Episode Transcript
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Speaker 1 (00:07):
It's time for the plan Strong Financial Forum. You're a
weekly hot topic update from a leading Boston area investment advisor.
It's smart investing simplifying down. Here's your host, Ken Carberry
with the president of plan Strong Investment Management Paul Parson,
and welcome to the Plan Strong Financial Forum.
Speaker 2 (00:26):
I'm your host, Attorney Ken carr Very, along with financial
advisor Paul Parsons and Paul Back. You're back in Sunday, Florida,
and we're a little cold up here, and more snow
coming our way as well, so we're a little jealous
quite frankly.
Speaker 3 (00:39):
Well, you know what, It's funny, Kenny, when I saw
that about the snow, I did, for a moment have
a little bit of a pang of you know, it
is awfully pretty when it does snow. It's just, you know,
if you could just keep it to the time it's snow,
it's kind of like when it rains and then it
gets nice and you don't look at it anymore. But
the problem with snow as it stays around and it
(01:01):
gets less and less attractive as it gets grayer and grayer,
you know. Speaking of which, before we get going on
the show today, do you realize that it was exactly
ten years ago. That was the period where we got
eight feet of snow dumped on Boston over a four
week period.
Speaker 4 (01:22):
Do you remember that the.
Speaker 5 (01:23):
Winter of twenty fifteen, that was a tough one.
Speaker 4 (01:26):
I will never forget that.
Speaker 3 (01:27):
I just remember looking out and we had a tree
in our backyard that was next to a fence, and
it had Christmas lights on it, and.
Speaker 4 (01:36):
Eventually it was no more. It was gone.
Speaker 3 (01:40):
It was just consumed by the snow until the springtime.
And that was the same year, Kenny, Do you remember
that it took until the July fourth weekend to get
rid of the last snow bank in Boston down at
the Old Pier where they finally it finally melted away.
But it literally took till July fourth to get rid
(02:02):
of that snow ten years ago.
Speaker 5 (02:04):
I remember it well.
Speaker 2 (02:05):
Yeah, my daughter was running track at Stonehill then and
they had to plow the tractor so.
Speaker 5 (02:10):
The kids could practice.
Speaker 2 (02:12):
It was just mounds of snow as she's practicing the hurdles.
Speaker 4 (02:16):
So they didn't want her to do hurdles and snow shoes.
Speaker 5 (02:18):
Yeah they did not.
Speaker 4 (02:19):
Yeah, no, that you know what talk about degree of
difficulty that would be hard.
Speaker 2 (02:23):
Exactly, Yeah, that would be hard. It was a crazy winter.
But you know, this one is not quite so bad.
But it's reminiscent a little bit of some older winters,
the last we got lucky, the last couple of years.
Speaker 5 (02:33):
But this is a little.
Speaker 2 (02:34):
Bit more like the good old days, or should I
say the not so good old days?
Speaker 4 (02:37):
The old days.
Speaker 5 (02:38):
Just leave it there.
Speaker 3 (02:39):
I will tell you we did have a cool December
and early January in Florida, but then now we are
in just a sweet spot of you know, just beautiful weather.
I looked at the forecast. It was the exact same
forecast for two weeks. You know, you're like, wow, this
is just like New England. Not but anyway, we'll just
(03:01):
leave that alone, and you're good fortune. No, but it's
very pleasant. I know you're worried about.
Speaker 4 (03:07):
Man. I want you to know I'm going to be okay.
Speaker 2 (03:09):
Busy week aside from super Bowl week, we have a
lot of things going on a lot of well that's right, yeah,
me out of Washington and New York.
Speaker 5 (03:16):
So what's up for today's show?
Speaker 3 (03:18):
Well, the first thing I wanted to talk about was
the latest economic data, because it's really important because you know,
what people are worried about is and investors specifically are
worried about, is you know, is the economy in good
enough shape. We're looking for a Goldilocks kind of economy,
not too hot, not too cold, just about right, so
(03:41):
that the FED will continue to gradually decrease rates. And
at the same time, we don't want to be going
towards anything like a recession or a hard landing or
whatever you want to call it. And so we got
a bunch of good data over the last couple of weeks,
and I wanted to talk to some of the most
current of that data to give you an idea of
(04:04):
what's not to you know, forget Q four and all
that other stuff. Let's talk about what's going on right now,
the state of the US economy, the state of inflation,
the state of employment within the United States, so that
you can really give investors a good feel as to
whether or not you got the wind at your back
or the wind in your face, because it matters hugely
as an investor.
Speaker 4 (04:25):
So start with that. Then I actually have some breaking news, Kenny.
Speaker 3 (04:29):
We just learned very late this last week that President
Trump had weighed in with the people who are trying
to write the tax bill that he actually opened the
door to a couple things that I was surprised at.
So this is important for investors to listen to this,
(04:52):
and it's essentially breaking news on tax policy. So it's
interesting as Trump is trying to balance you know, how
do I get the taxes on tips?
Speaker 5 (05:02):
Uh?
Speaker 3 (05:03):
You know, get that removed? And how do I get
some of my other stuff through? And the answer is, well,
I got to pay for it somehow.
Speaker 5 (05:09):
Uh.
Speaker 3 (05:10):
And so he's actually talked about increasing taxes on a
certain sector and I wanted to specifically address what that
was because it's new, it's different than something he's talked
about in the past. All right, Okay, I wanted to
give an update on weight loss drugs. We got a
lot of inform, frankly, very important information in the last
couple of weeks as it relates to earnings as well
(05:32):
as forward guidance by the two behemoths of the weight
loss drug war, you know as Novo Nordisk and and Lily.
Speaker 4 (05:42):
Uh.
Speaker 3 (05:42):
So I wanted to give an update on is Lily
still you know, pulling ahead as kind of the lead
dog here and and what's happening there.
Speaker 4 (05:53):
Then, you know, for all.
Speaker 3 (05:55):
Investors, very important for how Q four earnings results are
coming out, and specifically for the Magnificent Seven. Why because
we've talked about it over and over again. They are
driving a huge portion of the profitability of the S
and P five hundred, and even more importantly, a huge
(06:15):
portion of the growth of profits in the S and
P five hundred. So I wanted to give an update
because we have the results for six of the seven
Magnificent seven companies at this.
Speaker 5 (06:26):
Point, and Vidia likes to keep us waiting.
Speaker 3 (06:28):
Different you know what, Nvidia is a month later because
their fiscal year doesn't end on a calendar quarter. It
actually is on calendar quarter plus one month, and so
they are though they do report, in fact, they're going
to be reporting their latest quarterly results.
Speaker 4 (06:47):
Towards the end of February.
Speaker 3 (06:50):
So absent and Vidia, I can tell you about the
other six of the Magnificent seven and how they did
in their earnings and also what their guidance looks like.
Speaker 4 (06:59):
Now I think pretty important stuff. There.
Speaker 3 (07:02):
Another big story this last week, Hunawell is pulling a ge.
They're talking about exploding the company into three parts. And
so the question is is that a good thing. Should
we expect the same kind of results that GE got,
because you may notice GE was in the absolute doldrums
(07:25):
for years. They split apart, and all of a sudden
that the combined value of the three entities that used
to make up GE now are worth much much more
than the original entity. So you know, that's clearly what
Honeywell's hoping for. The question is should investors expect that
(07:45):
as a result, because the frankly, some of the circumstances
are a bit different. Another thing that's just happening right
now that I wanted to talk to investors about was
these new rules for inherited iras. They are now in effect,
and they impact some people, and so if you inherited
(08:08):
an IRA between twenty twenty and twenty twenty four, this
may be relevant to you.
Speaker 4 (08:16):
Okay, how's that for a tease?
Speaker 3 (08:18):
And then I wanted to talk about the artificial intelligence update,
because you know, we got this whole deep seek scare
in the market over the last couple of weeks, and
I talked about that, and specifically there was a real
concern that, oh, does this potentially mean there'll be less
(08:41):
hardware sales of AI kind of infrastructure companies, and there
was an interesting article written in Barrens about the fact
that if that eventually becomes the case, which they don't
necessarily think it will be, but if it does become
the case, it actually could become good news for certain
(09:04):
software companies. So I wanted to hit that angle as well.
And then finally, you know, we have so many good
stories this week, but this is a story that I
called Live by the Sword, Die by the Sword. Skyworks,
which makes RF chips radio frequency chips for your Apple iPhone,
(09:28):
well they learned that Apple being more than two thirds
of their revenue. When Apple decided they were going to
do something else with at least a portion of those chips,
Skyworks learned that that wasn't necessarily going to be great
for them. And so I wanted to talk about that
because Skyworks is a stock that is very heavily held
(09:50):
by institutional investors, and you know, I thought we should learn,
you know, talk about that this is the problem when
you have when one of your clients represents the great
already your revenues, and then that one client decides, you
know what, I'm going to do something else, or maybe
I'm going to spread it out a little bit, So
I want to hit that as well.
Speaker 5 (10:08):
Well.
Speaker 4 (10:09):
Is that enough for you, Kenny or I know?
Speaker 2 (10:12):
So before we break, let's at least kick off with Oh,
you don't want to talk about it?
Speaker 5 (10:18):
What super Bowl? Son?
Speaker 4 (10:20):
I knew you were going to do that when you said,
I can said, Paul, have you.
Speaker 5 (10:26):
Changed your mind? Are you going to be watching the
Super Bowl?
Speaker 3 (10:28):
I'm going to be distantly watching it? Kind of his background?
But no, are you?
Speaker 5 (10:37):
Well? I mean, I know what you're saying, but yeah,
I probably will be.
Speaker 3 (10:40):
Yeah, you're going to actually watch it for the commercials
or for the commercials are important? They're both talented teams,
they really are.
Speaker 2 (10:48):
Yes, you know, I expect a good game. I just
want them both to lose. I'm not sure how that
would work, but I know.
Speaker 3 (10:54):
Couldn't they have a tie at zero zero and then
you know, and kind of then you have a really
a Caesar moment where he gives them the thumbs down
and they both have to just leave the field.
Speaker 5 (11:05):
Tom Brady would be in charge of that. It would
be Tom Brady's thumb.
Speaker 3 (11:08):
I think that would be understanding. Unfortunately, I don't think
that's gonna happen. I get The big story I guess though,
is that the Eagles are so big and physical up
in front.
Speaker 4 (11:19):
Is it the Eagles that are big and physical apartment.
Speaker 5 (11:21):
The great line?
Speaker 2 (11:22):
But you know it's pet voting. I mean, betting against
Patrick Mahomes is probably not. That's a fool's Errand the
guy's a winner. He's a lot like Brady.
Speaker 3 (11:30):
You know, you go ahead bet against him at you're
at your peril, right, So anyway, I wish them both Locke.
I just you know, I'm just a little tired. I
will tell you. I did see a very cute meme
on the Babylon B, which is this whole that addressed
this whole thing about favoritism of the refs towards Kansas City.
Speaker 4 (11:56):
And it was on the Babylon B. It had Roger Goodell.
Speaker 3 (11:59):
Saying there's absolutely no evidence whatsoever that the NFL referees
have favored Kansas City or anything else. And of course
then they show a picture of him and he's dressed
in a Kansas City hat and a Kansas City jersey
and what has a Kansas City banner.
Speaker 4 (12:19):
It's like, okay, plum.
Speaker 5 (12:20):
Bees are often spot on, all right, Paul.
Speaker 2 (12:24):
When we come back We'll start off with looking at
some of that economic data. What does it mean for investors?
That's when we return. It's the plan Strong Financial Forum.
Speaker 3 (12:32):
This is Paul Parsons, president of Plan Strong Investment Management,
and you're listening to the plan Strong Financial Forum. If
you like what you hear on our show and want
me to take a look at your investments in retirement, plan.
Speaker 4 (12:44):
Called my office at eight eighty.
Speaker 3 (12:46):
Nine seven two seven five two six eight eighty nine
seven two seven five two six. That's eight eighty eight
nine seven to two plan or go to planstrong dot com.
Speaker 2 (12:56):
Securities and advisory services offered to Commonwealth Financial Network member
fit sip a rerigisal investment advisor for nine Evy Washington
Street dotaments.
Speaker 3 (13:03):
US stocks have generated extraordinary returns in recent years, doubling
over the last five years and tripling over the last ten,
but earnings haven't kept pace, so stocks.
Speaker 4 (13:13):
Are now overvalued.
Speaker 3 (13:15):
While there may be modest upside if all goes well,
the market is vulnerable to bad news. Investors near or
in retirement need to be especially careful. I'm Paul Parsons,
president of plan Strong Investment Management. Our client portfolios incorporate
investments that participate in market upside, but more importantly, help
(13:36):
to protect against market downside and without using annuities, bad
news could sink this market and fast. Call my office
today to help protect your retirement. Call eight eighty nine
seven to two plan that's eight eighty nine seven to
two plan or go to Planstrong dot Com.
Speaker 2 (13:56):
Securities and advisory services offered through Commonwealth Financial Network member
spe a reddish investment advisor.
Speaker 5 (14:01):
I need Washington Street.
Speaker 1 (14:02):
Elements from the Plan Strong Broadcast Studios at the epicenter
of capitalism. This is the Plan Strong Financial Forum with
Paul Parsons, President of Plan Strong Investment Management.
Speaker 2 (14:14):
And welcome back to the Plan Strong Financial Forum. I'm
your host, Attorney Ken Carberry, along with financial advisor Paul Parsons.
Speaker 5 (14:21):
And Paul, let's get to the meat of the program.
A lot of.
Speaker 2 (14:25):
Economic data coming in the last week, week and a
half or so.
Speaker 5 (14:29):
Is it still good? Is it still that Goldilocks zone
for investors?
Speaker 3 (14:34):
The short answers, yes, okay, But let me take you
through the data so that you understand why I've come
to that conclusion.
Speaker 4 (14:40):
Okay, In my.
Speaker 3 (14:42):
Opinion, the market looks, you know, supportive for that economic
picture that is is like Goldilock's porridge, not too hot,
not too cold, just about right. And the reason this
is so important is inflation can slowly subside and the
FED can still allow interest rates to slowly normalize or
(15:07):
decline without fear of stoking too hot inflation. And at
the same time, you want to make sure you want
the economy to be strong enough to placate fears of
a growth pause or worse, you know, an economic contraction
also known as a hard landing. So we're looking for
(15:27):
an economy that's growing nicely but not too hot. And
when I say nicely, also not too cold, you want
something right in the middle. And I think I can
make the case that that is where we are based
on the most current data.
Speaker 4 (15:43):
So let's divide it into three sections.
Speaker 3 (15:47):
Data associated with a state of economic activity in the
United States, data associated with inflation, and data associated with
the employment situation in the United States. And by the way,
these are the same three categories that are the mandates
for the FED. And I do it that way on purpose,
because I try to look through this data through the
(16:09):
lens of the FOMC to say, what would they do
with monetary policy with these circumstances. Okay, So let's start
with economic activity. Probably the most important data that we've
gotten for economic activity is the most current data for
economic activity, and that is the purchasing manager indexes for
(16:32):
the month of January, so literally just a week ago
kind of data, okay. And what we saw was that
for the first time in a long time, manufacturing activity
in January expanded modestly in both national surveys. There are
two national surveys for manufacturing and for services, and that
(16:56):
was the first time both of them showed expansion in
the manufacturing side after frankly an extended period of just
slight contraction for the past oh call it six or
seven months another and at the same time we also
got services activity, and services activity during that month was
(17:17):
also it was not quite as robust as the prior month,
but it still was strong enough. It was certainly moderate
expansion on the services side, so it felt really good
about that. As it relates to the sales of cars
and light trucks in January against this very current that
(17:38):
came down a bit. You know, we were selling pretty
darn close to seventeen million cars and light trucks in December.
That dropped down to call it fifteen and a half
in January, and that was specifically, we saw that decrease
in the demand for light trucks dropping, and so, you know,
don't know if it was year end sales or what
(17:58):
else came into play with that, but for whatever reason,
and it could be weather related as well, because anytimes
it snows or anything, or the fires out west, it
definitely impacts the ability for consumers to go out and
buy cars and trucks. But for one one reason or
another that slowed. It didn't slow to the degree that
(18:20):
you could say, oh, no, that's a big problem. Fifteen
and a half million is still okay, but I would
prefer to see that number. You know, a middle of
the road number of sixteen million would have been a
nicer number than fifteen and a half. So it's a
little bit lower than I would have wanted to see.
And then the other data I'm going to talk about
now for economic activities a little older. We got GDP
(18:43):
growth real GDP growth for Q four, and it came
in a little softer in Q four than it did
in Q three, and the growth real economic growth for
the United States was up two and a half percent
year over year and almost a similar amount quarter over
(19:04):
quarter annualized. That was down from three point one percent
the prior quarter, so it showed that the US economy
was slowing a bit, but still its growth was slowing,
it was still growing, it was still growing nicely. Two
and a half percent growth is fine, totally good. In fact,
what's nice about is you know it's not too hot
(19:26):
and you know it's not too cold, so that felt
pretty good. And then finally on the Economic Activity Department,
we looked at personal income in December, and in other words,
the amount of money that people had coming in increased
by four tenths of a percent month over a month,
so that's actually pretty good.
Speaker 5 (19:46):
It was a little.
Speaker 3 (19:47):
Higher than the amount of income that people were seeing
in November. And at the same time, spending. Consumer spending
was up a robust almost zero point seven percent month
over month in December, higher than the point six percent
month over month in November. Those are high numbers that
(20:08):
really reflects that the consumer is engaged now. And these
are all seasonally adjusted and everything else, so you can't say, oh, well,
that makes sense because it's you know, it's Christmas and
other holidays. But the short answer is that's a little
hotter than what we would have wanted to see. But
the good news is at least income rows in conjunction
with it, so it means that people aren't necessarily spending
(20:31):
money they don't have.
Speaker 2 (20:33):
Okay, so that's economic activity. So what about inflation.
Speaker 3 (20:37):
I would say this is the one kind of trouble spot.
And when I say trouble spot, I mean I'd like
to see.
Speaker 4 (20:46):
More improvement here.
Speaker 3 (20:47):
And when I say more improvement, I mean inflation coming
down more. It did make progress for example. You know, well,
let me give you the latest data first, and that's
the January jobs report. We got the wage and information
from that. Wages were up four point one percent your
over year, that showed no decline versus December, and it
(21:10):
really gives the most current insight into the state of
wage inflation around the country. And worse, on a month
over month basis, wages increased by point five percent in January.
That was double the month over month rate increase from December.
And you know, you think about it, point five percent
(21:31):
in one month. You annualize that, multiply it by twelve months,
that's six percent wage growth.
Speaker 4 (21:37):
That is way too hot.
Speaker 3 (21:38):
And that's going to make it very hard for inflation
to come down, okay, So that was a bit troubling.
On the other hand, the FEDS preferred measure of inflation,
the core PCE Price Index for December, so a month ago,
it was elevated. It was consistent with November, but it
(21:58):
was in the two It was up two point eight
percent year over year. That feels a lot better than
four point one percent where wages are right now, and
headline inflation increased a little between November and December. It
rose to about two point six percent. So whether it's
headline at two point six or core at two point eight,
(22:21):
both of them are certainly they start with the right
first digit, which is a two.
Speaker 4 (22:27):
Okay. The bad news is they're still.
Speaker 3 (22:30):
Higher than where you'd want them to be, okay. And
then we also got prices in the Q four GDP
report that were slightly higher in Q four than in
Q three. For example, prices were up two point four
percent year over year in Q four, up from two
point two percent in Q three, So just a little
(22:51):
bit higher inflation with prices that were contained in the
GDP report as well. And then finally, wages as measured
by the Employment cost Index were also elevated, but pretty
much at the same level. Q four up three point
eight percent year over year. Right, So again it's like
this close to four percent wage inflation, that's not your friend.
(23:16):
You want to see that come down into the lower
threes or the twos. Okay, So that's where inflation is,
and then you've got employment. I would say employment is
very much goldilocks. This the latest month, January, we added
the United States added one hundred and forty three thousand
non farm payroll jobs. Now that was substantially cooler than
(23:40):
the upwards revised three hundred thousand jobs added in December, okay,
And so the good news is it cooled down to
something that wasn't so substantial as the December number, and
it still was a respectable number. You know, the market
was really looking for, you know, one hundred to one
(24:01):
hundred and fifty, one hundred and seventy somewhere in there.
It delivered. One hundred and forty three came right in there.
All of that's good for January. The unemployment rate dropped
a little bit from four point one percent to four
percent at the same time, and then finally the other
thing that happened with employment was the number of open
jobs in December in the US actually decreased from eight
(24:27):
point one million to seven point six million. It's usually
to say, oh, that's bad, but not for what we're
looking for right now. We're looking for fewer open jobs
because there are more open jobs in the US today
than there are people who are unemployed. And to that,
let me just give you a couple of numbers. The
(24:47):
number of open jobs in December and the US decreased
from eight point one million to seven point six million,
while the number of unemployed in the country decreased slightly
from six point n nine million to six point eight million.
So what that means is the number of excess open
jobs actually decreased a little bit, from one point two
(25:11):
million down to eight hundred thousand. And what that means
is less pressure on upwards wage inflation. So that's good
news from that perspective. Okay, So as.
Speaker 2 (25:22):
We look at it, Paul, I've heard some good news,
some not so good news. Sounds hot, sounds gold. So
are we in fact in that goldilog zone still?
Speaker 3 (25:31):
I think the answer is yeah. I mean, economic activity
is good but not great. Inflation remains higher than target,
but core inflation seems to at least begin with the
correct first digit, right, and obviously we're going to need
more progress in a cooling wage inflation to really get
(25:51):
inflation under control. The employment situation is good, but not great,
essentially what the market was looking for, you know, overall,
I say, yeah, the Goldilock scenario is very much still
in play, and that's that's good news for markets. And
it's not surprising, Kenny that stocks are near all time highs.
The S and P five hundred is trading just around
(26:14):
sixty one hundred, and at the same time, bond yields
are down. We're seeing the ten year US Treasury now
yielding four point four percent. So you know, essentially what
we're looking at is pretty much the scenario we're hoping for.
Speaker 2 (26:28):
All Right, Paul, when we come back, we'll look at
that breaking news on tax policy. I think you might
surprise a few people. We'll also get an update on
weight loss of drugs. That's when we return. It's the
Plan Strong Financial Forum.
Speaker 3 (26:39):
This is Paul Parsons, president of Plan Strong Investment Management,
and you're listening to the Plan Strong Financial Forum. If
you like what you hear, on our show and want
me to take a look at your investments and retirement
plan called my office at eight eighty nine seven two
seven five two six eight eighty nine seven two seven
five two six. That's eight eighty eight nine seven two
(27:00):
plan or go to planstrong dot com.
Speaker 2 (27:02):
Securities and Advisory Services offer to a Commonwealth Financial Network
member f SIPC, A reridditional investment advisor forn Navy Washington.
Speaker 5 (27:09):
Street detaments.
Speaker 1 (27:14):
Who says financial talk can't be exciting and informative. Well,
at least it's informative. It's the plan Strong Financial Forum
with Paul Parson's, president of plan Strong Investment Management, and welcome.
Speaker 2 (27:27):
Back to the plan Strong Financial Forum. I'm your host,
Attorney Ken Carr. Me are you along with financial advisor
Paul Parsons and Paul You don't strike me as the
type to follow the latest gossip news.
Speaker 5 (27:38):
And yet you have a story who wanted to share?
Speaker 3 (27:41):
Well, I gotta tell you I kind of got sucked
into this, Okay. I have a friend who is spending
a disproportionate amount of her time paying attention to this,
so it forced me to learn about it. And on
top of that, I actually saw the movie that is
(28:02):
at the center point of this entire dispute on one
of my trips down to Florida, so.
Speaker 4 (28:09):
I have to it was kind of a troubling movie.
Speaker 3 (28:11):
It was called It Ends with Us, and it was
a story of a it's a love story that goes
wrong where the man turns out to be abusive towards
his spouse, and it's it's very disturbing, that's all I
can tell you, you know, And they suck you in too,
because you're you're feeling good, like, oh, this is just
(28:32):
a really pleasant story, you know, kind of a you know,
candy and then it turns dark and oh man, it's
it's just hard to you know, be in any way
get comfortable with. It's very unpleasant, frankly. But having said that,
this is the story, there's a backstory where the guy
who is the lead guy, a guy named Justin Baldoni,
(28:54):
who I wouldn't have known from Adam before this movie.
He apparently women find him very attractive looking. He and
Blake Lively, who I do know about because she's Ryan
reynolds spouse, and I've been following Ryan Reynolds for a
while because that whole he bought the soccer club in Wales,
and he's kind of kind of an interesting character. He's
(29:16):
an investor, he's made a lot of money, kind of
an interesting guy, I always thought. But he's been married
to this woman named Blake Lively, who's an attractive actress
who did a bunch of stuff that you know, is
younger people kind of TV that I don't know anything about.
But anyway, it's it looked like this love story between
(29:37):
Blake Lively and Justin Baldoni, and but they're having a
legal battle and she's accused him of sexual harassment.
Speaker 4 (29:48):
While being on the set of this movie.
Speaker 3 (29:51):
And you know, as I said, it's it's hard just
because the whole content of the movie is so unpleasant
that you know when you get to that point that
that you look at it and you say, gosh, that's
a hard line of work to be in where you
know you're supposed to look like you're you're you have
(30:12):
to be convincing that you love someone, and then you
have to be convincing that they've completely betrayed you. And
I just I find the whole thing difficult to separate
the whek from the chafe as it relates to well,
when when did this allegation of impropriety happen. There's no
(30:32):
overt you know, anything you know that you'd look at
and say, oh boy, they're right there.
Speaker 4 (30:38):
That's really bad.
Speaker 3 (30:39):
No, and so uh it's hard as an outsider to
watch this, But all I can tell you is these
are people thrown around very big dollar amounts, hundreds of
millions of dollars and all kinds of stuff, and it's
very much a big legal battle. That is is getting
an awful lot of people's attention right now. So I
(31:00):
don't know about you, Kenny, but I'm glad to just
be a financial advisor that doesn't have to worry about
this stuff.
Speaker 4 (31:05):
Because Kenny, I'm not going to kiss you. That's it.
I'm just leaving it. And you're welcome for that. Okay,
you're welcome.
Speaker 2 (31:12):
Let's quickly change the subject, please do There was this
breaking news.
Speaker 5 (31:17):
On tax pology.
Speaker 2 (31:18):
Yeah, as you mentioned in the beginning of the program,
President Trump has been talking about a lot of cuts,
but you have to pay for them somehow, and so
we may be seeing a little bit as.
Speaker 5 (31:28):
To how he expects to pay for some of those cuts.
Speaker 3 (31:31):
Yeah, and I think it's this really is different, Ken,
and frankly, it's different from what he proposed in twenty seventeen.
Remember essentially when he did the Tax Cuts and Jobs
Act of twenty seventeen. Essentially what they said was, hey,
it'll pay for itself with growth.
Speaker 4 (31:50):
With economic growth.
Speaker 3 (31:51):
And what was interesting was, I don't know if you
remember this, but we did a story about this and
what the market was looking for from tax policy from Trump,
and what specifically I said in the last say, three
or four months was the key to this working for
the market was that Trump would show a way to
(32:15):
pay for this, and it had to be done so
that it was primarily tax It was spending cuts, not
necessarily increase tax revenue. But there's a difference between having
tax cut, sorry, spending cuts, and he wants to actually
(32:37):
increase some spending, if you will. He wants to example,
for example, allow more things to avoid taxes. For example,
he had these campaign promises of no taxes on tips
or no taxes on overtime, and you know, he's really
trying to stick to that that campaign promise.
Speaker 4 (32:57):
And at the same time, he also.
Speaker 3 (32:59):
Understands that he probably has to raise the cap on
the salt deduction. The state and local tax deduction, right,
because that ten thousand bucks doesn't seem high enough. And
for him to get everybody, he's got to get all
the Republicans on board. That includes Republicans that are in
some of these high tax states. Right, So he's going
(33:21):
to have to probably allow that cap to increase to
maybe twenty or even thirty thousand dollars up from ten
thousand dollars.
Speaker 4 (33:30):
Well, what does that do. It reduces the amount of
taxes that are coming in.
Speaker 3 (33:34):
And so what was really interesting to me was I
learned just late this week that apparently he may be
on board to close a favorite tax deduction used by
hedge fund managers called carried interest, which, for those of
you that aren't familiar with the way hedge fund managers
get paid, the general partners get paid. Essentially, it's a
(33:58):
share of an investment fund profits paid to the general
partner as a performance fee, and currently those gains are
taxed at long term capital gains rates, which are much
favorable to ordinary income tax rates. And what he said
most recently is that he may be open to raising
(34:21):
that rate that those that carried interest income is essentially
taxed in even though it could adversely impact really the
flow of capital investments. So that's a big change, Kenny,
And I got to tell you, I'm very interested to
see if that gets followed through.
Speaker 2 (34:41):
On your opinion quickly. Paul on that, I know a
lot of folks have been talking about that because there
are very few of us who are edge fund manager, right,
it doesn't affect many people. But because it doesn't affect
many people, is there actually a big gain there?
Speaker 3 (34:55):
There actually is, because what the hedge fund managers the
key is is not is there a lot of money there?
Speaker 4 (35:02):
There is.
Speaker 3 (35:03):
There are guys that are making you know, tens and
hundreds of millions of dollars a year kind of thing. Okay,
so you know, will it solve the tax problems? No,
but could it pay for you know, taxes being waived
on or reduced on tips and some other things.
Speaker 4 (35:20):
Yes, it would. Okay, it's not that.
Speaker 3 (35:24):
It's more what will its impact be on capital then
getting reinvested into the capitalism system. Okay, well it actually
slow economic growth because hey, the same guys that got
to keep more of their money, well they didn't sit
around on that money. They took it and they invested
it in things. Right, So I mean they'll be less
(35:45):
that available. Does that mean the economy won't grow as robustly?
That's really the concern with it, ket.
Speaker 5 (35:51):
Right, good point. Good point.
Speaker 2 (35:53):
If let's move on a little bit to the warehouse
drugs issue. This is something we've been talking about for
quite a while. And you know, at first we yeah,
of course we had Novo Nordisk and Lily and they were,
you know, neck and neck.
Speaker 5 (36:03):
But of course now.
Speaker 2 (36:04):
We see that Novo has lately Lily has taken the lead.
Is Novo still losing to Loi?
Speaker 3 (36:11):
So the answer is Lily is slightly pulling ahead of
Novo Nordisk.
Speaker 4 (36:17):
But the bigger issue with them was people were worried.
Speaker 3 (36:22):
That, you know, is the is the obesity market the
whole revenue stream from that, is it going to continue
to grow substantially? H And essentially, what we've seen in
the latest earnings announcements and forward guidance that we're getting
from both of these companies is there is relatively good
(36:43):
nere term growth coming and that is assuaged investor concerns
about that topic. In fact, on Wednesday this week, Novo
projected a twenty percent increase in company wide sales for
its guidance for the year. And while it's slightly slower
(37:03):
than last year's growth rate, twenty percent is not chop livery.
You know that pace room really remains impressive in the
world of pharmaceutical companies. And then on Thursday of this
last week, Lily confirmed an earlier projection of about thirty
two percent revenue growth this year. And by the way,
(37:24):
you know, their margins and both of these companies are fantastic.
They have earnings before our interest and taxes margins in
the kind of forty to forty five percent of revenue range,
and they're showing little if any erosion in that margin
over the past several years. So these are they're growing
(37:44):
nicely and they are fat margin businesses, so.
Speaker 4 (37:47):
They're they're good.
Speaker 3 (37:49):
And then adding to investor optimism is this clear message
from the obesity leaders that they're just getting started. For example,
Novo has only one point two million patients currently being
treated with Regovi.
Speaker 4 (38:06):
I'm one of the.
Speaker 3 (38:06):
One point two million, by the way, and Regov is
their obesity drug. Right that's out of fifty five million,
one point two million out of fifty five million people
whose insurance would cover the drug. That means there is
an enormous untapped market. Sure, okay, And at the same time,
(38:28):
Lily is quickly closing in on Novo's first mover advantage,
as we report in the last month or so.
Speaker 4 (38:35):
In fact, Lily is.
Speaker 3 (38:36):
Now the market leader in new GLP one prescriptions and
its overall market share increased by five percentage points at
the end of twenty twenty four versus the same period
a year prior. And Lily believes that both weight loss
drug zep Bound and diabetes treatment Manjaro are still very
(38:57):
early in their life cycle per runways still coming. You know,
the biggest constraint Kenny manufacturing capacity. It isn't demand. They
can't just make this stuff fast enough. Both companies are
moving quickly to increase capacity. For example, Lily projects a
sixty percent increase in supply in these kinds of drugs
(39:20):
in the first half of twenty twenty five versus the
same period in twenty twenty four. And all of this
good news makes them the two most valuable pharmaceutical companies globally,
and it makes their pipelines important. So when we come back,
I'm going to talk about, well, what are their pipelines,
What does the you know, looking forward, look like.
Speaker 2 (39:42):
Okay, that's when we return more on weight loss drugs.
It's a Plan Strong Financial Forum.
Speaker 3 (39:47):
This is Paul Parsons, president of Plan Strong Investment Management,
and you're listening to the Plan Strong Financial Forum. If
you like what you hear on our show and want
me to take a look at your investments and retirement
plan called my office it nine seven two seven five
two six eight eighty nine seven two seven five two
six that's eight eighty eight nine seven to two plan
(40:08):
or go to planstrong dot Com.
Speaker 2 (40:10):
Securities and Advisory Services, offer to Commonwealth Financial Network member
Federal SIPC, a regitional investment advisor, n Navy Washington Street Detaments.
Speaker 1 (40:25):
Finally, a radio show that is not trying to sell
you insurance or annuities. This is the Plan Strong Financial
Forum with Paul Parson's, president of Plan Strong Investment.
Speaker 2 (40:37):
Management, and welcome back to the Plan Strong Financial Forum.
Speaker 5 (40:40):
I'm your host.
Speaker 2 (40:40):
Attorney Ken Carberry, along with financial advisor Paul Parsons and
Paul were right in the middle of kind of looking
at this battle between nov Nordis and Eli Lilly in
terms of the weight loss drugs, and so, Paul, you
wanted to address the pipeline at Lily explain that.
Speaker 3 (40:57):
So before we get to this, Kenny, can I just
tell you how old you and I both are. Notice
how I threw you right in there with me, right
under the bus. Do you feel a stud thud?
Speaker 5 (41:06):
You're right? Yeah?
Speaker 3 (41:08):
Can I just say to you, did you watch any
part of the Grammys the other night? I actually did,
because you're a music guy, right, you love music? Right?
Speaker 5 (41:15):
Did I watch watch about three quarters of it? Yeah?
Speaker 4 (41:18):
Okay, So tell me the truth. Did you know any
of the artists? Just any?
Speaker 2 (41:22):
I actually do, because you know that it's I teach
you to college at a college radio station, So this
is this is the music the college kids are playing.
Speaker 5 (41:31):
So I'm familiar with it. Doesn't mean I like it,
but I'm familiar with it.
Speaker 4 (41:35):
I have to tell you.
Speaker 3 (41:36):
I was like every person that went up there was like,
never saw that person before, never saw that no clue.
I realized that show isn't for a sixty eight year
old man.
Speaker 5 (41:48):
It's not for us. It's not.
Speaker 2 (41:50):
But having said that, I did think there were parts
of it that were throwback.
Speaker 4 (41:55):
Really there was a lot of tuxedo, big.
Speaker 2 (41:58):
Old fashioned Hollywood thrown in where I felt they were
doing a lot of those large scale song and dance numbers.
Speaker 5 (42:05):
Not necessarily the song and dance numbers you and I
know are like.
Speaker 2 (42:08):
But but it looked a little if you didn't hear
the music, it looked like a throwback to even forties
or fifties Hollywood, some of it because it was an extravaganza.
Speaker 5 (42:18):
I thought.
Speaker 2 (42:19):
In that regard, I felt they were doing a little
bit of throwback in terms of how it was presented.
Speaker 5 (42:24):
You know, the music, of course, is it has left us.
Speaker 3 (42:28):
I felt like when I was watching it and they
would introduce the next person, I felt like I feel
when I watched Jeopardy and the subject matter is either
the Bible or English literature, you could you could say whatever.
Speaker 4 (42:45):
You wanted to say, and I'd say, never heard of
that before.
Speaker 5 (42:48):
Never where they get me on Jeopardy.
Speaker 4 (42:51):
It's rivers.
Speaker 2 (42:54):
As soon as they do rivers, I just tell but Marry,
I'm gonna got it.
Speaker 4 (42:57):
It's time to time to get a coke. I'm off set.
Speaker 3 (43:00):
Yeah, okay, So anyway, I'm old and I'm not that
well versed on the Bible and English literature. That's what
we've determined from this so far. But I do want
to talk about obesity drugs.
Speaker 2 (43:10):
How's that, Kenny good Sony you mentioned the pipeline polve, Yeah, Lily,
what are you talking about?
Speaker 5 (43:15):
What does that mean? Yeah?
Speaker 3 (43:16):
So you know, as I said, first of all, these
DLP one drugs are killing it.
Speaker 4 (43:20):
They're doing fantastic and these two companies.
Speaker 3 (43:22):
Now Moovo and Lily are leading the pack when it
comes to large scaree, large scale pharmaceutical companies. Right, But
what's really important is what do their pipelines look like,
because can they improve on these meds and do they
have some other things that may be coming down the
pipe pipe that may be.
Speaker 4 (43:43):
Helpful or hurting them. So let's talk about each of them.
Speaker 3 (43:46):
For Lily, the focus really now shifts to late stage
data for its oral obesity drug, which is expected by midyear.
Because right now, you have to use a pan and
inject yourself once a week with it, and it takes
a lot to make those pens. Right, It's a lot
easier to crank out pills, and people are less queasy
(44:09):
about taking a pill than they are, you know, taking
a pen and.
Speaker 4 (44:13):
Injecting themselves with it.
Speaker 3 (44:14):
So that's important because they're looking at this data trial
on the oral obesity drug, which is expected by the
middle of twenty twenty five. Now, with good results, that
oral drug would offer increased convenience and scalability, And for Novo,
they're facing a more imminent problem check this out with
(44:35):
pricing caps by twenty twenty seven, courtesy of Medicare and
the Inflation Reduction Act. And that's why Novo's stock has
dropped nearly thirty percent over the last six months amid
concerns over its next wave of innovation. Now, while having
an impressive list of next gen drugs and development, is
(45:00):
whether any of Novo's meds can counter Lily's increasingly dominant position.
Given Lily's zet bounds superior weight loss to Novo's Wagovy,
I think the numbers are like twenty two percent weight
loss twenty three percent weight loss with zetbound versus say
(45:23):
fifteen percent with wagov Okay, it's a big difference, right,
And so Novo's future looked even a little grimmer when
they released Phase three results for a new two drug
combination shot for obesity that was supposed to result in
twenty five percent weight loss, but it actually reported an
(45:44):
average loss of twenty two percent plus. In other words,
they kind of matched the Lily efficacy, but they weren't
better than that. And in the end, most patients don't
care about twenty two versus twenty five percent. What they
do care about is side effects and tolerability and convenience,
and so you know, longer acting once monthly injections are
(46:08):
even better or alternatives. That's the way one of these
companies is going to get the jump on the other.
Speaker 5 (46:15):
Yeah.
Speaker 3 (46:15):
So you know, if you look at how where they
priced Novo today's trading, it around twenty two times forward earnings,
Lily's at thirty seven times, and both are down pretty
substantially from where they were six months ago. But the
market is obviously more impressed with Lily's products and pipeline
than Novo's, and frankly, for both companies, clarifying what comes
(46:40):
next in obesiti treatment will be key to sustaining momentum.
I got to tell you a Lily's forward path looks
a bit favorable to Novo's, especially with that whole medicare
pricing thread against Novo, But investors are already paying a
handsome premium for Lily's stock, so it's not a layup
(47:02):
as to which of these is the preferable investment at
this point.
Speaker 2 (47:06):
All right, Paul, you mentioned at the top of the
program a story about Honeywell. This is a company we
don't talk about much anymore, but certainly one of America's
big industrial conglomerates. They're in the news again. Looks like
they may be pulling a GE. I'll explain that.
Speaker 4 (47:20):
That is true.
Speaker 3 (47:21):
They're in fact on Friday's newspaper top top right column
in the Wall Street Journal. They're going to do a
three way split, essentially following GE and others. They essentially
plan to separate their aerospace division from their automation business
and spin out this other arm from that, called the
(47:42):
Advanced Materials Arm. Honeywell has been under pressure to split
from an activist investor, Elliott Management since last year, when
Elliott pointed to the runaway success of GE, since it
completed a.
Speaker 4 (47:57):
Three way split in twenty twenty four.
Speaker 3 (48:00):
Now, as you may recall, Kenny GE divided up into
separate companies, with their aerospace company called GE Aerospace very catchy,
their energy company, which is GE Vernova, and their healthcare business,
and together they have a market value now nearly four
times bigger than the conglomerate had in twenty twenty two,
(48:24):
and before the three way split, GE also took time
to unwind some disparate businesses, including their bank and appliance
efforts as well, and ultimately the aerospace business benefited from
surging post pandemic demand for air travel. The power business
(48:45):
was a trouble spot for them at that time, but
it's siden since ridden a wave of demand for energy
associated with AI data centers. Essentially, GE gave investors the
ability to participate in specific sectors and leaders the ability
to focus on operational and cultural improvements specific to those industries,
(49:09):
and they had a specific set of circumstances in which
their long term care business presented a huge liability across
the whole conglomerate, rather than isolating it just to one
entity like the GE healthcare business. And so their breakup
gave investors the ability to buy global leaders without, if
(49:32):
you will, side car businesses and side car liabilities, and
that's what the capital markets wanted, and so hunawell Well,
their CEO, said he realized during the review process that
Elliott had kind of forced them to take that The
aerospace segment in particular, was diverging more and more from
(49:55):
other parts of Honeywell, given its rapid growth and its
bigger industry headwinds, and he said, we came to the
conclusion that these three businesses are better separated to unleash
what they have. So the hope is that the three
new businesses will have greater financial flexibility, a more focused
management team, and Honeywell's aerospace business, which makes engines and
(50:20):
also those cockpit systems for Boeing in others, will become
one of the largest aerospace suppliers.
Speaker 4 (50:27):
And while the.
Speaker 3 (50:28):
Parent company, the overall conglomerate, trades it around it twenty
times forward multiple note that GE Aerospace trades at thirty
seven times next twelve months earnings, so they'd like to
see their aerospace business get treated the same as GES. Sure,
and at the same time, underwhelming results in Honeywell's industrial
(50:50):
and building automation units have hurt earnings. So my guess
is the first move is to see how much the
area aerospace business will add to overall market value. Now,
before you just jump on this and say, hey, this
worked for GE, sign me up. Let me buy Honeywell
now and see what happens. Got to remember this breaking
(51:13):
up doesn't automatically guarantee the kind of result that Ge attained.
In fact, a bane In Company study of three hundred
and fifty public spinoffs between twenty twenty twenty found that
half of the companies failed to create shareholder value a
couple of years after the splits, and a quarter of
(51:35):
them saw their values actually go down. So time will
tell what the story will be for Honeywell shareholders. The
benefits of the breakup are somewhat less overt than the
GE situation, and that's why investors should be careful with this.
Speaker 4 (51:53):
All I can say is we'll see Paulstoll.
Speaker 2 (51:56):
Free number eight eight eight nine seven two seven five
six eight nine seven to two plan or you can
go online to planstrong dot com.
Speaker 5 (52:05):
Well, thanks so much for coming in. We'll see you
next week.
Speaker 4 (52:07):
Hope everybody has a wonderful weekend.
Speaker 5 (52:09):
It's the plan Strong Financial four.
Speaker 2 (52:11):
Plan Strong Investment Management is located at nine eighty Washington Street, Deta,
Mass two O two six and can be reached at
eighty eight eight nine seven two seven five two six.
Securities and advisory services offered through Commonwealth Financial Network member
FINRA SIPC, a registered investment Advisor Paul Parsons Representative. This
radio show is for informational purposes only and is not
a solicitation or recommendation that any particular investor should purchase
(52:34):
or sell any particular security. The information contained herein is
obtained from sources believed to be reliable, but it's accuracy
and completeness are not guaranteed. Either Commonwealth Financial Network nor
your representative provides tax advice. Indexes are not managed, and
do not occur management fees, cost or expenses, and cannot
be invested in directly. Past performance of an index does
not guarantee future results
It's time for the plan Strong Financial Forum. You're a
weekly hot topic update from a leading Boston area investment advisor.
It's smart investing simplifying down. Here's your host, Ken Carberry
with the president of plan Strong Investment Management Paul Parson,
and welcome to the Plan Strong Financial Forum.
Speaker 2 (00:26):
I'm your host, Attorney Ken carr Very, along with financial
advisor Paul Parsons and Paul Back. You're back in Sunday, Florida,
and we're a little cold up here, and more snow
coming our way as well, so we're a little jealous
quite frankly.
Speaker 3 (00:39):
Well, you know what, It's funny, Kenny, when I saw
that about the snow, I did, for a moment have
a little bit of a pang of you know, it
is awfully pretty when it does snow. It's just, you know,
if you could just keep it to the time it's snow,
it's kind of like when it rains and then it
gets nice and you don't look at it anymore. But
the problem with snow as it stays around and it
(01:01):
gets less and less attractive as it gets grayer and grayer,
you know. Speaking of which, before we get going on
the show today, do you realize that it was exactly
ten years ago. That was the period where we got
eight feet of snow dumped on Boston over a four
week period.
Speaker 4 (01:22):
Do you remember that the.
Speaker 5 (01:23):
Winter of twenty fifteen, that was a tough one.
Speaker 4 (01:26):
I will never forget that.
Speaker 3 (01:27):
I just remember looking out and we had a tree
in our backyard that was next to a fence, and
it had Christmas lights on it, and.
Speaker 4 (01:36):
Eventually it was no more. It was gone.
Speaker 3 (01:40):
It was just consumed by the snow until the springtime.
And that was the same year, Kenny, Do you remember
that it took until the July fourth weekend to get
rid of the last snow bank in Boston down at
the Old Pier where they finally it finally melted away.
But it literally took till July fourth to get rid
(02:02):
of that snow ten years ago.
Speaker 5 (02:04):
I remember it well.
Speaker 2 (02:05):
Yeah, my daughter was running track at Stonehill then and
they had to plow the tractor so.
Speaker 5 (02:10):
The kids could practice.
Speaker 2 (02:12):
It was just mounds of snow as she's practicing the hurdles.
Speaker 4 (02:16):
So they didn't want her to do hurdles and snow shoes.
Speaker 5 (02:18):
Yeah they did not.
Speaker 4 (02:19):
Yeah, no, that you know what talk about degree of
difficulty that would be hard.
Speaker 2 (02:23):
Exactly, Yeah, that would be hard. It was a crazy winter.
But you know, this one is not quite so bad.
But it's reminiscent a little bit of some older winters,
the last we got lucky, the last couple of years.
Speaker 5 (02:33):
But this is a little.
Speaker 2 (02:34):
Bit more like the good old days, or should I
say the not so good old days?
Speaker 4 (02:37):
The old days.
Speaker 5 (02:38):
Just leave it there.
Speaker 3 (02:39):
I will tell you we did have a cool December
and early January in Florida, but then now we are
in just a sweet spot of you know, just beautiful weather.
I looked at the forecast. It was the exact same
forecast for two weeks. You know, you're like, wow, this
is just like New England. Not but anyway, we'll just
(03:01):
leave that alone, and you're good fortune. No, but it's
very pleasant. I know you're worried about.
Speaker 4 (03:07):
Man. I want you to know I'm going to be okay.
Speaker 2 (03:09):
Busy week aside from super Bowl week, we have a
lot of things going on a lot of well that's right, yeah,
me out of Washington and New York.
Speaker 5 (03:16):
So what's up for today's show?
Speaker 3 (03:18):
Well, the first thing I wanted to talk about was
the latest economic data, because it's really important because you know,
what people are worried about is and investors specifically are
worried about, is you know, is the economy in good
enough shape. We're looking for a Goldilocks kind of economy,
not too hot, not too cold, just about right, so
(03:41):
that the FED will continue to gradually decrease rates. And
at the same time, we don't want to be going
towards anything like a recession or a hard landing or
whatever you want to call it. And so we got
a bunch of good data over the last couple of weeks,
and I wanted to talk to some of the most
current of that data to give you an idea of
(04:04):
what's not to you know, forget Q four and all
that other stuff. Let's talk about what's going on right now,
the state of the US economy, the state of inflation,
the state of employment within the United States, so that
you can really give investors a good feel as to
whether or not you got the wind at your back
or the wind in your face, because it matters hugely
as an investor.
Speaker 4 (04:25):
So start with that. Then I actually have some breaking news, Kenny.
Speaker 3 (04:29):
We just learned very late this last week that President
Trump had weighed in with the people who are trying
to write the tax bill that he actually opened the
door to a couple things that I was surprised at.
So this is important for investors to listen to this,
(04:52):
and it's essentially breaking news on tax policy. So it's
interesting as Trump is trying to balance you know, how
do I get the taxes on tips?
Speaker 5 (05:02):
Uh?
Speaker 3 (05:03):
You know, get that removed? And how do I get
some of my other stuff through? And the answer is, well,
I got to pay for it somehow.
Speaker 5 (05:09):
Uh.
Speaker 3 (05:10):
And so he's actually talked about increasing taxes on a
certain sector and I wanted to specifically address what that
was because it's new, it's different than something he's talked
about in the past. All right, Okay, I wanted to
give an update on weight loss drugs. We got a
lot of inform, frankly, very important information in the last
couple of weeks as it relates to earnings as well
(05:32):
as forward guidance by the two behemoths of the weight
loss drug war, you know as Novo Nordisk and and Lily.
Speaker 4 (05:42):
Uh.
Speaker 3 (05:42):
So I wanted to give an update on is Lily
still you know, pulling ahead as kind of the lead
dog here and and what's happening there.
Speaker 4 (05:53):
Then, you know, for all.
Speaker 3 (05:55):
Investors, very important for how Q four earnings results are
coming out, and specifically for the Magnificent Seven. Why because
we've talked about it over and over again. They are
driving a huge portion of the profitability of the S
and P five hundred, and even more importantly, a huge
(06:15):
portion of the growth of profits in the S and
P five hundred. So I wanted to give an update
because we have the results for six of the seven
Magnificent seven companies at this.
Speaker 5 (06:26):
Point, and Vidia likes to keep us waiting.
Speaker 3 (06:28):
Different you know what, Nvidia is a month later because
their fiscal year doesn't end on a calendar quarter. It
actually is on calendar quarter plus one month, and so
they are though they do report, in fact, they're going
to be reporting their latest quarterly results.
Speaker 4 (06:47):
Towards the end of February.
Speaker 3 (06:50):
So absent and Vidia, I can tell you about the
other six of the Magnificent seven and how they did
in their earnings and also what their guidance looks like.
Speaker 4 (06:59):
Now I think pretty important stuff. There.
Speaker 3 (07:02):
Another big story this last week, Hunawell is pulling a ge.
They're talking about exploding the company into three parts. And
so the question is is that a good thing. Should
we expect the same kind of results that GE got,
because you may notice GE was in the absolute doldrums
(07:25):
for years. They split apart, and all of a sudden
that the combined value of the three entities that used
to make up GE now are worth much much more
than the original entity. So you know, that's clearly what
Honeywell's hoping for. The question is should investors expect that
(07:45):
as a result, because the frankly, some of the circumstances
are a bit different. Another thing that's just happening right
now that I wanted to talk to investors about was
these new rules for inherited iras. They are now in effect,
and they impact some people, and so if you inherited
(08:08):
an IRA between twenty twenty and twenty twenty four, this
may be relevant to you.
Speaker 4 (08:16):
Okay, how's that for a tease?
Speaker 3 (08:18):
And then I wanted to talk about the artificial intelligence update,
because you know, we got this whole deep seek scare
in the market over the last couple of weeks, and
I talked about that, and specifically there was a real
concern that, oh, does this potentially mean there'll be less
(08:41):
hardware sales of AI kind of infrastructure companies, and there
was an interesting article written in Barrens about the fact
that if that eventually becomes the case, which they don't
necessarily think it will be, but if it does become
the case, it actually could become good news for certain
(09:04):
software companies. So I wanted to hit that angle as well.
And then finally, you know, we have so many good
stories this week, but this is a story that I
called Live by the Sword, Die by the Sword. Skyworks,
which makes RF chips radio frequency chips for your Apple iPhone,
(09:28):
well they learned that Apple being more than two thirds
of their revenue. When Apple decided they were going to
do something else with at least a portion of those chips,
Skyworks learned that that wasn't necessarily going to be great
for them. And so I wanted to talk about that
because Skyworks is a stock that is very heavily held
(09:50):
by institutional investors, and you know, I thought we should learn,
you know, talk about that this is the problem when
you have when one of your clients represents the great
already your revenues, and then that one client decides, you
know what, I'm going to do something else, or maybe
I'm going to spread it out a little bit, So
I want to hit that as well.
Speaker 5 (10:08):
Well.
Speaker 4 (10:09):
Is that enough for you, Kenny or I know?
Speaker 2 (10:12):
So before we break, let's at least kick off with Oh,
you don't want to talk about it?
Speaker 5 (10:18):
What super Bowl? Son?
Speaker 4 (10:20):
I knew you were going to do that when you said,
I can said, Paul, have you.
Speaker 5 (10:26):
Changed your mind? Are you going to be watching the
Super Bowl?
Speaker 3 (10:28):
I'm going to be distantly watching it? Kind of his background?
But no, are you?
Speaker 5 (10:37):
Well? I mean, I know what you're saying, but yeah,
I probably will be.
Speaker 3 (10:40):
Yeah, you're going to actually watch it for the commercials
or for the commercials are important? They're both talented teams,
they really are.
Speaker 2 (10:48):
Yes, you know, I expect a good game. I just
want them both to lose. I'm not sure how that
would work, but I know.
Speaker 3 (10:54):
Couldn't they have a tie at zero zero and then
you know, and kind of then you have a really
a Caesar moment where he gives them the thumbs down
and they both have to just leave the field.
Speaker 5 (11:05):
Tom Brady would be in charge of that. It would
be Tom Brady's thumb.
Speaker 3 (11:08):
I think that would be understanding. Unfortunately, I don't think
that's gonna happen. I get The big story I guess though,
is that the Eagles are so big and physical up
in front.
Speaker 4 (11:19):
Is it the Eagles that are big and physical apartment.
Speaker 5 (11:21):
The great line?
Speaker 2 (11:22):
But you know it's pet voting. I mean, betting against
Patrick Mahomes is probably not. That's a fool's Errand the
guy's a winner. He's a lot like Brady.
Speaker 3 (11:30):
You know, you go ahead bet against him at you're
at your peril, right, So anyway, I wish them both Locke.
I just you know, I'm just a little tired. I
will tell you. I did see a very cute meme
on the Babylon B, which is this whole that addressed
this whole thing about favoritism of the refs towards Kansas City.
Speaker 4 (11:56):
And it was on the Babylon B. It had Roger Goodell.
Speaker 3 (11:59):
Saying there's absolutely no evidence whatsoever that the NFL referees
have favored Kansas City or anything else. And of course
then they show a picture of him and he's dressed
in a Kansas City hat and a Kansas City jersey
and what has a Kansas City banner.
Speaker 4 (12:19):
It's like, okay, plum.
Speaker 5 (12:20):
Bees are often spot on, all right, Paul.
Speaker 2 (12:24):
When we come back We'll start off with looking at
some of that economic data. What does it mean for investors?
That's when we return. It's the plan Strong Financial Forum.
Speaker 3 (12:32):
This is Paul Parsons, president of Plan Strong Investment Management,
and you're listening to the plan Strong Financial Forum. If
you like what you hear on our show and want
me to take a look at your investments in retirement, plan.
Speaker 4 (12:44):
Called my office at eight eighty.
Speaker 3 (12:46):
Nine seven two seven five two six eight eighty nine
seven two seven five two six. That's eight eighty eight
nine seven to two plan or go to planstrong dot com.
Speaker 2 (12:56):
Securities and advisory services offered to Commonwealth Financial Network member
fit sip a rerigisal investment advisor for nine Evy Washington
Street dotaments.
Speaker 3 (13:03):
US stocks have generated extraordinary returns in recent years, doubling
over the last five years and tripling over the last ten,
but earnings haven't kept pace, so stocks.
Speaker 4 (13:13):
Are now overvalued.
Speaker 3 (13:15):
While there may be modest upside if all goes well,
the market is vulnerable to bad news. Investors near or
in retirement need to be especially careful. I'm Paul Parsons,
president of plan Strong Investment Management. Our client portfolios incorporate
investments that participate in market upside, but more importantly, help
(13:36):
to protect against market downside and without using annuities, bad
news could sink this market and fast. Call my office
today to help protect your retirement. Call eight eighty nine
seven to two plan that's eight eighty nine seven to
two plan or go to Planstrong dot Com.
Speaker 2 (13:56):
Securities and advisory services offered through Commonwealth Financial Network member
spe a reddish investment advisor.
Speaker 5 (14:01):
I need Washington Street.
Speaker 1 (14:02):
Elements from the Plan Strong Broadcast Studios at the epicenter
of capitalism. This is the Plan Strong Financial Forum with
Paul Parsons, President of Plan Strong Investment Management.
Speaker 2 (14:14):
And welcome back to the Plan Strong Financial Forum. I'm
your host, Attorney Ken Carberry, along with financial advisor Paul Parsons.
Speaker 5 (14:21):
And Paul, let's get to the meat of the program.
A lot of.
Speaker 2 (14:25):
Economic data coming in the last week, week and a
half or so.
Speaker 5 (14:29):
Is it still good? Is it still that Goldilocks zone
for investors?
Speaker 3 (14:34):
The short answers, yes, okay, But let me take you
through the data so that you understand why I've come
to that conclusion.
Speaker 4 (14:40):
Okay, In my.
Speaker 3 (14:42):
Opinion, the market looks, you know, supportive for that economic
picture that is is like Goldilock's porridge, not too hot,
not too cold, just about right. And the reason this
is so important is inflation can slowly subside and the
FED can still allow interest rates to slowly normalize or
(15:07):
decline without fear of stoking too hot inflation. And at
the same time, you want to make sure you want
the economy to be strong enough to placate fears of
a growth pause or worse, you know, an economic contraction
also known as a hard landing. So we're looking for
(15:27):
an economy that's growing nicely but not too hot. And
when I say nicely, also not too cold, you want
something right in the middle. And I think I can
make the case that that is where we are based
on the most current data.
Speaker 4 (15:43):
So let's divide it into three sections.
Speaker 3 (15:47):
Data associated with a state of economic activity in the
United States, data associated with inflation, and data associated with
the employment situation in the United States. And by the way,
these are the same three categories that are the mandates
for the FED. And I do it that way on purpose,
because I try to look through this data through the
(16:09):
lens of the FOMC to say, what would they do
with monetary policy with these circumstances. Okay, So let's start
with economic activity. Probably the most important data that we've
gotten for economic activity is the most current data for
economic activity, and that is the purchasing manager indexes for
(16:32):
the month of January, so literally just a week ago
kind of data, okay. And what we saw was that
for the first time in a long time, manufacturing activity
in January expanded modestly in both national surveys. There are
two national surveys for manufacturing and for services, and that
(16:56):
was the first time both of them showed expansion in
the manufacturing side after frankly an extended period of just
slight contraction for the past oh call it six or
seven months another and at the same time we also
got services activity, and services activity during that month was
(17:17):
also it was not quite as robust as the prior month,
but it still was strong enough. It was certainly moderate
expansion on the services side, so it felt really good
about that. As it relates to the sales of cars
and light trucks in January against this very current that
(17:38):
came down a bit. You know, we were selling pretty
darn close to seventeen million cars and light trucks in December.
That dropped down to call it fifteen and a half
in January, and that was specifically, we saw that decrease
in the demand for light trucks dropping, and so, you know,
don't know if it was year end sales or what
(17:58):
else came into play with that, but for whatever reason,
and it could be weather related as well, because anytimes
it snows or anything, or the fires out west, it
definitely impacts the ability for consumers to go out and
buy cars and trucks. But for one one reason or
another that slowed. It didn't slow to the degree that
(18:20):
you could say, oh, no, that's a big problem. Fifteen
and a half million is still okay, but I would
prefer to see that number. You know, a middle of
the road number of sixteen million would have been a
nicer number than fifteen and a half. So it's a
little bit lower than I would have wanted to see.
And then the other data I'm going to talk about
now for economic activities a little older. We got GDP
(18:43):
growth real GDP growth for Q four, and it came
in a little softer in Q four than it did
in Q three, and the growth real economic growth for
the United States was up two and a half percent
year over year and almost a similar amount quarter over
(19:04):
quarter annualized. That was down from three point one percent
the prior quarter, so it showed that the US economy
was slowing a bit, but still its growth was slowing,
it was still growing, it was still growing nicely. Two
and a half percent growth is fine, totally good. In fact,
what's nice about is you know it's not too hot
(19:26):
and you know it's not too cold, so that felt
pretty good. And then finally on the Economic Activity Department,
we looked at personal income in December, and in other words,
the amount of money that people had coming in increased
by four tenths of a percent month over a month,
so that's actually pretty good.
Speaker 5 (19:46):
It was a little.
Speaker 3 (19:47):
Higher than the amount of income that people were seeing
in November. And at the same time, spending. Consumer spending
was up a robust almost zero point seven percent month
over month in December, higher than the point six percent
month over month in November. Those are high numbers that
(20:08):
really reflects that the consumer is engaged now. And these
are all seasonally adjusted and everything else, so you can't say, oh, well,
that makes sense because it's you know, it's Christmas and
other holidays. But the short answer is that's a little
hotter than what we would have wanted to see. But
the good news is at least income rows in conjunction
with it, so it means that people aren't necessarily spending
(20:31):
money they don't have.
Speaker 2 (20:33):
Okay, so that's economic activity. So what about inflation.
Speaker 3 (20:37):
I would say this is the one kind of trouble spot.
And when I say trouble spot, I mean I'd like
to see.
Speaker 4 (20:46):
More improvement here.
Speaker 3 (20:47):
And when I say more improvement, I mean inflation coming
down more. It did make progress for example. You know, well,
let me give you the latest data first, and that's
the January jobs report. We got the wage and information
from that. Wages were up four point one percent your
over year, that showed no decline versus December, and it
(21:10):
really gives the most current insight into the state of
wage inflation around the country. And worse, on a month
over month basis, wages increased by point five percent in January.
That was double the month over month rate increase from December.
And you know, you think about it, point five percent
(21:31):
in one month. You annualize that, multiply it by twelve months,
that's six percent wage growth.
Speaker 4 (21:37):
That is way too hot.
Speaker 3 (21:38):
And that's going to make it very hard for inflation
to come down, okay, So that was a bit troubling.
On the other hand, the FEDS preferred measure of inflation,
the core PCE Price Index for December, so a month ago,
it was elevated. It was consistent with November, but it
(21:58):
was in the two It was up two point eight
percent year over year. That feels a lot better than
four point one percent where wages are right now, and
headline inflation increased a little between November and December. It
rose to about two point six percent. So whether it's
headline at two point six or core at two point eight,
(22:21):
both of them are certainly they start with the right
first digit, which is a two.
Speaker 4 (22:27):
Okay. The bad news is they're still.
Speaker 3 (22:30):
Higher than where you'd want them to be, okay. And
then we also got prices in the Q four GDP
report that were slightly higher in Q four than in
Q three. For example, prices were up two point four
percent year over year in Q four, up from two
point two percent in Q three, So just a little
(22:51):
bit higher inflation with prices that were contained in the
GDP report as well. And then finally, wages as measured
by the Employment cost Index were also elevated, but pretty
much at the same level. Q four up three point
eight percent year over year. Right, So again it's like
this close to four percent wage inflation, that's not your friend.
(23:16):
You want to see that come down into the lower
threes or the twos. Okay, So that's where inflation is,
and then you've got employment. I would say employment is
very much goldilocks. This the latest month, January, we added
the United States added one hundred and forty three thousand
non farm payroll jobs. Now that was substantially cooler than
(23:40):
the upwards revised three hundred thousand jobs added in December, okay,
And so the good news is it cooled down to
something that wasn't so substantial as the December number, and
it still was a respectable number. You know, the market
was really looking for, you know, one hundred to one
(24:01):
hundred and fifty, one hundred and seventy somewhere in there.
It delivered. One hundred and forty three came right in there.
All of that's good for January. The unemployment rate dropped
a little bit from four point one percent to four
percent at the same time, and then finally the other
thing that happened with employment was the number of open
jobs in December in the US actually decreased from eight
(24:27):
point one million to seven point six million. It's usually
to say, oh, that's bad, but not for what we're
looking for right now. We're looking for fewer open jobs
because there are more open jobs in the US today
than there are people who are unemployed. And to that,
let me just give you a couple of numbers. The
(24:47):
number of open jobs in December and the US decreased
from eight point one million to seven point six million,
while the number of unemployed in the country decreased slightly
from six point n nine million to six point eight million.
So what that means is the number of excess open
jobs actually decreased a little bit, from one point two
(25:11):
million down to eight hundred thousand. And what that means
is less pressure on upwards wage inflation. So that's good
news from that perspective. Okay, So as.
Speaker 2 (25:22):
We look at it, Paul, I've heard some good news,
some not so good news. Sounds hot, sounds gold. So
are we in fact in that goldilog zone still?
Speaker 3 (25:31):
I think the answer is yeah. I mean, economic activity
is good but not great. Inflation remains higher than target,
but core inflation seems to at least begin with the
correct first digit, right, and obviously we're going to need
more progress in a cooling wage inflation to really get
(25:51):
inflation under control. The employment situation is good, but not great,
essentially what the market was looking for, you know, overall,
I say, yeah, the Goldilock scenario is very much still
in play, and that's that's good news for markets. And
it's not surprising, Kenny that stocks are near all time highs.
The S and P five hundred is trading just around
(26:14):
sixty one hundred, and at the same time, bond yields
are down. We're seeing the ten year US Treasury now
yielding four point four percent. So you know, essentially what
we're looking at is pretty much the scenario we're hoping for.
Speaker 2 (26:28):
All Right, Paul, when we come back, we'll look at
that breaking news on tax policy. I think you might
surprise a few people. We'll also get an update on
weight loss of drugs. That's when we return. It's the
Plan Strong Financial Forum.
Speaker 3 (26:39):
This is Paul Parsons, president of Plan Strong Investment Management,
and you're listening to the Plan Strong Financial Forum. If
you like what you hear, on our show and want
me to take a look at your investments and retirement
plan called my office at eight eighty nine seven two
seven five two six eight eighty nine seven two seven
five two six. That's eight eighty eight nine seven two
(27:00):
plan or go to planstrong dot com.
Speaker 2 (27:02):
Securities and Advisory Services offer to a Commonwealth Financial Network
member f SIPC, A reridditional investment advisor forn Navy Washington.
Speaker 5 (27:09):
Street detaments.
Speaker 1 (27:14):
Who says financial talk can't be exciting and informative. Well,
at least it's informative. It's the plan Strong Financial Forum
with Paul Parson's, president of plan Strong Investment Management, and welcome.
Speaker 2 (27:27):
Back to the plan Strong Financial Forum. I'm your host,
Attorney Ken Carr. Me are you along with financial advisor
Paul Parsons and Paul You don't strike me as the
type to follow the latest gossip news.
Speaker 5 (27:38):
And yet you have a story who wanted to share?
Speaker 3 (27:41):
Well, I gotta tell you I kind of got sucked
into this, Okay. I have a friend who is spending
a disproportionate amount of her time paying attention to this,
so it forced me to learn about it. And on
top of that, I actually saw the movie that is
(28:02):
at the center point of this entire dispute on one
of my trips down to Florida, so.
Speaker 4 (28:09):
I have to it was kind of a troubling movie.
Speaker 3 (28:11):
It was called It Ends with Us, and it was
a story of a it's a love story that goes
wrong where the man turns out to be abusive towards
his spouse, and it's it's very disturbing, that's all I
can tell you, you know, And they suck you in too,
because you're you're feeling good, like, oh, this is just
(28:32):
a really pleasant story, you know, kind of a you know,
candy and then it turns dark and oh man, it's
it's just hard to you know, be in any way
get comfortable with. It's very unpleasant, frankly. But having said that,
this is the story, there's a backstory where the guy
who is the lead guy, a guy named Justin Baldoni,
(28:54):
who I wouldn't have known from Adam before this movie.
He apparently women find him very attractive looking. He and
Blake Lively, who I do know about because she's Ryan
reynolds spouse, and I've been following Ryan Reynolds for a
while because that whole he bought the soccer club in Wales,
and he's kind of kind of an interesting character. He's
(29:16):
an investor, he's made a lot of money, kind of
an interesting guy, I always thought. But he's been married
to this woman named Blake Lively, who's an attractive actress
who did a bunch of stuff that you know, is
younger people kind of TV that I don't know anything about.
But anyway, it's it looked like this love story between
(29:37):
Blake Lively and Justin Baldoni, and but they're having a
legal battle and she's accused him of sexual harassment.
Speaker 4 (29:48):
While being on the set of this movie.
Speaker 3 (29:51):
And you know, as I said, it's it's hard just
because the whole content of the movie is so unpleasant
that you know when you get to that point that
that you look at it and you say, gosh, that's
a hard line of work to be in where you
know you're supposed to look like you're you're you have
(30:12):
to be convincing that you love someone, and then you
have to be convincing that they've completely betrayed you. And
I just I find the whole thing difficult to separate
the whek from the chafe as it relates to well,
when when did this allegation of impropriety happen. There's no
(30:32):
overt you know, anything you know that you'd look at
and say, oh boy, they're right there.
Speaker 4 (30:38):
That's really bad.
Speaker 3 (30:39):
No, and so uh it's hard as an outsider to
watch this, But all I can tell you is these
are people thrown around very big dollar amounts, hundreds of
millions of dollars and all kinds of stuff, and it's
very much a big legal battle. That is is getting
an awful lot of people's attention right now. So I
(31:00):
don't know about you, Kenny, but I'm glad to just
be a financial advisor that doesn't have to worry about
this stuff.
Speaker 4 (31:05):
Because Kenny, I'm not going to kiss you. That's it.
I'm just leaving it. And you're welcome for that. Okay,
you're welcome.
Speaker 2 (31:12):
Let's quickly change the subject, please do There was this
breaking news.
Speaker 5 (31:17):
On tax pology.
Speaker 2 (31:18):
Yeah, as you mentioned in the beginning of the program,
President Trump has been talking about a lot of cuts,
but you have to pay for them somehow, and so
we may be seeing a little bit as.
Speaker 5 (31:28):
To how he expects to pay for some of those cuts.
Speaker 3 (31:31):
Yeah, and I think it's this really is different, Ken,
and frankly, it's different from what he proposed in twenty seventeen.
Remember essentially when he did the Tax Cuts and Jobs
Act of twenty seventeen. Essentially what they said was, hey,
it'll pay for itself with growth.
Speaker 4 (31:50):
With economic growth.
Speaker 3 (31:51):
And what was interesting was, I don't know if you
remember this, but we did a story about this and
what the market was looking for from tax policy from Trump,
and what specifically I said in the last say, three
or four months was the key to this working for
the market was that Trump would show a way to
(32:15):
pay for this, and it had to be done so
that it was primarily tax It was spending cuts, not
necessarily increase tax revenue. But there's a difference between having
tax cut, sorry, spending cuts, and he wants to actually
(32:37):
increase some spending, if you will. He wants to example,
for example, allow more things to avoid taxes. For example,
he had these campaign promises of no taxes on tips
or no taxes on overtime, and you know, he's really
trying to stick to that that campaign promise.
Speaker 4 (32:57):
And at the same time, he also.
Speaker 3 (32:59):
Understands that he probably has to raise the cap on
the salt deduction. The state and local tax deduction, right,
because that ten thousand bucks doesn't seem high enough. And
for him to get everybody, he's got to get all
the Republicans on board. That includes Republicans that are in
some of these high tax states. Right, So he's going
(33:21):
to have to probably allow that cap to increase to
maybe twenty or even thirty thousand dollars up from ten
thousand dollars.
Speaker 4 (33:30):
Well, what does that do. It reduces the amount of
taxes that are coming in.
Speaker 3 (33:34):
And so what was really interesting to me was I
learned just late this week that apparently he may be
on board to close a favorite tax deduction used by
hedge fund managers called carried interest, which, for those of
you that aren't familiar with the way hedge fund managers
get paid, the general partners get paid. Essentially, it's a
(33:58):
share of an investment fund profits paid to the general
partner as a performance fee, and currently those gains are
taxed at long term capital gains rates, which are much
favorable to ordinary income tax rates. And what he said
most recently is that he may be open to raising
(34:21):
that rate that those that carried interest income is essentially
taxed in even though it could adversely impact really the
flow of capital investments. So that's a big change, Kenny,
And I got to tell you, I'm very interested to
see if that gets followed through.
Speaker 2 (34:41):
On your opinion quickly. Paul on that, I know a
lot of folks have been talking about that because there
are very few of us who are edge fund manager, right,
it doesn't affect many people. But because it doesn't affect
many people, is there actually a big gain there?
Speaker 3 (34:55):
There actually is, because what the hedge fund managers the
key is is not is there a lot of money there?
Speaker 4 (35:02):
There is.
Speaker 3 (35:03):
There are guys that are making you know, tens and
hundreds of millions of dollars a year kind of thing. Okay,
so you know, will it solve the tax problems? No,
but could it pay for you know, taxes being waived
on or reduced on tips and some other things.
Speaker 4 (35:20):
Yes, it would. Okay, it's not that.
Speaker 3 (35:24):
It's more what will its impact be on capital then
getting reinvested into the capitalism system. Okay, well it actually
slow economic growth because hey, the same guys that got
to keep more of their money, well they didn't sit
around on that money. They took it and they invested
it in things. Right, So I mean they'll be less
(35:45):
that available. Does that mean the economy won't grow as robustly?
That's really the concern with it, ket.
Speaker 5 (35:51):
Right, good point. Good point.
Speaker 2 (35:53):
If let's move on a little bit to the warehouse
drugs issue. This is something we've been talking about for
quite a while. And you know, at first we yeah,
of course we had Novo Nordisk and Lily and they were,
you know, neck and neck.
Speaker 5 (36:03):
But of course now.
Speaker 2 (36:04):
We see that Novo has lately Lily has taken the lead.
Is Novo still losing to Loi?
Speaker 3 (36:11):
So the answer is Lily is slightly pulling ahead of
Novo Nordisk.
Speaker 4 (36:17):
But the bigger issue with them was people were worried.
Speaker 3 (36:22):
That, you know, is the is the obesity market the
whole revenue stream from that, is it going to continue
to grow substantially? H And essentially, what we've seen in
the latest earnings announcements and forward guidance that we're getting
from both of these companies is there is relatively good
(36:43):
nere term growth coming and that is assuaged investor concerns
about that topic. In fact, on Wednesday this week, Novo
projected a twenty percent increase in company wide sales for
its guidance for the year. And while it's slightly slower
(37:03):
than last year's growth rate, twenty percent is not chop livery.
You know that pace room really remains impressive in the
world of pharmaceutical companies. And then on Thursday of this
last week, Lily confirmed an earlier projection of about thirty
two percent revenue growth this year. And by the way,
(37:24):
you know, their margins and both of these companies are fantastic.
They have earnings before our interest and taxes margins in
the kind of forty to forty five percent of revenue range,
and they're showing little if any erosion in that margin
over the past several years. So these are they're growing
(37:44):
nicely and they are fat margin businesses, so.
Speaker 4 (37:47):
They're they're good.
Speaker 3 (37:49):
And then adding to investor optimism is this clear message
from the obesity leaders that they're just getting started. For example,
Novo has only one point two million patients currently being
treated with Regovi.
Speaker 4 (38:06):
I'm one of the.
Speaker 3 (38:06):
One point two million, by the way, and Regov is
their obesity drug. Right that's out of fifty five million,
one point two million out of fifty five million people
whose insurance would cover the drug. That means there is
an enormous untapped market. Sure, okay, And at the same time,
(38:28):
Lily is quickly closing in on Novo's first mover advantage,
as we report in the last month or so.
Speaker 4 (38:35):
In fact, Lily is.
Speaker 3 (38:36):
Now the market leader in new GLP one prescriptions and
its overall market share increased by five percentage points at
the end of twenty twenty four versus the same period
a year prior. And Lily believes that both weight loss
drug zep Bound and diabetes treatment Manjaro are still very
(38:57):
early in their life cycle per runways still coming. You know,
the biggest constraint Kenny manufacturing capacity. It isn't demand. They
can't just make this stuff fast enough. Both companies are
moving quickly to increase capacity. For example, Lily projects a
sixty percent increase in supply in these kinds of drugs
(39:20):
in the first half of twenty twenty five versus the
same period in twenty twenty four. And all of this
good news makes them the two most valuable pharmaceutical companies globally,
and it makes their pipelines important. So when we come back,
I'm going to talk about, well, what are their pipelines,
What does the you know, looking forward, look like.
Speaker 2 (39:42):
Okay, that's when we return more on weight loss drugs.
It's a Plan Strong Financial Forum.
Speaker 3 (39:47):
This is Paul Parsons, president of Plan Strong Investment Management,
and you're listening to the Plan Strong Financial Forum. If
you like what you hear on our show and want
me to take a look at your investments and retirement
plan called my office it nine seven two seven five
two six eight eighty nine seven two seven five two
six that's eight eighty eight nine seven to two plan
(40:08):
or go to planstrong dot Com.
Speaker 2 (40:10):
Securities and Advisory Services, offer to Commonwealth Financial Network member
Federal SIPC, a regitional investment advisor, n Navy Washington Street Detaments.
Speaker 1 (40:25):
Finally, a radio show that is not trying to sell
you insurance or annuities. This is the Plan Strong Financial
Forum with Paul Parson's, president of Plan Strong Investment.
Speaker 2 (40:37):
Management, and welcome back to the Plan Strong Financial Forum.
Speaker 5 (40:40):
I'm your host.
Speaker 2 (40:40):
Attorney Ken Carberry, along with financial advisor Paul Parsons and
Paul were right in the middle of kind of looking
at this battle between nov Nordis and Eli Lilly in
terms of the weight loss drugs, and so, Paul, you
wanted to address the pipeline at Lily explain that.
Speaker 3 (40:57):
So before we get to this, Kenny, can I just
tell you how old you and I both are. Notice
how I threw you right in there with me, right
under the bus. Do you feel a stud thud?
Speaker 5 (41:06):
You're right? Yeah?
Speaker 3 (41:08):
Can I just say to you, did you watch any
part of the Grammys the other night? I actually did,
because you're a music guy, right, you love music? Right?
Speaker 5 (41:15):
Did I watch watch about three quarters of it? Yeah?
Speaker 4 (41:18):
Okay, So tell me the truth. Did you know any
of the artists? Just any?
Speaker 2 (41:22):
I actually do, because you know that it's I teach
you to college at a college radio station, So this
is this is the music the college kids are playing.
Speaker 5 (41:31):
So I'm familiar with it. Doesn't mean I like it,
but I'm familiar with it.
Speaker 4 (41:35):
I have to tell you.
Speaker 3 (41:36):
I was like every person that went up there was like,
never saw that person before, never saw that no clue.
I realized that show isn't for a sixty eight year
old man.
Speaker 5 (41:48):
It's not for us. It's not.
Speaker 2 (41:50):
But having said that, I did think there were parts
of it that were throwback.
Speaker 4 (41:55):
Really there was a lot of tuxedo, big.
Speaker 2 (41:58):
Old fashioned Hollywood thrown in where I felt they were
doing a lot of those large scale song and dance numbers.
Speaker 5 (42:05):
Not necessarily the song and dance numbers you and I
know are like.
Speaker 2 (42:08):
But but it looked a little if you didn't hear
the music, it looked like a throwback to even forties
or fifties Hollywood, some of it because it was an extravaganza.
Speaker 5 (42:18):
I thought.
Speaker 2 (42:19):
In that regard, I felt they were doing a little
bit of throwback in terms of how it was presented.
Speaker 5 (42:24):
You know, the music, of course, is it has left us.
Speaker 3 (42:28):
I felt like when I was watching it and they
would introduce the next person, I felt like I feel
when I watched Jeopardy and the subject matter is either
the Bible or English literature, you could you could say whatever.
Speaker 4 (42:45):
You wanted to say, and I'd say, never heard of
that before.
Speaker 5 (42:48):
Never where they get me on Jeopardy.
Speaker 4 (42:51):
It's rivers.
Speaker 2 (42:54):
As soon as they do rivers, I just tell but Marry,
I'm gonna got it.
Speaker 4 (42:57):
It's time to time to get a coke. I'm off set.
Speaker 3 (43:00):
Yeah, okay, So anyway, I'm old and I'm not that
well versed on the Bible and English literature. That's what
we've determined from this so far. But I do want
to talk about obesity drugs.
Speaker 2 (43:10):
How's that, Kenny good Sony you mentioned the pipeline polve, Yeah, Lily,
what are you talking about?
Speaker 5 (43:15):
What does that mean? Yeah?
Speaker 3 (43:16):
So you know, as I said, first of all, these
DLP one drugs are killing it.
Speaker 4 (43:20):
They're doing fantastic and these two companies.
Speaker 3 (43:22):
Now Moovo and Lily are leading the pack when it
comes to large scaree, large scale pharmaceutical companies. Right, But
what's really important is what do their pipelines look like,
because can they improve on these meds and do they
have some other things that may be coming down the
pipe pipe that may be.
Speaker 4 (43:43):
Helpful or hurting them. So let's talk about each of them.
Speaker 3 (43:46):
For Lily, the focus really now shifts to late stage
data for its oral obesity drug, which is expected by midyear.
Because right now, you have to use a pan and
inject yourself once a week with it, and it takes
a lot to make those pens. Right, It's a lot
easier to crank out pills, and people are less queasy
(44:09):
about taking a pill than they are, you know, taking
a pen and.
Speaker 4 (44:13):
Injecting themselves with it.
Speaker 3 (44:14):
So that's important because they're looking at this data trial
on the oral obesity drug, which is expected by the
middle of twenty twenty five. Now, with good results, that
oral drug would offer increased convenience and scalability, And for Novo,
they're facing a more imminent problem check this out with
(44:35):
pricing caps by twenty twenty seven, courtesy of Medicare and
the Inflation Reduction Act. And that's why Novo's stock has
dropped nearly thirty percent over the last six months amid
concerns over its next wave of innovation. Now, while having
an impressive list of next gen drugs and development, is
(45:00):
whether any of Novo's meds can counter Lily's increasingly dominant position.
Given Lily's zet bounds superior weight loss to Novo's Wagovy,
I think the numbers are like twenty two percent weight
loss twenty three percent weight loss with zetbound versus say
(45:23):
fifteen percent with wagov Okay, it's a big difference, right,
And so Novo's future looked even a little grimmer when
they released Phase three results for a new two drug
combination shot for obesity that was supposed to result in
twenty five percent weight loss, but it actually reported an
(45:44):
average loss of twenty two percent plus. In other words,
they kind of matched the Lily efficacy, but they weren't
better than that. And in the end, most patients don't
care about twenty two versus twenty five percent. What they
do care about is side effects and tolerability and convenience,
and so you know, longer acting once monthly injections are
(46:08):
even better or alternatives. That's the way one of these
companies is going to get the jump on the other.
Speaker 5 (46:15):
Yeah.
Speaker 3 (46:15):
So you know, if you look at how where they
priced Novo today's trading, it around twenty two times forward earnings,
Lily's at thirty seven times, and both are down pretty
substantially from where they were six months ago. But the
market is obviously more impressed with Lily's products and pipeline
than Novo's, and frankly, for both companies, clarifying what comes
(46:40):
next in obesiti treatment will be key to sustaining momentum.
I got to tell you a Lily's forward path looks
a bit favorable to Novo's, especially with that whole medicare
pricing thread against Novo, But investors are already paying a
handsome premium for Lily's stock, so it's not a layup
(47:02):
as to which of these is the preferable investment at
this point.
Speaker 2 (47:06):
All right, Paul, you mentioned at the top of the
program a story about Honeywell. This is a company we
don't talk about much anymore, but certainly one of America's
big industrial conglomerates. They're in the news again. Looks like
they may be pulling a GE. I'll explain that.
Speaker 4 (47:20):
That is true.
Speaker 3 (47:21):
They're in fact on Friday's newspaper top top right column
in the Wall Street Journal. They're going to do a
three way split, essentially following GE and others. They essentially
plan to separate their aerospace division from their automation business
and spin out this other arm from that, called the
(47:42):
Advanced Materials Arm. Honeywell has been under pressure to split
from an activist investor, Elliott Management since last year, when
Elliott pointed to the runaway success of GE, since it
completed a.
Speaker 4 (47:57):
Three way split in twenty twenty four.
Speaker 3 (48:00):
Now, as you may recall, Kenny GE divided up into
separate companies, with their aerospace company called GE Aerospace very catchy,
their energy company, which is GE Vernova, and their healthcare business,
and together they have a market value now nearly four
times bigger than the conglomerate had in twenty twenty two,
(48:24):
and before the three way split, GE also took time
to unwind some disparate businesses, including their bank and appliance
efforts as well, and ultimately the aerospace business benefited from
surging post pandemic demand for air travel. The power business
(48:45):
was a trouble spot for them at that time, but
it's siden since ridden a wave of demand for energy
associated with AI data centers. Essentially, GE gave investors the
ability to participate in specific sectors and leaders the ability
to focus on operational and cultural improvements specific to those industries,
(49:09):
and they had a specific set of circumstances in which
their long term care business presented a huge liability across
the whole conglomerate, rather than isolating it just to one
entity like the GE healthcare business. And so their breakup
gave investors the ability to buy global leaders without, if
(49:32):
you will, side car businesses and side car liabilities, and
that's what the capital markets wanted, and so hunawell Well,
their CEO, said he realized during the review process that
Elliott had kind of forced them to take that The
aerospace segment in particular, was diverging more and more from
(49:55):
other parts of Honeywell, given its rapid growth and its
bigger industry headwinds, and he said, we came to the
conclusion that these three businesses are better separated to unleash
what they have. So the hope is that the three
new businesses will have greater financial flexibility, a more focused
management team, and Honeywell's aerospace business, which makes engines and
(50:20):
also those cockpit systems for Boeing in others, will become
one of the largest aerospace suppliers.
Speaker 4 (50:27):
And while the.
Speaker 3 (50:28):
Parent company, the overall conglomerate, trades it around it twenty
times forward multiple note that GE Aerospace trades at thirty
seven times next twelve months earnings, so they'd like to
see their aerospace business get treated the same as GES. Sure,
and at the same time, underwhelming results in Honeywell's industrial
(50:50):
and building automation units have hurt earnings. So my guess
is the first move is to see how much the
area aerospace business will add to overall market value. Now,
before you just jump on this and say, hey, this
worked for GE, sign me up. Let me buy Honeywell
now and see what happens. Got to remember this breaking
(51:13):
up doesn't automatically guarantee the kind of result that Ge attained.
In fact, a bane In Company study of three hundred
and fifty public spinoffs between twenty twenty twenty found that
half of the companies failed to create shareholder value a
couple of years after the splits, and a quarter of
(51:35):
them saw their values actually go down. So time will
tell what the story will be for Honeywell shareholders. The
benefits of the breakup are somewhat less overt than the
GE situation, and that's why investors should be careful with this.
Speaker 4 (51:53):
All I can say is we'll see Paulstoll.
Speaker 2 (51:56):
Free number eight eight eight nine seven two seven five
six eight nine seven to two plan or you can
go online to planstrong dot com.
Speaker 5 (52:05):
Well, thanks so much for coming in. We'll see you
next week.
Speaker 4 (52:07):
Hope everybody has a wonderful weekend.
Speaker 5 (52:09):
It's the plan Strong Financial four.
Speaker 2 (52:11):
Plan Strong Investment Management is located at nine eighty Washington Street, Deta,
Mass two O two six and can be reached at
eighty eight eight nine seven two seven five two six.
Securities and advisory services offered through Commonwealth Financial Network member
FINRA SIPC, a registered investment Advisor Paul Parsons Representative. This
radio show is for informational purposes only and is not
a solicitation or recommendation that any particular investor should purchase
(52:34):
or sell any particular security. The information contained herein is
obtained from sources believed to be reliable, but it's accuracy
and completeness are not guaranteed. Either Commonwealth Financial Network nor
your representative provides tax advice. Indexes are not managed, and
do not occur management fees, cost or expenses, and cannot
be invested in directly. Past performance of an index does
not guarantee future results
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