00:00First of all, I know you called this the Super Bowl of Earnings Week and that it was I feel
00:03like it was like a giant middle finger to traders for all of these companies to decide within 80 seconds
00:08of each other to report just how difficult is this for the market to absorb these big consequential earnings coming
00:15from these companies that are uplifting CapEx and kind of the entire economy of the United States.
00:20Yeah, so we are not seeing any decline in spend and demand for AI. As we mentioned, it was the
00:29Super Bowl of Earnings last night. By the end of the week, 66% of the market cap of S
00:34&P will have reported Q1 earnings. And from us, it's a very positive sign on the tech industry.
00:42And the way that you invest in the U.S. equity market is one of high quality, high demand, high
00:48free cash flow. And it's unlike any world in the globe.
00:51So if these are so attractive, why do we see swings like Meta down nine and a half percent on
00:56the day after it reports?
00:58Yeah, so I would say that if I look at the run up into earnings and I take the semiconductor
01:03index, it rallied 19% over 19 days. And I think we're not seeing any real pullback in these names.
01:12Despite the move in Meta, but I would just say when I look at equity futures today hitting a new
01:17all time high, there is a big shift from what was a technical driver in March to one that is
01:22a fundamental driver in April.
01:24How do you distinguish that? Because I could, for example, look at that open AI news on the Wall Street
01:30Journal that perhaps you're not hitting their internal targets and you get tech that sells off.
01:33And it wasn't just tech. It was like a momentum basket does really poorly. So on days like that, when
01:39it's selling, how much of that is fundamentals in the driver's seat?
01:42And how much of that is just taking some of the air out of the momentum trade?
01:45I think the article happened to hit at an all time high point in the momentum factor.
01:50I think that baskets are trading in the market more than ever before. So it was orderly to me.
01:56It was a buying opportunity. It was one that was factor driven, but it didn't change any views on the
02:01fundamentals.
02:02Is it fair to say, though, that a lot of these pullbacks are just buying opportunities, especially for these quality
02:06big cap tech companies from our retail clients?
02:09We're really seeing that dynamic. So if I look at on Monday, we had our retail demand in the 94th
02:15percentile over the last five years.
02:17So I think when there is a sell off right now, it's a buying opportunity, especially in the U.S.
02:23mega cap tech stocks.
02:24Has that been the case through this volatility through the war in Iran? Are we seeing retail still buying the
02:31dip?
02:31So I think that's a great question where you had retail really playing defense around tax day.
02:38April 15th was a big day where they were playing more defense and less offense.
02:43We've seen this completely change. So retail had a very good trading year in 2025.
02:49We execute between 35 and 40 percent of all retail flow.
02:52So we see this with data driven insights. But now retail moved back into the driver's seat after especially one
03:01big, beautiful bill act and tax refund checks hitting the accounts.
03:05I think we're seeing a return from retail. It's no longer meme stock trading, but it's one that is, you
03:11know, they're driving the price action.
03:12What does that mean for supply demand? And you're always really brilliant here, because if you have retail buybacks coming
03:18back, hedge funds still participating, is there a real imbalance that could push stocks higher?
03:23There's a supply and demand mismatch right now, Danny.
03:26So when I look at corporate earnings, given that you mentioned it.
03:30So next week starts the start of the buyback window for corporates.
03:35If I look at U.S. corporates, they authorize five hundred and forty four billion dollars year to date over
03:42a trillion worth of repurchases this year.
03:45It'll be the largest year on record. So stock certificates are now a rare commodity again.
03:51And, you know, by my calculation, I see about five billion dollars worth of corporate demand every day during the
03:57open window, which negates some sort of the selling pressure.
04:01So U.S. corporates, again, are the biggest buyer of the stock market.
04:06And U.S. corporate CEOs are showing strength in their views on the market.
04:11If I just took everything you just said, it's very easy to be incredibly bullish on this market.
04:16And it's indeed not just easy, but logical.
04:18But then another part of my brain, Scott, goes to oil trading at four year highs, yields moving higher, 30
04:24year yields surpassing five percent.
04:26And at the same time, the VIX is 18.
04:29It does feel like a bit of a disconnect. Is that fair?
04:32Is there some irrational exuberance in markets that other macro cross assets aren't really reflecting as well?
04:38Yeah. So the way that I view both cross asset volatility and oil prices, you mentioned the 30 year bond
04:46hitting five percent.
04:47So there's a lot of reasons to run this wall of worry, especially on the software side and private credit.
04:54But when I look at the participation of who is trading the equity market, it's almost a macro economic indicator.
05:02When I think about the bottom 50 percentile of wealth demographics, we've seen equity exposure ramp by 300 percent since
05:112022.
05:12So it's almost a resilient consumer, one that grew up on the trading apps, trading all the exchanges and after
05:21hours type of volumes.
05:22That to me is as long as there's no displacements from AI in the jobs world, it's something that we're
05:30really bullish on.
05:31Can I say why I love that? Because we look at a lot of things like University of Michigan and
05:35sentiment looks really poor.
05:37Yeah. So I feel like this this is a better way to kind of gauge because it is it's a
05:40consumer that keeps spending and clearly continues to buy stocks, too.
05:44So we actually have our own sentiment indicator that we started publishing Citadel Securities executes between around 24 percent of
05:54the U.S.
05:54exchange on a daily basis. And what I find with our indicators is we're actually real time back testing this
06:02on data.
06:02And our indicators are a lot more euphoric than what the sentiment indicators that we've seen.
06:08Did they take any hit with higher oil prices and the war in Iran?
06:11I would say that it was a quick mechanical led sell off in March.
06:16It was very robotic on degrossing portfolios among institutional investors.
06:23But our retail clients were actually, you know, slowly entering into the market.
06:28And, you know, we've rallied pretty aggressively since then, by the way, since degrossing, have institutions regrossed up?
06:35Where do they stand in exposure? Yeah, that's a good question.
06:38So hedge funds, gross exposure, which is basically longs plus shorts.
06:44If I look at back to March, was at an all time highs led by the shorts.
06:48And if I look at net exposure, which is longs minus shorts, that was at lifetime lows.
06:53So you had this dramatic need to hedge based on rules.
06:58So it was shorting ETFs. It was shorting index futures.
07:01It was buying put options. That all happened in March.
07:05The market heals dramatically since then.
07:07Hedge funds are slowly participating on the way up.
07:10But retail is really the price setter in the market.
07:13By the way, what difference does it make, I guess both for institutions and for retail, to have these huge
07:18IPOs coming to market?
07:20So much has already been said about the concentration in tech.
07:22And now we're about to get $800, $900 billion companies, even more when it comes to SpaceX.
07:27What difference does that make to have such a change in the composition of this equity market?
07:32So when you think about the S&P 500, if you allocate $1 into the SPY ETF, $0.35 goes
07:40into the MAG-7, $0.40 goes into the top 10 stocks.
07:44When you think of what percentage of the U.S. equity market is AI or AI adjacent, it's $0.45
07:52of every dollar.
07:53So when I see the distribution, I find the U.S. market remains very robust in terms of rebalancing.
08:03So there will be some of the big names have to be sold to make room for new IPOs.
08:08We've done a number of work on this, but it's not a net negative.
08:13It's something that is based on all of these passive flows that go into the U.S. market, based on
08:20target date strategies, that make all companies higher in a market capitalization basis.
08:26So when they enter the market and go into these big indices, it's actually quite bullish for the U.S.
08:31versus the rest of the world.
08:33Interesting.
08:33So if you were running a portfolio and you'd want to kind of prepare for this, what do you advise?
08:38It's one that naturally the biggest weights need to be sold to to make room for these new IPOs.
08:46The interesting dynamic is that retail will actually get a decent slug of the IPO allocation.
08:52And this is a new phenomenon in 2026, something that we're actually quite passionate about.
08:57But needing to make room is one that, you know, dollar for dollar, it's net neutral.
09:02But some of the big ones have to be sold to make room for the new IPOs.
09:05Scott, we're almost out of time, but I feel like I'd be remiss if I didn't ask about about the
09:08setting that we're in right now.
09:10I want to leave the politics aside because there are some weird politics about New York and living there and
09:14working down here in Miami.
09:15You've you've been in the area for a long time.
09:17What is it like to be, you know, at the helm of one of the greatest financial firms in America
09:23and operating here out of out of Miami?
09:25It's really exciting. And if I take a look on the professional side, I just came down from a macro
09:32investor forum that we hosted in Palm Beach, where very where a lot of former central bankers and thought leaders
09:39spoke.
09:40So we had all of our institutional clients in town on the macro side.
09:43Two weeks ago, we hosted our 20th annual retail trading summit.
09:48So it's very interesting to have all the clients come down to Miami and South Florida and talk about the
09:55intersection of culture, politics, our firm's leadership here.
10:01And on the personal side, you know, it's really great to be able to coach my kids baseball team tonight,
10:08run the pitching machine and interview Mario Draghi in the same week.
10:10So for me, culture, Mario Draghi, he was just at our conference in Palm Beach this week, as well as
10:18other thought leaders.
10:19So I would say we actually have clients wanting to know what we're up to in Miami.
10:24We have a lot of interests and I expect that to continue.
10:26And I also expect every time they come down here, they do that thing where they're like, why don't I
10:30live here?
10:30I need to pick up and move. It happens a few times.
10:33Yeah, I'm feeling a little bit of that right now. Scott, thank you so much for joining us. We really
10:36appreciate it.
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