Is the AI Bubble about to Burst ... Or Expand? | Cabot Street Check

Estimated read time: 1:20

Summary

This episode of Cabot Street Check features Chris Preston and Brad Zimmermann discussing key topics in the financial world, including AI, the Federal Reserve's rate decisions, regional banks, and earnings reports from major tech firms. They debate whether AI is in a bubble, analyze Fed's policy stance, and explore the recent volatility in regional banks. Special guest Jacob Mintz shares insights on options trading and market trends, particularly in the AI sector. The episode wraps up with entertaining tales from the trading floor.

Highlights

AI's Bubble Potential: The podcast hosts debated whether AI is experiencing a bubble or an early growth phase, with its stock market influence being notable. 🎈
Fed’s Mixed Signals: There was a focus on the Federal Reserve’s decisions to maintain rates and how market perceptions shifted quickly after announcements. 🎯
Tech Stock Reactions: Earning season's impact on tech stock prices, with companies like Meta seeing large stock movements due to earnings reports, was highlighted. 📉
Concern Over Regional Banks: The recent downturn in regional banks sparked discussions on their impact and potential contagion effects in the market. 🚨
Jacob Mintz's Trading Floor Tales: Adding a touch of humor, Jacob Mintz shared colorful stories from his days on the trading floor. 😂

Key Takeaways

AI Bubble Debate: The podcast delved into whether AI is currently in a bubble or just embarking on a growth journey. 🚀
Fed Rates Speculation: Fed's rate decisions and their impact on the market were scrutinized. 📉
Tech Earnings Highlights: Major tech firms' earnings and their effects on stock prices were analyzed. 📊
Regional Banks Woes: The team discussed the recent struggles faced by regional banks and potential market implications. 🏦
Options Trading Insights: Guest Jacob Mintz offered keen insights into options trading, with a focus on AI stocks. 📈

Overview

The latest episode of Cabot Street Check is a deep dive into the potential bubble forming around AI. Hosts Chris Preston and Brad Zimmermann discuss various stages of financial bubbles and how AI fits into these categories. The conversation explores whether AI is just an inflated trend or a substantive part of future market dynamics.

Fed rates continue to captivate investors as the hosts discuss the Federal Reserve’s decision to keep rates unchanged. This segment evaluates the market's reaction to such announcements and the implications for future monetary policy. Alongside, they discuss tech earnings and how big players like Microsoft and Amazon are influencing market sentiments.

Special guest Jacob Mintz brings his options trading expertise to the table, offering a fresh perspective on current market conditions with a particular emphasis on AI stocks. His entertaining anecdotes from the trading floor add a lively touch to the podcast, making complex financial topics accessible and engaging.

Chapters

00:00 - 02:30: Intro and Groundhog Day Discussion In this chapter, Chris Preston and Brad Zimmermann introduce themselves and their podcast, 'Street Check,' which they humorously claim is the best in the 50+ year history of Kev Wealth Network, surpassing Carlton Lutz's podcast from 1970. They mention that it is Groundhog Day, hinting at the discussion to follow.
02:30 - 04:00: Current Market Overview The chapter discusses the reliability of Punxsutawney Phil in predicting the arrival of spring. It highlights that despite a tradition starting in 1887, Phil's accuracy rate is only 39%. The discussion humorously questions whether relying on Phil's prediction might actually imply the opposite of what is forecasted.
04:00 - 08:00: AI Bubble Discussion This chapter discusses the perceptions and experiences of spring across different locations on the East Coast of the United States. It highlights the variation in weather patterns, where some areas might experience spring-like temperatures as early as late March, while others like Vermont may not see spring until mid-April. The conversation captures the subjective nature of how individuals perceive the onset of spring in their respective regions.
08:00 - 16:00: Earnings Season Overview The chapter provides an overview of the earnings season, likening it to the outdated traditions such as the Groundhog Day. The speaker expresses indifference to the significance of Groundhog Day, highlighting a sense of irrelevance about the predictions made by the groundhog or similar old customs.
16:00 - 24:00: China's Market Outlook The chapter discusses the current outlook of China's market. There is a focus on recent commentary from JP, with a highlight on the Federal Reserve's decision to keep rates unchanged and its implications for the future. The chapter also notes it is the earnings season, with significant market responses, particularly mentioning Meta Platforms' outstanding performance, which saw a 20% rise after their report.
24:00 - 40:00: Interview with Jacob Mintz The chapter titled 'Interview with Jacob Mintz' features a discussion about China as a potential contrarian opportunity and later dives into a conversation with Jacob Mintz from Cabot Options Trader. The focus is on options trading, with insights from Mintz on market trends and options activity, providing clues about broader market movements.
40:00 - 43:00: Closing Remarks and Outro The chapter discusses the concept of financial bubbles, specifically in relation to AI. The speaker, Brad, is tasked with defending a take on whether AI is currently in a bubble. Brad explains that identifying bubbles is challenging before they burst, as they can appear as strong stock or sector performance. The chapter hints at Heyman Minsky's identification of five stages of bubbles, setting the stage for a deeper dive into the topic.

Is the AI Bubble about to Burst ... Or Expand? | Cabot Street Check Transcription

00:00 - 00:30 [Music] I'm Chris Preston and I'm Brad simmerman and welcome to Street check the best podcast in the 50 plus year history of Kev wealth Network I think it's a little better than Carlton Lutz's podcast from 1970 okay um thank you for joining us uh Brad it's Groundhog Day um then I I'm
00:30 - 01:00 happy to report that punks Tony Phil late breaking news here uh did not see a shadow which theoretically means an early spring however uh dating back to 1887 he's we've been doing this whole thing since 1887 apparently he has a 39% accuracy rate so I don't I don't know whether that means maybe we should expect a late spring now as the punks of Tony Phill of this podcast Brad um do you have any thoughts uh I'm amazed that a groundhog is still
01:00 - 01:30 around after 140 years um and early or late spring doesn't really matter um it was like 70 yesterday here will be I I think that's an East Coast thing uh yeah where are they engaging this spring like what temperature do it have to hit for people to be like spring I mean in Vermont I'm the opposite end of that we we don't get spring it's six weeks would be the optimistic view uh we don't get spring until maybe mid April so it's
01:30 - 02:00 like it it's like the Farmers Almanac of like quaint Traditions that should probably just be cast by the wayside um I was not aware it was Groundhogs Day until you brought it up um I have not lost any sleep over my lack of awareness of Groundhog's Day or the prognostication prognostications of a head a a groundhog in Pennsylvania yeah it's also known as is it sunny enough for for a groundhog or anything to see
02:00 - 02:30 it Shadow day I think that's literally the determining Factor there okay let's move on to the market um Brad what's the rundown uh for today so uh JP came out with his latest commentary we had the FED meeting rates unchanged what does that look like going forward uh we are in the thick of earning season we've had a lot of big responses notably meta platforms reported last night they're up 20% today uh they they killed it um and then we also are going to briefly
02:30 - 03:00 revisit China and see whether we were maybe too optimistic in saying it's a contrarian play um I don't know I think there's something to be there's a case to be made there still but we will get into that in full a little bit later and then after that we've got Jacob Mintz of cabat option Trader and option Trader Pro joining us today to talk in his words all things options all things options and we'll talk a little market with him as well usually options activity that Jacob seeing uh can give a clue as to you know
03:00 - 03:30 which way the market winds are blowing so we'll get to him later um first Brad though it's your you're up for defend the take and your take for this week for which you have 90 seconds is AI is now in a bubble go okay so bubbles notoriously are are hard to diagnose until after they've popped because otherwise it just looks like really good stock performance a really good sector performance um Heyman Minsky is sort of attributed with identifying five stages
03:30 - 04:00 of a bubble he used it to identify credit bubbles but those were displacement boom Euphoria profit taking and panic um I think AI just given the Magnificent Seven narrative the amount of interest on the street in AI the impetus for everybody to add AI to everything is sort of laying the state the groundwork for us being in a classic bubble um the displacement phase I'm arguing took place in November of 2022 when chat GPT hit the scene and sort of
04:00 - 04:30 connected the dots for a lot of people um after that phase boom that's when the early adopters start making profits and and start seeing really positive returns Euphoria is where everybody throws caution to the wind and you're just piling into a name because it's got AI in there uh profit taking people start exiting and then the Panic phase is when everything sells off I think we're in the boom phase right now um the there was a Bank of America I believe note that came out yesterday indicating that
04:30 - 05:00 the markets were not showing some of the euphoric signals that we would typically see some of the earning responses we saw from the companies where people are looking for AI progress have been mixed and not euphoric so we saw Microsoft come in sort of as expected we'll get into that more when we get into the earnings breakdown um but people are still are still looking for growth they're not throwing valuation totally out the window I do think that we're in AI bubble phase we're not in pet
05:00 - 05:30 phase of the internet bubble quite yet but I do think that we are in a bubble and that uh eventually this whole AI craze will settle down give a few extra seconds but uh yeah um you know as as as Tim Lotz um who uh you know long time Kev Chief investment strategist used to say um Trends last longer than people expect and that's why I think well we may yeah
05:30 - 06:00 technically be in a bubble I feel like it probably will last a while um you know like you said it doesn't feel like Euphoria at this point the most euphoric it felt was when it started out you know last last spring I guess spring and summer um then it's kind of died down and now you're you're seeing it you know now the market has um had a nice rally for the last three months AI has definitely been a big part of that but you know I I don't think we're at um you
06:00 - 06:30 know early 2021 EVS or or you know some of the peaks of Bitcoin uh levels of euphoria uh at the moment well I appreciate the perspective that is the entire reason that I wanted to bring that up I had um written about this in the daily a little bit back but I wanted your sort of real- time take on that assessment um yeah I I I am still in the bubble camp but it just based on your response it sounds like you're probably ear you're probably pinning us maybe
06:30 - 07:00 earlier on any kind of prospective bubble so maybe more in the boom phase before we're at the euphoric highs which means there's probably still room to run for a lot of these I mean yeah I think so it was like a year ago that this even start you know came on people's radar um you know for something as big a trend as big as AI or a mark you know industry as big as AI That's not a long time for people to process things um you know people need to start seeing and I guess
07:00 - 07:30 they already have but start seeing huge aii related Returns on stocks outside of you know a few magn Magnificent Seven stocks you know Microsoft or Nvidia doing my best to sort of recall the ear the late 90s the early internet uh Bubble Age there was a lot of PE there was a lot of media coverage discounting the internet as a fad as something that was you know inevitably
07:30 - 08:00 going away I don't even know that we're at that stage yet I don't think people have come out yet and started calling AI a fat or dismissed it I don't know if it's maybe because we're more tech-savvy or because technology is a bigger part of our lives but you know that from like 96 96 is when I think Bill Gates was on Letterman and he got roasted for talking about how you could get like sports scores through the internet and Letterman was like oh yeah you can turn on the radio you can look at the newspaper uh and he was getting roasted
08:00 - 08:30 in like '96 and that was 5 years before internet stocks really really tumbled um so just on that that sort of public perception front I think maybe we're maybe we're earlier than I think yeah um yeah you could potentially call it a bubble but I you know bubbles like Trends can can last long time before they pop um okay let's move on to uh our big three and we'll try and get through these uh fairly quickly so we can get to
08:30 - 09:00 Jacob um number one fed um you and I I guess this is our chance to take a Victory lap um we've been saying for months ever since you know the narrative flipped and well I guess that was beginning in November when the FED sort of changed its language and started signaling um raid Cuts they talking about raid Cuts in 2024 and the Market's been up since then pretty much but you and I never really thought it would happen as early as the first quarter or
09:00 - 09:30 March and now it seems finally uh the after you know the way I figured you and I both figured that pal would throw some cold water onto this narrative yesterday or sorry uh Wednesday and he did and now uh the chances according to the uh CME fed watch tool of a rate cut in March is now down to 19 and a half% we sat here I think it was two weeks ago and it was still at
09:30 - 10:00 79% in the 70s at least and we you and I are still like I don't see it uh so um you know we get a lot of things wrong but I think we right on right on this one I guess I guess the more the question is um the market was down after that meeting but it since recovered quickly yeah so like how much now that are we pass the now that you know odds are you know a fifth uh a fifth people are giving it a fifth of a
10:00 - 10:30 chance of of a cut in March do you think the market has already sort of processed that um and there won't be some sort of will they won't they overhang for the next two months I wish I could say Yes um you know frankly I I looked at that I was like okay well that this is going to be something of an inflection point and maybe we get into a little bit of a correction or retracement um I'll be curious when Jacob comes on later what he has to say about about all of this um the the market goldilock scenario is
10:30 - 11:00 still six rate Cuts that's what JP Morgan was calling for um I cited that a few weeks agoo a few months ago when we were talking about when we did our uh our sort of head-to-head matchup stuff they're still call it's still calling for like six rate cuts that would be a rate cut every meeting for the rest of the year I that doesn't seem feasible to me um fedwatch tool is pricing in the the largest allocation of expectation is like 36% going to five rate Cuts in the
11:00 - 11:30 rest of the year so what it's skip May and then do one every every meeting after or you do one in May and then say you you're going to hold and and avoid July and then start cutting it um that's still that now that we're actually in this year that seems a little bit optimistic to me um I I'm still probably in that like three four five range Cuts five even seems seems kind of aggressive if we're not till May right yeah so that if there's less than six Cuts or or if
11:30 - 12:00 there's even if there's five cuts we're still looking at a Fed funds rate at 4% at the end of the year which is not unreasonable but is probably much higher than than the sort of bull thesis is resting on um rates at 4% are not that materially different from rates at five and a quarter percent as far as the economic impact is concern so I I do think that we're sort of losing the the Goldilocks thread a little bit um yeah I don't know if
12:00 - 12:30 the I don't know if the the exuberance of the rate cut cycle starting is enough to override that but it still I think sets up some uncertainty through the rest of this year at least yeah um and it it just doesn't seem like there's there's the same Panic or fear about that because we've shifted to will they won't they cut phase rather then will they won't they raise again phas
12:30 - 13:00 just the the whole feel of the market has changed where yeah if it if they're you know if they sound more hawkish than they did previously for you know for a day the market will fall for a day or so um but it's not I don't think it's GNA be something that weighs the market down you know maybe if they don't do it in like May uh then you know there might be some more Panic that sets in but for now I
13:00 - 13:30 think the fact that it's changed to unlikely that they're going to start cutting in March I don't think that's going to weigh on things too much um okay let's ship to number two uh earn earning season a big week this week a lot of the big tech companies reported um as of through January 31st so two days ago so through the end of January um total Q4 earnings for the 176 of the S&P 500 members that had reported
13:30 - 14:00 results up 1.7% um for the same quarter a year ago I think the expected growth rate for the quarter was like 1.3% so a little maybe slightly above that uh two and a half% or 2.6% higher revenues 82% uh beating EPS estimates um what's your take takeaway from earning Seasons so far about what you expected better what do you think I'm I'm being surprised by some of the companies that
14:00 - 14:30 are beating on the upside I mentioned meta it's up 20% today um they reported earnings of 533 a share against 496 expected so it's a less than a 10% EPS beat but they also reported that they had doubled margins um I was surprised to learn they have three billion monthly active users I don't know anybody that uses Facebook uh in their daily lives but I well I guess Instagram but um yeah so that user number surprised me the
14:30 - 15:00 thing that I'm that I am sort of trying to take away or that I'm I'm seeing in it and I think my big takeaway is that um sharehold that investors shareholders are rewarding the companies that are continuing to set high expectations and delivering but just delivering is not enough Microsoft is relatively flat after reporting earnings uh because they're their numbers came in roughly as expected uh Google down about 6% since they reported and that's because they
15:00 - 15:30 had indicated some softness in their ad numbers I mean ultimately Google is just a big ad company that's the where the line share of their revenues came come from uh UPS was one that I had had mentioned I was paying attention to a few months ago or a month ago um fell about 10% after they reported earnings because they they' been able to claw back some of their shipping but they've still got some um I think they're still about 30% lower than what they're sh volumes would have been had they not run
15:30 - 16:00 into some of their labor issues Amazon is actually eating some of their lunch by taking uh more and more responsibility for the delivery component Amazon's about 10% of UPS's volumes AMD um you know big semiconductor manufacturer big chip company they fell slightly after reported earnings um they beat expectations on revenues but they offered somewhat disappointing guidance for what their revenue numbers are going to look like for some of their chips I guess expectations had been maybe as much as 8 billion from AI related ship
16:00 - 16:30 sales in 2024 and they came in closer to the sort of reasonable expectation of a two to three per two to three billion range uh Amazon Rose 7% after they reported earnings and that was another company where you know they they were showing sort of good numbers across the board and they're showing it's working and will continue to work um that that's like the big takeaway with the meta margins is Are you delivering on expectations and can you continue
16:30 - 17:00 beating those expectations going forward that seems to be the thesis that the market is testing these companies against yeah and that's why Tesla fell sharply uh they beat or missed narrowly but missed on both top and bottom line um for a second straight quarter um and it was punished um yeah mag mag seven in particular if you miss you know given how high that the bar is for those companies and how far they've run the stocks have run in the last year plus uh
17:00 - 17:30 if you miss you're going to get nailed for it but we're not seeing what we saw what two quarters ago where companies were beating expectations and still getting punished we're not in that kind of environment anymore yeah the market knows that a lot of these big tech companies especially are expensive everybody knows that that these companies are trading at elevated earnings that the S&P has traded it elevated earnings and they are the market is starting to demand that you're going to show a path forward to justify
17:30 - 18:00 these earnings um one that one that I wanted to flag we were talking about the mag 7 um we T I talked about Amazon having a money switch they flipped that a couple of days ago and I sort of speculated that it's a way for them to do higher targeted advertising uh in their earnings release sort of buried in the buried deep in it they are rolling out a sponsored TV offering if you're a US seller so they remove their ad spend
18:00 - 18:30 minimums and then they're they're offering improving ad capabilities up to 15 different additional like customer insights as well as generative AI ads so Amazon is very much uh on their way to bespoke advertising to where if they know that you buy if you've got kids Pampers or whatever and you're watching Prime video they can start just rolling out bespoke at offerings like hey Brad looks like you're running low on Pampers you should probably pick some up like I
18:30 - 19:00 mean it's it's a little bit it's a little bit of a dystopia but um I guess it'll be really effective yeah I when companies do that that kind of stuff it makes me want to reject them more than uh you know go along it's like no no no you don't know you don't know I don't want you prying into my life to that degree uh you don't know what I want yeah you know we say that
19:00 - 19:30 and there was a lot of backlash that Target got I want to say it was about 10 years ago when they started doing the same thing with mailers um One news story that got a lot of coverage was a teenage girl whose dad found out she was pregnant through targets targeted advertising because they were saying okay well if you're buying a pregnancy test and you're buying and you stop buying you know Sanitary products then you're probably pregnant so we're going to start sending you coupons for diapers
19:30 - 20:00 and there was a ton of public backlash about that level of tracking and then we all forgot about it and the companies just got smarter at tracking it's not going away the future is going to look like now only slightly worse I mean that seems to be the direction that we're all heading um but Amazon seems to be doing it right right um if you're going to bank on there being one company that exists Bruce sort of uh threw that out as a as a joke in a um one of his issues a few months ago saying like oh well if
20:00 - 20:30 it's just seven stocks driving everything what's going to happen we're just going to all own one stock and that'll be it yeah maybe and if that's the future we're looking towards uh Amazon's Not a Bad Bet for like the one monolithic company that remains yeah buy Amazon I guess buy Amazon there we go it could it could use the help uh I think our our audience might be just the Boost that they need um all right let's shift to our last uh item uh China um you know Chinese stocks continue to get hammered
20:30 - 21:00 I think they're down what six% in January now ever Grand think we're pronounced I think I'm pronouncing that right ordered to liquidate um I've been we've both been on here and said by China but you know contrarian play by China and just keeps falling so the last couple months we've been wrong I I still have a hard time believing that China there isn't some big recovery here for China or at least Chinese stocks um it's just a matter of when um
21:00 - 21:30 what are your thoughts are you still are you less bullish on China as a karian play just given the you know the beating they've taken I mean in October we sat here and the the market had been taking a beaten US Stocks had been taking a beaten for close close to two years and we thought that you know the turnaround was coming and turned out there there was now China's a different beast but I still
21:30 - 22:00 I still am am of the belief that a year from now Chinese stocks will be higher the I think the big takeaway is if you are a contrarian investor you don't pay attention to momentum right you look at at fundamentals because you know by its nature a contrarian investor you're saying hey the market is wrong about this investment they're not valuing it appropriately they're it you know they're selling shares at a discount to where fundamentally they should be trading um as of right now the uh
22:00 - 22:30 Chinese CSI index is trading at 10 times forward earnings um Chinese stocks have doubled in like the last decade whereas US stocks are up like four times or maybe it's the last 20 years I don't remember I'd seen a statistic which I should have cited but did not um Beijing did roll out a little bit of a Crackdown on Short Selling so they're they're limiting the ability to to lend shares for shorting on certain restricted
22:30 - 23:00 stocks During certain Windows um so they're trying to stop the bleeding there you mentioned evergr liquidation you know that's still the overhang is like the shadow lending sector and the property sector are this big sort of Sword of damic that are sort of hanging over the head of the Chinese economy uh but if you're looking for a contrarian play you're not looking at that momentum if the stocks are down another 6% in January well now they're just cheaper yeah um I don't know maybe there's a a
23:00 - 23:30 needle threader that you could do where it's like green shoots that's what Larry Chung kept saying green shoots and pin doo doo was one he said uh sort of the um the uh the upand cominging e-commerce play there and sure enough it's been down in the last month but if You' bought after he said by PDD on our podcast what was it like September October um it's up quite a bit um so
23:30 - 24:00 there's been you know Green shoots or or pockets of China where you know you actually been able to make money and I think you know eventually there'll be more of those yeah may maybe identify the babies that are getting thrown out with the bathwater is the way to go look for companies that are not particularly leveraged to the strength of the Chinese economy but that are doing what China does well as an economy and you know conversely if somebody like a byd starts selling in the global South starts selling in Europe maybe even if China starts making headways and offering some
24:00 - 24:30 lower cost EVS in the US right like that's that's a that strikes me as a very smart contrarian play you take the China risk for that opportunity and and for the fact that others are not willing to do it would I buy a Chinese ETF right now no um I think you I think you look for pockets of strength that are that are unfairly being discounted with the US aversion to being invested in anything China right now yeah I think that's a good call um okay let's uh move
24:30 - 25:00 on to our guest for today uh he is as we've mentioned uh Jacob minz our options trading extraordinaire here at kab wealth who runs C options Trader C options Trader Pro Kev profit booster uh Jacob welcome to your favorite podcast thank you guys you're at least in the top five to 10 for sure and and just to confirm you listen to five to 10 usually right uh um so uh we wanted to have you on um
25:00 - 25:30 you know we've had you on couple times when the market had just turned bullish I think you you and Mike came on it was both with with Mike CA both times um came on last summer um when things were bullish but it was a little thin and then I think you might have come on beginning of around the beginning of November when you know this re the current bull rally is uh was getting going or maybe sometime in November um what are you seeing now in the options
25:30 - 26:00 market like I know you at one point you had seen you're a little concerned about junk stocks junk stocks getting bought up um that being sort of a yellow flag for the market are you still seeing that are you seeing exuberance what what are you seeing um in terms of the junk sock rally it's kind of faded off it's you know for better or worse it's been the mag seven again it's envidia and the newer ones like super micro computer and AMD so that's really where the hot money is at that um I guess if I were to say I
26:00 - 26:30 have a concern right now and I'm and I am pretty bullish it's the regional Banks they uh they've come under a lot of pressure this week uh I think it was New York Central Bank symbol NYCB was down 40% at some point this week all the regional Banks kind of fell with it the the K the Regional Bank ETF was down I don't know somewhere between seven and 10% um for two days so that'd be my big concern right now but I got to say the Market's been handling this news really really well um you know last year when
26:30 - 27:00 the regional Banks fell apart the market tanked right this year Regional Banks fell and the market fell for like half a day and now we're right back towards near all-time high so that's pretty that's a pretty encouraging sign to see the market handle such you know such an important sector come under such pressure and kind of shrug it off yeah are there are you seeing like maybe a lower perception of a a risk of contagion you know I think we all are at least sort of intuitively aware that
27:00 - 27:30 commercial lending is problematic right now um everybody's sort of seeing their downtowns hollow out a little bit people push the suburbs everybody knows that there's risk in commercial lending and that that's a sort of I I've heard it called a slow moving train wreck out through 2027 given the maturities on a lot of these uh a lot of these commercial loans is the fact that it's sort of widely widely known um is that maybe priced in or is there just maybe lower risk of
27:30 - 28:00 contagion that's above my pay grade as usual Brad I just I just follow the the trend of the market in general um I will say I I try to keep it as simple as possible Right y uh the Market's handling the news really well the one concern though is and other than those Regional Banks falling is option activity in that sector has turned pretty bearish so uh there's put buying in the k the Regional Bank ETF in Zion Bank word symbol Z IO n um Blackstone uh
28:00 - 28:30 which has you know a big real estate type play huge put by in the uh yesterday so you know I'm just trying to follow the flows of the market both in terms of you know where the markets going as well as option activity in that sector so you know I'll leave the uh 2027 debt concerns to people that are way smarter than myself so what what xeres were you seeing with with the put buying in the regional Banks now that's a good
28:30 - 29:00 question Bren now you're talking my language um it's really across the board so it is in super short-term stuff like February March April um some September stuff um so it was it's definitely concerning that being said you know it's concerning until it's not and with the market back at all time you know right near all-time highs it's it's a yellow flag but you know I'm I'm thinking about adding Expos exposure to the Cav Ops Trader portfolio
29:00 - 29:30 uh today I bought a position in the Jacobs private Circle uh portfolio today so until until that yellow flag turns into a red flag um I'm going to keep pushing forward with with the bull market run and are there you know you mentioned Banks being sort of the yellow flag are there sectors is it really just the mag seven that are kind of the um where you're seeing the most you know bullish activ or is there sort of offshoots from that um it's pretty much everywhere to
29:30 - 30:00 be honest um it's not you know it's not Gang Busters out there but it's it's spread out so today there's call buying in Marvel uh semiconductor there's a lot of bullish activity in semiconductors there's bullish activity and trade desk which is you know like a I believe it's a advertising type uh play um probably something to do with the meta numbers if I'm getting that right um it's just kind of everywhere uh yeah you know the the most interesting option activity uh the
30:00 - 30:30 last couple days has been in that super micro computer that smci yeah which I bought for the Jacobs private Circle Folks at around like 50 or $60 and I rode it all the way to 75 and now it's trading at 500 or you know wherever it is so you know I got it right but I got out way too soon um they're buying calls at the 700 straight they're buying calls in Nvidia at the Thousand straight I mean it is just they are really really going after these AI offshoot plays verv symbol V I'm not
30:30 - 31:00 sure if I'm saying brtv I think brtv brt simpol VRT call buying I I have a position in that um and they just keep buying stocks up and up and up and up and they just keep buying calls so uh you know there's there's definitely a lot of momentum in these AI type plays I you know Brad was saying he thinks it's you know kind of maybe a bubble it certainly could be but I can tell you that uh they the big options Trad are gunning these things looking for much higher prices in the months to come a
31:00 - 31:30 thousand strike on Nvidia is seems insane to me like as soon as you said that I want I wanted to call back to like our conversation earlier it's like that that seems like bubble levels to me where you're totally disregarding valuation and you're not looking at the fundamentals at all um but I mean that's not Universal that's a company that's been really dominant for a year that's still leading the way and that has really low cap Act uh just because of the nature of its business they can justify a much higher
31:30 - 32:00 valuation because they're not doing most of manufacturing they're just creating products and they're creating the architecture and then licensing most of that out I don't I think something like two-thirds of their revenue is not relying on the actual production of chips uh and most of that's done by like tsmc so you know maybe uh maybe that makes a case for looking for other value plays in that in that trade somebody like a Taiwan semi you know all I can say Brad is when the stock went from 250 to 300 we probably could have said it
32:00 - 32:30 was overvalued then and now you know look at it now same thing with super micro I mean these Trends the cabit mantras these Trends can go on much longer than you could ever possibly imagine and yeah they were in that cycle I I I wrote I don't know maybe about two or three weeks ago was you know looking at these some of these numbers and I am not a numbers guy it it's possible that we are at the start of a super cycle of spending in the AI related place I mean you know smci smci basically said we
32:30 - 33:00 can't make enough I mean we just keep hearing that from you know those type of plays so you know it's possible that this is just the start and it could be a boom you know for the economy and the market I don't know that's above my pay grade but the way these stocks are moving the numbers they're reporting it's very possible you know that's sorry goad Chris well I was I mean like I mentioned to you Brad a little earlier we're like a year into
33:00 - 33:30 AI being like this mainstream thing that's you know or that's more than just you know some sort of idea CAD GPT brought it into the mainstream I think November 2022 even then you know it didn't become an investment play that people really talked about much until what like last spring you know and it did carry the market through the spring and early summer last year and then sort of you know died down a bit and now sort of coming back to to life in a big way
33:30 - 34:00 with stocks like smci that's not that long for you know for the bubble to burst already to me I think you might be right that we might be in the early Innings of a rally well the thing that it made me think of you know you and I have been talking for the better part of a year about how much the economy has been leaning on the consumer and you know what Jacob's talking about with like okay well we might be entering a new super cycle for business spending onch ATT that seems like a Baton Pass to me
34:00 - 34:30 uh you know if we are really getting into a like a sectarian bull market right like if we're getting into like a major bull market a handoff from the consumer who's been carrying us for the better part of a year and a half now to business spending seems like a pretty reasonable way to shift some of the burden of justifying some of these higher stock prices yeah I will say I do have ai plays in all my portfolios
34:30 - 35:00 um some are working some you know I own VRT in one portfolio um you know have arm Holdings Marvel these type of plays snap I will say it does see I'm gonna talk out of both sides of my mouth I don't want to necessarily own Nvidia and smci and vert because at some point yes there will be some shakeup in this group so you know I'm looking to add the you know a stock like American Express you know there there are stocks that are
35:00 - 35:30 outside of AI that are working that are breaking out on earnings American Express um IBM while not sexy for for a long time looks great um Textron which is like an arrow uh you know a plane type play I mean I got such a diverse list of stocks that are breaking out that's when I have when my list of potential buy candidates just keeps growing and growing and it's diverse like it is right now it's a pretty bullish sign you know and obviously Market making new all times highs is always a bullish sign yeah um we we we
35:30 - 36:00 talked about uh fed earlier we we reserved the macro talk for before you get on Jacob even though I know you love it um but you along with us had been very skeptical uh I know just from reading your issues I've been very skeptical that the FED would start cutting rates as early as March and seems like we're pretty validated here after what pal you know Pal's tone from the other day um I guess what made you skeptical there and do you think how
36:00 - 36:30 much do you think it actually matters whether it's in March or may or even later yeah so I will say I've I've written so many times that I don't believe that the FED will be cutting interest rates in March I started started to be like I'm really putting my neck on the line not that anybody really cares what I'm saying about the FED but uh I've been pretty vocal I seriously doubt that will happen that being said it certainly can the only way I can happen is if the economy really falls apart and I just don't see that happening with you know jobs number
36:30 - 37:00 today was big uh consumer confidence was at the highest levels uh this morning since 2021 I mean the econom is not falling apart that being said every single day this fed stuff changes uh you know on Tuesday or on Wednesday poell says we're you know unlikely to cut in March and then the next day it's well Regional banks are in trouble so we're going to have to cut and now today you know the job data is strong so we're gonna not it just goes back and forth it
37:00 - 37:30 doesn't really matter I mean we could just you know talk ourselves into a corner just every single day it's a different story just follow the trend of the market just follow where stocks are going nobody's gon to care if they cut in March or if they don't cut in March and they do it in June versus July it doesn't matter you know in the grand scheme of things yeah it sounds like Chris sort of hit the nail on the head with the all right well the sentiment has shifted now it's no longer is fed is the Fed going to remain a problem it's how quickly do
37:30 - 38:00 they get out of the way is like you know maybe some short-term consideration we saw the one day selloff that was quickly reversed in the next two days right um so I I do think that the sentiment shift is probably overriding any kind of uh P anything that might have you being pedantic about rate about the timing of rate Cuts you know which is my area of expertise being I'm gonna have to look up pedantic when we get off the call that's Brad's word of the day for you um Jacob before you let me let you
38:00 - 38:30 go I know you have a webinar free webinar next uh Wednesday 2 pm Eastern um the title is three winning trading strategies for 2024 do you want to just touch briefly on what you plan on talking about uh for people who might want to join well that means that I should start working on this presentation and to get ready for it you're you're you're in good shape okay good good um what I'm really going to do is I'm GNA break down three of my best trades I've had at cabat over my nearly
38:30 - 39:00 decade long time here and how I found those trades um the short answer is buy strong stocks in a strong Market that are attracting bullish option activity but I'm gonna really break down you know uh how I find those types of setups um and you know using my past winning trades uh to to find those Tres but at the end of the day another key point I'm going to make on at on the presentation is you know just have a process don't
39:00 - 39:30 get shook out by the fed you know if if all the signals are lined up like like I just mentioned don't worry about what the FED is saying on a Tuesday or a Wednesday just stick to the system if the trade works it works it could be you know a home run um if it doesn't then you'll just cut bait and move on but uh yeah just F just follow the trend of the of the market don't worry about meta's Revenue numbers Sorry Brad um and just uh if the Stock's going up and option activities strong it's time to get in and uh yeah so that that'll be next
39:30 - 40:00 Wednesday at 2 pm Eastern we'll put a link where people can sign up in the um for people who are watching this on YouTube we'll put a link there in the blur below um One Last Thing Before you go uh so a lot of the strategies that you'll you'll be talking about on that webinar uh and you know you've talked about a lot before you learned uh the Chicago Board of options trading floor as a market maker I don't don't think we've ever asked you to tell any of your uh trading floor stories on this podcast
40:00 - 40:30 any good ones that are sharable for a a PG PG-13 audience Now you kind of put me in a corner to to find a find a PG the what what tell tell about the one um was the your boss and his the secretary that there was a fight or something uh secretary got involved sure so uh when I came down to the floor I was the first thing you do is you become a clerk so you know I graduated uh college and I got the job to be a clerk with the
40:30 - 41:00 understanding that I would someday be a Trader so I was standing with next to my boss who was a maniac like a total total Maniac um he would podcast sorry was that he watches this podcast so yeah um he would just yell and scream and fight all the time just for no reason um but one day he got in a fight with uh another another Trader in the group or I'm sorry in the trading crowd somebody he was competing against um and
41:00 - 41:30 the other clerk that was working with me and who had been working with this gentleman for many years she was probably I don't 410 and weighed about 75 pounds um and so she and I were just watching this go on and they're in a fist fight and they're rolling on the ground and the other guy the other traditor uh gets on top of my boss and is just wailing on him well the clerk the young woman you know super small uh squeaky talking uh young lady picks up
41:30 - 42:00 an old monitor you know back in the day when they were like this big not like this like they now picked it up and bashed it over the head of the guy that was beating up my boss um so and that was pretty that that was pretty much the end of the fight end of the fight yeah yeah and uh at which point my boss uh walked across the street uh went to the bank and took out I don't remember what it was $2500 $5,000 of cash and handed it to her and that was was her uh that was a bonus for the day nice well worth it
42:00 - 42:30 yeah um yeah that's uh I can't say I've I've been on a trading floor like that well trading floor period but wow that's um that story has always stuck with me when you told yeah that's a similar to the way things are used to be at the cabin office that's right yeah yeah we usually ask Madison our producer to uh to jump in um well uh Jacob thanks for joining us um and again you can catch his webinar next Wednesday two o'clock uh and um
42:30 - 43:00 hopefully next time it seems like every time we have you on it's during uh it it pretends good things for the market so hopefully that'll continue to be the case um and anytime the markets down maybe we'll just have you on to see if we can change the trend but for joining us have to keep his record pristine so we only bring him on when things look good when things are bad it's just me and you Chris that's that's true yeah bring on the guy who look find gu what's that you bring on the guy that looks good when the when the mark exactly yeah
43:00 - 43:30 um at least to the the audio only people um uh thank you for joining uh Street check and we'll be back next Friday with our next episode