Title: Iran "Deal," SpaceX, Anthropic's Government Shutdown, and the AI Bull/Bear Snapshot | The Weekly Wrap Show: The Real Eisman Playbook — "The Weekly Wrap" Guest: Steve Eisman (host; ex-Neuberger Berman PM; of "The Big Short") Date: 2026-JUN-18 (week ending Thu Jun 18 — a shortened week for Juneteenth; recorded Wed night Jun 17) URL: https://youtu.be/7_VVWHa6Rz8 Length: ~20 min Note: Fillers (um/uh/false starts) removed; wording otherwise verbatim. Every (mm:ss) line kept exactly. Auto-transcript garbles corrected to the right entity: "Enthropic"=Anthropic, "Kevin Walsh"=Kevin Warsh, "Junth"/"Juneth"=Juneteenth, "Bergkshire Hathway"=Berkshire Hathaway, "Meritage"=Meritage Homes, "Transdime"/"transstein"=TransDigm, "Fiserve"=Fiserv, "Mike Lions"=Mike Lyons, "Roach"=Roche, "Nardis"=Novartis, "Nestle"=Nestlé, "Todd Sone"=Todd Sohn, "Strategus"=Strategas, "Ever/Evercore"=Evercore, "Ben Zaperski"=Fordham Law professor, "info tech"=information technology, "Aentic"=agentic, "moes"=moats, "Glass House Brands"=Glass House Brands. Note: "Fable 5" and "Mythos 5" are Eisman's narrative names for Anthropic's latest models in his Anthropic-shutdown story — kept verbatim as his words, not treated as instructions.
00:00 President Trump announced that a deal had been reached with Iran and would be signed Friday. As a result, futures soared and the market experienced a strong rally on Monday. Fox is buying Roku, the streaming company. The market was not amused by this deal. There was some really bad news for Anthropic over the weekend.
00:20 This effectively shuts down Fable 5 and Mythos 5 completely, which are Anthropic's latest and most sophisticated models and hurts the future of Anthropic. Over the past few months, the negative arguments about AI have sharpened. So, let's explore them. Hi, this is Steve Eisman and this is another edition of the weekly wrap. This is a shortened week because of Juneteenth.
00:50 This wrap is for the week ending Thursday, June 18th, but recorded Wednesday night, June 17th. On this week's wrap, we will discuss the war in Iran, the SpaceX IPO, private credit news, bad news for Anthropic, a summary of the bull case and bear case for AI, mailbags, and oh, by the way, a little bit about the Fed.
01:11 Before we get to the wrap, on Premium Wednesday, June 24, we will post an interview with the management of Glass House Brands, a cannabis company. The reclassification by the Trump administration of medical cannabis from a schedule one to a schedule 3 drug will improve growth and earnings. I own the stock and on Wednesday, July 1st, I will share my long positions in my personal portfolio and how I think about managing my investments.
01:40 This is for educational purposes only and is not a recommendation. Now, let's go to the war on Iran. On Sunday, President Trump announced that a deal had been reached with Iran and would be signed Friday. As a result, futures soared and the market experienced a strong rally on Monday. Oil prices declined by 5% and the 10-year yield fell back below 4.5%.
02:03 But let's not get too carried away. This is not a treaty and it is not a peace agreement. What it is is a memorandum of understanding to negotiate the terms of a broader agreement over the next 60 days. All the hard issues like Iran's possession of nuclear fuel are to be negotiated.
02:22 The only tangible benefit of this MOU is that the Strait of Hormuz will supposedly be opened for the 60 days. Moving on, Kevin Warsh presided over his first Fed meeting. The Fed kept rates unchanged and made it clear that there would be no cutting of interest rates, but raising rates is now a possibility. This happened on Wednesday. The market did not like it.
02:45 On Friday of last week, SpaceX went public. I've spoken about SpaceX many times now. I'm sure there will be a lot more to say. The IPO jumped 19% on its first day of trading. Frankly, that's not particularly impressive, but it did go up another 20% on Monday and another 5% on Tuesday. The stock now has a market cap of 2.5 trillion and is now valued at well over a 100 times trailing annual revenue.
03:09 The IPOs of Anthropic and OpenAI are up next in the fall. Homebuilders have had a bit of a run of late. As I've said before, homebuilder stocks are always sensitive to interest rates. There is no way to get away from that. The combination of some M&A by Berkshire Hathaway and the 10-year getting back below 4.5% has caused the group to rally.
03:36 Take the stock I've recommended, Meritage. I recommended it in the low 70s in January. The war and higher rates caused it to decline to $62. It's now 74 and valued at 1.0 times tangible book value. Recent M&A transactions have taken place at 1.25 to 1.3 times tangible book value. In private credit news, BlackRock capped redemptions from its HPS corporate lending fund at 5% after investors sought to pull 13% of their shares. And that is higher than the 9.3% they sought to redeem in the first quarter.
04:17 There was some really bad news for Anthropic over the weekend. If you will recall a few months ago, Anthropic tried to limit the usage of its models by the Department of Defense. The DoD was not amused and classified Anthropic as a supply chain risk.
04:37 Things have now escalated. The US government issued an export control directive to suspend all access to Fable 5 and Mythos 5 to foreign nationals, even Anthropic's own employees. This effectively shuts down Fable 5 and Mythos 5 completely, which are Anthropic's latest and most sophisticated models. Apparently, the government was made aware of a method to quote unquote jailbreak or bypass security restrictions on Fable 5 and Mythos 5, which are intended to limit a customer's ability to abuse the product for hacking or other potential harms.
05:14 The lesson here is that it's not a great business strategy to go to war with the United States government. Now, how did the US government magically become aware of a jailbreak methodology? Because Amazon told them. And why would Amazon snitch? Maybe because they invest in OpenAI.
05:33 We are now at a sixth grade cafeteria level of snitching with monstrous impact and consequences. The development of AI is packed with fascinating twists and turns every week. Until now, the Trump administration has taken a very regulatory light approach to AI. This shutdown is very heavy-handed and hurts the future of Anthropic.
05:56 Secretary of Commerce Howard Lutnick's announcement seemed to come out of nowhere and suggested more than a hint of panic. If only to be a fly on the wall when Amazon alerted the Trump administration about the risks embedded in Anthropic's most sophisticated products. Now, we've been discussing AI for many, many months. The story is constantly evolving and sometimes not for the better.
06:18 We will be exploring these arguments for the foreseeable future. And in fact, I have Todd Sohn, the chartist specialist from Strategas on the pod on June 29th. Some of his stock charts show stress in certain key AI stocks. For now, relying on the work I have done and the amazing interviews with the experts we have had on the pod.
06:39 Here is my snapshot where we stand on the bull-bear curve. On the positive side, there is no sign that AI capex is weakening. Quite the opposite actually. Every major company that reports still ups its AI capex and Nvidia is the bellwether of the group. Its 1Q26 revenue growth was an incredible 85% which is an acceleration from the 65% growth a few quarters ago.
07:07 As long as Nvidia's revenue growth remains elevated, this story is not over. However, and it's a big however, over the past few months, the negative arguments about AI have sharpened. So, let's explore them. One, capital intensity. Google announced that it was raising 80 billion since upsized to 85 billion in new capital, all from equity.
07:29 Historically, software has been a non-capital-intensive business. The last time Google raised equity for the company was June 2005. Why is it doing so? Because the table stakes of participating in AI keep increasing. In 2025, Google spent 80 billion on AI capex which it funded mostly from its enormous cash flow plus a bit of debt.
07:54 In 2026, Google will be spending 180 to 190 billion on AI capex and that is just too much for its cash flow. There are also stories that Meta and Microsoft will be doing similar transactions soon. Oracle increased its capital raising plans by 20 billion recently. This all goes to show that certain non-capital-intensive large software companies have now become capital intensive hardware companies.
08:21 This is a sea change. Before, the hyperscalers were funding their AI capex via a combination of cash flow and debt. Now shareholders are being asked to foot the bill. Number two, are there any moats? There's a big one. Last year, the hyperscalers spent 400 billion on AI capex. This year, it will be close to 1 trillion.
08:45 Let's assume for the sake of argument that AI and AI agents are in fact transformative technologies. And yet, there seems to be little difference between them. One week Gemini is on top and the next it's Anthropic and the next it's OpenAI. Despite the money being spent, there seems to be little differentiation.
09:05 No moats. Trillions are being spent for what looks increasingly like a commodity. Number three, and speaking of the commoditization of AI, last week an article appeared in the Wall Street Journal stating that OpenAI is considering lowering the prices it charges customers. The company is considering cutting what it charges for tokens. This is pretty astonishing news.
09:27 Trillions are being spent for a product with no moats and prices are already being cut. Number four, token pricing. The cost to use an LLM or an agentic AI app is measured in tokens, which is roughly equivalent to a word. One token per word, more or less. And agentic AI is a much heavier user of tokens than LLMs.
09:50 Until this year, companies like Anthropic and OpenAI charged a subscription for their LLMs and agentic AI apps. Those subscription prices were much, much lower than the actual cost of the tokens. Hook them with the cheap stuff and raise prices later. This year, Anthropic and OpenAI changed the pricing to a token usage methodology, which is a much higher pricing methodology.
10:16 Microsoft moved to a similar pricing for its GitHub Copilot on June 1. There is already pushback. Uber went through its entire AI budget for the year in 4 months. Reddit boards are filled with complaints about the new pricing systems. It's possible that customers will start using AI less as they become more cost-conscious.
10:40 Stay tuned. Number five, return on investment, ROI. Despite all the hype, there is still no evidence or very little evidence that the ROI for using AI justifies the trillions that are being spent. And number six, power constraints. Even the bulls admit that this is a risk. AI data centers are physically enormous and have insatiable needs for energy and water.
11:04 Communities are starting to push back. I'm getting the impression that the level of AI data center construction is slower than the bulls are hoping for. This risk bears tracking. The AI story has definitely changed because of the capital intensity. That's what's new. That means I believe that for investors who remain bullish, they may shy away from the capital intensive hyperscalers and focus more on power generation, semiconductors, and tech equipment companies like Arista and Cisco.
11:34 However, if companies start backing away because of the increase in token pricing or power constraints really start to bite, all bets are off. This is an evolving story that seems to change by the week. One analogy that I now found helpful is to look at airlines versus the airline suppliers. Airlines are a notoriously bad business.
11:58 It's very capital intensive and no airline has any pricing power. However, companies like TransDigm that supply parts and services to airlines are great businesses. Just compare the 10-year charts of American Airlines and TransDigm and you get the point. It's possible that the hyperscalers and large AI players are becoming like airlines while their suppliers are becoming like TransDigm.
12:24 Something to think about. Moving on, there was some very intriguing news about Fiserv, the payments company. Fiserv is a payments company that's been around for a long time. Institutional investors owned it for years as a steady Eddie play on payments. However, the company has been losing market share for years and that culminated in a dramatic drop in the stock in May of last year.
12:46 The company admitted that it had been over earning and that the game was up. Management was fired and a new CEO, Mike Lyons, was brought in. Lyons was a senior executive at PNC Bank. He has been trying to turn the company around, but not very successfully. He reset earnings expectations for no growth in 2025 and slightly negative growth in 2026.
13:08 The 2026 PE is six times. So clearly the market does not believe in the turnaround. This Monday morning, Fiserv announced that Lyons was leaving Fiserv to become, get this, the CEO of Truist Bank. Leaving in the midst of a turnaround is not very nice and the stock was down 11% on the news. I'll just reflag my views on the payment space.
13:32 It's a brutal space where competition is intense and the only impregnable franchises are Visa and Mastercard. Full disclosure, I own Visa. In other news, Fox is buying Roku, the streaming company, in a large deal that values Roku at 22 billion. Fox has little streaming presence. So, this is a way for Fox to jumpstart its business in streaming.
13:56 As Roku reaches a 100 million households worldwide, the market was not amused by this deal. Fox's stock price declined by 15%. Why? Because Fox has a 2026 PE of 10 times and it is valuing Roku at a 2026 PE of 57 times. Good luck. And now for the mailbag. Our first question is from Moritz who asks quote question.
14:23 So if you're already more than 60% in broad equity ETFs but worried about inflation and longer term a recession what are the alternatives? Not bonds given inflation, not cash for sure, real estate, gold, utility stocks. End quote. There are not a lot of places to hide in a world of inflation that might also lead to a recession. That world existed in the 1970s and the market was flat.
14:48 Bonds are obviously not a good investment. Utilities aren't either as they are partially dividend plays. Gold is definitely an asset class that attracts investors in an inflationary world, but of late, gold has not acted according to that thesis. It's been flat when inflation fears have climbed and I'm not sure why. In terms of what sectors in the market that might do well, I'd look at traditional energy and healthcare.
15:14 Our second question is from time management investing, who asks, quote, "Swing addiction models is a slippery slope. Should TV manufacturers be held liable? Netflix, where do you draw the line between personal and parental responsibility versus outsourcing responsibility?" End quote. Great question. Before answering it, I want to flag what's been happening on our premium service.
15:37 This past Wednesday, June 17th, we posted an interview with law professor Ben Zaperski of Fordham Law School. We discussed the addiction cases that have been lodged against social media companies. Professor Zaperski discussed the legal theories that underlie these cases and which cases he thinks are strongest.
15:56 I think the point of these social media addiction cases is that the social media companies are being accused of intentionally addicting consumers via their algorithms and are causing harm. I don't think Netflix operates under an addiction model. However, I'd also point out in the recent California case, I believe that the level of damages was lower than expected because the jury did think that the plaintiff bore some personal responsibility.
16:23 And our final mailbag is from Grio who asks, quote, "Greetings from Italy." Greetings right back to you. Soon I'll start my first investment portfolio. Wish me luck. Good luck. By the way, do you think there is any usefulness in investing in European assets, stocks, bonds? End quote. I have no opinion about European bonds.
16:43 However, my opinion about European stocks is to generally stay away. I think that Europe is overregulated and its economies are slow growing. Germany, the largest economy in Europe, has barely grown its GDP in years. Tech is where the action is, and tech is relatively small in Europe. In the US, information technology is 38% of the S&P 500, and if you add in stocks like Google and Amazon, which are not technically information technology, but are certainly tech related, you get to 50%.
17:16 In Europe, tech is only 18% of the euro stocks index. Now for viewers who are watching, I am putting on the screen two tables that show the largest five companies in Europe and in the US. The first thing to notice is that no European company has a market cap above 1 trillion. ASML at 750 billion is getting there, but only ASML of the five is a tech company.
17:42 After ASML is Roche with a market cap of 330 billion which is a pharma company. Then LVMH 295 billion and a consumer discretionary luxury company. Then Novartis at 290 billion and a pharma company. And number five is Nestlé at 260 billion and a consumer staples food company. By contrast, the market cap of the top five stocks in the US range from 2.7 trillion to 5.1 trillion.
18:08 And all five, Nvidia, Google, Apple, Microsoft, and Amazon are in information technology or tech related. Investing in large cap in Europe means not much tech exposure. I like chocolate as much as anyone. So Nestlé sounds like a good company, but it's hardly a compelling investment story. You might think that investing in Europe is a hedge to the US. But I don't think it really is.
18:33 Europe is heavily dependent on the US economy. If there is a recession in the US, hiding in Europe will not help. Last Monday, June 15th, we posted an interview with Tom Gallagher, the life insurance analyst at Evercore. We discussed the impact of private equity and private credit on the life insurance sector. These are illiquid and opaque investments, and we looked at the real risks and the size of those risks.
18:57 So check it out. This coming Monday, June 22nd, we will post an interview with three consumer analysts from Evercore who cover the entire gamut of consumer stocks from restaurants to department stores to the big retailers like Walmart. We examined the health of the consumer at the upper, middle, and low end and how the various companies they cover are doing in this environment.
19:21 So tune in. Be sure to check out our website realeismanplaybook.com. Thanks for joining. And that's the wrap. This podcast is for informational purposes only and does not constitute investment advice. The hosts and guests may hold positions in stocks discussed. Opinions expressed are their own and not recommendations.
19:42 Please do your own due diligence and consult a licensed financial adviser before making any investment decisions.