The Stock Market Is Now A Rocket Ship, According To Trump

Welcome back everyone. Today on the Jezel Carlson Show, President Trump says it's time to buy stocks. You better go out and buy stock now. Let me tell you, this country will be like a rocket ship that goes straight up. This is going to be numbers that nobody's ever seen before. The country is going to be like a rocket ship because, of course, the trade deal. That's why they're all in the Oval Office. That's why we have people from the UK there. President Trump and the United Kingdom both announced the first trade deal since April 2nd. We'll be looking at what type of framework is being put in place and if those tariffs, if the thing we've all been fearing, are coming down. Now, of course, we have other news to get to. Google's still recovering somewhat from the trade down it had after an Apple executive testified that the company was losing search volume in Safari browser, which is one of their biggest forms of distribution. But Google also responded to this. Late that evening, they released a statement on their blog saying that they're seeing overall query growth in search on Apple devices. This seems to somewhat conflict with the report that the Apple executive gave under oath. We'll be looking into both these statements and seeing how they could both be true at the same time and what that means for Google's future and my future with this stock. Now, we also had a big day for Palantir. This company has climbed up in the ranks with its monumental surge in stock price to now having a massive market cap, one that's so big it makes it amongst the top 10 most valuable US tech companies. Although it's noted here in the title that the earnings multiple for Palantir is astronomical, and that is not an understatement. Palantir is currently a bigger company by market cap than Salesforce. Both of these companies are, of course, SaaS data companies, and we'll be comparing them together, running reverse discounted cash flow assumptions and seeing what you have to assume in growth for either of these companies to be attractive investments. And then normally at the end of some of my episodes, on Fridays especially, I'll have TikTok investors say crazy things and we'll kind of make fun of it. In this case, we don't need TikTok investors because we have Cathie Wood going on to CNBC giving her price target for Tesla. We'll be looking over the price target she gives for Tesla and why she's continually invited back onto CNBC. Now, we start things off with this big recovery in the market by looking at the deal that the president made with the United Kingdom. As I've been saying for a while, one of the remaining bull cases in this market is a staircase of deals from the US with other trade partners. We'd make one deal, that would be the first one, the market will go up after that, and then every subsequent deal, investors will see more optimism. They'll be happier that deals are being made, trade barriers are being lowered, and hopefully the tariffs are being lowered. But the first deal is important because it sets the tone. It shows us a little bit of how the rest of this will work out. Now, President Trump announced this deal by saying, quote, I'm thrilled to announce that He mentioned that some final details of the pact would be negotiated over the coming weeks, but under the agreement, the UK would fast track American goods through their customs process and reduce barriers to agriculture, chemical, energy, and industrial exports. The deal includes billions of dollars of increased market access for American exports, especially in agriculture, dramatically increased access for American beef, ethanol, and virtually all products produced by our great farmers. Trump wasn't the only one to speak positively about it. We had the UK Prime Minister there saying that this is going to boost trade between and across our countries. It's going to not only protect jobs, but create jobs, opening market access. They mentioned that for the UK auto people, this is tens of thousands of jobs that the president agreed he would protect for them. Engines and planes parts from Rolls Royce will be able to enter the US without tariffs. British farmers will be given a tariff-free quote of 13,000 metric tons of beef. The UK will not weaken its food standards on American imports, its government said. This is one of the points that was heavily criticized. People saying, okay, we don't want American agriculture because they use pesticides. They're heavily industrialized. They don't have the same standards that the UK has. It'll be required to have the same standards of the UK. So we have all of these industries that we're making special carve outs for. For example, steel and aluminum, agriculture, aerospace, and pharmaceuticals. Another big one that was stressed was automotive. The UK baseline tariff dropped from 5.1% to 1.8, and the US actually increased from 3.4% to 10%. So one of the things that this made clear was even though we have special carve outs in different industries that have lower rates of tariffs, it seems like the new baseline that Trump's wanting to set is 10%. And that's not just temporary. That's not just as a negotiating tool. He wants 10% tariffs, which if this continues to be implemented and stays, that is an additional tax that the US consumer is paying. Almost all evidence shows that when a baseline tariff is implemented, the country that's implementing the tariff pays the majority burden of it. US consumers will be paying slightly more for UK goods. If I had to rate this deal and give it a grade, I would give it a C+. It's not the worst deal I've seen, but I also don't see how this is a great deal. For most US consumers buying stuff from the United Kingdom, they're going to be paying slightly more because the tariff rate at the baseline increased. Now to get an A, I would like to see the overall tariff rate go to virtually zero for both countries. Maybe not in every single industry. I think it's fine for countries to be protectionist with some specific critical industries, but having a baseline of 10% is much higher than where it was. I also don't think this is the worst deal. There are some positive aspects to it as well. But it does seem overall like President Trump wants to implement tariffs as a tax increase. Even Ted Cruz, a big supporter of Trump, agrees that tariffs should not be a long term solution. If we end up 30, 60, 90 days from now with significantly lower tariffs worldwide, that will be an historic win, an economic win for jobs and American business and productivity that we've never seen before. That's the path I want President Trump to take. There is another path, and there's a camp within his administration that doesn't see tariffs as a means to an end, doesn't see them as leverage, but rather sees them as the end, is happy with high tariffs as a permanent feature of economic system. I think path number two would be an utter disaster. So I am regularly and daily urging the president, use the leverage to get this win. He notes that the path that would be the win is ultimately having next to no tariffs. While having a 10% tariff is not something astronomical, and it's certainly something the market can swallow, the market will adjust to this. It's not the big win that we're hoping for. Another thing that hasn't been decided yet, even though it was brought up, is digital exports, in fact services. Right now we don't have deals of whether or not the laws regarding digital tax are changing if they're lowering them or raising them, but it's something that we'll keep an eye on. But the reason that the market isn't rocketing up this weekend like President Trump hoped for is because of that new 10% baseline. Without that in the deal, if the United States had a 0% tariff, the market would be much higher today. Now let's go ahead and move on to some news about Google. When we look at Google, this stock is still struggling. It's down to around 155, and of course this came after the report that we talked about in a recent episode where an Apple executive said that Google's search is on the decline in Safari. Now the reason this is a big deal is because Safari is really popular. I know most people use Chrome. It is more popular than Safari, but a lot of people use Safari, especially on Apple devices, and especially on iPhones in the US. In fact, Safari is around 50% of mobile usage within the United States, so it is significant. And these comments from an Apple executive said that Google searches on the decline in the past month, and he attributed that to more people switching to AI. He said that Apple, since this investigation started, knowing that they may lose their partnership with Google, has been looking into other solutions, AI searches, including stuff like Anthropic and Perplexity. This news sent Google stock cratering and went down 8% in the day. And then on that same day, later in the evening, Google released a statement. Google's statement says, we continue to see overall query growth in search. That includes an increase in total queries coming from Apple's devices and platforms. More generally, as we enhance search with new features, people are seeing that Google search is more useful for more of their queries, and they're accessing it for more new things and in new ways, whether from browser or the Google app, using it for voice and Google Lens. Now, this statement seems like a direct contradiction to what the Apple executive said. The Apple executive said that Google search volume is on the decline in Safari. The Google executives are saying that Google search volume is growing, even on Apple's platform. How can both of these be true? Well, when we try to reconcile this, they actually can both be true. The Apple executive said specifically that search volume in Safari is on the decline, just in Safari. Google said that search volume overall on Apple devices has grown. And that's where we have the difference, a key difference in their statements. Likely what's going on here is Google's doing a decent job getting their Google app, a specific Google app, onto people's phones. When people use that app to search, they're not searching through Safari. So that app may be growing in overall search volume. People are using the Google app to search more, offsetting the decline in Safari volume. This will also hold true with other different aspects of Google, like voice and Lens and non-browser input methods. Google search is becoming more ubiquitous across devices. There's more ways to access it than just through the browser. So those other ways of accessing it are clearly offsetting the Safari usage. Now, Google putting out this statement caused the stock to go back up a little from 152 to 155, but it's still struggling. The story from Google is still a difficult one. Even though Google continues to paint the narrative that search is fine, volume is growing, everything's okay with this company, it's becoming more and more clear to people how incredibly useful artificial intelligence-based LLMs are and AI searches. Most young people, if you go to the average person, 15 to 35 years old, and you ask them if they're increasingly using AI-based LLMs to search, most of them will say yes, and we've seen significant growth in ChachiPT. That storyline is growing rapidly. Usage of ChachiPT is expanding rapidly, and it's becoming a huge force in the story of Google. There's always two sides to this. Even though ChachiPT is growing, it is true that Google trades at a historically low valuation, it has a healthy free cash flow yield and a low PE ratio, and Google's not only a search company. As Google investors will be quick to tell you, it has many other great properties, including YouTube, Google's network, subscriptions, cloud, and their other bets which includes the rapid growth and scaling of Waymo. We've seen the weekly trips go up substantially. From just 10,000 in Q1 of 2024 to now Q1 of 2025, 250,000 paid weekly trips per week. But as good as that is, this is still a very small part of Google. For example, the other bets section which includes Waymo's revenue is right there. You can barely see it. It's literally that very dark sliver of Google. It's a speck on their overall revenue. Google Search is the dark orange part right here, making up over half the company's revenue, and it's a very high margin form of revenue, higher margin than the majority of the rest of the company. So this is a significant cash generative part of Google, and if this part is under threat by LLMs, the stock is going to price that in. Now, so far in terms of what I'm doing with this position, I have not sold any Google. And as of now, if we factor in the story fund, I'm overall in the green in Google with both of my positions. I'm around $5,000 in the red in the passive income portfolio and around $11,000 in the green in the story fund. So around $6,000 in the green overall. It's been an okay position, but not a great one. It's always difficult to know what to do in these situations, and this is a heavily divided stock. In fact, in my own community, I see around half of the people currently believing that Google's one of the best buys in the market, they're buying shares left and right, and the other half selling out. They believe that ChatGPT and other LLMs are biting into Google's moat, and it's time to exit for different positions. And both of them have decent arguments. This is one of the most dividing stocks that I've ever been involved with. Peter Lynch talks a lot about these type of positions where you have concerns about the fundamentals of a company. He says that there's no shame in losing money on a stock. Everybody does it. What is shameful is to hold on to a stock, or worse, to buy more of it when the fundamentals are deteriorating. Determining whether or not Google's fundamentals are deteriorating is a judgment call. Right now, we're not seeing that in the numbers itself from Google, but we're seeing some data suggesting it. The rapid and substantial growth, all within one year, of would-be competitors to Google. That is a concern, and it shows that there is fundamental deterioration with Google's moat and search. In my own investing philosophy PDF that I go over my portfolio management, I say that I only buy compounding machines. I buy them when they're below intrinsic value. But importantly, I note that I do not sacrifice quality for valuation. I don't look for whatever's trading the cheapest PE in the market. In many cases, those are troubled companies that deserve their lowered valuation. And I also do not add to companies that are becoming less predictable. If a company is becoming more difficult to judge the outcome, the probability distribution of its success is becoming wider and wider, I don't add to those positions. I sell companies if I've made a mistake on my original analysis. I sell them if the company no longer meets my quality standards, and I sell them if there is a far more attractive opportunity. Right now, my consideration continues to be potentially swapping Google for Amazon. It technically makes a lot of sense. In fact, I have yet to hear a good argument against it. Amazon, like Google, is a vast, expansive company in many leading territories. But unlike Google, Amazon's advertising business is not under threat by some paradigm shift. There's no big chat GPT coming from Amazon. Their fulfillment network and infrastructure is not under threat. And even though today the company trades at an optically higher valuation, Amazon is aggressively pushing into capital expenditures. When that cycle goes through and their cash flow rises back up to historical norms, the company will be far more profitable. I'll likely be always holding some Google in my portfolio. But over time, I may trim some of my position in favor of Amazon. Now, moving on, we also have some news of another company that's doing quite well, which is Palantir. The fundamentals are very strong and the company stock price has surged. In fact, Palantir is one of the top 10 most valuable U.S. tech companies currently. After an 8% stock increase on Thursday, it brought its valuation to $281 billion. That puts it ahead of Salesforce, which closed at $268 billion and had previously been ranked 10th. Palantir surpassed the legacy tech giants Cisco and IBM earlier this year. Microsoft tops the list at $3.3 trillion, followed by Apple and Nvidia. Now, here's the entire list. We look at the top 10 companies. These are tech companies in the United States. We have Microsoft, Apple, Nvidia, Amazon, Google, Meta, Broadcom, Tesla, Oracle, Palantir, and then Salesforce, ranging from $3.3 trillion to $268 billion. When we look at the Ford PE of these companies, we have ones like Microsoft at a 30 Ford PE, Apple at a 27, Nvidia at 27, Amazon at 30, Google at 16, Meta at 23, Broadcom at 30, Tesla at 137, Oracle at 23, and Palantir at 196, and then Salesforce at 25. It seems like a few of these companies are not like the others. Obviously, when we're looking at this list, there's a couple that stand out. Palantir's at a 200 Ford PE, and Tesla's at a 137. The rest of these companies in the top 10 list are orders of magnitude cheaper on their Ford PE than either of these companies, but rather than focusing on Tesla here, we'll do that in a minute with the Cathie Wood piece, I'd rather focus on Palantir. When we look at Palantir, I just want to compare it to one company that it's now surpassed market cap, which is Salesforce. Anytime an investor invests in a company, they're hoping to get a return, and that return is in the form of money. They want the company to pay them back money. It's either called free cash flow or earnings. Both of those are forms of accounting that show the money that's coming back from the company to the investor. In terms of yields and in terms of ratios, these are just quick ways we can use to look at the ratio that we're paying compared to next year's expected earnings. For Palantir, it's actually now higher than 200. It's 235. Investors are paying 235 times that next 12 months earnings. In terms of free cash flow yields, we look at this like we're buying a rental apartment. This is like you buy an apartment for $100 and then every year you get back $0.22. That's the return that you're getting for your $100. Would you pay $100 to get back $0.22? Probably not, so you're assuming a lot of growth in this formula. You believe this $0.22 is going to grow to $0.50 and $1 and $1.50 and $2. You believe the amount of cash flow is going to grow so much that it'll make this investment worth it. If we look at Salesforce, by contrast, it's trading at one of the more mid-range valuations, 24 times next 12 months earnings and a free cash flow yield of 3.5. Meaning if we bought this thing for $100 over the next 12 months, we can expect to get back at least $3.50. Now these ratios of PE ratios and free cash flow yields can always be a bit misleading. One thing that can clear this up is by looking at our assumptions of the future more clearly with what's called a reverse discounted cash flow calculator. Now that sounds really complicated, but it's very simple. You plug in assumptions on each of these companies, and then you get to see the outcome based on those assumptions. And this is exactly what I did for both of these companies and posted it on Elon Musk's X. I posted a reverse DCF on both Palantir and Salesforce. Here's the assumptions that it had. For Salesforce, I assumed that free cash flow per share would grow at a rate of 10%. Just 10% free cash flow per share per year. They've been growing much faster than that. And that the company would have a free cash flow yield that's rather high, meaning the valuation is rather low. A 4% free cash flow yield. If we make those assumptions, 10% growth, 4% yield, these are very moderate, I would say even low assumptions. We get a nice 13% return. That's pretty good. For these assumptions to get a 15% return per year, we need to buy the stock at $259. But again, even buying it today, we get a 13% return. Now, I did the same type of thing for Palantir. But instead of 10% free cash flow per share growth, I assumed a rate of 50% free cash flow per share growth for five consecutive years. That's really difficult. Most companies struggle to get 30% or 20%, even fast growing companies. Ones like FICO don't grow 50% per year for five consecutive years. So this would be astronomically huge free cash flow per share growth. And then on top of that, I assume half the yield, which means it's trading at double the valuation of Salesforce. A 2% free cash flow yield. When we make those assumptions, we get a return of 12.3%, which is still lower than Salesforce. Salesforce was 13%, Palantir was 12%. Now, the reason that I highlight this is because it puts in numbers the assumptions you're making and the outcome. Now, a lot of people pointed out that this isn't a fair comparison because Salesforce is a old company. Comparing it to Palantir is like comparing apples to oranges. And they said that I'd leave it alone unless you want to coin flip and gamble. I got this same comment many times to which I replied each time. That's fine. Let's not compare it to anything. What are your assumptions of earnings per share growth or free cash flow per share growth of Palantir over the next five years? This simple question of just asking Palantir investors, what do you assume the company is going to do in terms of growth for the next few years led to people being stumped. I didn't receive a single answer. This post was viewed 44,000 times. It got 400 thumbs up. Tens of thousands of people viewing this and not a single one would answer the question of what their simple assumptions are over the next five years. In fact, I got many replies like this one. Anyone trying to do old school analysis on Palantir is going to miss the boat. So apparently, just asking what do you think the company is going to do in terms of earnings or free cash flow per share over the next five years is old school analysis. Trying to look at a company through the lens of how much money it will produce is old school now. New school analysis is apparently to not focus on silly things like earnings or cash flow. To just invest in the company because, well, it's the leading company. What you're paying for it, how much it produces in cash is not a concern. And maybe they're right. Maybe it is a time where investors don't pay attention to cash flows. They don't care about valuation metrics, but I still do. I'm still at that point. Call me old school, but I'll continue buying companies that I think are growing very quickly, producing tremendous amounts of cash and have overall really good risk reward profiles. Salesforce may seem like an old company, and that's true. It's been around a long time, just like Palantir. But Salesforce's free cash flow per share is not growing slowly. Last year, it grew at 33 percent. With their moderate revenue growth and margin expansion, this company's free cash flow generation is speeding up. So I still consider this one a good buy today. Now, finally, we get to one of our favorite institutional investors, which is Cathie Wood. And she shows us that even though you're an institutional investor and you have lots of resources, you can still be really bad at investing and you can still lose a lot of money. Here's the latest with Cathie Wood explaining her price target on Tesla. Yes. Well, as we have put out there, our target in five years, 2030 again, is $2,600. And our confidence in that number has gone up now that Tesla is commercializing robo taxis in August, in June. What we don't have in that number and what is happening faster than we expected. And as you know, we're very focused on learning curves and how quickly new technologies are going to evolve. Humanoid robots. And Elon has been talking about that market being bigger, ultimately, than the robo taxi market. And he talks about Tesla being number one globally when it comes to humanoid robots, and also says that China is number two to 10. So we have to get moving on that score as well. We think that's a $26 trillion revenue opportunity split between home and industrial in the next five to 10 years. It's going to be a huge market. And the reason Tesla is ahead of the game is we're talking about the three platforms it's already innovating on. Robots. Robo taxis are robots. Energy storage. They will be electric. And AI. Those are the three technologies. In the humanoid robot movement as well. There she is again. Once again, invited onto primetime CNBC with very little pushback to try to pump her favorite stocks. This time, her price target for Tesla matches her price target five years ago. It's 10 times higher than the current price target. A price target of $2,600, which is roughly 10 times, maybe around eight or nine times of where Tesla stands today. So she picks a stock, one of her favorite stocks. She says it's going to go up 10x of where it is today. And if it doesn't do that, she just pushes back the timeline by another five years. If you recall during 2021, she said that in 2025, Tesla would be worth 10 times what it is today. Well, Tesla has been flat since 2021. Now in 2025, she's saying Tesla will be worth 10 times what it is today. It's always the same calls. And there's always this big grandiose bull case. This time it's humanoid robots. Something that wasn't even on her radar five years ago. But now that's the big bull case for Tesla. And keep in mind that Tesla today is already one of the highest valued stocks in the market. It's already trading at an extremely premium multiple. Tesla is the second highest P.E. ratio right behind Palantir. It has a P.E. of 137. It's around four or five times the valuation of any other leading tech company except Palantir, which I'll note, at least Palantir is growing quickly. Palantir is growing really fast while Tesla's revenue has remained flat and even declined. So Tesla is trading with an extreme premium without any current growth. One thing that I'd love to see, just a recommendation for CNBC the next time that they have Cathie Wood on her show to pump one of her stocks, is just to put up the stock price over the last five years of ARK ETF, of her flagship ETF. Over this exact same time period where she's down 13 percent, the S&P 500 is up nearly 100 percent, the QQQ is up likewise nearly 100 percent. She's been outperformed by nearly every hedge fund that's bought just a basket of random companies. She has one of the worst performances and highest volatility of any institutional fund manager. But yet she's still given primetime TV with little pushback to go and push her stocks. I've warned about Cathie Wood before that she gives out these extravagant price targets that they're highly likely to not happen. And anytime they don't happen, she just pushes them back further. If Tesla works out this time, she'll take credit. If it doesn't, she'll just push the timeline back further. Now that's going to be it for this episode. See you in the next one.