The markets have delivered a sharp reminder of just how quickly conditions can change.
After a nearly 10% pullback, stocks staged a rapid recovery in just a matter of days. While that kind of rebound can feel encouraging, it also raises an important question: what’s really driving the volatility?
It’s not unusual for markets to experience pullbacks, but the speed of both the decline and the recovery has stood out. Instead of the typical “fast down, slow up” pattern, we saw the opposite.
That kind of movement often signals uncertainty beneath the surface. Investors are reacting quickly to new information and trying to position themselves in a market that doesn’t have a clear direction.
One of the biggest drivers right now is inflation.
Recent data shows inflation remains above the Federal Reserve’s 2% target, and in some cases, it’s heating back up. Rising oil prices and ongoing geopolitical tensions are adding another layer of pressure, especially as energy costs tend to ripple through the broader economy.
From transportation to manufacturing to everyday goods, higher input costs don’t stay isolated for long.
This is where things get complicated.
The Federal Reserve is balancing two competing priorities: controlling inflation and supporting employment. Right now, neither side is giving them a clear path forward.
That leaves the Fed in a position where any move could have unintended consequences. As a result, markets are reacting in real time to every new data point, which is contributing to the recent swings.
While headlines tend to focus on major indexes, there’s been an important shift happening underneath.
Small- and mid-cap stocks have started to outperform large-cap names in recent months. That kind of rotation often signals changing investor sentiment, particularly around valuations and future growth expectations.
At the same time, international markets have shown relative strength, adding another layer to the evolving investment landscape.
While it’s impossible to predict short-term market movements, understanding the forces at play can help provide clarity during uncertain periods.
Periods like this can feel uncomfortable, but they’re not unusual. Markets are constantly adjusting to new information, and volatility is often part of that process.
The key is staying focused on the bigger picture and avoiding the temptation to react to every headline.
Hey, welcome back to another installment of the market enthusiast. I’m Noah Brooks. And obviously this is Chris needs good day.
So what do you think we are halfway through the month? the market went down almost 10%, 9.8 % and we came rallying back. Yeah. Opposite of what we normally see where it’s, you know, the elevator down and the steps back up. We saw it the other way around the market kind of hung in there.
during March and you know, all the geopolitical volatility we saw commodity volatility that we saw and boy, it popped up what seven and a half, 8 % in the last three trading days or so. obviously you’re paying attention and you know what’s going on. ⁓ we have a two week pause, right? So supposedly we’re not going to be doing anything, for the next two weeks, but we have some, the Israelis are there. They’re still
They’re still bombing Lebanon and they they were as of yesterday. I don’t know that I saw anything this morning on this. said middle of the month. We’re kind of at the end of the first third of the month. You know, there is a lot going on over there and there has been a lot of destruction in terms of the oil infrastructure. My concern for oil prices that have risen, I know 60 70 % ⁓
is that they’re not going to be able to go back down right away. And I think, you know, we got some inflation numbers this morning for March, and they were pretty hot. right. You know, what’s the term you’ve been using length and level, like thin level is what really matters. Absolutely. So if oil stays high for a long period of time, it’s going to get worse and worse and worse. And I think I’ve said this on here before, but you know, hydrocarbons and natural gas,
They go into a lot more than just our cars and our fuel. Now I’m not, what do you, do you got on a little better today. I don’t have my oil stretchy spandex on, but you know, it’s amazing how much hydrocarbon go into plastics. Those tiny little beads that they use to make all sorts of plastics are really like 40 % oil and a lot of them are made with natural gas as well. So
all of this increase in hydrocarbon prices is going to filter down through the economy in input costs for almost everything that we that we wear, buy, use, build, not timber, but almost everything else. then you have fertilizer, 20 % plus of global fertilizer and phosphates also comes out of the straight-up Hormuz as well. So that’s another thing you see.
food prices and things like that in the weeks and months to come might take upwards as well. Yeah. ⁓ you know, on the whole Iran thing, I mean, I think it’s, it’s valid and it’s, it’s a worthy cause to try to have a nuclear free Iran. ⁓ we see what’s happened with North Korea in that them having a nuclear capabilities, essentially there’s nothing we can do once you get it. It’s it’s a line that once you cross,
That’s how Kim Jong Un got at the big kids table, right? Yeah. I mean, he is a big boy. He’s he doesn’t necessarily necessarily deserve a seat at the big kids table. Yeah, their economy doesn’t really warn now that that’s I don’t I don’t see him getting into the G 20. Anytime. No, I don’t think so. Not not likely. Not likely. But like I said, we did get that CPI report this morning that included March that was up 3.3 year over year.
And we know that the Fed target is not 3.3 2%. We had PCE, which I think by law, I’m required to say is the feds preferred gauge of inflation, right? That came in reasonable yesterday. that was for February. So it’s kind of a read through we kind of dismissed that there is still sticky. It was still sticky. So yeah, there is inflation in the pipeline. Yeah, that is coming.
And it’s not just in gasoline. ⁓ you know, you can strip, strip out when, ⁓ when you look at inflation, CPI and the core numbers, that doesn’t include feud, ⁓ food and fuel. ⁓ but it includes everything else. And those things that we just talked about from hydrocarbons, ⁓ including fertilizer are all in there. So there’s going to be an inflation coming and it’s, you know, it’s not going to stop in March.
I think the expectation going forward is for higher inflation. And that brings us to the Federal Reserve. These guys are stuck. In our presentation to our advisors yesterday, you put the Federal Reserve in our J-PAL conversation right between inflation and labor markets. And it’s very, very accurate to do because they are between a rock and a hard place, right between their two mandates. mean, you have inflation, which is actually on the rise.
and you have labor markets which are cooling down. Now I don’t know in their dual mandate if there’s one that is more important. I know they say they don’t care about the stock market, right? Like if the stock market goes down, it’s It’s the third mandate. We know that. The Fed put is always there, right? I think with both pieces there’s,
conflicting information. So yes, inflation popped up and we’re sticky above the 2 % level that they target definitely. But this, ⁓ the 0.9 % over March, that’s a short term blip. That’s not expected. That’s not because of the supply demand and dynamics being messed up or wage price pressures being high. It’s a short term blip. So in most cases, they would kind of look through that. ⁓ But the point being is not to the level of being able to cut
because again, we were sticky at two and a half, 2.4 to 2.6. We’ll just call that the range of inflation around two and a half percent. And then you have the labor market. Okay, we’re getting these yo-yo numbers, big up, big down, or, you know, nothing good on a three or six month rolling basis. We’re not strong like we used to be, but people aren’t getting fired either. It’s the continuing claims and initial claims are just a shade above 200,000 on initial. So it’s like,
we’re not really dealing with a scenario where either they’re data dependent, but there’s conflicting data in the individual parts, let alone between looking at the two. mentioned continuing claims and, obviously we’re not in a high unemployment rate added unemployment rate. The number was 4.3, which actually came down ⁓ last month and we added jobs to the economy. But over the last 10 months,
we’ve had or over the last 12 months, we’ve had five down months in terms of jobs. And I think we said here on before that we only created 10,000 jobs a month in 2025. How much does immigration play into this? And is it good or bad? Do we know? I mean, if you ask the economists about the immigration situation,
it’s definitely not good. I mean, you want to have if you’re trying to build your GDP, you want as many people in the country as you can, right? I see, you know, that’s not necessarily sustained sustainable to come all at once, because then you have a bunch of pressures ⁓ on housing, which is already tight in the US, even though the market isn’t hot. You know, we do have a deficit of residential homes. yeah. But when you’re talking about the economic numbers,
with us having we’ll call it a net negative immigration or significantly lower immigration compared to history that sort of lowers the level that we need to hire to maintain an unemployment rate. So what I mean by that is we saw unemployment go down to 4.3 and we did have a strong jobs report of 178. I forget the exact number, a large number after a very negative number last month. ⁓
from what I’ve been seeing is that number, the replacement rate to basically not have a change or to have a stable unemployment rate has come down from recent years. So the number of people in the United States has gone up. I think we’re at the official head count is 342 million people. It seems to me that the people in the total employment, total people employed in the United States,
⁓ obviously came roaring back after, after COVID, but we seem to be stuck at around 158 and a half million people employed. If you, if, if we have, let’s just call it a net zero immigration going forward, and I’m not saying we’re going to, but for the sake of this conversation, there’s a net zero immigration coming in. and we don’t create any
real new jobs, then everything’s fine, right? Technically, because we have an aging population of people above age 65 in each year that increases. And that reduces the number of workers considered in the labor force participation rate, which is obviously trending down. And then we were below replacement rate on births in the United States. So the labor pool is shrinking.
which means we don’t need to bring on as many jobs to maintain that rate. So labor pool shrinking, immigration net negative, labor force participation rate stays the same, maybe even gets better if there’s people aging out. But none of that’s good for GDP or growth. It may not be bad for jobs and those data points, but it’s not great for growth.
Yeah, it reminds me of, of Japan 20 years ago. Yeah. And that’s the part that I worry about. I don’t have a fix for it. I don’t think, you know, simply it’s, it’s not just bring, have more immigration for more jobs. But the fact of the matter is the more people employed, ⁓ makes everybody feel better and everybody spends more money when they’re here. So are we going to get into the situation where we just have this long period of time where
growth is flat. And and now you have inflation creeping back up. There’s a word for that. Well, I see the other side of it is where we have increasing productivity. And we have less people where we’re going to see some deflationary impacts, which is kind of what Japan saw because their demographics didn’t help them. They weren’t growing. But productivity kept improving. We know they’re really good automation. Now everybody’s getting good at automation, you know, and
here, China with AI and all the robotics ⁓ that have been around and are improving at an even greater clip now. ⁓ I see an impact where if we don’t do something about immigration or about the birth rate where we actually start seeing deflation down the line, not immediately in the next year or two, but down the line. I read something the other day that China is actually ⁓ pushing IVF.
right in vitro fertilization because they’re concerned about a declining birth rate. have a cliff if you look demographically they could face a cliff and they just put a 13 % on tax on condoms. Oh boy. I’ll teach them. I don’t know if that makes a difference to people. You know, I don’t really I don’t know but they obviously we don’t like inflation. Nobody likes inflation above a targeted level.
but deflation might be even worse that, you know, that makes the debt that you have out there even heavier on your back because ⁓ the amount of dollars you can earn is technically decreasing, right? ⁓ That means there’s no growth in an economy. Well, in my mind, I always think to myself, if there’s deflation and prices go down and the average person makes the same amount of money, that’s a good thing.
But that’s an assumption right there is the new people getting the new jobs where there’s no growth. That means the employers definitely have all the power when they’re hiring and they don’t have to pay up. So in theory, in the deflationary environment, your wages would go downwards. you think that instead of getting ⁓ like a merit raise or something like that at the end of the year, halfway through the year, they’ll call people year, you year after year, so they could bring on new people at a lower wage that
we’ve never really seen a deflationary spiral like that, sort of Japan saw, but in theory, that’s what it would look like. I don’t, I think we’ll head that off somehow, but that’s what it would look like. But overall, and I didn’t think we were going to go here today, but overall in terms of people having children, it’s in the same camp as people having, buying their first house. It’s gotten, you know,
I think we said the average age of people buying the first home was risen by about 14 years over the last 100 years or 75 years. And there’s a lot of people that are choosing to have children later in life. And there’s a lot of people that are having choosing not to have children. You’re not one of them. No, I need to pause you here for a second. I’ve had a stat on my sheet here for about six months.
And we’ve never had the opportunity to say let’s hear it. Let’s hear it. The stat. What percentage of the American public do you think is both married and own a home by age 30? What percent of the American public is married and owns a home by age 30? Yes. ⁓ I mean, just a complete guess. I would say 12%.
You look at my notes. No, is that right? Well, you have to think about how many people are under 30 to throw out 12%. I literally did not tell him the entry. Get out of here. Well, anyway, the point of me, that’s very good guess. The number in 1960 was 52%. Oh, wow. So we are down 40 % on a nominal basis from 1960. People are why is that? I mean, the price of the house is a lot more.
I think when you factor in inflation, I don’t know that it’s dramatically more but the prices have gone up so much in the last, let’s say 10 years. Global financial crisis obviously brought prices down. But then once they once they reach their prior levels, they just, you know, took off. Yeah. I mean, can you imagine being a 28 year old making $50,000 a year trying to buy a $500,000 house? Yeah, how’s that possible?
And so that was sort of the other part of my size leading into that conversation. It’s like, what do you think the causes were? And, you know, obviously, you already hit on the cost of living. ⁓ But sort of, we’ll just say in general, in in pockets of the population, like marriage and family isn’t as important as it was in the 60s. Like it was like, you couldn’t live with someone back then until you were married.
totally but that’s gone. You couldn’t have a woman couldn’t have a credit card by herself without her husband’s man. That stuff’s ancient times. that’s not where we’re living anymore. But to that point, all these people aren’t married and can’t afford the house because you do get a discount will say a marriage discount not only on taxes and things like that, but ⁓ you combine incomes, it’s much easier to buy a house to buy meals and to get that quantity discount will say as a couple.
And, you know, that’s, think, putting people back as well now. Well, you kind of need to have two incomes to be, I think you need two incomes to be middle class. You probably need two incomes to just survive depending on where you are on, on that social scale. Uh, we were talking the other day, you know, where do you, where do you think you fit in? Um, there’s the, the information that we were looking at,
suggested that the lower middle class was in decline where the, obviously the, the, ⁓ the top 1 % was going up. ⁓ but the bottom rung is growing and more people are slipping. Like we’re just getting farther away. The middle class is getting farther away and I don’t see that as good. No. And I’m not sure that artificial intelligence is going to help that.
You would think it would exacerbate in the other direction until we get your word of the year Universal basic income. Well, guess 12 % killing me, dude. I don’t I just I thought 10 was too low and 15 was too high All right. I like it. Okay, you’re a super forecaster. I don’t think we’re gonna get I’m not I don’t think we’re gonna get universal basic income under this administration I think it’ll come in when they have to cut Social Security. They’re gonna
raise taxes on companies and social security will go to zero and they’re going to have to pass a new law and that’ll be the UBI. The president said the other day in a meeting that ⁓ the states were going to have to fund Medicare and some other programs because they just weren’t going to do it anymore. And obviously the president by himself doesn’t have the power to make that happen. That would be an onerous ⁓ fiscal
task for the states to do all that without federal assistance. This is just like that game, you know, where the person on the street has a ball under the cup and they move it around. It’s okay. So the state’s going to tax you now instead of the federal government. You know, it’s just moving the cup around. But what about states that don’t have ⁓ income tax like Florida or Texas or they’ll need to get one. Right. I mean, there’s no way that they could pay for medical care.
Medicaid in Florida just get rid of ⁓ property taxes too. think I don’t think they have property tax. Wow. That’s that please you want to move to Florida now? No income taxes. No, property taxes. It was 110 degrees in in May. Hey, we’re getting some warm weather next week. 88 and 89 on Wednesday and Thursday. Catch me outside.
Yeah, hey, we had a we had an Easter party that you and your family came to that was awesome. Last Friday on on Good Friday, and the weather looked so poor the entire week, it was going to be like 47 and raining. And then each day it got a little bit better. The party started at four o’clock at about 315. Oh, was beautiful. The sun came out. That was the most people we ever had at our home. We had about 55 adults.
and seemed to be about 20 kids there. I took it upon myself to ⁓ hire an Easter bunny for an hour or so. I think the kids liked that. Yeah. Yeah. It was interesting. Yeah. It was good Friday and you had all this beautiful spreads of food and I couldn’t eat me yet. Chimichurri there. I’m just looking at it like, ⁓ I mean you had some vegetables on you, right? I did. did. Thank you. Alish. Yeah.
So that the bunny guy though, it was a little bit strange, right? So you didn’t say anything? Well, he didn’t he didn’t speak the bunny did not speak. And some people thought that was strange. Some people were like, well, Disney characters don’t speak. I thought it was a little weird that he didn’t talk. I thought it was funny. He was holding up signs to like, three year olds like here read this like this is me and like, my two and a half year old just looking at like, huh?
He’ll know the signs next year. No, the kids had fun though. You had an Easter egg hunt for the kids, for the teenagers and then the adults. Yeah, we got we got lotto tickets. We got some $2 bills. We had the mini airline bottles of liquor. Everybody likes this, right? Yeah, yeah, that was that was interesting. But we are, you know, obviously coming through spring. I was driving yesterday, pulled over somewhere for some gas and the guy was cutting the lawn. I was like, wow.
⁓ you know, that smell of fresh cut long for the first time in like a month from now, it’s going to be so hot. can’t breathe, but yeah. let’s go back to inflation for a little bit. I think that’s important to touch on before I get there. I’m going to just talk where we are in the overall markets. So at the close of business yesterday, the S and P was down about a half a percent. I think today, ⁓
depending on what time of day this, this airs, I think it was up a little bit when we went in. ⁓ but large companies are underperforming small caps and mid caps year to date. ⁓ mids are up 7%, ⁓ smalls are up eight and a half percent, I think at the close of business yesterday, international, not as good, but still, you know, besting domestic companies up three and a 5 % for emerging markets.
So, you know, the name of the game has been that rotation, even though that the small companies, small cap and mid caps took a little bit of a harder fall in, in March, right? So what was the number that we had? Large companies were down 5 % in March. Mid size were down close to 6 % in March, but overall, they’re still whipping up on them. Yeah. You know, and that growth value spread
is really different. It’s about 12%. So large growth down 6%, large value up 6%. And that kind of goes to what we were talking about in the third quarter into the fourth quarter of last year is that overall rotation. know, people are getting concerned that large growth, whether it’s run its course, it’s gotten too high, the valuations are too stretched. And the money money moves where it’s best treated. And we’ve had this
software kind of apocalypse over the last six months. Software index is still continuing to go down and to make new lows. ⁓ Where do you see this ending? With software specifically? It’s tough out there for software. ⁓ You know, prior to Iran’s headlines, they were just getting beaten every single day of some new large language model, you know,
In January and February, was Anthropic sort of taking over the lead for, know, initially it was open AI and then, you know, Google took over as the best LLM and now it seems like Anthropic’s running away with it. you know, Claude was doing this, doing that, taking out different sectors of the economy. seemed like, and, you know, we first, I think the pain has come back into IGV, the software, uh, expanded tech software, ETF.
And there’s a new release, Methos from Anthropic that’s, you know, hitting things last two days. They said it’s so powerful. It’s too capable that it’s unsafe for them to release it for public usage. What do mean unsafe? It is too powerful. So they said it’s finding ⁓ things that are at risk in algorithms and in operating systems that previously were unhacked and everybody thought were secure.
And it’s finding these vulnerabilities just by simply putting like running the LLM on the operating system on the computer on the desktop. And it’s finding these issues. So they’re basically saying someone could hack or do all these nefarious things with it because of how powerful it is. So they are going to, I guess, keep that closed and keep it in the house. they created an LLM.
that is super high powered that they’re not going to do anything with. I think they’re going to do with it, but they’re they are going to keep it like in house. Like you have to come pay them if you want to utilize it. And it has to be for certain tasks that they’re not going to put it out there to schmoes. They’re not going to give it to the DOJ. As we know, that went down a month or two ago. They refuse to take the terms that the DOJ or not the DOJ, the Department of War.
was was asking of them and they said no, we can’t do that. So Department of War labeled them a national security risk and basically said anyone can’t use it in the US if they’re in the supply chain of the government. And that really hurts them. But now they have this coming out, I bet you the government knew about mythos at that time. So we’ll see how it pans out. But anthropics looking very valuable right now. And they’re still in the private equity space.
And they’re probably going to look the IPO in the next year or two. So I bet you they’re going to be pretty valuable. Yeah. There’s some big IPOs that, that I think are expected to come out. ⁓ I would say in 2026, obviously, obviously Anthropic is one of them. ⁓ open IA open AI, excuse me, the creator. How dare you talk about chat like that. The creator of chat GPT, ⁓ is the other one. And then what, what’s the, what’s the last one?
that’s supposed to come out. the hot one is a space X space X. Have you gotten anybody asking you about it? I have advisors here and there. Yeah. And clients as well, right? It’ll be, it’ll be a hot topic for sure. It will be a hot topic. I don’t know about the valuation and everything that goes into that, but well, when I think about space X, the first thing that comes to mind is Elon Musk shoveling money into a furnace.
Right. But when you actually look down at some of the companies that SpaceX owns, it’s a mixed bag. You know, I think it’s safe to say they’re not going to make any profit from sending people to Mars and that whole Mars exploration situation. I think it’s a Starship is what they’re calling it. I don’t, I don’t think they’re going to make any money on that. I don’t know what 50 years from now looks like with Starship.
But in the next 10, they’re not going to make any money. They’re going to lose money. The Starlink itself is would be a strong business on its own. It’s got I think up to a 40 % profit margin is the estimates we have, which are limited because they are private, obviously, but they’ve got a lot of losers in the in the coming to their draining that money is as fast as Starlink makes it. did a little bit of homework on what was publicly available, and I’m sure more will come out. ⁓
as it gets closer to the IPO. But the estimate, the 12 month estimate for Starlink in revenue is over $10 billion. And the estimated net income is over two and a half billion, right? So at least the 25 % margin. I actually had an opportunity a few weeks ago, we were up in the mountains and the owner of the cabin had a Starlink. This is in the middle of nowhere in the mountains of Pennsylvania.
And Comcast isn’t getting to there. There’s there’s no Comcast. There’s no files, no files. There’s nothing like that out there. He had this little portable Starlink and it was awesome. I mean, now we can debate whether we should be streaming videos ⁓ at the cabin where you’re trying to get away. We’re trying to get away. That’s probably the worst thing that happened is being, you know, having great Internet access makes you want to use it. That’s a whole nother story.
about what we should and shouldn’t be doing. I’d unplug that if I were there with the kids, like you are not seeing on YouTube, you’re not doing it. There’s no internet here. I ⁓ was a mixed bag when I was up there because I did use it. It was really handy to have it when you don’t normally have it. you know, Starlink by itself, great business. And then all of their launch services that they do, they all make money. There’s the commercial launch services, there’s the military applications. ⁓
you know, bringing big satellites into orbit, ⁓ what like 200 miles up into orbit. And like they make a boatload of money there. But then what was the name of that company that they used to own? wait, they still do Twitter, Twitter. right. Yeah, that cesspool. They lose a boatload of money on Twitter, something like $13 billion on ⁓ on Twitter. think the exit X AI portion will make money eventually.
I think they’re in like the insane build out phase. Now they’re going to be using it probably in, you know, Tesla’s and things like that. So I don’t know how that’ll work between his companies. Tesla will pay SpaceX for XAI or Tesla owns a portion of XAI too. I don’t know exactly how that works. ⁓ Elon has a vast complex spider web of companies and he could do some things financially that probably are beyond my skill level.
You think? Yeah, some engineering. When you look at the financials, though, it is a mixed bag. The SpaceX as a whole from what’s publicly available now is a big money loser. Right. And so I know we’re going to get these questions about should we be buying SpaceX? And I think to anybody out there listening, like you have to make your own decisions about it. They’re currently not going to be making any money based on the public information that’s available. But.
Gosh, you know, he has this cult following because that’s kind of what happened with Tesla, where for a long time they weren’t profitable. And then all of a sudden they turn it on and boom, you know, it’s one of the best stocks to own over, you know, certainly from COVID till today, it was one of the best stocks to own. And if you owned it earlier than that, good for you. And so I think there’s this cult following that people are going to want to own it, but I just not sure what the reality of
of turning on profit for the entire company is. And like I said, I just picture him shoveling the Starlink money right into into the furnace of the Mars. he weren’t the majority shareholder, and they had a board that was looking out for everyone, because I’m sure when we’re talking about this, he’s only going to be selling maybe 10 or 20 of the company, I haven’t looked too deep into the exact percentage.
I’m sure it will depend on the pricing ultimately when they’re talking to the investment bankers, but he’s going to be the majority owner. So in most cases, if you had a fully public company and you didn’t have a majority shareholder with the votes and control that he’ll have, they would just say, all right, X AI, let’s shutter this thing. And then suddenly we’re profitable immediately as soon as we shut this down. And he’s not going to do that though, because he’s going to still own probably 60 per, you know, whatever percentage he ends up.
keeping and holding on his own balance sheet. Right? mean, to your point, you know, if if the money loser is the the starship side of it, they could spin that off by itself, you know, then look at what GE just did with all their different business units.
No question about it. That all worked out pretty well. Those guys. Yeah. I mean, each one of those actually wound up being a double triple over a period of like a year or two. Yeah. When everybody thought it was the opposite. And even the main company, ⁓ did pretty well there with that spin-off. I don’t know that that’s going to happen with, if they spin off the starship version from space X and we’re not even, we haven’t even gotten to the first thing yet. Yeah. let alone a spin-off, but
realistically, it’s going to be a mixed bag for a while for SpaceX when it happens. If we could buy Starlink by itself. heck yeah. No, no question about it. I would I would be all over that thing. Not sure about buying SpaceX when it comes out. you ever watched the Starlinks go overhead? Have you ever seen? I’ve seen videos I’ve seen satellites go over I don’t know if that’s different than it’s just it’s just a line that are you know,
as you’re looking at it in the sky, there, looks like they’re and making up the distance. looks like they’re 50 miles apart, 200 miles up, you know, and it’s just a straight line of like 150 lights that you just see going in a perfect line, perfectly spaced apart. It’s pretty cool. How do they get them? So, ⁓ I mean, they must have their own capability of moving independently. Is that right? Sure. do to maintain perfect orbit. Yeah.
So we, told you, we were up at the cabin and Brian had this star link. And so he gets it and it has a hard wire to it. So he goes outside, there’s a table out there. He looks at his phone and he, the phone shows you which direction to it’s like a little tablet looking thing, which direction. And then it kind of gives you this like green indicator. Boom. He puts it down, goes in, plugs it into the router. And that’s the end of the story. Sounds pretty cool.
And the pricing didn’t seem crazy to me. So again, if if I had the opportunity to buy Starlink
that would be that would be amazing. That would be amazing. So where where does that leave us today? Think we’re gonna watch these next two weeks. ⁓ See how we have the further negotiation since apparently, Lebanon and Israel is our problem to deal with Iran. Apparently. We’re gonna see what goes on in Islamabad. And then ⁓ we’ll see in two weeks if we still have a ceasefire in place.
The market clearly likes the ceasefire talk and hopefully President Trump sees that and without giving up too much can keep a ceasefire going. right, so let’s say we get a ceasefire. What did what are we gonna get? Do you think they’re gonna give up their enriched plutonium?
It seems unlikely, right? I think it’s just a scenario where we’ve damaged some of their spots. They still have it. I mean, you heard that rescue mission that they made much about. Oh, the down def 15. Yeah, apparently that was in part to trying to get some enriched uranium out. And Iran claims it was foiled. You never can trust, you know, things coming out in the news nowadays. But I wouldn’t doubt we tried to.
pull some out if we knew a location where there’s your rich, enriched uranium or plutonium that we would go in and try to get it. I don’t know. We’ll see. I think it’s a valid. It’s a valid goal, right to prevent a non nuclear, like I said earlier, every administration we’ve ever had is against Iran being empowered and thus having nukes and uranium and such. Going back to the fall the
shot. Yeah, yeah. It’s what I guess Trump was the first one to say, Okay, well, no action, nobody other than sanctions, like dropping bombs, nobody wanted to do it. Because there was a lot of risk involved. the number one thing that they would do to retaliate was to close the strait. Yeah, which drives oil prices up, which has obviously a major impact. Right after the ceasefire, you had the east west pipeline in Saudi Arabia get hit by a drone strike.
don’t think it came from Iran, but they have their proxies all around. have the Houthis, have Hezbollah, every direction you look, there’s some terrorist organization somehow tied in with them. ⁓ the, those oil dollars are funding, ⁓ you know, the funding Iran and they’re funding the fight against Israel and they’re funding their proxy terrorist groups. So I’m, I’m all about, you know, somehow stopping that, but
Getting back to ⁓ pre-strike, right? February 26th or 28th. I don’t know that we’re going to get that way. I don’t know that we’re going to get prices down that much, but let’s say that they reopen and what we, what will have, what will we have accomplished? We will have damaged significantly some of their sites. They will, will have drained their arsenal. We’ve drained our arsenal.
pretty dramatically. I’m just not sure that there wasn’t another way to do what we’re trying to accomplish. And like I said, it’s a worthy goal to prevent Iran from being a nuclear power very worthy, in my opinion. I may have tried a different way myself. But hey, I’m not the president, right? Yeah, maybe one day. if we we looks like right now we slowed down their their march towards enriching, you know, to super dangerous level.
we’ve reduced some of their ballistic missile stockpiles, which with enriching uranium in a bomb are even more dangerous. And they had a missile that was longer range than they previously admitted when they Diego Garcia. Yeah, Diego Garcia. don’t know, I think if we slow them down and we can negotiate you don’t enrich passes percentage right back to where we were. And you can take a toll 2 million per ship is what they want. But
you’re not closing it again. We’ll see. I think that’s where we’re going to have to land for right now until one side or the other gets some some more chips. Yeah. said there was 15 ships I think that went through in the last 24 hours and where it really kills people is at the end of the supply chain. We you and I had that discussion yesterday about New Zealand and Australia where they get most of their oil from ⁓
Asia, right? Secondhand, secondhand South Korea and Japan. And so their costs have gone up. But if you’re at the very end of the supply chain, there are companies that may not want to sell it to you, because they would think that the price would go down before it gets to you. They might have some supply problems in the future if the straight is not reopened. Obviously, I don’t think we’re gonna have you know, here in the United States, I don’t think we’re gonna have any supply problem.
But there definitely could be supply problems in Europe and certainly in other parts of the world that don’t have access, free access to oil, not free access, but access to domestic oil like we do. That could be problematic. It would certainly be a growth slowdown, right? It would probably be net negative for, I say probably, it would be a net negative for growth in those respective countries if they had to ration oil.
that point. Yeah, that seems like something that’s gonna happen if if it’s not open. So do you think they’re gonna come to a terms and JD Vance our guy he’s over there. He’s hanging out. Hey, yeah, we called that out a couple weeks ago. You take it in and I think he can be harsh brash. He’s very smart lawyer and whatnot.
but I think he’s softer than negotiating maybe with Trump or Rubio. So maybe this is them trying to extend an all brand and say, all right, we’ll give up something. You have to give up something. Let’s not argue and have this out on truth social. Yeah. Well, so he gets into Islamabad. ⁓ He says, listen, we, just need you to give up the plutonium and they go, no, screw you. What do you say to that? Say, well, good luck getting home.
We’re watching you. Hey, here’s your address. I don’t know what the addresses are in Iran, but here’s your address. That probably wouldn’t go over. Why you showing me a picture of my house? You know why. But you know, to your point there, I think that that’s probably on their minds, right? Like we did go in and eliminate the top 40 people in their organization, administration, in government in first Trump.
Soleimani led orchestrated and funded an attack on Israel and You know, I think it was in northern Iraq as well There was a couple of things that we attributed to and then we went in and boom killed him That was in first Trump and then now we went after the supreme leader this time. definitely on their mind Yeah, I mean they may be forced to make a deal For fear of being killed
I’m not necessarily opposed to that. I’m not like I said, I may have done it a different way. But if it comes to it, I’m not necessarily opposed to them being forced into making a deal. If we can acquire their ⁓ enriched uranium, like I’m good with that. Yeah, let’s do it. So we don’t have to do it again. Yeah, honestly. All right. Well, that’s we’re coming to the end of the show. What do you have for the good of the order here, Chris? Anything interesting?
No, I think we’ll just keep our eye on the bounce back here in April. We know emerging markets and developed international we’re kind of leading the way along with domestically small and mid caps, they kind of got hit a little bit harder just because they were up more, maybe some profit taking and move to safer options. We’ll see if they bounce back and continue their momentum that they had, you know, going back several to 2025 and really at the end of the year. Yeah.
I think that rotation is gonna continue to happen. I think that- Valuation wise it should if you look at the forward price earnings. Absolutely. I guess my guess for the end of the year is gonna be single digits positives for the S &P 500. That’s a guess, right? Nobody knows, but that’s where I stand at the moment. And we had that almost 10 % decline. We came almost back. I say almost back because we’re not at new highs yet. A little over 7,000 was the intraday high on the S &P 500.
But yeah, it’s going to come down to Iran and what happens with, ⁓ with JD Vance, right? Yes, sir. All right. Hey, thanks so much for joining us. We really appreciate you here for everybody. Good life. Have a wonderful week and we’ll see you next time.
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The markets have delivered a sharp reminder of just how quickly conditions can change.
After a nearly 10% pullback, stocks staged a rapid recovery in just a matter of days. While that kind of rebound can feel encouraging, it also raises an important question: what’s really driving the volatility?
In the latest episode of The Market Enthusiast, Noah Brooks and Chris Needs break down the key forces behind the recent market swings and what investors should be paying attention to next.
A Market Moving in Both Directions
It’s not unusual for markets to experience pullbacks, but the speed of both the decline and the recovery has stood out. Instead of the typical “fast down, slow up” pattern, we saw the opposite.
That kind of movement often signals uncertainty beneath the surface. Investors are reacting quickly to new information and trying to position themselves in a market that doesn’t have a clear direction.
Inflation Is Still in the Picture
One of the biggest drivers right now is inflation.
Recent data shows inflation remains above the Federal Reserve’s 2% target, and in some cases, it’s heating back up. Rising oil prices and ongoing geopolitical tensions are adding another layer of pressure, especially as energy costs tend to ripple through the broader economy.
From transportation to manufacturing to everyday goods, higher input costs don’t stay isolated for long.
The Fed Is in a Tough Spot
This is where things get complicated.
The Federal Reserve is balancing two competing priorities: controlling inflation and supporting employment. Right now, neither side is giving them a clear path forward.
That leaves the Fed in a position where any move could have unintended consequences. As a result, markets are reacting in real time to every new data point, which is contributing to the recent swings.
Rotation Beneath the Surface
While headlines tend to focus on major indexes, there’s been an important shift happening underneath.
Small- and mid-cap stocks have started to outperform large-cap names in recent months. That kind of rotation often signals changing investor sentiment, particularly around valuations and future growth expectations.
At the same time, international markets have shown relative strength, adding another layer to the evolving investment landscape.
Looking Ahead
So what comes next?
There are still several moving pieces:
While it’s impossible to predict short-term market movements, understanding the forces at play can help provide clarity during uncertain periods.
Final Thoughts
Periods like this can feel uncomfortable, but they’re not unusual. Markets are constantly adjusting to new information, and volatility is often part of that process.
The key is staying focused on the bigger picture and avoiding the temptation to react to every headline.
Listen to the Full Episode
Full Episode Transcript
Hey, welcome back to another installment of the market enthusiast. I’m Noah Brooks. And obviously this is Chris needs good day.
So what do you think we are halfway through the month? the market went down almost 10%, 9.8 % and we came rallying back. Yeah. Opposite of what we normally see where it’s, you know, the elevator down and the steps back up. We saw it the other way around the market kind of hung in there.
during March and you know, all the geopolitical volatility we saw commodity volatility that we saw and boy, it popped up what seven and a half, 8 % in the last three trading days or so. obviously you’re paying attention and you know what’s going on. ⁓ we have a two week pause, right? So supposedly we’re not going to be doing anything, for the next two weeks, but we have some, the Israelis are there. They’re still
They’re still bombing Lebanon and they they were as of yesterday. I don’t know that I saw anything this morning on this. said middle of the month. We’re kind of at the end of the first third of the month. You know, there is a lot going on over there and there has been a lot of destruction in terms of the oil infrastructure. My concern for oil prices that have risen, I know 60 70 % ⁓
is that they’re not going to be able to go back down right away. And I think, you know, we got some inflation numbers this morning for March, and they were pretty hot. right. You know, what’s the term you’ve been using length and level, like thin level is what really matters. Absolutely. So if oil stays high for a long period of time, it’s going to get worse and worse and worse. And I think I’ve said this on here before, but you know, hydrocarbons and natural gas,
They go into a lot more than just our cars and our fuel. Now I’m not, what do you, do you got on a little better today. I don’t have my oil stretchy spandex on, but you know, it’s amazing how much hydrocarbon go into plastics. Those tiny little beads that they use to make all sorts of plastics are really like 40 % oil and a lot of them are made with natural gas as well. So
all of this increase in hydrocarbon prices is going to filter down through the economy in input costs for almost everything that we that we wear, buy, use, build, not timber, but almost everything else. then you have fertilizer, 20 % plus of global fertilizer and phosphates also comes out of the straight-up Hormuz as well. So that’s another thing you see.
food prices and things like that in the weeks and months to come might take upwards as well. Yeah. ⁓ you know, on the whole Iran thing, I mean, I think it’s, it’s valid and it’s, it’s a worthy cause to try to have a nuclear free Iran. ⁓ we see what’s happened with North Korea in that them having a nuclear capabilities, essentially there’s nothing we can do once you get it. It’s it’s a line that once you cross,
That’s how Kim Jong Un got at the big kids table, right? Yeah. I mean, he is a big boy. He’s he doesn’t necessarily necessarily deserve a seat at the big kids table. Yeah, their economy doesn’t really warn now that that’s I don’t I don’t see him getting into the G 20. Anytime. No, I don’t think so. Not not likely. Not likely. But like I said, we did get that CPI report this morning that included March that was up 3.3 year over year.
And we know that the Fed target is not 3.3 2%. We had PCE, which I think by law, I’m required to say is the feds preferred gauge of inflation, right? That came in reasonable yesterday. that was for February. So it’s kind of a read through we kind of dismissed that there is still sticky. It was still sticky. So yeah, there is inflation in the pipeline. Yeah, that is coming.
And it’s not just in gasoline. ⁓ you know, you can strip, strip out when, ⁓ when you look at inflation, CPI and the core numbers, that doesn’t include feud, ⁓ food and fuel. ⁓ but it includes everything else. And those things that we just talked about from hydrocarbons, ⁓ including fertilizer are all in there. So there’s going to be an inflation coming and it’s, you know, it’s not going to stop in March.
I think the expectation going forward is for higher inflation. And that brings us to the Federal Reserve. These guys are stuck. In our presentation to our advisors yesterday, you put the Federal Reserve in our J-PAL conversation right between inflation and labor markets. And it’s very, very accurate to do because they are between a rock and a hard place, right between their two mandates. mean, you have inflation, which is actually on the rise.
and you have labor markets which are cooling down. Now I don’t know in their dual mandate if there’s one that is more important. I know they say they don’t care about the stock market, right? Like if the stock market goes down, it’s It’s the third mandate. We know that. The Fed put is always there, right? I think with both pieces there’s,
conflicting information. So yes, inflation popped up and we’re sticky above the 2 % level that they target definitely. But this, ⁓ the 0.9 % over March, that’s a short term blip. That’s not expected. That’s not because of the supply demand and dynamics being messed up or wage price pressures being high. It’s a short term blip. So in most cases, they would kind of look through that. ⁓ But the point being is not to the level of being able to cut
because again, we were sticky at two and a half, 2.4 to 2.6. We’ll just call that the range of inflation around two and a half percent. And then you have the labor market. Okay, we’re getting these yo-yo numbers, big up, big down, or, you know, nothing good on a three or six month rolling basis. We’re not strong like we used to be, but people aren’t getting fired either. It’s the continuing claims and initial claims are just a shade above 200,000 on initial. So it’s like,
we’re not really dealing with a scenario where either they’re data dependent, but there’s conflicting data in the individual parts, let alone between looking at the two. mentioned continuing claims and, obviously we’re not in a high unemployment rate added unemployment rate. The number was 4.3, which actually came down ⁓ last month and we added jobs to the economy. But over the last 10 months,
we’ve had or over the last 12 months, we’ve had five down months in terms of jobs. And I think we said here on before that we only created 10,000 jobs a month in 2025. How much does immigration play into this? And is it good or bad? Do we know? I mean, if you ask the economists about the immigration situation,
it’s definitely not good. I mean, you want to have if you’re trying to build your GDP, you want as many people in the country as you can, right? I see, you know, that’s not necessarily sustained sustainable to come all at once, because then you have a bunch of pressures ⁓ on housing, which is already tight in the US, even though the market isn’t hot. You know, we do have a deficit of residential homes. yeah. But when you’re talking about the economic numbers,
with us having we’ll call it a net negative immigration or significantly lower immigration compared to history that sort of lowers the level that we need to hire to maintain an unemployment rate. So what I mean by that is we saw unemployment go down to 4.3 and we did have a strong jobs report of 178. I forget the exact number, a large number after a very negative number last month. ⁓
from what I’ve been seeing is that number, the replacement rate to basically not have a change or to have a stable unemployment rate has come down from recent years. So the number of people in the United States has gone up. I think we’re at the official head count is 342 million people. It seems to me that the people in the total employment, total people employed in the United States,
⁓ obviously came roaring back after, after COVID, but we seem to be stuck at around 158 and a half million people employed. If you, if, if we have, let’s just call it a net zero immigration going forward, and I’m not saying we’re going to, but for the sake of this conversation, there’s a net zero immigration coming in. and we don’t create any
real new jobs, then everything’s fine, right? Technically, because we have an aging population of people above age 65 in each year that increases. And that reduces the number of workers considered in the labor force participation rate, which is obviously trending down. And then we were below replacement rate on births in the United States. So the labor pool is shrinking.
which means we don’t need to bring on as many jobs to maintain that rate. So labor pool shrinking, immigration net negative, labor force participation rate stays the same, maybe even gets better if there’s people aging out. But none of that’s good for GDP or growth. It may not be bad for jobs and those data points, but it’s not great for growth.
Yeah, it reminds me of, of Japan 20 years ago. Yeah. And that’s the part that I worry about. I don’t have a fix for it. I don’t think, you know, simply it’s, it’s not just bring, have more immigration for more jobs. But the fact of the matter is the more people employed, ⁓ makes everybody feel better and everybody spends more money when they’re here. So are we going to get into the situation where we just have this long period of time where
growth is flat. And and now you have inflation creeping back up. There’s a word for that. Well, I see the other side of it is where we have increasing productivity. And we have less people where we’re going to see some deflationary impacts, which is kind of what Japan saw because their demographics didn’t help them. They weren’t growing. But productivity kept improving. We know they’re really good automation. Now everybody’s getting good at automation, you know, and
here, China with AI and all the robotics ⁓ that have been around and are improving at an even greater clip now. ⁓ I see an impact where if we don’t do something about immigration or about the birth rate where we actually start seeing deflation down the line, not immediately in the next year or two, but down the line. I read something the other day that China is actually ⁓ pushing IVF.
right in vitro fertilization because they’re concerned about a declining birth rate. have a cliff if you look demographically they could face a cliff and they just put a 13 % on tax on condoms. Oh boy. I’ll teach them. I don’t know if that makes a difference to people. You know, I don’t really I don’t know but they obviously we don’t like inflation. Nobody likes inflation above a targeted level.
but deflation might be even worse that, you know, that makes the debt that you have out there even heavier on your back because ⁓ the amount of dollars you can earn is technically decreasing, right? ⁓ That means there’s no growth in an economy. Well, in my mind, I always think to myself, if there’s deflation and prices go down and the average person makes the same amount of money, that’s a good thing.
But that’s an assumption right there is the new people getting the new jobs where there’s no growth. That means the employers definitely have all the power when they’re hiring and they don’t have to pay up. So in theory, in the deflationary environment, your wages would go downwards. you think that instead of getting ⁓ like a merit raise or something like that at the end of the year, halfway through the year, they’ll call people year, you year after year, so they could bring on new people at a lower wage that
we’ve never really seen a deflationary spiral like that, sort of Japan saw, but in theory, that’s what it would look like. I don’t, I think we’ll head that off somehow, but that’s what it would look like. But overall, and I didn’t think we were going to go here today, but overall in terms of people having children, it’s in the same camp as people having, buying their first house. It’s gotten, you know,
I think we said the average age of people buying the first home was risen by about 14 years over the last 100 years or 75 years. And there’s a lot of people that are choosing to have children later in life. And there’s a lot of people that are having choosing not to have children. You’re not one of them. No, I need to pause you here for a second. I’ve had a stat on my sheet here for about six months.
And we’ve never had the opportunity to say let’s hear it. Let’s hear it. The stat. What percentage of the American public do you think is both married and own a home by age 30? What percent of the American public is married and owns a home by age 30? Yes. ⁓ I mean, just a complete guess. I would say 12%.
You look at my notes. No, is that right? Well, you have to think about how many people are under 30 to throw out 12%. I literally did not tell him the entry. Get out of here. Well, anyway, the point of me, that’s very good guess. The number in 1960 was 52%. Oh, wow. So we are down 40 % on a nominal basis from 1960. People are why is that? I mean, the price of the house is a lot more.
I think when you factor in inflation, I don’t know that it’s dramatically more but the prices have gone up so much in the last, let’s say 10 years. Global financial crisis obviously brought prices down. But then once they once they reach their prior levels, they just, you know, took off. Yeah. I mean, can you imagine being a 28 year old making $50,000 a year trying to buy a $500,000 house? Yeah, how’s that possible?
And so that was sort of the other part of my size leading into that conversation. It’s like, what do you think the causes were? And, you know, obviously, you already hit on the cost of living. ⁓ But sort of, we’ll just say in general, in in pockets of the population, like marriage and family isn’t as important as it was in the 60s. Like it was like, you couldn’t live with someone back then until you were married.
totally but that’s gone. You couldn’t have a woman couldn’t have a credit card by herself without her husband’s man. That stuff’s ancient times. that’s not where we’re living anymore. But to that point, all these people aren’t married and can’t afford the house because you do get a discount will say a marriage discount not only on taxes and things like that, but ⁓ you combine incomes, it’s much easier to buy a house to buy meals and to get that quantity discount will say as a couple.
And, you know, that’s, think, putting people back as well now. Well, you kind of need to have two incomes to be, I think you need two incomes to be middle class. You probably need two incomes to just survive depending on where you are on, on that social scale. Uh, we were talking the other day, you know, where do you, where do you think you fit in? Um, there’s the, the information that we were looking at,
suggested that the lower middle class was in decline where the, obviously the, the, ⁓ the top 1 % was going up. ⁓ but the bottom rung is growing and more people are slipping. Like we’re just getting farther away. The middle class is getting farther away and I don’t see that as good. No. And I’m not sure that artificial intelligence is going to help that.
You would think it would exacerbate in the other direction until we get your word of the year Universal basic income. Well, guess 12 % killing me, dude. I don’t I just I thought 10 was too low and 15 was too high All right. I like it. Okay, you’re a super forecaster. I don’t think we’re gonna get I’m not I don’t think we’re gonna get universal basic income under this administration I think it’ll come in when they have to cut Social Security. They’re gonna
raise taxes on companies and social security will go to zero and they’re going to have to pass a new law and that’ll be the UBI. The president said the other day in a meeting that ⁓ the states were going to have to fund Medicare and some other programs because they just weren’t going to do it anymore. And obviously the president by himself doesn’t have the power to make that happen. That would be an onerous ⁓ fiscal
task for the states to do all that without federal assistance. This is just like that game, you know, where the person on the street has a ball under the cup and they move it around. It’s okay. So the state’s going to tax you now instead of the federal government. You know, it’s just moving the cup around. But what about states that don’t have ⁓ income tax like Florida or Texas or they’ll need to get one. Right. I mean, there’s no way that they could pay for medical care.
Medicaid in Florida just get rid of ⁓ property taxes too. think I don’t think they have property tax. Wow. That’s that please you want to move to Florida now? No income taxes. No, property taxes. It was 110 degrees in in May. Hey, we’re getting some warm weather next week. 88 and 89 on Wednesday and Thursday. Catch me outside.
Yeah, hey, we had a we had an Easter party that you and your family came to that was awesome. Last Friday on on Good Friday, and the weather looked so poor the entire week, it was going to be like 47 and raining. And then each day it got a little bit better. The party started at four o’clock at about 315. Oh, was beautiful. The sun came out. That was the most people we ever had at our home. We had about 55 adults.
and seemed to be about 20 kids there. I took it upon myself to ⁓ hire an Easter bunny for an hour or so. I think the kids liked that. Yeah. Yeah. It was interesting. Yeah. It was good Friday and you had all this beautiful spreads of food and I couldn’t eat me yet. Chimichurri there. I’m just looking at it like, ⁓ I mean you had some vegetables on you, right? I did. did. Thank you. Alish. Yeah.
So that the bunny guy though, it was a little bit strange, right? So you didn’t say anything? Well, he didn’t he didn’t speak the bunny did not speak. And some people thought that was strange. Some people were like, well, Disney characters don’t speak. I thought it was a little weird that he didn’t talk. I thought it was funny. He was holding up signs to like, three year olds like here read this like this is me and like, my two and a half year old just looking at like, huh?
He’ll know the signs next year. No, the kids had fun though. You had an Easter egg hunt for the kids, for the teenagers and then the adults. Yeah, we got we got lotto tickets. We got some $2 bills. We had the mini airline bottles of liquor. Everybody likes this, right? Yeah, yeah, that was that was interesting. But we are, you know, obviously coming through spring. I was driving yesterday, pulled over somewhere for some gas and the guy was cutting the lawn. I was like, wow.
⁓ you know, that smell of fresh cut long for the first time in like a month from now, it’s going to be so hot. can’t breathe, but yeah. let’s go back to inflation for a little bit. I think that’s important to touch on before I get there. I’m going to just talk where we are in the overall markets. So at the close of business yesterday, the S and P was down about a half a percent. I think today, ⁓
depending on what time of day this, this airs, I think it was up a little bit when we went in. ⁓ but large companies are underperforming small caps and mid caps year to date. ⁓ mids are up 7%, ⁓ smalls are up eight and a half percent, I think at the close of business yesterday, international, not as good, but still, you know, besting domestic companies up three and a 5 % for emerging markets.
So, you know, the name of the game has been that rotation, even though that the small companies, small cap and mid caps took a little bit of a harder fall in, in March, right? So what was the number that we had? Large companies were down 5 % in March. Mid size were down close to 6 % in March, but overall, they’re still whipping up on them. Yeah. You know, and that growth value spread
is really different. It’s about 12%. So large growth down 6%, large value up 6%. And that kind of goes to what we were talking about in the third quarter into the fourth quarter of last year is that overall rotation. know, people are getting concerned that large growth, whether it’s run its course, it’s gotten too high, the valuations are too stretched. And the money money moves where it’s best treated. And we’ve had this
software kind of apocalypse over the last six months. Software index is still continuing to go down and to make new lows. ⁓ Where do you see this ending? With software specifically? It’s tough out there for software. ⁓ You know, prior to Iran’s headlines, they were just getting beaten every single day of some new large language model, you know,
In January and February, was Anthropic sort of taking over the lead for, know, initially it was open AI and then, you know, Google took over as the best LLM and now it seems like Anthropic’s running away with it. you know, Claude was doing this, doing that, taking out different sectors of the economy. seemed like, and, you know, we first, I think the pain has come back into IGV, the software, uh, expanded tech software, ETF.
And there’s a new release, Methos from Anthropic that’s, you know, hitting things last two days. They said it’s so powerful. It’s too capable that it’s unsafe for them to release it for public usage. What do mean unsafe? It is too powerful. So they said it’s finding ⁓ things that are at risk in algorithms and in operating systems that previously were unhacked and everybody thought were secure.
And it’s finding these vulnerabilities just by simply putting like running the LLM on the operating system on the computer on the desktop. And it’s finding these issues. So they’re basically saying someone could hack or do all these nefarious things with it because of how powerful it is. So they are going to, I guess, keep that closed and keep it in the house. they created an LLM.
that is super high powered that they’re not going to do anything with. I think they’re going to do with it, but they’re they are going to keep it like in house. Like you have to come pay them if you want to utilize it. And it has to be for certain tasks that they’re not going to put it out there to schmoes. They’re not going to give it to the DOJ. As we know, that went down a month or two ago. They refuse to take the terms that the DOJ or not the DOJ, the Department of War.
was was asking of them and they said no, we can’t do that. So Department of War labeled them a national security risk and basically said anyone can’t use it in the US if they’re in the supply chain of the government. And that really hurts them. But now they have this coming out, I bet you the government knew about mythos at that time. So we’ll see how it pans out. But anthropics looking very valuable right now. And they’re still in the private equity space.
And they’re probably going to look the IPO in the next year or two. So I bet you they’re going to be pretty valuable. Yeah. There’s some big IPOs that, that I think are expected to come out. ⁓ I would say in 2026, obviously, obviously Anthropic is one of them. ⁓ open IA open AI, excuse me, the creator. How dare you talk about chat like that. The creator of chat GPT, ⁓ is the other one. And then what, what’s the, what’s the last one?
that’s supposed to come out. the hot one is a space X space X. Have you gotten anybody asking you about it? I have advisors here and there. Yeah. And clients as well, right? It’ll be, it’ll be a hot topic for sure. It will be a hot topic. I don’t know about the valuation and everything that goes into that, but well, when I think about space X, the first thing that comes to mind is Elon Musk shoveling money into a furnace.
Right. But when you actually look down at some of the companies that SpaceX owns, it’s a mixed bag. You know, I think it’s safe to say they’re not going to make any profit from sending people to Mars and that whole Mars exploration situation. I think it’s a Starship is what they’re calling it. I don’t, I don’t think they’re going to make any money on that. I don’t know what 50 years from now looks like with Starship.
But in the next 10, they’re not going to make any money. They’re going to lose money. The Starlink itself is would be a strong business on its own. It’s got I think up to a 40 % profit margin is the estimates we have, which are limited because they are private, obviously, but they’ve got a lot of losers in the in the coming to their draining that money is as fast as Starlink makes it. did a little bit of homework on what was publicly available, and I’m sure more will come out. ⁓
as it gets closer to the IPO. But the estimate, the 12 month estimate for Starlink in revenue is over $10 billion. And the estimated net income is over two and a half billion, right? So at least the 25 % margin. I actually had an opportunity a few weeks ago, we were up in the mountains and the owner of the cabin had a Starlink. This is in the middle of nowhere in the mountains of Pennsylvania.
And Comcast isn’t getting to there. There’s there’s no Comcast. There’s no files, no files. There’s nothing like that out there. He had this little portable Starlink and it was awesome. I mean, now we can debate whether we should be streaming videos ⁓ at the cabin where you’re trying to get away. We’re trying to get away. That’s probably the worst thing that happened is being, you know, having great Internet access makes you want to use it. That’s a whole nother story.
about what we should and shouldn’t be doing. I’d unplug that if I were there with the kids, like you are not seeing on YouTube, you’re not doing it. There’s no internet here. I ⁓ was a mixed bag when I was up there because I did use it. It was really handy to have it when you don’t normally have it. you know, Starlink by itself, great business. And then all of their launch services that they do, they all make money. There’s the commercial launch services, there’s the military applications. ⁓
you know, bringing big satellites into orbit, ⁓ what like 200 miles up into orbit. And like they make a boatload of money there. But then what was the name of that company that they used to own? wait, they still do Twitter, Twitter. right. Yeah, that cesspool. They lose a boatload of money on Twitter, something like $13 billion on ⁓ on Twitter. think the exit X AI portion will make money eventually.
I think they’re in like the insane build out phase. Now they’re going to be using it probably in, you know, Tesla’s and things like that. So I don’t know how that’ll work between his companies. Tesla will pay SpaceX for XAI or Tesla owns a portion of XAI too. I don’t know exactly how that works. ⁓ Elon has a vast complex spider web of companies and he could do some things financially that probably are beyond my skill level.
You think? Yeah, some engineering. When you look at the financials, though, it is a mixed bag. The SpaceX as a whole from what’s publicly available now is a big money loser. Right. And so I know we’re going to get these questions about should we be buying SpaceX? And I think to anybody out there listening, like you have to make your own decisions about it. They’re currently not going to be making any money based on the public information that’s available. But.
Gosh, you know, he has this cult following because that’s kind of what happened with Tesla, where for a long time they weren’t profitable. And then all of a sudden they turn it on and boom, you know, it’s one of the best stocks to own over, you know, certainly from COVID till today, it was one of the best stocks to own. And if you owned it earlier than that, good for you. And so I think there’s this cult following that people are going to want to own it, but I just not sure what the reality of
of turning on profit for the entire company is. And like I said, I just picture him shoveling the Starlink money right into into the furnace of the Mars. he weren’t the majority shareholder, and they had a board that was looking out for everyone, because I’m sure when we’re talking about this, he’s only going to be selling maybe 10 or 20 of the company, I haven’t looked too deep into the exact percentage.
I’m sure it will depend on the pricing ultimately when they’re talking to the investment bankers, but he’s going to be the majority owner. So in most cases, if you had a fully public company and you didn’t have a majority shareholder with the votes and control that he’ll have, they would just say, all right, X AI, let’s shutter this thing. And then suddenly we’re profitable immediately as soon as we shut this down. And he’s not going to do that though, because he’s going to still own probably 60 per, you know, whatever percentage he ends up.
keeping and holding on his own balance sheet. Right? mean, to your point, you know, if if the money loser is the the starship side of it, they could spin that off by itself, you know, then look at what GE just did with all their different business units.
No question about it. That all worked out pretty well. Those guys. Yeah. I mean, each one of those actually wound up being a double triple over a period of like a year or two. Yeah. When everybody thought it was the opposite. And even the main company, ⁓ did pretty well there with that spin-off. I don’t know that that’s going to happen with, if they spin off the starship version from space X and we’re not even, we haven’t even gotten to the first thing yet. Yeah. let alone a spin-off, but
realistically, it’s going to be a mixed bag for a while for SpaceX when it happens. If we could buy Starlink by itself. heck yeah. No, no question about it. I would I would be all over that thing. Not sure about buying SpaceX when it comes out. you ever watched the Starlinks go overhead? Have you ever seen? I’ve seen videos I’ve seen satellites go over I don’t know if that’s different than it’s just it’s just a line that are you know,
as you’re looking at it in the sky, there, looks like they’re and making up the distance. looks like they’re 50 miles apart, 200 miles up, you know, and it’s just a straight line of like 150 lights that you just see going in a perfect line, perfectly spaced apart. It’s pretty cool. How do they get them? So, ⁓ I mean, they must have their own capability of moving independently. Is that right? Sure. do to maintain perfect orbit. Yeah.
So we, told you, we were up at the cabin and Brian had this star link. And so he gets it and it has a hard wire to it. So he goes outside, there’s a table out there. He looks at his phone and he, the phone shows you which direction to it’s like a little tablet looking thing, which direction. And then it kind of gives you this like green indicator. Boom. He puts it down, goes in, plugs it into the router. And that’s the end of the story. Sounds pretty cool.
And the pricing didn’t seem crazy to me. So again, if if I had the opportunity to buy Starlink
that would be that would be amazing. That would be amazing. So where where does that leave us today? Think we’re gonna watch these next two weeks. ⁓ See how we have the further negotiation since apparently, Lebanon and Israel is our problem to deal with Iran. Apparently. We’re gonna see what goes on in Islamabad. And then ⁓ we’ll see in two weeks if we still have a ceasefire in place.
The market clearly likes the ceasefire talk and hopefully President Trump sees that and without giving up too much can keep a ceasefire going. right, so let’s say we get a ceasefire. What did what are we gonna get? Do you think they’re gonna give up their enriched plutonium?
It seems unlikely, right? I think it’s just a scenario where we’ve damaged some of their spots. They still have it. I mean, you heard that rescue mission that they made much about. Oh, the down def 15. Yeah, apparently that was in part to trying to get some enriched uranium out. And Iran claims it was foiled. You never can trust, you know, things coming out in the news nowadays. But I wouldn’t doubt we tried to.
pull some out if we knew a location where there’s your rich, enriched uranium or plutonium that we would go in and try to get it. I don’t know. We’ll see. I think it’s a valid. It’s a valid goal, right to prevent a non nuclear, like I said earlier, every administration we’ve ever had is against Iran being empowered and thus having nukes and uranium and such. Going back to the fall the
shot. Yeah, yeah. It’s what I guess Trump was the first one to say, Okay, well, no action, nobody other than sanctions, like dropping bombs, nobody wanted to do it. Because there was a lot of risk involved. the number one thing that they would do to retaliate was to close the strait. Yeah, which drives oil prices up, which has obviously a major impact. Right after the ceasefire, you had the east west pipeline in Saudi Arabia get hit by a drone strike.
don’t think it came from Iran, but they have their proxies all around. have the Houthis, have Hezbollah, every direction you look, there’s some terrorist organization somehow tied in with them. ⁓ the, those oil dollars are funding, ⁓ you know, the funding Iran and they’re funding the fight against Israel and they’re funding their proxy terrorist groups. So I’m, I’m all about, you know, somehow stopping that, but
Getting back to ⁓ pre-strike, right? February 26th or 28th. I don’t know that we’re going to get that way. I don’t know that we’re going to get prices down that much, but let’s say that they reopen and what we, what will have, what will we have accomplished? We will have damaged significantly some of their sites. They will, will have drained their arsenal. We’ve drained our arsenal.
pretty dramatically. I’m just not sure that there wasn’t another way to do what we’re trying to accomplish. And like I said, it’s a worthy goal to prevent Iran from being a nuclear power very worthy, in my opinion. I may have tried a different way myself. But hey, I’m not the president, right? Yeah, maybe one day. if we we looks like right now we slowed down their their march towards enriching, you know, to super dangerous level.
we’ve reduced some of their ballistic missile stockpiles, which with enriching uranium in a bomb are even more dangerous. And they had a missile that was longer range than they previously admitted when they Diego Garcia. Yeah, Diego Garcia. don’t know, I think if we slow them down and we can negotiate you don’t enrich passes percentage right back to where we were. And you can take a toll 2 million per ship is what they want. But
you’re not closing it again. We’ll see. I think that’s where we’re going to have to land for right now until one side or the other gets some some more chips. Yeah. said there was 15 ships I think that went through in the last 24 hours and where it really kills people is at the end of the supply chain. We you and I had that discussion yesterday about New Zealand and Australia where they get most of their oil from ⁓
Asia, right? Secondhand, secondhand South Korea and Japan. And so their costs have gone up. But if you’re at the very end of the supply chain, there are companies that may not want to sell it to you, because they would think that the price would go down before it gets to you. They might have some supply problems in the future if the straight is not reopened. Obviously, I don’t think we’re gonna have you know, here in the United States, I don’t think we’re gonna have any supply problem.
But there definitely could be supply problems in Europe and certainly in other parts of the world that don’t have access, free access to oil, not free access, but access to domestic oil like we do. That could be problematic. It would certainly be a growth slowdown, right? It would probably be net negative for, I say probably, it would be a net negative for growth in those respective countries if they had to ration oil.
that point. Yeah, that seems like something that’s gonna happen if if it’s not open. So do you think they’re gonna come to a terms and JD Vance our guy he’s over there. He’s hanging out. Hey, yeah, we called that out a couple weeks ago. You take it in and I think he can be harsh brash. He’s very smart lawyer and whatnot.
but I think he’s softer than negotiating maybe with Trump or Rubio. So maybe this is them trying to extend an all brand and say, all right, we’ll give up something. You have to give up something. Let’s not argue and have this out on truth social. Yeah. Well, so he gets into Islamabad. ⁓ He says, listen, we, just need you to give up the plutonium and they go, no, screw you. What do you say to that? Say, well, good luck getting home.
We’re watching you. Hey, here’s your address. I don’t know what the addresses are in Iran, but here’s your address. That probably wouldn’t go over. Why you showing me a picture of my house? You know why. But you know, to your point there, I think that that’s probably on their minds, right? Like we did go in and eliminate the top 40 people in their organization, administration, in government in first Trump.
Soleimani led orchestrated and funded an attack on Israel and You know, I think it was in northern Iraq as well There was a couple of things that we attributed to and then we went in and boom killed him That was in first Trump and then now we went after the supreme leader this time. definitely on their mind Yeah, I mean they may be forced to make a deal For fear of being killed
I’m not necessarily opposed to that. I’m not like I said, I may have done it a different way. But if it comes to it, I’m not necessarily opposed to them being forced into making a deal. If we can acquire their ⁓ enriched uranium, like I’m good with that. Yeah, let’s do it. So we don’t have to do it again. Yeah, honestly. All right. Well, that’s we’re coming to the end of the show. What do you have for the good of the order here, Chris? Anything interesting?
No, I think we’ll just keep our eye on the bounce back here in April. We know emerging markets and developed international we’re kind of leading the way along with domestically small and mid caps, they kind of got hit a little bit harder just because they were up more, maybe some profit taking and move to safer options. We’ll see if they bounce back and continue their momentum that they had, you know, going back several to 2025 and really at the end of the year. Yeah.
I think that rotation is gonna continue to happen. I think that- Valuation wise it should if you look at the forward price earnings. Absolutely. I guess my guess for the end of the year is gonna be single digits positives for the S &P 500. That’s a guess, right? Nobody knows, but that’s where I stand at the moment. And we had that almost 10 % decline. We came almost back. I say almost back because we’re not at new highs yet. A little over 7,000 was the intraday high on the S &P 500.
But yeah, it’s going to come down to Iran and what happens with, ⁓ with JD Vance, right? Yes, sir. All right. Hey, thanks so much for joining us. We really appreciate you here for everybody. Good life. Have a wonderful week and we’ll see you next time.
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