Google Historic Crash☄️Crypto Market Update

0:00 Google's historic crash is underway. Today, we'll break down into all of that and why this may be a signal that could be affecting crypto. I want to thank our sponsor today, and that is Tangium, where you guys can get into full self custody. Very easy to do your secure crypto hardware wallet. And one of the things about Tangium that I think a lot of people misunderstand with self custody is the ease of use and also the ease of being able to get this set up for you.

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0:44 This is the self-custody to you. So make sure and check it out. Tell them we sent you. Let's just jump in right into this first tweet. And that, of course, was the announcement of where Alphabet was falling. This is a $ 520 billion market cap erasure. Quite possibly one of the biggest in the history. Actually, it is the biggest in the history, and I'll show you something here in a second. When you look at the chart on this, I want to go over here to the earnings. Right there is the issue, right there. 29% surprise, negative. And that's the problem. When you go back to previous earnings in the red, back here, you know, 10%. Even further, if you look back into... Previous to that in 22, 16%.

1:29 I mean, we haven't seen anything that's been even remotely close to this. So this may be a, I don't know if this is a top signal, but it definitely is an issue that I think there is a transition underway for Google in a big way. And if you look at their business in general, search is, of course, being cannibalized by AI. Alphabet shares, of course, all being hit by that. I think revenue is going to continue to fall and they're going to need a new model, which is why I think they've also announced the custody plan with what they're doing with Google for blockchain. So this starts to also look at other major technologies that are being disrupted. And that is the clear issue that the market is facing right now. So is the AI

2:12 trade unwinding? A lot of you guys out there right now, after we did our live stream yesterday and we took a poll, many of you, I think it was over half, had AI unwinding post-2028. And some of you, I think about maybe another 20% in 2027, very few of you thought that this unwind would be taking place. So maybe that is the case because we are brewing into a next generation hit right now. And if you look at the model releases that Google is making, they announced it, Gemini 4 Carbon. All of this, of course, is pointing toward quantum threats, security, AI hacks. I think this is going to be their angle in which they try to go to market. The real question is productivity and what kind of tool sets does it provide the market that

2:59 will be better than what we've seen both with Anthropic and also with GrokBot and some of the other tools out there, even with Muse. So this is a very competitive layer right now, and it is one that is starting to stick into the market for a $ 520 billion erasure. This is a serious issue. that these executives are going to get punished on, I believe. And there are some analysis and some strategies out there that maybe Google should take.

3:28 Take a look at this clip.

3:29 Now you have the emergence of Muse as a personal agent. People are using Cloud for similar things. Then the search doesn't even happen in Google. That's their bigger problem. Converting within Google, they can do that. That's a matter of time. Their challenge is that they're going from 90% share in search to a lot less than that in a world where people start their commercial queries within a chat environment.

3:54 Are you suggesting they break up the company? I am and I have been. And that's something that when the stock was trading at 30 times earnings, nobody was really thinking about. As it opens today at 18 or 19 times earnings, you have to ask yourself, why do you want to penalize this very fast growing AI business? Look, I can make the argument that Waymo. fairly could and probably will ultimately be spun off.

4:18 And I don't even know if you think that's valued properly.

4:20 Waymo still needs capital. Waymo is going to lose money for many, many years. And therefore, it makes sense for that to be attached to a cash flow positive business. But the benefits from Google Cloud to the advertising are actually relatively limited.

4:36 All right. So the strategy, I think, is clear. And this is one that we've talked about here on our show about that issue, and that is that the centralization of Google's products are really the problem. Now that AI has really kind of reset the table, I think that a spinoff on many of these products are going to be in order. Be watching because I think their ad unit, there's some core elements around what we've seen in the enterprise side of things when you look at Gmail and just Google Cloud in general. But I also think YouTube will play into this of how they go forward. And then, of course, the AI unit. I'm not sure about Waymo.

5:15 That's the real question, Mark, because it's got such a long way to go to compete with where Elon is heading on full self-driving. And that's the problem right now. There's a lot of players that are competing on all fronts with exception of a few. And one of them, of course, is I think the golden child, which is YouTube, and then possibly their cloud business, which is potentially a little bit more competitive. So we'll see how it plays out.

5:41 But the point is, this starts to look pretty bad for the market in general, and it could be signaling the AI top and an unwind that could be happening. However, there is someone out there, the permable, that says, no, that's not the case. And that, of course, is Tom Lee. He's saying, and this, of course, coming off the FOMC meeting yesterday, I came away from that meeting very, very hawkish, and much more bearish in terms of how this market could respond with a couple of caveats. And there's many things that could still come into this that are more on the global macro side. But Lee says it right here, inflation expectations holding, no need to hike. That's not going to happen. We're going to see a hike in December.

6:23 Noted oil and rates are diverging dovish. I think that's also a narrative that is not yet here. Oil is still going to be a problem. The real question is, what does it look like post midterms? And then CapEx growth, not necessarily inflationary. It isn't necessarily inflationary unless we're dealing with a complete unwind of the AI trade and we start to see everything from neoclouds and many of these AI projects starting to take some real hard hits. So this is a lot different than I think a lot of people are prepared for. So just pay attention. And there was some things that he said yesterday, and I'm talking about Warsh. that you have to pay attention to.

7:05 We drew this out in the meeting or in the interview we did. We just came out of a heck of a family fight. That simply tells me these governors are in no way aligned. They are in a position where we could see a very fast track toward advanced rate cuts, or excuse me, rate hikes. Additionally, within this, the last statement right there, is one that you need to pay attention to. Five months into the job, Warsh refused to take the bait from the topic of he should be cutting rates because the president told him to.

7:39 So this is something, and he dodged a lot of questions yesterday. So that also tells me that this is a very, very uncertain Fed. So what do they know that the rest of the market does not? We're still seeing mostly the market in the red today. There are a handful of flyers, and I'll explain one of them, which is going to be hype, and we'll talk about that.

8:02 But I want to go to a clip real quick, because this gets into the other major factor into this, and that is the midterms. Take a look. He was asked repeatedly about sort of where we find ourselves in the political cycle. Like you can't ignore the fact that the midterms are around the corner.

8:19 I mean, nobody will admit it. And even though the increasing interest rate will not do anything to the economy within the next five days, At the same time, people might be unhappy. In my mind, looking at the language, there is no clear justification for not raising interest rates. The economy is strong, the inflation is higher than my target, but we want more data. But the data is saying that this is not the right interest rate for this target.

8:46 So the only explanation is, yeah, let's wait for the elections to pass.

8:51 And it will be interesting to see how many governors dissented on what this might look like. But definitely December, look for it, guys. It's coming. We will see a rate hike. The question is, is it a quarter point or do they get aggressive on this? All of this will come clean after the midterms because there's going to be some very clear signals that come out of that.

9:15 Another thing that plays into this is AI. And the Fed is somewhat sensitive to this. This was BlackRock talking about how sensitive they are.

9:25 Was a lot more discussion on financial conditions. He kind of opened with the financial conditions, unwilling and unable to call them tight, but noticing the tightening and linking it back to AI with this really important marker that AI, interest rates matter to AI. So we're going to pay more attention to that. And I think that's probably the most important takeaway.

9:45 So, Jeff, is the Fed put alive and well right now for risk assets?

9:50 Oh, our favorite topic. I don't know if I can say it's alive and well. He's sensitive to it. He's sensitive to looking at AI. We also got another piece of information that we hadn't maybe heard before when he answered the Korean reporter with, I'm really more focused on your markets than you may imagine me to be. That's really important because he understands just how important the AI driver is to growth. But certainly what we saw this month was the market sort of sniffing out that AI is a macro event as much as it is a micro event. And if there is a undermining of it, it's going to be a macro event that is primarily disinflationary.

10:35 All right.

10:35 So there's a few things to look at that. Short term, you could look at inflationary. This would kind of flow into infrastructure and energy strain and also the electric usage that plays into Long term, it could be deflationary because just productivity and automation and possibly a complete shift as we start to see other industries that will be affected by many of these advancements. And I think we might be on the cusp of something very big there. The question is, can the market hold as that times in?

11:07 Because there's a lot happening in AI that up to now, I don't think we've seen the major breakthroughs. I think for the first time, we are now seeing major breakthroughs, and that's going to value the product, which will get these companies into profitability possibly faster. And that's the whole issue with unwinding this. When you look at tech stocks in general, it looks like a bear market out there, guys.

11:29 Is this a stealth bear market that we are entering? I mean, look at CoreWeave. CoreWeave, I understand, being a neocloud, but look at Coinbase, down 56%. You've got Western Digital down, Oracle down 50, Arm, Circle down 44, Robinhood down 40. I mean, this is, dude, this looks like crypto land and it is the stock market. So think about that and how does this fall out? Do we continue to see this structure continue to get pressure heading into and post midterms? Other points that play into this is going to be the ant or anthropic IPO. And I think this is a problem right now because it may be another catalyst that could cause more pressure on the market with some pretty heavy black hole scenarios that would play

12:22 out here. Because I think you're going to see a very SpaceX-esque type approach to how the market will respond. Sure, everybody's going to play it. There'll be a handful of others that will start to get away from it. But I'm getting away from it just like with SpaceX. And then there will be an opportunity As AI starts to mature and we do see the profitability and also just the idea of where it's heading start to pay out, and then you'll figure out who the winners are. And this happens in every market. We've seen it multiple times before.

12:52 Look at this, though. This is Robinhood. This falls more than 4%. This was their third, because despite of the third quarter revenue, Revenue rose 12%. The problem is, is that where it's earning it from and how that cycle might play into this. So crypto revenue fell 55%. The prediction market was the thing that was holding it up.

13:16 So play into that and understand how the market looks and says, well, the prediction market may fall off after midterms. This is a big deal that's leading into it. And right now, that may be the case with Robinhood. Here is Vlad trying to explain this. See if you think it makes sense. Here we go.

13:35 Was event contracts in prediction markets made up a bigger chunk of at least transaction-based revenue compared to crypto? I mean, that's a huge.

13:43 Shift for you guys.

13:44 Are they kind of bailing on crypto to go into event contracts? And what does that look like for you guys?

13:50 I don't think there's cannibalization. So I think now it happens that crypto is in a relative winter. That said, though, you also look at Robinhood Chain, which we launched on July 1st. That's been a top five chain. Even though that's crypto technology, it's fundamentally different than trading Bitcoin or Bitcoin trading volume. So even within crypto, our business is diversifying.

14:19 All right, so you saw Vlad there. I think the concern right now I would have, especially with crypto down 55% in terms of earnings, prediction could get a little wobbly. And the real question is, do we see an RWA explosion? So watch the Q4 earnings. That, of course, will come out in January. That is the one that I think will be significant to keep an eye on. Other things that are happening right now, you got Backpack and SK Hynix coming to a partnership deal. This is going to be bringing SK Securities to bring Korean stock market trading to backpack users. More validation, I think, of where this next generation of finance is heading. You have all sorts of new players that are making inroads to old, basically

15:03 old model finance that are embracing this. And I think that's the key with the market. Here's SK Hynix right here. This is another one that has been kind of performed. That's the weekly guys. These guys just went public not too long ago, but there's the weekly chart up from what was trading right there on its low at around 136, holding at 161. SK Hynix, the Korean chipmaker for some of you if you're new to that one itself. And then if you look at the other token out there that has absolutely taken off today, part in what we've seen in the partnership with the NYSE, but also in general, we've got Elon also tweeting about this. And of course, that's hype. Up 17.8% right now, time of recording. This

15:46 thing is bumping into its all-time high, 95.10. I think we're going to see this probably around the $ 100 mark as the psychological question. And I'm going to ask you guys, do you think hype starts to go up beyond this? Because we've seen opportunities for a token to move with a lot less narrative than what we're seeing right now with Hyperliquid. And the opportunity of where this could be going, especially with what Duffy was saying at Swell, his kind of rant around what hyperliquid means for the next generation of investors. I don't know, guys. Let me know in the comments if you think hype goes up. I'm going to say another 50% higher than what its all-time high has been around $ 100. Let me know what you guys think.

16:36 As you guys know, we also follow what's happening in the Bitcoin world quite a bit. And we have some of the titans out there fighting it out. And you got Grant Cardone challenging Jason Calacanis of the All In pod after Jason kind of said this thing goes back down in the 50s, talking about Bitcoin. And the situation was simple. Cardone says he's going to bet Jason a million bucks if Bitcoin breaks the all-time high of $ 126, 210.

17:06 before October 28th, 2028. I think this is a bad bet for Jason. I think the other side of this is that I think Cardone might win this, not Calacanis. I think he might win this because I do think Bitcoin gets another bid. Question is when and how does it tie into this? Now, there are always factors that could play into this that could still put pressures on Bitcoin if, in fact, we are entering a bear market.

17:32 So Jason is very convicted on this. Remember, though, Both of them are talking their book. Cardone, very heavy into Bitcoin. Calacanis, very into the AI play. He wants that investment opportunity of every investor out there to put into AI and that kind of technology. So I get it. I love to see it because I think it's fun. You know, it's fun news. But anyway, we're going to cover this a lot more this week. But guess what, guys? We got midterms next week. That is going to set the stage for the rest of this year and how these market plays in will play out. And the real question is, do we get a bid in terms of a little mini bear market or a mini bull market based on what the midterms will result in? Stay tuned. If you

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