Episode Transcript
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Speaker 1 (00:01):
Good morning, 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,
we' right here in News Talk A ten one O
three one w g Y. We aired every Sunday. Actually
it's Friday morning, right after the jobs report. The jobs
report came in weaker than expected. We'll talk about that
for the month of July, June, and May, respectively. We're
(00:22):
also revised lower labor force participation rate revised down. During
the course of the week, we also had personal income
and spending, the personal change, Personal consumption expenditures GDP, first
look at Q two GDP consumer confidence. So we got
a lot to go discuss that. To President Trump's tariffs,
(00:45):
we're altered. Late in the week, we have the FED
meet divided FED two descents on FED deciding to leave
rates unchanged.
Speaker 2 (00:53):
Would say that's.
Speaker 1 (00:55):
That's the first time in three decades two governors have dissented.
So and President Trump is harping on that, called Jerome
Powell of moron on truth social Qualcom's earnings. We don't
own any Qualcom. Microsoft's earnings, Meta's earnings, Apples earnings, Amazon's earnings,
Boeing's earnings, Starbucks earnings. Yeah, but most importantly, I got
(01:17):
a freaking predator. I got a predator in my backyard.
Speaker 2 (01:21):
I think it's a squirrel.
Speaker 1 (01:22):
Squirrel doesn't eat kale that size and squirrell my butternut squash,
tiny kale. You ever see those banana leaves that they've
that they fanned, Yeah, that's the size of my cal
It's huge. It's pretty big. But anyways, I I.
Speaker 3 (01:40):
Saw you chuck to summer squashes in the uh into
the woods to the woods when we got to work
the other morning.
Speaker 1 (01:46):
Yeah, you can, only they only last so long and
then they become squishy. You know, you don't want a
squishy squash.
Speaker 3 (01:52):
My zucchini gets squishy inside, so you need it anyways, No,
what do you do with it? It's never happened. Oh,
it's never ever happened hectually. Now it does get squashy though.
You know, I brought some cucumbers to work, monster. They're huge,
bigger cucumbers you've ever seen.
Speaker 1 (02:07):
You gotta pick them sooner, you think so, Yeah, because
they get CD's like anything else, the inside gets.
Speaker 3 (02:13):
It's hard though, because they grow, they grow overnight a
little too small, too big in like two days, and you're.
Speaker 1 (02:19):
Going to have vacation too.
Speaker 3 (02:20):
Yeah, and my airm tomatoes are gonna be right right
when we're on vacation.
Speaker 1 (02:24):
So I'm in charge.
Speaker 2 (02:25):
Yeah you are, so you need to Uh, I need help.
Speaker 1 (02:28):
With that, No, no problem. And I got I got some.
I'm in good shape. And the rain on Thursday, which
is yesterday, because again we're recording this on Friday, was beautiful.
It was beautiful rain giving rain during the week like
that and will be good. But anyways, uh So on Wednesday,
Tuesday or Wednesday, the S and P five hundred, the
(02:48):
NAS that composite the US Total Market Index all closed
that record highs. On Thursday, the utility average closed that
record highs on the back of a couple different reasons.
One was kind of concern over the economy, Jerome Powell
not cutting Maybe the economy slows down, interest rates go down,
utilities become more attractive as the dividend becomes more attractive.
(03:10):
But I think more importantly it's the demand for energy
that we're going to see over the next you know, two, three, five,
ten years from all this artificial intelligence and the need
for that energy data centers that the data centers kind
of consume that that make these attractive and I think,
I think that's important. But the I guess the issue
(03:31):
that or the bottom line is, is that the market
is ad or near record hides and we are in
a period where usually it's it's kind of adult time.
Speaker 3 (03:44):
Yeah, in the next two months too, is usually the
hairyest of all the months when it comes to the
stock market. So, you know, with this weak job number
and week revisions on on Friday, you know you are
seeing a pullback. But at the same time, I think
this is going to be the final show with you know,
the Fed finally cutting.
Speaker 2 (04:05):
I can't see you. I can't see them not cutting, now,
do you.
Speaker 1 (04:10):
Well they meet again in September, so let's get into it. So,
non farm payroll growth rose by seventy three thousand. Estimates
were for about one hundred thousand. June and May were
also revised lower by a combined total of two hundred
and fifty eight thousand. Unemployment rose to four point two percent,
up from four point one percent. May. May's nonfarmer excuse me,
(04:38):
I'm sorry. June's non farm payrolls, I'm sorry, July none
from pair with seventy three thousand. June was fourteen thousand,
so that was revised sharply lower. So you have non
farm payrolls coming in weaker than expected for the prior month.
In the last two months revis sharply lower. You also
(05:01):
have unemployment ticking up a little bit. You had the
labor force participation rate go down a little bit. So
you have some issues that are affecting the jobs market,
and the jobs market is usually the last indicator to
respond to the direction of the economy because nobody really
(05:25):
wants to lay off somebody. That's the last thing you
want to do. You'll cut expenses, you'll cut advertising, you'll
maybe reduce technology spending, you'll reduce R and D, you'll
reduce cabecs, you'll do whatever, but the last thing you
want to do is lay somebody off because of the
impact that that has on his or her family and
their family. So we saw that, you know, President Trump,
(05:49):
you know, he called Jerome Powell and more on prior
to this. He was on truth Social shortly thereafter the
report was released today thirty Friday, and and you know
went on to Lambey pile again. Forget the forget the
words that are used. Is he right? Is President Trump
(06:09):
right that the FED should cut rates? The FED met
this pass mean we we can We'll get into that
in a minute. But is should the Fed cut? Fed cut?
Speaker 2 (06:21):
I don't think that.
Speaker 3 (06:24):
The Fed cutting will have the impact on rates that
Trump thinks or is trying to portray.
Speaker 1 (06:35):
That they will. Right.
Speaker 3 (06:36):
We talk a lot about yes, you know the Trump uh,
you know the FED cuts. You know that has impact
on the short term rates, but the long term rates
are supplying demand.
Speaker 2 (06:46):
So I'm more curious.
Speaker 3 (06:50):
To see what a what a rate cut would do
to the longer end of the you know, intermediate, longer, longer,
longer term rates and you know what that you know,
would have on on the housing market. I don't think that,
you know, the FED cutting, you with a cut by
(07:11):
a percentage point, would really have that much impact on like,
let's say, mortgages, because you know, you know, as you
were saying earlier today, you know, it's supply and demand.
If there's still a demand for mortgages, you know, at
higher rates, banks are going to charge those rates, right
and just get maybe a little bit better spread. So
(07:33):
But to your question, do I think Trump is right? No,
because he's been calling for this for months. You know,
we could have seen a cut, you know, this this
past week, and and I think that that could have
(07:55):
been a good idea. But you know, I think, you know,
in the in the past two, three, four or five months,
that he's been saying, hey, we should cut.
Speaker 2 (08:03):
You know, I don't think that, do you.
Speaker 1 (08:07):
I think that he FED should not have cut in July.
You know, I think the FED should have been more
conciliatory or dubvish, so to speak, in their tone with
their with their statement that they released afterwards. And again
we'll talk about that in a minute. You know, I
also think that, but they so so that would give
(08:29):
an indication that they are concerned about the slowing of
the economy. Had GDP come into three percent, but some
of that was just inventory build A lot of that
was inventory.
Speaker 3 (08:38):
A lot of it, yes, a lot of it was
inventory from the previous quarter.
Speaker 1 (08:41):
From from there, the inventory added three point one seven
percent the second quarter. GDP sales to domestic purchasers, which
is the bulk of it, up one point one percent.
It was up one point five percent in the first quarter. Uh,
so there, there, there. There are some signs certainly that
the economy is weakening. A personal income and spending also
(09:01):
also pretty weak during the month of June. But so
I think the FED is in a position where, certainly
we were talking about this before the show, They're kind
of in a no win position. Trump's gonna hammer them
until they cut, you know, and he's gonna say, right,
he's gonna blame all bad news on the FED, and
he's going to take credit for all good news now.
(09:24):
But I do think if the FED cut by a
quarter point, it wouldn't impact what it would impact this sentiment.
I think it would impact sentiment and make everybody aware
that the FED is aware of the slowing of the economy.
But you're right, and I look at there was an
article by Jesse Dickler and she I think she consolidates
really the impact of a FED cut credit card credit
(09:48):
cards are they're charging you know, eighteen nineteen twenty percent.
Do you think of FED rate cut that credit card
companies are going to cut cut rates? You now, first
of all, if the FED, if the FED cut rates
in this sign of a slowing economy, issuers of credit
cards might increase rates or keep them the same because
they're afraid of their delinquency rates rising. So there's not
(10:11):
really you know this that there's.
Speaker 3 (10:14):
More to go that goes into interest rates than just
the Fed. In the FED cutting rates right.
Speaker 1 (10:21):
Right right then, but just credit card rates he goes honestly,
with the rate cut likely postponed until least September, the
average credit card annual percentage rate is currently just over
twenty percent. So how closely is that linked. Let's say
the FED cuts rate by two percent and the credit
card rate goes from twenty to eighteen percent. That's not
going to make a heck of a lot of difference. Okay,
mortgage rates, they're not tied to the FED. They're tried
(10:43):
tied to supplying demand for more for treasuries, but intermediate
and longer term treasure six' eight, nine, ten years. Because
the average mortgage, the average war work is rate right
now six six point seven, six point eight percent, the
average fifteen years six percent. It's more to intermediate intermediate
term treasuries that are that are not directly impacted by
(11:05):
FED actions. So mortgage rates really won't decline. Car Loans
are are you know what they're tied more to short
term rates because the life of a car is five, six,
seven years, but right now there was at seven percent.
Federal student loan rates are tied to the ten year
treasury and saving rates, you know, savings rates on savings
accounts are basically uh handled by the banks, and the
(11:28):
banks you know, are choosing really not to pay a
heck of a lot on savings. And if those FED
cuts rates, those rates come down. So I don't see
the FED cutting rates really juicing the economy. It could,
it could have the adverse effect, you know, we really
I don't know. Maybe we'll never feel the impact of
tariffs and that will never come home to roost. But
(11:49):
I think the FED wants to sit and see, you know,
if it does and give it. Let's let's let's let
President Trump come. Let's just let's just tariff talk come
to a head, and let's get a final unto the
two or three months past to then see the past through.
If you're if you're a if you're a you know,
an importer, you know, you don't even know the tariff's
(12:09):
rates are going to be. So you're like, well, what
do we what do we charge?
Speaker 2 (12:13):
What?
Speaker 1 (12:13):
What do we charge our customers, what do we eat,
what do we pass on?
Speaker 3 (12:17):
I think you saw even business investment in the GDP
numbers down fifteen percent, So, you know, I think that
you know, people, you know, Yes, cutting rates, you know,
would be stimulative to the economy, but I think there's
a lot more that's going on for businesses and the
uncertainties around tariffs that are affecting the economy as much
as you know, I guess cutting rates would help the economy,
(12:38):
So you know, yeah, we could cut rates, but I
still think the uncertainty out there could kind of be
what's troubling the economy.
Speaker 1 (12:45):
I think so too. I think I think if the tariff,
if this tariff issue was cleared up, and remember we're
sitting at all time highs in the market, so let's
not moan and groan about it, you know. I I
think that the criticism and towards German Powell is somewhat fair,
(13:06):
and I think that's evidenced by the two dissenters during
the meeting, which were coincidentally or not, Michelle Bowman and
Christopher Waller, both who are kind of up, you know,
purportedly up to be the successor to Jerome Powell. So
(13:28):
you had these two FED heads, the scent against keeping
rates the same. They wanted to cut rates, and and
they're both kind of up up for up to succeed
Jerome Powell.
Speaker 3 (13:43):
And you know, I think we can we can blame Powell,
or you know, we or Trump can blame Powell. But
it is a twelve person panel. You know, Jerome Powell
is not a dictator, right, So even if you have
Waller come in or or Bowman come in and be
the you know, the FED share, you know, they have
to do what the entire committee or heads of the
(14:05):
FED board want to. So it is a you know,
not just Powell making this decision.
Speaker 1 (14:12):
And the last thing you want to do is cut
rates only to have to raise rates again shortly thereafter,
especially for inflation, you know what I mean. So if
you cut rates and then all of a sudden you decide, well,
I've got to raise rates a month later because inflation
is the problem, or two months later, that's where you
lose credibility from the Fed. It's better to stay a
little longer.
Speaker 3 (14:33):
Tourist and Slot came out with something on Saturday, and
this is a little bit alarming, and you know it.
Speaker 2 (14:40):
Talks about how to calculate CPI.
Speaker 3 (14:44):
They come up with ninety thousand price quotes every month,
coming covering two hundred different item categories, seventy five urban fields.
And you know, usually, you know, when data is not available,
the staff typically develop estimates for proximately ten percent of
the cells and the CPI count. However, the share of
data in CPI that is estimated has increased significantly in
(15:05):
recent months, is now above thirty percent. In other words,
almost a third of the prices going into CPI at
this moment are guesses.
Speaker 2 (15:12):
So you know, you have you.
Speaker 3 (15:14):
Know, those which cut staff in this agency by twenty
ish percent, so you know, the quality of the CPI
date is not as accurate as it once was too.
Speaker 2 (15:29):
So I don't know.
Speaker 3 (15:31):
I think I think that you know, if you just
take today or you know, Friday and jobs numbers, yeah,
you know, yes they should cut, but I think there's
still a lot of uncertainties out there that could be inflationary.
Another thing would be, you know a lot of these companies,
you know, they're going to eat these these tariffs as
(15:53):
much as they can until it starts to affect their shareholders.
Speaker 2 (15:57):
You know, because in their uh you know, Prospect this
or you.
Speaker 1 (16:03):
Know, Corporate Charter Charter.
Speaker 3 (16:05):
They have to do what's what's in what's best.
Speaker 2 (16:09):
For their shareholders.
Speaker 3 (16:10):
So eventually, you know, these companies won't be able to
you know, eat these tariffs and it will be passed
on to the consumer. So we cut rates, we cut rates,
we cut rates, and then these companies eventually have to
pass these tariffs along to the consumer.
Speaker 2 (16:24):
Then what happens, you know, so.
Speaker 1 (16:28):
Well, I think President Trump is broadbeating them. President Trump
is browbeating companies to kind of eat some of it.
And I and I think some some companies will not
pass along everything to the to the consumer. And and
and you know, we're talking to Doug and we were
just chatting probably a week or so ago, and just
saying that, you know, corporations, if they say they may
(16:50):
come out and there may be a marketing thing where
they say, look, we've decided to eat this rather you know,
so it may you know, who knows how that's going
to play out. But but I do think they'll pass
so long sum but I think perhaps they're not passing
any of those costs up now to the consumers because
they're eating them now until they get a clear that
(17:10):
until this is over, until they get a final word
on Okay, it's going to be fifteen percent across the board,
it's gonna be whatever. It's gonna be ten percent. Now Canada,
we haven't instructed deal yet with Canada, so you know,
so we'll see, we'll see where that goes.
Speaker 3 (17:23):
You know. And the FED does have a dual mandate
and that is a two percent inflation target, and we're
still not there. Yeah, it's way lower than it was
at one time, but we're still not there.
Speaker 1 (17:33):
I agree, Yeah, but I do think that I do
think the Fed should give a nod to the slowing economy.
They did a little bit in their policy statement that
they released. Although swings in net exports continue to affect
the data, recent indicator suggests that growth of economic activity,
and they change them has continued to expand at a
(17:54):
solid pace to that growth of economic activity has moderated
in the first half of the year, so you know.
But they also took out in the second paragraph uncertainty
about the economy economic outlook has diminished. They replaced that
with uncertainty about the economic outlook remains elevated. So I
(18:16):
think that's that's echoing exactly what you're saying. The economy's moderating,
the economic outlook, concern uncertainty remains elevated. And I think
the Fed's concerned about about the tariffs now, you know.
I we'll say, time will tell whether they've whether they've
(18:40):
stayed at the party too long as far as rates
being high, just like they did in twenty twenty one,
when they had a raise rates in twenty two, I
think that's one of the biggest fears from the Fed.
But I don't think it's you know, it might lower
short term rates, it might lower public borrowing costs, it
might lower uh, you know, uh mortgage rates to a
(19:03):
certain extent.
Speaker 3 (19:04):
I think what I think, what we also have seen
over the past month two months is I think Trump
has found if there is a slowing economy, who who's
gonna shoulder the blame, right, It's gonna be Powell.
Speaker 1 (19:17):
He's gonna try no matter what.
Speaker 3 (19:18):
You know, I think Trump is very good at you know,
President Trump is very good at that. And I think,
you know, I think Powell will be to be blamed
for a slowing economy no matter what. If it's tariffs,
if it's business investment, if it's foreign business investment, you know,
no matter what it is.
Speaker 2 (19:35):
You know, I think we're gonna lay the blame on
Powell now, But I.
Speaker 1 (19:38):
You know, I don't think there's any like you know,
I don't know. I think we we we spent a
half hour on this. We spend too much time on this.
The FED is at the center of this. I don't
think the FED is that important right now. I really don't.
I think AI is important. I think I think the
economy is okay. You know, a second quarter GDP up
three percent after declining half a point in Q one.
(20:00):
Final sales were down, as I mentioned earlier, rose and
annual rate of one point one percent two point three
percent year over year after climbing one point five percent.
Speaker 3 (20:07):
During Q one historic lows for you know, unemployment went
up by point one percent, but still you know, at
at at historic lows and have been for the past
few years.
Speaker 2 (20:17):
So the economy's still doing good.
Speaker 3 (20:19):
I think you're just seeing a little bit of you know,
cracks recently and in the as well as uh.
Speaker 1 (20:27):
How do you address the what are the cause of
those cracks and how do you address those? Is the
is the topic for a show specifically on the economy,
our job, you know, you know, And.
Speaker 3 (20:40):
I think what we've seen is we can talk, we'll
talk about this, and we've seen amazing business investment from
large cap tech companies. We've seen amazing earnings so far
this week from you know, technology companies and some of
the largest companies in the world. And I think, you know, yeah,
I think we've kind of talked about this for a
(21:02):
little bit too long, because I think that should be
the main storyline in the If you take a step
back and look at the next five to ten years
in the stock market is yeah, you know, we could
see a little bit of a slow down, a little
bit of a pullback. But I think as long as
these large cap tech companies are spending what they're spending,
I think the stock market should be in pretty good shape.
Speaker 1 (21:21):
Okay, yeah, it's okay. Is a tech tech lead economy
for sure. It's a tech led stock market for sure,
where and we are participating it for the benefit of
our clients. So I guess just you know, closing the
book or beating this dead horse one more time before
we close out the first half hour in two minutes
(21:42):
and twenty seconds, I think what President Trump has done well.
Has shifted from being so resolute on the mount of
tariffs to being more I guess malleable, more suppliable in
the in the second quarter as compared to the first.
You certainly don't want to go back to the first
(22:04):
I think he's done a good job, you know, kind
of talking to companies and kind of influencing them to
you know, think of America as the place to build,
and you talked about it over and over and over
again about the need to really reshore the middle class
in America. We're going to be viable for for the
next period of growth in our country or we're just
(22:27):
I think he's done a good job at deregulation. I think,
you know, high regulation is not good for for capital expenditures,
is not good for capitalism, it's not good for really
economic growth over the longer haul. You know, the appropriate
regulation is what you know, you would you would hope for.
And then it's Democrats and Republicans disagree as to what's appropriate.
(22:49):
But you said it last week that you think that,
you know, some of the some of the regulatory and
the regulatory environment became too stringent doing during after the
the Great Uh, the Great recession back in O eight.
So so we'll see, we'll see, we'll see where everything
shakes out. But I think the economy is doing okay.
(23:10):
I think I think, yeah, it could use a quarter
point cut, but more as like a sign that hey,
we're on top of things rather than you know, being
able to you know, have a direct impact on on UH,
on economic growth in the life. So but we'll have
to see. So after the break, we'll talk a bit
about microsoft S earnings, which are baffo.
Speaker 2 (23:29):
What does mean?
Speaker 1 (23:32):
What does mean?
Speaker 2 (23:33):
Yeah?
Speaker 1 (23:34):
Look it up?
Speaker 2 (23:35):
Do you even know what?
Speaker 3 (23:36):
Yeah, it means like wonderful, wow, baffo, best and final offer.
I think you just made up this word.
Speaker 1 (23:45):
Now I'm gonna looking all right. It's ten thirty on
the station and depend upon for news, weather and information.
News to k A ten and one O three one
w g Y, Good morning, and welcome back to the
second half hour of the Capitol District's Money and Investment Program,
the most baffo my money investment program that you will
ever listen to.
Speaker 2 (24:03):
Extreme success, outstanding, very good.
Speaker 1 (24:07):
In the US slang earnings. You're so in I am
that's unpacked this day through my lens. Yeah, let's unpack this.
What are some of the key words that you hear
when they talk about like on journalism.
Speaker 2 (24:22):
I don't hear baffo, so no not.
Speaker 1 (24:25):
But when they say, well, we'll have to unpack that issue.
I hear people on TV say that all the time
through my lens. We gotta start staying stuff like that.
So people think we're on cutting edge. But I did
say baffo, and you did look it up?
Speaker 2 (24:38):
I did.
Speaker 1 (24:38):
Yeah, So you owe me? You owe me? Uh a zucchini.
Speaker 3 (24:43):
It's actually Donald Trump's showbiz slang for success.
Speaker 2 (24:47):
Is it really? Yeah?
Speaker 1 (24:49):
Not bad?
Speaker 2 (24:50):
No, it's not.
Speaker 1 (24:52):
Where do you want to go? Let's go to Meta
Meta's earnings. Yeah, do you want to touch on that?
You want me to touch on that?
Speaker 3 (24:58):
Or I gotta find I gotta find the sheet first.
I mean you to do a better job putting.
Speaker 1 (25:04):
Your sheets together. Metas shares up ten percent on Thursday.
Third quarter sales excuse me. Revenue for the second quarter
forty seven point five to two billion versus forty four
point eight billion, which was expected. Third quarter sales expected
to be between forty seven and a half billion to
fifty billion. Estimates are for forty six point one four billion.
(25:26):
Earnings per share seven dollars and fourteen cents versus five
dollars and ninety two cents um. Capital expenditures between sixty
six and seventy two billion slightly revised, slightly higher from
six from sixty four to seventy two billion. Reality Labs
(25:47):
lost about four and a half billion dollars daily active
users for Meta's applications three point four to eight billion
in the second quarter, up from three point four or
five billion was the was the estimate three point four
to three billion in the first quarter. The numbers were outstanding.
Speaker 2 (26:08):
We do own shares or targeted advertising is amazing.
Speaker 3 (26:11):
You know, they invested fifteen billion dollars in scale Dot
AI and artificial intelligence company.
Speaker 2 (26:16):
So you know, I'm just.
Speaker 3 (26:18):
You know, as a you know, a holistic how I
think about you know, metas earnings, but also tech in generals.
I think, as long as tech keeps spending in cap X,
tech will do pretty well. You'll see five ten percent pullbacks.
But you know, all these companies are raising you know,
I think Meta, Amazon, Google, Microsoft, They're all spending seventy
(26:40):
plus billion dollars a year in artificial intelligence. And I
think as long as you know they keep this spending up.
You know, tech should do pretty well.
Speaker 1 (26:51):
You've got to own a basket, though, I think I
own a basket. I think because I know we're talking,
we own quite a bit of shares of Alphabet. You know,
it's done well for us, there's some concern over it.
As far as their search goes. I think they own
eighty five to ninety percent there of the share of
the search market. What does AI do to that? So
(27:12):
there are it's going to be a battle. It's going
to be a battle between these tech giants for dominance,
and I think that's going to play out over years,
not months, not quarters. And I also think there are
going to be losers. And if you look at BlackBerry
back in you know, in twenty ten to twenty fifteen,
the stock went from whatever one hundred to ten and
(27:35):
I don't know where it is now, maybe seven or eight.
So there are going to be losers that that when
we sit here ten years from I would say, oh
my gosh, do you remember when X company was one
hundred and now it's ten or whatever the case may be.
And then on the flip side, there's going to be
substantial winners. So I think you need a basket, where
would you look for it? So we have individual securities
(27:56):
in our portfolio. Some of our largest holdings are Alphabet,
Microsoft and Video Pallenteer Uh, Alphabet Micro Yah, you name
them at the at the top, you've got them. But
but but on the flip side, you look at J Tech,
the JP Morgan.
Speaker 3 (28:14):
Yeah, so that you know, their largest holdings is you know,
it's in video, Robin Hood, Snowflake, Netflix, Take two in
service Now and then J G r O which is
more of an active management growth portfolio. And their top
holdings are you know, in Video, Microsoft, Apple, Meta, Amazon,
so a little more correlated. I guess to you know,
(28:35):
the the larger companies that you would see. So I
think both of them deserve a place in your portfolio.
Speaker 2 (28:45):
Yeah.
Speaker 1 (28:45):
I think you look at the XLK if you want
something that's.
Speaker 3 (28:48):
Tech, you know, even the S and P five hundred
thirty five, you know it's you know, it's some things
are that simple, U.
Speaker 1 (28:57):
S h G.
Speaker 2 (28:58):
Yeah.
Speaker 1 (28:59):
I think schwab Us large cap growth. I think that's
another area that you could look for for technic exposure
to large cap technology companies. The largest holdings there in Video, Microsoft, Apple, Amazon, Broadcom,
Meta alphabet, TESLA alphabet, then the other Alpha they have
this Apple, Apple Amazon alphabet and Eli Lilly. Uh, so
(29:20):
I think you've you've got options there. So so J
Tech j T E K J GROW, j G R
O UH the xcel K which is the Spider Technology holding.
We named some individual securities. I just named them within
the X with the s C SWAB growth s C
(29:40):
h G or individual companies in video, Microsoft, Apple, Amazon,
you know, Broadcom a M D alphabet, buy them, buy
them on on on weakness in through here. But but
uh you would uh you would jump on the other.
So so those are some areas and so Meta came
(30:01):
out with good earnings.
Speaker 3 (30:03):
Microsoft had very good earnings, and you know Azor Azure
cloud growth was up thirty nine percent. You know analysts
were expecting thirty four point four percent. So personal computing
segment UH reported nine percent increase in revenue, beating estimates.
Consume Microsoft's three sixty cloud revenue increase twenty percent, LinkedIn
(30:27):
up nine percent, uh Dynamics three sixty five revenue up
twenty three percent.
Speaker 2 (30:32):
So you know these are all huge beats on it.
Speaker 3 (30:35):
And you know you're seeing the largest companies in the world,
and you know, a lot of times people will be like,
all right, you know the leaders of today won't be
the leaders of tomorrow, but like these are all industries
and yeah, you don't real business segment.
Speaker 1 (30:47):
Well, the leaders of today. You think a lot of
the leaders of today will be the leaders of tomorrow.
And I kind of I.
Speaker 3 (30:53):
Mean, you're seeing revenue growth of you know, twenty thirty
nine percent in AZOR, so you're in this is their
intelligen cloud, you know, with revenue a revenue of revenue
beat of nearly one billion dollars. So you know, these
are just really huge numbers coming out from you know,
giant businesses. You know, if you look that business is
(31:14):
twenty thirty forty years ago, they don't have anywhere near
the margins that these companies had. Uh, they don't have
anywhere near the diversification that these companies had into you know,
industries of tomorrow. So yeah, do I still think there
will be companies like you know, Service Now, Palenteer, you know,
you had, I don't know a lot of you know,
(31:35):
Rocket Labs. Could these be leaders in twenty thirty years, Yeah,
it's possible, but you know, this doesn't happen overnight. You know,
just from a fundamental aspect and a revenue growth aspect.
You know, these companies have revenue growth of companies that
are mid stage in their life cycle, you know, so
(31:55):
I still think they have a ways to go. And
you know, I do think it's important to have you
of the leaders of today and the leaders of tomorrow.
Speaker 2 (32:01):
But you know, that's kind of why we own palent here.
That's why we own you know, Robin Hood, So.
Speaker 1 (32:08):
That's kind of why we own a little bit of
a bitcoin.
Speaker 2 (32:12):
Yeah, so you try to, you know, have the leaders
of today and leaders of tomorrow.
Speaker 3 (32:17):
But yeah, what I what I what I picked up
from And I think a lot of this you you
had mentioned, but margins are actually increasing from Microsoft.
Speaker 1 (32:29):
You know, you had operating margins at forty four point
nine percent operating margins for a year ago forty three
point one percent. As your revenue growth, you're over your
growth at thirty nine percent. You mentioned that, So you
are seeing a lot of I guess, continued demand for
(32:54):
for their for the cloud revenue of twenty percent, A
LinkedIn revenue up ten percent, commercial cloud revenue up eighteen percent.
Uh and uh and like you said, the Azure the
probably the biggest growth driver for Microsoft and is probably
our third or fourth largest holding.
Speaker 3 (33:12):
UH.
Speaker 1 (33:13):
Azure revenue growth of thirty nine percent, as I mentioned,
the consensus estimate was thirty four point five percent. So
good news really for Microsoft. Yeah, yeah, I guess the
stock could be stock could be overpriced. You could see it.
Speaker 3 (33:30):
You've seen quite a pullback Friday morning. As you know,
we sit here at nine P forty. The S and
P right now is down one quarter percent on point
four percent.
Speaker 1 (33:40):
So how other companies they are reported earnings? And I
think Apple Computer at very good earnings, UH one of
our I think it's our second or third largest holding.
Revenue of ten percent. You're over Your revenue grew the
fastest since the quarter ending in December of twenty twenty one.
Earnings per sheriff twelve percent. Some some of that came
(34:01):
from buybacks, but both numbers revenue and earnings above expectations.
They did say probably close to a billion dollars in
drag due to Terra related quest member. Apple went from
producing in China to kind of diversifying over to Vietnam. Revenue.
Speaker 3 (34:22):
iPhone revenue forty four point six billion of thirteen thirteen
and a half percent year over year. Services up thirteen
percent year over year at an all time high.
Speaker 1 (34:35):
Yeah, services are just.
Speaker 3 (34:38):
Million dollars in June quarter, with one point one billion
expected in September if conditions remained the same. But again,
you know, Apple plants to increase significant AI investments, including
M and A, and I think that's huge, including M
and A aimed at accelerating its roadmaps. So you could
see something with I think fifty billion dollars worth of cash,
just cash on hand, that you could see Apple, you know,
(35:00):
buy its way into becoming a you know, major artificial
intelligence provider. And then you'll see the integration into the iPhone.
So you know, it's it's a great company. You know,
I think it lacks a little bit of innovation, but
you know it's it's fundamentally sound.
Speaker 1 (35:19):
And I'm just looking through looking through their earnings even closer,
you have thirteen and a half percent revenue growth in
the iPhone. Good solid numbers from from the right pad. Yeah,
so yeah, you just kind of want to hang on
to that stock. I believe it's just just a core holding.
(35:41):
I think we have six or seven percent of our
common stock holding in that, and.
Speaker 3 (35:45):
I think that would be about you know, if you
look at just the S and P, you know, it's
about six percent of the S and P five hundred.
So if you have more than that, you're overweight. If
you have less than that, you're underway.
Speaker 1 (35:56):
We don't own any Reddit, and I don't really want
to touch on it, only to say that it did
have good earnings.
Speaker 2 (36:00):
You know, it's advertising.
Speaker 3 (36:03):
You know, you're seeing really good you know, even Google
had really good earnings, They had really great advertising numbers.
So I think I think Meta has done a good
job integrating their artificial intelligence and advertising and make it
easy to advertise target advertising. I think Google does the same.
So you know, I think that you know, and I
think that's what you saw on Reddit. You know, Reddit
does a good job of you know, specifically targeted advertising
(36:29):
based on you know, what subreddits you join and things
like that, so you know, it's very good for advertise
advertisers in an accurate way to see, you know, what
clients and customers really like.
Speaker 1 (36:40):
What do you think about Amazon? Amazon had earnings that
were not too well received by the Wall Street at
least early on a Friday morning. I think I'd buy
it on the weakness. Yeah, me down fifteen points, revenue
of thirteen percent year over year, earnings per shared a
dollar sixty eight versus dollars twenty six year ago.
Speaker 3 (36:57):
And I think people were looking for AWS to do
a little bit better, you know, thirteen point eight seven
verse thirteen point eight billions. So I think I think
it wasn't good at it wasn't good enough.
Speaker 1 (37:10):
One hundred and ninety five billion dollar backlog in AWS,
Amazon Web Service.
Speaker 3 (37:14):
And one hundred billion dollars spend this year in artificial intelligence.
So you know, that's kind of what I and what
I'm getting at all these I think it's like I
think Nvidia, I think a MD I think I think utilities.
I think all these things will be great companies to
pair with to I mean some of them are tech
because I think this you know, AI revolution, let's say,
will be broader than just you know, traditional technology names.
Speaker 2 (37:37):
You know, I think you'll see energy. I think you'll
see you know, and I think the industry.
Speaker 1 (37:42):
I think you'll see industry. We saw. I think, you know,
Starbucks getting away from technology. Same store sales fell, revenue
better than expected. I think Starbucks CEO Brian Nickel, who
I believe came over from Chipotle.
Speaker 2 (37:57):
I think they really did a bad job with their brand.
Speaker 1 (38:02):
You know.
Speaker 3 (38:02):
I think Starbucks used to be a place at Jet
you know, they had like the CDs in there. You know,
you could sit, you could have a cup of coffee.
Now they all look like you know, cement bricks while
they're trying to get you in and out for a
seven dollar coffee. You know, just look at Troy for example.
How many coffee spots are in downtown Troy. You know,
there's a lot of options out there now. And I
don't think it's as easy to invest in China as
(38:24):
it once was when they just when they said they
were gonna open five hundred stores a year about five
years ago, six years ago. So you know, I think,
you know, their competition, they don't have the loyalty I
think that they once had.
Speaker 2 (38:38):
I think it's it's a tough it's a tough business
to be in.
Speaker 1 (38:40):
I go in to McDonald's and there's a kiosk and
not a lot of seats anymore. And I get in
and out of there, and I don't go to McDonald's.
Life by a found soda once in a while, by
a found soda and but but I think you're right.
I think when you go into Starbucks before the pandemic,
you were going in there to meet people hang out.
(39:01):
I was never one to do that really, you know,
you know, do some homework, need a client out. Yeah,
And I think what happened with the pandemic is they
changed their model to be more like the McDonald's up today,
which is get your coffee and get out of there.
And what happened was, I think and they had they
had some issues with I think they had turnover and
employment and labor concerns there. Transaction time slowed precipitously. They
(39:26):
brought in Brian Nickel and and you know, he is
saying things are turning around. I think it's relatively richly valued,
does pay a decent dividend at two and a half
two and three quarters percent around there. So I think,
you know, I think you just got to if you
own Starbucks, and we do for our clients, I think
you just got to give it time and wait. It's
(39:46):
flat for the year, but it is down from you know,
probably twenty percent over the past two or three years.
I don't know where it falls on the spectrum of
how much we own, we own, we own enough. We
always own an if something's not doing as great as
you wanted to. But I think we've sold some. We
sold some. I think when Brian Nickel was appointed a CEO,
(40:08):
and don't quote me on this, for probably ninety three
to ninety four bucks to share. That was it maybe
within the past year or so, and right now it's
sitting at eighty seven. I think we took about a
third of our off the table. One stock that I
do like is Boeing.
Speaker 2 (40:22):
You know bo We own a good amount of Boeing.
Speaker 1 (40:24):
We own a good amount of Boeing. They're picking up
the pace. They lost a dollar twenty four share, expected
a dollar forty eight revenue came in above expectations. Kelly Orberg,
I don't know where he came I don't know if
he came over from Lockheed Martin. I forget exactly where
he came over from taking over the CEO. Changes take time,
but we're starting to see a difference in our performance
(40:45):
across the business. I think this is going to be
ge ESQ as far as what happens to Boeing over.
Speaker 3 (40:51):
And you know, I think it's what you know going
back to Starbucks. I think it's what Starbucks needs and
what Nike is in the is in the middle of doing.
Is know, kind of every once in a while, you
have to go over your business plan and you know,
who are we?
Speaker 1 (41:04):
You know what a mission?
Speaker 3 (41:06):
Right?
Speaker 2 (41:06):
What is that called?
Speaker 3 (41:07):
I forget what it's called, but you know you make
them in business all the time. Strategic plan, That's what
That's the word I was looking for, and I think
a lot of time.
Speaker 2 (41:15):
I think that's what they need right now.
Speaker 3 (41:17):
They need to really find out the value that they
provide to their customers Starbucks. Really, I think Boeing has
done a good job getting back to that Starbucks. I
think Nike's in the middle of it, I think, But
I think that's what Starbucks needs. But I think Boeing
is on the the other side of needing that, right.
I think they've done a good job. They've hired somebody
who knows what they're talking about from an engineering standpoint,
(41:39):
and you know, I'm pretty confident in uh, you know
where they're going.
Speaker 1 (41:44):
Having spent a lot of the show talking about interest
rates and also technology to a certain extent. Article by
Fred Imbert uh this has become the tech and everything
else stock market and and this Dan ives Wedbush, analyst
who's you know, kind of on CNBC a lot. He
(42:05):
wears bright Sue coats. And this was yesterday or was Thursday,
and he's talking about Microsoft and Meta platforms. Says, these
are some moments that will be remembered in the markets
for market for many years. Last night was one of
them with the eye popping results from Microsoft and Meta.
These massive results seen by Microsoft and Meta further validate
the use cases for an unprecedented spending trajectory for the
(42:28):
AA revolution on both the enterprise and consumer fronts. You know,
you know, so the tire of the arcle, he says you.
And then the first sentence in that article says, you
can't be cool in this market. If you're not in tech,
you can't be And I think you have to have
tech exposure.
Speaker 3 (42:43):
You have to have a good I mean, yeah, but
like if you're a passive investor or your own eat,
yes you do.
Speaker 2 (42:49):
You know who doesn't?
Speaker 3 (42:50):
Is kind of what I guess what I'm saying is
is if you know the SMP is what thirty five
percent technology, most people probably do, don't you think?
Speaker 1 (43:01):
Well, who doesn't? I think who doesn't.
Speaker 2 (43:04):
I mean there's a diction who doesn't and who's severely
underweight in it.
Speaker 1 (43:09):
I think you have to have a you know, generally
speaking in and around the market way between consumer discretionary.
Speaker 3 (43:15):
Yeah, I agree, you know, communication services, communication services and
technology percent.
Speaker 1 (43:21):
You know, people think of you know, communication services. You know,
you're you're looking at companies in there, like the number
one companies Meta and then I forget the Netflix, T Mobile,
so we're not communication services. We're not talking. It does
have ANT and T but the largest holding is.
Speaker 2 (43:36):
Met eighteen percent, Google in eighteen percent Meta.
Speaker 1 (43:40):
That's thirty six percent. You attack on eight percent Netflix,
and then Mobile and T Mobile. We're talking. Half of
it is in those four companies. Basically the two alphabets
things they have different classes of shares. So and that's
that's symbol. Xl C xl K is the technology and
communicationation services consumer discretionary.
Speaker 2 (44:03):
Xl Y xl Y.
Speaker 1 (44:04):
I think you're right. XLY is the other one. And
then the largest holdings in there are XY. It would
be Amazon, Tesla, home depot booking holdings, which is kind
of driven by technology, McDonald's TJXO. I think those those
are the three that you want to have forty percent
of your money or so in, or those are the
(44:26):
three sectors if you're using some individual securities along the way.
Outside of that, I think you look at NBL, you know,
kind of kind of drift away from from those specific sectors.
N OBL is very a dividend aristocrat at pro shares
dividend Aristocrats ETF pays a dividend of two point one percent.
(44:47):
You're to date, it's up three in a quarter. So
it's going to lag those other areas, but it's also
going to provide support in the down market. Largest holdings
there Emerson, Caterpillar, Albu, Moo, Franklin Resources, New Core, t
row Price. So you get a lot of the clarssification there,
uh as opposed to those other three that that I
just mentioned. Anyways, when we got left here, we got
(45:11):
about three three more minutes to go. Anything else you
want to talk about, I don't mean to put you
on the spot.
Speaker 3 (45:16):
No. I think the market needs, you know, the markets
right now at nine p fifty two, down about one
point six percent. I think it's kind of what the
market needs a little bit right now.
Speaker 2 (45:25):
I think it.
Speaker 3 (45:26):
I think we got a little bit too optimistic in
a lot of the speculative names. We saw that Figma,
you know, up two hundred and three hundred percent when
it was when at Ipo'. You see companies like Circle
ipo and kind of go crazy. So I think it's
a it's a justifiable reset.
Speaker 2 (45:45):
In the market.
Speaker 3 (45:46):
I'm not I'm not really worried right now about the
you know, medium long term implications of you know, just
this one day pullback on Friday, And I would look
at as a as a buying opportunity, you know, I
think we still have a strong consum We've had a
very very strong earning season, and we've also we're also
in August and September, which typically are the you know,
(46:08):
two or three worst months you know, on average, So
you know, I wouldn't take too much. I wouldn't look
too much into this pull back on Friday, and I
think that the market will continue to you know, to
do well six uh three six months from now.
Speaker 1 (46:25):
Yeah. I just think I think you always got a
very rarely do you get a green light that says
jump in, jump in. Most of them come hindsight. The
hard money is made at the lows, and the hard
money has made it. Actually, the hard money has made
at the highs, the easiest money has made at the lows.
I think that the pivot on the tariff was big.
(46:46):
Now we probably own maybe seven or eight percent cash,
maybe three or four percent in short short term bonds,
short term treasuries or ETFs B I L I B
T H I B T L. We mentioned those several
times here. So other than that, you know, you know,
one percent two percent pullback, I think you need a
little more than that to jump in. You know, you'll
get them. You'll get them on individual securities like you
(47:08):
So you'll see it with the Amazon today. So if
that stays down fifteen points, if you're listening, you know,
you might want to nibble at that for the longer
haul and uh and go from there. Yeah, you know,
I think you know, the tariff thing is going to
continue to to weigh on sentiment, and it's going to
continue to keep the question as to what the Fed
(47:30):
is going to do in the in the in the forefront,
uh for quite some time. You know, I don't know,
we just saw the numbers come out. President Trump, you know,
basically stated on next Thursday, this coming Thursday, countries that
(47:51):
are not, don't have it, don't have any type of
teriff agreement. The United States are going to have an
additional ten percent in tariffs, so that would include certainly
Canada and Mexico, two of our larger trading partners. So
I think I think we'll see that now we are
pretty much an economy that is kind of a self contained,
so that works out to our benefit. But I think
(48:13):
I think companies want to see that settled once and
for a while, so it is all we're looking at,
you know, for for our customers. August marks are thirty
sixty year in business manage eight hundred and sixty seventy
million dollars and also do a lot of planning for retirement,
social security planning, state planning. So give us a call
(48:36):
out two seven ninety four che because I know web
fagansset dot com. Have you got
Good morning, 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,
we' right here in News Talk A ten one O
three one w g Y. We aired every Sunday. Actually
it's Friday morning, right after the jobs report. The jobs
report came in weaker than expected. We'll talk about that
for the month of July, June, and May, respectively. We're
(00:22):
also revised lower labor force participation rate revised down. During
the course of the week, we also had personal income
and spending, the personal change, Personal consumption expenditures GDP, first
look at Q two GDP consumer confidence. So we got
a lot to go discuss that. To President Trump's tariffs,
(00:45):
we're altered. Late in the week, we have the FED
meet divided FED two descents on FED deciding to leave
rates unchanged.
Speaker 2 (00:53):
Would say that's.
Speaker 1 (00:55):
That's the first time in three decades two governors have dissented.
So and President Trump is harping on that, called Jerome
Powell of moron on truth social Qualcom's earnings. We don't
own any Qualcom. Microsoft's earnings, Meta's earnings, Apples earnings, Amazon's earnings,
Boeing's earnings, Starbucks earnings. Yeah, but most importantly, I got
(01:17):
a freaking predator. I got a predator in my backyard.
Speaker 2 (01:21):
I think it's a squirrel.
Speaker 1 (01:22):
Squirrel doesn't eat kale that size and squirrell my butternut squash,
tiny kale. You ever see those banana leaves that they've
that they fanned, Yeah, that's the size of my cal
It's huge. It's pretty big. But anyways, I I.
Speaker 3 (01:40):
Saw you chuck to summer squashes in the uh into
the woods to the woods when we got to work
the other morning.
Speaker 1 (01:46):
Yeah, you can, only they only last so long and
then they become squishy. You know, you don't want a
squishy squash.
Speaker 3 (01:52):
My zucchini gets squishy inside, so you need it anyways, No,
what do you do with it? It's never happened. Oh,
it's never ever happened hectually. Now it does get squashy though.
You know, I brought some cucumbers to work, monster. They're huge,
bigger cucumbers you've ever seen.
Speaker 1 (02:07):
You gotta pick them sooner, you think so, Yeah, because
they get CD's like anything else, the inside gets.
Speaker 3 (02:13):
It's hard though, because they grow, they grow overnight a
little too small, too big in like two days, and you're.
Speaker 1 (02:19):
Going to have vacation too.
Speaker 3 (02:20):
Yeah, and my airm tomatoes are gonna be right right
when we're on vacation.
Speaker 1 (02:24):
So I'm in charge.
Speaker 2 (02:25):
Yeah you are, so you need to Uh, I need help.
Speaker 1 (02:28):
With that, No, no problem. And I got I got some.
I'm in good shape. And the rain on Thursday, which
is yesterday, because again we're recording this on Friday, was beautiful.
It was beautiful rain giving rain during the week like
that and will be good. But anyways, uh So on Wednesday,
Tuesday or Wednesday, the S and P five hundred, the
(02:48):
NAS that composite the US Total Market Index all closed
that record highs. On Thursday, the utility average closed that
record highs on the back of a couple different reasons.
One was kind of concern over the economy, Jerome Powell
not cutting Maybe the economy slows down, interest rates go down,
utilities become more attractive as the dividend becomes more attractive.
(03:10):
But I think more importantly it's the demand for energy
that we're going to see over the next you know, two, three, five,
ten years from all this artificial intelligence and the need
for that energy data centers that the data centers kind
of consume that that make these attractive and I think,
I think that's important. But the I guess the issue
(03:31):
that or the bottom line is, is that the market
is ad or near record hides and we are in
a period where usually it's it's kind of adult time.
Speaker 3 (03:44):
Yeah, in the next two months too, is usually the
hairyest of all the months when it comes to the
stock market. So, you know, with this weak job number
and week revisions on on Friday, you know you are
seeing a pullback. But at the same time, I think
this is going to be the final show with you know,
the Fed finally cutting.
Speaker 2 (04:05):
I can't see you. I can't see them not cutting, now,
do you.
Speaker 1 (04:10):
Well they meet again in September, so let's get into it. So,
non farm payroll growth rose by seventy three thousand. Estimates
were for about one hundred thousand. June and May were
also revised lower by a combined total of two hundred
and fifty eight thousand. Unemployment rose to four point two percent,
up from four point one percent. May. May's nonfarmer excuse me,
(04:38):
I'm sorry. June's non farm payrolls, I'm sorry, July none
from pair with seventy three thousand. June was fourteen thousand,
so that was revised sharply lower. So you have non
farm payrolls coming in weaker than expected for the prior month.
In the last two months revis sharply lower. You also
(05:01):
have unemployment ticking up a little bit. You had the
labor force participation rate go down a little bit. So
you have some issues that are affecting the jobs market,
and the jobs market is usually the last indicator to
respond to the direction of the economy because nobody really
(05:25):
wants to lay off somebody. That's the last thing you
want to do. You'll cut expenses, you'll cut advertising, you'll
maybe reduce technology spending, you'll reduce R and D, you'll
reduce cabecs, you'll do whatever, but the last thing you
want to do is lay somebody off because of the
impact that that has on his or her family and
their family. So we saw that, you know, President Trump,
(05:49):
you know, he called Jerome Powell and more on prior
to this. He was on truth Social shortly thereafter the
report was released today thirty Friday, and and you know
went on to Lambey pile again. Forget the forget the
words that are used. Is he right? Is President Trump
(06:09):
right that the FED should cut rates? The FED met
this pass mean we we can We'll get into that
in a minute. But is should the Fed cut? Fed cut?
Speaker 2 (06:21):
I don't think that.
Speaker 3 (06:24):
The Fed cutting will have the impact on rates that
Trump thinks or is trying to portray.
Speaker 1 (06:35):
That they will. Right.
Speaker 3 (06:36):
We talk a lot about yes, you know the Trump uh,
you know the FED cuts. You know that has impact
on the short term rates, but the long term rates
are supplying demand.
Speaker 2 (06:46):
So I'm more curious.
Speaker 3 (06:50):
To see what a what a rate cut would do
to the longer end of the you know, intermediate, longer, longer,
longer term rates and you know what that you know,
would have on on the housing market. I don't think that,
you know, the FED cutting, you with a cut by
(07:11):
a percentage point, would really have that much impact on like,
let's say, mortgages, because you know, you know, as you
were saying earlier today, you know, it's supply and demand.
If there's still a demand for mortgages, you know, at
higher rates, banks are going to charge those rates, right
and just get maybe a little bit better spread. So
(07:33):
But to your question, do I think Trump is right? No,
because he's been calling for this for months. You know,
we could have seen a cut, you know, this this
past week, and and I think that that could have
(07:55):
been a good idea. But you know, I think, you know,
in the in the past two, three, four or five months,
that he's been saying, hey, we should cut.
Speaker 2 (08:03):
You know, I don't think that, do you.
Speaker 1 (08:07):
I think that he FED should not have cut in July.
You know, I think the FED should have been more
conciliatory or dubvish, so to speak, in their tone with
their with their statement that they released afterwards. And again
we'll talk about that in a minute. You know, I
also think that, but they so so that would give
(08:29):
an indication that they are concerned about the slowing of
the economy. Had GDP come into three percent, but some
of that was just inventory build A lot of that
was inventory.
Speaker 3 (08:38):
A lot of it, yes, a lot of it was
inventory from the previous quarter.
Speaker 1 (08:41):
From from there, the inventory added three point one seven
percent the second quarter. GDP sales to domestic purchasers, which
is the bulk of it, up one point one percent.
It was up one point five percent in the first quarter. Uh,
so there, there, there. There are some signs certainly that
the economy is weakening. A personal income and spending also
(09:01):
also pretty weak during the month of June. But so
I think the FED is in a position where, certainly
we were talking about this before the show, They're kind
of in a no win position. Trump's gonna hammer them
until they cut, you know, and he's gonna say, right,
he's gonna blame all bad news on the FED, and
he's going to take credit for all good news now.
(09:24):
But I do think if the FED cut by a
quarter point, it wouldn't impact what it would impact this sentiment.
I think it would impact sentiment and make everybody aware
that the FED is aware of the slowing of the economy.
But you're right, and I look at there was an
article by Jesse Dickler and she I think she consolidates
really the impact of a FED cut credit card credit
(09:48):
cards are they're charging you know, eighteen nineteen twenty percent.
Do you think of FED rate cut that credit card
companies are going to cut cut rates? You now, first
of all, if the FED, if the FED cut rates
in this sign of a slowing economy, issuers of credit
cards might increase rates or keep them the same because
they're afraid of their delinquency rates rising. So there's not
(10:11):
really you know this that there's.
Speaker 3 (10:14):
More to go that goes into interest rates than just
the Fed. In the FED cutting rates right.
Speaker 1 (10:21):
Right right then, but just credit card rates he goes honestly,
with the rate cut likely postponed until least September, the
average credit card annual percentage rate is currently just over
twenty percent. So how closely is that linked. Let's say
the FED cuts rate by two percent and the credit
card rate goes from twenty to eighteen percent. That's not
going to make a heck of a lot of difference. Okay,
mortgage rates, they're not tied to the FED. They're tried
(10:43):
tied to supplying demand for more for treasuries, but intermediate
and longer term treasure six' eight, nine, ten years. Because
the average mortgage, the average war work is rate right
now six six point seven, six point eight percent, the
average fifteen years six percent. It's more to intermediate intermediate
term treasuries that are that are not directly impacted by
(11:05):
FED actions. So mortgage rates really won't decline. Car Loans
are are you know what they're tied more to short
term rates because the life of a car is five, six,
seven years, but right now there was at seven percent.
Federal student loan rates are tied to the ten year
treasury and saving rates, you know, savings rates on savings
accounts are basically uh handled by the banks, and the
(11:28):
banks you know, are choosing really not to pay a
heck of a lot on savings. And if those FED
cuts rates, those rates come down. So I don't see
the FED cutting rates really juicing the economy. It could,
it could have the adverse effect, you know, we really
I don't know. Maybe we'll never feel the impact of
tariffs and that will never come home to roost. But
(11:49):
I think the FED wants to sit and see, you know,
if it does and give it. Let's let's let's let
President Trump come. Let's just let's just tariff talk come
to a head, and let's get a final unto the
two or three months past to then see the past through.
If you're if you're a if you're a you know,
an importer, you know, you don't even know the tariff's
(12:09):
rates are going to be. So you're like, well, what
do we what do we charge?
Speaker 2 (12:13):
What?
Speaker 1 (12:13):
What do we charge our customers, what do we eat,
what do we pass on?
Speaker 3 (12:17):
I think you saw even business investment in the GDP
numbers down fifteen percent, So, you know, I think that
you know, people, you know, Yes, cutting rates, you know,
would be stimulative to the economy, but I think there's
a lot more that's going on for businesses and the
uncertainties around tariffs that are affecting the economy as much
as you know, I guess cutting rates would help the economy,
(12:38):
So you know, yeah, we could cut rates, but I
still think the uncertainty out there could kind of be
what's troubling the economy.
Speaker 1 (12:45):
I think so too. I think I think if the tariff,
if this tariff issue was cleared up, and remember we're
sitting at all time highs in the market, so let's
not moan and groan about it, you know. I I
think that the criticism and towards German Powell is somewhat fair,
(13:06):
and I think that's evidenced by the two dissenters during
the meeting, which were coincidentally or not, Michelle Bowman and
Christopher Waller, both who are kind of up, you know,
purportedly up to be the successor to Jerome Powell. So
(13:28):
you had these two FED heads, the scent against keeping
rates the same. They wanted to cut rates, and and
they're both kind of up up for up to succeed
Jerome Powell.
Speaker 3 (13:43):
And you know, I think we can we can blame Powell,
or you know, we or Trump can blame Powell. But
it is a twelve person panel. You know, Jerome Powell
is not a dictator, right, So even if you have
Waller come in or or Bowman come in and be
the you know, the FED share, you know, they have
to do what the entire committee or heads of the
(14:05):
FED board want to. So it is a you know,
not just Powell making this decision.
Speaker 1 (14:12):
And the last thing you want to do is cut
rates only to have to raise rates again shortly thereafter,
especially for inflation, you know what I mean. So if
you cut rates and then all of a sudden you decide, well,
I've got to raise rates a month later because inflation
is the problem, or two months later, that's where you
lose credibility from the Fed. It's better to stay a
little longer.
Speaker 3 (14:33):
Tourist and Slot came out with something on Saturday, and
this is a little bit alarming, and you know it.
Speaker 2 (14:40):
Talks about how to calculate CPI.
Speaker 3 (14:44):
They come up with ninety thousand price quotes every month,
coming covering two hundred different item categories, seventy five urban fields.
And you know, usually, you know, when data is not available,
the staff typically develop estimates for proximately ten percent of
the cells and the CPI count. However, the share of
data in CPI that is estimated has increased significantly in
(15:05):
recent months, is now above thirty percent. In other words,
almost a third of the prices going into CPI at
this moment are guesses.
Speaker 2 (15:12):
So you know, you have you.
Speaker 3 (15:14):
Know, those which cut staff in this agency by twenty
ish percent, so you know, the quality of the CPI
date is not as accurate as it once was too.
Speaker 2 (15:29):
So I don't know.
Speaker 3 (15:31):
I think I think that you know, if you just
take today or you know, Friday and jobs numbers, yeah,
you know, yes they should cut, but I think there's
still a lot of uncertainties out there that could be inflationary.
Another thing would be, you know a lot of these companies,
you know, they're going to eat these these tariffs as
(15:53):
much as they can until it starts to affect their shareholders.
Speaker 2 (15:57):
You know, because in their uh you know, Prospect this
or you.
Speaker 1 (16:03):
Know, Corporate Charter Charter.
Speaker 3 (16:05):
They have to do what's what's in what's best.
Speaker 2 (16:09):
For their shareholders.
Speaker 3 (16:10):
So eventually, you know, these companies won't be able to
you know, eat these tariffs and it will be passed
on to the consumer. So we cut rates, we cut rates,
we cut rates, and then these companies eventually have to
pass these tariffs along to the consumer.
Speaker 2 (16:24):
Then what happens, you know, so.
Speaker 1 (16:28):
Well, I think President Trump is broadbeating them. President Trump
is browbeating companies to kind of eat some of it.
And I and I think some some companies will not
pass along everything to the to the consumer. And and
and you know, we're talking to Doug and we were
just chatting probably a week or so ago, and just
saying that, you know, corporations, if they say they may
(16:50):
come out and there may be a marketing thing where
they say, look, we've decided to eat this rather you know,
so it may you know, who knows how that's going
to play out. But but I do think they'll pass
so long sum but I think perhaps they're not passing
any of those costs up now to the consumers because
they're eating them now until they get a clear that
(17:10):
until this is over, until they get a final word
on Okay, it's going to be fifteen percent across the board,
it's gonna be whatever. It's gonna be ten percent. Now Canada,
we haven't instructed deal yet with Canada, so you know,
so we'll see, we'll see where that goes.
Speaker 3 (17:23):
You know. And the FED does have a dual mandate
and that is a two percent inflation target, and we're
still not there. Yeah, it's way lower than it was
at one time, but we're still not there.
Speaker 1 (17:33):
I agree, Yeah, but I do think that I do
think the Fed should give a nod to the slowing economy.
They did a little bit in their policy statement that
they released. Although swings in net exports continue to affect
the data, recent indicator suggests that growth of economic activity,
and they change them has continued to expand at a
(17:54):
solid pace to that growth of economic activity has moderated
in the first half of the year, so you know.
But they also took out in the second paragraph uncertainty
about the economy economic outlook has diminished. They replaced that
with uncertainty about the economic outlook remains elevated. So I
(18:16):
think that's that's echoing exactly what you're saying. The economy's moderating,
the economic outlook, concern uncertainty remains elevated. And I think
the Fed's concerned about about the tariffs now, you know.
I we'll say, time will tell whether they've whether they've
(18:40):
stayed at the party too long as far as rates
being high, just like they did in twenty twenty one,
when they had a raise rates in twenty two, I
think that's one of the biggest fears from the Fed.
But I don't think it's you know, it might lower
short term rates, it might lower public borrowing costs, it
might lower uh, you know, uh mortgage rates to a
(19:03):
certain extent.
Speaker 3 (19:04):
I think what I think, what we also have seen
over the past month two months is I think Trump
has found if there is a slowing economy, who who's
gonna shoulder the blame, right, It's gonna be Powell.
Speaker 1 (19:17):
He's gonna try no matter what.
Speaker 3 (19:18):
You know, I think Trump is very good at you know,
President Trump is very good at that. And I think,
you know, I think Powell will be to be blamed
for a slowing economy no matter what. If it's tariffs,
if it's business investment, if it's foreign business investment, you know,
no matter what it is.
Speaker 2 (19:35):
You know, I think we're gonna lay the blame on
Powell now, But I.
Speaker 1 (19:38):
You know, I don't think there's any like you know,
I don't know. I think we we we spent a
half hour on this. We spend too much time on this.
The FED is at the center of this. I don't
think the FED is that important right now. I really don't.
I think AI is important. I think I think the
economy is okay. You know, a second quarter GDP up
three percent after declining half a point in Q one.
(20:00):
Final sales were down, as I mentioned earlier, rose and
annual rate of one point one percent two point three
percent year over year after climbing one point five percent.
Speaker 3 (20:07):
During Q one historic lows for you know, unemployment went
up by point one percent, but still you know, at
at at historic lows and have been for the past
few years.
Speaker 2 (20:17):
So the economy's still doing good.
Speaker 3 (20:19):
I think you're just seeing a little bit of you know,
cracks recently and in the as well as uh.
Speaker 1 (20:27):
How do you address the what are the cause of
those cracks and how do you address those? Is the
is the topic for a show specifically on the economy,
our job, you know, you know, And.
Speaker 3 (20:40):
I think what we've seen is we can talk, we'll
talk about this, and we've seen amazing business investment from
large cap tech companies. We've seen amazing earnings so far
this week from you know, technology companies and some of
the largest companies in the world. And I think, you know, yeah,
I think we've kind of talked about this for a
(21:02):
little bit too long, because I think that should be
the main storyline in the If you take a step
back and look at the next five to ten years
in the stock market is yeah, you know, we could
see a little bit of a slow down, a little
bit of a pullback. But I think as long as
these large cap tech companies are spending what they're spending,
I think the stock market should be in pretty good shape.
Speaker 1 (21:21):
Okay, yeah, it's okay. Is a tech tech lead economy
for sure. It's a tech led stock market for sure,
where and we are participating it for the benefit of
our clients. So I guess just you know, closing the
book or beating this dead horse one more time before
we close out the first half hour in two minutes
(21:42):
and twenty seconds, I think what President Trump has done well.
Has shifted from being so resolute on the mount of
tariffs to being more I guess malleable, more suppliable in
the in the second quarter as compared to the first.
You certainly don't want to go back to the first
(22:04):
I think he's done a good job, you know, kind
of talking to companies and kind of influencing them to
you know, think of America as the place to build,
and you talked about it over and over and over
again about the need to really reshore the middle class
in America. We're going to be viable for for the
next period of growth in our country or we're just
(22:27):
I think he's done a good job at deregulation. I think,
you know, high regulation is not good for for capital expenditures,
is not good for capitalism, it's not good for really
economic growth over the longer haul. You know, the appropriate
regulation is what you know, you would you would hope for.
And then it's Democrats and Republicans disagree as to what's appropriate.
(22:49):
But you said it last week that you think that,
you know, some of the some of the regulatory and
the regulatory environment became too stringent doing during after the
the Great Uh, the Great recession back in O eight.
So so we'll see, we'll see, we'll see where everything
shakes out. But I think the economy is doing okay.
(23:10):
I think I think, yeah, it could use a quarter
point cut, but more as like a sign that hey,
we're on top of things rather than you know, being
able to you know, have a direct impact on on UH,
on economic growth in the life. So but we'll have
to see. So after the break, we'll talk a bit
about microsoft S earnings, which are baffo.
Speaker 2 (23:29):
What does mean?
Speaker 1 (23:32):
What does mean?
Speaker 2 (23:33):
Yeah?
Speaker 1 (23:34):
Look it up?
Speaker 2 (23:35):
Do you even know what?
Speaker 3 (23:36):
Yeah, it means like wonderful, wow, baffo, best and final offer.
I think you just made up this word.
Speaker 1 (23:45):
Now I'm gonna looking all right. It's ten thirty on
the station and depend upon for news, weather and information.
News to k A ten and one O three one
w g Y, Good morning, and welcome back to the
second half hour of the Capitol District's Money and Investment Program,
the most baffo my money investment program that you will
ever listen to.
Speaker 2 (24:03):
Extreme success, outstanding, very good.
Speaker 1 (24:07):
In the US slang earnings. You're so in I am
that's unpacked this day through my lens. Yeah, let's unpack this.
What are some of the key words that you hear
when they talk about like on journalism.
Speaker 2 (24:22):
I don't hear baffo, so no not.
Speaker 1 (24:25):
But when they say, well, we'll have to unpack that issue.
I hear people on TV say that all the time
through my lens. We gotta start staying stuff like that.
So people think we're on cutting edge. But I did
say baffo, and you did look it up?
Speaker 2 (24:38):
I did.
Speaker 1 (24:38):
Yeah, So you owe me? You owe me? Uh a zucchini.
Speaker 3 (24:43):
It's actually Donald Trump's showbiz slang for success.
Speaker 2 (24:47):
Is it really? Yeah?
Speaker 1 (24:49):
Not bad?
Speaker 2 (24:50):
No, it's not.
Speaker 1 (24:52):
Where do you want to go? Let's go to Meta
Meta's earnings. Yeah, do you want to touch on that?
You want me to touch on that?
Speaker 3 (24:58):
Or I gotta find I gotta find the sheet first.
I mean you to do a better job putting.
Speaker 1 (25:04):
Your sheets together. Metas shares up ten percent on Thursday.
Third quarter sales excuse me. Revenue for the second quarter
forty seven point five to two billion versus forty four
point eight billion, which was expected. Third quarter sales expected
to be between forty seven and a half billion to
fifty billion. Estimates are for forty six point one four billion.
(25:26):
Earnings per share seven dollars and fourteen cents versus five
dollars and ninety two cents um. Capital expenditures between sixty
six and seventy two billion slightly revised, slightly higher from
six from sixty four to seventy two billion. Reality Labs
(25:47):
lost about four and a half billion dollars daily active
users for Meta's applications three point four to eight billion
in the second quarter, up from three point four or
five billion was the was the estimate three point four
to three billion in the first quarter. The numbers were outstanding.
Speaker 2 (26:08):
We do own shares or targeted advertising is amazing.
Speaker 3 (26:11):
You know, they invested fifteen billion dollars in scale Dot
AI and artificial intelligence company.
Speaker 2 (26:16):
So you know, I'm just.
Speaker 3 (26:18):
You know, as a you know, a holistic how I
think about you know, metas earnings, but also tech in generals.
I think, as long as tech keeps spending in cap X,
tech will do pretty well. You'll see five ten percent pullbacks.
But you know, all these companies are raising you know,
I think Meta, Amazon, Google, Microsoft, They're all spending seventy
(26:40):
plus billion dollars a year in artificial intelligence. And I
think as long as you know they keep this spending up.
You know, tech should do pretty well.
Speaker 1 (26:51):
You've got to own a basket, though, I think I
own a basket. I think because I know we're talking,
we own quite a bit of shares of Alphabet. You know,
it's done well for us, there's some concern over it.
As far as their search goes. I think they own
eighty five to ninety percent there of the share of
the search market. What does AI do to that? So
(27:12):
there are it's going to be a battle. It's going
to be a battle between these tech giants for dominance,
and I think that's going to play out over years,
not months, not quarters. And I also think there are
going to be losers. And if you look at BlackBerry
back in you know, in twenty ten to twenty fifteen,
the stock went from whatever one hundred to ten and
(27:35):
I don't know where it is now, maybe seven or eight.
So there are going to be losers that that when
we sit here ten years from I would say, oh
my gosh, do you remember when X company was one
hundred and now it's ten or whatever the case may be.
And then on the flip side, there's going to be
substantial winners. So I think you need a basket, where
would you look for it? So we have individual securities
(27:56):
in our portfolio. Some of our largest holdings are Alphabet,
Microsoft and Video Pallenteer Uh, Alphabet Micro Yah, you name
them at the at the top, you've got them. But
but but on the flip side, you look at J Tech,
the JP Morgan.
Speaker 3 (28:14):
Yeah, so that you know, their largest holdings is you know,
it's in video, Robin Hood, Snowflake, Netflix, Take two in
service Now and then J G r O which is
more of an active management growth portfolio. And their top
holdings are you know, in Video, Microsoft, Apple, Meta, Amazon,
so a little more correlated. I guess to you know,
(28:35):
the the larger companies that you would see. So I
think both of them deserve a place in your portfolio.
Speaker 2 (28:45):
Yeah.
Speaker 1 (28:45):
I think you look at the XLK if you want
something that's.
Speaker 3 (28:48):
Tech, you know, even the S and P five hundred
thirty five, you know it's you know, it's some things
are that simple, U.
Speaker 1 (28:57):
S h G.
Speaker 2 (28:58):
Yeah.
Speaker 1 (28:59):
I think schwab Us large cap growth. I think that's
another area that you could look for for technic exposure
to large cap technology companies. The largest holdings there in Video, Microsoft, Apple, Amazon, Broadcom,
Meta alphabet, TESLA alphabet, then the other Alpha they have
this Apple, Apple Amazon alphabet and Eli Lilly. Uh, so
(29:20):
I think you've you've got options there. So so J
Tech j T E K J GROW, j G R
O UH the xcel K which is the Spider Technology holding.
We named some individual securities. I just named them within
the X with the s C SWAB growth s C
(29:40):
h G or individual companies in video, Microsoft, Apple, Amazon,
you know, Broadcom a M D alphabet, buy them, buy
them on on on weakness in through here. But but
uh you would uh you would jump on the other.
So so those are some areas and so Meta came
(30:01):
out with good earnings.
Speaker 3 (30:03):
Microsoft had very good earnings, and you know Azor Azure
cloud growth was up thirty nine percent. You know analysts
were expecting thirty four point four percent. So personal computing
segment UH reported nine percent increase in revenue, beating estimates.
Consume Microsoft's three sixty cloud revenue increase twenty percent, LinkedIn
(30:27):
up nine percent, uh Dynamics three sixty five revenue up
twenty three percent.
Speaker 2 (30:32):
So you know these are all huge beats on it.
Speaker 3 (30:35):
And you know you're seeing the largest companies in the world,
and you know, a lot of times people will be like,
all right, you know the leaders of today won't be
the leaders of tomorrow, but like these are all industries
and yeah, you don't real business segment.
Speaker 1 (30:47):
Well, the leaders of today. You think a lot of
the leaders of today will be the leaders of tomorrow.
And I kind of I.
Speaker 3 (30:53):
Mean, you're seeing revenue growth of you know, twenty thirty
nine percent in AZOR, so you're in this is their
intelligen cloud, you know, with revenue a revenue of revenue
beat of nearly one billion dollars. So you know, these
are just really huge numbers coming out from you know,
giant businesses. You know, if you look that business is
(31:14):
twenty thirty forty years ago, they don't have anywhere near
the margins that these companies had. Uh, they don't have
anywhere near the diversification that these companies had into you know,
industries of tomorrow. So yeah, do I still think there
will be companies like you know, Service Now, Palenteer, you know,
you had, I don't know a lot of you know,
(31:35):
Rocket Labs. Could these be leaders in twenty thirty years, Yeah,
it's possible, but you know, this doesn't happen overnight. You know,
just from a fundamental aspect and a revenue growth aspect.
You know, these companies have revenue growth of companies that
are mid stage in their life cycle, you know, so
(31:55):
I still think they have a ways to go. And
you know, I do think it's important to have you
of the leaders of today and the leaders of tomorrow.
Speaker 2 (32:01):
But you know, that's kind of why we own palent here.
That's why we own you know, Robin Hood, So.
Speaker 1 (32:08):
That's kind of why we own a little bit of
a bitcoin.
Speaker 2 (32:12):
Yeah, so you try to, you know, have the leaders
of today and leaders of tomorrow.
Speaker 3 (32:17):
But yeah, what I what I what I picked up
from And I think a lot of this you you
had mentioned, but margins are actually increasing from Microsoft.
Speaker 1 (32:29):
You know, you had operating margins at forty four point
nine percent operating margins for a year ago forty three
point one percent. As your revenue growth, you're over your
growth at thirty nine percent. You mentioned that, So you
are seeing a lot of I guess, continued demand for
(32:54):
for their for the cloud revenue of twenty percent, A
LinkedIn revenue up ten percent, commercial cloud revenue up eighteen percent.
Uh and uh and like you said, the Azure the
probably the biggest growth driver for Microsoft and is probably
our third or fourth largest holding.
Speaker 3 (33:12):
UH.
Speaker 1 (33:13):
Azure revenue growth of thirty nine percent, as I mentioned,
the consensus estimate was thirty four point five percent. So
good news really for Microsoft. Yeah, yeah, I guess the
stock could be stock could be overpriced. You could see it.
Speaker 3 (33:30):
You've seen quite a pullback Friday morning. As you know,
we sit here at nine P forty. The S and
P right now is down one quarter percent on point
four percent.
Speaker 1 (33:40):
So how other companies they are reported earnings? And I
think Apple Computer at very good earnings, UH one of
our I think it's our second or third largest holding.
Revenue of ten percent. You're over Your revenue grew the
fastest since the quarter ending in December of twenty twenty one.
Earnings per sheriff twelve percent. Some some of that came
(34:01):
from buybacks, but both numbers revenue and earnings above expectations.
They did say probably close to a billion dollars in
drag due to Terra related quest member. Apple went from
producing in China to kind of diversifying over to Vietnam. Revenue.
Speaker 3 (34:22):
iPhone revenue forty four point six billion of thirteen thirteen
and a half percent year over year. Services up thirteen
percent year over year at an all time high.
Speaker 1 (34:35):
Yeah, services are just.
Speaker 3 (34:38):
Million dollars in June quarter, with one point one billion
expected in September if conditions remained the same. But again,
you know, Apple plants to increase significant AI investments, including
M and A, and I think that's huge, including M
and A aimed at accelerating its roadmaps. So you could
see something with I think fifty billion dollars worth of cash,
just cash on hand, that you could see Apple, you know,
(35:00):
buy its way into becoming a you know, major artificial
intelligence provider. And then you'll see the integration into the iPhone.
So you know, it's it's a great company. You know,
I think it lacks a little bit of innovation, but
you know it's it's fundamentally sound.
Speaker 1 (35:19):
And I'm just looking through looking through their earnings even closer,
you have thirteen and a half percent revenue growth in
the iPhone. Good solid numbers from from the right pad. Yeah,
so yeah, you just kind of want to hang on
to that stock. I believe it's just just a core holding.
(35:41):
I think we have six or seven percent of our
common stock holding in that, and.
Speaker 3 (35:45):
I think that would be about you know, if you
look at just the S and P, you know, it's
about six percent of the S and P five hundred.
So if you have more than that, you're overweight. If
you have less than that, you're underway.
Speaker 1 (35:56):
We don't own any Reddit, and I don't really want
to touch on it, only to say that it did
have good earnings.
Speaker 2 (36:00):
You know, it's advertising.
Speaker 3 (36:03):
You know, you're seeing really good you know, even Google
had really good earnings, They had really great advertising numbers.
So I think I think Meta has done a good
job integrating their artificial intelligence and advertising and make it
easy to advertise target advertising. I think Google does the same.
So you know, I think that you know, and I
think that's what you saw on Reddit. You know, Reddit
does a good job of you know, specifically targeted advertising
(36:29):
based on you know, what subreddits you join and things
like that, so you know, it's very good for advertise
advertisers in an accurate way to see, you know, what
clients and customers really like.
Speaker 1 (36:40):
What do you think about Amazon? Amazon had earnings that
were not too well received by the Wall Street at
least early on a Friday morning. I think I'd buy
it on the weakness. Yeah, me down fifteen points, revenue
of thirteen percent year over year, earnings per shared a
dollar sixty eight versus dollars twenty six year ago.
Speaker 3 (36:57):
And I think people were looking for AWS to do
a little bit better, you know, thirteen point eight seven
verse thirteen point eight billions. So I think I think
it wasn't good at it wasn't good enough.
Speaker 1 (37:10):
One hundred and ninety five billion dollar backlog in AWS,
Amazon Web Service.
Speaker 3 (37:14):
And one hundred billion dollars spend this year in artificial intelligence.
So you know, that's kind of what I and what
I'm getting at all these I think it's like I
think Nvidia, I think a MD I think I think utilities.
I think all these things will be great companies to
pair with to I mean some of them are tech
because I think this you know, AI revolution, let's say,
will be broader than just you know, traditional technology names.
Speaker 2 (37:37):
You know, I think you'll see energy. I think you'll
see you know, and I think the industry.
Speaker 1 (37:42):
I think you'll see industry. We saw. I think, you know,
Starbucks getting away from technology. Same store sales fell, revenue
better than expected. I think Starbucks CEO Brian Nickel, who
I believe came over from Chipotle.
Speaker 2 (37:57):
I think they really did a bad job with their brand.
Speaker 1 (38:02):
You know.
Speaker 3 (38:02):
I think Starbucks used to be a place at Jet
you know, they had like the CDs in there. You know,
you could sit, you could have a cup of coffee.
Now they all look like you know, cement bricks while
they're trying to get you in and out for a
seven dollar coffee. You know, just look at Troy for example.
How many coffee spots are in downtown Troy. You know,
there's a lot of options out there now. And I
don't think it's as easy to invest in China as
(38:24):
it once was when they just when they said they
were gonna open five hundred stores a year about five
years ago, six years ago. So you know, I think,
you know, their competition, they don't have the loyalty I
think that they once had.
Speaker 2 (38:38):
I think it's it's a tough it's a tough business
to be in.
Speaker 1 (38:40):
I go in to McDonald's and there's a kiosk and
not a lot of seats anymore. And I get in
and out of there, and I don't go to McDonald's.
Life by a found soda once in a while, by
a found soda and but but I think you're right.
I think when you go into Starbucks before the pandemic,
you were going in there to meet people hang out.
(39:01):
I was never one to do that really, you know,
you know, do some homework, need a client out. Yeah,
And I think what happened with the pandemic is they
changed their model to be more like the McDonald's up today,
which is get your coffee and get out of there.
And what happened was, I think and they had they
had some issues with I think they had turnover and
employment and labor concerns there. Transaction time slowed precipitously. They
(39:26):
brought in Brian Nickel and and you know, he is
saying things are turning around. I think it's relatively richly valued,
does pay a decent dividend at two and a half
two and three quarters percent around there. So I think,
you know, I think you just got to if you
own Starbucks, and we do for our clients, I think
you just got to give it time and wait. It's
(39:46):
flat for the year, but it is down from you know,
probably twenty percent over the past two or three years.
I don't know where it falls on the spectrum of
how much we own, we own, we own enough. We
always own an if something's not doing as great as
you wanted to. But I think we've sold some. We
sold some. I think when Brian Nickel was appointed a CEO,
(40:08):
and don't quote me on this, for probably ninety three
to ninety four bucks to share. That was it maybe
within the past year or so, and right now it's
sitting at eighty seven. I think we took about a
third of our off the table. One stock that I
do like is Boeing.
Speaker 2 (40:22):
You know bo We own a good amount of Boeing.
Speaker 1 (40:24):
We own a good amount of Boeing. They're picking up
the pace. They lost a dollar twenty four share, expected
a dollar forty eight revenue came in above expectations. Kelly Orberg,
I don't know where he came I don't know if
he came over from Lockheed Martin. I forget exactly where
he came over from taking over the CEO. Changes take time,
but we're starting to see a difference in our performance
(40:45):
across the business. I think this is going to be
ge ESQ as far as what happens to Boeing over.
Speaker 3 (40:51):
And you know, I think it's what you know going
back to Starbucks. I think it's what Starbucks needs and
what Nike is in the is in the middle of doing.
Is know, kind of every once in a while, you
have to go over your business plan and you know,
who are we?
Speaker 1 (41:04):
You know what a mission?
Speaker 3 (41:06):
Right?
Speaker 2 (41:06):
What is that called?
Speaker 3 (41:07):
I forget what it's called, but you know you make
them in business all the time. Strategic plan, That's what
That's the word I was looking for, and I think
a lot of time.
Speaker 2 (41:15):
I think that's what they need right now.
Speaker 3 (41:17):
They need to really find out the value that they
provide to their customers Starbucks. Really, I think Boeing has
done a good job getting back to that Starbucks. I
think Nike's in the middle of it, I think, But
I think that's what Starbucks needs. But I think Boeing
is on the the other side of needing that, right.
I think they've done a good job. They've hired somebody
who knows what they're talking about from an engineering standpoint,
(41:39):
and you know, I'm pretty confident in uh, you know
where they're going.
Speaker 1 (41:44):
Having spent a lot of the show talking about interest
rates and also technology to a certain extent. Article by
Fred Imbert uh this has become the tech and everything
else stock market and and this Dan ives Wedbush, analyst
who's you know, kind of on CNBC a lot. He
(42:05):
wears bright Sue coats. And this was yesterday or was Thursday,
and he's talking about Microsoft and Meta platforms. Says, these
are some moments that will be remembered in the markets
for market for many years. Last night was one of
them with the eye popping results from Microsoft and Meta.
These massive results seen by Microsoft and Meta further validate
the use cases for an unprecedented spending trajectory for the
(42:28):
AA revolution on both the enterprise and consumer fronts. You know,
you know, so the tire of the arcle, he says you.
And then the first sentence in that article says, you
can't be cool in this market. If you're not in tech,
you can't be And I think you have to have
tech exposure.
Speaker 3 (42:43):
You have to have a good I mean, yeah, but
like if you're a passive investor or your own eat,
yes you do.
Speaker 2 (42:49):
You know who doesn't?
Speaker 3 (42:50):
Is kind of what I guess what I'm saying is
is if you know the SMP is what thirty five
percent technology, most people probably do, don't you think?
Speaker 1 (43:01):
Well, who doesn't? I think who doesn't.
Speaker 2 (43:04):
I mean there's a diction who doesn't and who's severely
underweight in it.
Speaker 1 (43:09):
I think you have to have a you know, generally
speaking in and around the market way between consumer discretionary.
Speaker 3 (43:15):
Yeah, I agree, you know, communication services, communication services and
technology percent.
Speaker 1 (43:21):
You know, people think of you know, communication services. You know,
you're you're looking at companies in there, like the number
one companies Meta and then I forget the Netflix, T Mobile,
so we're not communication services. We're not talking. It does
have ANT and T but the largest holding is.
Speaker 2 (43:36):
Met eighteen percent, Google in eighteen percent Meta.
Speaker 1 (43:40):
That's thirty six percent. You attack on eight percent Netflix,
and then Mobile and T Mobile. We're talking. Half of
it is in those four companies. Basically the two alphabets
things they have different classes of shares. So and that's
that's symbol. Xl C xl K is the technology and
communicationation services consumer discretionary.
Speaker 2 (44:03):
Xl Y xl Y.
Speaker 1 (44:04):
I think you're right. XLY is the other one. And
then the largest holdings in there are XY. It would
be Amazon, Tesla, home depot booking holdings, which is kind
of driven by technology, McDonald's TJXO. I think those those
are the three that you want to have forty percent
of your money or so in, or those are the
(44:26):
three sectors if you're using some individual securities along the way.
Outside of that, I think you look at NBL, you know,
kind of kind of drift away from from those specific sectors.
N OBL is very a dividend aristocrat at pro shares
dividend Aristocrats ETF pays a dividend of two point one percent.
(44:47):
You're to date, it's up three in a quarter. So
it's going to lag those other areas, but it's also
going to provide support in the down market. Largest holdings
there Emerson, Caterpillar, Albu, Moo, Franklin Resources, New Core, t
row Price. So you get a lot of the clarssification there,
uh as opposed to those other three that that I
just mentioned. Anyways, when we got left here, we got
(45:11):
about three three more minutes to go. Anything else you
want to talk about, I don't mean to put you
on the spot.
Speaker 3 (45:16):
No. I think the market needs, you know, the markets
right now at nine p fifty two, down about one
point six percent. I think it's kind of what the
market needs a little bit right now.
Speaker 2 (45:25):
I think it.
Speaker 3 (45:26):
I think we got a little bit too optimistic in
a lot of the speculative names. We saw that Figma,
you know, up two hundred and three hundred percent when
it was when at Ipo'. You see companies like Circle
ipo and kind of go crazy. So I think it's
a it's a justifiable reset.
Speaker 2 (45:45):
In the market.
Speaker 3 (45:46):
I'm not I'm not really worried right now about the
you know, medium long term implications of you know, just
this one day pullback on Friday, And I would look
at as a as a buying opportunity, you know, I
think we still have a strong consum We've had a
very very strong earning season, and we've also we're also
in August and September, which typically are the you know,
(46:08):
two or three worst months you know, on average, So
you know, I wouldn't take too much. I wouldn't look
too much into this pull back on Friday, and I
think that the market will continue to you know, to
do well six uh three six months from now.
Speaker 1 (46:25):
Yeah. I just think I think you always got a
very rarely do you get a green light that says
jump in, jump in. Most of them come hindsight. The
hard money is made at the lows, and the hard
money has made it. Actually, the hard money has made
at the highs, the easiest money has made at the lows.
I think that the pivot on the tariff was big.
(46:46):
Now we probably own maybe seven or eight percent cash,
maybe three or four percent in short short term bonds,
short term treasuries or ETFs B I L I B
T H I B T L. We mentioned those several
times here. So other than that, you know, you know,
one percent two percent pullback, I think you need a
little more than that to jump in. You know, you'll
get them. You'll get them on individual securities like you
(47:08):
So you'll see it with the Amazon today. So if
that stays down fifteen points, if you're listening, you know,
you might want to nibble at that for the longer
haul and uh and go from there. Yeah, you know,
I think you know, the tariff thing is going to
continue to to weigh on sentiment, and it's going to
continue to keep the question as to what the Fed
(47:30):
is going to do in the in the in the forefront,
uh for quite some time. You know, I don't know,
we just saw the numbers come out. President Trump, you know,
basically stated on next Thursday, this coming Thursday, countries that
(47:51):
are not, don't have it, don't have any type of
teriff agreement. The United States are going to have an
additional ten percent in tariffs, so that would include certainly
Canada and Mexico, two of our larger trading partners. So
I think I think we'll see that now we are
pretty much an economy that is kind of a self contained,
so that works out to our benefit. But I think
(48:13):
I think companies want to see that settled once and
for a while, so it is all we're looking at,
you know, for for our customers. August marks are thirty
sixty year in business manage eight hundred and sixty seventy
million dollars and also do a lot of planning for retirement,
social security planning, state planning. So give us a call
(48:36):
out two seven ninety four che because I know web
fagansset dot com. Have you got
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