I’m Noah Brooks. Obviously Chris needs with me today. Hello everyone. Chris, I am super excited. Two reasons today. First time that we’re doing the podcast right after a fed meeting. And more importantly, I’m leaving on vacation tonight. I’m sure that is the more important of the two because there’s nothing, nothing substantial in this fed meeting. No, they didn’t really say too much. Obviously we don’t have the

transcript yet, but they came out, they said they’re not going to lower rates. We did have two, ⁓ two members of the FOMC that dissented Waller and Bowman. Yeah. Now you in favor of a rake in favor of rate cut. Now you had told us last, last time that Waller seems to be the front runner. He has an angle. He has an angle. And obviously the angles is he might be the front runner for a fed chair.

coming up when the when the current chairs term expires or, or sooner. Yeah, I mean, he has colleagues that he’s been working with, he would be I guess, a more seamless option other than maybe we’ve heard wash and even best, but he’s doing such a good job at Treasury. doesn’t. Yeah, and he he doesn’t want that job. He doesn’t want that job. ⁓ But you know, we got some more data this morning. And I would imagine that the Federal Reserve

wasn’t waiting for this data, even though that they have it probably a few days in advance, but GDP came out and quarter over quarter, it was up 3%. Let’s talk about that for a little bit. Um, before we go anywhere else last quarter, GDP was actually down. And as you noted, it had to do with imports and exports and the whole tariff situation. Yeah, we were down 0.5 % last quarter. Yeah. And, um,

We sort of knew the effects of what went into that. It wasn’t necessarily a decrease in economic activity. It was just a lot of the front running of potential tariffs. And ⁓ basically how that works is our companies were purchasing more from abroad, which would go to the GDP of those countries we were importing for because they were producing something that we were buying rather than us producing here. This

quarter was the snapback effect of that there was less imports or less of a detractor or less of a subtraction from our GDP figure. Since the imbalance wasn’t so great. So the headline, you know, when you see that three, you’re like, Oh wow, that’s, that’s really good. And maybe that’s a reason why the federal reserve wouldn’t raise because you wouldn’t raise rates as economic activity is expanding. That doesn’t seem like something that they would do. It’s not something they would do.

Um, you would leave them steady or you may increase rates. Obviously I don’t think we’re at a spot where they’re, where they’re going to increase rates, but it seems like just on the onset that this is more of just a bounce back because a lack of imports over that time period since the last quarter. I think the easy thing to do would be to sort of average out those two numbers to get a true level of GDP over those two periods. Um,

you know, it’s not that we have an overheating up at 3 % would be above our trend or expectation of growth. But again, I would say your best bet is to somehow smooth those two numbers we just got. Well, I was definitely more excited for the trip than I was for Fed Day. Although both are interesting, right? I mean, there’s there’s no question about it. So where does this leave Jay Powell? Would it like

I mean, we know that there’s pressure on Jay Powell from the president to lower rates. Economically speaking, he’s not seeing data that would suggest that they need to even know people want him to the data doesn’t say you should be lowering rates now. do see some clues of potential weakness on the horizon. We are looking at a couple things earlier today. But the jobs reports have been strong. have another jobs report.

you coming out shortly in a couple days. Yeah, but do you trust those job numbers? I do. I do. But I think you’re right. He’s sitting in a good spot. He doesn’t he feels like the economy is performing well. He doesn’t feel like he needs to rush to cut because things are looking okay. You know, there’s a lot of very strong points and there’s some weaker forward looking points.

But he’s he’s saying he’s data dependent and the data for the most part has been pretty strong. Yeah. Well, you said he’s in a good spot. I think the fact of the matter is that we are in a good spot, right? The overall economy, the overall market, and there’s certainly pockets of weakness out there. I think some of the headline stuff that we’ve been seeing is, you know, real estate’s a little bit slow to certain markets out there.

Tourism is slow, certainly in Las Vegas. You know, we’ve been talking about that. I was in Vegas earlier this year. Didn’t seem slow to me anecdotally, ⁓ but year over year figures for flights in or passengers in or down a little bit. ⁓ housing seems to be, there seems to be a lot of price cuts on houses out there. And you know, you question whether that’s like the canary in the coal mine or is that just Vegas because prices went up too far too fast.

and will that have an effect in ⁓ the flyover states in the rest of the United States? I’m not sure that it will. It seems like that might be an idiosyncratic situation where

corporations, the entire city of Vegas is just really expensive. And they had a lot of buying. And the activities just need to pause or slow down a little bit. don’t have the seasonality on it. But here’s how I think of it as a father and whatnot. You know, the summer months that’s family vacation time. I’m not taking my family to Vegas. I’m going on a guy’s trip or a bachelor party to Vegas. So I wonder if it’s a seasonally

slower time of year. We talked about some effects on the margin. Maybe that will affect Vegas longer term about, you know, the tax bill and some provisions in it that don’t, I guess, behoove the professional gamblers. pointed out that professional gamblers can no longer deduct all of their losses. Yeah, previously, they could deduct 100 % of their losses. But right now, it’s down to 10 % of their losses, but they still have to claim 100 % of their winnings.

That makes it a tough gig to have a career on that. So do you think that that by itself will change people’s habit of gambling? I don’t, I don’t think so. But I mean, on the margin, it certainly could impact some people. Not this guy. The people who are the equivalent of the institutional.

the institutional gambler, the institutional gambler who probably account for a large outside percentage of the dollars. If I forget to be an institutional gambler, that sounds like hell to me. That doesn’t have zero interest in being an institutional gambler. I think when I was there last time, ⁓ I think we took out 200 bucks and I might’ve set it on here. I think we walked home or we were there maybe 30 minutes at the roulette wheel. We walked out of there with $300.

I was like, all right, we’re good. I gambled three drinks and some money. Not bad. Yeah. I think it probably even bought my drinks there. ⁓ yeah. That wasn’t, that wasn’t great. ⁓ but you know, there’s always this like excitement that you have build up when you’re going on a trip. And right now I’m, I’m in this excite mode, right? And I feel like I’ve been there. Ailish and I have been talking about this trip for so long. We made it. I dunno, I think mid February we were supposed to go.

away with a friend for his 40th birthday around my time for my 50th birthday. And then that didn’t pan out there going to a wedding. And so we’re still going. We’d made the reservations. And so we’ve been talking about it since February and like, there’s this buildup, there’s this buildup, there’s this buildup. And part of me goes, man, you should not be building this up so much. And you shouldn’t be so excited because there’s this real opportunity for a letdown in the trip.

⁓ I don’t know, like if there’s nothing specifically that I’m concerned about, it’s just really excited. It’s tough to constrain that anticipation. Yeah. So knock on wood. I’m, I’m, I’m hoping for a great trip, but I am excited, ⁓ to get out of here for a little bit, get out of the office, see the rest of the world, ⁓ eat some tapas and pinchos in, in Spain and all that stuff.

⁓ but before I get there, I mean, we still have, I still have another, another day thinking about this. ⁓ what is on the horizon over the next week or so? I mean, we have jobs, have PCI should be coming out shortly in terms of economic data. Those are two of the main points there. And we’re just keeping our eye on the markets. Yeah. I don’t think there’s anything in the short term that’s going to make the fed, ⁓ move any quicker.

We have a couple of deals at least that they can consider obviously a portion of their stance of why they are not moving on rates is uncertainty on trade. We got a couple big deals. did end up getting EU at 15 % tariffs. There’s several billion dollars of stuff they’re probably going to purchase anyways.

Yeah, so our aircraft and things like natural gas $750 $750 $750 billion to buy energy from the United States kind of seems like they might have done that regardless of whether shipping them. Yeah, and G anyways, like with natural gas anyways. So there’s a I believe the EU has an embargo on Russian gas. And so they’ve needed to find other areas of the world to import gas in.

And I wonder if they just know they’re like, well, if that’s what you want, great. We’ll say we’re going to do it. We were already going to do it beforehand. And, and so the administration could say, look at this win. We’re going to have 750 billion. The EU can go, Hey, we’re going to buy 750 billion. But like it was already in the cards prior to that. I wonder how much of that it plays into these deals. I’d love to be behind the scenes where I’m sure they said it was going to be.

400 billion, but we’ll move it up to 750 to give you a win and I mean a lot of the EU leaders aren’t very happy with it after the fact obviously they have to negotiate as a block and Ursula von der Leyen is the ultimate negotiator. She’s the EU president. Is that the term president something like that? and you know, she’s under a little bit of heat there in Europe because everything we’ve seen I don’t know if you’ve seen anything different, but it doesn’t look like

We are going to be subject to tariffs going in there. There’s still regulatory burdens we have to deal with and, and that taxes, but kind of separate. So we’re going to charge, we’re going to tariff them, whether you call it an excise tax, however you want to position it. ⁓ we’re going to tariff them 15 % and they’re not going to receive any tariff or our goods are not going to receive any tariff over there. So far.

We’ll see when there’s a deal on pen and paper rather than that videotaped handshake between the two. I would love to see some of these deal finalized with the details released. The I saw over the last 24 hours, the administration, I guess is threatening to put a 25 % tariff on India, which India was originally thought to be one that would come to the table early. And now they’re going to get the stick.

instead of the carrot. I don’t know how it’s all going to play out. mean, I obviously I have hope for the best. I think at some point, and I’ve said this before, we talk about it pretty regularly. Like Modi has the president of India, prime minister of India. ⁓ he has his own constituents that he has to, whether you want to call it play gate, he can’t look like he’s going to roll over, ⁓ to, the U S administration. ⁓

And like the president of Brazil, he’s basically pushing back really hard on Donald Trump at the moment. ⁓ He is not him and Lulu are in an argument over multiple things right now. Yeah, he there’s there that might that might. It might get a little bit worse before it gets better, because he’s not backing down. He has a situation. I mean, all of these

leaders of other parts of the world have their own constituents that they have to worry about and they have to worry about getting reelected. I mean, yeah, the I take a look at BRICS countries don’t really have many deals. China is really the only one I don’t know if South Africa has a deal but I don’t think there’s significant, you know, volumes going back and forth. They are a big economy actually South Africa. So you have the situation where

EU and Japan and the framework of a deal in China is worked out. But there is really nothing right on paper that’s officially agreed to. especially with China. I our trade negotiators are in Stockholm right now talking with them. And you know, we’re expecting a 90 day additional pause as they work out.

more granular things. Obviously, they’ve done export controls against us and this sort of held us hostage. They have a lot of leverage with, you know, the rare earth metals and the specialized magnets and I think Besant joked he’s like, I never want to talk about magnets again after this.

Well, listen, we know that battery storage is really important as we move forward. I don’t care if you’re an electric car purchaser now or at some point in the future, you will be driving an electric car. In 50 years from now, I don’t think it’s foreseeable that anybody’s going to be utilizing traditional hydrocarbons, at least for your personal vehicles. And you probably won’t be driving.

the AI will be driving and driving around. So all of that anticipation, all of that lead up, it really is going to drive the demand for electricity. read ⁓ one of the places that I’m looking at, might’ve been the journal has an article about a nuclear power plant that was mothballed in Michigan. I think it’s the Palisades power plant and it was set for ⁓ decommission in 2022.

And the regulatory agency just came out and said that they are going to allow it to be reopened. And you made a comment to me earlier today about all of the nuclear power plants in Pennsylvania. And it’s one of the reasons that, ⁓ the data centers are actually coming here because we have a lot of, I don’t want to say cheap. It’s, not cheap. It has gone up, but we have a lot of, ⁓

large generation supply. Yeah, large generation that doesn’t, it’s very consistent. Yes. Right. So nuclear power plants, very consistent. You don’t have to worry about wind or, or solar, anything like that, as well as natural gas fired stuff. but you can turn it on or turn it off, you know, with, I guess within a few hours, nuclear power plants, they don’t have to worry about getting any brownouts or anything like that. So that’s why we’re seeing a lot of data centers come here to Pennsylvania.

And I suspect that everybody, whether it’s governors or the public utility commissions in other States, they’re looking around going, Ooh, you know, we might be losing out to a state like Pennsylvania because we don’t necessarily have the excess capacity. ⁓ and that seems like it’s just going to continue to play out. Yeah. I mean, we, we’re very bullish on the theme of electricity demand increasing. think it’s a very common sense hypothesis. I’ll say.

And, you know, if you have the ability to have a highly efficient producer of electricity in your state, people are going to move to your state because it’s it’s a race for energy, where we’re looking in the next, you know, 10 years, five, 10 years beyond even right now, they’re starting to do these contracts and build these data centers. ⁓ Texas seems to have a yearly brownout.

Right. They have some issues. Everybody has seen it in the news as summer comes along. I mean, it’s either really hot or really cold. They experience it. really cold down there. They’ll get have one random big freezing storm and it’ll just totally stop everyone in their tracks. Well, I think that’s more of like I think that’s more of the ice on the power lines or something like that, as opposed to being really cold for a long time.

I mean, here we are in Pennsylvania and it’s probably one of the hottest days of the year, especially with the heat index all across the Northeast. Uh, I saw, uh, Des Moines, Iowa was like the heat index was like 107 or 108 yesterday. I think it’s going to be even hotter today. Uh, that obviously is driving power plants. I’m not going to get into discussion about, you know, temperatures rising anecdotally. It seems like we’re getting warmer at least in the short term and

Everybody likes to be cool. Everybody’s running their air conditioners. It really is. I saw, ⁓ I think somebody in Philadelphia maybe it was the mayor yesterday asked people to not turn down their AC too low. Like, are you doing guys? Come on. It’s going to be 70 or bust for me. I don’t, it’s not, it’s not getting any warmer in my house than 70 and knock on wood. We don’t have any brown outs here. Yeah. I don’t think that we’ve ever had any. I haven’t, I haven’t experienced it.

⁓ so I mean, here we are. We’re in end of July, the market’s up for the year. We had a massive drawdown. and it seems like, well, not that anybody forgot about it, but it seems like these things happen more and more where you have these quick drawdowns. And then here we are up for the year. Yeah. I mean, we had a stat we were looking at chart earlier today and it basically showed the

max entry year total return drawdowns versus the end of year returns. And since 1980, we’ve had 25 years where there’s been a 10 % plus drawdown. 17 of those 25 and a positive on the year and some significantly so hopefully we’re tracking towards that this year. let’s let’s focus on that for a minute. So what you’re saying is in a given year, from at from any point, the market goes down at least 10%.

but yet ends the year positive. 17 out of 25. there were, again, this is kind of rare that you see a drawdown done in a total return capacity, but it is probably the best way to do it. Including dividends. Yeah, including dividends. So if you take out the dividends and look at the price return, technically there were two more instances. Both of those instances were positive. So it would have been 19 for 27 instances where you end the year positive.

I mean, that’s, that’s pretty nutty. So you’re going back to 1980. There’s 17 years where the market’s down more than 10 % that ends the year. Now, if we ended today, ends of the ends of your positive. So if we ended the year today, this would be another year, right? 18 years. I mean, it just goes to show you that those pullbacks, they’re frequent. They happen with some consistency. And for most investors,

you really shouldn’t be doing anything at that time period. If you’re looking on a weekly or monthly basis, certainly the stock market can be punishing in the short term. ⁓ That’s not an issue with the stock market. That is the price of admission, right? And we talk about that all the time. And so we’ll do it again. You know, this will be every occurring theme we’ll say, but investors who stayed the course, you know, they weren’t they didn’t benefit from market timing and getting out.

they benefited from being patient and staying in, in each of those instances. Yeah. Well, I mean, it used to be that you go to bonds or utilize bonds for your ⁓ buoyancy in your portfolio. And then that kind of flew out the window in 2022. Now yields are up a little bit and people are, you know, more attracted to bonds. But when you look at like the 20 year returns, I think the ag

the U S bond Ag on the 20 year number is like a 3 % and the S and P is closer to nine and a half. I mean, that is, that is really something to think about. And so I don’t know that I would be in a situation where I would give up those longterm returns for the sake of a year, not going down as much. Yeah. You know, so people say to me, well, what are you doing? Well, I’m

As an investment guy, I’m a stock guy. I’m a hundred percent equity. I don’t own any bonds. Um, it’s just not part of my portfolio. I always preface that with, you know, most people do own some bonds out there and it’s not inappropriate to do it, but historically it does bring down the return and maybe not, you know, when interest rates were at 15 % in 1980, 1981, you probably made a fair amount of money.

in as rates were coming down pretty quickly in the bond market. I just think things have changed. Certainly in the last 25 years, you know, those numbers don’t hold up when you compare stocks versus bonds. ⁓ And so it really just comes down to understanding your own personal investment philosophy and your ability to absorb risk. Not everybody should be like, I don’t care if the market’s down 20%.

But I think you have to zoom out a little bit and think about those, you know, 30, 40, in some cases, 50 year investment returns. And, you know, position your, your brain to understand that you’re going to have some really big downturns in that time period. Yeah. Fight the urge to not for everyone, not financial advice, but fight the urge to add fixed income at a market bottom or during a market downturn and maybe do the opposite. Yeah.

Well, listen to asset allocation is, is really, ⁓ how you invest when you don’t know what the market’s going to do. And you should be prepared for, you know, almost anything. And that asset allocation is going to give you a pretty good idea based on long-term track records of how your, investment is going to perform. It’s not going to tell you what it’s going to do this year or, or certainly not in this month or this day, but it will give you a pretty good idea over a long period of time.

Hey, going forward, listen, the market is up right now about ⁓ eight and a half percent, eight and a quarter percent growth stocks for the year up 10 value stocks up eight. ⁓ Like I said, we would add to that number 17, we’d add 18. We had way more than 10 % drawdown, obviously, close to 20. I think it was 19, 18.9. I ⁓ mean, we seem to be in kind of a sweet spot at the moment. There’s no train coming down the tracks that’s going to hit us.

we know about tariffs, what am I what am I missing? You know, just look at these valuations, we could be, you know, subject to a five or 8 % draw down here. And again, that’s nothing to be worried about, because we’ve come back so fast. But yeah, a lot of the trade deal volatility, we’ll say half of it, maybe more than half of it, if you look on like a GDP percentage waiting.

is sort of in the rear view now. So we still have Canada, as you mentioned, India, you know, out there, where there’s still headline risk. And that’s where I think you’ll see like a five to set five to 8 % drawdown is, you know, earlier in the year, we said it to our advisors, you know, in April, literally right before the bottom headline risk is now moving positive, meaning you’re going to see big jumps upward on headlines rather than what we had seen. I think there was like a back to back down.

5 % two days in a row at one point off of headlines. I think we’re back at the point where we’re at neutral to possibly negative on headline risk just because of how quickly we’ve come back in the valuations we’ve reached. But again, on what we just talked about, if there’s a five to 8 % drawback, that’s not something that you run from the market for say this is the big one, we’ve already had a 20 % drawdown almost.

depending if you’re looking intraday or closing prices. It’s unlikely. It’s not impossible. It’s unlikely we’ll see another one in the same year, but that doesn’t preclude us from having volatility again because we’ve been, we’re down right about 16 on the VIX, the volatility index right now, but that’s a very suppressed level and we were below it for the last week or two.

Yeah. So lots of good things coming up before we get out of here. ⁓ let’s talk about astronomer for a second and cold play. It went viral. have to, I have to bring it up. So I’m a little bit dated on this, but there’s this situation at the Coldplay concert. Probably everybody out there knows about it. The CEO of astronomer, ⁓ is up on the kiss cam and he’s looks like he’s having a wonderful evening dancing with somebody. ⁓ Chris Martin.

the lead singer you would assume with his wife having a great time with his wife. soon as the kiss game comes up, obviously, not obviously, but as soon as the kiss game comes up, ⁓ he ducks down like he’s tying a shoe and Chris Martin says, maybe they’re having an affair. Well, in fact, they were right with the HR lady and, ⁓ the CEO. And then so the reason I bring it up now is so two or three days ago, there was a commercial

Their marketing department is capitalizing on man. You know how to turn that frown upside down right? Everything is an opportunity. So Gwyneth Paltrow is now. She said a very temporary, very temporary spokesperson for astronomer. I saw the ad on something and it was really funny. Yeah, now I’m not ⁓ a user of astronomer when.

when she’s talking about what she’s doing, I’m not familiar with astronomers operations. But if those words were familiar to me what she’s talking about, I’d be like, maybe I should look at astronomer. Is that how you deal with one of these really crazy public events? mean, they had that negative viral event. And I’ve seen that videos gotten well over 3 million views on their page. So they’re gonna, like you said, turn that frown upside down into a

funny marketing moment. I mean, someone in the marketing department deserves a raise. I’m sure Gwyneth got paid to do it pretty well. Yeah, pretty handily. yeah, I think it was a good little turnaround. At least they’re getting some notoriety instead of just negative press. Yeah, use it ⁓ for the power of good. Maybe I can only get one chance when you’re in the spotlight. Yeah. they’re gonna. Well, it’s like, ⁓ they could have done that at SeaWorld.

But they I don’t think they did a good job at SeaWorld when those killer whales, you know, had that little incident. ⁓ But the thing about it, I have to go to is, if the if these two people, the CEO and the HR lady hadn’t have reacted to the kiss cam, no one would have been the wiser, they would have moved off from them and went back about their business and it wouldn’t have been a thing.

Yeah, I mean, not to condone in any way, certainly. But yeah, if they just acted normal, like it’s not like his wife had a hard line into the stadium broadcast his cam, you know, didn’t make any sense to me. That’s an expensive $160 million mistake. Yeah. I mean, multiple mistakes appears to be but ⁓ do think they’re gonna stay together? Nevermind. Nevermind.

All right, everybody. Thank you so much for listening today. We really appreciate any questions or thoughts. Please don’t hesitate to shoot us an email at marketenthusiast at goodlifefa.com. We’ll see you next time. Thanks, everybody.