Investors had plenty to digest this week as a new Federal Reserve Chair took center stage, SpaceX completed a historic public debut, and markets continued to evaluate the economic outlook for the remainder of 2026.
Kevin Warsh officially presided over his first Federal Reserve meeting as Chair, marking the beginning of a new chapter for one of the world’s most influential financial institutions.
While the decision to hold rates steady was widely expected, investors paid close attention to how Warsh communicated with markets and whether his leadership could signal a shift in the Fed’s approach moving forward. Chris and Noah discuss the role of forward guidance, the usefulness of dot plots, and why changes in communication can sometimes have as much impact as policy decisions themselves.
The conversation also explores recent inflation and labor market data, both of which continue to influence expectations for future interest rate decisions.
With inflation showing signs of moderation and employment remaining relatively strong, investors are attempting to determine whether the Fed’s next move will be a rate cut, a rate hike, or an extended pause. As always, the hosts emphasize the importance of focusing on long-term trends rather than reacting to short-term headlines.
Another major topic is the developing agreement involving Iran and the resulting decline in oil prices.
Lower energy costs can have a broad impact throughout the economy, influencing everything from transportation and manufacturing to agriculture and consumer spending. While geopolitical developments often create uncertainty, markets have largely viewed the recent developments as a positive step toward easing inflationary pressures.
One of the biggest market stories of the year arrived with SpaceX’s long-awaited public debut.
Chris and Noah discuss investor enthusiasm surrounding the company, the future of Starlink, and the growing demand for artificial intelligence infrastructure. The conversation also explores how markets are valuing innovation and what investors should consider when evaluating high-growth opportunities.
Although technology remains a dominant market theme, value-oriented investments have quietly outperformed growth stocks in 2026.
The hosts discuss why this rotation may be occurring and how advancements in AI could ultimately benefit a much broader range of companies than many investors currently expect.
The episode closes with an important reminder about investor behavior.
Whether markets are reacting to Fed announcements, geopolitical developments, or major IPOs, emotional decision-making can often create more challenges than the events themselves. Chris and Noah discuss why maintaining a disciplined investment approach remains one of the most effective ways to navigate changing market conditions.
Hey, welcome back to another episode of Market Enthusiast.
I’m Noah Brooks, and obviously this is Chris Needs. Hello. So a lot of stuff happening today. We got a Fed meeting going on that just wrapped up. We have SpaceX that happened last Friday. Where where do you want to start? Gotta start with Kevin Warsh, okay, new Fed chair, having his opening meeting. I think he was
Kind of swaggerjacking Pal a little bit. He looked like he was trying to mimic the mannerisms at the very beginning. We didn’t get to see the whole speech. We’re kind of in here recording as he’s talking. But yeah, watch the very start of it. What you you think he’s he’s watching old tape? Yeah, yeah, he’s watching tape. He was scouting, doing he was doing work, yeah. I don’t know. He started breaking on the tone. He he doesn’t sound quite as velvety. You th you thought Powell sounded velvety? yeah. His voice the the market loved his voice.
The market did love his voice. Yeah. It always seemed to go up after after hearing him soothe our nerves. Yeah. Now I it seems like from what the new Fed chair has said publicly, that he wants to reduce those soothing words, that he wants to say a lot less than than other Fed chairs have in the past. Mm-hmm. Yeah. I think his opinion has been that they’ve been over communicating.
doing a little too much, I guess. And he even chose not to give his own personal dot in the ceremonial quarterly dot plot for their projection. Did he stop other people from doing that? in this instance they still I guess put their dots down so there were eighteen dots recorded instead of the nineteen previously from March. Okay. So so far he has not been able to stop okay well historically speaking you know as far as the Federal Reserve goes
having an open press conference after the the meeting isn’t hasn’t been around forever. It really started in around 1994 with Alan Greenspan. And he started by doing it four times a year, you know, half the time, every other meeting he would come back out. And then I think with the global financial crisis, they really wanted to provide an update, an immediate update right away.
used to be, I mean, when I started in the nineties, it was like the beige book was all the rage. And I I I mean, honestly, I don’t know that too many people look at the beige book anymore because the guidance that the Fed gives after each meeting. You know, it covers labor markets, spending, manufacturing, real estate, inflation, you know, all that stuff. And they’ve done a really good job of communicating the guidance. You know, it’s almost like they’re gonna let the market
Do the work for them. You know, if if they say, hey, it looks like, you know, we might have to raise rates in two months, three months, or later this year, well, the market actually moves those rates for them. So they don’t have to front runs it, right? So do you think that’s good or bad that they may be less communicative in the future? I mean, in my investing life, I mean, like you said, Bernanke and Yellen really were the ones who started communicating.
super frequently. Maybe that is a little too much, but we’ve all as investors gotten used to the communication frequency. anytime you make a change can be a little disconcerting. I would say two things can be true at once where, you know, the hour long J pal or Yellen meetings were a little too much, but at the same time, I like it.
I mean, I like to hear what they have to say. I I don’t know that I hover on every word, but certainly the the markets as a whole do. What I where I will agree with him is the dot plots are stupid. They’re never right. It’s just they’ve people can manipulate it just like Mirin, like it’s pointless. They can they have been wrong. I mean, I don’t know when the first time I saw one, but when we were in ZERP, the dot plot was always looking forward and it was always, you know, in in eighteen months it’s gonna be at three percent. It didn’t move for
Five, seven, eight years ever. And it they kept saying it was going to be higher, higher, higher. And it just never moved until in you know 2018 they started moving them up a little bit. it doesn’t make a lot of sense. So I’m not necessarily opposed to them reducing their frequency or maybe not giving as many dot plots or something like that. I still want to know what’s going on. And maybe this is a case where the beige book kind of comes back in vogue and people start worrying about it.
When I first started it was Greenspan and you know, which side of the size of the folder. Size the folder and where he was carrying his briefcase and all that nonsense. Yeah. I don’t I know that that’s that’s as good as the Super Bowl winner, right? When it comes to markets and what’s happening. Yeah. Yeah. I I thought it was interesting to see in his first meeting today. We did we were out there long enough to see the statement and sort of the initial reaction.
but nine of the eighteen people who did put their dots in essentially projected a rate hike this year, which don’t quote me on the numbers, in March, I think it was five or six. So an interesting increase in that number for his very first dot plot. And I know we’ve had Iran move up oil prices and yields, but we also got the deal this weekend and oil has come down really fast. And you would think, you know.
not point for point, but in the same direction correlating downwards, you would think yields would follow that. And even with sort of those moves known so far, and by the point of this FOMC meeting, they still chose to say nine of those 18 say let’s raise heights potentially or we see. It makes me think to myself, what is it that they’re looking at? What data do they do they have that no one else is looking at if they think the next move is still going to be higher?
after this potential deal. and we can kind of get into this deal a little bit. Obviously, some of the text was leaked. I don’t know that it all of it was. It doesn’t sound all that different. I didn’t see anything that suggested we were going to go in and collect any nuclear material. that makes me think it is closer to the old deal that we had than the new deal. But back to the Fed
What is it or or what could it be that they’re seeing? Are they seeing a lot of job growth that’s not out? I mean, we had a decent number for jobs that came out, 172,000 new jobs for May, right? That’s a very respectable number. The jolt number, I think we talked about when we were here last time, up 800,000, so more than 10% increase in the number of jobs that are available out there that are at least being listed. And that might freak people out a little bit.
Right. I mean a 10% increase. Now, to me, some of that has to do with the fact that tariffs, I don’t know that they’re over, but CFOs and CEOs and businesses in general are thinking, okay, we have a little bit of breathing room, we can go back to our original hiring, and maybe they had hiring pauses for the last year because of tariffs, and they’re they’re understaffed. So if they’re getting a read on on human capital on labor,
That says, you know, everybody’s being hired, that would make me think that they the next move could be higher. At the same time, you know, the CPI report came out and core CPI was pretty tame, up two tenths month over month. PPI, producer price index, that was hot. That was hot. Yeah. F almost five, four nine year over year, and month over month of four tenths, which it was definitely warmer than expected.
Yeah. So maybe that plays into it. not all of these nineteen people are gonna vote, right? So twelve vote. Yeah, twelve twelve are gonna vote on it. but and you don’t know which twelve It was unanimous twelve for a hold. Everybody knew they were holding this meeting. Yeah. So I it’s just one of those things where you you look at what Warsh is has been appointed to do, right? And you can’t really ignore that.
And so, you know, you had said earlier, well, what type of what type of biases are there from these, you know, nine people? And I thought that was an in interesting point. I’m not sure if it’s if it’s accurate, but you you’re you said essentially, well, are these people saying, Listen, this is our house, you’re not gonna come in here and lower rates and we’re in in in addition to not raising rates, we’re gonna say the next move is is likely higher.
Yeah. Because they’re biased against the yeah, I like thinking about Stephen Mirin was clearly biased to the downside with his dots standing alone and you know more than one move away from everybody else’s. in a similar thing. Maybe they’re attempting to counterbalance the perceived dovishness of Warsh, who historically actually has been a hawk, because they just assume he’s gonna come in and do the president’s dirty work and he’s gonna try and
cut rates and push everything down. So we’re gonna counteract that by pushing things upwards. And our vote will be for upwards, even if maybe they truly intend to stay neutral, just to counterbalance the narrative they’re choosing to signal upwards. Because we saw last time you had several people basically say they didn’t agree with the statement based on the bias of, you know, leaning dovish. I I think it’s possible that there’s several people that are
Doing it simply on that, unfortunately. Everyone has biases, and this is a very intentionally politicized situation. Sure. Yeah, no question about it. I if I had to pick one, you know, what the next move was going to be, I would say lower though. That that’s my personal opinion. And you know, anything can change, but the data right now that’s being presented, especially it’s almost as if the nine out of eighteen, just in my mind, if they were truly neutral and just you know.
Checking the data and going off the data, they would say, well, oil’s down 20% in the last four days. This is a good sign. This is good, you know. You made the comment earlier. If they this was the end of the month and there was a CPI number coming out and oil was down 20% from the previous number, that would look good for the headline CPI, obviously, not core. but you have things in fertilizer, and that generally affects foods, also, not in core.
But a lot of things that would on the headline number be impacted. Positively. There’s there’s gotta be to to talk about this Iran deal at the moment, there’s gotta be a group of people that think it’s either not gonna go through or that there’s gonna be some trials and tribulations in it. Yeah. Right. Otherwise oil would be back down to where it was. And I know that it takes time to open up the strait and get pumping and and of course a lot of the infrastructure in Iran has been damaged.
but it seems like they’re gonna get a whole bunch of money to fix it back up. Some of their money back. Some of the some of their money back. Okay. We’ll we’ll give it that. I as I said earlier, we have not seen I I don’t know that anybody’s actually seen it except the around the room. Yeah. so there’s supposed to be a signing of this this deal, what Sunday or Fri no Friday afternoon, where the president may or may not attend. That’s what he said.
He’s currently over in France at the G seven. He told everybody this morning that he was the boss. I heard that on Bruce Springsteen. Yeah, yeah. He said he was Bruce Springsteen. that got a chuckle out of the room from from the guys there. They had already started the meeting, I I was told. that’s what was being reported. So kind of kind of funny stuff if you can laugh at that. I’m sure there’s gonna be fits and starts with the Iran deal, you know, just like anything else, you know. Think about
Israel with you know Hezbollah and and everything in Beirut, you know, I’m sure there’s gonna be a couple things like that that money the waters temporarily. But time and time again, and whether truly Iran means any of it or whatever, in the end, it seems like both sides’ goal is to decrease the amount of strikes to de-escalate. So in the end, you know, I I think the move in oil makes sense. So hopefully that that holds for the most part and
you know, most of this Iran conflict is in the past, hopefully. Yeah, let let’s hope so for my gas tank. I I gotta say, that was that was uncalled for and very expensive for for for me personally. I don’t I don’t really like paying five forty for a gallon of gas or something. But yeah, I know you don’t have to worry about it. You just plug it in. I get it. I get it. One day I’ll I’ll get there. but electricity is getting expensive too.
It it is. It is. I locked in for eighteen months, so I’m good for a little bit. How many how much how many cents per kilowatt hour? Ten point three or point one zero three, whatever it works out to be. That’s pretty low. Yeah. I’m at like nineteen. I got before the last leg up. Okay. Gotta start shopping your rate, man. I did. I looked around. you know, they said they called it. I didn’t see anything that was even remotely below like maybe a half a s half a cent below where we’re at. You missed the boat.
The data center started piling in. Something’s got to give on that one. but oil is below eighty today. last I looked, it was around seventy nine. Around here, four bucks, four ten on gas and seems to be dropping lower a little bit every day. you know, below three would be great. I’m sure maybe somewhere in the country it is at the moment below three, but not not in this neck of the woods. I would that would really be helpful to me. I would I would love that.
But you know, the Strait of Hormuz is opening up and it’s not just oil that goes through there. Of course, it’s diesel and LNG and you know fertilizer and the things that go into the fertilizer, which will be great for the farmers. I mean, I’ve been hearing a lot of complaints from people out west about the input prices that it it’s costing them between the expensive diesel for the tractors.
And the input prices for the seeds and the fertilizer, those guys, the farmers are the ones really getting hurt the worst because they just have to take what prices are available, right? They can’t set the prices. That would be a conspiracy, I guess. They can’t set the prices, right? I mean, they have to take what the price of corn, what the price of soy is. And when their input prices go up, man, that’s that’s tough. They can’t just raise the price because it’s a market break based price, mm-hmm. Like lobster.
At a restaurant. yeah. Which I don’t get ever. but so yeah, let’s hope that this opens. the straight the the reporting that it’s open. Let’s hope that it continues to be open. markets largely looking through it. Yeah. Down Russell, you know, right at all time highs. S P not far away. Yeah. Last time I looked, S P five hundred was trading around seventy five hundred, which is about a hundred points below its all-time high close.
that puts it at up about 10% for the year. mid sized companies are up 15% for the year. Small companies are up almost 19% for the year. emerging markets up 25%. And I think the the reduction in oil prices is actually helping them pretty dramatically. Yeah. They took it on the chin when everything broke with Iran. Absolutely. Holding on to their gains. Yeah. value outperforming growth.
Right by leaps and bounds, values up 15 and a half, growth is only up four year to date as of today. that’s a little bit it’s it’s a little bit interesting because we’ve talked about the rotation, right? You know, at some point people are gonna start to leave growth companies and move into the value companies. This this rotation that we’re seeing, or this delta between these two returns.
has gotten wider over the last month or so. And there’s tons of winners on the growth side still. And and that’s the interesting thing. There’s a rotation underneath the growth within the growth sector alone. you know software really got its teeth kicked in earlier in the year. There’s still one struggling. We’ve seen some bounce backs. but yeah Microsoft’s you know one of the biggest c companies in the world still struggling still down Salesforce
getting hammered. you’ve seen Oracle come back a little bit for a little while. They’re headed back down. There’s just some tough moves. It’s been a tough month for software again. After maybe a reprieve, maybe everyone took their eye off it and we’re thinking about Iran and missiles and somehow accidentally started buying software again. But now that that’s sort of moving back as less of a concern, people are back to selling software.
Yeah, they’re selling software. I guess they’re doing that to buy SpaceX. I guess, because SpaceX had a wonderful IPO. I think everyone kinda won. You had the one one thirty five was the IPO price. First trade was at one fifty. Yesterday, so we’re recording Wednesday, Tuesday, they closed, I think, just a shade below two two. Yeah. So investors still got a little meat on that bones right off the bat. Down a little bit today. I think one ninety nine, one ninety eight when we came in here.
You know, it’s tough for me to wrap my head around where they’re gonna be in five or ten years. You know, I think everybody understands some of the components of SpaceX, like the Starlink, highly profitable. You get anywhere or you get internet anywhere you are through this little device. I think I’ve mentioned on here I I a buddy of mine planes are throwing it on planes now too. American is gonna connect with Starlink next year throughout their entire fleet. They’re gonna add them on there.
So it’s not gonna be like twenty dollars to get internet anymore? Thank goodness. I don’t know about that. Democratized internet for I’m not sure about that, but it’s not gonna be sl super slow. I think that’s the worst thing about it. but I mean, I remember flying on a plane when there was no internet. It sounds awful. That was a thing. I guess I did as well. I remember flying on a plane when they smoked on planes too. So I guess that’s you know, you there some bad things, some good things, right?
Give up smoking at internet. You ever go on a tour bus back in the day when they had the real midget TVs like every ten seats and they’re like, Yeah, go ahead, look at your seven inch screen ten rows ahead of you and watch this movie. Well, that’s that’s the way airplanes used to be. They would have television, a a monitor drop down in the front in like first class, and then there’d be two or three back there and they’d come around, they’d ask if you wanted headphones to watch the movie.
And everybody was watching the same movie. I mean, that’s nostalgia, maybe. Yeah. I don’t I don’t know. I’m kinda glad we don’t do that. I did see a crazy movie on the way home from from Portugal the other week, Begonia. Have you seen it? I have not seen it, no. It was part of the part of the nominations for best movie for the Academy Awards, and we we would try to watch them.
I I won’t give any spoilers away if anybody hasn’t seen it. It is a freaky deekey movie, but it is it’s actually worth watching. I would I would spend the two hours to watch it. there’s some honeybee action in there. Emma Stone is in there. The guy from Breaking Bad, Jesse Pinkman. No, not Jesse Pinkman. huh. Piemans or Plumens, he’s in there. okay. I know what you’re talking about. He’s the
The bad kid. He’s a bad kid in in Breaking Bad. Great movie. Very strange, but it was it was well worth watching. But I watched it by myself. I didn’t have to have everybody watch it with me, which was pretty fancy. Yeah, yeah, yeah. It was pretty pretty exciting about that. so we were talking about earnings earlier and you know where this market is gonna go. It looks like earnings estimates continue to ratchet up.
And first quarter was amazing. Yeah. Absolutely amazing. I think what was the number? 28% or something in in that range. Year over year. Yeah. And and now we’re tracking Q2. Analysts are looking at about 22% quarter over quarter earnings growth. Crazy numbers. Awesome. Love to see that moving up. And so we haven’t had to rely on multiple expansion so far this year. It’s been earnings expansion. If and with only up being only being up 10%.
Are we kind of trailing the fundamentals in terms of the performance for this year? I know we discount forward in the market, but I I would say it’s it’s good that we’re not up twenty percent right now. Now you can annualize it and you can say, well, we’re up we’re on track. We’re on track to be up twenty percent. I I don’t think it the market generally works that way. I don’t I don’t think it’s I don’t think it’s safe to make that assumption that we’re gonna be up twenty for the year. I don’t know it’s safe to make any assumptions. It seems like the gas is still on, but there’s some churning underneath.
that’s you know, that rotation between growth and value is getting a little bit bigger, which I think is very, very healthy. you mentioned some of those software companies that are, you know, falling behind a little bit down for the year, some of them double digits down for the year. those neo cloud stocks are taking all their flows, apparently. Something something like that. I would just like to see, and I I’ve said this on here before.
When we’ve had big rallies in a short period of time, I’d like to see just some grinding. I think that’s healthy. you can call it price discovery, you can call it just the market not necessarily going anywhere, but I think that would be healthy for a market that’s up 10%. And quite frankly, I think you know, value may wind up winning this year. Now, I’ve I’ve said that in the past. I’ll be honest, I I’ve put that out there before, but
You know, all of this AI infrastructure spending and computing power that these companies are putting together, it’s yes, it’s to help them, but in the end, it’s going to be the other companies, the non-tech related companies, that I think are going to be the primary benefactors of all of this computing power, make them more efficient. And to me, could be wrong, but to me, that’s why we’re seeing value significantly outperform at the moment.
Yeah, and they don’t have to normally they were the ones who had the high capex and and the high costs. And now we’re seeing all the the tech giants have high capex and high costs that we’re not used to having. Normally they were asset light. Now they’re buying all these data centers, all these server racks, all these chips, and it costs a lot of money to get these LLMs up and running. You know, we’ve had NVIDIA.
They issued some debt for the first time since I think 2021. Yeah, like five years. And they have boatloads of money, so much free cash flow, but they still chose to issue some debt. You had Google, who issued shares, about 85 billion of shares for the what third largest company in the world? That’s a while. They have plenty of cash on hand. Well what does that tell you about the mindset? Because you know, you think to yourself, well.
If I’m the CFO of these guys and I think rates are gonna go up, well then yeah, we’re gonna wanna issue more debt, not necessarily shares, but more debt at these levels. But they’re doing it and rates are kinda, you know, I mean, reasonable, let’s put it that way. They’re not super high, they’re not super low. And to your point about Google issuing new shares, it there’s like this rush to get out there and to raise capital now.
Do they think that in three months or six months or later this year that maybe they won’t be able to, or that it’ll be at a substantially higher cost to them? I don’t know if it’s just they want a little bit more flexibility. you know, like you said, the free cash flow is wild on some of these. We saw when Oracle went free cash flow negative on some of those deals, I think with open AI and what have you. Market punished them and it got ugly.
Cut them in half essentially. Yeah. So I don’t know. Obviously, they’re not going free free cash flow negative, but the CapEx is massive and it’s worth keeping an eye on. I mean, we still have, you know, obviously we talked about SpaceX there. Anything can happen with those shares. You know, you’re talking about fundamentals real quick. Starlink works, but X AI and Twitter don’t really work. But, you know, Anthropic still has to come out. They’re
leading the world and everything. I mean, gosh, we have our own government putting export controls on their f I think it’s Fable Five and and the Mythos five, which we’ve heard a lot about Mythos in the news and from the talking heads lately, because they’re so powerful. that tells me they’re gonna have a crazy valuation as well. And you have open AI rushing to the market. Next year you’ll have Andor who’s a defense contractor doing some really cool powerful things as well. Yeah, I mean
Something to be aware of. There will be some new IPOs coming on that are large as well. And they won’t be sure SpaceX was the largest ever IPO. But it was only five percent of the float. That’s why anything can sort of happen with those shares. But now the company is valued as the fifth largest company. Passing Amazon, yeah. Right. I mean, I’m not sure that that makes sense to me. I could be dead wrong on it. That’s not a buy, sell, or hold. It’s simply I I don’t fully understand it.
the idea of putting I guess computing power in low orbit, right? And using using solar to to power these these chips that are, I guess, floating around on satellites, it seems like that might be kind of far away. I don’t think that’s gonna be like two thousand twenty seven or two thousand twenty-eight. It’s an interesting idea, right? I mean it’s it’s right out of
you know a sci-fi magazine or or or a sci-fi movie but it’s gonna take a long time to do that. And there’s no question that we need more computing power at the moment. That’s not up for debate. I’m just and there’s like this NIMBY thing going on right now with data centers. So I think that’s an extra way out of it. So data centers in the sky. Yeah. And it’ll solve all of our issues. Well do you have to worry about heat?
Like right now, I mean, they’re they’re they were talking about building one of the largest data centers in apparently in the world in in Utah. And they were suggesting, and there’s a lot of pushback on it, they were suggesting that this data center was going to utilize more electricity than the entire state of Utah, and that it had the potential to raise the surrounding temperature for like twenty or thirty miles up a degree and a half.
And certainly the environmentalists are pushing back on it and some of the locals are. do you have to worry about that if th all of this heat is being dispersed into to low orbit or to low space? Can we just throw it on the moon too? Why worry about it falling down on falling on our heads? Why don’t we just put it on the moon? Well, how would you get the data back here?
Stata, you know, light speed, you know. Beam it down, Scotty. I don’t I don’t know about that. That seems seems a little far away. Hey. If hey, that’s I have not done my cost benefit analysis on sky computing and sky servers. But I’ll tell you what, hey. If it’s profitable, they’re gonna do it. I guess that’s the rule of thumb for capital markets.
Right. I I made the mistake of of saying, I don’t know if it was a mistake, but there was someone talking about I guess moral clarity, and I said that the markets are not a moral barometer. They just really care. Like you can invest however your morals are or however your values w are, and if you don’t
you know, have the same values as a company, like you’re allowed not to invest in that. That’s that’s not a problem. But overall the capital markets don’t care about the morality of it. and so if they’re putting data centers in the sky, I don’t know that you can put a a moral clause on that part, but if you’re putting data centers in the sky, I mean, and it’s profitable, it’s gonna work. And I guess maybe that’s what people are thinking SpaceX is going to be or a portion of SpaceX is going to be in the future.
Does it make sense? And I’m not talking about logic. Yeah, totally agree. I could see it though, right? Why not? I could I could see it. so you you know, we’ve talked about tariffs on here, we talked about inflation, everything seems to be moving in the right direction. we have this Iran situation, which looks like it’s gonna work itself out. You had said we’re on track for a 20% year, I would say maybe.
I don’t I don’t think that that’s the case. I don’t think three of the last four years would be up twenty percent, and the one year that wasn’t was up like 18 plus percent for total return. That would be you know, another twenty percent year would be like a home run. And there are people out there that have missed some of this because of emotions and moral
Clarity and political issues. Sometimes it’s not even that. Sometimes things things seem so good. It’s like we just went up forty percent or forty, it was actually end up compounding like fifty percent in two years. It can’t get better than this. I better lighten up and then you miss out. Yeah. That’s sometimes it’s just people self sabotaging because things can’t be this good, right? I I mean, if you look at the nineties and you go back
And you look at the the returns. Obviously there were some years that were were bad and there was volatility in ninety-seven and ninety-four when they started raising rates for the first time in a long time. A lot of volatility, but the people that were rewarded were the people that stayed in the markets. And of course, there was a a lot going on in the nineties that’s not happening today from a productivity standpoint with people getting computers on their desks. But technology led the nineties.
And technology so far has really been leading the twenty twenties. There’s just that’s not really up for debate. You you bought me the nineteen twenty nine book by Aaron Ross Sorkin and I know you read think about I think it was like nineteen twenty five timestamp Charles Schwab, the Charles Schwab was like, I’m done. This is getting too hot, I’m getting out. Well, unfortunately, sir, you get no points for getting out three years early. Like you’re a real loser for getting out three years too early. I’m not saying that, you know, like a
to be on the lot or anything, but truly, if you get out of a bubble three years early, that’s not a win. You don’t you don’t get bonus points for that. It’s tough. That that’s why making money’s hard, right? It certainly can be, although it hasn’t seemed to be that hard lately. Lately. I I will tell you that. But you had to ride through COVID.
Right. You had to ride through to Liberation Day. Well 2022. Twenty twenty two. I mean, twenty twenty-two was a bad year. Very bad. Yeah. Down twenty-five percent at one point, we and winded up down twenty, top to bottom on the SP five hundred. NASDAQ was down thirty at one point. you know, but you have to be able to be resilient, ride through those. And when we talk about financial planning, you know, you have to have
cash on the sidelines for immediate income needs and even in some cases income needs that are a little bit longer out. And the more cash that you have on the sidelines or the more you know, dry powder, the less you’re gonna need to sell when that volatility hits. And recently the volatility has been relatively short. I mean, Iran was was it February twenty seventh we went in? Markets drops like a rock.
And here we are back at seventy five hundred, just shy of all time highs. Dow is at all time highs. And you really only had to do one thing, which was just not sell at the bottom. Yeah. And think about the people who aren’t on their computer looking at their bounces though. Imagine you get that statement halfway through like April and you’re like, I’m getting out of this crap. And then you know, you sell on like April fifteenth and then
I do I do hate. I mean, I over the years I have gotten scared out of something, right? Whether it’s an individual stock or a sector, not necessarily the market as a whole. but the worst feeling in the world is getting scared out, thinking to yourself at the bottom. Yes, thinking to yourself, I made the right move, and then just watching whatever you sold head back up. You have like one or two days of really good sleep. I did the right thing, I sold.
Limited my exposure and then you can’t sleep because it just keeps going up and up and up from there. That that is a tough pill to swallow. Yeah. That is a tough pill to swallow. I wouldn’t say never sell because I don’t think that’s the right thing to do for most investors. but you know, the the less emotion than you that you put into it, I think is really I think it’s a it’s a better investing style.
You should be measured. If you’re an eighty percent equity investor and things quote unquote hit the fan, maybe you go to sixty. If you’re really scared, maybe you go to fifty. But you don’t I don’t think you go to zero. I I see it. ‘Cause that’s sticky when you get into that money market and it’s like, well, it went up five percent this week. I can’t get in now and then next thing you know, it’s up thirty percent for the year. Well, you know what’s worse than getting out and watching it go up is getting out
watching it go up, getting back in, and then watching it go down. That whipsaw. The third derivative of failure. Yeah, that whipsaw is by far worse than watching it go back up. And I can say, historically I I haven’t done that too often. once I make that move, generally speaking, I’m not gonna try to go back in and get my head sliced off again. But I I certainly have been whipsawed and it’s even worse than just missing the move up.
It it is that’s a that is really, really tough for me. So I would say just, you know, don’t make any emotional decisions, don’t make any political decisions, make your decisions based on your ability to absorb risk, your income needs, you know, how you responded the last time the market went down. And and I think you’ll kind of be okay in the end. Right? Yeah. All right.
All right, for everybody here at Good Life, we appreciate your time. Thanks for listening, and we’ll see you next time on The Market Enthusiast.
Have questions about how this impacts your investment strategy? Reach out to your advisor or email us at marketenthusiast@goodlifefa.com.
The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you consult the appropriate qualified professional prior to making a decision. Economic forecast set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
The Fed Changes Hands, SpaceX Takes Off, and Markets React
Investors had plenty to digest this week as a new Federal Reserve Chair took center stage, SpaceX completed a historic public debut, and markets continued to evaluate the economic outlook for the remainder of 2026.
In Episode 63 of Market Enthusiast, Chris Needs and Noah Brooks discuss the latest developments shaping the investment landscape and what they could mean for long-term investors.
Table of Contents
A New Face at the Fed
Kevin Warsh officially presided over his first Federal Reserve meeting as Chair, marking the beginning of a new chapter for one of the world’s most influential financial institutions.
While the decision to hold rates steady was widely expected, investors paid close attention to how Warsh communicated with markets and whether his leadership could signal a shift in the Fed’s approach moving forward. Chris and Noah discuss the role of forward guidance, the usefulness of dot plots, and why changes in communication can sometimes have as much impact as policy decisions themselves.
Economic Data Remains in Focus
The conversation also explores recent inflation and labor market data, both of which continue to influence expectations for future interest rate decisions.
With inflation showing signs of moderation and employment remaining relatively strong, investors are attempting to determine whether the Fed’s next move will be a rate cut, a rate hike, or an extended pause. As always, the hosts emphasize the importance of focusing on long-term trends rather than reacting to short-term headlines.
Oil Prices Fall as Geopolitical Tensions Ease
Another major topic is the developing agreement involving Iran and the resulting decline in oil prices.
Lower energy costs can have a broad impact throughout the economy, influencing everything from transportation and manufacturing to agriculture and consumer spending. While geopolitical developments often create uncertainty, markets have largely viewed the recent developments as a positive step toward easing inflationary pressures.
SpaceX Makes History
One of the biggest market stories of the year arrived with SpaceX’s long-awaited public debut.
Chris and Noah discuss investor enthusiasm surrounding the company, the future of Starlink, and the growing demand for artificial intelligence infrastructure. The conversation also explores how markets are valuing innovation and what investors should consider when evaluating high-growth opportunities.
Value Stocks Quietly Lead the Way
Although technology remains a dominant market theme, value-oriented investments have quietly outperformed growth stocks in 2026.
The hosts discuss why this rotation may be occurring and how advancements in AI could ultimately benefit a much broader range of companies than many investors currently expect.
Staying Disciplined Through Market Moves
The episode closes with an important reminder about investor behavior.
Whether markets are reacting to Fed announcements, geopolitical developments, or major IPOs, emotional decision-making can often create more challenges than the events themselves. Chris and Noah discuss why maintaining a disciplined investment approach remains one of the most effective ways to navigate changing market conditions.
Listen to the Full Episode
Full Episode Transcript
Hey, welcome back to another episode of Market Enthusiast.
I’m Noah Brooks, and obviously this is Chris Needs. Hello. So a lot of stuff happening today. We got a Fed meeting going on that just wrapped up. We have SpaceX that happened last Friday. Where where do you want to start? Gotta start with Kevin Warsh, okay, new Fed chair, having his opening meeting. I think he was
Kind of swaggerjacking Pal a little bit. He looked like he was trying to mimic the mannerisms at the very beginning. We didn’t get to see the whole speech. We’re kind of in here recording as he’s talking. But yeah, watch the very start of it. What you you think he’s he’s watching old tape? Yeah, yeah, he’s watching tape. He was scouting, doing he was doing work, yeah. I don’t know. He started breaking on the tone. He he doesn’t sound quite as velvety. You th you thought Powell sounded velvety? yeah. His voice the the market loved his voice.
The market did love his voice. Yeah. It always seemed to go up after after hearing him soothe our nerves. Yeah. Now I it seems like from what the new Fed chair has said publicly, that he wants to reduce those soothing words, that he wants to say a lot less than than other Fed chairs have in the past. Mm-hmm. Yeah. I think his opinion has been that they’ve been over communicating.
doing a little too much, I guess. And he even chose not to give his own personal dot in the ceremonial quarterly dot plot for their projection. Did he stop other people from doing that? in this instance they still I guess put their dots down so there were eighteen dots recorded instead of the nineteen previously from March. Okay. So so far he has not been able to stop okay well historically speaking you know as far as the Federal Reserve goes
having an open press conference after the the meeting isn’t hasn’t been around forever. It really started in around 1994 with Alan Greenspan. And he started by doing it four times a year, you know, half the time, every other meeting he would come back out. And then I think with the global financial crisis, they really wanted to provide an update, an immediate update right away.
used to be, I mean, when I started in the nineties, it was like the beige book was all the rage. And I I I mean, honestly, I don’t know that too many people look at the beige book anymore because the guidance that the Fed gives after each meeting. You know, it covers labor markets, spending, manufacturing, real estate, inflation, you know, all that stuff. And they’ve done a really good job of communicating the guidance. You know, it’s almost like they’re gonna let the market
Do the work for them. You know, if if they say, hey, it looks like, you know, we might have to raise rates in two months, three months, or later this year, well, the market actually moves those rates for them. So they don’t have to front runs it, right? So do you think that’s good or bad that they may be less communicative in the future? I mean, in my investing life, I mean, like you said, Bernanke and Yellen really were the ones who started communicating.
super frequently. Maybe that is a little too much, but we’ve all as investors gotten used to the communication frequency. anytime you make a change can be a little disconcerting. I would say two things can be true at once where, you know, the hour long J pal or Yellen meetings were a little too much, but at the same time, I like it.
I mean, I like to hear what they have to say. I I don’t know that I hover on every word, but certainly the the markets as a whole do. What I where I will agree with him is the dot plots are stupid. They’re never right. It’s just they’ve people can manipulate it just like Mirin, like it’s pointless. They can they have been wrong. I mean, I don’t know when the first time I saw one, but when we were in ZERP, the dot plot was always looking forward and it was always, you know, in in eighteen months it’s gonna be at three percent. It didn’t move for
Five, seven, eight years ever. And it they kept saying it was going to be higher, higher, higher. And it just never moved until in you know 2018 they started moving them up a little bit. it doesn’t make a lot of sense. So I’m not necessarily opposed to them reducing their frequency or maybe not giving as many dot plots or something like that. I still want to know what’s going on. And maybe this is a case where the beige book kind of comes back in vogue and people start worrying about it.
When I first started it was Greenspan and you know, which side of the size of the folder. Size the folder and where he was carrying his briefcase and all that nonsense. Yeah. I don’t I know that that’s that’s as good as the Super Bowl winner, right? When it comes to markets and what’s happening. Yeah. Yeah. I I thought it was interesting to see in his first meeting today. We did we were out there long enough to see the statement and sort of the initial reaction.
but nine of the eighteen people who did put their dots in essentially projected a rate hike this year, which don’t quote me on the numbers, in March, I think it was five or six. So an interesting increase in that number for his very first dot plot. And I know we’ve had Iran move up oil prices and yields, but we also got the deal this weekend and oil has come down really fast. And you would think, you know.
not point for point, but in the same direction correlating downwards, you would think yields would follow that. And even with sort of those moves known so far, and by the point of this FOMC meeting, they still chose to say nine of those 18 say let’s raise heights potentially or we see. It makes me think to myself, what is it that they’re looking at? What data do they do they have that no one else is looking at if they think the next move is still going to be higher?
after this potential deal. and we can kind of get into this deal a little bit. Obviously, some of the text was leaked. I don’t know that it all of it was. It doesn’t sound all that different. I didn’t see anything that suggested we were going to go in and collect any nuclear material. that makes me think it is closer to the old deal that we had than the new deal. But back to the Fed
What is it or or what could it be that they’re seeing? Are they seeing a lot of job growth that’s not out? I mean, we had a decent number for jobs that came out, 172,000 new jobs for May, right? That’s a very respectable number. The jolt number, I think we talked about when we were here last time, up 800,000, so more than 10% increase in the number of jobs that are available out there that are at least being listed. And that might freak people out a little bit.
Right. I mean a 10% increase. Now, to me, some of that has to do with the fact that tariffs, I don’t know that they’re over, but CFOs and CEOs and businesses in general are thinking, okay, we have a little bit of breathing room, we can go back to our original hiring, and maybe they had hiring pauses for the last year because of tariffs, and they’re they’re understaffed. So if they’re getting a read on on human capital on labor,
That says, you know, everybody’s being hired, that would make me think that they the next move could be higher. At the same time, you know, the CPI report came out and core CPI was pretty tame, up two tenths month over month. PPI, producer price index, that was hot. That was hot. Yeah. F almost five, four nine year over year, and month over month of four tenths, which it was definitely warmer than expected.
Yeah. So maybe that plays into it. not all of these nineteen people are gonna vote, right? So twelve vote. Yeah, twelve twelve are gonna vote on it. but and you don’t know which twelve It was unanimous twelve for a hold. Everybody knew they were holding this meeting. Yeah. So I it’s just one of those things where you you look at what Warsh is has been appointed to do, right? And you can’t really ignore that.
And so, you know, you had said earlier, well, what type of what type of biases are there from these, you know, nine people? And I thought that was an in interesting point. I’m not sure if it’s if it’s accurate, but you you’re you said essentially, well, are these people saying, Listen, this is our house, you’re not gonna come in here and lower rates and we’re in in in addition to not raising rates, we’re gonna say the next move is is likely higher.
Yeah. Because they’re biased against the yeah, I like thinking about Stephen Mirin was clearly biased to the downside with his dots standing alone and you know more than one move away from everybody else’s. in a similar thing. Maybe they’re attempting to counterbalance the perceived dovishness of Warsh, who historically actually has been a hawk, because they just assume he’s gonna come in and do the president’s dirty work and he’s gonna try and
cut rates and push everything down. So we’re gonna counteract that by pushing things upwards. And our vote will be for upwards, even if maybe they truly intend to stay neutral, just to counterbalance the narrative they’re choosing to signal upwards. Because we saw last time you had several people basically say they didn’t agree with the statement based on the bias of, you know, leaning dovish. I I think it’s possible that there’s several people that are
Doing it simply on that, unfortunately. Everyone has biases, and this is a very intentionally politicized situation. Sure. Yeah, no question about it. I if I had to pick one, you know, what the next move was going to be, I would say lower though. That that’s my personal opinion. And you know, anything can change, but the data right now that’s being presented, especially it’s almost as if the nine out of eighteen, just in my mind, if they were truly neutral and just you know.
Checking the data and going off the data, they would say, well, oil’s down 20% in the last four days. This is a good sign. This is good, you know. You made the comment earlier. If they this was the end of the month and there was a CPI number coming out and oil was down 20% from the previous number, that would look good for the headline CPI, obviously, not core. but you have things in fertilizer, and that generally affects foods, also, not in core.
But a lot of things that would on the headline number be impacted. Positively. There’s there’s gotta be to to talk about this Iran deal at the moment, there’s gotta be a group of people that think it’s either not gonna go through or that there’s gonna be some trials and tribulations in it. Yeah. Right. Otherwise oil would be back down to where it was. And I know that it takes time to open up the strait and get pumping and and of course a lot of the infrastructure in Iran has been damaged.
but it seems like they’re gonna get a whole bunch of money to fix it back up. Some of their money back. Some of the some of their money back. Okay. We’ll we’ll give it that. I as I said earlier, we have not seen I I don’t know that anybody’s actually seen it except the around the room. Yeah. so there’s supposed to be a signing of this this deal, what Sunday or Fri no Friday afternoon, where the president may or may not attend. That’s what he said.
He’s currently over in France at the G seven. He told everybody this morning that he was the boss. I heard that on Bruce Springsteen. Yeah, yeah. He said he was Bruce Springsteen. that got a chuckle out of the room from from the guys there. They had already started the meeting, I I was told. that’s what was being reported. So kind of kind of funny stuff if you can laugh at that. I’m sure there’s gonna be fits and starts with the Iran deal, you know, just like anything else, you know. Think about
Israel with you know Hezbollah and and everything in Beirut, you know, I’m sure there’s gonna be a couple things like that that money the waters temporarily. But time and time again, and whether truly Iran means any of it or whatever, in the end, it seems like both sides’ goal is to decrease the amount of strikes to de-escalate. So in the end, you know, I I think the move in oil makes sense. So hopefully that that holds for the most part and
you know, most of this Iran conflict is in the past, hopefully. Yeah, let let’s hope so for my gas tank. I I gotta say, that was that was uncalled for and very expensive for for for me personally. I don’t I don’t really like paying five forty for a gallon of gas or something. But yeah, I know you don’t have to worry about it. You just plug it in. I get it. I get it. One day I’ll I’ll get there. but electricity is getting expensive too.
It it is. It is. I locked in for eighteen months, so I’m good for a little bit. How many how much how many cents per kilowatt hour? Ten point three or point one zero three, whatever it works out to be. That’s pretty low. Yeah. I’m at like nineteen. I got before the last leg up. Okay. Gotta start shopping your rate, man. I did. I looked around. you know, they said they called it. I didn’t see anything that was even remotely below like maybe a half a s half a cent below where we’re at. You missed the boat.
The data center started piling in. Something’s got to give on that one. but oil is below eighty today. last I looked, it was around seventy nine. Around here, four bucks, four ten on gas and seems to be dropping lower a little bit every day. you know, below three would be great. I’m sure maybe somewhere in the country it is at the moment below three, but not not in this neck of the woods. I would that would really be helpful to me. I would I would love that.
But you know, the Strait of Hormuz is opening up and it’s not just oil that goes through there. Of course, it’s diesel and LNG and you know fertilizer and the things that go into the fertilizer, which will be great for the farmers. I mean, I’ve been hearing a lot of complaints from people out west about the input prices that it it’s costing them between the expensive diesel for the tractors.
And the input prices for the seeds and the fertilizer, those guys, the farmers are the ones really getting hurt the worst because they just have to take what prices are available, right? They can’t set the prices. That would be a conspiracy, I guess. They can’t set the prices, right? I mean, they have to take what the price of corn, what the price of soy is. And when their input prices go up, man, that’s that’s tough. They can’t just raise the price because it’s a market break based price, mm-hmm. Like lobster.
At a restaurant. yeah. Which I don’t get ever. but so yeah, let’s hope that this opens. the straight the the reporting that it’s open. Let’s hope that it continues to be open. markets largely looking through it. Yeah. Down Russell, you know, right at all time highs. S P not far away. Yeah. Last time I looked, S P five hundred was trading around seventy five hundred, which is about a hundred points below its all-time high close.
that puts it at up about 10% for the year. mid sized companies are up 15% for the year. Small companies are up almost 19% for the year. emerging markets up 25%. And I think the the reduction in oil prices is actually helping them pretty dramatically. Yeah. They took it on the chin when everything broke with Iran. Absolutely. Holding on to their gains. Yeah. value outperforming growth.
Right by leaps and bounds, values up 15 and a half, growth is only up four year to date as of today. that’s a little bit it’s it’s a little bit interesting because we’ve talked about the rotation, right? You know, at some point people are gonna start to leave growth companies and move into the value companies. This this rotation that we’re seeing, or this delta between these two returns.
has gotten wider over the last month or so. And there’s tons of winners on the growth side still. And and that’s the interesting thing. There’s a rotation underneath the growth within the growth sector alone. you know software really got its teeth kicked in earlier in the year. There’s still one struggling. We’ve seen some bounce backs. but yeah Microsoft’s you know one of the biggest c companies in the world still struggling still down Salesforce
getting hammered. you’ve seen Oracle come back a little bit for a little while. They’re headed back down. There’s just some tough moves. It’s been a tough month for software again. After maybe a reprieve, maybe everyone took their eye off it and we’re thinking about Iran and missiles and somehow accidentally started buying software again. But now that that’s sort of moving back as less of a concern, people are back to selling software.
Yeah, they’re selling software. I guess they’re doing that to buy SpaceX. I guess, because SpaceX had a wonderful IPO. I think everyone kinda won. You had the one one thirty five was the IPO price. First trade was at one fifty. Yesterday, so we’re recording Wednesday, Tuesday, they closed, I think, just a shade below two two. Yeah. So investors still got a little meat on that bones right off the bat. Down a little bit today. I think one ninety nine, one ninety eight when we came in here.
You know, it’s tough for me to wrap my head around where they’re gonna be in five or ten years. You know, I think everybody understands some of the components of SpaceX, like the Starlink, highly profitable. You get anywhere or you get internet anywhere you are through this little device. I think I’ve mentioned on here I I a buddy of mine planes are throwing it on planes now too. American is gonna connect with Starlink next year throughout their entire fleet. They’re gonna add them on there.
So it’s not gonna be like twenty dollars to get internet anymore? Thank goodness. I don’t know about that. Democratized internet for I’m not sure about that, but it’s not gonna be sl super slow. I think that’s the worst thing about it. but I mean, I remember flying on a plane when there was no internet. It sounds awful. That was a thing. I guess I did as well. I remember flying on a plane when they smoked on planes too. So I guess that’s you know, you there some bad things, some good things, right?
Give up smoking at internet. You ever go on a tour bus back in the day when they had the real midget TVs like every ten seats and they’re like, Yeah, go ahead, look at your seven inch screen ten rows ahead of you and watch this movie. Well, that’s that’s the way airplanes used to be. They would have television, a a monitor drop down in the front in like first class, and then there’d be two or three back there and they’d come around, they’d ask if you wanted headphones to watch the movie.
And everybody was watching the same movie. I mean, that’s nostalgia, maybe. Yeah. I don’t I don’t know. I’m kinda glad we don’t do that. I did see a crazy movie on the way home from from Portugal the other week, Begonia. Have you seen it? I have not seen it, no. It was part of the part of the nominations for best movie for the Academy Awards, and we we would try to watch them.
I I won’t give any spoilers away if anybody hasn’t seen it. It is a freaky deekey movie, but it is it’s actually worth watching. I would I would spend the two hours to watch it. there’s some honeybee action in there. Emma Stone is in there. The guy from Breaking Bad, Jesse Pinkman. No, not Jesse Pinkman. huh. Piemans or Plumens, he’s in there. okay. I know what you’re talking about. He’s the
The bad kid. He’s a bad kid in in Breaking Bad. Great movie. Very strange, but it was it was well worth watching. But I watched it by myself. I didn’t have to have everybody watch it with me, which was pretty fancy. Yeah, yeah, yeah. It was pretty pretty exciting about that. so we were talking about earnings earlier and you know where this market is gonna go. It looks like earnings estimates continue to ratchet up.
And first quarter was amazing. Yeah. Absolutely amazing. I think what was the number? 28% or something in in that range. Year over year. Yeah. And and now we’re tracking Q2. Analysts are looking at about 22% quarter over quarter earnings growth. Crazy numbers. Awesome. Love to see that moving up. And so we haven’t had to rely on multiple expansion so far this year. It’s been earnings expansion. If and with only up being only being up 10%.
Are we kind of trailing the fundamentals in terms of the performance for this year? I know we discount forward in the market, but I I would say it’s it’s good that we’re not up twenty percent right now. Now you can annualize it and you can say, well, we’re up we’re on track. We’re on track to be up twenty percent. I I don’t think it the market generally works that way. I don’t I don’t think it’s I don’t think it’s safe to make that assumption that we’re gonna be up twenty for the year. I don’t know it’s safe to make any assumptions. It seems like the gas is still on, but there’s some churning underneath.
that’s you know, that rotation between growth and value is getting a little bit bigger, which I think is very, very healthy. you mentioned some of those software companies that are, you know, falling behind a little bit down for the year, some of them double digits down for the year. those neo cloud stocks are taking all their flows, apparently. Something something like that. I would just like to see, and I I’ve said this on here before.
When we’ve had big rallies in a short period of time, I’d like to see just some grinding. I think that’s healthy. you can call it price discovery, you can call it just the market not necessarily going anywhere, but I think that would be healthy for a market that’s up 10%. And quite frankly, I think you know, value may wind up winning this year. Now, I’ve I’ve said that in the past. I’ll be honest, I I’ve put that out there before, but
You know, all of this AI infrastructure spending and computing power that these companies are putting together, it’s yes, it’s to help them, but in the end, it’s going to be the other companies, the non-tech related companies, that I think are going to be the primary benefactors of all of this computing power, make them more efficient. And to me, could be wrong, but to me, that’s why we’re seeing value significantly outperform at the moment.
Yeah, and they don’t have to normally they were the ones who had the high capex and and the high costs. And now we’re seeing all the the tech giants have high capex and high costs that we’re not used to having. Normally they were asset light. Now they’re buying all these data centers, all these server racks, all these chips, and it costs a lot of money to get these LLMs up and running. You know, we’ve had NVIDIA.
They issued some debt for the first time since I think 2021. Yeah, like five years. And they have boatloads of money, so much free cash flow, but they still chose to issue some debt. You had Google, who issued shares, about 85 billion of shares for the what third largest company in the world? That’s a while. They have plenty of cash on hand. Well what does that tell you about the mindset? Because you know, you think to yourself, well.
If I’m the CFO of these guys and I think rates are gonna go up, well then yeah, we’re gonna wanna issue more debt, not necessarily shares, but more debt at these levels. But they’re doing it and rates are kinda, you know, I mean, reasonable, let’s put it that way. They’re not super high, they’re not super low. And to your point about Google issuing new shares, it there’s like this rush to get out there and to raise capital now.
Do they think that in three months or six months or later this year that maybe they won’t be able to, or that it’ll be at a substantially higher cost to them? I don’t know if it’s just they want a little bit more flexibility. you know, like you said, the free cash flow is wild on some of these. We saw when Oracle went free cash flow negative on some of those deals, I think with open AI and what have you. Market punished them and it got ugly.
Cut them in half essentially. Yeah. So I don’t know. Obviously, they’re not going free free cash flow negative, but the CapEx is massive and it’s worth keeping an eye on. I mean, we still have, you know, obviously we talked about SpaceX there. Anything can happen with those shares. You know, you’re talking about fundamentals real quick. Starlink works, but X AI and Twitter don’t really work. But, you know, Anthropic still has to come out. They’re
leading the world and everything. I mean, gosh, we have our own government putting export controls on their f I think it’s Fable Five and and the Mythos five, which we’ve heard a lot about Mythos in the news and from the talking heads lately, because they’re so powerful. that tells me they’re gonna have a crazy valuation as well. And you have open AI rushing to the market. Next year you’ll have Andor who’s a defense contractor doing some really cool powerful things as well. Yeah, I mean
Something to be aware of. There will be some new IPOs coming on that are large as well. And they won’t be sure SpaceX was the largest ever IPO. But it was only five percent of the float. That’s why anything can sort of happen with those shares. But now the company is valued as the fifth largest company. Passing Amazon, yeah. Right. I mean, I’m not sure that that makes sense to me. I could be dead wrong on it. That’s not a buy, sell, or hold. It’s simply I I don’t fully understand it.
the idea of putting I guess computing power in low orbit, right? And using using solar to to power these these chips that are, I guess, floating around on satellites, it seems like that might be kind of far away. I don’t think that’s gonna be like two thousand twenty seven or two thousand twenty-eight. It’s an interesting idea, right? I mean it’s it’s right out of
you know a sci-fi magazine or or or a sci-fi movie but it’s gonna take a long time to do that. And there’s no question that we need more computing power at the moment. That’s not up for debate. I’m just and there’s like this NIMBY thing going on right now with data centers. So I think that’s an extra way out of it. So data centers in the sky. Yeah. And it’ll solve all of our issues. Well do you have to worry about heat?
Like right now, I mean, they’re they’re they were talking about building one of the largest data centers in apparently in the world in in Utah. And they were suggesting, and there’s a lot of pushback on it, they were suggesting that this data center was going to utilize more electricity than the entire state of Utah, and that it had the potential to raise the surrounding temperature for like twenty or thirty miles up a degree and a half.
And certainly the environmentalists are pushing back on it and some of the locals are. do you have to worry about that if th all of this heat is being dispersed into to low orbit or to low space? Can we just throw it on the moon too? Why worry about it falling down on falling on our heads? Why don’t we just put it on the moon? Well, how would you get the data back here?
Stata, you know, light speed, you know. Beam it down, Scotty. I don’t I don’t know about that. That seems seems a little far away. Hey. If hey, that’s I have not done my cost benefit analysis on sky computing and sky servers. But I’ll tell you what, hey. If it’s profitable, they’re gonna do it. I guess that’s the rule of thumb for capital markets.
Right. I I made the mistake of of saying, I don’t know if it was a mistake, but there was someone talking about I guess moral clarity, and I said that the markets are not a moral barometer. They just really care. Like you can invest however your morals are or however your values w are, and if you don’t
you know, have the same values as a company, like you’re allowed not to invest in that. That’s that’s not a problem. But overall the capital markets don’t care about the morality of it. and so if they’re putting data centers in the sky, I don’t know that you can put a a moral clause on that part, but if you’re putting data centers in the sky, I mean, and it’s profitable, it’s gonna work. And I guess maybe that’s what people are thinking SpaceX is going to be or a portion of SpaceX is going to be in the future.
Does it make sense? And I’m not talking about logic. Yeah, totally agree. I could see it though, right? Why not? I could I could see it. so you you know, we’ve talked about tariffs on here, we talked about inflation, everything seems to be moving in the right direction. we have this Iran situation, which looks like it’s gonna work itself out. You had said we’re on track for a 20% year, I would say maybe.
I don’t I don’t think that that’s the case. I don’t think three of the last four years would be up twenty percent, and the one year that wasn’t was up like 18 plus percent for total return. That would be you know, another twenty percent year would be like a home run. And there are people out there that have missed some of this because of emotions and moral
Clarity and political issues. Sometimes it’s not even that. Sometimes things things seem so good. It’s like we just went up forty percent or forty, it was actually end up compounding like fifty percent in two years. It can’t get better than this. I better lighten up and then you miss out. Yeah. That’s sometimes it’s just people self sabotaging because things can’t be this good, right? I I mean, if you look at the nineties and you go back
And you look at the the returns. Obviously there were some years that were were bad and there was volatility in ninety-seven and ninety-four when they started raising rates for the first time in a long time. A lot of volatility, but the people that were rewarded were the people that stayed in the markets. And of course, there was a a lot going on in the nineties that’s not happening today from a productivity standpoint with people getting computers on their desks. But technology led the nineties.
And technology so far has really been leading the twenty twenties. There’s just that’s not really up for debate. You you bought me the nineteen twenty nine book by Aaron Ross Sorkin and I know you read think about I think it was like nineteen twenty five timestamp Charles Schwab, the Charles Schwab was like, I’m done. This is getting too hot, I’m getting out. Well, unfortunately, sir, you get no points for getting out three years early. Like you’re a real loser for getting out three years too early. I’m not saying that, you know, like a
to be on the lot or anything, but truly, if you get out of a bubble three years early, that’s not a win. You don’t you don’t get bonus points for that. It’s tough. That that’s why making money’s hard, right? It certainly can be, although it hasn’t seemed to be that hard lately. Lately. I I will tell you that. But you had to ride through COVID.
Right. You had to ride through to Liberation Day. Well 2022. Twenty twenty two. I mean, twenty twenty-two was a bad year. Very bad. Yeah. Down twenty-five percent at one point, we and winded up down twenty, top to bottom on the SP five hundred. NASDAQ was down thirty at one point. you know, but you have to be able to be resilient, ride through those. And when we talk about financial planning, you know, you have to have
cash on the sidelines for immediate income needs and even in some cases income needs that are a little bit longer out. And the more cash that you have on the sidelines or the more you know, dry powder, the less you’re gonna need to sell when that volatility hits. And recently the volatility has been relatively short. I mean, Iran was was it February twenty seventh we went in? Markets drops like a rock.
And here we are back at seventy five hundred, just shy of all time highs. Dow is at all time highs. And you really only had to do one thing, which was just not sell at the bottom. Yeah. And think about the people who aren’t on their computer looking at their bounces though. Imagine you get that statement halfway through like April and you’re like, I’m getting out of this crap. And then you know, you sell on like April fifteenth and then
I do I do hate. I mean, I over the years I have gotten scared out of something, right? Whether it’s an individual stock or a sector, not necessarily the market as a whole. but the worst feeling in the world is getting scared out, thinking to yourself at the bottom. Yes, thinking to yourself, I made the right move, and then just watching whatever you sold head back up. You have like one or two days of really good sleep. I did the right thing, I sold.
Limited my exposure and then you can’t sleep because it just keeps going up and up and up from there. That that is a tough pill to swallow. Yeah. That is a tough pill to swallow. I wouldn’t say never sell because I don’t think that’s the right thing to do for most investors. but you know, the the less emotion than you that you put into it, I think is really I think it’s a it’s a better investing style.
You should be measured. If you’re an eighty percent equity investor and things quote unquote hit the fan, maybe you go to sixty. If you’re really scared, maybe you go to fifty. But you don’t I don’t think you go to zero. I I see it. ‘Cause that’s sticky when you get into that money market and it’s like, well, it went up five percent this week. I can’t get in now and then next thing you know, it’s up thirty percent for the year. Well, you know what’s worse than getting out and watching it go up is getting out
watching it go up, getting back in, and then watching it go down. That whipsaw. The third derivative of failure. Yeah, that whipsaw is by far worse than watching it go back up. And I can say, historically I I haven’t done that too often. once I make that move, generally speaking, I’m not gonna try to go back in and get my head sliced off again. But I I certainly have been whipsawed and it’s even worse than just missing the move up.
It it is that’s a that is really, really tough for me. So I would say just, you know, don’t make any emotional decisions, don’t make any political decisions, make your decisions based on your ability to absorb risk, your income needs, you know, how you responded the last time the market went down. And and I think you’ll kind of be okay in the end. Right? Yeah. All right.
All right, for everybody here at Good Life, we appreciate your time. Thanks for listening, and we’ll see you next time on The Market Enthusiast.
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The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you consult the appropriate qualified professional prior to making a decision. Economic forecast set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
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