August 22, 2025 • 34 mins
During his speech on Jackson Hole this morning, Fed Chair Jerome Powell opened the door to a September Rate Cut, stirring in major market rallies as traders ramp up the odds to nearly 90%. What did Chairmen Powell say and what does it mean for you? We'll break down the takeaways from Labor Market concerns to inflation signals and what might be next for intrest rates.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Good happy Friday afternoon to you. A good Friday afternoon
to you. Welcome to the John Sanchez showing his talk
seven to eighty K which joining me, of course, Jason
Gunn of the aforementioned how are you, my friend.
Speaker 2 (00:12):
I'm doing okay. I'm very happy it's Friday, and I'm
very happy. The markets were up a lot today.
Speaker 3 (00:17):
Yeah, a good day.
Speaker 1 (00:18):
As we say, when we have a big rally like
this kind of felt like the old dot com days,
didn't it, Except we didn't get a bunch of stock
split announcements. How about that one?
Speaker 3 (00:25):
That's fair? That's fair.
Speaker 2 (00:27):
Yeah, I mean, if there was definitely some pockets of strength,
I would say, as people are getting ready for rates
to go.
Speaker 1 (00:34):
Lower's exactly well, folks, this is exactly what we're going
to be discussing this afternoon. It looks like a September
rate cut is coming, exactly what Jason just said. Of course,
this was the highly anticipated morning the Jackson Hole speech
by Jerome Palell, Chairman of the Federal Reserve. What did
the chairman say? Well, he said pretty much everything the
(00:54):
market wanted him to say. And man, old man, did
we rally on the news and did everybody become one
hundred percent convinced that the chairman probably not by what
he wants to do, but for whatever reason, he's changed course,
and we're going to discuss it. Like things aren't really
all that bad, even though a week or two ago
I kind of hinted that they were kind of bad.
(01:14):
Is what he, you know, told us, And now two
weeks later, things aren't all that bad. And you know,
he used some verbiage that we'll explain to you just
a moment to basically come right out and otherwise summarize,
we're gonna have a rake cut in September. Now, I
normally wait to we get back from the first break
to tell you what this market did, but it's very
important let me let me share with all of you
(01:35):
exactly what it did do, because it was again an
incredible day to day eight hundred and forty six point
gain on the dow one point eight nine percent closed
it forty five thousand, six thirty one. Didn't feel like
to you that at one point we're going to hit
a thousand on the game.
Speaker 3 (01:51):
I don't know what thousand? What index are you speaking of?
Speaker 1 (01:53):
The dew?
Speaker 3 (01:55):
Oh the dow. I didn't look at it. I'm not
gonna lie. Yeah, but if so much for that? All right,
it's all highs. You know the SMP. I can tell you. Yeah,
I thought sixty sixty five hundred was coming, But.
Speaker 1 (02:07):
What's the SMP five hundred little companies right exactly?
Speaker 3 (02:12):
Bucket shops.
Speaker 1 (02:13):
Yeah, we uh, forty five thousand, six thirty one was
the closing level of the dowdy quick to that eight
hundred and forty six point game. We hit forty five thousand,
seven fifty seven, So yeah, we gave a little bit up,
but yeah, we were we were so close to a
thousand point gain day. I was hoping it was going
to hold the and hit that. But just back down
a little bit. That had been fun to talk about.
But at three ninety six increase on the Nasdaq one
(02:35):
point eight eight percent to close at twenty one thousand
and four ninety six, SMP hired by ninety seven points
one point five to two percent. But the star of
the day was not the DOWB, not the NASDAK, not
the SMP. But those are the little guys out there
that we call the Wrestle two thousand Small Cap Index
Wrestle two thousand, surging eighty eight points three point eighty
six percent gain to a level of two thousand, three
hundred and sixty one that followed through the small caps. Jason,
(02:59):
that was really something to show some conviction out there today.
Speaker 2 (03:03):
Yeah, and we've talked about it, right, the fact that
lower interest rates are good for companies that need to borrow. Right,
that's what the small caps are. A lot of them
are unprofitable, and so a lower interest rate environment will
help small caps. Other areas that you know, again we've
talked about biotech, right, that's a spot that they have
(03:24):
borrowing that they have to do. So those can be
helpful in the future lower interest rates. But the market did.
It went from cautiously optimistic to I would say optimistic
optimistic that rates are going lower, and that's why you
see those oversized move in some of those interest rates
sensitive areas. Even value held up pretty darn well today
just given the lower interest rate potential.
Speaker 1 (03:46):
Well, I thought the other thing that was interesting is
to really watch the somewhat consumer sensitive type of names
like Caterpillar. You know, it's more industrial, but the thought is, oh,
interest rates come down, companies are going to borrow to
go out and buy a you know a new roadscraper,
new dozer, new d nine blah blah blah blah blah.
That socks shot up seventeen dollars and sixty one cents
(04:06):
home depot. Well, interest rates are down, people are gonna
go borrow some money. I do a little he lock
or maybe a cash out refinance. And guess what they're
gonna go remodel their home home depot? What fourteen dollars
and seventy one cents? And then you take Goldman sacks
twenty six dollars and forty five cent rise up three
point sixty nine percent to seven forty two forty. Well,
guess what low interest rate environment, these banks can make
some good money. Ey, they're going to be borrowing more,
(04:28):
and b guess what, they're not going to be paying
you as much as you wanted. And so therefore that
spread again what they pay the depositor versus what they
can lend it out for. Uh, that is a big benefit.
But man, it was just right across the board. Is
fascinating to see all these different areas and how they
reacted to something that was Again, Jason, let's remind everybody
this was not a surprise, right, I'm gonna admit I
(04:50):
was wrong. I did not. I sent it on the
area yesterday. I did not think that Chairman Powell was
going to be as forthright as he was today. I
thought he was still going to go we're dad to
pretty much what he has said over and over again
at all the uh uh uh press conferences after the
Fed interest rate decision. I did not think he was
going to be, like I said, so forthright coming today
(05:10):
and really come out and tell the world, uh, we're
ready to do it. I want to just share this
comment before before you jump in, and we'll got it.
When this, when this, these few words, I want to say,
it's a full sentence. These few words were uttered out
of the Chairman's mouth. This is when things took off,
he said. The balance of risks appear to be shifting.
He said. It is a curious kind of balance that
(05:31):
results from markets slowing about the supply of and demand
for workers. That led to an unusual situation in which
in which the risk of worse unexpected labor marker outcomes
are rising, and if those risk materialize, they can do
so quickly in the form of sharply higher layoffs and
rising unemployment. So now you take the other side of things,
and you go, well, wait a minute here, okay, so
(05:53):
he is seeing problems in the labor market, as they've hinted,
he is worried about tariffs now and so on so forth.
So let's give the market. And you know, again this
is always the fun part. When you start talking about
rate cuts. You go, well, they cut rates because things
are slowing and they need to stimulate the economy. So
that's a negative. But yet their forever reason. I just
mentioned those stocks doing very well. People get excited because
(06:13):
hate lower barring costs and so on so forth. So
it's always a diverging dynamic when the FED starts lowering rates,
isn't it.
Speaker 3 (06:20):
It really is.
Speaker 2 (06:21):
And you know something that I was talking literally in
two different meetings today that I think is important.
Speaker 3 (06:26):
Right, Why does the FED raise rates? Right? Simply two reasons.
Speaker 2 (06:31):
The FED raises rates because they want to make savings
accounts more competitive than they were the day before. They
want people to park their money in something earning three
and a half four percent, et cetera, because it's a
very good return for a low level of risk, thus
pulling money out of the stock market, pulling money out
(06:52):
of spending that they would otherwise normally do. Sort of
changes a bit of that savings impulse. The other reason
is for firm like ours, so borrowing costs are higher, Right,
we're less inclined to go out and spend money to
go buy a shiny new Sanchez Gaunt Capital Management storefront
and hire five more people who will then go spend
(07:13):
their wages and so on and so forth and create
that compound effect in the market.
Speaker 3 (07:16):
That's why the FED raises rates.
Speaker 2 (07:18):
They're trying to slow down the economy and suck liquidity
out of the system. Oftentimes you get that benefit of
lower inflation because there's less cash out there chasing things.
Why are they lower rates the complete opposite, Right, they
want to push money into the system. They want get
folks where they're not making four and a quarter and
they're high yield anymore. A year from now, they're probably
(07:39):
making closer to three and they're like, wait a minute,
where are some other places that I can get a
better rate to return. It also makes companies want to
go out and spend and buy and expand and higher,
and that's why it helps employment over the longer term too.
So thinking of why the FED does the basis for
why they raise and or lower is helpful as to
(07:59):
power saying, look, I now have enough AMMO to say
that the job part is more of a concern. The
potential slow down the economy is now a higher concern
than inflation. We've gotten a little more color on what
tariffs look like and whether they're going to be as
much of a headwind as folks thought they'd be initially.
(08:20):
And it's a six to nine month lag effect before
any of these cuts get into the market, because you know,
FED cutting rates tomorrow, John and I are not going
to go buy that building tomorrow, right, We're gonna wait.
And then all of a sudden, we got more clients
who were saying, hey, I have these assets I want
to invest. They've been sitting in a savings account. We've
heard you guys do a great job. How do you
invest them for us? And then maybe we're like, you
know what, it's time to go think about expanding because
(08:41):
we've got all these clients. It doesn't happen overnight. It
takes time, and that's why the Fed's sort of starting
to signal now. And finally, Jackson Hole tends to be
a time when FED leaders when they want to make
a change in policy that is a reverse of some
kind or a shift, Historically, it's been a good time
(09:02):
to do it. So I think that's why he was pushed. Clearly,
Trump didn't hurt, but I think that's a reason why
they chose today to sort of I would say, decide
that the pivot is nigh right, right, Yeah.
Speaker 1 (09:16):
It's interesting. I want to go to the tariff discussion
because again, this has been something that everyone is watching closely.
Obviously the FED has been watching it closely. And he
went on to say that the effects of the tariff
and what they're having on consumer prices quote are now
clearly visible, and they're expected to accumulate in the months ahead.
The question for the FED is whether those price increases
(09:37):
will quote maturely raise the risk of an ongoing inflationary problem. Now,
this was the first time that pal suggested somewhat greater
confidence in a base case forecast that the effects of
higher good prices due to tariffs would be relatively short lived.
He cautioned that a quote one time increasing prices didn't
necessarily mean all at once, because it will take time
(09:58):
for tariffs increases to filter through the supply chain. But
you know, it's so strange, Jason. I think this is
one of those dichotomies where I mean I talked to
enough business owners I know you do too, and I've
yet to find one of them that says it is
cheaper to operate my business today than it was what
in April when the teriffs were announced. Right, If you
(10:20):
talk to any housewife, husband, anybody that goes to the
grocery store, not one of them are going to say, hey,
my prices are down a little bit, you know, since
the tariffs came in. So once again, it's one of
those dichotomies where with the I figure what the terminologies
maybe you remember where the the the government meaning the
FED sees things in one way, but the reality is
(10:42):
it's not really what the consumer is feeling, right.
Speaker 3 (10:44):
Yeah, it's a textbook versus real life, right yeah.
Speaker 1 (10:48):
Yeah, yeah, Wall Street versus Main Street.
Speaker 3 (10:50):
The data are yeah, exactly.
Speaker 1 (10:52):
Exactly, So it'll be interesting to see. Of course, a
lot of this was uh, we'll see. Of course, when
you have these big realies, we always like to costion
you don't get too overly excited because many times, of course,
it could be a shortcover rally. We'll see if there's
a follow through next week and see if that momentum continues,
But hopefully it does. I'm sure it won't be another
eight hundred and forty six point day or so. But
(11:14):
if we can just get one hundred two hundred points
here and continue to power higher, I think everybody will
be smiling. So we've fined up basically six key talking
points of the Powell Jackson whole speech. We'll start going
down those in more detail when we come back with
turned over to Kristen Snow. She's in the right now
traffic center. Hello, Kristin, Welcome back to the John Sanchez
(11:38):
Show on News Talk seven eighty KOH with Jason Gunn.
All right, here's how we finished, once again, an eight
hundred and forty six point game on the down one
point eight nine percent. Now z thatch grows three hundred
ninety six, one point eight eight percent, SMP five hundred
trading on the upside by ninety seven or one point
five to two, and they'll rustle the star. Three point
eight six percent increase again, pretty magnificent numbers. What happened well?
(11:58):
Once again? Chairman Palell spoke at the Jackson Hole Economic Symposium,
and he told the Street what they wanted, and that
is those very key words, as I said, with policy
as restrictive territory, the baseline outlook and the shifting balance
of risk may warrant adjusting our policy stance. Turned that
into English meaning we're gonna get us a September inch,
a straight cut based upon the interpretation by the Street
(12:20):
on that. So, you know, I think the next thing
to really move into Jason. I mean, you know, the
critics there and there were a lot of critics of this.
Not everybody is thrilled with his decision. I actually had
one FED member today saying, you know, she didn't this
was before not decision, but his choice of words. We
had one FED member earlier in the day basically indicate
(12:41):
that she was, you know, not in the camp of
wanting to cut rates, that she wanted to kind of
set back like many of the other FED members, just
like the dot plot showed and and you know set back,
and you know, look at the economic data coming in.
So it's going to be interesting to see the the
pessimists and the others out there that are like, well,
(13:03):
you know, he should have waited, did he get pressured
by Trump to do this. There's gonna be a lot
of controversy bottom line, because again, this wasn't a slam
dunk where everybody wanted this retcut.
Speaker 2 (13:12):
And it's not always the case that it's a slam dunk, right,
I mean, you tend to have discent on both side.
Speaker 1 (13:18):
Right.
Speaker 2 (13:18):
He had Waller and I forget her name a Bowman
who were both you know, a month ago, stating that
they would have done different things, and so on and
so forth.
Speaker 3 (13:28):
So it's a it's a slow process. Did Trump affect it? Sure?
Did Trump affect it as much as some would say?
Probably not? Right.
Speaker 2 (13:40):
I think the data has presented itself in the sense
that things are slowing, right. I think I think the
average job was, like gain was thirty one thousand.
Speaker 3 (13:50):
I think not a big number.
Speaker 1 (13:52):
Right.
Speaker 2 (13:52):
You're seeing a deceleration, and the tariffs could be part
of it, right, And that's some of the pushback that
say tariffs don't cause inflation. Well, they do unless you
cause a recession, right, because costs go up and people
can't buy any the things, and then people lose their
jobs because companies aren't able to sell as much as
(14:14):
they were before. And there's all that part of it too,
you know. So it's just how you want to just
state that tariffs don't cause inflation, right, So it's a
the Fed has enough data now they're at four and
a quarter to four and a half. Inflation has been
coming down closer to target. Jobs are very much decelerating,
(14:36):
and there's that lag effect. It takes time. Again, we
just talked about it in the earlier segment. He doesn't
want to be too late as well, he doesn't want
to be too early. But at this point, like I've
said before, if you got Trump yelling, you know that
you're a knucklehead and you're on the margin at this point.
If he does cut, I think Trump's gonna about face
(14:56):
in three months and say that you shouldn't cut rates.
Speaker 3 (14:58):
You're an idiot, exactly right.
Speaker 2 (14:59):
So you know, again, very soon he'll be sort of
a shadow person. Anyway, once Trump decides who he's gonna choose,
I think this lets him control the direction now and
make it his decision on paper, then someone two months
from now saying oh, well I'm gonna cut, and then
him cutting afterwards. Right, So it may have been part
(15:21):
of that too. All make the choice at least feel
as if I did, versus have it forced upon me
for some reason.
Speaker 3 (15:28):
Right, again, just my thought.
Speaker 1 (15:30):
And and you know, you bring up a point that
I was gonna bring up also, and that is you
sit there and you go, well, maybe he just did
this because he knows he's out and it's like, what
the hell, Let's just go ahead and you know, get
the market a rate. Guy, don't. I don't think that's
the case, But you don't out there thinking that.
Speaker 2 (15:44):
Also, I think the data leads to this decision. Right,
the market would are already pricing in a you know,
seventy percent probability. It's not like this came out a
left field. It's just now they're agreeing. And typically when
the market and the economy or agreen, the FED tends
to follow.
Speaker 3 (16:01):
And so I think that's a lot of what we saw.
Speaker 1 (16:04):
Yeah, and once again he's indicated that the terror related
costs are going to continue to accumulate in the economy,
but for the first time suggest a greater confidence that
the effects of higher good prices would be short lived.
Time will only tell. They'll admit they don't know, No one,
we've never been in a terror situation like this. Before.
So that's one thing that we'll continue to watch. So
(16:24):
let's kind of talk about digest a little bit as
far as the market reaction. So I told you what
the endses did a moment ago. Here's a couple of
little tidbits of information for you, so you know, coming
into today, Jason, let's not forget. Let's remind everybody we
had five consecutive losing days on the S and P
five hundred. That's the longest losing streak since January. So
that's one big positive. Of course, snapping that the Dow
(16:47):
closing again, as I said, up eight forty six to
forty five, six thirty one. That was a record finish
for the Dow. You don't even you know, high five
me or anything, because my doubt find I had.
Speaker 2 (16:56):
The mess with the Dow earlier. You know, well when
I got when I get a fastball, I get a you.
Speaker 1 (17:01):
Know, there you go, there you go. Uh, cryptos were
doing did extremely a bitcoin today at four percent to
one hundred and sixteen thousand, sixty fifty eight ether surging
fourteen percent to a new all time high. Clothes a
four thousand, eight hundred and forty five. I mean on
and on it. Oh. By the way, folks, by the way,
you know the government got his FICO score check today.
(17:23):
That's right, double a rating they maintained with S and P.
So hey there, what do you think that's probably what
about a seven forty seven to fifty equal then to
human being FYCOS score?
Speaker 3 (17:35):
Good job government, not.
Speaker 1 (17:36):
Perfect, but good enough to still be investment grade out alone.
Speaker 3 (17:39):
Exactly.
Speaker 1 (17:40):
Yeah, all right, all right, we come back. We'll continue
our discussion on today's big interest rate. To take away
from Jerome Heal speech in Jackson Hole, let's turned over
to Jack Saban. He's got news, traffic and weather. Hey, Jack,
welcome back to the John Sanchez Show, one News Talk
seven eighty k oh with Jason got happy Friday all
of you once again. A heck of a rally today,
(18:01):
eight forty six game on the Dow with three ninety
six on the Nasdaq and hire by ninety seven on
the S and P five hundred. Well, it looks like
a September rate cut is going to happen. That was
the takeaway of Chairman Palace speech today at Jackson Hole.
Before we get to a really interesting topic which is
really all you care about, and that is how is
this going to impact me? Right? What's going to be
the personal impact in my financial life? Now that the
(18:24):
Fed has given us one, maybe it's the beginning. There's
still a lot of controversy whether we're going to get more.
But now that the Fed is pretty well convincing everybody
that we're going to get this cut in September based
on Girman Palace speech today, what is it really going
to mean for you? But before we get to that,
let's talk a little bit about Jason. Something that happened
this afternoon also, and that is it's been rumored for
(18:45):
a while, but it now looks like it's come true,
and the President saying the government is now going to
take a nearly ten percent stake in Intel. That of
course caps a two week visiting frenzy by the CEO
of Intel, who remember, just a few weeks ago was
criticized by the President that he needed to be fired
because he has Chinese ties, he's a Chinese descent himself.
(19:07):
But now with their buddies, mister Tam came back to
the White House today. I think this is the number
two or number three trip in the last week or so,
and so the government, Yeah, they're gonna take over a
ten percent of the of Intel. And Trump said the
following He says, I said I think you should pay
us ten percent of the company. And he said, yes,
(19:29):
what can I what can I? Negotiator? Are you, mister president?
Why don't me say fifty percent? Or you know what?
Sign the company? Yah? You got exactly. You guys haven't
done much. Signed the whole company over. And we as
the government, will take this over and just take it
off your hands, mister tam That's all it should work. Now.
You know, we touched on this beginning of the week, Jason,
when this story was rumored. And remember, folks, we go
(19:52):
back to twenty twenty two, right when the Chip sack,
when the Biden administration created the Chip sack, and they
told all of these companies, hey, we're gonn to give
you some money, right, these are grants use semiconductor company.
We're gonna give you grants to again, just like Trump
wanted to do, or wants to do, build factories here,
hire great people of America and so on and so forth.
So here's some money to go do that. Remember what
(20:13):
a great, great run up we saw in the chip
sector in that point well, come to find out, like
anything with the government, it's not kind of what it seems.
It seemed like there was some oh we'll call it
a little fine print that some of these companies didn't understand.
And that is because the government lent them or granted
them this money, the government can basically come in and
take over a portion of the company. So the now
(20:36):
we're starting to wonder how many other chip companies is
Trump gonna want to, you know, maybe go after I'm
I got to find a list of you know, what
companies really got it. You know, I didn't the vidiot
get some of that money that AMD. But you know, hey,
the governments starting to develop a heal of portfolio adjacent. Right,
we have what knpon steel now and that the US
steel deal. We got a piece of that. And now
(20:57):
we got a piece of Intel. I mean, we're gonna
become quite the soft wolf here in the US.
Speaker 3 (21:01):
We're nor China, yeah and everything. I think it's just Intel.
Speaker 2 (21:08):
As far as the Semis are concerned, right, they need
the money. I think they're in a spot where they've
been behind for a long time. I don't think in
video is going to be handed out a ten percent
stake anytime soon. Micron was another company that was thrown
around as potentially and again I don't think they're in
a situation that they need government intervention. But Intel's in
(21:29):
a tough spot it Uh, I hope it's not the
beginning of us, you know. I mean again, ironically, now
we all own Intel, which is cool. You know, you
didn't buy it, but in your portfolio folks, as an
American citizen, you know on Intel. So that's uh, you
got that going for you. So now I think that
it's just probably specific to them. I'm hoping, but you know,
(21:52):
with Trump, you never know.
Speaker 1 (21:54):
Right right, Well, you're also going to be part of
a big tech group soft Bank, which again is well
I can't they're a hedge Japanese zone, but they're yeah,
they're head fund, but a lot of Asian money, yeah,
a lot of Asian money. Yeah, yeah, exactly. The company
they kicked in about two billion dollars in cash. Trying
(22:17):
to see the date here wasn't long ago?
Speaker 2 (22:18):
Yeah, it stock went up six percent that day they
kicked in like two billion dollars.
Speaker 1 (22:22):
Yep, yeah, two billion dollars. I just said, yeah, and
then you know, Intel's up went up five and a
half percent today five point five three to be exact
dollar thirty gain to twenty four eighty and then the
after hours is up another one percent or twenty six cents.
So we'll see if there's others to follow as the
saying goes. You know, again, I think Trump would like
to see a nice, big fat sovereign wealth fun if
you're not familiar with that term, that's what a lot
(22:43):
of countries, like Saudi Arabia and many of these others,
that's what they have. They take their excess capital in
the country and they almost create like a like their
own mutual fund, their own hedge fund. Whatever. They'll go
out and they'll take steaks and companies, they'll try to
get a seat on the board if their stake's large enough,
so on and so forth. So we'll see what ends
up happening with this strategy going forward. But I think
the President does like this idea of, you know, having
(23:05):
ownership in some of America's companies, and especially an iconic
company like Intel. Yes, they have struggle, but they're still Intel, right,
It's been around a long time.
Speaker 3 (23:13):
Yeah, all right, that was interesting, you know as far
as that node. But you saw.
Speaker 2 (23:18):
I mean in Nvidia one hundred and seventy eight bucks.
I think it closed that today. Semis in general did
quite well, so obviously Intel helped the space. But there's
you know, it seems like every time those things fall,
there's buyers that come swooping in, especially on weakness and
a strong day on across the board.
Speaker 1 (23:37):
Let's say what the commodities did, and then go to
the bond market that we're going to tie this into again.
What is this potential rateket that we're going to see
in September? What does it mean to you personally? So
seventeen cent game on oil sixty three sixty seven a
barrel gold up thirty seven dollars and ten cents threeenty four,
eighteen eighty seven basis point drop on the tenure treasure
yield today four and a quarter or four point twenty
six was our close down seven basis for the week.
(24:01):
Let's talk volatility, Jason, I think this is a good
time to bring out the professor's side of you and
talk about how the market when you have a day
like this where you get a little bit of an uptick,
market goes up a couple hundred points and then another two,
another four, another six, and you know it's the perpetual
buying which also works on the downside. But this was
a prime day to learn about that side of it.
Speaker 2 (24:21):
Yeah, this is what often referred to as a volatility smash.
Right where the event was Jackson Hole, the event was
the speech, and the fact that it was I would
say market favorable or not bad news created. I mean,
the VICS index was down almost fifteen percent today to
fourteen twenty two. And now we start to get into
(24:43):
some of those complacency levels right as you're trading fourteen
thirteen twelve. Those tend to be times when the market
gets overly excited and overly frothy. I don't think we're
there yet, but the act of the event occurring creates
the need to re use hedges. Right the potential bad
(25:03):
news is now gone. If I'm someone who owns puts,
I need to now remove those and try to get
whatever money I can back for what I spent on
that insurance policy. And the act of closing that option
makes the person I bought it from need to go
buy the market to go reduce the hedge they had on.
So this type of a day fed on itself, just
(25:25):
given the fact that volatility continued to decay all day long,
and that event risk continues to decay, and that's why
the market popped just like it did, and you saw
such a big drop in volatility. So we're not at
complacency levels yet, but here at all time highs and
EVIX at fourteen is where you at least start to
try to think of ways to be a little less aggressive.
(25:50):
Not saying, you know, like we've said earlier in the week,
still of the expectation that the market's higher than here
at the end of the year, but we could see
some you know, near term GI if you get anything
less than amazing news, I would say over the next
week or two with inflation data. We've got PCEE next week.
Again we'll touch on a little later in the show,
(26:11):
but there's a fair amount of data now to you know,
still cause some i'd say, could angst for the market.
Speaker 1 (26:19):
Oh yeah, definitely, all right. You speaking of the year
to date, here's where we sit NAASAC on the year
today basis now through today's close. This is of course,
now we'p eleven point three percent, SMP's hired by ten
percent year to date, down's up seven point three and
the Russell two thousand gaining five point nine percent. So
looking good, looking good, looking good? All right, let's get
to our topic. What are the benefits to you, as
(26:41):
the quote the consumer when we get into these conditions
like this for the Fed. Again, we don't know if
this is one and done, or is this one of
two and then done or what of mini and done?
Only time will tell. But what we are confident about
is that we will get this FED cut in September.
So what does this mean for you? So first thing,
of course we want to touch on is the market
and slash mortgage rates. Right, so mortgage payments. Of course,
(27:04):
as you hear us talk on Tuesdays and Thursdays and
even Jason and I periodically, the bond market does control
mortgage rates. Right, It's not the Fed. Remember what if
we get the September cut with this is talking about,
it's the FED funds rate, that is the rate that
banks charge one another to borrow money overnight. The rest
of the rates the bond market, et cetera. They should
(27:24):
follow suit. And that's why we saw bond yields coming down.
Like I said, seven basis points on the tenure. Now,
so let's talk the mortgage side of things. What most
of you care about. This is again should be a
very very powerful and this is what we said on
the show with Corey and Dwight on Tuesday. This is
going to potentially be a very powerful move in the
in the housing market as far as mortgages and things
(27:44):
are concerned. And today was indicative of that seven basis
point decline on the ten year treasuries I said, thirty
year mortgage today according to Mortgage News Daily, damn ten
basis points. Ten basis points in one day. Six fifty
two is the national average for the thirty year. But
Hight was sitting here. You go, hey, John, Jason, look
at that fifteen year broke the six percent mark today
(28:06):
down to a yield down or an interest of five
point nine percent. So this is again the key psychologically,
get these rates below that six percent. We've done it now.
This is the second time in the last week or
so the fifteen years got there. Now, if we can
get this thirty year down that low six percent, Jason,
I think we could really begin to see some very
very strong buying activity, even though it's you know, as
(28:28):
Corey said, July first typically is the peak of the
buying season, and then it starts to taper off until
spring rolls around the next year. But I think this
time could be different if these mortgage rates continue to
drop based upon the anticipation of more interest rate cuts
from the FED. So lower barring cost always going to
feel good. Any place you want to add to.
Speaker 2 (28:45):
That, I had a question through email, but also if
anyone has any questions that you want us to answer
on air, you can text our office seven seven five
eight hundred eighteen oh one through our normal line. Just
text any questions you have, keep them cleaning right in
front of it, and now we'll help you.
Speaker 3 (29:03):
We'll help you.
Speaker 2 (29:03):
Answer any questions you have that we're not covering today.
But no, I think anyone who thinks the rates are
gonna have a three handle on them, probably on mortgages,
please don't wait for that. But again, you wouldn't be
surprised to see at the end of this cycle maybe
high fours, low fives if FED continues to move in
this at least desired direction over the next twelve to
(29:24):
eighteen months. Right.
Speaker 1 (29:25):
Absolutely, And the last point we'll mentioned on this lower
baring costs, we touched on the mortgage but of course
what we should see but don't. It's not gonna be much. Remember, folks,
I get, I can't out emphasize this enough. I touched
on this with Corey and Dwight on Tuesday. Again, we
were talking about rates. Remember, the bond traders are going
to ultimately deterimin whati your mortgage rate's going to be,
how they trade the Fanny Maize and Jenny Mays and
all those mortgage related bonds. But also, we could come
(29:47):
out on Monday. We could come out on Monday and
you could see bond yields back up, you could see
mortgage rates back up. It's just the reaction that we're
seeing today because again, these bond traders are looking at
so many other factors. They don't really care so much
about what the Fed is doing, the rate the banks
charge one another. But a lot of times you will see,
like I said, if the lenders out there, banks, credit
(30:08):
card companies, auto loan companies, et cetera, think hey, we're
in a declining interest rate environment, we better start lowing rates,
then we could see that. I think it's going to
be interesting, Jason, to see if we are going to
see the aforementioned actually dropping rates or are they not
going to drop rates to try to make a little
bit more interest income on you know, meaning what they
charge everybody to offset tariffs, and again somewhat of a
slowing economy. So I think that's going to be an
(30:29):
interesting divergence that we see going for. We'll talk about
access to credit just real quickly when we come back,
and then we'll get into what the week ahead has
in store for us. Wrapping up with Kristen Snoan the
Right Now Traffic Center. Hello Kristen, welcome back to the
John Sanchez Show on News Talk seven to eighty k which.
If Jason and I and the team can be of
any service to you, please don't hesitate to call our
(30:49):
office at seven seven five eight hundred eighteen oh one,
send us an email at office at Sanchez gone Gaunt
dot com and we will immediately respond to you and
get you on our calendar by all means. All right, So,
great day, very solid on the year today basis numbers now,
but it's all behind us now. We must rub the
crystal ball, look forward to next week and begin to
(31:11):
tackle this. So Jason, let's break down our earnings forecast,
which I'll take care of it. We'll do that one
first because it's a pretty light one, and then you'll
bring us up to date on what we have as
far as the earnings numbers or excuse me, as far as
the economic numbers for next week. So earnings wise, really
nothing on Monday Tuesday looks pretty light and nothing of
any significant. So we move on to the twenty seven.
(31:32):
You got some retailers still Trickling and Abracambri and Fitch
and Cohle's Mastercraft. Yeah for you voters out there, and
William soon Oma. Those are going to be before the bell
on the twenty seventh, that I said on Wednesday, after
the bell the biggie, you've got Navidio and then Snowflake
Urban Outfitters five below, etc. So Nividia, of course will
be the highlight. We get into Thursday, more retailers Best
(31:55):
Buy before the bell, Dick's Sporting Goods, Dollar General, and
then after the bell on Thursday, Yeah, got Den that's
a big one, Marvel. That's about it, and then really
nothing on Friday, Ali Baba for those of you that
like to invest in that company, that'll be before the bill.
So we're almost done with it. We're almost made it
through another earning season. Yeah, the economic scited.
Speaker 2 (32:15):
Other than Nvidia, right kind of you know that one
will be very important. We'll spend up clocks and all
kinds of stuff setting up for that new home sales
on Monday, durable goods orders on Tuesday. I think that's
going to be one that's very highly watched streets. Looking
for a drop of four percent on headline flat on
core ex transportation, consumer confidence. That numbers got inflation data
(32:38):
in it. That's also on Tuesday. On Thursday, we'll get
GDP just an update there. The second estimate is at
three point one percent initial claims.
Speaker 3 (32:47):
They've been taken higher.
Speaker 2 (32:49):
Two hundred and thirty eight thousand was the estimate two
thirty six prior. And then on Friday, big one pce
fed's favorite inflation. That'll give them a little more color
as to direction of things.
Speaker 1 (33:01):
Jesser peal to go. Uh oh, I should have said
that last Friday.
Speaker 2 (33:06):
Yeah, so personal income, personal spending, Michigan confidence. But yeah,
I think PC is gonna be the big one in video,
as you mentioned, gonna be a mammoth one. Durable goods,
any sort of deceleration would give tailwind to rate cuts.
Any sort of shock on the upside to inflation may
cause a little bit of market angst.
Speaker 1 (33:24):
Right right exactly. Yeah, So not gonna be too bad.
That gonna be too bad, as like I said, not
like it was this week, coming into all the major
important reports. Bottom line right now, what is Wall Street
telling us? No, it's easy to say we're in a
bullish mode right now after today's big run up, but
it's too soon to say that. Again, we snapped five
days of losing going on on the S and P
five hundred. Again, things are changed potentially from today. Enjoy
(33:47):
the weekend. Let's see what things look like on Monday.
Make sure this was in a big shortcover rally, and
then roll up to sleeves and get to work next Monday. Jay,
it'll be here before we know it.
Speaker 3 (33:56):
Can't wait.
Speaker 1 (33:57):
I hear you, all right, God, bless everybody. Thanks Jake, Thanks, everybody.
Will do it again on Monday on the John Sanchez Show.
Have a great weekend. This program was sponsored by Sanchez
Gaunt Capital Management, LLC. The material in this program was
intended as general information only and should not be taken
as specific investment tax or legal advice. None of the
information on this broadcast was intended to be a solicitation
(34:18):
for the purchase or sale of any security. Further information
is available by contacting John at Sanchezgaunt dot com or
seven seventy five eight hundred one eight oh one. John
Sanchez offers securities and advisory services through Independent Financial Group LLC,
a registered broker Dealer and Investment Advisor member FINRA SIPC.
Securities offered only in States. John Sanchez is registered in
(34:41):
Sanchez Gaunt Capital Management LLC. In Independent Financial Group LLC
are unaffiliated entities.
Good happy Friday afternoon to you. A good Friday afternoon
to you. Welcome to the John Sanchez showing his talk
seven to eighty K which joining me, of course, Jason
Gunn of the aforementioned how are you, my friend.
Speaker 2 (00:12):
I'm doing okay. I'm very happy it's Friday, and I'm
very happy. The markets were up a lot today.
Speaker 3 (00:17):
Yeah, a good day.
Speaker 1 (00:18):
As we say, when we have a big rally like
this kind of felt like the old dot com days,
didn't it, Except we didn't get a bunch of stock
split announcements. How about that one?
Speaker 3 (00:25):
That's fair? That's fair.
Speaker 2 (00:27):
Yeah, I mean, if there was definitely some pockets of strength,
I would say, as people are getting ready for rates
to go.
Speaker 1 (00:34):
Lower's exactly well, folks, this is exactly what we're going
to be discussing this afternoon. It looks like a September
rate cut is coming, exactly what Jason just said. Of course,
this was the highly anticipated morning the Jackson Hole speech
by Jerome Palell, Chairman of the Federal Reserve. What did
the chairman say? Well, he said pretty much everything the
(00:54):
market wanted him to say. And man, old man, did
we rally on the news and did everybody become one
hundred percent convinced that the chairman probably not by what
he wants to do, but for whatever reason, he's changed course,
and we're going to discuss it. Like things aren't really
all that bad, even though a week or two ago
I kind of hinted that they were kind of bad.
(01:14):
Is what he, you know, told us, And now two
weeks later, things aren't all that bad. And you know,
he used some verbiage that we'll explain to you just
a moment to basically come right out and otherwise summarize,
we're gonna have a rake cut in September. Now, I
normally wait to we get back from the first break
to tell you what this market did, but it's very
important let me let me share with all of you
(01:35):
exactly what it did do, because it was again an
incredible day to day eight hundred and forty six point
gain on the dow one point eight nine percent closed
it forty five thousand, six thirty one. Didn't feel like
to you that at one point we're going to hit
a thousand on the game.
Speaker 3 (01:51):
I don't know what thousand? What index are you speaking of?
Speaker 1 (01:53):
The dew?
Speaker 3 (01:55):
Oh the dow. I didn't look at it. I'm not
gonna lie. Yeah, but if so much for that? All right,
it's all highs. You know the SMP. I can tell you. Yeah,
I thought sixty sixty five hundred was coming, But.
Speaker 1 (02:07):
What's the SMP five hundred little companies right exactly?
Speaker 3 (02:12):
Bucket shops.
Speaker 1 (02:13):
Yeah, we uh, forty five thousand, six thirty one was
the closing level of the dowdy quick to that eight
hundred and forty six point game. We hit forty five thousand,
seven fifty seven, So yeah, we gave a little bit up,
but yeah, we were we were so close to a
thousand point gain day. I was hoping it was going
to hold the and hit that. But just back down
a little bit. That had been fun to talk about.
But at three ninety six increase on the Nasdaq one
(02:35):
point eight eight percent to close at twenty one thousand
and four ninety six, SMP hired by ninety seven points
one point five to two percent. But the star of
the day was not the DOWB, not the NASDAK, not
the SMP. But those are the little guys out there
that we call the Wrestle two thousand Small Cap Index
Wrestle two thousand, surging eighty eight points three point eighty
six percent gain to a level of two thousand, three
hundred and sixty one that followed through the small caps. Jason,
(02:59):
that was really something to show some conviction out there today.
Speaker 2 (03:03):
Yeah, and we've talked about it, right, the fact that
lower interest rates are good for companies that need to borrow. Right,
that's what the small caps are. A lot of them
are unprofitable, and so a lower interest rate environment will
help small caps. Other areas that you know, again we've
talked about biotech, right, that's a spot that they have
(03:24):
borrowing that they have to do. So those can be
helpful in the future lower interest rates. But the market did.
It went from cautiously optimistic to I would say optimistic
optimistic that rates are going lower, and that's why you
see those oversized move in some of those interest rates
sensitive areas. Even value held up pretty darn well today
just given the lower interest rate potential.
Speaker 1 (03:46):
Well, I thought the other thing that was interesting is
to really watch the somewhat consumer sensitive type of names
like Caterpillar. You know, it's more industrial, but the thought is, oh,
interest rates come down, companies are going to borrow to
go out and buy a you know a new roadscraper,
new dozer, new d nine blah blah blah blah blah.
That socks shot up seventeen dollars and sixty one cents
(04:06):
home depot. Well, interest rates are down, people are gonna
go borrow some money. I do a little he lock
or maybe a cash out refinance. And guess what they're
gonna go remodel their home home depot? What fourteen dollars
and seventy one cents? And then you take Goldman sacks
twenty six dollars and forty five cent rise up three
point sixty nine percent to seven forty two forty. Well,
guess what low interest rate environment, these banks can make
some good money. Ey, they're going to be borrowing more,
(04:28):
and b guess what, they're not going to be paying
you as much as you wanted. And so therefore that
spread again what they pay the depositor versus what they
can lend it out for. Uh, that is a big benefit.
But man, it was just right across the board. Is
fascinating to see all these different areas and how they
reacted to something that was Again, Jason, let's remind everybody
this was not a surprise, right, I'm gonna admit I
(04:50):
was wrong. I did not. I sent it on the
area yesterday. I did not think that Chairman Powell was
going to be as forthright as he was today. I
thought he was still going to go we're dad to
pretty much what he has said over and over again
at all the uh uh uh press conferences after the
Fed interest rate decision. I did not think he was
going to be, like I said, so forthright coming today
(05:10):
and really come out and tell the world, uh, we're
ready to do it. I want to just share this
comment before before you jump in, and we'll got it.
When this, when this, these few words, I want to say,
it's a full sentence. These few words were uttered out
of the Chairman's mouth. This is when things took off,
he said. The balance of risks appear to be shifting.
He said. It is a curious kind of balance that
(05:31):
results from markets slowing about the supply of and demand
for workers. That led to an unusual situation in which
in which the risk of worse unexpected labor marker outcomes
are rising, and if those risk materialize, they can do
so quickly in the form of sharply higher layoffs and
rising unemployment. So now you take the other side of things,
and you go, well, wait a minute here, okay, so
(05:53):
he is seeing problems in the labor market, as they've hinted,
he is worried about tariffs now and so on so forth.
So let's give the market. And you know, again this
is always the fun part. When you start talking about
rate cuts. You go, well, they cut rates because things
are slowing and they need to stimulate the economy. So
that's a negative. But yet their forever reason. I just
mentioned those stocks doing very well. People get excited because
(06:13):
hate lower barring costs and so on so forth. So
it's always a diverging dynamic when the FED starts lowering rates,
isn't it.
Speaker 3 (06:20):
It really is.
Speaker 2 (06:21):
And you know something that I was talking literally in
two different meetings today that I think is important.
Speaker 3 (06:26):
Right, Why does the FED raise rates? Right? Simply two reasons.
Speaker 2 (06:31):
The FED raises rates because they want to make savings
accounts more competitive than they were the day before. They
want people to park their money in something earning three
and a half four percent, et cetera, because it's a
very good return for a low level of risk, thus
pulling money out of the stock market, pulling money out
(06:52):
of spending that they would otherwise normally do. Sort of
changes a bit of that savings impulse. The other reason
is for firm like ours, so borrowing costs are higher, Right,
we're less inclined to go out and spend money to
go buy a shiny new Sanchez Gaunt Capital Management storefront
and hire five more people who will then go spend
(07:13):
their wages and so on and so forth and create
that compound effect in the market.
Speaker 3 (07:16):
That's why the FED raises rates.
Speaker 2 (07:18):
They're trying to slow down the economy and suck liquidity
out of the system. Oftentimes you get that benefit of
lower inflation because there's less cash out there chasing things.
Why are they lower rates the complete opposite, Right, they
want to push money into the system. They want get
folks where they're not making four and a quarter and
they're high yield anymore. A year from now, they're probably
(07:39):
making closer to three and they're like, wait a minute,
where are some other places that I can get a
better rate to return. It also makes companies want to
go out and spend and buy and expand and higher,
and that's why it helps employment over the longer term too.
So thinking of why the FED does the basis for
why they raise and or lower is helpful as to
(07:59):
power saying, look, I now have enough AMMO to say
that the job part is more of a concern. The
potential slow down the economy is now a higher concern
than inflation. We've gotten a little more color on what
tariffs look like and whether they're going to be as
much of a headwind as folks thought they'd be initially.
(08:20):
And it's a six to nine month lag effect before
any of these cuts get into the market, because you know,
FED cutting rates tomorrow, John and I are not going
to go buy that building tomorrow, right, We're gonna wait.
And then all of a sudden, we got more clients
who were saying, hey, I have these assets I want
to invest. They've been sitting in a savings account. We've
heard you guys do a great job. How do you
invest them for us? And then maybe we're like, you
know what, it's time to go think about expanding because
(08:41):
we've got all these clients. It doesn't happen overnight. It
takes time, and that's why the Fed's sort of starting
to signal now. And finally, Jackson Hole tends to be
a time when FED leaders when they want to make
a change in policy that is a reverse of some
kind or a shift, Historically, it's been a good time
(09:02):
to do it. So I think that's why he was pushed. Clearly,
Trump didn't hurt, but I think that's a reason why
they chose today to sort of I would say, decide
that the pivot is nigh right, right, Yeah.
Speaker 1 (09:16):
It's interesting. I want to go to the tariff discussion
because again, this has been something that everyone is watching closely.
Obviously the FED has been watching it closely. And he
went on to say that the effects of the tariff
and what they're having on consumer prices quote are now
clearly visible, and they're expected to accumulate in the months ahead.
The question for the FED is whether those price increases
(09:37):
will quote maturely raise the risk of an ongoing inflationary problem. Now,
this was the first time that pal suggested somewhat greater
confidence in a base case forecast that the effects of
higher good prices due to tariffs would be relatively short lived.
He cautioned that a quote one time increasing prices didn't
necessarily mean all at once, because it will take time
(09:58):
for tariffs increases to filter through the supply chain. But
you know, it's so strange, Jason. I think this is
one of those dichotomies where I mean I talked to
enough business owners I know you do too, and I've
yet to find one of them that says it is
cheaper to operate my business today than it was what
in April when the teriffs were announced. Right, If you
(10:20):
talk to any housewife, husband, anybody that goes to the
grocery store, not one of them are going to say, hey,
my prices are down a little bit, you know, since
the tariffs came in. So once again, it's one of
those dichotomies where with the I figure what the terminologies
maybe you remember where the the the government meaning the
FED sees things in one way, but the reality is
(10:42):
it's not really what the consumer is feeling, right.
Speaker 3 (10:44):
Yeah, it's a textbook versus real life, right yeah.
Speaker 1 (10:48):
Yeah, yeah, Wall Street versus Main Street.
Speaker 3 (10:50):
The data are yeah, exactly.
Speaker 1 (10:52):
Exactly, So it'll be interesting to see. Of course, a
lot of this was uh, we'll see. Of course, when
you have these big realies, we always like to costion
you don't get too overly excited because many times, of course,
it could be a shortcover rally. We'll see if there's
a follow through next week and see if that momentum continues,
But hopefully it does. I'm sure it won't be another
eight hundred and forty six point day or so. But
(11:14):
if we can just get one hundred two hundred points
here and continue to power higher, I think everybody will
be smiling. So we've fined up basically six key talking
points of the Powell Jackson whole speech. We'll start going
down those in more detail when we come back with
turned over to Kristen Snow. She's in the right now
traffic center. Hello, Kristin, Welcome back to the John Sanchez
(11:38):
Show on News Talk seven eighty KOH with Jason Gunn.
All right, here's how we finished, once again, an eight
hundred and forty six point game on the down one
point eight nine percent. Now z thatch grows three hundred
ninety six, one point eight eight percent, SMP five hundred
trading on the upside by ninety seven or one point
five to two, and they'll rustle the star. Three point
eight six percent increase again, pretty magnificent numbers. What happened well?
(11:58):
Once again? Chairman Palell spoke at the Jackson Hole Economic Symposium,
and he told the Street what they wanted, and that
is those very key words, as I said, with policy
as restrictive territory, the baseline outlook and the shifting balance
of risk may warrant adjusting our policy stance. Turned that
into English meaning we're gonna get us a September inch,
a straight cut based upon the interpretation by the Street
(12:20):
on that. So, you know, I think the next thing
to really move into Jason. I mean, you know, the
critics there and there were a lot of critics of this.
Not everybody is thrilled with his decision. I actually had
one FED member today saying, you know, she didn't this
was before not decision, but his choice of words. We
had one FED member earlier in the day basically indicate
(12:41):
that she was, you know, not in the camp of
wanting to cut rates, that she wanted to kind of
set back like many of the other FED members, just
like the dot plot showed and and you know set back,
and you know, look at the economic data coming in.
So it's going to be interesting to see the the
pessimists and the others out there that are like, well,
(13:03):
you know, he should have waited, did he get pressured
by Trump to do this. There's gonna be a lot
of controversy bottom line, because again, this wasn't a slam
dunk where everybody wanted this retcut.
Speaker 2 (13:12):
And it's not always the case that it's a slam dunk, right,
I mean, you tend to have discent on both side.
Speaker 1 (13:18):
Right.
Speaker 2 (13:18):
He had Waller and I forget her name a Bowman
who were both you know, a month ago, stating that
they would have done different things, and so on and
so forth.
Speaker 3 (13:28):
So it's a it's a slow process. Did Trump affect it? Sure?
Did Trump affect it as much as some would say?
Probably not? Right.
Speaker 2 (13:40):
I think the data has presented itself in the sense
that things are slowing, right. I think I think the
average job was, like gain was thirty one thousand.
Speaker 3 (13:50):
I think not a big number.
Speaker 1 (13:52):
Right.
Speaker 2 (13:52):
You're seeing a deceleration, and the tariffs could be part
of it, right, And that's some of the pushback that
say tariffs don't cause inflation. Well, they do unless you
cause a recession, right, because costs go up and people
can't buy any the things, and then people lose their
jobs because companies aren't able to sell as much as
(14:14):
they were before. And there's all that part of it too,
you know. So it's just how you want to just
state that tariffs don't cause inflation, right, So it's a
the Fed has enough data now they're at four and
a quarter to four and a half. Inflation has been
coming down closer to target. Jobs are very much decelerating,
(14:36):
and there's that lag effect. It takes time. Again, we
just talked about it in the earlier segment. He doesn't
want to be too late as well, he doesn't want
to be too early. But at this point, like I've
said before, if you got Trump yelling, you know that
you're a knucklehead and you're on the margin at this point.
If he does cut, I think Trump's gonna about face
(14:56):
in three months and say that you shouldn't cut rates.
Speaker 3 (14:58):
You're an idiot, exactly right.
Speaker 2 (14:59):
So you know, again, very soon he'll be sort of
a shadow person. Anyway, once Trump decides who he's gonna choose,
I think this lets him control the direction now and
make it his decision on paper, then someone two months
from now saying oh, well I'm gonna cut, and then
him cutting afterwards. Right, So it may have been part
(15:21):
of that too. All make the choice at least feel
as if I did, versus have it forced upon me
for some reason.
Speaker 3 (15:28):
Right, again, just my thought.
Speaker 1 (15:30):
And and you know, you bring up a point that
I was gonna bring up also, and that is you
sit there and you go, well, maybe he just did
this because he knows he's out and it's like, what
the hell, Let's just go ahead and you know, get
the market a rate. Guy, don't. I don't think that's
the case, But you don't out there thinking that.
Speaker 2 (15:44):
Also, I think the data leads to this decision. Right,
the market would are already pricing in a you know,
seventy percent probability. It's not like this came out a
left field. It's just now they're agreeing. And typically when
the market and the economy or agreen, the FED tends
to follow.
Speaker 3 (16:01):
And so I think that's a lot of what we saw.
Speaker 1 (16:04):
Yeah, and once again he's indicated that the terror related
costs are going to continue to accumulate in the economy,
but for the first time suggest a greater confidence that
the effects of higher good prices would be short lived.
Time will only tell. They'll admit they don't know, No one,
we've never been in a terror situation like this. Before.
So that's one thing that we'll continue to watch. So
(16:24):
let's kind of talk about digest a little bit as
far as the market reaction. So I told you what
the endses did a moment ago. Here's a couple of
little tidbits of information for you, so you know, coming
into today, Jason, let's not forget. Let's remind everybody we
had five consecutive losing days on the S and P
five hundred. That's the longest losing streak since January. So
that's one big positive. Of course, snapping that the Dow
(16:47):
closing again, as I said, up eight forty six to
forty five, six thirty one. That was a record finish
for the Dow. You don't even you know, high five
me or anything, because my doubt find I had.
Speaker 2 (16:56):
The mess with the Dow earlier. You know, well when
I got when I get a fastball, I get a you.
Speaker 1 (17:01):
Know, there you go, there you go. Uh, cryptos were
doing did extremely a bitcoin today at four percent to
one hundred and sixteen thousand, sixty fifty eight ether surging
fourteen percent to a new all time high. Clothes a
four thousand, eight hundred and forty five. I mean on
and on it. Oh. By the way, folks, by the way,
you know the government got his FICO score check today.
(17:23):
That's right, double a rating they maintained with S and P.
So hey there, what do you think that's probably what
about a seven forty seven to fifty equal then to
human being FYCOS score?
Speaker 3 (17:35):
Good job government, not.
Speaker 1 (17:36):
Perfect, but good enough to still be investment grade out alone.
Speaker 3 (17:39):
Exactly.
Speaker 1 (17:40):
Yeah, all right, all right, we come back. We'll continue
our discussion on today's big interest rate. To take away
from Jerome Heal speech in Jackson Hole, let's turned over
to Jack Saban. He's got news, traffic and weather. Hey, Jack,
welcome back to the John Sanchez Show, one News Talk
seven eighty k oh with Jason got happy Friday all
of you once again. A heck of a rally today,
(18:01):
eight forty six game on the Dow with three ninety
six on the Nasdaq and hire by ninety seven on
the S and P five hundred. Well, it looks like
a September rate cut is going to happen. That was
the takeaway of Chairman Palace speech today at Jackson Hole.
Before we get to a really interesting topic which is
really all you care about, and that is how is
this going to impact me? Right? What's going to be
the personal impact in my financial life? Now that the
(18:24):
Fed has given us one, maybe it's the beginning. There's
still a lot of controversy whether we're going to get more.
But now that the Fed is pretty well convincing everybody
that we're going to get this cut in September based
on Girman Palace speech today, what is it really going
to mean for you? But before we get to that,
let's talk a little bit about Jason. Something that happened
this afternoon also, and that is it's been rumored for
(18:45):
a while, but it now looks like it's come true,
and the President saying the government is now going to
take a nearly ten percent stake in Intel. That of
course caps a two week visiting frenzy by the CEO
of Intel, who remember, just a few weeks ago was
criticized by the President that he needed to be fired
because he has Chinese ties, he's a Chinese descent himself.
(19:07):
But now with their buddies, mister Tam came back to
the White House today. I think this is the number
two or number three trip in the last week or so,
and so the government, Yeah, they're gonna take over a
ten percent of the of Intel. And Trump said the
following He says, I said I think you should pay
us ten percent of the company. And he said, yes,
(19:29):
what can I what can I? Negotiator? Are you, mister president?
Why don't me say fifty percent? Or you know what?
Sign the company? Yah? You got exactly. You guys haven't
done much. Signed the whole company over. And we as
the government, will take this over and just take it
off your hands, mister tam That's all it should work. Now.
You know, we touched on this beginning of the week, Jason,
when this story was rumored. And remember, folks, we go
(19:52):
back to twenty twenty two, right when the Chip sack,
when the Biden administration created the Chip sack, and they
told all of these companies, hey, we're gonn to give
you some money, right, these are grants use semiconductor company.
We're gonna give you grants to again, just like Trump
wanted to do, or wants to do, build factories here,
hire great people of America and so on and so forth.
So here's some money to go do that. Remember what
(20:13):
a great, great run up we saw in the chip
sector in that point well, come to find out, like
anything with the government, it's not kind of what it seems.
It seemed like there was some oh we'll call it
a little fine print that some of these companies didn't understand.
And that is because the government lent them or granted
them this money, the government can basically come in and
take over a portion of the company. So the now
(20:36):
we're starting to wonder how many other chip companies is
Trump gonna want to, you know, maybe go after I'm
I got to find a list of you know, what
companies really got it. You know, I didn't the vidiot
get some of that money that AMD. But you know, hey,
the governments starting to develop a heal of portfolio adjacent. Right,
we have what knpon steel now and that the US
steel deal. We got a piece of that. And now
(20:57):
we got a piece of Intel. I mean, we're gonna
become quite the soft wolf here in the US.
Speaker 3 (21:01):
We're nor China, yeah and everything. I think it's just Intel.
Speaker 2 (21:08):
As far as the Semis are concerned, right, they need
the money. I think they're in a spot where they've
been behind for a long time. I don't think in
video is going to be handed out a ten percent
stake anytime soon. Micron was another company that was thrown
around as potentially and again I don't think they're in
a situation that they need government intervention. But Intel's in
(21:29):
a tough spot it Uh, I hope it's not the
beginning of us, you know. I mean again, ironically, now
we all own Intel, which is cool. You know, you
didn't buy it, but in your portfolio folks, as an
American citizen, you know on Intel. So that's uh, you
got that going for you. So now I think that
it's just probably specific to them. I'm hoping, but you know,
(21:52):
with Trump, you never know.
Speaker 1 (21:54):
Right right, Well, you're also going to be part of
a big tech group soft Bank, which again is well
I can't they're a hedge Japanese zone, but they're yeah,
they're head fund, but a lot of Asian money, yeah,
a lot of Asian money. Yeah, yeah, exactly. The company
they kicked in about two billion dollars in cash. Trying
(22:17):
to see the date here wasn't long ago?
Speaker 2 (22:18):
Yeah, it stock went up six percent that day they
kicked in like two billion dollars.
Speaker 1 (22:22):
Yep, yeah, two billion dollars. I just said, yeah, and
then you know, Intel's up went up five and a
half percent today five point five three to be exact
dollar thirty gain to twenty four eighty and then the
after hours is up another one percent or twenty six cents.
So we'll see if there's others to follow as the
saying goes. You know, again, I think Trump would like
to see a nice, big fat sovereign wealth fun if
you're not familiar with that term, that's what a lot
(22:43):
of countries, like Saudi Arabia and many of these others,
that's what they have. They take their excess capital in
the country and they almost create like a like their
own mutual fund, their own hedge fund. Whatever. They'll go
out and they'll take steaks and companies, they'll try to
get a seat on the board if their stake's large enough,
so on and so forth. So we'll see what ends
up happening with this strategy going forward. But I think
the President does like this idea of, you know, having
(23:05):
ownership in some of America's companies, and especially an iconic
company like Intel. Yes, they have struggle, but they're still Intel, right,
It's been around a long time.
Speaker 3 (23:13):
Yeah, all right, that was interesting, you know as far
as that node. But you saw.
Speaker 2 (23:18):
I mean in Nvidia one hundred and seventy eight bucks.
I think it closed that today. Semis in general did
quite well, so obviously Intel helped the space. But there's
you know, it seems like every time those things fall,
there's buyers that come swooping in, especially on weakness and
a strong day on across the board.
Speaker 1 (23:37):
Let's say what the commodities did, and then go to
the bond market that we're going to tie this into again.
What is this potential rateket that we're going to see
in September? What does it mean to you personally? So
seventeen cent game on oil sixty three sixty seven a
barrel gold up thirty seven dollars and ten cents threeenty four,
eighteen eighty seven basis point drop on the tenure treasure
yield today four and a quarter or four point twenty
six was our close down seven basis for the week.
(24:01):
Let's talk volatility, Jason, I think this is a good
time to bring out the professor's side of you and
talk about how the market when you have a day
like this where you get a little bit of an uptick,
market goes up a couple hundred points and then another two,
another four, another six, and you know it's the perpetual
buying which also works on the downside. But this was
a prime day to learn about that side of it.
Speaker 2 (24:21):
Yeah, this is what often referred to as a volatility smash.
Right where the event was Jackson Hole, the event was
the speech, and the fact that it was I would
say market favorable or not bad news created. I mean,
the VICS index was down almost fifteen percent today to
fourteen twenty two. And now we start to get into
(24:43):
some of those complacency levels right as you're trading fourteen
thirteen twelve. Those tend to be times when the market
gets overly excited and overly frothy. I don't think we're
there yet, but the act of the event occurring creates
the need to re use hedges. Right the potential bad
(25:03):
news is now gone. If I'm someone who owns puts,
I need to now remove those and try to get
whatever money I can back for what I spent on
that insurance policy. And the act of closing that option
makes the person I bought it from need to go
buy the market to go reduce the hedge they had on.
So this type of a day fed on itself, just
(25:25):
given the fact that volatility continued to decay all day long,
and that event risk continues to decay, and that's why
the market popped just like it did, and you saw
such a big drop in volatility. So we're not at
complacency levels yet, but here at all time highs and
EVIX at fourteen is where you at least start to
try to think of ways to be a little less aggressive.
(25:50):
Not saying, you know, like we've said earlier in the week,
still of the expectation that the market's higher than here
at the end of the year, but we could see
some you know, near term GI if you get anything
less than amazing news, I would say over the next
week or two with inflation data. We've got PCEE next week.
Again we'll touch on a little later in the show,
(26:11):
but there's a fair amount of data now to you know,
still cause some i'd say, could angst for the market.
Speaker 1 (26:19):
Oh yeah, definitely, all right. You speaking of the year
to date, here's where we sit NAASAC on the year
today basis now through today's close. This is of course,
now we'p eleven point three percent, SMP's hired by ten
percent year to date, down's up seven point three and
the Russell two thousand gaining five point nine percent. So
looking good, looking good, looking good? All right, let's get
to our topic. What are the benefits to you, as
(26:41):
the quote the consumer when we get into these conditions
like this for the Fed. Again, we don't know if
this is one and done, or is this one of
two and then done or what of mini and done?
Only time will tell. But what we are confident about
is that we will get this FED cut in September.
So what does this mean for you? So first thing,
of course we want to touch on is the market
and slash mortgage rates. Right, so mortgage payments. Of course,
(27:04):
as you hear us talk on Tuesdays and Thursdays and
even Jason and I periodically, the bond market does control
mortgage rates. Right, It's not the Fed. Remember what if
we get the September cut with this is talking about,
it's the FED funds rate, that is the rate that
banks charge one another to borrow money overnight. The rest
of the rates the bond market, et cetera. They should
(27:24):
follow suit. And that's why we saw bond yields coming down.
Like I said, seven basis points on the tenure. Now,
so let's talk the mortgage side of things. What most
of you care about. This is again should be a
very very powerful and this is what we said on
the show with Corey and Dwight on Tuesday. This is
going to potentially be a very powerful move in the
in the housing market as far as mortgages and things
(27:44):
are concerned. And today was indicative of that seven basis
point decline on the ten year treasuries I said, thirty
year mortgage today according to Mortgage News Daily, damn ten
basis points. Ten basis points in one day. Six fifty
two is the national average for the thirty year. But
Hight was sitting here. You go, hey, John, Jason, look
at that fifteen year broke the six percent mark today
(28:06):
down to a yield down or an interest of five
point nine percent. So this is again the key psychologically,
get these rates below that six percent. We've done it now.
This is the second time in the last week or
so the fifteen years got there. Now, if we can
get this thirty year down that low six percent, Jason,
I think we could really begin to see some very
very strong buying activity, even though it's you know, as
(28:28):
Corey said, July first typically is the peak of the
buying season, and then it starts to taper off until
spring rolls around the next year. But I think this
time could be different if these mortgage rates continue to
drop based upon the anticipation of more interest rate cuts
from the FED. So lower barring cost always going to
feel good. Any place you want to add to.
Speaker 2 (28:45):
That, I had a question through email, but also if
anyone has any questions that you want us to answer
on air, you can text our office seven seven five
eight hundred eighteen oh one through our normal line. Just
text any questions you have, keep them cleaning right in
front of it, and now we'll help you.
Speaker 3 (29:03):
We'll help you.
Speaker 2 (29:03):
Answer any questions you have that we're not covering today.
But no, I think anyone who thinks the rates are
gonna have a three handle on them, probably on mortgages,
please don't wait for that. But again, you wouldn't be
surprised to see at the end of this cycle maybe
high fours, low fives if FED continues to move in
this at least desired direction over the next twelve to
(29:24):
eighteen months. Right.
Speaker 1 (29:25):
Absolutely, And the last point we'll mentioned on this lower
baring costs, we touched on the mortgage but of course
what we should see but don't. It's not gonna be much. Remember, folks,
I get, I can't out emphasize this enough. I touched
on this with Corey and Dwight on Tuesday. Again, we
were talking about rates. Remember, the bond traders are going
to ultimately deterimin whati your mortgage rate's going to be,
how they trade the Fanny Maize and Jenny Mays and
all those mortgage related bonds. But also, we could come
(29:47):
out on Monday. We could come out on Monday and
you could see bond yields back up, you could see
mortgage rates back up. It's just the reaction that we're
seeing today because again, these bond traders are looking at
so many other factors. They don't really care so much
about what the Fed is doing, the rate the banks
charge one another. But a lot of times you will see,
like I said, if the lenders out there, banks, credit
(30:08):
card companies, auto loan companies, et cetera, think hey, we're
in a declining interest rate environment, we better start lowing rates,
then we could see that. I think it's going to
be interesting, Jason, to see if we are going to
see the aforementioned actually dropping rates or are they not
going to drop rates to try to make a little
bit more interest income on you know, meaning what they
charge everybody to offset tariffs, and again somewhat of a
slowing economy. So I think that's going to be an
(30:29):
interesting divergence that we see going for. We'll talk about
access to credit just real quickly when we come back,
and then we'll get into what the week ahead has
in store for us. Wrapping up with Kristen Snoan the
Right Now Traffic Center. Hello Kristen, welcome back to the
John Sanchez Show on News Talk seven to eighty k which.
If Jason and I and the team can be of
any service to you, please don't hesitate to call our
(30:49):
office at seven seven five eight hundred eighteen oh one,
send us an email at office at Sanchez gone Gaunt
dot com and we will immediately respond to you and
get you on our calendar by all means. All right, So,
great day, very solid on the year today basis numbers now,
but it's all behind us now. We must rub the
crystal ball, look forward to next week and begin to
(31:11):
tackle this. So Jason, let's break down our earnings forecast,
which I'll take care of it. We'll do that one
first because it's a pretty light one, and then you'll
bring us up to date on what we have as
far as the earnings numbers or excuse me, as far as
the economic numbers for next week. So earnings wise, really
nothing on Monday Tuesday looks pretty light and nothing of
any significant. So we move on to the twenty seven.
(31:32):
You got some retailers still Trickling and Abracambri and Fitch
and Cohle's Mastercraft. Yeah for you voters out there, and
William soon Oma. Those are going to be before the bell
on the twenty seventh, that I said on Wednesday, after
the bell the biggie, you've got Navidio and then Snowflake
Urban Outfitters five below, etc. So Nividia, of course will
be the highlight. We get into Thursday, more retailers Best
(31:55):
Buy before the bell, Dick's Sporting Goods, Dollar General, and
then after the bell on Thursday, Yeah, got Den that's
a big one, Marvel. That's about it, and then really
nothing on Friday, Ali Baba for those of you that
like to invest in that company, that'll be before the bill.
So we're almost done with it. We're almost made it
through another earning season. Yeah, the economic scited.
Speaker 2 (32:15):
Other than Nvidia, right kind of you know that one
will be very important. We'll spend up clocks and all
kinds of stuff setting up for that new home sales
on Monday, durable goods orders on Tuesday. I think that's
going to be one that's very highly watched streets. Looking
for a drop of four percent on headline flat on
core ex transportation, consumer confidence. That numbers got inflation data
(32:38):
in it. That's also on Tuesday. On Thursday, we'll get
GDP just an update there. The second estimate is at
three point one percent initial claims.
Speaker 3 (32:47):
They've been taken higher.
Speaker 2 (32:49):
Two hundred and thirty eight thousand was the estimate two
thirty six prior. And then on Friday, big one pce
fed's favorite inflation. That'll give them a little more color
as to direction of things.
Speaker 1 (33:01):
Jesser peal to go. Uh oh, I should have said
that last Friday.
Speaker 2 (33:06):
Yeah, so personal income, personal spending, Michigan confidence. But yeah,
I think PC is gonna be the big one in video,
as you mentioned, gonna be a mammoth one. Durable goods,
any sort of deceleration would give tailwind to rate cuts.
Any sort of shock on the upside to inflation may
cause a little bit of market angst.
Speaker 1 (33:24):
Right right exactly. Yeah, So not gonna be too bad.
That gonna be too bad, as like I said, not
like it was this week, coming into all the major
important reports. Bottom line right now, what is Wall Street
telling us? No, it's easy to say we're in a
bullish mode right now after today's big run up, but
it's too soon to say that. Again, we snapped five
days of losing going on on the S and P
five hundred. Again, things are changed potentially from today. Enjoy
(33:47):
the weekend. Let's see what things look like on Monday.
Make sure this was in a big shortcover rally, and
then roll up to sleeves and get to work next Monday. Jay,
it'll be here before we know it.
Speaker 3 (33:56):
Can't wait.
Speaker 1 (33:57):
I hear you, all right, God, bless everybody. Thanks Jake, Thanks, everybody.
Will do it again on Monday on the John Sanchez Show.
Have a great weekend. This program was sponsored by Sanchez
Gaunt Capital Management, LLC. The material in this program was
intended as general information only and should not be taken
as specific investment tax or legal advice. None of the
information on this broadcast was intended to be a solicitation
(34:18):
for the purchase or sale of any security. Further information
is available by contacting John at Sanchezgaunt dot com or
seven seventy five eight hundred one eight oh one. John
Sanchez offers securities and advisory services through Independent Financial Group LLC,
a registered broker Dealer and Investment Advisor member FINRA SIPC.
Securities offered only in States. John Sanchez is registered in
(34:41):
Sanchez Gaunt Capital Management LLC. In Independent Financial Group LLC
are unaffiliated entities.
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