The Number One Question Facing Investors, How the US Became Recession Proof, Why Tech Stocks Might Underperform Going Forward With Datatrek’s Nick Colas and Jessica Rabe

**Josh Brown** (0:13)
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Welcome back to an all new edition of What Did We Learn? On today's show, we're going to answer one of the biggest questions facing the stock market today.
How much more time will investors give the hyperscalers before they turn negative on capex spending? You guys, I actually think this is the question, because this is where all the earnings growth is coming from.
OK, I'm here with Nick Colas and Jessica Rabe, my friends, and the co-founders of Datatrek Research, and the authors of Datatrek's morning briefing newsletter, which goes out daily to over 1500 institutional and retail clients. Nick and Jessica also have their own YouTube channel, which you can find a link to in the description below. Guys, welcome back. Somehow it's halfway through the summer. Hope you're enjoying yourselves.

**Nick Colas** (2:03)
So far, so good.

**Josh Brown** (2:05)
All right.

**Jessica Rabe** (2:05)
Thank you for having us back.

**Josh Brown** (2:06)
Yeah, no, always my pleasure and a treat for the audience. So Nick, we're going to start with you.
I guess the headline is this time is different, at least a little bit, but this framing of this being the biggest question facing investors, I really think this is the key to the second half. If we think that all of a sudden CapEx announcements and actual spending are not going to be greeted with the same amount of enthusiasm as they have been over the last couple of years, it changes an awful lot about what we think will work in the stock market and what we think may not work. You broadly agree with that idea, I think.

**Nick Colas** (2:53)
Absolutely. I couldn't say better myself.
All right.

**Josh Brown** (2:59)
Tell us what we need to know.

**Nick Colas** (3:00)
Okay. Let's pop up the first slide because this is a three-point discussion and it really goes back to something we've been talking about with clients for the better part of one to two years now.
This is really underpinning not just the CapEx question, but literally every single important part of the market, including valuations. Let's just dig in right into it. The title of this first slide is this time is at least a little bit different. And the framing here is over the last 15 years, we've had a recession in the US for just over two months, 1% of the time during the pandemic crisis. In the prior 15 years, we had recession 14% of the time. In the 15 years before that, it was 13% of the time. So we have had literally no recession for the better part of 16 years now. And that is highly unusual. Aside from two months in the pandemic, which we'll put an asterisk on, it's been a remarkable long string of growth and it's not like we didn't have a lot of reasons for the economy to go into recession. 2011 Greek debt crisis, 2015 global growth scare, 2018-19, first year out of Fed policy mistake and there are tremendous tariff and trade uncertainty. 21-22 an inflation surge, 22 again the oil price spike from the Russian-Ukraine war and 500 basis points of Fed rate hikes. 2023 regional bank failures, 2025 and 26 huge trade policy shock last year and an equally huge oil shock and Mideast war this year. I've been doing this 30 plus years. I can tell you any one of those would have snapped us into recession literally overnight over any one of those catalysts and yet we didn't have a recession. And so the big takeaway is something feels different. And I covered the autos, I covered cyclicals in the 1990s and I was acutely aware of recessions. We studied recessions, we looked at it from an industrial standpoint. And this period feels very anomalous to someone like me who's been doing this such a long time that that recession framing kind of stopped working. And the question is why. So let's pop up the second presentation slide.