The Fagan Financial Report

July 20th, 2025. 

Episode Transcript

Speaker 1 (00:01):
Good morning, and welcome to the Capital District's Money and
Investment program. You're listening to the Fagan Financial Report on
Dennis Fagan, sitting here with my son Aaron, as we
do every Sunday right here in news to K ten
and one O three one w g WY. It is
Friday morning, though we're recording this at just before eight o'clock.
Market's kind of meandering around the flat line the futures
this morning, Dow excuse me not the S and P

(00:23):
five hundred US total marketing and then nask All closed
that record highs yesterday.

Speaker 2 (00:28):
What do we plan to talk about today?

Speaker 1 (00:30):
We plan to talk about our newsletter that went to
print a couple of days ago, maybe our largest holdings
at the end of the second quarter. What does it
mean when the markets that record highs? You have the
PPI or inflation indices at the at the wholesale and
retail level, pros and cons and pluses and minuses for
the market in the second half earnings and in general

(00:53):
banks posted good earnings. What do we think about that?
But most important, another snake in the garden.

Speaker 3 (01:01):
Right, we have a snake that lives by our house.
I think I know where it lives it almost I
think it lives in the house actually, and like we haven't.

Speaker 4 (01:10):
Like old farmhouse, so you do.

Speaker 3 (01:13):
And there's like a little place that it can I
don't know, like essentially, you know, so I think it
lives in there.

Speaker 4 (01:19):
But you know, they're surprising when you first see them.

Speaker 3 (01:22):
But they're very good for for your property if you
do have them, So you know, I do think it's
important that we, you know, be nice to the snakes
that live there.

Speaker 1 (01:32):
You know, and I I don't like snakes, but in
general I.

Speaker 3 (01:37):
Surprised you though, you know, I don't think. I think
you're just surprised by you don't like surprises.

Speaker 2 (01:42):
No, who does really when somethings that you're.

Speaker 3 (01:44):
People like surprises like surprise parties, birthday, birthday something like that.

Speaker 4 (01:48):
It's funny.

Speaker 2 (01:48):
I am as Many's birthdays past week.

Speaker 3 (01:50):
It was she's one very nice nice my mom made
her a blueberry pie.

Speaker 4 (01:54):
She loved it.

Speaker 2 (01:56):
She did.

Speaker 3 (01:57):
You know, my my wife is very big into not
very anti sweets.

Speaker 4 (02:03):
And not getting you know whatever. But it was our
first like foray.

Speaker 3 (02:08):
Into into a suite, and she was she was loving
that blueberry post.

Speaker 2 (02:12):
She was she was She's she's adorable, both your kids.

Speaker 4 (02:16):
Mom gave me like the inner, the filling of the pie,
the leftover filling.

Speaker 2 (02:22):
Oh she did.

Speaker 3 (02:22):
Yeah, so Lauren a few like a month ago. For
was it my birthday? No, it was Father's day. She
made a strawberry I love pie, like pie is like
my favorite thing in the world. So we have an
extra pie cross, so I took it out. You know,
I was in the freezer. So I think I'm going
to make another blueberry pie with that filling because we
got we got all the equipment, you know.

Speaker 2 (02:42):
Yeah, it's good. So Mom gave you my blueberry pie filling.

Speaker 3 (02:47):
I guess it would be your blueberry pie filling. Yeah, right, Uh,
it's funny.

Speaker 4 (02:52):
You know.

Speaker 3 (02:52):
Another thing that I just was just listening to a
podcast where they were interviewing Dan Patrick and it's making
me like a little bit and they they talk to
him about his interview techniques and things that he like
goes by in his head. You know, he goes like
he has two questions always, two questions are this, you know,
And it's making me a little bit self conscious today

(03:13):
of what we're talking about, know of like how we're
talking on the radio because he's like, I mean, he's
been it's his job to be on the radio. So
he was kind of saying some things that he does.

Speaker 2 (03:21):
It's not our job.

Speaker 4 (03:23):
It's not our job. Yeah, it's true. So but how
good he is at it?

Speaker 1 (03:27):
You know, it's it's July, so to be thirty six
years have you on the radio of founding our company?

Speaker 3 (03:34):
You know?

Speaker 2 (03:35):
Yeah, but I do like to talk about I was.

Speaker 1 (03:39):
I was with with a client yesterday and we were
talking about things, you know, and and he's I didn't
realize this.

Speaker 2 (03:46):
He's a big gardener.

Speaker 1 (03:47):
I mean he's got he's got orchards, you know, raspberries, blueberries, apples, pears, peaches,
you know. And then he's got the traditional stuff that
we all have, you know what I mean. And he says,
fish emulsion, you know, uses a combination of grass clippings,
you can't let the grass go to seed, and uses

(04:07):
grass clippings and wood chips together for the green and
the brown. And that's what he does. I told him
I hate.

Speaker 2 (04:13):
Him because that's all he does. I'm trying to think
I'm out there.

Speaker 1 (04:16):
I can't really, I don't know, I can't, but I
was so like, I'm out there all the time, and you.

Speaker 4 (04:21):
Are out there all that you're almost mad at my garden.

Speaker 3 (04:24):
I'm like, oh that you're out you know, I just
kind of let the weeds take over.

Speaker 2 (04:29):
And he's got and you got, you got, you got
great stuff, girl, I got.

Speaker 3 (04:32):
I got some huge cucumbers. I am Everyone has zucchini.
I mean, zucchini is like the doomsday plant to grow.

Speaker 2 (04:38):
Right.

Speaker 3 (04:39):
If you think that the world's gonna end and you
need to grow something, you grow zucchini.

Speaker 1 (04:44):
My world revolves around butternut squash really right now. And pumpkins.
I need I need to get four pumpkins.

Speaker 3 (04:50):
Me and mom were talking about that last time you're
at the office. Oh really, it's our last time she
was here. You know, it's okay to not have a
pumpkin per grandchild.

Speaker 1 (04:59):
So one for Esme, one for June, one for Findlay,
one for Milo, and they etched their name in and
then then it kind of scabs over it.

Speaker 4 (05:06):
It's kind of cool.

Speaker 2 (05:07):
It is actually a butternut squash one.

Speaker 1 (05:10):
Yeah, because I got seven or eight butternuts squashed now
that are green that will turn orange by the time
I give them.

Speaker 2 (05:17):
Yeah, they won't know the difference.

Speaker 4 (05:19):
Kidding me.

Speaker 2 (05:19):
Here's a weird here's a weird looking pumpkin. Anyways, let's
get after this.

Speaker 1 (05:24):
So market is a record has Let's touch on some
of Let's let's start off with current events.

Speaker 2 (05:31):
Uh, this past week.

Speaker 1 (05:31):
Consumer Price Index up three tenths of a percent during
June two point seven percent year over year, the highest
in five months after edging one ten percent higher in May.
The CPI is falling from a year to year year
over year high of nine point one percent during June
twenty twenty two. Energy prices up nine ten percent. That's
kind of a wildcord. Food and beverage up three tenths

(05:52):
of a percent, three percent year of year, shelters coming down.
It was only up two percent during the month of
June three point eight percent year over year excluding food
and energy energy cords CPI up two tens of percent.
Got a lot of typos in there, just because after
rising two ten percent during May, I was hurrying this
morning a little bit when putting this stuff together. Over

(06:13):
the past year, the CPI has risen two point nine percent.

Speaker 2 (06:16):
Uh. Let's let's go right to the PPI air if you.

Speaker 1 (06:18):
Want to read a little bit about that, and then
we can kind of pull them together and put our
thoughts as to you know, what we're thinking about inflation.

Speaker 3 (06:25):
Yeah, PPI was unchanged during June. You know, I think
the consensus was it too for a to rise point
two percent. You did not write that in here though,
after rising point three percent in May. Over the past year,
ppissen two point three percent, down from two point seven
percent in May, as well as from a peak of
eleven point seven percent during March of twenty twenty three.

Speaker 4 (06:44):
Was it twenty twenty three or.

Speaker 2 (06:45):
Twenty twenty two, twenty twenty three?

Speaker 3 (06:49):
Okay, March of twenty twenty three, energy prates was point
six percent finished food products point up point two percent.
What else is in here excluding food and energy corpse?
PPI rose point three percent. So you know, you had
CPI come in a little hot on their on Tuesday,
and then Wednesday PPI came in a little bit more tamer.
So you know, we didn't hear anything from Trump after

(07:11):
Tuesday CPI number. Then when PPI numbers came, I think
you tweeted something like we need a three percentage point cut.
A three point cut, you know, so three hundred basis
points that it would be uh, and it you know,
I don't know what I mean. I guess I do
know what you think, So I'll just ask you what
you think so we can tell the listeners what we think.

Speaker 4 (07:32):
What are you thinking about?

Speaker 3 (07:34):
What?

Speaker 2 (07:35):
You know?

Speaker 3 (07:36):
I guess this whole Jerome Powell saga. We even saw
Trump and the administration I think kind of find a
way to put pressure on Powell with this building of
not building.

Speaker 4 (07:49):
But I don't know what they're doing to the so I.

Speaker 3 (07:54):
Think you know, you're seeing the administration find renovation circumvent.
You know, they're trying to put pressure on Powell. You know,
I am I'm a very uh. I think Powell is
doing a good job. You could say that he was
a little late to the party with the transitory inflation

(08:15):
back during COVID, but I think he's doing a great job.
You know, I don't think that it's necessary to cut yet,
you know, I think when you I think it's extremely
important for the Federal Reserve to be independent, which they are,
and I think that you know, we can continue to
be data dependent.

Speaker 4 (08:31):
I don't think that with all the.

Speaker 3 (08:35):
With whatever Trump is doing between tariffs and you know,
our relationships geopolitically, you know, I don't think now is
the time to cut. You know, I think inflation will
continue to be a subject that we talk about, and
I think until we see some definite weakening signs of
the economy. You know, what we have in our back
pocket is monetary policy. You know, if there is a

(08:57):
weakening economy, I just don't know if we begin to cut.
So if we begin to cut and then we see
a weakening economy, then what that's my big fear.

Speaker 4 (09:06):
You know, what's the next.

Speaker 2 (09:08):
Ahead of it?

Speaker 1 (09:08):
He gets ahead of it, you know, he gets ahead
of it. If you cut, it's like breaking. You know,
if you break before you need to break, then you know,
it's an easier you cushion that kind of pace at
which you slow down. So the idea is to begin
to cut prior to seeing you know, ideally you cut
prior to seeing weakness. You know, ideally you cut break

(09:29):
way before.

Speaker 2 (09:30):
That red light there.

Speaker 3 (09:31):
And I you know, I do agree that that's great
in theory, but you know, weakness can be determined by
a lot of different factors, and we're not seeing that
much weakness yet. You know, you can say it would
be the consumer, it could be inflation, it could be
you know, you know.

Speaker 4 (09:44):
PPI, CPI, it could be wage growth.

Speaker 3 (09:47):
So I think there's a lot of different ways to
determine the weakness of the economy and then kind of
pull that all together what the Fed does, and then
decide what to do. And I don't think we're seeing
enough signs of a weaken economy yet to begin that process.

Speaker 1 (10:03):
Well, it's kind of like investing. You know, investing is
x percent science and y percent art. I mean, I think, uh,
monetary policy is probably the same thing. You know, and
you know, I think the problem with Chair Powell is
that you know, he waited was way too data dependent
back in twenty twenty two to raise rates and let

(10:23):
the inflation horse out of the barn, so to speak.
So now people are just HARKing back to that and say, well,
you were late that time, you're this, and they're gonna
be laid again, and why do we why do we
trust you?

Speaker 2 (10:34):
And and you know, and this and that and so
so that. So that's that's his issue right now that
he's wrestling with.

Speaker 4 (10:41):
So do you think that the FED should cut rights?

Speaker 1 (10:46):
I don't think it would hurt if they cut a quarter.
I don't think it would help the economy if they
cut a quarter, you know, I from from a from
A from a from a standpoint of recognizing the fact
that the economy, recognizing the fact that inflation is two

(11:07):
percentage points below the.

Speaker 2 (11:11):
Treasury rates, and that there.

Speaker 1 (11:13):
Are a little there's a little bit of a wider
spread between also GDP growth and treasury rates then and
inflation and treasure rates. Then is historically the case, they
could cut a quarter. I don't blame Powell for not
cutting either, and waiting to see how these tariff things
work out. You know, it's quite possible. And then there

(11:35):
was a in our newsletter and we'll probably get into
it in a deeper fashion in a bit, but there
is yet to be Okay, inflation has not really tariffs
have not really caused a lot of inflation.

Speaker 2 (11:47):
Now, Christopher Waller was on it.

Speaker 1 (11:49):
We'll talk about him a little bit, said governor talking
about cutting by a quarter point. And I don't have
a problem with that. But so, but getting back to
the tariffs, it's quite possible. If I'm if I'm a company,
I'm sitting back and saying, let's see how this whole
thing plays out. President Trump is is is uh using
you know, some tactical uh maneuvers to gain you know,

(12:14):
amidst the longer term strategic plan perhaps and you know,
we don't know what that strategic plan really is, and
the companies don't know what that is. So they might
be saying, look, let's eat these tariffs right now. Let's
eat the cost increases right now. And then when when
the when the when the ink is dried on these tariffs,
and then we'll decide what we want to eat, what

(12:34):
we want to pass along, and what we can what
we can uh kind of ameliorate, so to speak, through
changes in uh, you know, production and how we change production,
and the and the and the advent and and the
input of AI. So I think you've got all those
things right now that that the FED is wrestling with
and his his term is coming up in May. I

(12:55):
don't think it's look, you know, and maybe a little more.
President Trump is not my style. You know, he's just
not my He's not my style.

Speaker 2 (13:04):
Uh.

Speaker 1 (13:05):
You know, he's more abrasive, he's more bombastic. So that
kind of rubs me the wrong way. And I think
basically right now he should wait. And a lot of
presidents have kind of put heat on the Fed on
different FED governors, you know, and I can't say specifically,
but you know, reading reports and listening, it's like, you know,
this this is not uncommon. What is uncommon is the
level and the actual the verbiage used by the president

(13:29):
to describe like, you know, a numbskull and this and
that and that generally isn't you know, I don't think
that's that's positive for confidence in the FED. And yet
you know, his his I think his term is up
May twentieth, So let's let this thing play out. I
think the thing that President I mean to J I
think President Trump is worried about is that that's kind
of close to the election. So if he is right

(13:50):
and Poulll should have cut, it could hurt the midterms.
It could be too late to change course. And we
saw that back in the in the early nineties when
George Bush the first you know, basically blame the FED
and President Clinton beating him in nineteen ninety two. So
so we'll see how We'll see how it plays out,
you know, but you know, you know, and I.

Speaker 3 (14:13):
Think what we'll see too is, you know, we're getting
into earning season.

Speaker 4 (14:16):
I'm very curious to see you know, a lot of these.

Speaker 3 (14:21):
I mean large companies that get a lot of their
revenue overseas. See what they have to say with earnings,
with margins, with tariffs, and how it'll affect their bottom line.
So I think, yeah, this earning season is is important
to see. You know, where we what they did in
the first half of this year, and you know, I
guess what their plan is for the second half of
this year as well.

Speaker 1 (14:43):
You gotta you got a dollar down nine percent in
the first quarter, the strongest dropping the dollar in a
long time, and.

Speaker 4 (14:48):
Which should you know, incentivize some imports.

Speaker 1 (14:53):
Yeah, it should should help imports, but it also helps exports.

Speaker 4 (14:57):
Help That's what I mean, exports companies that.

Speaker 2 (14:59):
Export is you know.

Speaker 1 (15:00):
So, but then you know Jamie Diamond, who's you know,
he's always saying what he thinks and lots of times
you know, he you know, he has been wrong quite often,
he has been right quite often. So the US economy
remained resilient in the quarter. The finalization of tax reform
and potential deregulation are positive for the economic outlook. Whoever,
significant risks persist, including from tariffs and trade uncertainty. We're
seing geopolitical conditions, high fiscal deficits, and elevated asset prices.

(15:24):
And I think that's kind of what the chair the
share Powell is seeing, you know, you know, and before uh,
you know, within our newsletter that we sent, we were
sending out with our with our quarterly uh investment reports.
We close with the following and then we can kind
of you know, refer back to that too.

Speaker 2 (15:46):
Air. Uh.

Speaker 1 (15:47):
So, I don't want people to think that we're anti
you know, you know, uh, we're giving President Trump, but
I would consider a fair shake here and closing if
we were school teachers. Despite his bombastic personality which I
just mentioned earlier, we would give the president high marks
for his positioning in regarding tariffs during much of the
second quarter, especially when compared to the first. And this

(16:08):
isn't only because this is not part of it. This
isn't only because the market rebound, but I think he
pivoted and became more rational regarding tariffs.

Speaker 2 (16:15):
We back to the article.

Speaker 1 (16:16):
We think this pivot has comforted the markets and allowed
them to focus on deregulation, a key component to his reelection.
In our opinion, If this refocus and continues them upside
bias will stay intact if, however, returns he returns to
his hardline positions.

Speaker 2 (16:31):
Espouse during the first quarter.

Speaker 1 (16:32):
If he attempts to fire fair chaed fed chair Pal,
volatility lies ahead, you know, right, So that's kind of
you know, what do you think?

Speaker 2 (16:44):
What do you think?

Speaker 3 (16:45):
I think the economy is still in good shape. I
think that you know, I think we're going to see
a strong earning season. Actually, I think that we're seventy
percent service based economy. You know, we talk a lot
about tariffs and the like, but I think being a
seventy percent service based economy. You know, I think the
ten largest companies in the world being forty percent of uh,
forty percent of the S and P five hundred, I

(17:07):
think that these companies will continue to do well. I
think we are in a you know, an upward trend
with technology, with artificial intelligence. So I think that the
market can continue to go up here and in the
companies that make up a large percentage of the S
and P five hundred. I mean, technology is thirty two

(17:27):
thirty three percent of the S and P five hundred.
You know, the S and P five hundred kind of
drives the markets really and I think these companies can
continue to do well in this type of environment. So
that's kind of what I'm thinking right now. You know,
the economy is not the stock market either, so I
think you're I think that'll maybe start to be more
of a front and center topic that we continue to
talk about. And the consumer still is still in good shape,

(17:51):
so I think that is always key. Some things I'm
nervous about is, you know, I think deregulation is I
think deregulation is a good thing. From where we are now,
I think we overregulated after two thousand and eight. I think,
you know, some deregulation is good, But when you do
deregulate like things like you know we're just seeing now
bringing bringing private investments into the four one K, you know,

(18:15):
some some of those things I don't see as necessary.
And I think some of those things can bring upon
things that we don't even know, some sort of black
swanaman too, So I think that's something that we're watching
as well. But you know, I do think in this
market cycle, as long as the consumer remains in good shape,
I think that that over you.

Speaker 4 (18:32):
Know, will go overvalued, undervalued.

Speaker 3 (18:35):
We'll see five ten percent pullbacks, but I think as
long as that were, we continue to build up you know,
data centers, artificial intelligence in those projects, I think that
I think that the market will continue to do well,
you know, barring anything geopolitical or you know, something that
is I guess unforeseen.

Speaker 1 (18:51):
Right, And that's that always happens, just beating a dead
horse because it is top that, you know, and I
think the economy is okay, it's okay, it's it's you know,
I think this is the normal, you know, to go
keep on going back to that.

Speaker 2 (19:12):
This is the new normal was you know, it.

Speaker 1 (19:16):
Was from two thousand and nine or so to twenty
and twenty when the FED had difficulty getting inflation up
to two percent.

Speaker 2 (19:22):
The normal is when.

Speaker 1 (19:23):
The Fed's got to cut periodically to get inflation down
to two percent or not cut, you know, keep interest
rates higher to get inflation down to two percent.

Speaker 2 (19:31):
And I think I think that's what they're doing.

Speaker 1 (19:33):
This is this is this is these interest rates that uh,
you know, mortgage rates between six and seven, treasuries between
four and five or six and around there is all
you know, pre two thousand and eight normal. Now I
don't know if you have it in front of you,
but it's the it's an article. It talks about Waller
says Fed should cut rates now. So you've got Federal

(19:53):
Reserve Governor Christopher Waller and and also another Federal Reserve governor,
Kevin I think, I think he is. Kevin are supposedly
on the short list of replacing Powell. And Christopher Waller
was out yesterday Thursday, you know, speaking about uh, you know,
inflation and interest rates in the Lake and he and

(20:16):
there's some interesting quotes there, and we'll probably close out
the first half with that. With inflation near target and
the upside risk to inflation limited, we should not wait
until the labor market deterior rates before we cut the
policy rate. And that's kind of what he what he
is what you know, what people are afraid of. It's
it's that if he's so data dependent that if he
waits until the labor market weekends, then it's too late.

Speaker 2 (20:39):
You're breaking at the red light. He said, I believe
it makes sense.

Speaker 1 (20:42):
To cut the FOMC is the Federal Open Market Committee
that is acronym for policy rate by twenty five basis
points two weeks from now.

Speaker 2 (20:48):
The Fed meets at the end of this month. You know, looking.

Speaker 1 (20:51):
Across the soft and hard data, I get a picture
of a labor market.

Speaker 2 (20:56):
On the edge. Yeah, he would know more than I.
But I don't get a picture of the labor market
on the end.

Speaker 3 (21:02):
No. But then you have Torst and Slock from Apollo
Asset Management say something that is interesting that I think
most of us wouldn't think, and it's comparing way did
you see this? Comparing wage growth for job stairs and
job switchers. So, when the labor market is hot, wage
growth for jobs switchers is higher than wage growth for
job stayers. Today, wage growth for job switchers is lower
than wage growth for jobs stay ors, suggesting that the

(21:25):
that the labor market is cooling down a little bit.
So now I think maybe some of the soft data
is coming in with A with A with a, I
guess a weakening labor market. But you know, I still
think it's it's a relatively strong labor market, you know,
just speaking back and forth, and you know, you know,
I don't think that you know the extremes, right, we

(21:48):
maybe we don't need a you know, a three hundred
basis point cut, but you know, would a twenty five
basis point cut put a little bit more optimism in
UH companies. It also starts spending a little bit more, and.

Speaker 1 (22:05):
It also says to the American public business community, the
FED is on is on alert to the to the downside.
Excuse me for the slowing of the economy. I think
the risk to the economy is to the downside.

Speaker 3 (22:21):
And you know, I I think it's tough, right, So,
you know, you don't want the FED to be political,
but at the same time, you have you know, in
my opinion, Trump's Trump's Trump's agenda for inflation. It's all right,
we're gonna put tariffs on countries, We're gonna cut rates,
but we're also going to pressure these companies individually to

(22:42):
not raise prices.

Speaker 4 (22:44):
Right they go after Apple.

Speaker 3 (22:45):
For manufacturing and China, They're gonna try to They're gonna
have to try to, you know, keep inflation down by
having companies, you know, eat those terriffs. But at the
same time, the companies will eventually have a duty to
their shareholders. So I think that's where you could start
to see a lot of friction in between companies and
the administration in that you know, tariffs are inflationary. UH,

(23:09):
they'll only eat the terriffs for so long until they
have a duty to their shareholders.

Speaker 4 (23:13):
Right.

Speaker 2 (23:14):
So, and that's what I think they're right, that's what
we're talking about.

Speaker 3 (23:17):
Like you know, see how yeah, it's you know, so
every time it's like you know, every time you uncover
one thing, it's a new problem solved. Right, So it's
gonna continue to be a back and forth.

Speaker 1 (23:27):
But right, plus, don't from from talking about the president.
I mean, Christopher Waller says, and Kevin Kevin Worsh is
not a member of the foot Miserve Border Governors. I
apologize and I was. I didn't know he is not
anymore he was. But the with the what we got
twenty four minutes, right, it's almost done. Yeah, but when
the president calls for you know, three hundred and three
percent cut in the FED funds rate, that's irrational. That's

(23:49):
what that you know, you know, say hey we should
cut a little bit, let's leave recognize the weakness and
that type of thing. Right now, it's ten thirty on
the station depend upon for news whether an information news
to ten and one O three one w g Y,
Good morning, Welcome back to the second half our of
the Capitol District's Money and Investment Program. You're listening to
the Fagan Financial Reportum, Dennis Fagan sitting here with my
son Aaron, as we do every Sunday. It's Friday morning

(24:11):
though recording the show. It's about a twenty or eight ten.
Actually we're talking the first half, and again I want
to get into our letter to our newsletter to our clients,
and then anything you want to talk about. But I was,
you know, this whole interest straight cut. I think the
President would have much more credibility if he just you know,

(24:32):
you know, talked about you know, easing of monetary policy,
you know, and leave it at that. I think the
Fed should cut, you know, when you get into the
amount that he should cut and saying that we're going
to save X dollars in interest, you know.

Speaker 2 (24:45):
That that that that's not that crazy. I think.

Speaker 1 (24:47):
I think it was the same thing when the market
went off the rails in early April when he posted
that board of the terriff rates. I think that did
not show really due diligence and really deep thinking as to,
you know, what the end product was gonna be. And
some people say there was a tactical approach over over
a logical strategic plan and the market has responded then

(25:10):
when the President pivoted. But I think when when President
Trump talks about, hey, cut to one percent. If you
cut by one percent, we're gonna save three hundred billion
dollars an interest for each percent you cut. And let's say,
and the interest rates are at four and a quarter
four and a half now, so they're gonna save over
a trillion dollars an interest. And that's not necessarily the case.
And I'll use an example because if the FED cut
to zero, well, that would be great.

Speaker 2 (25:33):
But if we cut to.

Speaker 1 (25:34):
Zero, there would be inflation, a lot of inflation because
of all the free money, and the end it'd be
like rain, it would be a flood. It end up
a flood, which is not good. And I think so
so there needs to be and I think, and I
don't you know, I have a problem with the President
saying the FED should cut and we think they should cut,
you know, we think there's weakness in the economy of

(25:54):
that type of thing. But the the the heaviness of it,
I think lends itself really to to acrimony that that
doesn't necessarily need to be there. Again, given the fact
that the economy is doing okay, the tariffs are in question,
and the Fed's tenure comes up or term comes up

(26:14):
in the middle of early you know, I think it's
May twentieth or so next year. So anyway, so that's
that's my position, Kevin. I want to say one final
thing about it. Christopher Waller did say because he was
asked a question about the renovation of the Central Banks headquarters,
and that's you know, there's some there's some concern that
President's going to use that as a way to get chair,

(26:35):
but he can't fire pile other than for cause. And
the cause could be that there's such cost overruns that
on the UH on the headquarters that that is cause.
But so so Waller says, there's a lot of attention
on it. Any construction project I've ever heard, this is
a common I mean, I'm not defending it, but it
is not an uncommon thing. And we've had inflation much

(26:56):
higher than anybody was that anybody was bidding out in
twenty seventeen. So maybe this has been going on for
this renovation going on for eight years or so, so
that's clearly a factor. So I will leave that at that.
What do you want to get into anything? Do you
want to get into our newsletter the cover page, or
you tell me I drove the.

Speaker 2 (27:16):
Bus for a while. Now you you're the pigeon drive.
You're the pigeon.

Speaker 4 (27:19):
The pigeon drives the bus.

Speaker 2 (27:21):
The pigeon drives. That's a great book. Jude likes that.
He still like it. Or no, he likes the thing
on the wall.

Speaker 4 (27:26):
He likes it.

Speaker 2 (27:27):
You know.

Speaker 4 (27:27):
Moe Williams, people love him. He's good.

Speaker 1 (27:29):
You know.

Speaker 3 (27:29):
There's short books too, which is good. You don't want
sometimes the books are way too long for kids. I
don't know what do you.

Speaker 2 (27:37):
Get within this.

Speaker 1 (27:39):
I've got a few things, okay, the first and there's
several paragraphs in here that I wanted to touch on.
I mentioned the last paragraph. I already talked about that,
but starts out after a few rough days at the
start of the second quarter that's spilled over from the first.
A pivot by the Trump administration regarding their position on
tariffs I head of the market open on April ninth
has resulted in most major ndixes indexes steadily moving higher.

(28:03):
Whether the seemingly unwavering rhetoric prior to that day was
merely a tactic amidst the well designed strategic plan or
the result of pressure exerted on the administration by unsettled
equity as well as fixed income markets, remains to be seen. However,
for now, the markets seemed content that the president is
making progress on this matter. And then it talks about
the bull market and and the like that bull markets

(28:25):
beget more bull markets, rallies beget more rallies. And Doug Keenholtz,
who works with us, who did the chart talk this
past week, which is something we put out every Wednesday
to whoever wants, but it goes out most of the
people who subscribe our clients, they get that automatically. It
talks about for those that are afraid that they are

(28:46):
arriving too late to the ballpark, to the bull party.
It was noted in a recent chart talk that history
shows that investing at new high fields similar percent I
think over one three and five year period. Yeah, I
didn't put their percents in. So what do you think
about that? Do you think about those that say, you know,
and I had I would talk to a client who
you know, you know, he has some meta and bought

(29:07):
it at one hundred and actually he's the one who
said he wanted it back then, I must say that
we have a lot of meta for clients. It's one
of our top holdings. It's our seventeenth or eighteenth largest
holding period and within the top fifteen or so of
individual securities, So we own a lot of it. He said, look,

(29:27):
you're gonna buy it now. You know why buy it now?
And higher prices don't necessarily mean more risk to a stock,
you know what I mean?

Speaker 3 (29:36):
Yeah, And you know when when we talk about investing
in new highs and you know, it's tough. Sometimes when
you have clients come over to us when they're in retirement,
sometimes you get money to work faster than others, depending
on what they need, if they need distributions, if they
need growth.

Speaker 4 (29:50):
But let's say you're listening.

Speaker 3 (29:51):
To this show and you know you just want to hunt,
and yet you have one hundred percent of your money
in this stock market. You know, I don't think it's
I think once you bring those questions to your mind,
they don't stop. You continue to ask yourself things like this.
So like I'm kind of under Like for myself, I
get paid once a month, I put money. I put
some money into the vt IVAN or total stock market.

(30:13):
In the next every single month just because it's a
good habit. Sometimes it'll be a great price, sometimes it'll
be not so good of a price. But I think
if you're you know, dollar cost averaging and just investing
for the long term, you need to almost take that
out of the equation until that's it's just another barrier

(30:33):
to uh, you know, your performance, and it takes up
a lot of mental energy to you know, and you
don't have a plan. You know, if you're if you're
continuously adjusting the figures that you're that you're you know,
contributing based on what you think of the market. You know,
that's you're gonna always be asking that question every single month,
and you know you don't have a strategy really, so

(30:56):
I think you have to have a strategy stick to it,
and you know know that you know you're not gonna
you know, catch tops or bottoms, and that's right.

Speaker 4 (31:04):
Even if you're right, once you're gonna be wrong.

Speaker 1 (31:06):
Well, I think what you said there was like and
I thought it was like I said, I think it
was great. Once you enter once that enters to your mind,
is this the right time, You're never gonna you're You're
never really gonna have a like a plan that's gonna
get you where you want it because it's always gonna
be in.

Speaker 4 (31:23):
There, right, you know, do I do three hundred bucks
this month? Do I do five?

Speaker 3 (31:26):
Do I do one fifty? Based on where the market is?
And it's like, that's not really a plan. I think
a plan is, you know, dollar cost averaging into something
that goes up over time, knowing that some prices will
be good and some prices.

Speaker 4 (31:38):
Will be bad.

Speaker 3 (31:39):
But even if you're right the first time, that you know,
you're not gonna be right every time, so you know
then then you're wrong one time, then that skews what
you think. So I think you have to find a
plan and stick to it. And if it's dollar cost
averaging into the market, if you're forty thirty five, you know,
forty five, even fifty to fifty five, maybe you'll do
like the Vanguard Wellington or something like that, with a

(32:01):
little bit less risk the closer and nearing to retirement.

Speaker 4 (32:04):
I think that's the that's the correct approach.

Speaker 1 (32:07):
And the market spends most of its time within a
few percentage of an all time high.

Speaker 4 (32:11):
I think it's like ninety percent.

Speaker 2 (32:13):
I was gonna just typed that in.

Speaker 3 (32:16):
You know, it's probably gonna be hard to find a
you know, something really quickly. But I think it's in
the ninety percent that you know, the markets within Yeah,
a few percentage of there of all.

Speaker 2 (32:28):
Time, so interesting. Interesting.

Speaker 1 (32:31):
So so that's that's one thing. So I think when
you when you when you're investing money. You know, I'm
not saying though, like there are individual securities that I
think you do have to use discretion with, Like I
think there's yeah, you know, I think right now, I
know I've got to call on a couple of clients
have called on a particular security. That's that's in uh,

(32:54):
that's in rare Earth, and then that is US Resources,
And it's going from you know, you know, roughly Jesus
under ten to over twenty and it could keep going higher.
And so what I said is what you want to
do is dollar cost average into that. Yeah, you know,

(33:16):
because that stock is kind of going parabolic, especially over
the past several days, and the possibility, let's say it's
going from seventeen to twenty two in the past week
and a half, there's a good chance that it could
still be in a long term uptrend and go from
twenty two back to seventeen, right, and then begin a
more stable ascent. So you know, if you want to

(33:36):
end up with four percent of your portfolio and a
stock like that, you know, start out with one or
two and build upon that. And that's kind of what
I recommended to these people, so, you know, So referring
back to your comment, which, like I said, you know,
I think you've guys just got to ignore where the
where the overall market is maybe bet but be judicious

(33:57):
as to what you're buying within that market perhaps. But
you know, yeah, it's almost like you know, not a
big weightlifter, but just because you're lifting more does not
mean there's more risk. You have worked to get stronger,
these companies have worked to get where they are. Generally speaking, fundamentally,
the market's a little rich as far as on evaluation basis,

(34:19):
but in generally, historically speaking, the evaluation in the overall market,
you know, limits upside more than it portends a big downside.
Like you know, it's more economic data that comes out
that's going to be reflected in the overall stock price
rather than you know, the valuation of other.

Speaker 2 (34:38):
Stock so to speak.

Speaker 1 (34:40):
The other thing too, as I wanted to mention within
this is that and you notice the typo, So we
got to get it right on that to correct that.
This bill mark, which began at the conclusion of the
most recent pair market on October twelfth of twenty twenty two.
So this bull market began in October of twenty two,
has lasted more than a thousand days, making the longest
bull market on wreck, the fourth longest, the fourth longest

(35:02):
bull market on record. And I think that's interesting, but
was interesting what I thought too. As a point of reference,
the previous bear market bear began with the S and
P five hundred at a record forty seven ninety six.
So right now the S and P five hunded sitting
at sixty three hundred, you know, thirty some percent above
the previous bull high. So you have a bull market,

(35:24):
a bear market that brings it down to thirty five
seventy seven. Now we're sitting at sixty three hundred. I
think that just goes to show you that, you know,
generally speaking, the market is a stare step upward with.

Speaker 3 (35:34):
And even what you were just saying, you know, all
time highs are followed by all time The ten prior
times and index has rallied twenty percent in two months
or less.

Speaker 4 (35:45):
It was higher a year later, all.

Speaker 3 (35:46):
Ten times for an average of twenty three point seven percent.
So I think, you know, yeah, that's uh, that kind
of plays into the you know, I think that we
could be in a you know, and we could continue
to extend this bull market.

Speaker 1 (36:00):
Now I'm sitting here thinking to myself, all right, so
technically the market looks good, which we sent out to
our clients. Economic data remains neutral at worse, but in
general supportive of stocks. Unemployment four point two percent, inflation
is stabilized for now in the mid two percent range.
Both of the above should help the consumer's shoulder the

(36:20):
burden of the cost of importance should rise, should prices
rise as a result of the policy of the Trump administration.
And I went on to say, I think, you know, furthermore,
in our opinion, Trump's bold course of action in regard
to Iran, as well as their Iran's temperate response, selped
eed some geopolitical concerns in the Middle East, helping investor
bull andsh this as well. I think President Trump took
a bold step, and I think that is reverberating, not

(36:45):
only geopolitically, but also economically and also you know, so
I think that has been positive for the market. I
think his biggest the biggest risk to the market is
that President Trump reverts back to the President Trump of
February and March.

Speaker 4 (37:03):
I think it is inflation.

Speaker 3 (37:05):
If inflation starts to uh, if we start to see
some significant inflation in the second half of the year,
I think that would be some cost for concern for investors.
So I think that is the that that is the
biggest risk to the market right now.

Speaker 2 (37:18):
And we could yeah, you know, and I haven't heard
much about it lately.

Speaker 3 (37:23):
But I was still you'd see some you'd see some cutting,
you know, from from the FED.

Speaker 1 (37:27):
So that's got real. I think that's what they're waiting for,
you know. I think I think that's you know, I
don't blame the I mean I talked about in the
first half we did the FED cuts a quarter. I
don't think it's really going to help the economy a
lot because I think some of the you know, I
think it's not gonna hurt obviously, but I think some
of the it's gonna it's gonna say to the economy
that that you know, we've got your back and we're

(37:48):
not oblivious to some of the issues that are facing
the economy. But on the flip side, you know, I
do think that we've yet to.

Speaker 2 (37:56):
See the the.

Speaker 1 (37:58):
Economic implication of tariffs. And Christopher Waller said that's a
one time you know, that's a one time effect. So
maybe he's right and he knows more certainly than we
do about that. But the other thing too we haven't
seen is the the inflationary impact of a labor force
built upon you know, immigration. Yes, you know, obviously we

(38:19):
wanted you know, there were too many people coming in
there weren't weren't The open border was not a great idea,
and Aaron and I never thought it was. But I
think that I'm sorry to speak for you for that too. Yeah,
you know, but what does that mean for some of
our the the farming community, the agricultural community. You know,

(38:40):
look at California that relies on these people Texas and
I think that's we've yet to see the inflationary impact
of those individuals not being there, you know. So you know,
go on to say and that we're not pollyannish and
realize that several challenges remain. One is the unorthodox met
in which President Trump uses is using the change the

(39:03):
direction of America, Republican legislators aligning up behind him as
Democrats stand unified, and opposition politics as the art of
compromises has been laid to rest.

Speaker 2 (39:11):
And I think that's an issue, and well, we'll see
what happens.

Speaker 3 (39:17):
Yeah, you know, I just we just printed out I
think you printed out Q three twenty twenty five is
the Bespoke report they do with pros and cons every year,
so we or every quarter, so we have the Q
three Pros and cons. I don't know if you have
that up. It's on page three, I think, and you know,
I think what we're seeing.

Speaker 4 (39:34):
A lot a lot is.

Speaker 3 (39:38):
A lot of pros, you know. I think we're in
a bull market. Is the is the big one? We
have strong semis so I think the foundation of artificial
intelligence and technology, we're still building on that foundation and
that could take a while. And I think some of
the largest companies in the world, you know, will continue
to spend and that'll create you know, the NVIDIAs and

(40:01):
the AMDs of the world to do well as well
as Amazon, Google, Microsoft. But on the other hand, you know,
one of the cons is the cap weighted valuations of
you know, ten the top ten companies in the world
being forty percent of the S and P five hundred.

Speaker 4 (40:16):
So I think, you know.

Speaker 3 (40:18):
On one hand, you know, it makes you nervous that
those top companies are are are forty percent of the
S and P five On the other hand, if you
look at those companies like Man, those companies are still
very fundamentally sound. So you know, as long as those
companies remain fundamentally sound, I think that's uh will will
put some some floor on the market.

Speaker 1 (40:39):
Yeah, and then you know, you talk about valuation, Yes,
they're richly valued, but they deserve that valuation.

Speaker 3 (40:47):
Yeah, and you know then richly valued based on history.
But I think you need to continuously, you know, update
how you value companies based on what type of companies
they are. So it's like, all right, so why are
we taking historical data back to the forties when we
were you know, thirty percent service based economy as opposed

(41:09):
to seventy percent service based economy now with you know,
forty percent of ADS and P five hundred technology. You know,
I think you always have to update, you know, what's
expensive based on you know, what the industries are and
the companies are.

Speaker 1 (41:22):
You know, and I do I think too is and
I don't know if I included it anywhere, but I
do think some of the risks to current policy and
you know, and this this only addresses the second half
to be spoken, this is but my concern is more
for the standing the standing of the US globally, you know,

(41:43):
in in an economic sense. You know, I think the
President's trying to you know, bolster that, but you know, some.

Speaker 2 (41:50):
Of the the uh, you know, and maybe it's just
part for the course.

Speaker 1 (41:56):
Really maybe maybe we'll look back on these two or
three years from now and say it was nothing or
that's part of the whole process. But you know, the
redefining of alliances or realigning of alliances is some of
my bigger concerns. And what what that means for our economy,
you know, is it But it's not going to be
this quarter. But it's something that you know, let's let's

(42:17):
you know that that that could come to the front
as well as obviously are sizeable that you.

Speaker 3 (42:21):
Know, but I think you know not but I think
I think as investors you need to always now more
than ever in one of our largest positions is d
G T it's the Dow Global ETF and it's about
fifty percent in the United States, fifty two I think,
in forty eight percent overseas, And I think you always
have to remember that, you know, yes, you know, you
kind of benchmark yourself to the S and P. But

(42:41):
as investors with you know, the technology that we have today,
you can invest in anywhere in the world as well. So,
you know, although international competition is one of the kinds
I think you always have to have, you know, now
more than ever, some allocation towards global if what if
you know what you're saying, does come to fruition and
right now, you know, I think DGT is probably one
of our larger holdings. I'm on the ETS side. We

(43:04):
do try to balance out ETFs. We try to use
ETFs to balance out some of our larger positions, which
happens to be you know, large cap tech, and that
has worked out this year. I think the DGT is
up eighteen or so percent, seventeen eighteen percent, So yeah,
I think you always have to remember that, you know,

(43:24):
although international tends to lag, and sometimes you have things in.

Speaker 4 (43:27):
Your portfolio that you think, why do I own this?

Speaker 3 (43:30):
You know, I think I think it's important to have
five ten percent in international or global emerging markets, you
because they do tend to outperform when you do when
you do enter a bear market.

Speaker 1 (43:46):
Right, you know, and the and the other thing too,
and you know, you know I was thinking about that
if you look at our largest ETFs and you were
we were talking whatever about that. So on the ETF side,
it's the JP Morgan Equity Premium Income Fund, which we
buy as kind of like a hybrid fund.

Speaker 2 (44:05):
Its symbols J E, P I.

Speaker 3 (44:07):
You know, it gives you some correlation to the S
and P five hundred without the downside risk. I think
it's a great fund for people. I mean, it gives
you some equity exposure as well as you know, you
have that downside protection as well. And you know a
lot of our clients are are retired or nearing retirement,
so you know, it gives you that protection there. And
I think it has like a seven percent yield.

Speaker 2 (44:27):
So I would call it like a hybrid fund.

Speaker 1 (44:28):
And then the Spider one to three month T bill
ETF that's somewhat of a cash alternative. That's our that's
our second largest ETF holding. Our third is the I
shares US Aggregate Bond Index the ETF a symbol AGG
and the kind of offsets the b I L, which
is that one to three month and then our largest
or largest global fund and our largest pure equity fund

(44:51):
on the.

Speaker 2 (44:52):
ETF site is the d GT. And that's what kind
of made me made me look.

Speaker 3 (44:55):
And that's kind of you know, if you see, I
think we only have two et s on this list,
but they are DGT and n O b L, and.

Speaker 4 (45:03):
It's kind of what to equity ets to equity et s.

Speaker 3 (45:07):
Yeah, and that's what I was saying, you know, a
few minutes ago, and that we do try to use
ETFs to balance out, you know, the technology.

Speaker 4 (45:15):
Part of our portfolio.

Speaker 3 (45:16):
So we have d GT and n ob L, which
is the S and P five hundred Dividend Aristocrat et F,
which is having a pretty good year. I think I
think it's up six percent or so, so you know,
not up with the sm P is up, but you
know it's not expected to be.

Speaker 1 (45:30):
Right and and and what you were saying is that
it does offset the Dividend Aristocrat fund.

Speaker 2 (45:38):
By its objective is offsets.

Speaker 1 (45:41):
The the technology waiting that we have individual sort of
five largest holdings are alphut Microsoft, Apple, palent Here, and Nvidio.

Speaker 3 (45:48):
And you know, you know, I don't want people to
see men Palenting is one of your largest holdings. And
although it is uh it is basically because of capital
gains and how how well it's done. We did take
like a of about a two percent position in it
and it's just two percent common stock position in it,
and it's just grown so much over the past year.

Speaker 2 (46:08):
You know, we've trimmed it. We've trimmed different time to time,
but you know.

Speaker 3 (46:11):
We trimmed I think fifteen percent of it or so
a few months ago, but it just continues to do well.

Speaker 1 (46:17):
So you know, I'm just looking at that, you know,
on the Dividend Aristocrat fund, just using that offset. The
largest position on the sector side is consumer defensive, then
industrials and financial services and basic materials. So you don't
see consumer discretionary in there. You don't see communication services,
and you don't see technology, and and that's kind of
that offset, that balancing out of a portfolio. Uh, you know,

(46:40):
just to get the the uh, you know, correlation to
the market. You know, what do you think about on
the on the con side, getting frothy.

Speaker 2 (46:55):
The market. The market is sentiment getting frothy, is the Yeah.

Speaker 3 (46:59):
I think sentiments getting a little bit frothy, you know,
I always I think I talk about on the show.
Sometimes you can see when clients place their own trades
and you're seeing some people, you know, bail on the
the safer stocks just to get into racier stocks. And
that's when that's where I start to see a problem.
It's like the you know, you have fomo, you know,

(47:19):
the fomo trade. So you know, I don't I don't
think valuations are getting frothy on you know, the large
cap side.

Speaker 4 (47:26):
But I think when you see in you.

Speaker 3 (47:28):
Know, Rocket Labs in those companies up ten twelve percent
every single day, Quantum Scape, you know, things like that
that are really people are really starting to pile in.
That's when I think you have to be like, okay,
you know, don't get caught in that trap of you know,
buying something when it's been up two hundred percent over
the past you know, three months. So that's kind of
where I'm seeing frothiness a little bit. Is the is

(47:49):
the optimism in small cap companies that have little, little
revenue and are very very richly valued, but you know,
on the large cap set.

Speaker 4 (47:57):
I do not think that the market's overvalued.

Speaker 2 (47:59):
No, I don't either.

Speaker 1 (48:00):
And also sentiment, if you look at the American Association
of Individual Investors, sentiment isn't really frothy. A bullish sentiment,
I think is around thirty five percent, which is historically
very low, so I think. And there's a ton of
cash I think seven trillion dollars in the sidelines. We
have about a seven or eight position position on the sidelines. Yeah,
as of the last I don't have it in front
of me cash cash and equivalents eight point sixty five percent,

(48:23):
so there's room to move.

Speaker 2 (48:26):
Generally speaking, these are the dog days of summer.

Speaker 1 (48:28):
The market tends to struggle during I think these months
ending during the I think the second week in October.
Count of market historically sometimes bottom. So anyways, give us
call during the week five, one, two, seven, nine, ten
forty four, check us out on the web if they
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Speaker 2 (48:43):
Have a great day, Take care,