Markets don’t move in a vacuum. Even in a week that starts with Easter plans and family gatherings, global events can quickly shift the tone.
That is exactly what we are seeing right now.
After reaching recent highs, the S&P 500 has pulled back roughly 7 percent. While short-term declines are normal, the driver behind this move is what matters. Much of the pressure has been tied to rising oil prices and increasing geopolitical tension, particularly in the Middle East.
The market had been in a relatively healthy position earlier this year. After strong gains, a period of sideways movement allowed valuations to stabilize and moving averages to catch up.
That setup typically supports continued growth.
However, conditions changed quickly.
Oil prices surged, with Brent crude up significantly year to date. At the same time, geopolitical uncertainty increased. Those two factors together shifted sentiment and added pressure across equities.
When markets break below key technical levels like the 200-day moving average, it often signals a change in momentum. While not a guarantee of further downside, it does reflect a more cautious environment.
Oil is not just another commodity. It touches nearly every part of the economy.
This creates a ripple effect that moves far beyond the energy sector.
The key issue is not just that prices are rising, but how long they stay elevated. The longer oil remains high, the more likely it is to work its way into broader inflation.
Not all inflation is the same.
What we are seeing now is largely supply-driven inflation. It is being caused by higher input costs rather than increased consumer demand.
That distinction matters.
When inflation is driven by demand, the Federal Reserve can typically respond by raising interest rates to slow spending. But when inflation is driven by supply shocks like energy prices, rate hikes are less effective.
This creates a more challenging environment for policymakers and adds uncertainty for markets.
Beyond the headlines, there are notable shifts happening within the market.
Growth stocks, including the widely followed “Mag 7,” have struggled year to date. At the same time, other areas of the market have held up better, highlighting a growing divergence between sectors.
This type of rotation is not unusual, but it reinforces the importance of looking beyond broad index performance.
There are also ongoing concerns in areas like private credit, where liquidity can become an issue during periods of stress. These are not always front-page topics, but they can matter when market conditions tighten.
Short-term volatility does not necessarily change long-term outlooks, but it does remind investors that markets can adjust quickly when conditions shift.
For now, the focus remains on how these external pressures evolve and how they feed into inflation, policy decisions, and overall market sentiment.
Markets often move from calm to uncertainty faster than expected.
One week, the conversation may center around family events and seasonal celebrations. The next, it shifts to oil prices, inflation, and global conflict.
Staying informed and understanding what is driving those changes is key.
Because while headlines may change quickly, the underlying forces shaping the market tend to follow a more consistent pattern.
Welcome to the market enthusiast. I’m Noah Brooks and obviously this is Chris needs welcome.
Noah Brooks (00:22)
Welcome to the market enthusiast. I’m Noah Brooks and obviously this is Chris needs welcome.
Came in today a little bit giddy. I just secured the Easter bunny for the family Christmas party or for the family Christmas party for the family Easter party next Friday. All right. A real live six foot Easter bunny is coming to the house. boy. Nolan will love that. It is going to be great. We have about 10 or 12 little kids coming. And so we’re going to lay out all of the eggs and some candy. So
obviously for the Easter Easter egg hunt for them and then we’re going to do an adult Easter egg hunt as well. Maybe a fireball in there or something. All right. Yeah, don’t know. I’m not in charge of that. They don’t they don’t let me near that stuff. ⁓ Welcome everybody. Thank you so much for joining us. We come to you on Thursday and a week and to them and near the end of the month and market has taken a little bit of a downturn this month. ⁓
We hit an all time high of just below 7,000 on the S and P 500 March 27th. And since then we’re down about 7%. So a drawdown of about 7 % since that time period. Most of that, not all of it, but most of it has come since, um, the, the war in Iran. Yeah. You know, a lot of selling pressure as oil has gone up. Um, I think Brent crude is up about 70 % year to date.
And West Texas intermediate as they call it is up about 57 % year to date. things things were okay for a while where we were talking last year with valuations where they were and the AI story where it was how it would be healthy to digest the gains from the last two to three years go sideways a little bit, which we did. Yeah, you know, setting up maybe for a stronger move up.
until all of this kind of came into play and we started getting some weaker economic data and we went from consulting sideways healthily to uh healthily I don’t know healthy healthily okay and uh going sideways but those uh moving averages caught up to us which normally would be good until you are hitting some weakness or some geopolitical stuff some wars
missiles flying around and now we’ve broken below those 200 day moving averages on NASDAQ and the S &P 500 which is not ideal. Yeah not ideal they generally say all the bad things happen under that 200 day moving average and whether you’re on a simple moving average or an exponential doesn’t necessarily matter where we’re under on both of them. You know so my expectation I think as we went into 2026 not I think my expectation was that it was going to be pretty similar to 2000
and 25 maybe not with the full upside that it has. That’s what we put in our 2026. average. Yeah, average return. Originally, my mindset was negative five to plus five. And I still think we’re probably going to get above plus five at the end of the year. We’re down 5 % right now. Down 7 % from the highs as I said, that’s not the end of the world. This type of stuff happens all the time.
But you know, as, as we were coming in here to record today, ⁓ the president had a, ⁓ conference around one o’clock, one 30 or so in which he stated, ⁓ some of the effect of, don’t know if we can make a deal with Iran. They should have taken it for four weeks ago. ⁓ and then the market kind of sold off into that news or into what he was saying. ⁓ and then you start looking around for ways out of this and I’m not a hundred percent sure what the
what the win is. Did you say to me earlier that they wanted to stop negotiating with Kushner and Wyckoff? Yeah, apparently they want a new envoy to work with. What I saw floating out there was they wanted to negotiate directly with VP Vance, which was kind of an interesting turn for them to I’m surprised that they didn’t say Rubio. I don’t know. Maybe there’s maybe there’s been some beef there already. Rubio would be the logical person, right?
I don’t know. Maybe they want someone higher up even higher up than Marco Rubio. They don’t want to negotiate directly with Trump apparently. Why not? I don’t know. don’t know. He’s a good negotiator. That’s what he does. Is that what? Okay. Yeah, I’ll buy that for a dollar. Yeah, so pretty much what’s going on right now is everybody’s focused on Iran and oil prices. And I said this to you guys two weeks ago. It’s really about the length and the level how long
due to oil prices stay elevated before it really starts to work its way into the economy. So on this program, we talk about inflation quite, quite often, right? Because it’s certainly a topic out there every month, every comes out every month. But you know, you people really feel it in their in their wallets. ⁓ And so when gasoline goes up, and obviously oil going up, prices rise on the gas side on the consumer side, heating oil rises.
And you know, we talked about this, you and I were talking about yesterday, clothing. Um, there’s just so many goods in the United States that we consume every day that use hydrocarbons. And that cost has gone up dramatically, uh, year to date. And then of course, just in the last three or four weeks, and you have the phosphates, which goes into every food we have, it’s not affecting yields or crops just yet. only know all organic stuff. Yeah. All right. Yeah. Phosphates and,
fertilizers, you know, that’s heavy, heavy component of that. ⁓ the straight comes, comes through that straight of Hormuz. Although we don’t really get a lot of oil from there. Russia apparently gets a little bit of oil. Japan, I think gets like 90 % of their oil from ⁓ trying to get a lot. ⁓ we produce 13 million barrels a day. We use 21 million. We kind of have some important export on, different types.
mixtures of crude oil. And then obviously, the refineries are the ones that taking that crude and making it into gasoline or kerosene or diesel. They’re rallying. energy is doing great. Leading this year, what did you say it’s up? Up 40 % as of earlier today. And it was a laggard last year. So it’s a strong bounce back. You know, energy is one of those that has I mean, obviously, in 2020, it was down dramatically oil traded, you know,
depending on how you look at it, or traded negative for a day or two on one of those contracts. ⁓ So worst performer. And then you’re like, well, maybe I should nibble on some energy. And boom, it’s been a it’s been a monster. Certainly in the last cycles, land man and ⁓ what’s the guy’s name? ⁓ Billy Bob, Billy Bob’s his his who he plays his character put it perfectly saying we want it between 65 and 85. Don’t quote me on the numbers. ⁓
Well, it’s probably above there. Yeah. I mean, crushing demand above that point. Yeah, absolutely. ⁓ we’re still here locally. We’re still around four bucks a gallon for the cheap stuff. ⁓ that’s kind of where it was a year and a half ago, two years ago, ⁓ at its height, it was over, I think $5 for the cheap stuff. ⁓ but diesel is pretty expensive. don’t know. It’s over five. Yeah, it’s close to six. I think it’s five 99 here. I mean, you’re loving life.
I was just looking at the possibility of Mustang Mach E. Just level up to the Rivian, man. Nah, I’m not gonna do a Rivian. They’re so cool. The SUV version’s real cool. There was one parked here today. I kind of scoped it out a little bit, drove real slow. I would take one. just… What happens if it breaks? Where do you take it? Where’s a Rivian dealer? You know, same place wherever.
Wherever Joe’s Joe’s fix it down the street. They’ll they’ll take care of it for you. What could go wrong? mean, there’s so fewer parts in EVs compared to combustion engines. I’ve never had an issue besides, you know, the obvious one issue offender bender, no mechanical issues. Yeah, no mechanical issues. Well, we’ll we’ll see what happens. I mean, it’s getting closer. The other cars getting there and we’re we’re ready for what’s going to pull the boat then.
I guess the Rivian could know I have the x5. Okay. Yeah. It has a tow hitch on it. I think the Mach-E could pull it. I don’t know if it comes with a tow hitch. Probably probably doesn’t $1500 up charge. Sure. Yeah. Yeah. So where that puts us today, going back to the markets for a minute. I said, SB 500 down about 5 % mid caps are up, they’re up 2 % year to date, small caps are almost up 3%.
International just flipped negative this week down about 1 % and emerging markets are still up almost 2 % year to date. Equal weight up a little bit, just over half a percent. Value, where we have a little bit of a tilt, is up a point and half for the year. Growth is the big loser, down almost 10.5 % year to date. We talked before we came in. I had a note on here for March.
growth was actually doing a little bit better than it did in January and February. And I guess that was until today. And, you know, on the month, I think it’s right back around value or just a shape or a little value. Now after this rough day, we’re encountering down 2 % on the Nasdaq today when we came in. Yeah. And so let’s, let’s talk about that for a little bit, because obviously the mag seven has been the trade to be in for realistically for a long time, a year to date, every single mag seven stock,
Google, Amazon, Apple, Metta, Nvidia, Tesla, Microsoft are down for the year. Every single one of them. What do you think the biggest loser is for the year? Well, I know. already knows. I know it’s Microsoft. It’s Microsoft. The least loser is Nvidia, right? Yeah. Down about 4 % Microsoft down about 33 % for the year. It is almost back to its liberation day lows in the 330 range.
And it was I mean, you’re essentially down 200 points if you bought at I think the top was 556. What’s your thought on that? Is it the software exposure? Is it open AI? Is it such a not being aggressive enough sort of like Apple like just not putting out compelling products out there? What’s your thoughts on Microsoft being down so much? I would say ⁓ it’s a combination of factors, right? So it’s one of the biggest positions in SPY. So if you’re selling chunks,
of equities, starting with mega caps, that’s going to be one reason why. But realistically, when you pull out Nvidia, it’s not down that much. So that can’t be the pure result of it. I really think it’s just the innovation, you know, in terms of what have you done for me lately, they haven’t really come through on the AI channel. They haven’t been able to ⁓ do those year over year comps for their software.
at a rate that’s equal to some of the other AI companies. And so I just I think they’re a little bit behind in that respect. think from the commercial or business perspective, obviously, you know, got busted kind of for a bit of a monopoly going on, but they’ve maintained the office suite of products. But why do we have to pay so much to license something as simple as a word processor, or Excel? Like, why are we paying this much for it? And I think part of
you know, people maybe don’t think of them as like the high growth software, but their software, that’s what they are. So it makes sense that they’re getting hit with the software group. the SaaSpocalypse that we talked about, right? Software as a service, they’ve all gotten hit. Obviously, we talked about the software sector being down. But Microsoft is in the thick of that as software as a subscription, right?
I mean, one of first to do it going back to like even who is it like Adobe? I think they were like the leaders in that back in the day. Yeah, the thing about office is we’re obviously office users here. But you can’t really get away from it, right? Like, yes, you can utilize ⁓ Google. What’s their version of word? They have a version of it. They have sheets. They have, you know, the word processor. But for business, that’s not really compatible.
Yeah, you know, so it’s one of those things where you’re tied into it. I don’t think people are necessarily leaving it. I just don’t think there’s a lot of growth in that side of it. And the server side has been the thing that has really been compounding them. Think about all the the the desks and the consultants and we talked about the headcount and software dropping dramatically. Well, all those consultants, you would think, had a computer had maybe two computers, a laptop and you know,
using those licenses. Well, if we’re dropping them for AI agents, know, those fewer licenses in corporate America. That’s Microsoft. could be. It very well could be. mean, if people are leaving the software industry, leaving, right? And that’s the word I’m to use. If they’re leaving the software industry, ⁓ but you’re saying that they’re not going to have another license somewhere else. I don’t know. AI doesn’t need a license.
I thought Microsoft Teams was gonna save Microsoft. Do you like Microsoft Teams? On the record, I mean, I like the ability to message people within the firm, right? It’s pretty good. You and I use it. Yeah. I use it with other, like we use it all the time. It’s not as cool as AIM was back in the day. AIM Messenger? my goodness. You’re dating yourself. ICQ, that’s my ringtone for text messages, ICQ. Uh-oh. boy.
Let’s get into some of the economic data. I think that’s important. You know what’s happened really since the I was going to use the word invasion. That’s not right. Since we started dropping bombs on Iran is yields have kind of spiked up. Yeah, the kinetic counteroffensive kinetic counteroffensive. Yeah, yields have spiked up pretty dramatically. The 10 year was well under four were at about 4.4 today.
30 year is just shy of five. think it’s 4.93 when we walked in here. And what’s that, what that is doing is pushing up mortgage rates. So essentially mortgages topped out at about 7.8 % in 2023, maybe November of 2023. And they really have been dropping. I mean, with some ups and downs, they’ve really been dropping ever since then. Last month,
the 30 year average mortgage in the United States got below 6 % for the first time since October of or September of 22. So we’re definitely been moving in the right direction, which is really good for affordability in the housing market. And then boom, what happens and we’re back up at 6.4. Now I don’t know if the difference between six and 6.4 is going to stop somebody, but it definitely makes it less of the wrong direction. Yeah, it’s the wrong direction. And there’s so many things going into that.
You know, we talked about the inflation impacts already of the straight-up poor Moos and Iran, everything going on. You have that inflation going up, you know, in the short term, the one year break even inflation rates as measured by, you know, nominal US treasuries versus the tips, the treasury inflation protected securities is up above 2.3 now today, I believe. Pair that with the stuff that’s always going on.
You have just passed 39 trillion in debt and 147 days we went from 38 to 39 So we’re knocking on 40 trillions doorstep that pushes the yields up the inflation pushes yields up if Elon has all of this money and he wants to pay the TSA workers Why doesn’t he pay down some of our debt? Huh? It’s like feeding the wild animal the more you give them the more they spend
Meaning the government not the wild animal. They don’t spend anything. Yeah, they don’t they don’t spend anything. Going back to inflation for second. We did get some PPI information since last time we were in here and it was pretty hot. Right. So PPI is essentially the wholesale cost or wholesale inflation at at the manufacturing level what they’re selling it for came in at point seven month over month that is that is that is pretty high. 3.
four headline versus 2.9 on the year over year. then, jeez, core was 3.9 versus, I don’t know, was it like 3.5 or 3.4 expectation? Both were really hot. Yeah. And I’ll note and make sure we get this. ⁓ That was before oil prices went up. Right? So I think what we’ve done here is we’ve made a path for higher prices across the board.
as hydrocarbon prices, aka oil, ⁓ is being sold at these new higher prices. mean, it basically went up 30 bucks a barrel in a course of four weeks. And that translates across the board to higher prices for all of those things that petroleum products make. Doesn’t matter what it is, if it’s tires, if it’s gasoline, if it’s polyester, all those things. So we are going to see that. And I said earlier about the length and the level, right?
the longer it stays elevated, the worse it’s going to be. Yeah. And really, I mean, we saw some of that after COVID and then it mellowed out and we had 50 at some point, well, we had well below 50, but you know, I think to, to your character in land man, right? You know, 65 to 85 kind of, okay, start getting above a hundred. It’s gets, that gets a little bit rough. Yep. To, uh, yeah. Demand starts going down and vice versa, you know,
When we had negative oil during COVID, you got to shut down the pumps. They won’t pump it. Yeah. Why would they pump it? Right? Absolutely. I want to touch back on the, on the mag seven for a second, because I think it’s important. I said, uh, none of the mag seven is positive for the year. Nvidia is the least negative at, uh, down 4%. When you look at the S and P 500 and you look at the concentration of the top 10, which obviously all of the mag seven are part of,
Top 10 is about 38 % of the S &P 500. So when you have these big companies in there that are down for the year, it is going to push prices down. It is going to push large cap index down. And so you really are seeing a big difference between the value side of large cap and the growth side of large cap. And value is more financial-related. They’re down dramatically for the year, about 8 % because yields…
have moved up a little bit and the yield curve is not so favorable for financials, not to mention private credit. We talked about that a little bit last time. No real major shocks over the last two weeks in the private credit market. There was another fund that slowed redemptions down. Did you say, so it was the FS and KKR co-branded fund essentially.
specialty lending, I think specialty lending, they put ⁓ some restrictions on redemption, basically, people that invested in that can’t get their money back on demand. So they have to wait until they they open that you want to drill down on on private equity at all? Like, sure, I personally, I don’t believe there’s any magic bullet in the markets. Otherwise, we know that would be arbitraged away. And yet it’s been held out by the professionals.
as a magic bullet, you get exceptional return with very little volatility. Well, we all know that’s not the case. They’re just smoothing over the volatility by not reporting or marking to market. If you don’t have to be on the stock market, and you don’t have to show a price and sell every day at some price, you’re not going to report that price if it’s going down, right. So it’s almost like the price you see is almost like a high water
And you know, all the people we’ve heard selling it. Yeah, of course, they’re gonna sell it. We’ve been since Vanguard did a solid to our all of us investors and started this race to zero on expense ratios. You know, everything’s been going down, even active funds have come down over the last decade. But you know what hasn’t come down is the private stuff because they can still charge those really high expense ratios and management fees.
of course they’re going to sell that in absence of their formerly high active funds and stuff. Yeah, it’s just such a shame that everybody sort of bought that line sinker and luckily most people, common retail people have been saved from it. But it almost or might be coming into 401ks at some point and it seems to me right at the moment, Yeah, I think they’re gonna pump the brakes on
private credit in retirement plans, certainly, or Rissa your time and plans for one case for three B’s, 457 things like that. And quite frankly, I don’t think they’re appropriate for everybody. They’ve they’ve been in these this world of the high net worth and ultra high net worth for a long time, who don’t need that liquidity, who don’t need the liquidity, you can lock it away for five, in some cases, longer years. And they’ve tried to democratize private credit and bring it out in areas where it maybe shouldn’t be brought out in. Yeah.
And we don’t really deal in anything like that here. So our, you know, our traditional investment models don’t have any direct exposure to private credit. But of course, you know, even companies like JP Morgan have exposure, you know, financials in general have exposure, they have exposure to real estate, they have exposure to private credit. They, they, you know, essentially, private credit is just giving loans to companies that aren’t public, you know, and then not marking it like a mutual fund or an exchange traded fund.
And I think this is the perfect situation where you have to look at and say, where they’re locking up withdrawals and things like that is the perfect explanation why if you are requiring me to lock up my money where I can’t sell it any day, week or month, maybe there’s some quarterly tender at 5 % or something like that, that they do allow such a red flag to me because there’s no way they can honestly achieve
the premium required for locked up. Now, I’m not a billionaire with a capital B that you’re lock up $500 million like, you know, some institutions like Harvard and Yale that sort of made it famous. But I just don’t see how they could honestly achieve a premium worth the lack of liquidity. I just don’t think it exists. You are possibly correct. It seems like the shiny golden thing that
doesn’t have a lot of downside until they stop redemption. Yeah. And we obviously Yeah, as you said, we don’t invest in any private stuff or gated stuff that doesn’t have daily liquidity for multiple reasons. But we have advisors who come to us and they’ve invested in and they’re like, I’m in this and now I can’t get out. What do you recommend? Like, not buying it? Yeah, I shouldn’t have bought it is what I recommend. Well, I mean, therein lies the rub is that it is appropriate for certain investors.
it’s appropriate for high net worth and ultra high net worth clients that literally don’t care what happens in the next five years. And that’s who it’s appropriate for. I’m sure there’ll be a million people out there, not a million people. There’ll be a lot of financial salespeople suggesting otherwise, but I’m here to tell you that it’s not meant for everybody. Not meant for everybody. We’re talking about high net worth and ultra high net worth clients.
We saw something interesting when we were down in Philly the other day. Oh yeah. Yeah, we did. came out. What were we doing? Were we bowling that night? And we came outside and we heard a whole mess of noise. So loud waiting for the car. I thought there was like a riot going on. It sounded like a riot and we couldn’t see anything. It was that far away from us downtown Philadelphia. Noah’s like, I’m going to check it out. He just starts marching up the street. I’m like, Oh my gosh, dude. And he comes back. He’s like, guess what it was.
It was a protest in front of the Ritz Carlton and eat the rich protest. I thought that was it was interesting. But wait, that wasn’t the interesting part. We heard all this noise and we thought it was a full on riot like surrounding city hall or something. How many people was it Noah? 11. 11 people with a bullhorn. Yeah. Which got us talking like think about how 10 people 11 people can make that much noise. So like they might have some pots and pans to like
like at New Year’s Eve. Do ever do that? I mean, yeah. Yeah, okay. I was just astounded that you came back and say it was 1011 people. So think about how little buy in you need to make a difference or not make a difference, but make a commotion. Like, Philly had we’ll just call it million people in Philly. If you have 1 % of people buying into some idea that’s 100,000 people and if only 1 % of that 100,000 actually is an activist who wants to
go out to the streets in March. That’s 1000 people. This was 10. It’s wild. I don’t endorse eat the rich. Occupy Wall Street. You work on Wall Street. I do not work on Wall Street. I work in the investment community, but not not in New York and nothing wrong with that. I’m okay up here in Pennsylvania. I’m not private equity, bro. No, none of that for us.
But speaking of private equity, there are some really small startup companies that are getting financing for some really crazy stuff out there. ⁓ If you were ill, if you were sick and you needed a new gallbladder or you needed a new lung or you needed a new heart, ⁓ where would you go for it? You’d have to go on a waiting list, right? Kidney, you’d go on a waiting list and you’d
do whatever you had to do. But there is a new startup out there that is ⁓ going to be growing.
it’s a California company, right? Wouldn’t be wouldn’t be the case without it being in California. A company called R3 bio has been growing has the idea they haven’t been they’ve been doing it with with mice apparently, but they’ve been growing humanoids for or the idea is to grow humanoids for organ harvesting. the humanoid, they’re gonna start putting attaching them to an AI head and just go ahead and body no head.
So the idea was, believe the Trump administration has kind of cut back on animal testing. That’s been in the works for a while, right? PETA and everything. I don’t know how the Trump administration did anything, but that’s what was quoted in this article that maybe it was just in place for the last few years. ⁓ But the lack of ability to animal test here in the United States drove these people to think about, why don’t we create essentially mice without heads?
And apparently they’re in the process of doing that. So they can test what happens with different materials and drugs on these headless mice. Because you can’t, I guess you can’t care about something if it doesn’t have a brain. Right. And so that morphed into a humanoid where they’re you’re essentially a body sack waiting to be harvested. I don’t like any of this, dude. It does seem like it’s right out of a sci fi movie, right?
But think about it. If you if you fast forward 30 or 40 or 50 years, how about this? How about you’re born? They take a little bit of your DNA and they grow another you. So when you’re 70 or 80, you can get. This is literally the plot of a book I read when I was like in fourth grade. You know they had the book fair. I went down this book. Scorpions are cool. House of the Scorpion. OK, let’s read it. You know, I’m just a little kid running around here.
And it was about a Mexican drug cartel leader who just built like 20 clones and they grew up in the exact situation as him, like on this little shanty shed on a farm, just like he did. But they were being raised for slaughter to be an organ farm for the drug lord. And one of the clones like broke out, got a clue and sort of upended the whole thing. That was House of the Scorpion. Sorry for the spoiler, but it’s like 25.
years old now if you didn’t read it by now you probably weren’t gonna read it well it’s a little bit like the Mickey 17 that we saw right that I saw last year where they just are able to reprint you and reprint you and reprint you and then inject your memories and your personality I guess in into a clone body but this is actually happening apparently they are doing it with mice or some type of rodent without a head so that they can test drugs on it and their goal is to be able to create humanoids with no head
that they could just harvest the organs. I’d like a new heart, maybe a good pumper, please. How about some lungs? And you can specify, right, who you want it from.
I don’t like any of that. So that’s what some private equity is invested in. think that private equity company was needed proof they were evil. Singapore based immortal dragons was the name of that that funding company venture venture funding. We were talking about that one guy earlier who was on a podcast I listened to that like is on the quest for immortality. I forget his name. Brian Johnson. So I don’t know the guy from AC DC.
And he just is like doing every single like, DNA age hacking thing you can do out there and documenting his path. And apparently he’s like 65. But his like, now genetic age, you know, they have those things they can like test you and say your genetic age is truly this. He’s like now the same age as his son. Because he’s done he’s bio hacked himself so well he went from being 65 to being like 35. How do they test that? I don’t know.
It doesn’t seem ⁓ sounds sounds about as legit as your bio body sac human. I’m telling you in 10 or 20 years, that’s going to be a thing. If not if not sooner.
I believe you I’ll take some new lungs, please. I unfortunately believe you. Yeah. I believe science has a capability. Yeah. You know what I’d like science to do? I know we probably aren’t going to be the ones benefiting. It’ll be the capital B ones, the the capital who are being protested against ultra high net worth. Well, so I mean, are you going to democratize it if that actually happens? Just like private equity democratize it. And you can go and you can pick out some new tendons for your elbow or
I don’t know why you would need a new gallbladder. You can take it out. You don’t need it. New liver, new liver, right? New kidney, right? If you can go and do that, is it going to be democratized? Is it going to be on public health care or is it going to be for the ultra wealthy? Yeah, I think it starts out ultra wealthy and then everybody will have access to it. Probably not. Yeah, probably not. Um, so let’s go back a little bit. If, if I would, I, if science could do anything for me, it would create
a battery that could be charged instantaneously that would go for thousands of miles and not blow up in your face. state. Yeah. Yeah. Solid state battery, something like that right now. You know, battery cars, you obviously have this Tesla. I’m looking at a Mach-E, but the fact of the matter is right now it’s a very small percentage of cars being driven and being sold across the world.
And we are reliant on hydrocarbons, on oil and gas for most of our vehicles here in the United States and certainly throughout the world. And this situation in Iran ⁓ doesn’t appear to be getting any better as we’re sitting here. So I just thought we’d talk a little bit about the idea of the petrodollar and what that means and how we got there. We talked a little bit last time about Iran and some of the regimes over the last hundred years.
Um, and if we go backwards to the Arab oil embargo ended around, uh, March of 2000, not 2000, March of 1974 with, with president Nixon and office 73 and 74. Um, you know, essentially Nixon made a, uh, an agreement with the Saudi Arabia to provide protection to Saudi Arabia if they would.
sell their their oil in dollars. And just to back up one step further, this is after we broke out of the Brenton Woods system where we had gold and silver backing up the dollar, right? So we needed something to truly back up the dollar in terms of value to maintain confidence, we’ll say. Yeah. Brenton Woods was 40, 19, 1944. Right after the war, right? Right at the end of the war. And that was in place until 71, the gold standard here in the United States. Yeah.
⁓ And so you have the situation where Saudi Arabia is pumping a lot of oil They agree that it’s going to be done in dollars the creation of the petrodollar It really comes into place and what that does is if you’re pricing oil in dollars ⁓ They’re taking in all these dollars and then they or any of the company countries that are selling oil are going to recycle those treasuries in two dollars
recycle, excuse me, recycle those dollars into US treasuries. ⁓ At the time and certainly today, the US dollar is the most liquid currency that there is in the world. And all that ⁓ velocity increased through the most heavily used commodity in the world on a day to day basis strengthens our currency, you know, supported us after breaking the peg to, you know, gold and silver backing it up. And not only
does that but allows us to have lower interest rates because we are a stronger absolutely. And whether president Nixon knew it or not, I mean, we were at the cusp of a situation where the demand for oil was just going off the charts. And and really you have the situation where the world needs oil. And so if it’s priced in oil, priced in dollars, the world needs to accumulate dollars. And the oil exporters are going to accumulate dollars.
And then those dollars get recycled into us assets. And so kind of cemented the us currency as the global currency, something that everybody could count on and locked in our influence with having bases there and the agreement to protect Saudi and other Gulf states, which all sort of fell in line, which maybe Iran doesn’t like so much. So how do we come through this? I we could talk more about the petrodollar, but what, what is going to be a win?
for the United States and what’s going to be a win for Iran. You mentioned ⁓ that ⁓ whoever is in charge in Iran and I don’t know who that is today, but they don’t necessarily want to talk to Kushner or Wyckoff. They want to talk to JD Vance, right? That’s what that’s rumors are stating right now. We we don’t have an inside track to the administration. No, no, we don’t.
But what do you think if you were over there, what would you think a win would be for Iran? And what would you think the win would be for the United States? The asks on both sides are so far apart, obviously, like Iran is asking for full war reparations for all the damage incurred. want permanent ceasing of hostilities. They want permanent guarantees of their control of the whole Strait of Hormuz. And, you know, I don’t see any of that happening.
⁓ other than the ceasing of hostilities. ⁓ That’s their starting point negotiations. Obviously you start asking for the most and you whittle down. I think the true win for them would be maintaining the stray of Hormuz and ceasing of hostilities or knocking reparations and that control of the stray of Hormuz won’t be real control. We’ll say you keep your coast on there, but like we’re not going to let them log jam and
hold the world hostage every 10 years, you know. So I think all they’ll really get is no hostilities, no further attacks, and that’s all they’re gonna get in the end if I had to game it out myself. So what do you think a win would be for the United States? Effectively controlling the straight and having a more docile Iran in terms of, you know, global terrorism and their political lean.
coming back to center. This is where I diverge from you pretty dramatically because I don’t think that we need to control the Strait of Hormuz to have a win in the Middle East. think that I personally think the point of this was we’re going to build a canal and skip them. Maybe maybe you never know. I was going to say I think the point is X but I don’t know what the point is. I think a win
would be to have a non nuclear Iran ⁓ in in ⁓ permanent effect. Definitely. Right. So falls under the docile Iran. Yeah. Maybe stop funding terrorist organizations. Yep. Right. Hamas and others. Hezbollah. And then even I believe they they fund Boko Haram in Africa. Right. So a win to me looks like no nuclear weapons.
and opening up the straight of four moves. And I don’t know much. I don’t know how much else we could actually get. Was it worth? Yeah, I gotcha. You know, yeah, was it worth it? Yeah, I don’t know if if it’s gonna be worth it. Only time will tell if we can get a non nuclear Iran with inspectors roaming free. I think that that would be a good win for us. Yeah, I’m not sure that we’re gonna get there in the next you know, few weeks.
I think probably what happens is they open it up and we stop bombing them. And it’s not really a win for anybody. And we kicked that can down the road a little bit. Still, mate set back their conventional and potential nuclear back a couple more years, maybe by hitting their sights so hard like we did. Yeah, I could see that is a stalemate. I talked to people though, that have a little bit of a different position and they say, well, we should just go in and take it and control Iran.
and control oil. And then I said, What are you gonna put Rubio? And he’s the president of Venezuela, and he’s gonna be the president of Iran. They won’t even talk to him. I doubt it. Well, maybe JD Vance, yeah, will be the president of Iran. ⁓ but I just I don’t think you can forget legality or anything like that. I don’t think you can just take over another country. I mean, we’ve, we’ve tried that in Iran with a shaw of Iran.
before and it lasted a while right to have a western friendly leader in there and then they eventually sacked him. I it seems like the same thing playing out again. Yeah, I would love to see a non nuclear Iran and you know full access to oil but it is their oil. I mean unless we’re going to go in and say hey this is now ours. It’s theirs so I don’t know what the what the end game here is at least in the
from a an from a oil perspective, certainly from a safety perspective, a nuclear perspective. I think it’s it’s time for them to give it up. Right. Maybe. So right at the moment, that doesn’t look like it’s going to happen. I don’t know who they are negotiating with because there are a lot of leaders are no longer leading us no longer with us, which could be a problem.
from a standpoint, negotiate with? Apparently they don’t know because everyone’s saying they’re negotiating and aren’t, they’re saying they’re not negotiating. We have like Egypt and Pakistan and everybody else negotiating who really has the ability to say yes to things. don’t know. Yeah. I don’t know that there is someone that could actually do it. Although there is, ⁓ they’re talking about this week talking about a new person.
new strong man being the leader there. don’t know. of a new strong man, new leader. So whose economic opinions are you going to listen to? Kevin Warsh? Are you going to listen to Jay Powell? Who are you going to listen to? Well, the totally totally totally changed. Yeah. The federal prosecutor came out this week and said that they didn’t have any evidence of criminal wrongdoing by the Fed Chairman, Jay Powell. And
For me, I was like a sign of relief because I’ve been a Powell fan or not even a Powell fan, although he does like the Grateful Dead. went through a a very velvety voice that the market seems to like. He does. He does. I like him too. But I’m a fan of an independent Federal Reserve, right? So for me, that was great to hear. ⁓ You know, cost overruns aren’t criminal. And, you know, I don’t know the details of it, but they’re not criminal. can tell you that. So I
Kevin Warsh has the chops, you know, from an economic standpoint. Now, I think it’s, I think the perspective is that anybody that the president appoints is going to be the president’s lapdog, lapdog, right? Like anybody that he does, that’s the opinion anybody who would have been chosen. So we shouldn’t hate on him unnecessarily. No, I don’t think we do because he should be given a fair shake. Yeah, but ⁓ the leader of the Federal Reserve does not make independent decisions. Right.
there’s there’s voting involved. And so if everybody on there gets replaced, well, yeah, the feds independence is is done for if one person is chosen. And again, Kevin Walsh has economic chops. ⁓ If one person is chosen, you know, to replace Jay Powell, that’s okay. I mean, that’s there’s nothing wrong with that. So it’s not one that I prefer, Kevin or Jay. I think Kevin will probably do a fine job.
Now, we started to see some news of when the the minutes came out, right? We were talking about that yesterday. The minutes came out a few weeks ago. And there was discussion of a Fed hike. Yeah, so Jay Powell said apparently, in the in the pressure that he wasn’t saying it’s likely or anything, but he was asked a question about, well, is it possible with inflation moving in an opposite direction where you want to go that a hike could be next?
He said there were discussions of the potential for a hike to be the next move. And boy, the market didn’t like that. no, no. I mean, where we’re sitting right now, if you look at December, there’s a slightly better odds. Granted, small odds, about 13 to 20 % fluctuating on any given day, probably a little bit higher today because of the news with the inability to negotiate with Iran. But.
still 20 % isn’t a sure thing and it isn’t a likely thing. But we’re still we no longer have rate cuts. There is not going to be I can’t use the word guarantee, right? Right. There is not going to be a rate hike in 2026. They are they are not like, would agree 100 % with that demand driven inflation is not what we are seeing.
Right. We are seeing inflation caused by material price increases, not the shock, not a true demand. Absolutely. Which which raising rate rates will not affect at all. Yeah, it’ll just harm jobs, raise the cost of capital, which will slow jobs down even more. And we know we’ve talked about this already. Very weak labor market. So I don’t think there’s any chance of a Federal Reserve hike in 2026. My crystal ball doesn’t go into 2027.
Maybe maybe later, just stuff. Yeah, just stops at the end. Maybe later in the year. We’ll have that discussion again, but it’s not going to happen in 2026. I still think we’re going to get a cut or two. think we will too, because of how weak the economic data has been how weak the labor market is looking. And I think the pain that will be felt from the higher prices this again, not the type of inflation that a rate hike cures. And I think we will still see a cut personally. Yeah.
hiking would be a mistake. Yeah, absolutely. But we but we might still see 3 % headline CPI and you know, PC, just because of the shock here, you were likely to see that. But what are they? What’s the Fed known for being dependent on data, right? And so they’re gonna say, well, we’re gonna balance the higher hydrocarbon prices with the fact that the job market is relatively unproductive at the moment.
And they’re not going to do anything. can’t further lock up the housing market too, by increasing. You already mentioned the Moria draids ticking back upwards. They can’t continue to lock that up. All right. As we come to the end of the program, what do you have for the good of the order? I have been pushing off to ⁓ my dismay watching the Peaky Blinders movie, The Immortal Man. I’m so excited to see Tommy Shelby back. But ⁓ tonight, I’m going to watch it tonight. Okay. Come back.
Hopefully with a review next time. All right. I would be remiss if I didn’t bring up Chuck Norris. Everybody’s been talking about it. All the podcasts we listen to they’re talking about it was all over the all over the news. I don’t know that I was a giant Chuck Norris fan. ⁓ He had a bunch of movies in the 70s and 80s like Delta Force and missing an action. Some good action movies, good action movies. He was one of those guys long. It wasn’t tensile though. He wasn’t. He wasn’t.
He was the equivalent of Sylvester Stallone in Rambo and those types of movies and famous roundhouse kick famous roundhouse kick but everybody knows him at least the younger generation knows him for memes. Yeah, I don’t know. It was interesting. I’m not gonna go rewatch any of his stuff but it was that what everybody was talking about. Yeah, yeah, you’re gonna rewatch it. you never did. I watched Texas Walker range, Texas Ranger, whatever it’s called. I did watch a little bit.
Okay, not not going out of my way. Just you know, back in the 90s, we didn’t have 8000 channels like we have now. So he’s like, Okay, I got these 42 to choose from. So watch this. Yeah, there you go. Well, listen, everybody. Thank you so much for joining us. We wish you a very merry Easter. I’m so excited for the Easter bunny to come to our our Easter egg hunt. It’s gonna be a good spread, right? We’re gonna have we’re gonna have a great spread. We’ll bring something nice. For everybody at Good Life.
Have a wonderful Easter and we’ll see you next time. Thanks so much for joining us.
Have questions about how this impacts your investment strategy? Reach out to your advisor or email us at marketenthusiast@goodlifefa.com.
The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you consult the appropriate qualified professional prior to making a decision. Economic forecast set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Markets don’t move in a vacuum. Even in a week that starts with Easter plans and family gatherings, global events can quickly shift the tone.
That is exactly what we are seeing right now.
After reaching recent highs, the S&P 500 has pulled back roughly 7 percent. While short-term declines are normal, the driver behind this move is what matters. Much of the pressure has been tied to rising oil prices and increasing geopolitical tension, particularly in the Middle East.
What Is Driving the Pullback
The market had been in a relatively healthy position earlier this year. After strong gains, a period of sideways movement allowed valuations to stabilize and moving averages to catch up.
That setup typically supports continued growth.
However, conditions changed quickly.
Oil prices surged, with Brent crude up significantly year to date. At the same time, geopolitical uncertainty increased. Those two factors together shifted sentiment and added pressure across equities.
When markets break below key technical levels like the 200-day moving average, it often signals a change in momentum. While not a guarantee of further downside, it does reflect a more cautious environment.
Why Oil Matters More Than You Think
Oil is not just another commodity. It touches nearly every part of the economy.
When oil prices rise:
This creates a ripple effect that moves far beyond the energy sector.
The key issue is not just that prices are rising, but how long they stay elevated. The longer oil remains high, the more likely it is to work its way into broader inflation.
A Different Kind of Inflation
Not all inflation is the same.
What we are seeing now is largely supply-driven inflation. It is being caused by higher input costs rather than increased consumer demand.
That distinction matters.
When inflation is driven by demand, the Federal Reserve can typically respond by raising interest rates to slow spending. But when inflation is driven by supply shocks like energy prices, rate hikes are less effective.
This creates a more challenging environment for policymakers and adds uncertainty for markets.
A Shift Beneath the Surface
Beyond the headlines, there are notable shifts happening within the market.
Growth stocks, including the widely followed “Mag 7,” have struggled year to date. At the same time, other areas of the market have held up better, highlighting a growing divergence between sectors.
This type of rotation is not unusual, but it reinforces the importance of looking beyond broad index performance.
There are also ongoing concerns in areas like private credit, where liquidity can become an issue during periods of stress. These are not always front-page topics, but they can matter when market conditions tighten.
What Comes Next
The path forward will likely depend on a few key factors:
Short-term volatility does not necessarily change long-term outlooks, but it does remind investors that markets can adjust quickly when conditions shift.
For now, the focus remains on how these external pressures evolve and how they feed into inflation, policy decisions, and overall market sentiment.
Final Thoughts
Markets often move from calm to uncertainty faster than expected.
One week, the conversation may center around family events and seasonal celebrations. The next, it shifts to oil prices, inflation, and global conflict.
Staying informed and understanding what is driving those changes is key.
Because while headlines may change quickly, the underlying forces shaping the market tend to follow a more consistent pattern.
Listen to the Full Episode
Full Episode Transcript
Welcome to the market enthusiast. I’m Noah Brooks and obviously this is Chris needs welcome.
Noah Brooks (00:22)
Welcome to the market enthusiast. I’m Noah Brooks and obviously this is Chris needs welcome.
Came in today a little bit giddy. I just secured the Easter bunny for the family Christmas party or for the family Christmas party for the family Easter party next Friday. All right. A real live six foot Easter bunny is coming to the house. boy. Nolan will love that. It is going to be great. We have about 10 or 12 little kids coming. And so we’re going to lay out all of the eggs and some candy. So
obviously for the Easter Easter egg hunt for them and then we’re going to do an adult Easter egg hunt as well. Maybe a fireball in there or something. All right. Yeah, don’t know. I’m not in charge of that. They don’t they don’t let me near that stuff. ⁓ Welcome everybody. Thank you so much for joining us. We come to you on Thursday and a week and to them and near the end of the month and market has taken a little bit of a downturn this month. ⁓
We hit an all time high of just below 7,000 on the S and P 500 March 27th. And since then we’re down about 7%. So a drawdown of about 7 % since that time period. Most of that, not all of it, but most of it has come since, um, the, the war in Iran. Yeah. You know, a lot of selling pressure as oil has gone up. Um, I think Brent crude is up about 70 % year to date.
And West Texas intermediate as they call it is up about 57 % year to date. things things were okay for a while where we were talking last year with valuations where they were and the AI story where it was how it would be healthy to digest the gains from the last two to three years go sideways a little bit, which we did. Yeah, you know, setting up maybe for a stronger move up.
until all of this kind of came into play and we started getting some weaker economic data and we went from consulting sideways healthily to uh healthily I don’t know healthy healthily okay and uh going sideways but those uh moving averages caught up to us which normally would be good until you are hitting some weakness or some geopolitical stuff some wars
missiles flying around and now we’ve broken below those 200 day moving averages on NASDAQ and the S &P 500 which is not ideal. Yeah not ideal they generally say all the bad things happen under that 200 day moving average and whether you’re on a simple moving average or an exponential doesn’t necessarily matter where we’re under on both of them. You know so my expectation I think as we went into 2026 not I think my expectation was that it was going to be pretty similar to 2000
and 25 maybe not with the full upside that it has. That’s what we put in our 2026. average. Yeah, average return. Originally, my mindset was negative five to plus five. And I still think we’re probably going to get above plus five at the end of the year. We’re down 5 % right now. Down 7 % from the highs as I said, that’s not the end of the world. This type of stuff happens all the time.
But you know, as, as we were coming in here to record today, ⁓ the president had a, ⁓ conference around one o’clock, one 30 or so in which he stated, ⁓ some of the effect of, don’t know if we can make a deal with Iran. They should have taken it for four weeks ago. ⁓ and then the market kind of sold off into that news or into what he was saying. ⁓ and then you start looking around for ways out of this and I’m not a hundred percent sure what the
what the win is. Did you say to me earlier that they wanted to stop negotiating with Kushner and Wyckoff? Yeah, apparently they want a new envoy to work with. What I saw floating out there was they wanted to negotiate directly with VP Vance, which was kind of an interesting turn for them to I’m surprised that they didn’t say Rubio. I don’t know. Maybe there’s maybe there’s been some beef there already. Rubio would be the logical person, right?
I don’t know. Maybe they want someone higher up even higher up than Marco Rubio. They don’t want to negotiate directly with Trump apparently. Why not? I don’t know. don’t know. He’s a good negotiator. That’s what he does. Is that what? Okay. Yeah, I’ll buy that for a dollar. Yeah, so pretty much what’s going on right now is everybody’s focused on Iran and oil prices. And I said this to you guys two weeks ago. It’s really about the length and the level how long
due to oil prices stay elevated before it really starts to work its way into the economy. So on this program, we talk about inflation quite, quite often, right? Because it’s certainly a topic out there every month, every comes out every month. But you know, you people really feel it in their in their wallets. ⁓ And so when gasoline goes up, and obviously oil going up, prices rise on the gas side on the consumer side, heating oil rises.
And you know, we talked about this, you and I were talking about yesterday, clothing. Um, there’s just so many goods in the United States that we consume every day that use hydrocarbons. And that cost has gone up dramatically, uh, year to date. And then of course, just in the last three or four weeks, and you have the phosphates, which goes into every food we have, it’s not affecting yields or crops just yet. only know all organic stuff. Yeah. All right. Yeah. Phosphates and,
fertilizers, you know, that’s heavy, heavy component of that. ⁓ the straight comes, comes through that straight of Hormuz. Although we don’t really get a lot of oil from there. Russia apparently gets a little bit of oil. Japan, I think gets like 90 % of their oil from ⁓ trying to get a lot. ⁓ we produce 13 million barrels a day. We use 21 million. We kind of have some important export on, different types.
mixtures of crude oil. And then obviously, the refineries are the ones that taking that crude and making it into gasoline or kerosene or diesel. They’re rallying. energy is doing great. Leading this year, what did you say it’s up? Up 40 % as of earlier today. And it was a laggard last year. So it’s a strong bounce back. You know, energy is one of those that has I mean, obviously, in 2020, it was down dramatically oil traded, you know,
depending on how you look at it, or traded negative for a day or two on one of those contracts. ⁓ So worst performer. And then you’re like, well, maybe I should nibble on some energy. And boom, it’s been a it’s been a monster. Certainly in the last cycles, land man and ⁓ what’s the guy’s name? ⁓ Billy Bob, Billy Bob’s his his who he plays his character put it perfectly saying we want it between 65 and 85. Don’t quote me on the numbers. ⁓
Well, it’s probably above there. Yeah. I mean, crushing demand above that point. Yeah, absolutely. ⁓ we’re still here locally. We’re still around four bucks a gallon for the cheap stuff. ⁓ that’s kind of where it was a year and a half ago, two years ago, ⁓ at its height, it was over, I think $5 for the cheap stuff. ⁓ but diesel is pretty expensive. don’t know. It’s over five. Yeah, it’s close to six. I think it’s five 99 here. I mean, you’re loving life.
I was just looking at the possibility of Mustang Mach E. Just level up to the Rivian, man. Nah, I’m not gonna do a Rivian. They’re so cool. The SUV version’s real cool. There was one parked here today. I kind of scoped it out a little bit, drove real slow. I would take one. just… What happens if it breaks? Where do you take it? Where’s a Rivian dealer? You know, same place wherever.
Wherever Joe’s Joe’s fix it down the street. They’ll they’ll take care of it for you. What could go wrong? mean, there’s so fewer parts in EVs compared to combustion engines. I’ve never had an issue besides, you know, the obvious one issue offender bender, no mechanical issues. Yeah, no mechanical issues. Well, we’ll we’ll see what happens. I mean, it’s getting closer. The other cars getting there and we’re we’re ready for what’s going to pull the boat then.
I guess the Rivian could know I have the x5. Okay. Yeah. It has a tow hitch on it. I think the Mach-E could pull it. I don’t know if it comes with a tow hitch. Probably probably doesn’t $1500 up charge. Sure. Yeah. Yeah. So where that puts us today, going back to the markets for a minute. I said, SB 500 down about 5 % mid caps are up, they’re up 2 % year to date, small caps are almost up 3%.
International just flipped negative this week down about 1 % and emerging markets are still up almost 2 % year to date. Equal weight up a little bit, just over half a percent. Value, where we have a little bit of a tilt, is up a point and half for the year. Growth is the big loser, down almost 10.5 % year to date. We talked before we came in. I had a note on here for March.
growth was actually doing a little bit better than it did in January and February. And I guess that was until today. And, you know, on the month, I think it’s right back around value or just a shape or a little value. Now after this rough day, we’re encountering down 2 % on the Nasdaq today when we came in. Yeah. And so let’s, let’s talk about that for a little bit, because obviously the mag seven has been the trade to be in for realistically for a long time, a year to date, every single mag seven stock,
Google, Amazon, Apple, Metta, Nvidia, Tesla, Microsoft are down for the year. Every single one of them. What do you think the biggest loser is for the year? Well, I know. already knows. I know it’s Microsoft. It’s Microsoft. The least loser is Nvidia, right? Yeah. Down about 4 % Microsoft down about 33 % for the year. It is almost back to its liberation day lows in the 330 range.
And it was I mean, you’re essentially down 200 points if you bought at I think the top was 556. What’s your thought on that? Is it the software exposure? Is it open AI? Is it such a not being aggressive enough sort of like Apple like just not putting out compelling products out there? What’s your thoughts on Microsoft being down so much? I would say ⁓ it’s a combination of factors, right? So it’s one of the biggest positions in SPY. So if you’re selling chunks,
of equities, starting with mega caps, that’s going to be one reason why. But realistically, when you pull out Nvidia, it’s not down that much. So that can’t be the pure result of it. I really think it’s just the innovation, you know, in terms of what have you done for me lately, they haven’t really come through on the AI channel. They haven’t been able to ⁓ do those year over year comps for their software.
at a rate that’s equal to some of the other AI companies. And so I just I think they’re a little bit behind in that respect. think from the commercial or business perspective, obviously, you know, got busted kind of for a bit of a monopoly going on, but they’ve maintained the office suite of products. But why do we have to pay so much to license something as simple as a word processor, or Excel? Like, why are we paying this much for it? And I think part of
you know, people maybe don’t think of them as like the high growth software, but their software, that’s what they are. So it makes sense that they’re getting hit with the software group. the SaaSpocalypse that we talked about, right? Software as a service, they’ve all gotten hit. Obviously, we talked about the software sector being down. But Microsoft is in the thick of that as software as a subscription, right?
I mean, one of first to do it going back to like even who is it like Adobe? I think they were like the leaders in that back in the day. Yeah, the thing about office is we’re obviously office users here. But you can’t really get away from it, right? Like, yes, you can utilize ⁓ Google. What’s their version of word? They have a version of it. They have sheets. They have, you know, the word processor. But for business, that’s not really compatible.
Yeah, you know, so it’s one of those things where you’re tied into it. I don’t think people are necessarily leaving it. I just don’t think there’s a lot of growth in that side of it. And the server side has been the thing that has really been compounding them. Think about all the the the desks and the consultants and we talked about the headcount and software dropping dramatically. Well, all those consultants, you would think, had a computer had maybe two computers, a laptop and you know,
using those licenses. Well, if we’re dropping them for AI agents, know, those fewer licenses in corporate America. That’s Microsoft. could be. It very well could be. mean, if people are leaving the software industry, leaving, right? And that’s the word I’m to use. If they’re leaving the software industry, ⁓ but you’re saying that they’re not going to have another license somewhere else. I don’t know. AI doesn’t need a license.
I thought Microsoft Teams was gonna save Microsoft. Do you like Microsoft Teams? On the record, I mean, I like the ability to message people within the firm, right? It’s pretty good. You and I use it. Yeah. I use it with other, like we use it all the time. It’s not as cool as AIM was back in the day. AIM Messenger? my goodness. You’re dating yourself. ICQ, that’s my ringtone for text messages, ICQ. Uh-oh. boy.
Let’s get into some of the economic data. I think that’s important. You know what’s happened really since the I was going to use the word invasion. That’s not right. Since we started dropping bombs on Iran is yields have kind of spiked up. Yeah, the kinetic counteroffensive kinetic counteroffensive. Yeah, yields have spiked up pretty dramatically. The 10 year was well under four were at about 4.4 today.
30 year is just shy of five. think it’s 4.93 when we walked in here. And what’s that, what that is doing is pushing up mortgage rates. So essentially mortgages topped out at about 7.8 % in 2023, maybe November of 2023. And they really have been dropping. I mean, with some ups and downs, they’ve really been dropping ever since then. Last month,
the 30 year average mortgage in the United States got below 6 % for the first time since October of or September of 22. So we’re definitely been moving in the right direction, which is really good for affordability in the housing market. And then boom, what happens and we’re back up at 6.4. Now I don’t know if the difference between six and 6.4 is going to stop somebody, but it definitely makes it less of the wrong direction. Yeah, it’s the wrong direction. And there’s so many things going into that.
You know, we talked about the inflation impacts already of the straight-up poor Moos and Iran, everything going on. You have that inflation going up, you know, in the short term, the one year break even inflation rates as measured by, you know, nominal US treasuries versus the tips, the treasury inflation protected securities is up above 2.3 now today, I believe. Pair that with the stuff that’s always going on.
You have just passed 39 trillion in debt and 147 days we went from 38 to 39 So we’re knocking on 40 trillions doorstep that pushes the yields up the inflation pushes yields up if Elon has all of this money and he wants to pay the TSA workers Why doesn’t he pay down some of our debt? Huh? It’s like feeding the wild animal the more you give them the more they spend
Meaning the government not the wild animal. They don’t spend anything. Yeah, they don’t they don’t spend anything. Going back to inflation for second. We did get some PPI information since last time we were in here and it was pretty hot. Right. So PPI is essentially the wholesale cost or wholesale inflation at at the manufacturing level what they’re selling it for came in at point seven month over month that is that is that is pretty high. 3.
four headline versus 2.9 on the year over year. then, jeez, core was 3.9 versus, I don’t know, was it like 3.5 or 3.4 expectation? Both were really hot. Yeah. And I’ll note and make sure we get this. ⁓ That was before oil prices went up. Right? So I think what we’ve done here is we’ve made a path for higher prices across the board.
as hydrocarbon prices, aka oil, ⁓ is being sold at these new higher prices. mean, it basically went up 30 bucks a barrel in a course of four weeks. And that translates across the board to higher prices for all of those things that petroleum products make. Doesn’t matter what it is, if it’s tires, if it’s gasoline, if it’s polyester, all those things. So we are going to see that. And I said earlier about the length and the level, right?
the longer it stays elevated, the worse it’s going to be. Yeah. And really, I mean, we saw some of that after COVID and then it mellowed out and we had 50 at some point, well, we had well below 50, but you know, I think to, to your character in land man, right? You know, 65 to 85 kind of, okay, start getting above a hundred. It’s gets, that gets a little bit rough. Yep. To, uh, yeah. Demand starts going down and vice versa, you know,
When we had negative oil during COVID, you got to shut down the pumps. They won’t pump it. Yeah. Why would they pump it? Right? Absolutely. I want to touch back on the, on the mag seven for a second, because I think it’s important. I said, uh, none of the mag seven is positive for the year. Nvidia is the least negative at, uh, down 4%. When you look at the S and P 500 and you look at the concentration of the top 10, which obviously all of the mag seven are part of,
Top 10 is about 38 % of the S &P 500. So when you have these big companies in there that are down for the year, it is going to push prices down. It is going to push large cap index down. And so you really are seeing a big difference between the value side of large cap and the growth side of large cap. And value is more financial-related. They’re down dramatically for the year, about 8 % because yields…
have moved up a little bit and the yield curve is not so favorable for financials, not to mention private credit. We talked about that a little bit last time. No real major shocks over the last two weeks in the private credit market. There was another fund that slowed redemptions down. Did you say, so it was the FS and KKR co-branded fund essentially.
specialty lending, I think specialty lending, they put ⁓ some restrictions on redemption, basically, people that invested in that can’t get their money back on demand. So they have to wait until they they open that you want to drill down on on private equity at all? Like, sure, I personally, I don’t believe there’s any magic bullet in the markets. Otherwise, we know that would be arbitraged away. And yet it’s been held out by the professionals.
as a magic bullet, you get exceptional return with very little volatility. Well, we all know that’s not the case. They’re just smoothing over the volatility by not reporting or marking to market. If you don’t have to be on the stock market, and you don’t have to show a price and sell every day at some price, you’re not going to report that price if it’s going down, right. So it’s almost like the price you see is almost like a high water
And you know, all the people we’ve heard selling it. Yeah, of course, they’re gonna sell it. We’ve been since Vanguard did a solid to our all of us investors and started this race to zero on expense ratios. You know, everything’s been going down, even active funds have come down over the last decade. But you know what hasn’t come down is the private stuff because they can still charge those really high expense ratios and management fees.
of course they’re going to sell that in absence of their formerly high active funds and stuff. Yeah, it’s just such a shame that everybody sort of bought that line sinker and luckily most people, common retail people have been saved from it. But it almost or might be coming into 401ks at some point and it seems to me right at the moment, Yeah, I think they’re gonna pump the brakes on
private credit in retirement plans, certainly, or Rissa your time and plans for one case for three B’s, 457 things like that. And quite frankly, I don’t think they’re appropriate for everybody. They’ve they’ve been in these this world of the high net worth and ultra high net worth for a long time, who don’t need that liquidity, who don’t need the liquidity, you can lock it away for five, in some cases, longer years. And they’ve tried to democratize private credit and bring it out in areas where it maybe shouldn’t be brought out in. Yeah.
And we don’t really deal in anything like that here. So our, you know, our traditional investment models don’t have any direct exposure to private credit. But of course, you know, even companies like JP Morgan have exposure, you know, financials in general have exposure, they have exposure to real estate, they have exposure to private credit. They, they, you know, essentially, private credit is just giving loans to companies that aren’t public, you know, and then not marking it like a mutual fund or an exchange traded fund.
And I think this is the perfect situation where you have to look at and say, where they’re locking up withdrawals and things like that is the perfect explanation why if you are requiring me to lock up my money where I can’t sell it any day, week or month, maybe there’s some quarterly tender at 5 % or something like that, that they do allow such a red flag to me because there’s no way they can honestly achieve
the premium required for locked up. Now, I’m not a billionaire with a capital B that you’re lock up $500 million like, you know, some institutions like Harvard and Yale that sort of made it famous. But I just don’t see how they could honestly achieve a premium worth the lack of liquidity. I just don’t think it exists. You are possibly correct. It seems like the shiny golden thing that
doesn’t have a lot of downside until they stop redemption. Yeah. And we obviously Yeah, as you said, we don’t invest in any private stuff or gated stuff that doesn’t have daily liquidity for multiple reasons. But we have advisors who come to us and they’ve invested in and they’re like, I’m in this and now I can’t get out. What do you recommend? Like, not buying it? Yeah, I shouldn’t have bought it is what I recommend. Well, I mean, therein lies the rub is that it is appropriate for certain investors.
it’s appropriate for high net worth and ultra high net worth clients that literally don’t care what happens in the next five years. And that’s who it’s appropriate for. I’m sure there’ll be a million people out there, not a million people. There’ll be a lot of financial salespeople suggesting otherwise, but I’m here to tell you that it’s not meant for everybody. Not meant for everybody. We’re talking about high net worth and ultra high net worth clients.
We saw something interesting when we were down in Philly the other day. Oh yeah. Yeah, we did. came out. What were we doing? Were we bowling that night? And we came outside and we heard a whole mess of noise. So loud waiting for the car. I thought there was like a riot going on. It sounded like a riot and we couldn’t see anything. It was that far away from us downtown Philadelphia. Noah’s like, I’m going to check it out. He just starts marching up the street. I’m like, Oh my gosh, dude. And he comes back. He’s like, guess what it was.
It was a protest in front of the Ritz Carlton and eat the rich protest. I thought that was it was interesting. But wait, that wasn’t the interesting part. We heard all this noise and we thought it was a full on riot like surrounding city hall or something. How many people was it Noah? 11. 11 people with a bullhorn. Yeah. Which got us talking like think about how 10 people 11 people can make that much noise. So like they might have some pots and pans to like
like at New Year’s Eve. Do ever do that? I mean, yeah. Yeah, okay. I was just astounded that you came back and say it was 1011 people. So think about how little buy in you need to make a difference or not make a difference, but make a commotion. Like, Philly had we’ll just call it million people in Philly. If you have 1 % of people buying into some idea that’s 100,000 people and if only 1 % of that 100,000 actually is an activist who wants to
go out to the streets in March. That’s 1000 people. This was 10. It’s wild. I don’t endorse eat the rich. Occupy Wall Street. You work on Wall Street. I do not work on Wall Street. I work in the investment community, but not not in New York and nothing wrong with that. I’m okay up here in Pennsylvania. I’m not private equity, bro. No, none of that for us.
But speaking of private equity, there are some really small startup companies that are getting financing for some really crazy stuff out there. ⁓ If you were ill, if you were sick and you needed a new gallbladder or you needed a new lung or you needed a new heart, ⁓ where would you go for it? You’d have to go on a waiting list, right? Kidney, you’d go on a waiting list and you’d
do whatever you had to do. But there is a new startup out there that is ⁓ going to be growing.
it’s a California company, right? Wouldn’t be wouldn’t be the case without it being in California. A company called R3 bio has been growing has the idea they haven’t been they’ve been doing it with with mice apparently, but they’ve been growing humanoids for or the idea is to grow humanoids for organ harvesting. the humanoid, they’re gonna start putting attaching them to an AI head and just go ahead and body no head.
So the idea was, believe the Trump administration has kind of cut back on animal testing. That’s been in the works for a while, right? PETA and everything. I don’t know how the Trump administration did anything, but that’s what was quoted in this article that maybe it was just in place for the last few years. ⁓ But the lack of ability to animal test here in the United States drove these people to think about, why don’t we create essentially mice without heads?
And apparently they’re in the process of doing that. So they can test what happens with different materials and drugs on these headless mice. Because you can’t, I guess you can’t care about something if it doesn’t have a brain. Right. And so that morphed into a humanoid where they’re you’re essentially a body sack waiting to be harvested. I don’t like any of this, dude. It does seem like it’s right out of a sci fi movie, right?
But think about it. If you if you fast forward 30 or 40 or 50 years, how about this? How about you’re born? They take a little bit of your DNA and they grow another you. So when you’re 70 or 80, you can get. This is literally the plot of a book I read when I was like in fourth grade. You know they had the book fair. I went down this book. Scorpions are cool. House of the Scorpion. OK, let’s read it. You know, I’m just a little kid running around here.
And it was about a Mexican drug cartel leader who just built like 20 clones and they grew up in the exact situation as him, like on this little shanty shed on a farm, just like he did. But they were being raised for slaughter to be an organ farm for the drug lord. And one of the clones like broke out, got a clue and sort of upended the whole thing. That was House of the Scorpion. Sorry for the spoiler, but it’s like 25.
years old now if you didn’t read it by now you probably weren’t gonna read it well it’s a little bit like the Mickey 17 that we saw right that I saw last year where they just are able to reprint you and reprint you and reprint you and then inject your memories and your personality I guess in into a clone body but this is actually happening apparently they are doing it with mice or some type of rodent without a head so that they can test drugs on it and their goal is to be able to create humanoids with no head
that they could just harvest the organs. I’d like a new heart, maybe a good pumper, please. How about some lungs? And you can specify, right, who you want it from.
I don’t like any of that. So that’s what some private equity is invested in. think that private equity company was needed proof they were evil. Singapore based immortal dragons was the name of that that funding company venture venture funding. We were talking about that one guy earlier who was on a podcast I listened to that like is on the quest for immortality. I forget his name. Brian Johnson. So I don’t know the guy from AC DC.
And he just is like doing every single like, DNA age hacking thing you can do out there and documenting his path. And apparently he’s like 65. But his like, now genetic age, you know, they have those things they can like test you and say your genetic age is truly this. He’s like now the same age as his son. Because he’s done he’s bio hacked himself so well he went from being 65 to being like 35. How do they test that? I don’t know.
It doesn’t seem ⁓ sounds sounds about as legit as your bio body sac human. I’m telling you in 10 or 20 years, that’s going to be a thing. If not if not sooner.
I believe you I’ll take some new lungs, please. I unfortunately believe you. Yeah. I believe science has a capability. Yeah. You know what I’d like science to do? I know we probably aren’t going to be the ones benefiting. It’ll be the capital B ones, the the capital who are being protested against ultra high net worth. Well, so I mean, are you going to democratize it if that actually happens? Just like private equity democratize it. And you can go and you can pick out some new tendons for your elbow or
I don’t know why you would need a new gallbladder. You can take it out. You don’t need it. New liver, new liver, right? New kidney, right? If you can go and do that, is it going to be democratized? Is it going to be on public health care or is it going to be for the ultra wealthy? Yeah, I think it starts out ultra wealthy and then everybody will have access to it. Probably not. Yeah, probably not. Um, so let’s go back a little bit. If, if I would, I, if science could do anything for me, it would create
a battery that could be charged instantaneously that would go for thousands of miles and not blow up in your face. state. Yeah. Yeah. Solid state battery, something like that right now. You know, battery cars, you obviously have this Tesla. I’m looking at a Mach-E, but the fact of the matter is right now it’s a very small percentage of cars being driven and being sold across the world.
And we are reliant on hydrocarbons, on oil and gas for most of our vehicles here in the United States and certainly throughout the world. And this situation in Iran ⁓ doesn’t appear to be getting any better as we’re sitting here. So I just thought we’d talk a little bit about the idea of the petrodollar and what that means and how we got there. We talked a little bit last time about Iran and some of the regimes over the last hundred years.
Um, and if we go backwards to the Arab oil embargo ended around, uh, March of 2000, not 2000, March of 1974 with, with president Nixon and office 73 and 74. Um, you know, essentially Nixon made a, uh, an agreement with the Saudi Arabia to provide protection to Saudi Arabia if they would.
sell their their oil in dollars. And just to back up one step further, this is after we broke out of the Brenton Woods system where we had gold and silver backing up the dollar, right? So we needed something to truly back up the dollar in terms of value to maintain confidence, we’ll say. Yeah. Brenton Woods was 40, 19, 1944. Right after the war, right? Right at the end of the war. And that was in place until 71, the gold standard here in the United States. Yeah.
⁓ And so you have the situation where Saudi Arabia is pumping a lot of oil They agree that it’s going to be done in dollars the creation of the petrodollar It really comes into place and what that does is if you’re pricing oil in dollars ⁓ They’re taking in all these dollars and then they or any of the company countries that are selling oil are going to recycle those treasuries in two dollars
recycle, excuse me, recycle those dollars into US treasuries. ⁓ At the time and certainly today, the US dollar is the most liquid currency that there is in the world. And all that ⁓ velocity increased through the most heavily used commodity in the world on a day to day basis strengthens our currency, you know, supported us after breaking the peg to, you know, gold and silver backing it up. And not only
does that but allows us to have lower interest rates because we are a stronger absolutely. And whether president Nixon knew it or not, I mean, we were at the cusp of a situation where the demand for oil was just going off the charts. And and really you have the situation where the world needs oil. And so if it’s priced in oil, priced in dollars, the world needs to accumulate dollars. And the oil exporters are going to accumulate dollars.
And then those dollars get recycled into us assets. And so kind of cemented the us currency as the global currency, something that everybody could count on and locked in our influence with having bases there and the agreement to protect Saudi and other Gulf states, which all sort of fell in line, which maybe Iran doesn’t like so much. So how do we come through this? I we could talk more about the petrodollar, but what, what is going to be a win?
for the United States and what’s going to be a win for Iran. You mentioned ⁓ that ⁓ whoever is in charge in Iran and I don’t know who that is today, but they don’t necessarily want to talk to Kushner or Wyckoff. They want to talk to JD Vance, right? That’s what that’s rumors are stating right now. We we don’t have an inside track to the administration. No, no, we don’t.
But what do you think if you were over there, what would you think a win would be for Iran? And what would you think the win would be for the United States? The asks on both sides are so far apart, obviously, like Iran is asking for full war reparations for all the damage incurred. want permanent ceasing of hostilities. They want permanent guarantees of their control of the whole Strait of Hormuz. And, you know, I don’t see any of that happening.
⁓ other than the ceasing of hostilities. ⁓ That’s their starting point negotiations. Obviously you start asking for the most and you whittle down. I think the true win for them would be maintaining the stray of Hormuz and ceasing of hostilities or knocking reparations and that control of the stray of Hormuz won’t be real control. We’ll say you keep your coast on there, but like we’re not going to let them log jam and
hold the world hostage every 10 years, you know. So I think all they’ll really get is no hostilities, no further attacks, and that’s all they’re gonna get in the end if I had to game it out myself. So what do you think a win would be for the United States? Effectively controlling the straight and having a more docile Iran in terms of, you know, global terrorism and their political lean.
coming back to center. This is where I diverge from you pretty dramatically because I don’t think that we need to control the Strait of Hormuz to have a win in the Middle East. think that I personally think the point of this was we’re going to build a canal and skip them. Maybe maybe you never know. I was going to say I think the point is X but I don’t know what the point is. I think a win
would be to have a non nuclear Iran ⁓ in in ⁓ permanent effect. Definitely. Right. So falls under the docile Iran. Yeah. Maybe stop funding terrorist organizations. Yep. Right. Hamas and others. Hezbollah. And then even I believe they they fund Boko Haram in Africa. Right. So a win to me looks like no nuclear weapons.
and opening up the straight of four moves. And I don’t know much. I don’t know how much else we could actually get. Was it worth? Yeah, I gotcha. You know, yeah, was it worth it? Yeah, I don’t know if if it’s gonna be worth it. Only time will tell if we can get a non nuclear Iran with inspectors roaming free. I think that that would be a good win for us. Yeah, I’m not sure that we’re gonna get there in the next you know, few weeks.
I think probably what happens is they open it up and we stop bombing them. And it’s not really a win for anybody. And we kicked that can down the road a little bit. Still, mate set back their conventional and potential nuclear back a couple more years, maybe by hitting their sights so hard like we did. Yeah, I could see that is a stalemate. I talked to people though, that have a little bit of a different position and they say, well, we should just go in and take it and control Iran.
and control oil. And then I said, What are you gonna put Rubio? And he’s the president of Venezuela, and he’s gonna be the president of Iran. They won’t even talk to him. I doubt it. Well, maybe JD Vance, yeah, will be the president of Iran. ⁓ but I just I don’t think you can forget legality or anything like that. I don’t think you can just take over another country. I mean, we’ve, we’ve tried that in Iran with a shaw of Iran.
before and it lasted a while right to have a western friendly leader in there and then they eventually sacked him. I it seems like the same thing playing out again. Yeah, I would love to see a non nuclear Iran and you know full access to oil but it is their oil. I mean unless we’re going to go in and say hey this is now ours. It’s theirs so I don’t know what the what the end game here is at least in the
from a an from a oil perspective, certainly from a safety perspective, a nuclear perspective. I think it’s it’s time for them to give it up. Right. Maybe. So right at the moment, that doesn’t look like it’s going to happen. I don’t know who they are negotiating with because there are a lot of leaders are no longer leading us no longer with us, which could be a problem.
from a standpoint, negotiate with? Apparently they don’t know because everyone’s saying they’re negotiating and aren’t, they’re saying they’re not negotiating. We have like Egypt and Pakistan and everybody else negotiating who really has the ability to say yes to things. don’t know. Yeah. I don’t know that there is someone that could actually do it. Although there is, ⁓ they’re talking about this week talking about a new person.
new strong man being the leader there. don’t know. of a new strong man, new leader. So whose economic opinions are you going to listen to? Kevin Warsh? Are you going to listen to Jay Powell? Who are you going to listen to? Well, the totally totally totally changed. Yeah. The federal prosecutor came out this week and said that they didn’t have any evidence of criminal wrongdoing by the Fed Chairman, Jay Powell. And
For me, I was like a sign of relief because I’ve been a Powell fan or not even a Powell fan, although he does like the Grateful Dead. went through a a very velvety voice that the market seems to like. He does. He does. I like him too. But I’m a fan of an independent Federal Reserve, right? So for me, that was great to hear. ⁓ You know, cost overruns aren’t criminal. And, you know, I don’t know the details of it, but they’re not criminal. can tell you that. So I
Kevin Warsh has the chops, you know, from an economic standpoint. Now, I think it’s, I think the perspective is that anybody that the president appoints is going to be the president’s lapdog, lapdog, right? Like anybody that he does, that’s the opinion anybody who would have been chosen. So we shouldn’t hate on him unnecessarily. No, I don’t think we do because he should be given a fair shake. Yeah, but ⁓ the leader of the Federal Reserve does not make independent decisions. Right.
there’s there’s voting involved. And so if everybody on there gets replaced, well, yeah, the feds independence is is done for if one person is chosen. And again, Kevin Walsh has economic chops. ⁓ If one person is chosen, you know, to replace Jay Powell, that’s okay. I mean, that’s there’s nothing wrong with that. So it’s not one that I prefer, Kevin or Jay. I think Kevin will probably do a fine job.
Now, we started to see some news of when the the minutes came out, right? We were talking about that yesterday. The minutes came out a few weeks ago. And there was discussion of a Fed hike. Yeah, so Jay Powell said apparently, in the in the pressure that he wasn’t saying it’s likely or anything, but he was asked a question about, well, is it possible with inflation moving in an opposite direction where you want to go that a hike could be next?
He said there were discussions of the potential for a hike to be the next move. And boy, the market didn’t like that. no, no. I mean, where we’re sitting right now, if you look at December, there’s a slightly better odds. Granted, small odds, about 13 to 20 % fluctuating on any given day, probably a little bit higher today because of the news with the inability to negotiate with Iran. But.
still 20 % isn’t a sure thing and it isn’t a likely thing. But we’re still we no longer have rate cuts. There is not going to be I can’t use the word guarantee, right? Right. There is not going to be a rate hike in 2026. They are they are not like, would agree 100 % with that demand driven inflation is not what we are seeing.
Right. We are seeing inflation caused by material price increases, not the shock, not a true demand. Absolutely. Which which raising rate rates will not affect at all. Yeah, it’ll just harm jobs, raise the cost of capital, which will slow jobs down even more. And we know we’ve talked about this already. Very weak labor market. So I don’t think there’s any chance of a Federal Reserve hike in 2026. My crystal ball doesn’t go into 2027.
Maybe maybe later, just stuff. Yeah, just stops at the end. Maybe later in the year. We’ll have that discussion again, but it’s not going to happen in 2026. I still think we’re going to get a cut or two. think we will too, because of how weak the economic data has been how weak the labor market is looking. And I think the pain that will be felt from the higher prices this again, not the type of inflation that a rate hike cures. And I think we will still see a cut personally. Yeah.
hiking would be a mistake. Yeah, absolutely. But we but we might still see 3 % headline CPI and you know, PC, just because of the shock here, you were likely to see that. But what are they? What’s the Fed known for being dependent on data, right? And so they’re gonna say, well, we’re gonna balance the higher hydrocarbon prices with the fact that the job market is relatively unproductive at the moment.
And they’re not going to do anything. can’t further lock up the housing market too, by increasing. You already mentioned the Moria draids ticking back upwards. They can’t continue to lock that up. All right. As we come to the end of the program, what do you have for the good of the order? I have been pushing off to ⁓ my dismay watching the Peaky Blinders movie, The Immortal Man. I’m so excited to see Tommy Shelby back. But ⁓ tonight, I’m going to watch it tonight. Okay. Come back.
Hopefully with a review next time. All right. I would be remiss if I didn’t bring up Chuck Norris. Everybody’s been talking about it. All the podcasts we listen to they’re talking about it was all over the all over the news. I don’t know that I was a giant Chuck Norris fan. ⁓ He had a bunch of movies in the 70s and 80s like Delta Force and missing an action. Some good action movies, good action movies. He was one of those guys long. It wasn’t tensile though. He wasn’t. He wasn’t.
He was the equivalent of Sylvester Stallone in Rambo and those types of movies and famous roundhouse kick famous roundhouse kick but everybody knows him at least the younger generation knows him for memes. Yeah, I don’t know. It was interesting. I’m not gonna go rewatch any of his stuff but it was that what everybody was talking about. Yeah, yeah, you’re gonna rewatch it. you never did. I watched Texas Walker range, Texas Ranger, whatever it’s called. I did watch a little bit.
Okay, not not going out of my way. Just you know, back in the 90s, we didn’t have 8000 channels like we have now. So he’s like, Okay, I got these 42 to choose from. So watch this. Yeah, there you go. Well, listen, everybody. Thank you so much for joining us. We wish you a very merry Easter. I’m so excited for the Easter bunny to come to our our Easter egg hunt. It’s gonna be a good spread, right? We’re gonna have we’re gonna have a great spread. We’ll bring something nice. For everybody at Good Life.
Have a wonderful Easter and we’ll see you next time. Thanks so much for joining us.
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