Hello everybody. Welcome to another

episode of the sense of things with Ron

and Jeff. On today’s show, Ron’s gonna

take us into the week in history once

again. He’s also got some stuff on

credit card interest rates. That’s where

we left off last week talking about.

He’s also got some charts on the biggest

tail risks on the mortgage side as well

as a little bit of an estimate of the

first quarter GDP. So, he’ll have that.

I’ve got some economic data, some what I

would consider a little busy data that

we’re seeing that’s making things

unclear and that might have led to the

Fed holding or halting any interest rate

drops in their meeting yesterday. So,

we’ll have a little bit of an overview

of that. So, stay tuned. We’ll be right

back on in just a second.

Hey everybody, welcome to the show. Ron,

how are you my friend?

Good morning. Earning season has

certainly kicked off.

It has.

And as long And then tech is taken off

as long as you’re not a software stock.

Yeah. [laughter]

Yeah. I know. It’s it’s funny this year

with that my themes I really don’t have

much exposure to it. So I just haven’t

even quite frankly paid much attention

to a lot of the big tech names and stuff

like that and the nifty five or eight or

10 or whatever the heck it is nowadays.

The funny thing is memory and storage

has been going through the roof. We have

several clients in Seagate and for years

Seagate was a decent stock

at the low of the tariffs and

[laughter]

At the April 8th last year, the low was

63 and change.

Yesterday, the stock was up 74 and now

it’s selling at 4 448 449.

Wow.

It’s insane. It’s insane.

Yeah. The interesting thing to me is

what I’ve seen this with them and

Western Digital and I’m still trying to

figure out what has prompted that just

massive move up because

I get I’m assuming it’s something to do

with data centers and stuff like that.

storage. You got to store the data

somewhere. And I know I think there was

a quote from Jensen Wong over the last

several months or even six to nine

months ago that he anticipated there may

be a shortage in chips and in storage.

And storage people listen, right?

Yeah, that’s it. And yeah, like I said,

I’ve watched it just rocket up over the

last really year. You look at Western

Digital and Seagate, but Seagate’s been

the key. Yeah, Seagate’s been the key.

It’s really led that. I think it I think

Western Digital is more of a Yeah. Yeah.

This one’s going up. So, this one’s got

to go up, too, as a result of it.

Western Digital, a little bit of Seagate

was always known back in the day as the

hard drive. They always had the hard

drives back in the day. So,

yeah,

things have changed.

Yeah, they now they’ve gone to solid

state everything. But you’re even

seeing, interestingly enough, AMD’s

gotten some livelihood to it for some

reason. It’s the the chips are

outstanding. They were just

Micron.

Yeah, they were getting pummeled by

Nvidia and man all of a sudden I just

looking at our position in that it’s up

like 15% in a month. So something h

something finally everybody realized

maybe AMD actually makes some chips or

something.

I don’t know. I think one or two of them

maybe take out targets because I know

Seagate has a market cap around 85 or 90

billion and that’s petty cash for some

of the big boys.

Yeah, exactly. Literally, you could an

Apple or a Nvidia could just say, “Hey,

we just want it and we’ll we’ll just

stroke a check for it.” They wouldn’t

even have to do a uh a stock deal on it.

Cool. What do you got as far as this

week in history?

All right, here we go. First,

1790, the first session of the Supreme

Court took place.

Okay.

1838. I did not know this. Tennessee

passes nation’s first prohibition law,

which is crazy because they make

whiskey.

That’s [laughter] rejected. That’s

correct.

One of their major products and they

make whiskey. That’s crazy.

They can make it doesn’t mean they’re

going to consume it.

That’s true.

Legal.

1865, House passes the 13th Amendment,

abolishing slavery in America.

Awesome.

1933, the Lone Ranger debate debuts on

Detroit radio. Now, why did I put this

in there? [clears throat]

I was thinking of my father years ago

whenever we used to come back from

dinner on Sunday night. That was our

night we all went out to dinner. He put

on the radio station and listened to

reruns of the shadow, [laughter]

which it was it’s comical, but I could

understand back in the day

that was like an audio book, right? Of

course, listen to it, whatever. So, when

I saw this, I’m like, ah, in honor of

him, I I’ll put this on there.

or the long ranger. Either one. But

there you go. [laughter] 1936, US

Baseball Hall of Fame elects first

members

and controversy ever since.

Yes.

1951, first atom atomic detonation at

the Nevada Test Site. As a matter of

fact, in Vegas, they used to have atomic

watch parties where they knew it was

going to go off and everybody would be

back whatever however many miles it was

on the roofs of the hotel. The nuclear

bombs go off. I don’t know how often

they did it. I think it was a few times

a month.

It was quite a bit because we went to

when we were out in Vegas a couple years

ago. Remember we you and I used that’s

where we met was out at one of those

conferences and they cancelled it

because of the the pandemic. And so

Crystal and I just went out there for a

long weekend and we went to the atomic

test museum and you see those like

overhead pictures of that test site and

it’s just pockmarked everywhere. So he

blew up a ton of those things.

Oh yeah.

1964, one of my favorite movies, Dr.

Strange Love or something about the

bomb, right?

Yeah. Oh yeah. It’s like a huge long

title.

George C. Scott was in that. It was a

good flick.

Slim Pickins riding bomb down. Yep.

But he’s you couldn’t have picked a

better person to be in that role as the

P. Now, other than that, I know he was

in Blazing Saddles, but I don’t remember

too many other things he was in,

movies, and stuff like that.

1967, unfortunately, this was an

anniversary of when the astronauts died

in the launchpad fire, 100% oxygen.

There was a spark.

That was the end of that.

And lots of velcro. Way too much velcro

inside there.

[clears throat]

1985

music starts music stars, excuse me,

gathered to record We Are the World.

There’s actually a very good Netflix

documentary on this that came out last

year. It was very interesting. Oh, it

was

a lot of the behind the scenes and how

people got like upset and left and

but I my favorite part of that whole

thing was Bob Dylan. I don’t know what

he was smoking.

He didn’t know his lines. He didn’t even

know who he was. I don’t think

I don’t know what happens when you take

mushrooms.

I can’t remember if it was like Lionel

Richie or something like that that had

to like Okay, this is what I need you to

do specifically.

Yeah. Yeah. He and Quincy Jones were the

producers on that.

Yep.

1990 first McDonald’s opens in the

Soviet Union after the wall comes down

the year before

and the rest is history.

The rest is history.

They get fat. they get fat along with

the rest of the US citizens.

Funniest thing. So Crystal and I were

over in in Europe for Christmas markets

and there was a picture. So we had all

these pictures we took on Facebook.

There was like one of those little

things where it came back as oh here’s

remember this in history and all this

stuff. And so we’re looking at the

pictures and she goes you got to see

this and all these pictures in front of

the Berlin wall. Oh in front of this.

And then we’re right at Checkpoint

Charlie and it identifies as we are at

KFC. So,

of course, why not?

All right. 2003

Columbia space shuttle mission ends in

disaster.

We were we were just talking about that

the other day because Crystal I thought

it was earlier in the year and I’m like

nope it was January. That’s I think the

last launch that they done in a January

because it was so bad.

All right, so here we go. the most

common passwords. I thought it was just

one, two, three, four, but apparently

it’s one through six.

Okay.

So,

and then through nine.

Yeah, but I also thought the last one

password would have had more, too. Oh,

they got password up here.

Yeah, it’s right there.

One just has a capital P.

Okay.

I like this one. Shh. It’s a secret.

All right. Or my favorite secret.

[laughter]

Wow.

I know a lot of people now do characters

and things like that. But

if you’re reading this or if you’re

watching this and you have any of these

passwords, please change them today at

this point

or do it backwards.

Yeah. Whatever it takes. Yeah. I it Wow.

I would have never thought. I love the

one through nine. It’s, oh, I’ve got a

really long password. Yeah, but it’s

sequential. That’s not good.

Or you could have gone nine through one.

Just do it backwards.

Yeah, exactly.

All right, here we go. Now,

[clears throat] we’ve shown this chart

over time,

probably for two years.

Yeah.

And with everything coming up about

credit card rates and whatever, I wanted

to show first of all, since 22, this was

the big rise to where it’s at right now

in the 21 to 22% range. Yes.

I thought it was

the banks just can’t The banks can’t

make money if it’s not at 23 or 24%.

I mean, this is the crazy thing.

The average was just under 14 for

forever.

Yeah. For 26 of those years.

You got to give me a break.

We if those rates go down, we just can’t

make money. Well,

that’s why I said they’re trying to cap

it at 10. They need legislation to pass

this. I think they’ll probably end up

around 15. Yeah,

it’s fine. Just cap it at around 15 and

I still don’t understand how they say,

“Oh, if we go down that low, it’ll hurt

it’ll hurt their credit scores.” I don’t

I have no idea the legitimacy.

Makes no sense. Yeah, it makes no sense

at all. No, it’ll hurt your your stock

profits and your dividends that you’re

pumping out to your shareholders. But

yeah, it’s not going to hurt anybody’s

credit. Rainey, just look at that in

2022. just absolutely outlandish run up

and rates have come down significantly

since then and they have no intention of

pulling them back down.

But there were interest rate rises in

this time frame here up until we till

the market collapsed in ’08. So, and by

the way, this was like I think four or

five% Fed rate in ‘ 05 and six. So, does

that does so the interest rate thing? I

don’t understand like if it goes up,

credit card rates got to go up. No, this

is just greed.

That is absolute greed.

And also collusion.

Yep.

Collusion.

Because they’re all doing this together.

They’re not one. If you can get one of

them to come down, maybe the other ones

will start to do it for competitiveness.

But yeah, that’s the reality is they

know they’ve got people trapped

basically at this point. And you figure

21%

a quarter of everything you pay or more

is going just to interest every so

you’re never going to get out of this.

No.

Yeah.

All right. So, primary mortgage market

study.

So, here we are hovering just above the

6% range. Now, I thought this was

interesting. probably a deeper

conversation for another time. But you

know what they were talking about when

they said, “Oh, a 50-year mortgage, what

you would pay in interest.”

Yeah.

I don’t think half the people understand

what they’re paying in interest on a

30-year mortgage.

I don’t think any mortgages should be

above 15 because at least that gives you

a realistic time frame to pay it off and

you’re building up equity a lot faster.

And then if interest rates were the

mortgage rates were half the amount at

15 year that makes more logical sense

over a long period of time because

they’re bitching about a 50-year how

much you’re paying in interest. Yeah.

Look how much you’re paying in 30 year.

Yeah.

But that gave affordability for people

to get into a house.

That’s the key. And in the end it’s

okay. What can you do to try and pull

these rates down a little bit to get

them a little bit more in line? Quite

frankly, they’re if you look back out to

before 2008, they’re where they were at

that point. And the market,

interestingly enough, on the other

podcast I do with our realtor, we were

talking about this and actual prices,

especially in some of the hot markets,

Austin was the the during the pandemic,

Austin was the poster child for this.

We’ve seen rates come back, like actual

prices of houses down like 17 18%. Yeah.

from the peak at this point. So, I think

the market is adjusting to it.

I personally don’t see us getting below

much below six at this point. I think

it’s going to hang in there around six

and the market’s just going to have to

they’re going to find some way to get it

to 55 by the end of the year. That’s one

of my predictions.

Yeah, they’ve talked about having Freddy

and Fanny go in and buy up mortgages and

all that. The problem is it’s like a$

1.5 trillion market and they’re talking

about 15 to 20 billion dollars. That’s l

literally like throwing a a small glass

of water on a big fire. It’s not going

to do any good. No. Then on the right we

have two slides here. This is the first

one. So with the first one, this is the

BFA global fund manager survey. So they

want to look at the biggest tail risk.

Now notice the word there’s the phrase

tail risk versus tailwind or headwind.

So they’re saying look yes we believe we

could go forward but here are our risk.

Obviously geopolitical is always going

to be in the ether when we talk about

this the AI bubble I thought was

interesting because they’re looking at

less of a risk now than in January than

it was November which I think is

interesting because they’re all still

going up. Now the next slide is a little

tough to view but you’ll get it. So now

going back to the survey

right of July of 11 going back if you

just see every three months and how

things have just changed of

[clears throat] possible trade war

recessions second wave of inflation

possibly which didn’t really happen the

AI equity bubble and then of course

geopolitical risk but if you just see

geopolitical that’s just you

just going to say that’s a given we’ve

been literally for the last 5,000 years

we’ve had some kind of conflict going

around in the world. So yeah, it’s just

the world we live in.

But here we are. If you look at April,

this thing is just off the chart. More

than 80% looked at the tail risk being a

recession.

Yeah.

And then if you take a look at April of

2022 when interest rates spiked, what

they were looking at was a recession.

They were looking at hawkish central

banks. But then over here, right when

they were literally probably in the

third or fourth hike of 75 basis points,

they’re looking at a credit crunch

because the interest rates are going up.

We’re not going to be able to send out

as much money. So I look, I think this

is very interesting. How many of these

things actually contributed to tail

risk? I would say a good chunk of them,

but obviously the recessions never

happened. Your thoughts?

Yeah, but what is Yeah, what is tail

risk at this point? Okay, how do you

measure tail risk? The market has been

we’re on year number four of a

double-digit market at this point. I

don’t see it slowing down anytime soon.

So something if something happens, it’s

probably going to be from the

geopolitical standpoint, but honestly

don’t know. Any wacko with a truck and a

bomb can cause geopolitical risk at this

point. I the AI equity bubble, I don’t

know. I personally I mean from looking

at the market the good thing that I have

seen this year and from some of the

moves we made portfolio-wise

I’m seeing more money working its way

out into the regular part of the market

and less yeah you still see the big boys

going up but I’m seeing more of the

other the other 497 stocks in the S&P

500 that are actually starting to go up

and I think we’re seeing a much more

breath in the market than we’ve seen in

a long time, which is great because then

that means there’s a lot more

opportunity with less risk as you’re

going out there. That’s the amazing

part.

And my last slide, I know we made fun of

them before and they were dead on, was

the Atlanta Fed

and they’re looking, I can’t believe it,

at above 5%

for last quarter.

I believe it.

We laughed at this because they were

always above everybody else and they

definitely hit it a couple of times.

Yeah, they’ve been pretty dang close.

Yeah, sometimes they were a little bit

more probably excited than the rest, but

they’ve been pretty dang on track.

But the average of the top 10 below

isn’t even 2%.

Yep.

They’re more than tw and a half times

that.

Yeah. The funny thing when you look at

the blue chip consensus, okay, we’ve had

two quarters in a row over 3%, but you

think it’s going to be 2%. at this point

that miraculously something’s going to

happen and be down there. You know what?

I think the Atlanta Fed, they’ve been

willing to go, you know what, we’re not

going to sit here and do the kind of

group think that everybody else is

doing. And once again, they’ve been

pretty dang accurate as a result of it.

Yeah, I agree. All right.

Yeah. Once again, I just I look at

economists and I’m like, “Okay, you all

did you all go to the same schools and

you all think exactly the same way?” And

if you don’t like something, you’re

going to keep continuing to do the same

thing. All right, let me share a little

bit here. Just taking a look at some of

the econo day stuff for the week. Can

you see that one? Okay, Ron, do I need

to bump it up?

I cannot see it at all.

Oh, yeah. You got to definitely make it

like five times bigger.

Okay, right around there.

Oh, that’s good. Yep.

Okay. All right. Few things off of this

week’s calendar that I thought were

interesting. We’ve seen a lot. One, the

stock market’s blowing up and going like

crazy, and there’s huge pockets of

things that are going through the roof.

But more than anything, we get back to

consumer confidence. And even though the

administration is saying, “Hey, things

are great and things are working that

way.” The stock market’s saying, “Hey,

everything’s great and all that.”

Consumers are still feeling it and

going, “Not so much.”

So, we had a consensus of 90 coming into

this week’s consumer confidence or this

month’s and it came in at 84.5. So, once

again, consumers are just not feeling it

at this point. And you know that more

than anything until you get the consumer

to go, hey, we feel good about this.

It doesn’t matter anything else that

anybody says or what any other

politician says. This I thought was

extremely interesting. This was a late

number coming out of the Fed. said it

was it or late number coming out. It was

supposed to have been December 24th.

Durable goods orders, these were off the

charts positive. Going right into the

end of the year, this was November 2025.

It’s going to be interesting to see what

the December numbers are. Um, prior to

that, durable goods were down 2.1%.

Consensus had been, like I said, three.

We came in at really close to the top of

the range. So, this is going to be

interesting, especially coming into the

end of the year with with companies that

can do full expensing. It’d be

interesting to see what happen in the

markets, which will I guess we’ll see

sometime in February. We’ll see the

December numbers. International Trades

of Goods and Services. This is one I

said I’ve been following. Um it was

really intriguing because we we were

seeing we got two of these reports right

in a row where it was around 29 billion

negative meaning inflow versus outflow

of our country. It bounced back up. It

almost doubled again this month. So it’s

just once again it’s something we’re

going to have to keep an eye on. And

this was come some of these cloudy

numbers to say okay what where and how.

Last is jobless claims came in where we

thought a little bit higher than

consensus but within the consensus range

and it’s right about where it’s been

around 210 to 200. So I don’t think

anything anything extraordinary there.

And I think that led to some of the Fed

just saying okay we’re going to take a

wait and see. I we were talking before

the this on the the Fed chairman’s

speech yesterday. I literally I sat and

listened to it and I it was gobbly goop,

but more of the same of just hey, we’re

data dependent and we’re going to go and

I don’t think there’s a clear trend.

What’s your thoughts?

I I got to tell you,

I think the Fed is doing a good job. I

know that maybe not be a popular

opinion, but

two things now. There have been a rash

of of layoffs. We’ve seen that kind of

coming out.

Yeah.

But unemployment is still under 5% or

employment unemployment is still under

5%.

Yep.

GDP, there’s growth and whatever.

There’s no reason in my opinion to step

on the gas, lower rates, and keep

flooding the market with more money

right now. And I heard actually two

market strategists talk yesterday that

if we truly get,

let’s just say Pal leaves in May and the

next two meetings they lower rates a

total of a quarter or a half a point.

People they’re saying that’s not good

because they’re saying something

happened with the economy. I know the

administration, this is a whole another

conversation, talks about what we’re

paying in our debt because of the

interest rate, but that’s not the Fed.

That that’s not the Fed’s right. Yeah. I

think that’s the problem is once again I

think every politician needs to take an

economics course because they don’t seem

to understand that what the Fed does has

absolutely nothing to do with that. They

control the short end of the market.

They don’t control mortgage rates and

all that. That’s the bond market.

Yeah. But Jeff, this is the problem.

You and I are junkies for this.

Yeah.

95 to 98% of America doesn’t even

understand it.

Doesn’t understand it. Yep.

Or they don’t care. Yeah.

That’s what’s worse. They don’t care.

All they want to know is I want to make

more money. I want to spend more money.

That’s it. That’s it. I And I need a job

for security.

That That’s it. I need a job to pay my

exor exorbitant credit card bills that I

have to pay.

Yeah. I it just that unfortunately most

people don’t understand that and it’s a

shame, right? They’re not teaching it in

schools and as far as I’m concerned. I

look I we said it two years ago, we said

it last year, there’ll probably be two

or three rate cuts, but there’s no way

1% or more. I don’t see how that would

that means something bad would have to

happen to the economy.

Yeah, like I said, I think they’re

getting close to where that neutral rate

needs to be. I could see another 50

basis points and then it’s where it

needs to be. You still want to have I

think people comes to this belief that

oh interest rates really need to be

super low like they were. Like they were

was not normal at this point. We even

looked at like mortgage rates in 2009

versus where they are today. They’re

right about where they need to be. It’s

just we’ve seen from an affordability

standpoint, we’ve seen massive rise in

the amount of the cost of housing, the

actual physical cost of housing, not the

mortgage rates. And I think that’s where

you’re going to see I think you’re going

to see more of this pullback. The

reality is we’re sitting like five, six

years from the pandemic when all these

people moved and the reality is people

are having to now go back to work. They

thought they would be able to move to

someplace far away from where their work

is and now their work wants them to be

back in the office. So, they’re going to

have to move. Plus the simple fact that

people get to a point where they have to

move because of job changes and things

like that. And the reality is you got to

sell your house and that’s going to be

whatever price it is at that time or

you’re going to have to lower it to get

to that point because we’ve seen average

on market like 20% higher this year than

we were seeing in previous years. So

people are keeping their rate or keeping

their price of their house way up, but

nobody’s buying. So

no. And unless they have they’re putting

50% or more down or they’re paying cash,

yeah, we’re going to see more definitely

more price decrease price price listing

decreases or I know there was a record

last month of the amount pulled off the

market.

Yeah.

So, the spring’s coming up. That’s the

biggest time of the year. We’ll have to

see how it goes. Maybe we’ll cover that

next time.

What are you Yeah. What are you seeing

out in the Phoenix area? Because that

was another hot bet out Uh we’re

definitely following the trend, but

we’re not at the peak of the trend where

we’re having the biggest price decreases

or the most amount of houses coming off

the market, but they’re ticking up.

They’re definitely ticking up.

I guess that’s a good sign. It’s good

for you because your rates, yours is

going up and ours, like I said, have

been steadily going down, but it

no ticking up trend wise as far as

listings being pulled off the market and

price

decrease. Yeah. Yeah. So then they can

pop it back on the market in a few

months and go, “Oh, look, it’s a brand

new listing at this point.” Not

I think they changed that law. I don’t

know. I think it’s got to be off the

market from on a listing for 90 days.

Okay.

Which makes sense if they took it off

the market November and December to get

ready for March, April

selling season here. Yeah. You weren’t

going to sell it during the holidays

anyhow. So take it off and then throw it

back on and it’s like a whole new world.

Folks, thanks for joining us. As always,

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