Mr. Money Talk

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Episode Transcript

(00:09):
This is Josh Arnold Miss Money Talkwith Judd Arnold here to answer your questions
on stocks, bonds, mutual funds, how you should position your investment dollars
including your IRA in four one k. But you do have to give us
a call at nine five two atnine two five five six oh eight.
That's nine five two nine two fivefive six oh eight. You always get

(00:32):
straight talk, not sugarcoated advice.Before we begin, have to give an
additional disclaimer. Of course, allinvestments do fluctuate in value, can lose
money as well as gain to gainmoney. Past performance is no guarantee of
future results. Markets are always changing. The opinions that we share are hours

(00:58):
Judd's and mine and hours alone fordiscussion purposes only. Please consult the financial
advisor before making any financial decisions.Nothing on this show is investment advice.
Let's hop in there. We goa big, big, big week on
Wall Street and even even in adinah, but we'll focus more on the

(01:21):
stuff that goes on on Wall Streetrather than what's going on in a dinah.
We had the the FED meeting inthe middle of the middle of the
week, and of course the marketreacted similarly to how it has reacted in
the past. Market hads moved upon the fed's announcement and then seals off

(01:47):
during FED Chairman J Powell's conference call. We had big earnings announcement from some
of the largest players in technology,Microsoft, Google, Meta Slash also known

(02:07):
as as Facebook. We had McDonald's. We had Coca Cola. We had
occurring Doctor Pepper. We had abank merger that was very very interesting and
took took some more risk off theoff the table. We had Japan coming

(02:32):
in with an interest rate movement announcement. We had information coming from China that
still issues with their economic growth,so more stimulus in China is being provided.

(02:53):
And then we have next week,at least for me, a big
earnings week with several of my leisurerelated companies in Caesar's Palace, MGM,
and Draft Kings reporting as well asmy big two Apple and Amazon reporting on

(03:14):
on Thursday. Just a lot ofinformation, But to me, some of
the will say takeaways from this week. One the FED is going to did
raise interest rates in other twenty fivebasis points. They continued saying that they're
going to be flexible and data dependent. However, it's still how do you

(03:39):
show an eye roll on the radio? How do I roll my eyes on
the radio? I want to knowthat. I think it's just I think
it's just my voice in flex JayJay Powell, that is absolute best to
try try so hard. He's reallyattempting to convince people that he may raise

(04:00):
rates again. Well, he mightraise race, he might. There's spite
despite the fact that on Friday,Friday, we had the PC which is
one of the curse, the PersonalConsumption Index, which is considered the Fed's

(04:20):
primary tool in evaluating UM inflation,and that was only up point two percent
year over year over year, andeven less month over months, and that
would indicate point two times Twell,well, there's two point four percent inflation.

(04:43):
Um, Okay, there's still worried. The FED is still worried about
too many people working and being paidtoo much money. And they're still worried.
We have a strong we have astrong economing up. We have a
strong economy. Oh, don't don'ttell anybody. We had as better than
expected. We had an upward revisionto GDP. But all these all these

(05:04):
judge, all these strategists are stillsaying that they are right on recession,
and they might be, but theykeep pushing out when the recessions, when
the recession is going to start.Given you know, they're looking at what
the FED is doing. The moneymoney, money is tight, The Fed
is tightening money, raising interest ratesat a significant clip. We've trying to

(05:27):
bring down inflation, and the yieldcurve is still uh, significantly inverted.
When I had my throw stuff atthe screen moment a couple of months ago,
and it was on a Tuesday,we got some economic data that said
FED would have to raise rates moreand oil went down, and I just
said, this is ridiculous, andwe were talking about it, and we

(05:50):
just said that this narrative has goneon too long. That's it. And
we've been talking on this show formonths now that the bookcase for stocks is
that rates are five percent in twoyears, because what that has to mean
is that the economy is good.Yes, that's what has to mean.
And what we are seeing from thisearning cycle from the economic data is exactly

(06:16):
that. Which is the curve actuallythe curve being the bond curve, which
is there's one month, two month, three months, six months. Now
I think there's a nine month Tbill twelve months, two year, three
year, five year, ten year, anyway that you lay it all out
out to thirty years and you makea curve. Okay, when we say

(06:36):
it's inverted, it means rates atthe front of the curve, meaning the
one month, two months, allthe way after two years are higher than
the ten year rate. Now,normally the curve should be upward sloping because
the longer you lend money out outto somebody you want to hire interest rate
because you're taking more risk because morebad things can happen over time. Inverted

(06:57):
your curves typically meeting for sessions andwe've been to fating and the strategists,
as you mentioned, have been debatinghow is the curve going to resolve itself?
And it is what it is flatteningand what I would consider and you
would consider it to be actually avery fullish way, which is the back
end of the curve rates are rising. That's that would be a positive net.

(07:19):
The Barish scenario is the FED wego into de procession and the FED
has to cut short term rates andthe long rates are correct and it is
actually turning out to the opposite.So we had a good GDP print.
We had just a flurry of greatearnings. Again, these tech guys,
and let's just call out Mark Zuckerbergand Meta because he was the poster boy

(07:41):
on the way down, just spendinglike a drunken sailor. Why do we
stay drunken? I don't even knowwhat a drunken sailor is. But anyway,
you you you never you never metyour great grandfather. I did not,
But anyway, really just lightened onfire from a low on Meta.
You know, the new Facebook Ithink had bottomed about ninety bucks over three

(08:03):
hundred. It's going to take out. It's pandemic high. It's going to
take it out either this year ornext year. I mean they are cutting
costs, raising round. I mean, everything is working for that stock.
So that's tech land, then anold economy land. One of the big
bearcases. And we'll get this wasthe other thing that's just been fueling it,
which is the left tail. Lefttail risks are bad things, right

(08:24):
tail risks are good things. Oneof the left tail risks in the market
has been how does this banking crisispost Silicon Valley Bank resolve itself. So
that's a big, big, bigdeal. And we had one of the
resolutions this week, which is pacWest, one of the troubled banks banks

(08:46):
training at fifty cents from the dollara book value, A lot of terrible
loans on that balance sheet did gotbought by a much more pack West is
about a forty five billion dollar assetbank got bought by Bank of California only
eleven billion in size. Plus theygot a four hundred million dollar co invests

(09:09):
that has the ability to be upsizedby another three hundred millions, so potentially
seven hundred million from two huge reputableinvestment firms, Warburg Pincis and center Bridge,
effectively blessing the transaction. The oldstock heel traded up, and now
you have the seeds of private equitycoming in and all these troubled banks getting

(09:31):
fixed, and that is a bigdeal. The KIRI, which is the
bank Regional Bank index, has ralliedsharply, has to rally sharply because that
was in wors than bear market condition. Well it's worse, but from a
price to book basis, they neverreally got cheap on average. There were

(09:52):
a few that traded to fifty centsfrom the dollar book value, but the
average regional banquet set in their pointypoint nine times book. Now, thanks
are still a terrible place. You'vegot raising cost of regulatory capital and indeed
the ft JED just come out laterthis week raising regulatory capital requirements, which
is going to push more money intothe shadow banks. But all in all,

(10:13):
there's a reason we're off nineteen anda half percent year to day in
the SMP five hundred. Welcome back. We'll come back and explain more of
that when we return. When wereturn. This is Josh Arnold, mister
money talk with Judd Arnold here toanswer your questions on stocks, bonds,
mutual funds, how you should positionyour investment dollars including your IRA in four
oh one K. Give us acall nine to five two nine two five

(10:35):
five six oh eight. You'll alwaysget straight talk, not sugar coded advice.
This is Josh Arnold, mister moneyTalk with Judd Arnold here to answer
your questions on stock, spawns,mutual funds, how you should position your
investment dollars including your IRA in fouroh one K. Don't hesitate to give

(10:56):
us a call nine to five twonine two five five six oh eight.
That's nine five two nine two fivefive six oh eight. Do you always
get straight talk, not sugarcoaded advice. Do remember, nothing that we discussed
on the show is actual investment advice. In this for discussion purposes only.
Please consult the financial advisor before makingany financial decisions. Investments contain risk,

(11:18):
including risk of loss. Let's go, Let's go. We finished the last
segment talking about some of the regionalbanks and how with the bank merger of
Bank of California buying pack West,that some of the issues relating to regional
banks seem to have been taken outof the awsome table and that has given

(11:41):
the market some point, took offleft tail risk, which is downside risk
in the market. Very important thingsin this transaction. Number one, no
government support. That's very very interesting, very helpful. All the past deals
this year of involved government aid.This had no government aid. That's number
one. Number two, you hadtwo smart investment serves come in, make

(12:05):
an initial four hundred million dollars investmentand get the right through wards to put
in another three hundred million, whichthey're probably going to do. Number Three,
I think this is three yea allstock transaction. So if you're pack
if you're a pack West shareholder,and why the board decided to do this,

(12:26):
you're looking at raising capital in adilutive way, potentially going under,
or you can take fair value effectivelybecause they didn't get much of a freeman
and they actually got a little bitof a discount on the stock exchange ratio.
Okay, but that's better. Butyour your shareholders get to participate in

(12:50):
the new security, so over timethey're going to end up better. So
it was a win win win,and they hope, they hope they're going
to do well well. Bank ofCalifornia traded up in pack West actually traded
up, you know, because it'sa fixed exchange ratio, they would have
traded up as well. It tradedup as well, so you really look
at it was just a win winwin across the board. And now private

(13:11):
equity, and it's not just privateequity, this is just all financing,
you can say corporate America or reallythe world in general, which is now
that you've got the blueprint of atransaction and the market received it, well,
you're gonna get copycats. Well.That had been talked about or has
been talked about numerous times in thepast that on there are too many banks,
and two there are too many banks, bank consolidation should be on the

(13:35):
table. Yeah, we are inMinnesota and I will make a little aside.
The United States, I think ithad ten thousand banks. You're something
crazy. Europe has far, far, far fewer. So when people talk
about consolidation and banking, they needto remember something. The reason why the
United States has so many banks ismost of them are agriculture slash farm banks

(13:56):
Okay and City Group, JP,Morgan and whatnot are not the right institutions
to bank farmers. Why you wantthe person banking a farmer to know the
attributes of the farmers land. That'salways helpful that you want to bank,
and that is that any type ofon any type of loan, to at

(14:18):
least understand your business and to endor the business cycle that you're dealing with.
Yeah, so we're always going tohave structurally in the United States just
a lot more banks than the Europeans. But yes, consolidation, we maybe
we have a few too many,but anyway, that's a that's a flight
aside. Back to the market upnineteen and a half percent year to date,

(14:39):
the market being the SMP five hundredas opposed to the dal Jones because
of dal Jones Index is only upabout six percent the year to day.
Well, the equal weighted SMP fivehundred, Please explain, equal weights hundred
is market cap weighted, so thebiggest companies are a bigger share of the
index. The top ten companies aremore than thirty percent of the index,

(15:01):
so the other four nine year lessthan seventy percent. The equal weighted means
they're all weighted exactly the same.You take one hundred divides, you know,
five hundred into one hundreds or whatis that point point two which one's
got a point two weight? Ofcourse they move, you know, so
I don't know how often they rebalancethat. But the equal weights only at
nine and a half percent, tenpoints behind the S and P five hundred.

(15:24):
Now, what a lot has goneon this year is tech has rallied
because it's done better. After twoyears, it's done a heck of a
lot better. They cut costs andrevenue is kind of held in there,
and the rest of the market hasreally led. Banks, which are twenty

(15:45):
percent of all stocks outstanding, havedone terrible because of Silicon Valley Bank and
all the other bank failures. Thatis starting to reverse, but generally most
stocks had this recession question where investorswere unwilling to bid them up fearful of
a recession. And what we startedto reverse over the last couple of months

(16:06):
is investors are once again buying intothose quote unquote cyclical and economically exposed stocks
now in order to do that,because money money is always at a premium,
it would seem that the tech techstocks or many of the technology stocks
have stopped going up as money andmaybe coming out of them and going into

(16:27):
some of the other other names.I'm gonna get fancy right now. Oh
good. The study that we didaround COVID, so we're trying to figure
out what to buy first. Welook back twenty five years at what rallies
first. Tech always rallies first.The reason it rallies first is it as
the best balance sheets and as themost growth and the most growth that's uncorrelated.

(16:48):
So this is just a normal rally. And for the people debating whether
this is a bear market rally ora new ball market, it feels a
lot like this is a new ballmarket. And now we saw the lows
last October. Now it doesn't meanwe can't go lower from here. Probably
ken the average year we've got threeto four or five percent selloffs. But

(17:10):
the bear case, as we justtalked about the bank, we lost the
left tail risk with the banks,which is good. Earnings have come in
better than expected for this quarter.GDP has been upwardly revised. We have
a soft inflation print, so theFed is winning. We have the bond
market doing a bullish flattener, whichis a fancy way of saying, race

(17:33):
in the back end are rising inresponse to better economic activity, flattening an
inverted ye old curve, and you'rejust you're seeing just a strong economy.
The Fed. I don't know ifwe're going to soft land it, but
the Fed has seemingly beaten inflation withoutsix million people losing their job. Well,

(17:56):
that to me would be a hugething. But the Fed keeps it,
still keeps banging banging out. We'vegot to well, he has to
hire, he has to job unemployment, he has to he has to
job. The now Austin, wait, what has been the fuel for this?
Keep in mind the death ceiling dealallows for four to five I think

(18:17):
it's four trillion of new death spendingover the next two years, two trillion
a year. The government if that'ssignificantly. Yes, we'll call it.
That's a lot of fiscal stimulus maninto the market, and the IRA,
the Inflation Reduction Act, which hadabsolutely nothing to do with inflation reduction,
by the way, it was amap of suspending bill. It is a

(18:37):
big part of that. So it'sjust we're waiting, bears are waiting and
waiting for something to break this market. You look at credit, it looks
fine and all the anecdotal stuff thatthe faults aren't rising. They're sort of
in line OMF, which is onemain financial A subprime lender showed him proven

(19:00):
credit mathematrics lending Club. Another subprimelender, near prime lender said, the
problem isn't default. The problem iswe've got wider credit spreads in some air
pockets of credit just because there's somuch supply, because banks are shedding assets.
And that's being reversed obviously. Sonow let me ask you as you

(19:22):
ask you this and then we cancontinue on in the next next segment about
this. There is a concern ini'll say in the market marketplace about consumer
spending, and a lot of theconsumer spending has been going to travel,
we'll say travel and leisure and notto buying buying things, and the traveling

(19:48):
leisure stocks have done pretty well.But at the same time, there is
a concern that student loan student loanmoratorium is going to be ended in September,
and that means that those students orformer students are gonna have to start

(20:11):
paying back their student loans. Andmany of those people during the moratorium took
on other debt, whether it becar debt or mortgage debt or I don't
have been out on their door cards. How would that impact There's a question
that student loan thing's a big questionbecause that you're going to hit four hundreds
basically four hundred dollars a month fora lot of people who can't afford four

(20:33):
hundred dollars a month is what thetheory is the offset to that. You
have a really strong labor market andyou have upward movements and raith sorry wages
O suy in wages. So Ijust I don't think that's gonna be the
straw that thanks for the camel's back, because the camera is so vertical at
this point. Okay, don't geta job now. Will this impact leisure

(20:56):
spending potentially on the margin, ButI just don't think this is going to
be the thing that matters. We'llsee macro is really hard, macro meaning
a big picture question like that.So it's something we're monitoring. I don't
know. It doesn't seem scary enoughto me yet, but what is scary
as We had to take a breakand we will be back. This is

(21:18):
Josh Arnold missed or money Talk withJudd Arnold here to answer your questions on
stock spawns, mutual funds, howyou should position your investment dollars including your
IRA and four oh one K dogive us a call nine to five two
nine two five five six oh eight. You always get straight talk, not
sure your coded advice. This isJosh Arnold missed money talk with Judd Arnold

(21:44):
here to answer your questions on stockspawns, mutual funds, how you should
position your investment dollars including your IRAin four oh one K. Don't hesitate
to give us a call nine fivetwo at nine two five five six oh
eight. That's nine five two ninetwo five five six oh eight. Always
gets straight talk, not sugar codedadvice. To remember that this program is

(22:06):
for informational purposes only. UH.Nothing should be considered investment advice. Please
consult up the nacial advisor before makingany decisions. All investments contained risk,
including risk of loss. Let's go. Let's go still on a big,
big picture, big picture question,uh, in terms of consumer behavior and

(22:27):
spending. Uh, you know,going going forward? If if in fact
there are a lot of i'll sayindividuals with the student loans, and you're
saying four hour every month is fourhundred bucks a month. I saw a
report from TransUnion that said it wasonly three hundred dollars a month. But
either either way, that could bea significant amount of money for people who've

(22:51):
taken on additional debt. How doyou think that might resolve itself going forward?
Or maybe it won't, or maybeit won't have any impact whatsoever.
Men and nations act rationally once theyhave exhausted, exhausted all other options.

(23:11):
There there you go. That's thatis a famous quote on international diplomacy.
Four hundred dollars a month is notinsurmountable in this job market, if you
will will upward movements and wages.We have very tight employment, meaning there
are way more yet there's way moreneed for labor than labor is supplied.
Okay, you are gonna have togo back to work four hundred bucks a

(23:34):
month. Hustle. I don't meanto be rude. I don't mean I
must have had set had a toughset of parents, you know when you
were younger that said you had ahustle here and earned some money. I
had parents that taught me the invaluablerules of life. Number one, a's
mean you can do anything. Numbertwo, money equals freedom. Number three.

(23:56):
To get money and to be free, you must have discipline. There
you go, okay, well you'revery very discipline, and I know you
do take a discipline approach to Lookingat at companies. Now, two of
the areas that you have invested inhave had a difficult time this year,

(24:17):
one being an energy and two,we'll say in some of the small small
companies, well that had formerly beenspecial purpose acquisition companies. Well, let's
talk about, like, so energylagged a bunch this year at the start,
I mean, I think at theWID, the XL that's the energy
sector ETF. You can also lookat the XLP, which is producers,

(24:41):
or the OIH, which is servicescompanies. But we'll just talk about the
XL, which is the SMP fivehundred energy ETF that was down I think
about eleven percent year to date atthe lows now after two huge years,
by the way, and I'll giveyou a break, sat So Ximvel's done
nothing this year, absolutely nothing.Well, they weren't real good in terms

(25:03):
of their earning earnings report that cameout on Friday, right, If you
have held Xonmobile for three years,your keger, your annualized growth rate is
forty four percent a year. Sothere's a little bit of a catch up
going on, which is names afterconsolidate and whatnot. Where we are positioned
in energy, which is offshore drillersand the boats that supply them, that

(25:27):
is heating up in a big way. And we're talking about transition, which
is take her R I G.Tidewater which is our biggest holding, and
offshore which is the boats to servicethe rigs that to take your tv W
N E which is Noble Corpuses theother one I would advise people to look
at. But we have a shiftfrom onshore production to offshore. Off Shore

(25:51):
has been in a bear market foreight nine years. All the big three
offshore guys report next week starting Tuesday. Tuesday, Wednesday, Thursday, three
in a row, Transocean Valaris thanthan Noble, all of the services guys
have said off shore spending is goingto go vertiical five hundred billion dollars of
new projects, which is just that'sa hu huge amount of money. Huge.

(26:12):
We have a massive catch up,that's where the money's going. So
that's exciting. You know, tidewaterwhich we got into last year at twenty
north to sixty right now, sowe're we're feeling good about energy. I'd
say on the producers side, that'sa much harder trade because US producers,
which have worked really well, shaleis kind of pieced. Okay, give

(26:34):
me an example of a producers orsever eog Okay, guys who drill and
shale. Okay, Occidental Petroleum Buffet'sgot a bunch of it. You can
look at that stock chart. It'sdone nothing for a year and a half
since Ukraine and they all these facts. They had a big move from Ukraine.
But shale growth is really slowing aswe pivot to offshore. Most of

(26:56):
the US producers are shale focused.And when you don't have growth, being
an energy company, a tech company, in any company, without growth,
you don't have the stock that workscorrect. Now we do have the oil
price consolidating and that has bounced fromI think it dipped under seventy bucks.
It's now about eighty bucks as well. Eighty is kind of the goldilocks zone

(27:17):
where consumers can pay at the pumpand the producers make a ton of money,
which is great. Oil demand isincreasing and that feels kind of nice.
Terms of the spacks, look,my biggest position we've talked about it
has been Pagaia ticker PGY, whichis a lending enablement company. It's the

(27:37):
best way I can describe it.It software AI that helps people make loans
to consumers, auto and whatnot.This stocks all the spacks they come at
ten bucks. This thing fell tofifty cents and a lot of spacks by
the way of fallen and we've we'vesort of picked up the wreckage. Open
Door was another one that people weweren't involved with, just to give people

(27:59):
reference. One from twenty five toone. Huge moves. Now open Door
has gone from one to four anda half. Pagaya has gone from fifty
cents to two fifty. So alot of these that have been left forget.
If you will have rallied a lot. A lot of these stocks seem
to me to be very very speculative, A lot of them are A lot

(28:22):
of them aren't going to be aroundin a couple of years. And you
know what we try to do isfind the ones where you have good balance
sheets, well funded, not alot of leverage, business models that make
sense that they I'm not gonna saybaby out with the bathwater, but you
get the idea. It's a hugedislocation. And some of these things were

(28:42):
mispriced. And this is a littlebit Buffet esque from the early Buffet days
where he's trying to buy cigar buttcompanies that are just a little cheap.
So we shall see, but thatstuff has really started to rally. A
lot of the COVID IPO class aswell, has started a rally after bottoming.

(29:03):
We had two big ones have beenTeldoc, which Teledoc I think hit
three hundred during COVID fell all theway to twelve and now back mid twenties,
up Start, another lending company hitalmost four hundred, fell to eleven
and it's now back to sixty five. Huge moves in these things. So

(29:25):
with a lot of these unseasoned acquisthey are not suitable for most people.
Please be careful, but we havewe have certainly done well with Pagaya up
over one hundred percent in i'll callit five weeks in that thing, which
is you know, always nice tohave a big winner like that. A

(29:45):
lot of these names that are goingto start reporting next week, in the
week after so next week or Isay, this coming week is the last
week of quote unquote real companies reporting, and then once you get to the
second week of August, like AugustAugust ten, now you're getting an the
plankton that I don't mean the plankton. I mean you still have all the
retailers still have to report. Thoseare plankton. Nobody invests in retail.

(30:08):
Retail yet serious retail is big.There are a lot of people who participate
in retail and one retail to dodo very very well. I just don't
think retail is what people what itused to be. It's non indicative of
anything so much. Guys are omnichannel. What we've always hated about retail
stocks is they have no volatility mostdays of the years. Then four days

(30:30):
of the year when they report earnings, they can go up or down.
Twenty five percent. The hedge fundguys always seem to have the number that
you don't. And what's craziest.After working at a few hedge funds,
I talked to a few of thebig consumer portfolio managers and they would tell
me crazy stuff like this is anearning season that even if I had the
number, if you told me thenumber, I'd only be right sixty percent

(30:53):
of the time on what the stocksgoing to do. So when you know
that's the pros, they invest millionsof dollars to figure out, you know,
in a legal way. Some obviouslycrossed the line, but facts that
move that much on earnings every earningsare very hard to own. Wrong term,
So I think they're trading vehicles andthey're not for everybody. If you

(31:17):
miss the early part of the show. Let's do the quick recap before we
take a break. The FED isnear the end. They've defeated inflation largely.
We're now rooting as a firm forhigher rates. Why are we rooting
for higher rates because it means thatthe economy is doing good and the market
has shifted from higher rates being badto higher rates being good. Corporate earnings
have come in better than expected.We've got a lot of companies blow the

(31:41):
lights out, and we recently hada bank merger with pacweston Bank of California,
which is a harbinger of the finalresolution of the Silicon Valley banking crisis.
With all of that markets up nineteenand a half percent, that's the
SMP five hundred. We are stillbullish and we will be back. This

(32:04):
is Josh Arnold missed or money Talkwith Judd Arnold here to answer your questions
on stocks, bonds, mutual funds, how you should position your investment dollars
including your IRA in four oh oneK, give me a call and give
us a call nine five two ninetwo five five six oh eight. That's
nine five two and nine two fivefive six oh eight. You'll always get

(32:24):
straight talk, not your coded advice. This is Josh Arnold, Mister money
talk with Judd Arnold here to answeryour questions on stocks, bonds, mutual
funds, how you should position yourinvestment dollars including your IRA and four oh

(32:45):
one K. Don't hesitate to giveus a call at nine five two nine
two five five six o eight.That's nine five two nine two five five
six oh eight. You always getstraight talk, not sur coded advice.
Please please remember usual caveats apply pastperformances no guarantee of future results. Markets

(33:07):
are always changing, All investments canfluctuate in value. This show is for
informational purposes only. All opinions areJudds and mine alone. Any investments discussed
may not be suitable for you.Please consult an advisor before you make an

(33:35):
investment. But again, should youneed any help, don't hesitate to call
us nine two, nine to five, five, six oh eight. Again,
this has been a very very big, big week week on Wall Street
that the S and P continued it'smove up interest rates. I'll say the

(33:59):
interest rate curve is starting to stabilizeas the long end of the curve is
coming up to meet the short endof the curve. The Federal Reserve did
raise short term interest rates in othertwenty five bases points and said they could

(34:21):
raise them raise short term rates again, but they are going to continue to
be data dependent and be flexible.My sense has more FED governors come out
and talk over the coming weeks andmonths until the next FED meeting, which
will be the end of September.FED speakers will continue to emphasize the higher

(34:49):
for longer. There's still more workto do in dealing with inflation. That
said, it seems to me thatmarket participants are moving away from looking just
at the FED to looking at whileI say, more on a micro level,
and looking at what companies are doingand how companies have been responding to

(35:14):
this the current market market and thecurrent economy. The economy seems to be
a lot better than most strategists,most people in government had anticipated. The
economy seems to be fairly resilient,and that has been shown pretty much in

(35:42):
individual companies earnings reports that have beenbeen coming out, and more companies have
been beating estimates. Whether those estimateshave been reduced coost or not is you
know, has been another another story, because estimates for companies earnings and companies

(36:08):
sales have been coming down since lastyear, and many strategists who make predictions
about the direction of the market upor down had seen earnings estimates coming down
the economy slowing, and they hadbeen predicting that the SMP five hundred would

(36:34):
be quote more in the three thousandrange rather than close to a recent high
in the forty five hundred forty fivehundred range. There have been a few
more bullish analysts who have will say, speculated that the S and P five

(37:04):
hundred is going to finish the yearcloser to forty eight hundred than we'll say
the bearish analysts who are looking forthe S ANDP to finish the year at
thirty thirty seven hundred or thirty eighthundred. So there's a pretty still a
pretty big bet. More strategists thannot that I have listened to or read

(37:32):
are still saying to underweight stocks andoverweight bonds and or fixed income. And
when they talk about overweight or underweight, they're typically talking about an acid allocation

(37:52):
model of keeping sixty percent of yourportfolio in stocks and forty end of your
portfolio in bonds. Last year,that sixty forty portfolio was under under underwhelming

(38:14):
as it finished in you know,double digit uh double digit negative negative territory.
And if I were to just bejust take a look at long term
bonds measured by the Long Term BondsIndex UH market symbol TLT, that was

(38:34):
down a third as much as andit was down as much as the nadsdeck
in index. So as bonds,which are seen by most strategists most advisors
as providing an an offset against thevolatility of stocks. Last year, with

(38:59):
interest rates rise very quickly, thatoffset wasn't there. And many of these
strategists are still recommending overweight bonds becausethere are the belief that if you do
have a recession or an economic slowdown, the FED is going to drop interest

(39:19):
rates and drop interest rates quickly,and that would push up bond prices and
push down yields. Well. WhileI have been wrong before in my assessment
of interest rates, is I'm onrecord believing the interest rates we're going to

(39:43):
go up a lot sooner than theydid at this point. I would look
and take the Fed's word that interestrates on the short term because that's what
the FED can set are going tostay higher longer than anticipated. So,

(40:06):
okay, if you want a fourand a half percent or five percent short
term yield on your investments, thatis safe. Okay, parking money in
short term government bonds may make sense. Me, I'll say me. We

(40:27):
typically keep up to and our assetallocation model typically keep up to thirty percent
of our funds in cash, bothfor safety and for opportunity. And I
say up to, so sometimes youknow, the cash portfolio was a lot
lower and the stock portfolio because weare more growth stock investors, Judd focusing

(40:55):
more on small and mid sized companies, me focusing more on larger capitalization growth
companies. Have found over time thatthat has gotten the best the best results
over time. So we're going tostick with that. The big thing that

(41:20):
I can leave you with this weekas stocks. Uh, stocks still doing
well. Uh, And I believeand that's broadly speaking, but even specifically,
any company that has has mentioned artificialintelligence has seen their stock get a

(41:43):
lift. And it does not matterwhether it's been a Google or a Meta
or even Microsoft, though Microsoft stockdropped significantly this week after their their earnings.
Earnings from wort On you more fearson computer sales, personal computer sales

(42:06):
slowing down, and Microsoft did makea comment on Friday that artificial intelligence could
be slowed if they're having issues gettinggetting specialized chips. But McDonald's talked about
artificial intelligence. Huh, there's afood company talking about artificial the use of

(42:28):
artificial intelligence. I saw a transportationcompany doing doing the same. So just
pay attention to how artificial intelligence goingto be used. But a beneficiary for
artificial intelligence is still right now.Chip companies and the two leaders in that,
Nvidia and Advanced micro devices, aregoing to be at a forefront.

(42:54):
Both of these stops are trading atvery high levels price to earnings and price
to sales, but that is wherethe market right now seems to be pointing
next week. As I said,I'm going to be waiting for Apple and

(43:14):
and Amazon's earnings next Thursday. Goingto be interesting. In the meantime,
we're here to help call us ninefive two nine two five five six o
eight. Josh Arnold Investment Consultant isa registered investment advisor located in a state
of Minnesota. All securities discussed arefor informational purposes only. Investing contains risks,
including risk of loss. Consult yourinvestment professional before making any decisions about

(43:37):
your investment portfolio.