Kersten Wealth Management Group - Money Sense 9-06-25

Episode Transcript

Speaker 1 (00:00):
Hello, and welcome to Money Cent. You're listening to the
advisors of Kirsten Wealth Management Group, Brad and Kevin Kirsten.

Speaker 2 (00:05):
Happy to be with you today, Brad.

Speaker 1 (00:07):
The market's not really moving much since we last spoke,
since we lasted this show, and we're certainly looking for
a little bit more volatility going into the month of September,
but it hasn't really panned out at least here in
this first week. S and P five hundred is still
up slightly more than ten percent on the year, and
it's interesting to see some of the storylines that have

(00:30):
come out. One that happened this week, so I think
we should bring it up is we did have one
down day. Market's back up here today, so I can't
even string two down days together, but we did have
one down day and it was fascinating to me on
that day because Friday was the announcement this past Friday,

(00:52):
as this show is airing, it would have been a
week ago, but it was after the market had closed
that there was a judge that had said that Trump's
tariffs aren't lawful unless they're approved by Congress, basically.

Speaker 2 (01:07):
And.

Speaker 1 (01:09):
The reaction in markets was, first of all, interest rates
went up because they the pundits were saying, well, this
is terrible because we were paying.

Speaker 2 (01:18):
Down the debt. And stocks were down because they said,
this is terrible because we don't have the tariffs, and
the bond market doesn't like it because interest rates are up.
So that's making the stock market go down. And I
thought to myself, how far we've come, because it used
to be You realize, if this judge had made this

(01:41):
announcement in April, on April ninth, instead of Trump not
announcing the exact same announcement tariffs aren't legal, the Dow
Jones would have went up two thousand points. Now we're
down because now we like tariffs. Are we now proving
Trump's point? I now proving the point if you take
away the tariffs that are reducing the the market likes tariffs. Yeah.

(02:05):
So now the market likes tariffs, and maybe the only
thing it didn't like in April was the unknown of
where the tariffs are gonna fall because Trump was negotiating
and doing really high and then negotiating to something more reasonable.
And now that they are reasonable and the judge says
we're going to take it away, the market sells off
and the experts say that's selling off because it now

(02:26):
likes them. It's it's just a backfill of the story, right,
It's unbelievable.

Speaker 1 (02:30):
So that was really the only day we had any
sort of volatility in the last week.

Speaker 2 (02:35):
But I still think.

Speaker 1 (02:38):
There's this push and pull with the month of September
because you have this on one hand and on the
other hand, On one hand, seasonally, it's one of the
worst month months historically, very skewed by a couple of
big ones. Two thousand and eight, two thousand and two,
nine to eleven was obviously in the month of September,

(03:02):
and there was a big sell off, So there's a
lot there's there's a couple of big down months of
September that really skew the averages. But then also more
and more every year that goes by, everyone's talking about it, and.

Speaker 2 (03:18):
So just like a December, a Santa Claus rally, or
a January effect, people front end load that to make
sure that they're in. Just like this, were people who
were worried about it already out. Maybe we is the
FEDS meeting on the seventeenth and the anticipation of a
cut holding it up. Does the market move around that

(03:38):
or just after that maybe, but it we're only a
couple weeks away from kind of seeing what the market's
reaction is going to be. We do have some we
had jobs numbers this week, and then we have PPI
and CPI next week, and I think that is what
is leading the market initially here with the weaker jobs
numbers for the market to now be back at ninety

(03:59):
five percent, are going to cut on September seventeenth, and
I don't know the weaker jobs numbers. It's a little
strange because the unemployment rate stays low, the job's numbers
are getting a little bit weaker. And I just wonder,
just like all the other jobs numbers that we were
seeing that were not accurate, is it becoming an obsolete

(04:21):
thing to do surveys and even get accurate data on
the jobs. Are there a lot of jobs that are
newer types of jobs that are not covered and are
we just making assumptions that are nineteen ninety five nineteen
eighty five assumptions on the job market And we don't
really know. Even on the job's openings here, we are
still seven point two seven point three million job openings,

(04:43):
a number that pre COVID would have been unheard of,
and we're supposed to look at that and say, you know,
that's a weaker number than we started the year over
eight million, and now it's in the low sevens. I mean,
it's still seven million job openings that are posted and
not taken yet. That's a little bit of a backstop
for the jobs number. But weaker jobs number means the

(05:03):
FED more likely to cut. And next week, as long
as CPI and PPI come in in line, I think
it's one hundred we're going to go to one hundred
percent the Fed's cutting. Can someone explain to me why
we're doing surveys on the jobs numbers? With technology? Why
is it a survey? It shouldn't be at all. Right,
if somebody hires, somebody new, fills out their W two,

(05:24):
puts their Social Security number in, we should already know.
I mean, don't payroll taxes. Tell us how many we
have and had and knew, and how many are new,
and how many switched and how many.

Speaker 1 (05:37):
There's only about three companies in the whole country that
process payroll too, right, so.

Speaker 2 (05:42):
Instead of doing a million data points, we could do
three and have them now.

Speaker 1 (05:47):
It used to be that that was too tedious. We
didn't have we have the technology. Now why are we
doing a phone call survey? Well, it makes no sense whatsoever.

Speaker 2 (05:57):
It's because the person that would point this is with
every industry, the person that would point out that we
there's a better way to do it would be eliminating
their own job if they did point it out. So
there's no incentive to make things more efficient because the
way they're running now employs more people, right, and that's
that's all of government.

Speaker 1 (06:13):
Yeah, so just back to the market on the whole,
I still think that we in the short run, we
probably could and it would be okay, and it would
be healthy to have a three to five percent pull
back or maybe even a little bit more.

Speaker 2 (06:26):
It's interesting.

Speaker 1 (06:27):
I listened to a couple other financial podcasts throughout the week,
and one of the ones I was listening to Brad
just going over charts, going over charts, and the theme
was we're definitely in a bull market. Okay, fine, we're
definitely in a bull market. But this concept goes back
to like the psychology of investing. Okay, every chart on

(06:48):
this particular show they were bringing up was all these
positive charts about junk bond spreads being the lowest they've
ever been, and the the the number of stocks above
their fifty to two hundred day moving average being the
highest it's ever been, and using this to confirm the

(07:11):
point that we're in a bull market, and find we're
in a bull market. But what I can't understand when
I hear other people talking about this is the fact
that they don't comprehend that they're looking at something that
is not current. What do you mean it's not current?
It's happening now, No, it's not. We always joke on

(07:32):
the show about the old space Balls clip in the
movie space Balls where he said.

Speaker 2 (07:36):
You're at now now what will then be now? Soon? Right?

Speaker 1 (07:41):
There is no chart that you can look at from
the market that is current. By its very definition, Every
single chart you look at is looking in the rear
view mirror. And by the way, also can't look at
a future chart. Everything speculation, every single chart you look at. Okay,
and I'm not saying great, we're in a bull market. Fine, okay,

(08:02):
but I'm listening to this show and my head's about
to explode because I guarantee you every single one of
those charts before our last bear market in twenty twenty two.
If you had looked at those charts on January first,
twenty twenty two, they would have all looked that good
as well, right, That is what charts look like right
before a downtown right before it drops. So it's a

(08:24):
meaningless conversation to go into how great everything is.

Speaker 2 (08:29):
We already know, we just live through it.

Speaker 1 (08:30):
Yes, yeah, So if you're going to take anything from it,
you're talking about having a little bit more caution, which
we are because the easy money's been made, And that's
the entire point. When you're looking at any investment, you
want to put yourself on the side of probability. We've
looked at the charts and said, Okay, after a twenty

(08:52):
percent sell off like what we had in March and April,
after a twenty seven percent sell off like what we
had in twenty twenty two, when we eventually find the bottom,
the first two thirds or seventy five percent of the
rally happens very very quickly. That's the very definition of
probability being on your side.

Speaker 2 (09:11):
Okay, right now we've rallied three years. How low is
the probability that our next six months, Brad are the
same performance as the six months from October twenty two
to April of twenty three or April of this year
till today. Pretty low, pretty low. Not very many occurrences

(09:32):
where you pick up speed or even keep the same
speed for six more months. That's all that matters if
you're going to be tactical. But to sit out there,
to me, it's the equivalent of a weatherman going outside
looking at the sky and saying, well, blue skies today,
and then reporting it. That's all these people are. They're

(09:53):
not even weathermen who even look at a radar. All
they are is weathermen that look at the sky and say,
sky's blue. There you go, and if you're one, that's
I mean, momentum has worked for a long time. But
if your little market can continue, it can it can,
and momentum can continue. But if you're looking at your
own portfolio and saying this is working, this is not,

(10:15):
or this is doing well, let me keep it. This
is not doing well at mean not. That's that's all
the past. You don't know what's going to happen. That
did well, it's not doing well. That's that's the present tense.
It did well, we don't know how it's going to
do in the future, but it's not currently doing well.
There is no present there is no present day. Yeah,

(10:37):
what does that? I mean?

Speaker 1 (10:38):
I know you're getting philosophical here, But the sooner you
change your mindset and realize that there, how's the market doing.

Speaker 2 (10:46):
It's not doing it's not doing it did well, it
might do well, or it might not do well, or
it might not do well. There there is no how's
the market doing right now? That does not exist.

Speaker 1 (10:57):
And to me, it's just irresponsible to look at a
bunch of charts and say everything's great and assume that
it can never be bad as long as that charts
look good. The moment those charts start looking bad, by
the way.

Speaker 2 (11:09):
Those people the market will have already dropped it, will
already dropped it, and those people will say the market's
not doing well. Now we're in a bear market, confirming
a bear market. I'm gonna be out. We're gonna be
saying the opposite. We're gonna be saying they will. Actually,
that is what we were waiting for. You were waiting
for a better opportunity to put the ads in your favor.
That the next six months, the next twelve months, the
next three years will have better than average performance. And

(11:31):
that will only happen if you can do it after
a market has a little bit of a downturn. Yeah,
and this person that I'm referring to, I guarantee you
will have charts the next time the market is down
saying the exact same thing. Well, we're in a bear market,
so we're in a bear market. Yeah, what does that
even mean. That doesn't mean anything. We're in a bowl market.

(11:51):
We're in a bear market.

Speaker 1 (11:53):
It's just going outside and telling people what the sky is.
So the better thing to do is in the short
to intermediate term, if you want to be tactical, get
on the side of probability. Get on the side of probability,
especially at the market extremes. Okay, I mean, if you
look and I'm sure you know we don't need charts

(12:14):
for this.

Speaker 2 (12:14):
We can look at it. If I look at a
twelve month rolling there's a there's a certain level of
twelve month rolling periods where if on a twelve month
period it's thirty percent or better, I'm gonna guess that
typically it's not another thirty percent twelve months after that, Okay,
And if it's minus thirty percent on a twelve month

(12:35):
rolling again, not gonna be minus thirty for the next
twelve That would be extremely rare.

Speaker 1 (12:40):
So stop pointing out where we currently sit, because that
is irrelevant, especially when you're invising people about their retirement,
or you're advising people about saving for retirement, or who
are already in retirement. Those are not the right questions.
And I've even seeing people come to me and write

(13:01):
down that question. You know, how's them What is your
opinion of the current market. I can have one, It's fine.

Speaker 2 (13:08):
And I always do it. My opinions is irrelevant.

Speaker 1 (13:10):
It's not relevant to how someone allocates their money and
what's going to happen in the next twelve months.

Speaker 2 (13:17):
And so.

Speaker 1 (13:19):
Reverting to those charts is a good thing. But in
many cases, Brad, it's only a good thing for the
opposite reason of the why the person's putting it out there.

Speaker 2 (13:30):
Yeah. Yeah, we always say contrarian, but that's kind of
what we mean is is you're you're going against at
some point, you're going against what the consumer sentiment is
and what the everyday pundit on TV is saying, because
the probabilities are now in your favor. But they're not
pointing that out.

Speaker 1 (13:48):
And it's not about being contrarian to say, you know,
some of these people have stuck with old, boring dividend
stocks or energy stocks.

Speaker 2 (13:57):
So it's not about something that's working. That's and not
the wrong kind of contrarian. Yeah, okay, you could you
could just buy crap. Yeah, you could just buy inexpensive
stocks for the purpose of inexpeensive stocks. And they're they're
inexpensive for a reason. I mean, the thing that's worked
for the last ten years have been the things that
they've told you are expensive. But it's because their earnings

(14:19):
are growing at a faster pace than their expensive pe Well,
two things can be true. At the same time.

Speaker 1 (14:25):
Technology stocks have been wonderful investments for the last fifteen years.

Speaker 2 (14:30):
They could be also overvalue in the next month. Yeah,
but that as well as every single time we have
a correction they go down more. Yeah, And every time
the market rallies for ten years, they rally more, they
rally more. So just because they've been the best performers
doesn't mean you want to load up right before a correction. Yeah.

Speaker 1 (14:51):
Okay, you might want to buy right after a correction,
but it just it frustrates me because you think it
does a disservice to people to ever sound sort of
some kind of all clear. There is no such thing
as sounding and all clear on markets. Ever, Okay, I'll
sound and all clear over the next thirty years, our

(15:12):
markets will do just fine. That's the all clear out sounds.
That's your time arise. But these people are sounding and
all clear like right now. I don't understand how you
can do that with a straight face. Some of this
information we talk about going into September brand and the seasonality.
Check it out on our market commentary on our website
Kirstenwealth dot com. Call them before the storm question Mark

(15:33):
can this rally continue in September? Talked about some of
the stats on September not as bad as you would
think when you're positive on the year. So we go
into that, also go into some of the earnings revisions
and how good those were in the second quarter, and
then the last part talks about small caps and how
they have broken out a little bit above their fifty

(15:55):
to two hundred day moving averages. So that's really been
I think helpful to the broad mark market as well
is seeing seeing the rest of the market small and
midcaps maybe pick up a little bit of slack. I'll
also point out to our our clients that are on
our email list for the newsletter. A lot of those
points kind of summarized in our newsletter that went out
midweek this week, So check out your own inbox for

(16:17):
a one page summary of all those ideas. Let's take
our first pause here, Kevin, interest rates have fallen. Let's
take a look at where mortgage rates have gone in
the last week and really kind of talk about what
happened last year as we approached the first FED rate
hike of the year and what mortgages did at that time.
You're listening to Money Cents, the advisors a Christen Wealth
Management Group.

Speaker 2 (16:36):
We'll be right back and welcome back. You're listening to
the advisors of Christon Wealth Management Group, Brad and Kevin
here with you this morning. Kevin, we talk about interest
rates a lot, but really the real point and why
it really matters I think in the next year is
not interest rates talking about interest rates in people's CDs

(16:58):
or something, you know, what you can get in your
money market. I think there's been a lot of pent
up demand for real estate activity and also refi activity,
and I think the refi is the one that will
put more money in people's pocket quicker than even the
housing activity. That is a little bit of a probably
a coiled spring for this market too. And it's also

(17:19):
kind of twofold, you know, more, when refi activity picks up,
it's just right to the bottom line of big banks,
but more importantly more of an impact to regional banks
and smaller banks that you're going to find in small
and MidCap portfolios. To take a look at a twenty
twenty three lowest refis in the last probably twenty years

(17:39):
for the entire year, there was only eight hundred and
forty one thousand refis for the entire year of twenty
twenty three. Right now we have we have had more
than that in the first two quarters of this year,
but it's starting to pick up. We had in the
last month, I think it was the it was the
most that we've had in three years in a month.
And but if we just look at a week ago

(18:02):
kind of be interest rates started to fall about a
month ago. About two weeks ago is when interest rates
really started to fall, and they have continued to fall.
Mortgage rates that is right now, I'm sorry. A month ago,
there were two million people that could refi. Today that
numbers three million, and if the thirty year gets below six,
the estimate is that it's five million people that could refi.

(18:26):
If it got to five and a half, seven million
people could refi. So we could get to the point
where somewhere between five and seven million people over the
next fifteen months could refi and save themselves money, put
more money in their pocket, create activity for the regional
banks and bigger banks, help their bottom line, help help financials,

(18:46):
the whole financial sector, and you know, you're talking about
numbers that are five times higher on that activity for
that entire sector and industry. I think it's going to
be pretty impactful. And so that's why the first FED
rate cut matters, because last year the FED cut a
few times and then kind of changed their language even

(19:07):
before the last cut to say we're not going to
keep going if we cut and they don't change the
language and mortgages continue to fall, I think we're going
to have all this activity come in. So last year,
rates moved for about three three months leading into the
first FED rate cut. Mortgages followed them, but literally the

(19:28):
day before the FED rate cut was the bottom for
interest rates and the bottom for mortgages last year. It'll
be really interesting to see if that same trend holds.
If mortgages fall to say, you know, six two five
on the thirty year and five and a half on
the fifteen year, and then go up after the first
Fed rate cut, you'll know that we're going to have
a very similar pattern where the market's not gonna believe

(19:51):
the Fed's going to keep going, and we fully priced
in three rate cuts and no more. And I think
that wouldn't be as healthy as going a little further
or getting maybe that thirty year back down below six.
Having five something on that thirty year again, I think
would have everyone off the fence. Yeah, and.

Speaker 1 (20:12):
It's as it pertains to housing specifically, but there's a
lot more that goes into it.

Speaker 2 (20:18):
As we know.

Speaker 1 (20:19):
I mean, certainly, the strength of the economy will dictate
where the ten year treasury goes, probably more than what
the Federal Reserve does. And if the economy strong, you know,
you could see that ten year treasury, you know, hold
in there. The economy maybe hits a little bit of
a hiccup, that's that's where people are gonna get their
opportunity to refinance, and so looking at that spread between

(20:46):
two years and ten years, of course the two years
is gonna come down when the Fed starts cutting rates.
So if that spread can hold in there, then both
rates kind of float down together.

Speaker 2 (20:55):
Yeah, but the ten years made a huge move. Even
this week, I think I saw below four to two,
and they see where it is today, Uh yeah, four
to one seven eight. So you think about that historic
relationship of one to five, even if it's a little
higher ten year to thirty year. At four, you're talking
about five and a half, it could get to on

(21:15):
the thirty year. Even if it got to five seven five,
that would be a pretty healthy level for refis and
a pretty healthy level for people wanting to finally put
a house up for sale and move and not feel like, Okay,
I'm walking away from three seven, five or four and
a quarter and I'll have to stomach going to seven

(21:35):
or eight on a mortgage at the peak. And now, okay,
I'm walking away from four and a quarter and I'm
gonna get you know, five and a quarter on a
fifteen year. I'll think a lot of people are willing
to do that trade off.

Speaker 1 (21:48):
Yeah, I mean, I get it's still you know, it's
still a big number. I mean, if we look at
just putting something into a mortgage calculator, let's say a
six hundred thousand dollars home, and what were you saying
if it can get down to what, well, five seventy five, yeah,
five seventy five on a thirty year yeah, okay, five
seventy five, and say you're.

Speaker 2 (22:10):
Walking away from four and a quarter, So you're going
up one and a half percent on your thirty year
for the same amount of mortgagee.

Speaker 1 (22:16):
Right, So we in that scenario, we're looking at ten
and how big is your mortgage here? Well, I did
a six hundred thousand with eighty thousand down. Okay, that's
just what pre filled in there.

Speaker 2 (22:29):
Yep.

Speaker 1 (22:30):
So you're at a five hundred and twenty thousand dollars
mortgage and it is about thirty four to ten per month, okay,
thirty four to ten per month. And if I switched
that to you know where you're saying four percent for.

Speaker 2 (22:46):
Four to four and a quarter or something like that.

Speaker 1 (22:47):
So if I switched that to four and a quarters,
it's a one and a half percent difference. You're talking
about twenty nine thirty three, so five hundred a month. Yeah,
still again compared to where that somebody was.

Speaker 2 (23:01):
Yeah, but it the reason that somebody wasn't going to
do it is you're talking about five hundre a month.
It would have been fifteen hundred a month, you know,
a year. Actually thought it would be more.

Speaker 1 (23:09):
I thought it would be more in terms of you know,
on I mean, I hate to use such big numbers,
but that's that's the prices of houses these days, right,
And that doesn't seem to be something that I think,
you know, people might cut something else. Yeah, right, I mean,
if you had to pick, I think most people would
rather have their house than buy that new car. Maybe

(23:32):
they postponed that new car. Maybe that's where you'll see it, Brad.
Maybe it's going to be housing at the expense of cars. Yeah,
And I think that most people probably would choose that
in terms of where they live versus what they're driving,
or even.

Speaker 2 (23:46):
Think about that that trade off. If your car, your
car loan was six seven a couple of years ago,
and now you can get that car loan for a
lower number, maybe the trade off is that there is
no there is no trade off. They're both lower, and
so we've had to endure, you know, in the same

(24:06):
time that people have held off on maybe selling a
house to move to something else, they've also had to
endure higher interest rates on cars more than likely, and
so maybe they feel like they're getting a good trade
off to go lower on both. It's amazing. The national
average for car.

Speaker 1 (24:20):
Payments is I think upwards is seven hundred dollars a
month is the average, which is unbelievable to me. But
I mean, I think we had a big jump in
technology in cars in the last five years, and I
really think if you look at the new stuff out
there right now, now there's this big push right now,
and not if you saw those numbers yesterday. But evs

(24:41):
are having their best couple of months because the credit's expiring.
Trump got rid of the EV tax credit in the
One Big Beautiful Bill, and so anybody and everybody who
might be buying an electric is going to do it.
This is rushing out in these next two months. So
last month was was I think a record for electric vehicles.
This month will probably be another record, but then they're
gonna fall off a cliff. I mean without the tax credit.

(25:04):
I mean they are gonna fall off a cliff. And
I think that if you're comparing vehicles from five years ago, now,
what's the new tech? What's the new tech that gets
you excited? I mean, I understand maintenance and all those things.
A newer car is going to be cheaper on that.
But it used to be, you know, way back when
it was the safety features, right, so, give me the
give me the airbags, that was an original safety feature.

Speaker 2 (25:27):
Then it was that was give me a give me
a CD player instead of the cassette. Then it was
give me the the the bluetooth capabilities right then.

Speaker 1 (25:37):
It then it became some of these other things like
blind spot protection and heads up displays and all those things. Fine, great,
that might might get somebody off the fence. But what
is it today?

Speaker 2 (25:49):
Yeah, probably that there's more cars that are hybrids and
so you can get the best of both worlds, and
maybe you don't feel like if you can, especially for
your commuters, are selling tremendously well, yeah, so if you
don't have, if you don't get the credit, the tax credit,
but the car is barely any more. I think that's
where the price has to come down as on those
hybrids because people feel like they're actually getting something for

(26:11):
it because they're going to spend less of gas for
the life of the car. And I know, the hybrids,
unless they're a plug in hybrid, I don't think they
qualify for any of the EV tax credits that they're
the traditional style hybrids. But it's I think that that
those sales will continue to be a way that people
are going to put their toe in the door on electric.

(26:31):
But at the same time, okay, let's say those sales continue.
I say, what, what's going to get people excited? You
look at those Your two biggest monthly expenses are probably
your house in your car. I think most people are
going to pick their house so after not doing it
for so long, after not doing it for so long.
So and part of it is just me.

Speaker 1 (26:51):
I was just recently looking at my own vehicle that
I bought, and I was looking at the brand new
ones and I was.

Speaker 2 (26:56):
Like, Eh, no reason, nothing different. Well, people been doing
that with phones for the last two years. What's the difference, right,
instead of you know, when the iPhone first came out,
it was every year. Then you're like, okay, every other
year's fine, and now people are what four or five
years and so all these things. I mean, some of
these companies, especially in the auto industry, they're almost a

(27:18):
victim brad of their own quality because cars didn't used
to last very long. Right, You don't even pay attention
to the miles anymore.

Speaker 1 (27:26):
No.

Speaker 2 (27:26):
In fact, I was in my car. I had to
click so many buttons to even find my mile here. Right.
It used to be a lot more prominent. It used
to be the number one number on the two cars
that it pops up for a second when you turn
it on, and then it's hard to find.

Speaker 1 (27:39):
I couldn't find mine. But I'm thinking to myself, well,
what do I care about the miles? As long as
it runs well? And so it's nothing anymore to have
a car with one hundred and fifty thousand miles, And
that would have been you're pushing it into the junk
yard thirty years ago. So so, and maybe that's the
first place you'll see a little bit of a slowdown,

(28:00):
probably see it in automobiles before you see it in housing.
But there's a lot of noise right now because we
had all the EV credits. Now Trump's getting rid of
the EV credits. But then there's just pull forward. We
didn't have tariffs. Oh we're gonna have tariffs. So in
March and April everyone ran out.

Speaker 2 (28:18):
But once you're run every time you pull forward, though,
you increase sales for the whole year. You really do,
because you do. But look what happened after cash for
Clunkers back in the day. You have that sales. If
you average out the big month, the down month, and
then back to normal, you bet you're more sales. It
ends up with more because people get off the fence
that weren't gonna buy in either month, and so you

(28:40):
have your normal buyer plus the on defence people and
it ends up being more. And the same thing is
happening now with the EV's. You mentioned the cash for
clunkers though. When they did that, yeah, there was a
huge uptick and then sales fell off. Yeah yeah, So
you know, I don't know if that's going to be
as prominent with EV's or with the tariffs. We'll see.
On the tariffs, I think I think we did a
little bit of pull forward that's not going to just

(29:02):
go away with some of those.

Speaker 1 (29:04):
The funny thing about the terrorists is if you look
at the incentives right now that are out for new cars.
You are actually cheaper today than when the tariff negotiations
started and people ran out to buy a car in
March and April. The incentives are even higher than they
were back then. So the tariff scare, I mean, obviously,

(29:24):
if you're in the business you want to get people
out to the dealership, then there's.

Speaker 2 (29:27):
Always a reason. There's always a reason talk about it.
So I'll talk a little bit about the stock news
of the week when come back from the break. Apple
had its biggest day of the year. Google had its
biggest day in three years, both on the same day.
Let's talk about that news story revolving around those two companies,
and a little bit more about new stories around tech.
We come back. You're listening to advisors of Kristen Wealth
Management Group. We'll be right back. Welcome back to the show.

Speaker 1 (29:49):
You're listening to the advisors of Kristen Wealth Manager Group,
Kevin Kirsten and Brad Kirsten. There was some tech news
Brad this week with Google getting a positive anti Trust
Rules anti trust ruling. They were originally looking to possibly
sell the Chrome browser and worry that they would no
longer be the default search on the iPhone.

Speaker 2 (30:12):
Well, but Google went up a nine percent on I
think it was Tuesday Wednesday maybe, and Apple went up
about about three and a half and mainly because Google
was just paying Apple to be the default browser. I mean,
that's what That's what should happen in the real world.
You want to be the default browser, pay for it.

(30:32):
What's wrong with that? I don't understand. I'll push back
a little bit. I mean, how many of these smaller
browsers they can't compete, they can't pay for it. Yeah,
but just the default browser, right, I mean, if you
want you want duck duck, go download the app and
they'll get rid of it. Yeah, but nobody does that.
Come on, I mean people do if they're you know

(30:55):
what happened if duc dug go is the default browser,
people would go to go get Google and put it
on and get rid of that one.

Speaker 1 (31:01):
That's what would happened. I'll bet a duck dot go
is a avault browser. They we wouldn't be able to
handle the traffic. Well that too, So that's that's true.
I think I think it's irrelevant.

Speaker 2 (31:10):
I mean I think that the browser in three years
is a thing of the past, and these companies that
that don't pivot away from AD revenue because of people
pushing people to websites. That's going away. When you know
when you search anymore, if you're on on on Google,

(31:32):
I would say ninety percent of my searches are just
to get an answer for something, and I'm just looking
at at Google's Gemini for the answer and and it
puts it all up there. I'm not clicking on anything,
I'm asking it something. It's telling me something, and that's
that's that's an AI search tool that didn't used to
be there. And it's hurting Google actually because you're not
clicking on anything. And how can they sell AD revenue

(31:54):
If you're not clicking on anything. You know, they're producing
nothing eventually, and they're hurting them sells with it. And
the same thing with UH even if you're not using
Google for it, you're eventually just gonna use all of
the AI chatbots for everything that you do, and it's
just gonna tell you where to go and what to do.
You're not gonna be searching the Internet for things. So
I think these companies better pivot, have to pivot. And

(32:17):
the same thing with the now biggest company in the world,
and Vidia has its its earnings and then kind of
falls a little bit because every time they do, the
competition speaks up and says, you know, we're building this,
We're doing this every If you're the biggest company in
the world making the most profits, you said it probably
starting two years ago. You're companies are not just gonna

(32:39):
let you go. They're gonna try to compete. They're gonna
build a comparable product, They're gonna they're gonna undercut your
big profits and try to sell into your market and
and save companies a little bit. And that's already happening.
Every time there's Nvidia news, there's competitor news, and that
will continue to happen. But I think the real hurt
for the semiconductor companies are there's no way we're going

(33:01):
to be selling at this current pace forever. At some
point you've built out the infrastructure, and the pace of
chip sales.

Speaker 1 (33:08):
Has to look at the boom and bus cycles of
the past. In terms of chips, I don't know why
that would change. It's not going to change, whether it
be Micron or Intel or AMD going all the way back.
There's big buildouts for new technology and then they coast.

Speaker 2 (33:24):
Yeah, and if you want to go back another decade,
there's big buildouts for internet. What was that then saying
number on Nvidia that just an unbelievable percentage of their
sales was for two companies and they wouldn't name them,
but we know you know, yeah, I think it was
thirty eight percent. Well who is It's Microsoft and Google?
Is it? Or is it face? Microsoft and Facebook? Well,

(33:45):
who's building who's building the most AI data centers? That's
who it's going to be. It was probably Facebook. Well
you could put Microsoft in there because they're a majority
owner or minority owner of open Ai. It's probably open Ai.
Then my guess would be Microsoft and Facebook would be
the two big cut So fine, but that's to me,
that's a big risk too. Yeah, one of them switches.

(34:06):
You're going now by fourteen and one of them switches,
one of them gets to the plateau. Yeah, we're gonna
slow down our AI build out because we have enough. Right,
that's what's gonna happen. I mean, go one hundred years back.
Once you've built the railroad, we don't need as much
steel to build a side by side railroad. It's built.
You know, every industry works that way, and people act

(34:27):
like that the tree grows to the sky. With something
that is an infrastructure build out, it makes no sense whatsoever. Now,
the next build out that is just now starting is
the infrastructure electrical grid that has to get built out
for all of this stuff to work. And we're gonna
start to hear about government dollars going that way too,
and the government will likely over the next three years

(34:48):
be the biggest spender when it comes to infrastructure build
out for our electrical grid and for the energy grid.

Speaker 1 (34:58):
You know, yeah, and that could be you know, I
think that could be something that would be if you're
looking at bullet points to say what has Trump accomplished,
Improving our electrical grid would be something that I hope
someone is talking to him about because we have a
lot of antiquated you know, we went back a couple

(35:18):
of months ago talking about how antiquated air traffic control
and all these other things are. But you know, power
outages could be more prevalent if we don't improve upon
our electrical grid too. So, and given that these data
centers are using more and more and more, you know,
I don't think people are going to be too happy.
I mean, you even look locally when that Facebook data

(35:39):
center goes in, better rates are going to go up.

Speaker 2 (35:43):
Yeah, unless they're fully self contained. They are building you
can tell they're building electric utility infrastructure there. You can
see basically it looks like a power plant. But is
it self contained or is it going to be drawing
from it? Are they going to be drawing on the
water source? Is the water bill going to go up?
Because you deeed water cool all of these data centers,
So it could it could be one or the other

(36:04):
or both. And so there are communities all over the
US dealing with that same thing. And when the noise
gets loud enough, uh, the government will have to step
in to start spending money that way so that the
problem doesn't get worse. Right.

Speaker 1 (36:17):
Well, when if Trump does it, though, he'll just say, heye,
Toledo Edison, you can, Well, we'll do it.

Speaker 2 (36:23):
Will help you build out. But I want to I
want to cut for the country. Yeah, I want you mean,
I want five percent, five percent of the company or
whatever I mean.

Speaker 1 (36:31):
I don't you know that we're pivoting a little bit
to what Trump is doing with Intel, But in a way.

Speaker 2 (36:38):
It makes some sense. You're not just giving money away.
I'm giving you this, you give me this. By the way,
the government did this in two thousand and eight with
the banks. Yeah, they took ownership, they made a profit,
and they sold it off. Yeah, and then they sold
it off. They do it with with the strategic oil reserve.
It's there for a reason. However, they buy it and
they sell it and hopefully.

Speaker 1 (36:59):
They're The question being is not so much should the
government get something for their money. I mean, I think
a healthy company would want to say no. I mean, famously,
Jamie Diamond and JP Morgan did not want any of
the quote unquote bailout money from two thousand. The government
made them do it because it would have looked bad
on the other if they said no, that another company
is going to say no, and only ones that would

(37:20):
take it would have been the super unhealthy companies, and
that would have.

Speaker 2 (37:23):
Been a toll.

Speaker 1 (37:24):
But the reason why Jamie Dimond was hesitant was if
I give you ownership, I'm also giving you the right
to tell me what to do.

Speaker 2 (37:31):
Yeah.

Speaker 1 (37:32):
And that's the worry with government investing in these companies,
not so much that the American people don't deserve to
have the equity stake, because it is the taxpayer's money.
The question being do we want our government and our
politicians who we don't we already don't trust, you know,
calling the shots for a company.

Speaker 2 (37:52):
If I was a company building out electrical grade, I
would want the government to be my partner, because then
I know I'm getting fast tracked on permitting. That could
be the biggest deterrent for things done quickly.

Speaker 1 (38:01):
True, but I think utilities are a little bit different
because there's such a fundamental requirement of society. But I
think it's a you get into the slippery slope argument
with a company like Intel, even though they've done so poorly,
they'd probably would have given half the company away. But
do you want in general, your government like what China does,

(38:25):
calling the shots for publicly traded companies.

Speaker 2 (38:30):
I don't know.

Speaker 1 (38:30):
I don't think that that's something that we really want
long term. Let's take our last pause. Brad, you're listening
to Money Since Kevin and Brad Kirsten.

Speaker 2 (38:37):
We'll be right back.

Speaker 1 (38:38):
Welcome back to the show. You're listening to the advisors
of Kirsten Wealth Management Group. Kevin Kirsten and Brad Kirston,
happy to be with you today. As a reminder, we
are professional financial advisors and our offices are in Perrysburg.
Give us a call throughout the week if you want
to sit down and have a consultation to review your
financial plan. Whether you're just getting started, well on your way,
or already in retirement, we'd be happy to sit down

(38:59):
and go over things with you four one nine eight
seven to two zero zero sixty seven, or check us
out online at kirstonwealth dot com. Brad, let's close out
here with some stats looking at Nvidia. Not a recommendation
of buy or sell, but you did mention their earnings
and having some risk. Well here's something that to me.

(39:19):
It just I know it's not the only thing, but
the sheer size of the company four point four trillion
dollars as of August twenty eighth.

Speaker 2 (39:28):
That is the.

Speaker 1 (39:28):
Size of six Walmarts, thirty eight Nikes, and ninety four
Ford motor companies. It has a bigger market cap than
the entire equity markets of five of the seven G
seven countries. G seven countries being Germany, France, help me out,

(39:49):
the United States, UK. I did know that they were
bigger than all of Germany, which I found stunning.

Speaker 2 (39:59):
So yeah, and you know, we for much of last
year we were pointing out that Google and Apple and
Microsoft and Meta, all of them were big buyers of
other companies and really have a lot of They're a conglomerate.
And Video is not a conglomerate. They are just a
chip maker, that's it. So when you look at a

(40:20):
company like Microsoft's and say, wow, look at the market
cap of Microsoft, Microsoft's probably one hundred different major companies
that would be in the top one thousand companies. So
Microsoft's more like like one hundred and one companies, not one,
and Video is just a chip maker. Yep. We mentioned
the broad rally that we've seen here, Brad.

Speaker 1 (40:42):
Last Friday on August twenty second, ninety six percent of
stocks in the Russell two thousand were higher on that day.
That is only happened. That is a ninety ninth percentile event. Okay,
And if you go back last fifteen years, six months
after that kind of a reading, the Russell two thousand

(41:03):
has never been lower six months later, with an average
gain of thirteen point one percent. So pretty interesting to
see that broad based nature of the small cap market
breaking out a little bit.

Speaker 2 (41:12):
Yeah, I mean, it is logical that lower interest rates
will help those companies. But we've had other periods of
time like a year ago where rates went lower and
small caps still lacks large caps. So it's yet to
be to prove itself that this current pattern that we're
in of getting that this current level we're in small

(41:35):
caps can actually break out of it. So we'll see
the next three months for small caps that really tell
the tale. I think there's a lot of people that
if it fails again, will throw the towel in maybe
forever on small caps.

Speaker 1 (41:45):
Looking at the last week of August, there are twenty
two stocks brad in the S and P five hundred
that have negative ten year returns. We talked about not
getting being diversified, not being married to anyone company, even
if you work for that company. Some of these companies
that are on this list could be companies that even
people around here could work for. Walgreens, Craft Hines, Biogen,

(42:08):
and Halliburton are all negative. So looking at loading up
on the company you work for, or for whatever reason
you might load up at a company, you might fifteen
years ago or ten years ago have looked at a
company like craft Hines as oh well, that's a staple
of American society. That's something you want to own, and

(42:29):
it's been negative over the last ten years.

Speaker 2 (42:31):
Talk this week about breaking it up. Orn Buffett doesn't
like the plan, but I think they're going to be
doing that anyway. And yeah, they're doing it just to
shake up the company because of the terrible performance of it.

Speaker 1 (42:41):
We talked about housing earlier. We had some low inventory
levels that were posted here in the summer. Home prices
in June actually rose four percent year on year in
the Midwest. In the Midwest, so New York, Chicago, well,
New York is on that list too, but Chicago, Detroit,
Cleveland all all had four percent or more increases from

(43:03):
a year ago. Prices in once fraughty southern and Western
cities like San Francisco, Dallas, Tampa, and Denver are now
down year over year, even though the Midwest cities are
up on their real So.

Speaker 2 (43:15):
We looked at that a couple months ago and the
biggest declines were kind of the the Fort Myers area
and suburbs and a little bit on the Panhandle. They
had the biggest increase, and now they have the biggest
decrease over the last twelve months. How about this.

Speaker 1 (43:30):
The top four hundred US wage earners in the entire
country had an effective tax rate of twenty four percent
from twenty eighteen to twenty twenty.

Speaker 2 (43:44):
Wagerner, what a what an odd term wage? I mean,
you're the if you're the toppy, if you're the top earner,
you're not really taking home a wage. And so a
lot of that pay is capital gains from sales of
stock and other things like that. Yeah, I mean, very
little is getting taxab Well, it has changed. It has
changed though.

Speaker 1 (44:06):
It was well, it's thirty percent for the entire US
on average from twenty ten to twenty seventeen. The effective
tax rate of the top four hundred eers was was
also over thirty percent, so it has dropped. Yeah, so
it has dropped. So that's interesting to see. Fifty three
percent of Americans say their personal finances have deteriorate in
the last six months. So that's another survey that that

(44:27):
we were kind of ripping on. But that same survey
was forty nine percent in the spring in April, so
that number is coming down a little bit. Thirteen percent
of American consumers failed to meet their minimum monthly credit
card payment in August. That's interesting to see that was
only eight percent in the spring, So yeah, I think
that that is something to pay attention to. But once again,

(44:51):
is it this is this real data or is this survey?
I mean, this is just people calling out and saying,
how do you feel about your finances?

Speaker 2 (44:58):
Did you pay your credit off in full? Or did
you make the minimum payment? Yeah, if it's a survey,
I don't know. You know who's got time to answer
a survey somebody who's not working. So you're kind of
cherry picking the people who are not in a good
financial situation. Anyway, if you're busy and working, you don't
have time to fill that stuff out. You're you're ignoring it.

Speaker 1 (45:17):
Right, So what do you what do you think for
the we're going to look for for the next couple
of weeks in September?

Speaker 2 (45:24):
What are the big We got back to back weeks
here where we get it was it was employment week
this week and it was a little weaker, which is
what I think the market needed to see so that
the Fed will cut. Now we have CPI and PPI
next week. If they are at least in line or
slightly weaker, it's a guarantee that the Fed's going to
cut the fall.

Speaker 1 (45:43):
So what are we looking for? What are we looking
for on those numbers, because we're often in a mode
where we don't know what we want or what we're
rooting for.

Speaker 2 (45:51):
What is the good news.

Speaker 1 (45:53):
On CPI and employment as it pertains to market movements?

Speaker 2 (45:58):
What's the good news? Yeah, well, with the good news,
well weaker, weaker CPI. Well, weaker CPI, that's obvious. But
this week's numbers, it was weaker jobs, so that if
the drives were too strong, the Fed would feel like
they wouldn't cut. Well they did. They came in slightly
lower than expectations. We added less, and the unemployment, the
unemployment claims, the weekly UH was slightly higher, and so

(46:23):
that was actually good for what the market wanted to
see because they want the Fed to at least get
to Friday. Is Friday the August report? Or is it
a week from Friday? So for CPI? No, no, no for
job job for the full month for the we're talking
about the week? Correct, Yeah, it is. Where are we
here either way you are rooting for? I hate to

(46:43):
say here, it is, Yeah, Friday, the unemployment report is Friday.
The market will rally on week jobs. Well, the expectation
seventy five thousand. The prior month was seventy three. And
if we added less than seventy five, yeah, that's the
market will applaud it. It will.

Speaker 1 (46:56):
By the way, look for the revisions because last month
when we had all the rev visions, that's when Trump
came out and fired the.

Speaker 2 (47:02):
BLS YEP chair and they were all weak. So then
next week, real quick, Uh, the I think the annual
is what really catches people's eye. The PPI annual is
expected to be three point three. The CPI is expected
to be two point seven. Those are both in line
with the prior months. So uh, if you're lower than
two point seven and lower than three point three, those

(47:23):
are on Wednesday and Thursday, respectively, it's it's it'll be
one hundred percent guarantee. The Fed's going to cut the
following week. So two weeks of inflation and and and
jobs and Fed talk and and then I think we
don't have a lot you know, the market reaction to that.
Once we digest that, we'll be back to talking about
dusting off the playbook for how you're going to position

(47:45):
yourself for the next six months. We talked about the
fundamentals of investing. Sometimes we're talking about the fundamentals of
the market, but we talked about the fundamentals of investing.
We'll be dusting off that playbook and talking about getting
ready for any kind of weakness to put the put
dollars back to work. If you were on the fence
new money in particular, or if if you want to

(48:05):
dial up risk for the next six months, we'll be
talking about that. Thanks for listening. We'll talk to you
next week. You've been listening to Money since brought to
you each week by Kirsten Wealth Management Group. To contact
Dennis Brad or Kevin professionally, call four one nine eight
seven to two zero zero six seven or eight hundred
eight seven five seventeen eighty six. Their email address is

(48:28):
Kirstenwealth at LPL dot com and their website is Kirstenwealth
dot com. Opinions voiced in this show are for general
information only and are not intended to provide specific advice
or recommendations for any individual. To determine which investments may
be appropriate for you, consult with your financial advisor prior
to investing. Securities are offered through LPL Financial member FINRA

(48:50):
SIPC