00:00So I still think we're trying to figure out is there's to me, it's two economies, right? The AI
00:04driven data center compute build the economy and the rest of the economy. And that's been firing
00:10on all cylinders, right? The data centers compute just being built everywhere. Prices are able to be,
00:14you know, ramped up and companies are accepting it. I think we saw some of the first cracks last
00:19Thursday when, you know, for the first time, Zuckerberg said meta might actually sell some
00:24excess compute. And we went from a world where the only mistake you could make is not having
00:28enough compute to maybe being able to sell it. To me, that's the real question here is,
00:32yeah, we're no, the next six months, year are all looking good on this. But will people start
00:36questioning where they want to be two years from now? That to me is the biggest risk to the market
00:40is some change in compute. And it is kind of funny, though, you point that out. And some of these
00:45compute kind of companies have already sold off very hard. So some of that is getting priced in
00:49the market. But I think there's more risk. And that's, I don't see how the rest of the market
00:53or the economy does well if the compute starts fading. That compute spending is such a huge
00:58driver. So, Peter, we're going to come into, as Jess mentioned, kind of the earnings season here.
01:04Boy, the first quarter earnings were so, so good. And that arguably was what's been driving
01:08this market all year. What are your expectations for the second quarter?
01:12You know, one, I think we just went through such a quarter where everything was so good,
01:17people looked at it. And it's funny, you just talked about the idiosyncratic risk,
01:20right? What I did notice is the earnings were so driven by a handful of companies,
01:25right? If you look at the index level earnings, they're awesome. But strip away those companies,
01:29the rest did not look as good. So again, I think it's going to be harder to win through
01:32the earnings game. I think people becoming, you know, a little bit, hey, we're back at,
01:36you know, record valuations. We need to see this. You know, it was two weeks ago,
01:41the one company, I believe it was Micron, did give clear indication that they have orders locked
01:45in for years to come. I think that's what's going to need to be done, right? It's not just this
01:49quarter's earnings. It's really going to be, what have you sold next year? What are you selling
01:53two years from now? And how certain are you that those sales are coming through? And again,
01:57it's going to be very driven by compute, I think. And toward the end of the month,
02:00as we were talking, not only the Federal Reserve decision, but it comes the same week as a lot of
02:04those big tech earnings as well and the hyperscalers. What are you expecting to hear from
02:08them when it comes to that AI spending and CapEx? And how do you think markets could potentially
02:13react to your point when you're looking ahead to the future here?
02:17You know, I think we expect, and it's built in, that all is going well, sales are on pace,
02:22that there's no slowdown in the need for compute. So I think anything that kind of puts a doubt in
02:28there will have a disproportionate effect. And that's where I do think market structure has
02:31been very helpful to this industry on the way up. You know, I keep looking at SOXL. So it's the
02:35triple leverage SOX ETF. It's 20 some odd billion. That has been amplifying the moves in both directions.
02:42And I think it amplifies them mostly on the way up, but it will amplify on the way down if
02:46we get
02:46any cracks. And you start looking at this, I'm having a lot of conversations with, you know,
02:50hedge funds, you get news that looks like it should be a half percent to one percent move day,
02:54and it becomes a two to three percent. And I think that's a lot to do with market structure.
02:57So I think right now we're probably a little bit more susceptible to the downside,
03:00though it would still help on the upside. And all of this, I think when we're going to start
03:04getting inflation data, I think Warsh is going to be able to say, hey, inflation's coming down under me.
03:09I think he did a phenomenal job addressing inflation. I really think we're going to see
03:13deflation, you know, inflation decline. Everything that's going on in oil is generally helpful to
03:18that. But also, I think he's going to start discussing some of these other metrics like
03:22truflation, Zillow rents, things that actually don't say inflation's above two percent. I think
03:27that's going to be the key to his success and why I think the market's really mispricing.
03:31Everything's thinking he's hawkish and we're going to get hikes. I think he's still dovish.
03:35He just needs the excuse that inflation and how he looks at inflation is going to give him that
03:39excuse to be dovish again. Soon. Probably not this meeting, but soon.
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