Mr. Money Talk

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Episode Transcript

(00:10):
Good afternoon. This is Josh Arnold, mister Money Talk with Judd Arnold here
to answer your questions on stocks,bonds, mutual funds. You should position
your investment dollars including your IRA infour oh one K. Don't hesitate to
give us a call five two ninetwo five five six oh eight. That's

(00:32):
nine five two nine two five fivesix eight. Joy, please join it.
Yeah. Everything we say on theshow is for discussion purposes only.
Nothing should be considered as investment advice. Some are All of the securities we
discuss on this show may or maynot be suitable for you. Do not
make an investment decision without consulting aninvestment professional. Investing in the stock markets

(00:56):
contains risk, including and especially riskof loss. There we go, but
no losses this week because it lookslike the Fed's done. The job's number
was okay, not great, notbad, so it looks like we could
have a soft landing, and themarkets rallied hard, with the equal weighted

(01:18):
SMP up over three percent this weekand the regular SMP up a little bit.
More. More importantly, banks,which have been the big source of
trouble, climbed. I believe aboutten percent this week, Well, the
banks in general, just specific No, the kra Regional Bank KRI, which
is the regional bank index. Iknow that. I saw an interview with

(01:42):
the old bond king, Bill Gross, who said that he was getting long
and very long the regional bank indexbecause of his belief that the FED was
done and that that would mean thatbond prices go up, yields go down,

(02:07):
and that would be a big boostto the regional banks. Yeah,
but the regional banks are still toast. I think it's a terrible trade.
But nonetheless, I mean, whatare you going to do now? Banks
of rally do I think point atimes book value? They're not worth point
eight times book value. They stillgot massive problems. What a rally in
the bank index is going to dois it's going to allow these regional banks

(02:28):
which are in deep, deep troublebecause they took a deposit surge during COVID.
They invest in all that money atterribly low interest rates and got torched.
Their Most banks are selling assets.We've already lost several banks, looking
Valley Banks, Signature Bank in NewYork. But what the rally in bank
stocks is going to do this week, and if it carries to the next

(02:50):
week. It's going to allow theseregional banks to issue lots of equity to
help cure the balance sheets, whichis good for systemic risk. It's great
for other sectors because it takes awaywhat they call a downside node, the
potential for ruin. And believe me, if the bank index rallies, well,
I'm sure this weekend, I don'teven have to wait. I'm sure

(03:12):
this weekend every bank board is beingtold by their regulator, you're going to
issue stock next week, because that'swhat the regulator are supposed to do,
and that's what these banks should havedone a long time ago. Well,
now, if they start start movingup, the dilution that they're going to
face, maybe not maybe won't beas bad as had been expected. But

(03:37):
as our listeners know, we arenot bank investors. We can do avoid
and I avoid almost like avoid,like the plague. Investing in banks to
me, not a good business tobe in. Ten times ten times levered.
You can get zero and they earnreturns on a wall you despite ten

(03:58):
times leverage, they're going to earnsub ten percent returns on equity. That,
sir, does not sound like agreat deal to make. And they
are all very poorly positioned. Ifyou're going to buy banks, you want
to buy them in twenty ten,twenty eleven, when things are really bad
but healing and you can feel goodabout buying a distress bank. Most of
the good banking investments of the lastthirty forty years have also occurred at somewhere

(04:21):
between point three and point four timesbook value. I'm looking at City Bank
way back. I think that wasin the late eighties early nineties when the
Prince the Prince came in and boughtPrince will Leave ben Fwall. You can
look at Wells Fargo in the midnineties when Warren Buffett and Tiger, the
original Tigers Julian Robinson's Tiger bought hugepositions and made a fortune. And then,

(04:43):
of course the unbelievable investment of BerkshireHathaway into Bank of America in twenty
eleven. That has turned out tobe I want to say, a seven
or eight bagger. So that's whenyou want to do it. We are
at point eight times book no reasonto touch any of this stuff, move
on, But we have to talkabout it, because banks and blow off
your portfolio, even if you don'tknow banks. I no, just in
talking about about banks, I gota question last week from one of my

(05:08):
clients asking if it meant anything thatlast week at this time, Jamie Diamond
announced that he was going to unloada substantial amount of his JP Morgan holdings.
Well, he's selling on twenty percent. He's never sold JP Morgan stocks
since he went over there, soit's about twenty years. He's getting older,

(05:30):
and I think he is also sayingI trade JP Morgan treats at a
huge premium to everybody else. It'sthe safe his bank, it's the best
run, and he's doing some estateplanning. And also the probability of it
being you know, materially outperforming theequity indexes for all the reasons we've stated
for the next five years isn't great. I would say another thing, which

(05:51):
is, don't read too much intoinsider sales with a company like JP Morgan.
It just doesn't mean that much,and inside advice don't mean that much
either. So with this, Ithink you can safely say we got a
lot of problems in the banking index. He hasn't sold for twenty years,
he's selling twenty percent of it asholding over the next year. By the

(06:12):
way, he's doing a blind youknow, let's call it ten B five.
So stock's done really well. Peoplesell when stocks go up. I
think he's up twenty twenty times hismoney on his JP Morgan. But he's
got a lot of stock com sohe's still going to be a huge holder.
People like reading the sea leaves.People are very susceptible to conspiracy theories.

(06:35):
Conspiracy theories, Oh yeah, conspiracytheories. I'll stay away from conspiracy
theories other than other than I'll justfocus in on corporate earnings and some of
the moves that I've seen in themarket this week, you know, going
going back to the banks, sawa lot of money over the last several

(07:01):
weeks being pushed into the Long TermTreasury Index t LT That was stated by
e t EF dot com and theiranalysis showed so much money going into t
l T that they likened it tothe Momo money that went into rolling.

(07:27):
I know you're rolling your eyes,and can I say why I'm rolling my
eyes? The US treasury market isthe most liquid market in the world.
Dare I say the Milky Way galaxy? So get serious that this really matters,
and I'll look at the the dailyvolume is up slightly, an extra

(07:47):
ten million ships. Get serious,Okay, it's very simple. We had
a FED. We had a FEDmeeting where Powell got up and basically said
the Fed's done. We had adata point with the employment number on Friday
that confirmed that view. And youhave a lot of people in bonds who

(08:07):
have been wrong all year trying totry to buy the bottom once again.
Once these things start rallying, theymove very quickly, and that's what we've
seen. We saw the ten yearyield, which less than no about a
week ago is five percent not evenhow about how about on Monday the ten
year yield was just a tad overfour point nine percent. Currently it's four

(08:30):
and a half percent. That isa huge, huge move in the ten
year, right. But I would, and I would underscore a huge point
that we've been making. Those buyingbonds for safety are taking huge macro risk
on mark to market. If youare wrong and yels go from five to
six, you're stuck in that security. Or you can take a ten percent

(08:52):
loss in a bond position right away, or you can hold that for ten
years or until yields get better.If you make a little bit of extra
money. Why has he made money? Because you correctly called the movement of
interest rates, which I'm going tosuspect people who want to clip coupons aren't
trying to do. But nonetheless,here we are. Well, that's another

(09:16):
area. So we're not bond investors, we're not bank investors. What we
are is stock investors. And wecan talk a lot more about stocks and
earnings when we come back with moremoney talk. I am Josh Arnold,
mister money talk with jut Arnold,always here to help you with your investments.

(09:41):
Call us nine five two nine twofive five six oh eight. This
is Josh Arnold, mister money talkwith jut Arnold, here to answer your
questions on stocks, bonds, mutualfo how you should position your investment dollars
including your IRA and four oh oneK. Don't hesitate to give us a

(10:05):
call. Nine five two nine twofive five six eight. That's ninety five
to two nine two five five sixoh week. You always get straight talk,
not sure coded advice. Big earningsweek for me and for Uja just
this past week. Wow, asthe earnests roll in, why don't we

(10:28):
talk about Apple? Say your piece, I'll say my piece. I liked
what Tim Cook said with Apple's Apple'snumbers, I liked. I liked that
I had cautioned clients as I normallydo, prior to earnings. I've been
cautioning clients prior to earnings four timesa year for the last twenty years with

(10:58):
Apple. When Apple comes out withtheir earnings, they could be they could
be great. But there is alwaysgoing to be some group of analysts or
some group of very short term tradersthat will focus in on some number within

(11:20):
Apples, within Apple's earnings performance,and focus in on that number and say,
oh, the end of Apple iscoming. Sell, sell, sell,
and I look and say, okay. Initially it was how many iPads

(11:45):
or iPods were they selling, andthat the focus was off any computer sales
or any music sales or services business. And one of the reasons that I
got into Apple originally was their servicesbusiness or their iTunes business, where Apple
was making thirty cents out of everydollar dollar spent. I said, heck

(12:07):
of a heck of a good business. Then Apple got into the added added
phones to that, and initially itwas oh, they can't sell any more
phones, and then it was oh, they didn't sell it as many phones,
et cetera, et cetera, etcetera. This time, let me
just finish, let me finish here, jud's this time. I just looked

(12:30):
and said, hey, they beatthe earth. They beat the earnings number.
They they slightly beat on the revenuenumber. Their margins are up at
forty five percent. Their services numberis now half of their iPhone sales business
and is growing growing faster. They'regrowing around the world. They've got more

(12:52):
products coming. Heck of a business, and they hold this amount of cash.
Hold on a second, they've hadrevenue to let's be a little bit
fair. The old okay, youcan earn an you can say, okay,
our revenue number is not growing overthe last year, all right,
five six years ago, this businesswas forty percent of revenue came in Q

(13:16):
four and it was a product company. Today half the revenue is services.
But since services is twice the marginof products. But you know, mid
sixties versus mid thirties, services,which is the monthly recurring revenue stream,
is now a disproportionate majority of theprofits of the company now while revenue has

(13:39):
declined four quarters in a row.So let's let's be fair. There the
composition of revenue continues to improve.Where the bullbear argument is is that you
have a stock still training at twentyseven twenty eight times earnings, which is
a premium to the market at abouteighteen times, and the average stock at
about fifteen. And what the bullswould say is, yes, the PE

(14:03):
multiple's really high. Yes, thecompany an aggregate is not growing. Revenue,
services continues to grow, and ifyou do the math, in the
next few years, as services becomesa bigger and bigger piece, it will
return to revenue growth. It willkeep buying backstock. And the valuation,
the PE multiple that you would giveto a services business is far higher than

(14:24):
a product business. But we arein a classic valuation fight between people saying
product product product declining over all earningsversus bulls saying the multiple makes sense because
of the margin inflection and the mixshift. So that's where we're going to be.
Where's the rubber meat this road.Let's just put it out there.

(14:48):
A year from now, Apple betterbe growing overall top line because the mixshift
continues. And right here, youknow, you could be rangebound for a
little bit as the mixshift plays outdifferent than the last time we had these
revenue fears. Buffett came in withBerkshire and bought the living daylights out of
this company. So I think theprice action ended the week about flat,

(15:11):
right, Yeah, well, actuallythe end of a weak up up just
to ted from where it was lastweek, and it was just down down
a little bit from where it closedon Thursday prior prior to the earnings.
I would say this too. Appleshould usually verse the other big tech stocks

(15:33):
the Magnificent seven. Apple should generallyoutperform in a down market, i e.
Hold up better because of the strengthof its monopoly, and in an
upmarket where risk goes back on itshould participate, but generally underperform a more
cyclical stock like Meta. Now toallset that from a portfolio perspective, you

(15:54):
also have a big position in am Z and Amazon, which should certainly
outperforming an update as it's more economicallysensitive. And that's how you're set up
from a portfolio perspective. Yes Iam, and you're doing very good,
Thank you very much. Amazon.You know a week ago did did gangbuster

(16:14):
numbers and and the stock has reflectedthat since Amazon reported their their numbers a
little over a week ago. Nowthe stock has gone from one nineteen to
one thirty eight, so not toofar off a recent recent high. But
I was jumping up and down withthat then then I looked at Mike My

(16:37):
casino names did a better better thanexpected. Both Caesar's and DraftKings reported very
very well. We had a veryinteresting report from AMD in that they missed

(17:03):
numbers, but they indicated they werecoming out with a new chip that could
be better, better, and fasterthan the videos uh gaming gaming chips,
And all of a sudden, oha m D which had been knocked down

(17:23):
came back very very strongly after aftertheir numbers. Of course, they might
have gotten a boost from some ofthe other semiconductors that were reported reporting this
week. You've got Starbucks beat andthe CEO and from Starbucks said we're going

(17:48):
to be expanding, and actually Starbuckslooks like it's going to be following Apple
into India. Starbucks has talked abouthaving an adition fifty thousand stores. I'm
guessing globally that's a lot of alot of stores. Look, I had

(18:11):
a beyond earnings. I think wejust had the level set here. The
market really rallied hard, not somuch because of earnings. But because the
perception from midweek confirmed on Friday withthe weaker jobs number that the FED is
likely done and the movement and thetime. That goes to a question that
one of my friends asked on Thursdaywhen we had lunch. With all the

(18:37):
problems that are going on in theworld, why is the stock market moving
up? And I said all hasto do with the FED and the direction
of interest rates and the belief thatthe FED could be done raising interest rates

(19:00):
right now yep. And I wouldalso say with everything going back in the
world, we have conflicts going onsossiarly Ukraine and Israel verse Hamas which has
not spread yet, that are inplaces that are not economically sensitive, and
where we can go from chaos inthe world to chaos in the market,
if particularly the Israel Hamas work becomesa war that impacts the flow of oil

(19:23):
out of the Persian Gulf, whichis you know for non Middle East people,
I would point out the other sideof the Middle East, certainly that
will have an impact, but thatdoes not happened, and indeed you saw
oil, a very key tell wasweaker all week as the war continues to
be look to be contained has alot came out. That's the Iranian backed

(19:44):
militia that controls the southern portion ofLebanon came out and said they are sitting
out the war for now, sowe will see all these things could flare
up. Obviously a lot of peopleare losing their lives and that's horrific and
we hope for peace and tranquility inthe world. On that note, we'll
be back. This is Josh Arnold, mister money Talk with jud Arnold here

(20:04):
to answer your questions on stocks,bonds, mutual funds, how you should
position your investment dollars. Don't hesitateto give us a call. Nine five
two nine two five five six oheight. Always here to help you.
Good afternoon again, this is JoshArnold, mister money Talk with jud Arnold

(20:30):
here to answer your questions on stocks, bonds, mutual funds, how you
should position your investment dollars including yourIRA and four oh one K. Don't
hesitate to give us a call.Nine five two nine two five five six
oh eight. That's nine five twonine two five five six oh eight.
Say if you missed the start ofour show, just a friendly reminder that

(20:52):
everything we discussed on The show isfor discussion purposes only. Nothing should be
construed as investment advice. Some areAll of the securities we discussed in the
show may or may not be suitablefor you. Don't make an investment decision
without talking to investment professional. Investingin the stock market contains risk, including
the risk of loss. All rightback to it, back to it,
there's this. Will continue to continuetalking about some of the earnings that have

(21:18):
been coming out, as well asthe market moving up with we'll just talk
it FED not only FED speak,but the FED seems to be on pause
in terms of reacting to inflation andraising short term interest rates. The bond
market reacted positively to the jobs jobsreport on Friday, and over the course

(21:47):
of the week and particularly since theFED meeting, the long long term treasuries
saw a yields drop, prices rows, and that will is that helped boost
the bank index, particularly regional banks, which we are not investors in,
UH brought up bond prices again notsomething that we want to invest in,

(22:15):
but also helped boost the overall stockmarket. It is interesting and focusing in
on some of what i'll call theI don't have to say broad lending market
jud and some of and one ofthe companies that you you follow, UH

(22:37):
very small company called Pagaya which haslet's we can talk about lending the specialty
lenders in general because Sofi, whichis one thing a lot of people follows
a key partner, Pagaya, PagayaTaker p g Y Sofi is s o
f I. What you're seeing generally, and you can talk about Schwab as
well is And this is something we'vebeen all over all year, which is

(23:00):
the banks which took in too manydeposits during COVID invested all that money in
very low interest rate treasuries or badloans and have blown themselves up. Banks
in aggregate the twenty the average say, the aggregate amount of bank capital is
about twenty three trillion dollars. It'sa big number, twenty three trillion.

(23:21):
It's about the size of GDP.But they are not growing their balance sheets.
They have to sell assets, firstbonds and then loans because deposits are
leaving the system. We over depositabout two trillion dollars and now we're you
know, we're trying to normalize thatnumber, which is about equal to the

(23:42):
amount of book equity in banks,you're seeing new lenders encroach and take share,
which is what you always see inindustries that pull back. So far
is a big one. They've beengrowing richer originations. This is a little
bit of a COVID darling. It'sin what they call it neo bank,
so most of it's online. Theyuse the ABS market to partially fun.

(24:04):
The CEO was an ex Goldman guy, which always sounds better than it is.
Not that Goldman isn't a great company, but but I just have found
the people who tread on the resume, so to speak of Goldman typically,
I always thought that Anthony Solo waswas was a was an analyst. Yeah
he's a Goldman guy. It doesn'tmatter. But what you're saying is they're

(24:27):
growing like a weed. And thenPaguya, which I'm invested in, which
which intermediates between banks that want tolend money and the ABS market that wants
to lend. That's the sec securitiesmarket. They get a fee for being
a middleman. They help make loansand there's a lot of AI behind it.
Those guys are growing incredibly fast andtaking share and effectively, our view

(24:51):
is the guys that can grow througha down cycle are going to grow the
best in an up cycle. Andyou're seeing on the flip side. Schwab,
for instance, which is obviously oneof the biggest broker dealers in the
country, they have a huge,huge problem because they bought tons of treasury
Schwabs really just a bank. Theybought tons of treasuries at one percent.

(25:11):
They've got losses if they were forcedto sell their treasuries, which they are
not, and I want to pointthat out they are not required to,
but if they were forced to sellthem at current market rates, the company
would be bankrupt. You have Schwabon the verge announcing ten percent layoffs and
you know, I'll fire people.Not that that'll make a difference. I
mean this is it's like trying tostop the win by leaning into it,

(25:33):
which doesn't really make sense. Leaningagainst the wind is a term of art
for people who are economic majors orPhDs or outside observers. So that's the
big picture thing that's going that's goingon in the lending ecosystem. One of
them, certainly. We also hadanother lender, Credit Acceptance Corps, which

(25:55):
is ticker CACC. They're one ofthe biggest subprime auto lenders in the country.
We're seeing auto for the first timeever have losses worse than the global
financial crisis. And people say,oh, my goodness, the sky is
falling. How could they do worsethan the global financial crisis. Well,
speaking of somebody who was there,auto loans did incredibly well during the global

(26:15):
financial crisis because it turned out,and this is a little bit old given
what's changed during COVID, but peoplerealize their house was overvalued, so they
were happy that. We're not happy, I should say they were more willing
to default on their house and sleepin their car than default on their car
and try to defend and put moneyinto their overvalued house. What we are

(26:38):
seeing now is the reverse because autosof people have bought a car recently,
they understand autos are very The priceshave gone up a ton because of the
COVID boom and supply chain fears,and so you're seeing as financial stress comes
that people are making a different choicethis time. So that is what is

(27:00):
going on now. Interestingly, creditaccept in SCORPSCACC posted dreadful numbers, seeing
rights of losses on loans made intwenty twenty one to twenty two. But
interestingly, and this is another callwe've made because credit has gotten tighter,
said go forward. Business I e. Twenty twenty three Business and beyond is
incredibly attractive and in fact more attractivethan business they've done in a very long

(27:21):
time. As banks continue to pullback from the market, allowing other lenders
to make outsized profits. Now,let me just just ask you just in
terms of other lenders, would youinclude like a firm and upstart in this
group? So it depends, SoI bring up a firm only in that
they kind of deal with Amazon onbuy now, Pay Later. They've already

(27:47):
been involved with Amazon and buy nowPay later. I would say a firm,
and we can get to Square.Square owns after pay, which is
the other big buy now, paylater lender. These stocks are down a
lot. I'm not sure the buynow, pay later business model worked in
a higher interest rate environment. Theseguys have been unable to sit to show
real profits. None of them have, in fact, And so these stocks,

(28:10):
while down nine percent from their peaks, are incredibly well. Little good
news can move them a lot.They're heavily shorted. I remain somewhat skeptical.
The same thing for Square and youcan talk about PayPal as well.
I think that's a little bit.It's a different business, and I am
much more skeptical there. These arehard businesses and there's no guarantees, certainly
with Pagaya, which I'm invested in, that that that ends up working.

(28:33):
And these are hi high risk businesses. But generally it was nice to see
going back to c acc an areathat's been tough for our best in breed
company, talk about better go forbusiness and despite dreadful numbers, the stock
rallying, which is typically a sideof the market bottom of course, that
was Wednesday in the stocks now up, I think ten ten earnings, is

(28:56):
the market really rallied a bunch?So that's what I would say there.
Well, I hear you, butI think that's all all these things you
know that I notice, you know, particularly having once invested in Square and

(29:18):
in pay Pal, primarily because Iused used the products, and I know
other people have used PayPal and throughpay PayPal Venmo uh and then Square using
their cash app, and both ofSquare and PayPal seem to be UH used

(29:40):
a lot by the problem that we'reseeing with Square. Yeah, the problem
with financial intermediation like that with paymentsthat we've seen with Square, PayPal audience
another one h A d y uhe y is the ticker. It's a
Dutch company. You're seeing margins comeway down. And I think one of

(30:02):
the truisms that we've seen through thesellf over the last eighteen months is that
Visa and MasterCard have really asserted theirdominance. And if you want to touch
payments, that's a lot better wayto do it, unless I'll say the
upstarts, if you will, notto point at upstart, but they need
to prove out their business model becauseyou're paying in terms of valuations. You
are paying a real valuation for thesecompanies and they could be zero, and

(30:26):
that when zero's on the table,you and I tend to get skitti shit,
very very not only antsy, butput up our hands. We're far
away, far away away. We'llbe asked for the last second. This
is Josh Arnold, mister money talkwith Judd Arnold here to answer your questions
on stocks, bonds, mutual funds, how you should position your investment dollars

(30:52):
including your IRA and four oh oneK. Don't hesitate to give us a
call two six eight it's nine fivetwo nine two five five six oh eight.
You always get straight talk, notyour code of advice. This is

(31:15):
Josh Arnold Minster Money Talk with JuddArnold here to answer your questions on stocks,
bonds, mutual funds, how youshould position your investment dollars including your
IRA in four oh one, K, don't hesitate to give us a call.
Nine five two nine two five fivesix oh eight. That's nine five
two nine two five five six oheight. Well, it is very interesting

(31:38):
to me jud to hear we'll saythe CEO of Target talk talking this week
and saying that to him and toTarget, consumers have cut back on spending,
and particularly in spending on groceries.That echoes some remarks made by Walmart

(32:00):
a few weeks ago that people havebeen cutting back on spending. Some of
that do, at least according toWalmart, and cutting back spending on food
due to the new diet drugs thathave been out for a while, but

(32:22):
their use has been set primarily fordiabetes, but now they're using for weight
loss, and that could benefit companieslike Eli Lilly or Novo North. But
I didn't want to move that wayother than just you know, focus a

(32:43):
little on some of the retail spendingand some of the differences that was going
on in we'll say consumer behavior andconsumer spending, where spending might be cutting
back on at Walmart and Target,people are spending and still spending money at
uh Lulu Laman or Sketchers or youhad brought up this this stock on shoes.

(33:13):
That's where money has been spent.And then then you know, I've
focused a lot on some other leisurecategories and this past week, uh Expedia
and price Line reported and pretty goodnumbers. So people are still spending money,
we'll say on experiences, and probablyone of the local experiences is the

(33:39):
money spent at Ticketmaster owned by LiveEntertainment, as they got a big boost
due to Beyonce and the new TaylorSwift, multi multi billionaire Taylor Swift.
I I think just a part retailis historically really really really really hard.

(34:04):
So we don't like businesses like Walmarteven or Costco, which has worked incredibly
well for every Costco, there's fiveother retailers that have gone bankrupt and for
longer term listeners. Are people interested. There is a podcast out there that
you can find in the last weekwhich is an interview with Charlie Munger and

(34:27):
Charlie Munger talking about who's been ahuge investor in Costco for a long time.
This is Warren Buffett's longtime business partner, and they asked him why he
couldn't convince Buffett to buy Costco despitethe stock working and Charlie had a very
good anecdote. Now, for peoplewho followed Berkshire for a long time,
they will know that Berkshire in thenineteen seventies owned a department store. They
owned the whole thing. And whatCharlie said was that Warren just has no

(34:52):
confidence about any retailer being able tomaintain business position over the long term and
that he is content to miss Costcobecause Costco is the exception. And the
rule is that most of these retailersgo under looking at j C. Penny,

(35:12):
Sears, Roba, camp Mark,you name it, and these guys,
you know, Charlie Munger and WarrenBuffett probably have a much longer list
than I can rattle off. Andthat is the difficulty with retail. So
we shall see. But certainly theWalmart. My point is is that people
are spending money on experiences. Yeah, but I I and we're seeing.

(35:39):
We're seeing that in hotels, we'reobviously seeing that gaming and cruise and what
have you. I think the secondderivative that people are trying to get an
economic read, I think is alittle bit more difficult of a read,
because spending patterns are changing, theamount of wealth concentrated in the top twenty
percent continues to grow and so on. Unfortunately, and this is the fate

(36:00):
of all societies. It's something calledthe Parado effect, which is the eighty
to twenty rule. For most people, they understand that way, which is
a greater and greater share of capitalgoes to the people with the most capital
over time. But I just struggleto see a second derivative, you know,

(36:21):
impact or read. And indeed itwas perhaps you know, confirmatory for
me in a confirmatory bias sort ofway. Seeing the ten you know,
the view of the Fed stopping withthe raid hikes and being done, the
ten year yield coming in from fiveto four point five percent very rapidly,
and the equity market indeed rallying aggressivelyon the back of that because the perception

(36:44):
is as rates come in, youknow, mortgage rates. Let's talk about
that you talk about freaking people out. The thirty year mortgage is over eight
percent right now. People are stuckin their homes. Most people refinance their
mortgage is incredibly cheaply. They're happywith it, but they can't move because
if they move, they lose themortgage. And so you haven't been read.
And that's that's really tough. Socredit card interest out really well at

(37:05):
the same At the same time you'reyou're talking about that, I've seen several
upgrades on home builders. Whether it'sof course because the homebuilders look at the
stock charts, you know, they'vealready discounted in the stock charts, they've
gotten obliterated. You can look atuh DHI, which is d R Horton
Holmes, you know, got torched, and you know, these things got

(37:30):
to start trading back to about bookvalue. You also have a secondary dynamic
going out with homes, which isparticularly hard for the millennials. They deferred
housing format, you know, householdformation. They they got married later,
they had kids later, they stayedin cities much longer. So we've had
demand for homes over the last youknow, since the global financial crisis,

(37:51):
be chronically low. That's now shiftedthese people don't have a choice. You
got two kids, you can't livein New York. I mean you can,
but you have to be Taylor swiftRidge or you live in the suburbs
and you're commuting an hour and ahalf each way. Well, speaking of
Taylor swift Ridge, I saw sawa report that one of the richest men

(38:15):
in the world is leaving a hightax state to go to a low tax
state. And Jeff Bezos leaving Seattlefor Florida. He avoids the seven percent
annual capital gains tax. He's abig seller of Amazon stock, obviously,
and he also avoids the potential ofa wealth tax that has been floated.

(38:38):
Now interestingly, this is what justmakes people like you and I laugh and
chuckle. The wealth tax that wasproposed in Washington State was supposed to bring
in three point two billion dollars ayear. Of that three point two billion,
about a billion six of that,so half was expected to come from
Jeff Bezos. I guess they're gonnahave to redo that math I always,

(39:01):
I always have you hear me laughing, of course, because I always I
always chuckle when people keep, youknow, the politicians and others keep saying
well, the rich don't pay theirfair share. And when you ask them
what is their fair share, giveme a number. Uh, well,

(39:21):
it's their fair share. Can't givecan't give a number other than the well
to do are not paying their fairshare, and we're paying. Uh,
we're paying too much. So ifthose guys over there pay more, then
we won't have to pay as much. Well, just remember, arguing with

(39:42):
the fool makes you an idiot.So well that's why I try not to
argue with a fool. I'm sureJeff Bezos, who create one of the
biggest companies of all time, tonsof employment in Washington State, massive economic
impact that generated tens of billions ofdollars and tax revenue, he's still the

(40:02):
bad guy there. But you knowpeople, these people, you can't convince
him. It doesn't matter. I'msure Jeff's really going to be crying living
on Indian Creek Island in Miami withit with the big boat and uh his
second wife. But on that note, well maybe maybe maybe the point is
he needs a place to dock hisboat now or I'm gonna have to get

(40:23):
any boat. In any event,We'll see everybody, hope everybody has a
great week. We got a bigweek of earnings coming up next week,
a lot to do, and we'realways here to help help you deal with
everything, the ups, down,sideways of the market. We're here to

(40:45):
help you uh create the kind ofwealth and only a few dream about.
This is Josh Arnold nine five twonine two five five six oh eight and
Judd Arnold two nine two five fivesix eight. See you next week.

(41:05):
Josh Arnold Investment Consultant is a registeredinvestment advisor located in the state of Minnesota.
All securities discussed are for informational purposesonly. Investing contains risk, including
risk of loss. Consult your investmentprofessional before making any decisions about your investment portfolio.