. Anyways,

So you're going to go with Deadpool then? That's the plan.

I did last night. I might try the Larry David again tonight if I'm a little bit more secure and in touch with my, like, just decide. It's like

That's going to be a hit and then you can take it off at some point in the night. But you start out crowd-pleaser. You're the funniest guy in the room. Everyone loves it. And then you can sort of take it off and be like, 'Okay, I'm normal now.'

The key, I think, if I'm wearing the Larry David outfit is to do what I did last weekend at UVA when somehow I ended up renting a white minivan. And that is, as you're driving, you just got to go, 'I like me. I like me. I feel good about me.' By the way, minivans, they're incredible. I totally see why they sell so well. They're incredible. They're so easy to get in and out of and they got that automatic door thing and a ton of luggage. I don't know. I'm, I'm thinking about a minivan.

I'm going to be Tony Montana.

Really? I like it. Is your, is your girlfriend going as Michelle Pfeiffer?

Correct.

Wow, that's a good one. That'll be good. It'll be good. I have, I have a wig.

I need to get myself like a cigar or something. I tried to order like a toy gun.

Yeah. No, no toy guns.

I guess it's illegal. Amazon, Amazon is not happy with that. So, we won't do that. Um, but yeah, we'll see. I'll send you a photo,

Right? Should we get into the show?

Let's do it. And by the way, if you like the show, please be sure to hit follow wherever you're listening or subscribe to us on YouTube and hit the bell icon to get all of our latest episodes. Thank you very much. September's personal consumption expenditures report showed inflation continuing to climb. Both headline and core PCE hit their highest annual rate since May, with headline inflation rising 3.6% year-over-year. That data came in just a day after the Fed decided to hold rates steady. Nonetheless, two officials dissented in favor of a quarter-point hike. Chair Powell also noted that financial and credit conditions have tightened for some businesses and households. So, inflation remains a persistent problem and the Trump administration has faced plenty of blame for the state of the economy. But at the midterms tomorrow, we will get a better sense of how Americans really feel about this administration and how they have handled things. So Scott, inflation keeps going up. Not really any surprises. PCE rose to 3.6%. Uh, gas prices continue to go up. Diesel prices are up 77% year-over-year. Real wages fell 0.7% in September. That was the sixth straight month of declining earnings. Um, not great. And on Tuesday, I think it's going to be a referendum on those numbers, how, how upset people really are. Um, what are your expectations, uh, going into Tuesday?

Well, that's the correct question, but what's weird is it feels like the mother of all bad things and all the moons are lining up against Republicans and for Democrats. And that is, according to the Washington Post, six in ten families can't afford the basic costs of living in the battleground districts. So the place that the president's or the current policies seem to be having the most damage are in swing states that are in play. The share of households that could not cover the basics rose by 2.1 percentage points in Republican-held districts and 1.7 in Democratic-held ones. In the past three years, rents in Republican-held battlegrounds have risen 9% compared to 4% in Democratic-held ones. So it, it just feels as if inflation is not only peaking at the exact wrong moment, or not inflation is peaking, but the, the, the people feeling or the impact or the negative sentiment around inflation, but it's especially bad in close races or in toss-up districts. Kalshi puts the odds of a blue wave, as defined by Democrats win at least 218 House seats and at least 49 Senate seats in the November midterms, at 82%. What was even interesting is there's now a technical term for tsunami, and that is Democrats get both the House and the Senate, and that's at about somewhere between, I saw in Kalshi, between now 65 and 67%. So there's a two-in-three chance now that there's a quote-unquote tsunami for Democrats. And then they have a new category called super tsunami where they get 54 seats in the Senate and a massive pickup in, in the House. I had on The Prof G Pod Nate Silver and he pointed out that when Democrats last got a bunch of seats mid-cycle, 2018, it was D plus 7. Now D is polling plus nine. Typically as you get closer, whoever is down closes. In other words, it tightens. What's unusual, so far, and the polls might be off, so far it looks like it's not tightening. It's actually the Democrats are expanding their lead. And let's talk about voters in rural parts of America. Six in ten rural voters disapprove of how Trump is handling the economy. The average Republican constituent drives 26% more miles than a Democratic constituent. So, they're feeling the pain of higher gas prices. So, this is just, it just, it's like the, the sum of all fears for the Republican party. I don't see any, I don't see any sort of bright spots right now. Do you have any thoughts on this?

I'm in total agreement. I mean, you look back to the beginning of the year, if you were to say that the Democrats were going to take the House and the Senate at the midterms, people would say you were nuts. And, and you can look at the, the Kalshi data on that where it was, I think it's doubled over the course of the year. Um, so there has been a massive sea change and it's obvious what the problem is. It's inflation. Um, and people know how tariffs affected inflation. We saw that immediately and then he doubled down on higher prices with the war in Iran. Um, and so when you look at Trump's approval rating, you know, yes, it is hitting all-time lows. But the, the topics on which he is most underwater are the economy and also inflation. And I just think that this is such a unique situation, such a unique moment because usually when, when a, when an economy is struggling or when you're seeing inflation, you're seeing higher prices, usually it's a little bit of a blame game on like who's responsible. And, and it's very difficult to pin down who is actually at fault because economics is complicated and it's nuanced and there are multiple factors and you can never really pin anything down. But that's not the case this time round at all. Like we know exactly who's responsible. We know exactly what caused this. It's Trump. It's his tariffs and his war in Iran. And everyone knows this. Usually there's debate, but literally everyone on both sides understands what the problem is. And I think your point is an important one, which is the people who are getting most screwed by his decisions are his base. It's the people who have historically supported him. It's the farmers who have to deal with diesel prices being up nearly 80% over the past year, which of course is a necessary input for fertilizer and therefore for growing crops, which is why farmers are struggling right now. It's as you say, the rural voters who are the frequent drivers. You point out how much more those, those, those voters drive compared to Democratic districts and gas prices are up 40%. And then I think the other one is, is the real crucial demographic which was so important in 2024, which is young men who have seen their wealth fall over the past four or so years by about 23%, and of course the boomers have seen their wealth rise by about 37%. And this is going to be a big problem because 55% of young men voted for Trump in 2024 and now the polls are saying that actually this time around it's going to be 26%. So all of the key demos have gotten screwed and usually, like, I say this all the time because I think that Trump really, really has screwed over the middle class and screwed over poor people, unlike any other president at least in recent memory. But a lot of people say, 'Well, they don't understand that.' Like the American people, try getting the American people to like understand the facts. But this time, I think they do because the facts are so obvious. It's so clear what went wrong here. So, I'm, I'm with you. I, I think it's a sweep. Um, I think the Democrats take the House. I mean, certainly take the House. Question is, will they take the Senate? I think they will. Um, and we can go into some of the state-level data here because that's what's going to matter here. It's going to be the, it's going to basically rest on a few swing states like Maine, like Texas, Michigan. Those are, those are going to be the important states. Um, but I, I think the Democrats crush it in all of those states because, again, as you say, they're getting hit the hardest.

Yeah. When you see Trump campaigning in Kansas or in South Carolina, that's not, the map is tilting. The map is imploding and they're pulling money out of what usually are battleground states because they've just given up on them. What's interesting, and you touched on this, it's really fascinating to see which cohorts pivot from one party to the other in between elections or in consequential elections or sequential elections. And one of the biggest pivots from blue to red in 2024 was, was young people. Yeah. And now people ages 18 to 29, get this, in 2024, 46% identified as Democrats, 47% Republicans, which shocks me, 18 to 29, the majority in 2024 or more identified as Republican. Today it's Democrats, or 54% of 18 to 29-year-olds, people your age, identify with Democrats and 38% Republican. It, it's, I love this. We're now, it feels like the majority of the pollsters are saying it's a toss-up between a tsunami and a super tsunami. And Fox News even just flipped South Carolina from likely Republican to toss-up.

And it's like nothing indicates insecurity like a company or an organization that has a vested interest in things going the other way, covering its ass by saying, 'Oh, this might go blue.' So, this is, I mean, I'm, I'm still holding my breath waiting for what he's going to try and do next, whether it's, I don't know, offer people a million dollars if the Republicans hold on to the Senate. I'll be curious what he tries to come up with. But this feels, and again what's interesting is a lot of the voting, I wonder what it is, I think it's about a third the voting's already been decided. People like, 'I've already...' Have you already voted? I've already voted.

I'm going to do it after this.

Vacc. That's my new nickname for you. That back. Oh my god, we're getting comments for you. All right, Philip, folks, what is the likely, is there a non-zero probability that Ed was the Vivek Ramaswamy of his junior class in high school? What, I, I think there's a non-zero probability here. I just, I'm, I'm putting it out there. Anyways,

No, no blue tsunami.

Tsunami, we're gone. Let's get this done. I mean, just looking at some of these states and, and how their economies have been specifically affected, like I think Maine is probably the most interesting because you would have expected and the prediction markets did expect that, that it would, it would be red. Um, but you've got Troy Jackson, the Senate candidate, um, who's Democrat at 61% right now on Kalshi. And you just look at the way Maine's economy works and what its strengths are and what its weaknesses are and it, it all makes sense. Like for, for one, they rely on heating oil to heat up their homes more than any other state. It's like 50% of their homes is fuel oil, heating oil. And the cost of that has gone up 83% in the past year. So you're immediately, that's, that's half of, of the state is watching their energy prices just explode as a result, a direct result of Trump's policies. Then you have the Canada tariffs as well, which is also an issue because Maine sends 40% of its exports to Canada. And so as soon as the Canada trade war breaks out, suddenly you're putting a huge dampener on Maine's economy. Plus, they also have this giant logging industry, which is a huge part of their economy. And then Trump puts 50% tariffs on all of the logging equipment and all of the wood products, which just decimates the foresting industry in Maine. Like it's a perfect encapsulation of this is a state that wants to love Trump, that wants to like him, that, that identifies with the ethos and the culture of the Republican party, but he alone has been so economically devastating to, to, to thousands of people across the state to the point where I, I don't know. I mean, I don't know if they're going to swing blue, but they're probably not going to show up. They're probably not going to show up to the polls. I mean, if they, if they're going to say anything about how gigantic of a disaster the past two years have been in their own lives, this is their moment to say it. So, I, I do think that that is going to be likely. I think the same, we see very similar dynamics in Wisconsin, Texas, Iowa, where, as you say, you know, one in five Iowans is employed by the agriculture industry, which has also gotten hit really, really hard by the increasing oil prices. So it just doesn't look good for the Republicans in any of these key swing states. I think the next question is like what are the market implications of various outcomes, like if the Democrats sweep, what happens? I think the first two things that we have been seeing already in the markets is that healthcare stocks could rise because you might see that a lot of these Medicaid cuts will be reversed. But again, that's already seemingly getting priced in right now because the healthcare sector is up more than 9% over the past three months. Defense stocks as well could fall. Again, that also happened over the summer. Maybe you see a rise in clean energy stocks. Maybe there is a slowdown in the AI boom. Maybe it could be the Democrats are going to get a bit more stringent on data centers. That could be one of the directions they go. So, I think those are some of the things that we might see. But again, the fact that we're already beginning to see it in the stock market is indication further that investors really believe that come Tuesday, Democrats are going to win this thing. What do you think?

I think it's already been priced in. Um, and I think if you look at the markets, so first off, the polls, like Maine, in Maine, it, it, the polls don't seem to matter. So, we don't know what's going to happen in Maine. In places like South Carolina, that I think the last Republican or the last Democrat they sent to Washington resigned in 2002, but Lindsey Graham is now at 78% and, um, uh, what is her name? Her name is, oh, Annie Andrews is now at 28%. She was at 10% just a couple months ago and she's gaining right now. So it's, sweep is the base case, right? So the most exposed to getting hurt are probably pharma with undisclosed pricing deals with the White House. Um, the companies that signed administration pricing agreements, and House Democrats have floated the idea if they have the power of, if they now run these committees, of subpoenaing drug makers for the terms of those deals. I think it's going to hurt the oil majors. Democrats are trying, are tying high energy prices to broader cost pressures and plan oversight of corporate pricing and market concentration. I think oil is going to come down, which is going to hurt them more. Um, and there's already investigations over energy exploration in Venezuela, which matters most for a company like Chevron. I think defense contractors get hurt. Maybe the AI tech and data center build-out. There'll probably be more pauses, if you will. Uh, private equity and single-family rental owners. Um, the private equity is probably going to face more scrutiny and companies close to the administration. Um, ongoing Democratic investigations and some of his cronies that he's been carving up TikTok and giving, giving to drug pricing deals, tariff refunds, um, um, you know, a Senate majority adds a second chamber issuing subpoenas. Some of the beneficiaries, um, the tariff-exposed retailers, if we roll back the tariffs and there's more certainty around the tariffs going away or being reduced, um, folks like Walmart, Target, Nike, Best Buy, I think actually benefit if the Democrats sweep. And then ACA marketplace insurers like Centene, Oscar, Molina, making health subsidies permanent would just be good for those guys. So, some winners and some losers. I just, the question is, has it already been priced in?

I think sports betting companies are also very worried about this. Uh, and the number that I have to back that up is the fact that they spent $72 million on this midterm election cycle. DraftKings spent $34 million. FanDuel spent $27 million. Um, you have to just think that these guys are desperate for the Democrats not to get in there and start regulating this gambling stuff. But the key word there is spend. What's so staggering about this race, obviously the outcome is going to be the most interesting thing, but post-election, I think what we're really going to, there's going to be a couple big stories, but one of them is going to be that we have now spent more on this Senate race, this off-cycle midterm Senate race than we've spent on the presidential election in terms of money spent. So, this isn't even a tail wagging the dog. This is a tail is wagging the dog so furiously. It's got its own weather system. I mean, and, and when you think about just how insane it is, I think about $800 million is going to go into the Senate race in Texas. $800 million and 330 of it or 370 of it is coming from one man. And I think, you know, generally speaking, I think November 4th marks a lot of things. Marks a lame-duck president. But I also think it kicks off a new era in America where we spent the last 40 years talking about how do you get wealthy? And we're going to spend the next 10 years with a lot more discussion around what are the obligations of wealth. And when one man, you, you know, numbers but you can't really grasp the numbers. So Elon Musk has put, call it $400 million into the Texas race.

366 is the number. I would even think at some point the Supreme Court is going to go, 'Jesus, this is out of control. We have to do something about this.' By the way, when you're with Katty K and the Mooch, my guess is that'll be topics one, two, and three is campaign finance reform. That is, I was with Senator Mark Kelly in Arizona and I asked him what is the first thing he would do if elected president, and a lot of them are saying that the number one issue is campaign finance reform.

It's ridiculous. $366 million. He has now spent, Elon has now spent more on this cycle than George Soros has spent his entire life. So it's gotten completely out of control. Um, and, and you mentioned like the next, I mean, we talked a lot about how to build wealth and, and, and the next sort of era of politics and, and policy is going to be about how, how to keep it, uh, if you're already a billionaire. I mean, one of the big things to, to watch out for in this election will be Prop 40 in California. And talk about spending a lot of money on politics. Sergey Brin has spent $102 million to fight Prop 40, which is the wealth tax. Um, so I mean, this, this, these midterms are weirdly important on so many different levels and you, you can see it in the amounts that people are spending, especially the amounts that billionaires are spending. They are very, very worried about how, uh, how this election might turn out. We'll be right back after the break. And if you're enjoying the show, send it to a friend and please follow us on YouTube, Spotify, or wherever you get your podcasts.

We're back with Prof G Markets. Last week's earnings reports from Microsoft and Google gave investors a look at how two of the biggest players in big tech are performing. And the market's reaction could not have been more different. Microsoft shares jumped as much as 5% after the company beat expectations with revenue up 19% year-over-year. It also disclosed Azure revenue in its earning statement for the first time, revealing that its cloud business grew 48% from a year earlier. Google shares, meanwhile, dropped more than 13%, wiping out $500 billion for its worst market cap loss ever. That pain came despite reporting 25% revenue growth in the third quarter. Investors were disappointed by weaker-than-expected search and advertising revenue and negative free cash flow. Uh, Scott, really interesting week for the hyperscalers because we have the Anthropic S-1 which came out, which has polarized a lot of people as to whether that was great or whether that was bad or something in the middle. But then also we have these big tech earnings coming out. Microsoft was great. Investors were very happy about it. Google's on the surface like not terrible, I thought at least from a revenue perspective, but investors were very, very freaked out about this idea that search revenue growth is beginning to decline and all of the fears that we, that we were hearing about, I would say two years ago basically when ChatGPT was starting to gain steam, um, suddenly those fears have come back where investors are saying, 'Oh my gosh, AI is going to kill Google search.' That plus the fact that their free cash flow is negative and they're plowing more and more money into the AI data centers, something we're also seeing from Meta, something we're also seeing from Amazon. Um, what do you make of, of this week in big tech land?

I thought it was pretty shocking and it's sort of a tale of two cities. It's the same AI arms race but entirely opposite verdicts. Microsoft was up 5% on cash flow discipline and Alphabet down double digits on cash burn. And the way I would describe it is both companies had amazing year-on-year revenue growth and really outstanding businesses, but I think it's two things that punished. Microsoft was able to thread the needle here and that is they said we're going to surprise to the upside on the top line and the bottom line. And what I think really excited people is their capex looked fairly disciplined. Now granted, it's still unbelievable, it's still out of control, but it looks fairly disciplined

Compared to the alternatives.

Yeah. And compared to Alphabet, and when Alphabet's executive admits on the earnings call that AI mode generates fewer ads, it's like the company confessing its flagship product cannibalizes its core business. So AI is a profit center that needs to be managed well for Microsoft in terms of capex. AI needs to be a profit center for Alphabet that needs to be managed well. It doesn't look like the capex was managed as, as in as disciplined a fashion. In addition, AI is an existential threat to Alphabet because the world's most profitable largest toll booth in history, search, it appears like is kind of under attack. I don't know about you, but I think there's probably a lot of analysts listening and hearing, seeing, hearing the numbers. They see the capbacks of a company growing its AI business, but what they don't see or what they also see is that AI is an existential threat to their ability to generate the cash flow they need for capex for the arms race. And the anecdotal evidence, I don't know if you find this, I am now doing basic search on, on Claude and at some point that's just going to show up in the, in the numbers. But my, what Microsoft did was unbelievable. Microsoft renovated with cash on hand and Alphabet appears to be taking out second mortgages, you know, for the same renovation, uh, uh, which is going to result in kind of a different call from the bank, if you will. So really two divergent results here and the largest market cap erosion, single-day market cap erosion in the history of the company. That's a big deal. I'm less worried about the search revenue because I see the fact that it's growing and it, it grew less than investors had expected. And I think that the reason there was such an allergic reaction on that front is that this is the boogeyman for the markets. This thing obsessed with chatbots several years ago, which is when we went in and said this thing's gotten over-punished, and, and so they've been, they've just, their antennae are up on this big question. And so as soon as they see even an inkling of a sign that maybe something bad is happening, suddenly they freak out and they panic about the whole situation. For me, I'd want to see, I would want to see more concrete evidence that that's actually happening. I'd want to see their, their, their search revenue flatline or even decline. That's something that would make me more confident in this idea that ChatGPT is going to, to, to eat Google's lunch. But then again, at the same time, Google also has Gemini. And so I, I think they've actually kept up on, on this, on this AI race quite well. But I do think that the real problem in my view is that negative free cash flow. And to be clear, Google is not alone there because we also know that Oracle's free cash flow is negative, Meta's free cash flow is negative, now Amazon's free cash flow is negative. Now all of the hyperscalers have now entered into negative free cash flow because of how much money they're spending on the data centers. It's, it's nearly $700 billion on capex in the past 12 months. That's up nearly 90% from a year ago. The only hyperscaler with positive free cash flow is Microsoft, which is great, but it still came down 27%. So, the thing that worries me is the fact that these businesses can no longer use their profits to finance their goals, which is in this case to build data centers and build the AI revolution. And so you think about, okay, well, what can they do then if the most profitable companies in the world can't even use their profits to do whatever it is that they want to do? Well, then you'd say, okay, they can go to the cash on their balance sheet. And that's what a lot of people have pointed out. And to be fair, these guys have a lot of cash on hand. If you look at their cash and cash equivalents and their short-term investments, you got Amazon with more than $120 billion. You got Google with more than $250 billion. If you add all the hyperscalers together, it's nearly $600 billion, which is great. But then you look at how much capex is going to rise next year and the year after that. And if you add it all up among the hyperscalers, the five of them, Oracle, Microsoft, Meta, Amazon, Google, over the next two years, it's estimated to be more than $2 trillion. So basically what you have is, is like a $1.5 trillion gap between how much money they're going to spend and how much money they actually have, because remember they can't use the profits anymore because, or the cash flows, because those cash flows are negative. So they have to get the money from somewhere else. And so then you think, okay, where is that money going to come from? And the answer is they have to go to the capital markets and raise money. And that's why I was really like, you know, it felt really powerful that literally the day after Microsoft reports their earnings, they also announced a $25 billion bond sale. And that's just a week after Meta said, 'We're going to go raise $95 billion in the equity markets.' So, what was so great about these companies is how independent they were for so long. They were so strong, so profitable, they could do whatever they want. Who gives a about the market conditions? They don't need our money. But that has now completely changed. They need money from the capital markets. They need money from us, the investors. And if we decide that we don't want to give them that money, then they're screwed. They're just in a systemically more vulnerable position. And that to me is the real shift in what's happened here for big tech. They used to be these dependent, or excuse me, independent companies, do whatever they want, but now they have to go out there and they have to please investors and they have to convince them, 'Don't worry, give us the money, we'll pay it back, we can, we can raise it through the bonds, we can raise it through the equity, but just play the game with us.' They're dependent on the capital markets now.

I think of a historical analogy here around the AI arms race is impacting everyone. And I think of, so basically we were in an arms race, an actual arms race with the Soviet Union, and we had the economy and the growth and the capital to win. And we basically, the Soviet Union imploded on itself because it couldn't keep up with this type of military or defense spending and poor leadership and an autocracy, etc. And it collapsed on itself and that resulted in kind of a 40-year run as the world, you know, of hegemony where basically the US was the only game in town. Everyone is in an arms race right now and you, the, the companies are starting to say, 'All right, who, who's going to survive? Who has the underlying capital to survive?' Now to your earlier point about Alphabet, every time in Alphabet's history you've had this sort of check back, it's been a buying opportunity. And kind of pregnant with your comments is a really interesting question and that is, is this a buying opportunity? Because if you look at Alphabet's PE right now, it's 14.6 versus the S&P at 19.5. Take your average S&P company, Caterpillar, P&G, these are great companies. Mondelez, whatever it is, you know, they're not Alphabet. YouTube is on fire. Google search, every time we keep, you know, rumors of its death have always been greatly exaggerated. I don't know what it was up, it's always up double digits. They have a booming cloud business. They have, if there's an agentic layer that emerges, they have relationships with millions of businesses and billions of consumers to start bridging the gap and start eating OpenAI or Anthropic's launch. And it's trading at a lower PE multiple than your average S&P company. And obviously when you look at how robust this business is, how diversified it is, how well-run it is, the