Three Signs the Bottom is In | WAYT?

ELI5/TLDR

The stock market just had a rough quarter, but Josh Brown and Michael Batnick think the worst might be over — with about 60% confidence, which they’d like you to know is not exactly “pounding the table.” Their evidence: the most panicky small traders are buying protection at levels only seen during COVID, investors are flooding into cash at historic rates (usually a sign of a bottom, not a top), and the stocks bouncing hardest are old-economy physical-infrastructure companies, not the usual tech darlings. Meanwhile, the US-Iran conflict is the elephant in every room, OpenAI just raised $122 billion like it was nothing, and most people still don’t understand how dividends work.

The Full Story

The Bottom: Maybe, Probably, Who Knows

The episode opens on the question everyone in markets is asking in early April 2026: did the S&P 500 just put in its low? The VIX sits at 25-26, the S&P is down less than a percent after a four-day rally, and the mood has shifted from panic to cautious optimism. Michael puts his confidence at 59%. Josh mocks this as wishy-washy and bumps his own to 69%. Then Michael, in a moment of candid self-awareness, explains his real strategy:

“My strategy is more about being right on camera than doing anything with my own money for this particular subject.”

He settles on giving the bottom a 40% chance, which he notes is the perfect hedge. If markets crash, he looks smart. If they don’t, nobody will remember the conversation. Josh calls this “how you do it” and means it as a compliment. This is professional market commentary at its most honest.

The three signs they cite for a potential bottom:

1. Retail panic hit COVID levels. For only the third week ever, the smallest options traders spent a third of their volume buying puts. The only other times this happened were during the COVID washout.

2. Historic rush to cash. Flows into money markets and cash-like ETFs over a rolling three-month period are at levels that historically coincide with market bottoms. Could get more extreme, but the “zone” has been entered.

3. Broad participation in the bounce. 53% of tech stocks are up 5% since the local low, and the stocks leading the recovery are not the usual suspects.

The War in the Background

All of this market analysis comes with a rather large asterisk: the United States is in an active military conflict with Iran. President Trump has issued an 8 PM deadline threatening to, in his words, wipe out an entire civilization, followed by “God bless the people of Iran.” The market’s reaction to this rhetoric has been to largely shrug.

“If traders took him at face value that he was going to wipe out a civilization, the VIX would probably not be at 26.”

Josh frames the Strait of Hormuz situation as a hostage scenario where the hostage is not a person but 20% of global seaborne oil. He questions why the Department of Defense didn’t plan for what seems like Iran’s most obvious leverage point. The political and military commentators he listens to suggest the White House expected a Venezuela-style negotiation — throw money at someone reasonable — but, as Josh puts it, “we’re not talking about rational people.”

One research firm, Satorini, sent an analyst (known only as “analyst number three”) with $15,000 in recording gear and a speedboat into the Strait of Hormuz to see what’s actually happening. The strait is not closed; Iran is collecting tolls. Wall Street research is apparently not yet fully replaceable by AI.

Ed Yardeni, a veteran market strategist, declared Monday was the bottom, noting the US actually benefits from higher oil prices as an energy exporter. His reasoning on how the oil eventually flows:

“One way or another, the oil is going to come out of the Persian Gulf.”

Josh’s response: “What’s the other way?”

The Great Rotation: Mag 7 Out, Old Economy In

The most structurally interesting story of 2026 so far is getting zero attention because the war is consuming all the oxygen. Value stocks outperformed growth in Q1 by the widest margin since 2001.

Two trillion dollars has left the Mag 7 stocks. Where did it go? Into Exxon, Chevron, Walmart, Micron (now a $430 billion company, which genuinely shocked both hosts), J&J, Applied Materials, Caterpillar, Costco, Intel, GE Vernova, Lockheed, and others. Every single one of the top 20 contributors to the S&P 500’s year-to-date return is a physical infrastructure company. Not one sells software or information. Many have been in business for a century.

Meanwhile, the stocks getting destroyed are the ones retail investors actually own: Tesla, Adobe, Salesforce, Robin Hood (down 54%), Coinbase (down 60%), Block (down 80%), Nike (down 75%), Walt Disney in a 550% drawdown. Palantir peaked in November 2025, which in retail-investor time might as well be the Mesozoic era.

The skepticism around value’s staying power is warranted by history. Josh points out that on the long-term chart, value outperformance quarters are rare and almost never consecutive, while growth runs last for years. The collective memory of getting burned by “value sucker rallies” keeps most investors from committing.

“You’re not gonna trick me again into buying the 10 PE stocks.”

Michael thinks this time has legs. The underlying driver is a structural shift from asset-light to asset-heavy businesses, with AI spending pressuring margins at the big tech companies while their suppliers — particularly semiconductor firms — collect the checks.

BlackRock vs. QQQ: The Fee War Comes for NASDAQ

BlackRock is launching its own NASDAQ 100 ETF (ticker: IQQ), likely priced at 12 basis points versus QQQ’s 18. State Street is also entering the game. Something has clearly changed — likely an exclusivity arrangement expiring — though neither host bothered to look this up beforehand.

The QQQ analysis is sharp: $376 billion in assets, split roughly 45/55 institutional/retail. Existing holders won’t switch because of embedded capital gains. Hedge funds won’t switch because they need QQQ’s liquidity and its ecosystem of derivatives. But new money, institutional non-taxable money? Six basis points is six basis points.

They point to iShares’ own precedent: IEMG overtook EEM in emerging markets ($136 billion vs. $25 billion) by offering a lower fee, and that was self-cannibalization within the same firm. QQQ’s moat has been penetrated, even if the castle still stands.

The segment also surfaces a fascinating historical footnote: Invesco ran the third-largest ETF in the world for 26 years and essentially pocketed nothing from it. The original 1999 licensing deal sent $500 million annually to NASDAQ and $109 million to BNY as trustee. QQQ was basically a loss leader that bought Invesco brand recognition.

Jamie Dimon’s Letter: The New Buffett?

Jamie Dimon’s 48-page annual letter to JP Morgan shareholders prompts the question: is this the new Berkshire Hathaway letter? The consensus is no. Millions read Buffett’s letter, translated into Asian languages. Nobody outside the financial services industry reads Dimon’s.

But the numbers back up why perhaps they should. JP Morgan’s return on tangible common equity sits at 20%, versus Wells Fargo at 14%, Bank of America at 15%, and Citi at 7-8% (though Citi has been “restructuring for 48 years”). The stock has returned 20% annualized over 5 years versus 15% for the financials index. Over 10 years: 20% versus 13%.

Josh makes the case that Dimon earns his opinions:

“This is a guy that literally delivers for shareholders on every time frame.”

The bank’s secret, they agree, is not just about winning — it’s about not losing. JP Morgan bought Washington Mutual, Bear Stearns, and First Republic at crisis prices, each time because it had the fortress balance sheet to be the buyer while others were the wreckage. $41 trillion in assets under custody. A 227-year-old institution.

OpenAI: $122 Billion and a Podcast

OpenAI raised $122 billion at an $852 billion valuation. Amazon put in $50 billion ($35 billion contingent on an IPO), SoftBank and Nvidia each contributed $30 billion. For context, the next largest raise in history was Saudi Aramco’s IPO at $25 billion. The comparison, as Josh puts it, is like charting Michael Jackson’s record sales against the rest of the Jackson 5.

Anthropic, meanwhile, announced $30 billion in annualized revenue run rate, up from $9 billion at end of 2025, with enterprise customers spending over $1 million doubling from 500 to 1,000 in under two months. For scale: that’s more revenue than Charles Schwab or McDonald’s. Josh notes the accounting is somewhat creative — Anthropic books cloud revenue that flows through Amazon’s infrastructure — but even discounted, the growth rate is staggering.

The more entertaining segment is OpenAI’s reported acquisition of TBPN, a daily tech podcast, for roughly $100 million. Ben Thompson of Stratechery called it nonsensical:

“OpenAI might be the short bus at the end of the rainbow. There’s supposed to be a pot of gold there, but it never quite seems to materialize.”

Josh’s counter-argument is less elegant but possibly more correct: Sam Altman just got savaged by an 11-month New Yorker investigation. OpenAI is going public this year. Owning your own media outlet with a million viewers is not insane — it’s the same impulse that drives every billionaire who buys a newspaper. Michael points out that Josh is essentially calling anyone who disagrees an idiot for questioning someone building a trillion-dollar company, which is the Elon Musk defense and has, historically, been correct about as often as it’s been wrong.

Dividends: Most People Have No Idea

A Meb Faber survey found that only 25% of individual investors understand how dividends actually work — that when a stock pays a $5 dividend, the share price drops by $5. The other 75% think dividends are free money, like bank interest. Even among professionals, only 60% get it right. Meb’s own audience scores better (80% of individuals), but his audience is, by definition, the nerdiest cohort of investors that exists.

Biotech and Netflix

Michael makes a quick bull case for biotech, favoring XBI (equal-weighted) over IBB (cap-weighted). The XBI-to-IBB ratio suggests room for the smaller biotechs to catch up. Technically, 130 is the trigger level.

The mystery chart turns out to be Netflix, which Josh identifies instantly because he looks at it every day despite not owning it. The setup: risk 9 points to make 20, with a clean stop at 90. Fundamentals are strong, they just raised prices, and they now have every live sporting event imaginable. Both agree it’s one of the better risk/reward setups in the market.

Claude’s Take

This is a good episode of smart people talking about markets with appropriate humility, occasional self-awareness, and minimal pretension. The hosts are at their best when they’re honest about what they don’t know, which is frequently.

The “three signs the bottom is in” thesis is reasonable but comes with the caveat that both hosts openly admit they’re guessing. The sentiment and flow data they cite is historically meaningful — extreme retail put-buying and cash hoarding do tend to cluster around bottoms. But “tends to” is doing a lot of work. The Iran situation is a genuine wildcard that could render all the technical and sentiment analysis irrelevant overnight, and they know it.

The most valuable insight in the episode is the rotation story. The data on $2 trillion leaving Mag 7 and flowing into old-economy stocks is concrete and verifiable. The observation that every top-20 S&P contributor this year makes physical things is genuinely striking. Whether this persists is unknowable, but the “concentrated market can’t survive if leaders fall” thesis has been clearly disproven in 2026, and they deserve credit for having pushed back on it in real time.

The OpenAI/Anthropic revenue discussion is where the analysis gets thinnest. They correctly flag that Anthropic’s revenue accounting is questionable (booking cloud pass-through as revenue), but don’t push hard enough on what “real” revenue looks like for either company. The TBPN acquisition debate is entertaining but inconclusive — Josh’s “Altman wants his own media outlet” theory is plausible, but “plausible” and “$100 million well-spent” are different claims.

The dividend literacy segment is genuinely useful for anyone who manages money for other people. If 75% of your clients think dividends are free money, that explains a lot of portfolio construction preferences that don’t make economic sense.

One thing worth flagging: the hosts’ confidence in calling bottoms, even hedged, should be taken in context. These are the same people who would have a show next week regardless of what happens. The asymmetry of being a market commentator — you get credit for right calls and amnesty for wrong ones — is something Michael literally says out loud, which is either refreshingly honest or a tell about how seriously to take any of this.