COT 27 – Chaos in Israel, More Chaos in  Washington, and A Boat Load of Economic News 

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[00:00:00]

Jeff Kikel: Hey, everybody. Welcome to the sense  of things. It’s Jeff and Ron here once again,  

and we are kicking off another  week. A lot of craziness that’s  

happened during that time period. Of  course we’ve had the actions happening  

in Israel. We’ve got some economic  stuff we’re going to talk about today.

Jeff Kikel: We’ll get a little bit,  Ron’s got some stuff on the markets  

that we’ll talk about. And we’ve got an  interesting pop culture thing to talk about.

Ron Lang: Ron, how are you doing, bud? Morning,  

Jeff. Good. Other than international  news. You’re right. It’s a slow week,  

despite the fact that had a couple of economic  was the PC came out and CPI is coming out today.

Ron Lang: Tomorrow. I’ve got a

Jeff Kikel: slide on that.  That will cover PPI and CPI.

Ron Lang: Yeah. So we’ll talk about  that. But other than [00:01:00] that,  

not much is going on. I think a lot of people  other than what’s going on in the Middle East.  

I think a lot of people are waiting on corporate  earnings, which so far have not been too bad,  

even though some have been retrenching some  employees, but nothing on a mass scale.

Jeff Kikel: And I think, as we’ve discussed  with previous. Quarters. It seems like they’re  

now ahead of time guiding down pretty  significantly coming into these so that  

the earnings reports actually look like,  they’re in line or surprises at this point.

Ron Lang: I hear you. What do you wanna say?

Ron Lang: You wanna start with your pop

Jeff Kikel: culture? Why don’t we start  with the pop culture piece and this is,  

you being a Philadelphia Phillies Absolutely.  Philadelphia native. Red October. Yep. Here’s a,  

here’s what could have been more red October.  A Philadelphia Phillies fan this week tried  

to get into the game with what he was calling a  service animal, which was actually an alligator.

Jeff Kikel: So it is an  emotional support alligator.

Ron Lang: So let me ask [00:02:00]  you, what’s wrong with this?

Jeff Kikel: Yeah. I remember my Dallas Cowboys  going to Philly’s games and, the fans balling up  

batteries and and snowballs and throwing them at  the players. But this is a whole new one for me.

Ron Lang: I did that to Jimmy Johnson and  the Cowboys about 35 years ago. That was  

it. What, which is another reason why they  stopped selling beer after halftime. Yeah.

Jeff Kikel: The thing I’m trying to figure out  here is it’s Philly. I, maybe if this was Miami,  

I could figure this out. I could see an emotional  support alligator, but I’m just guessing.

Jeff Kikel: I just don’t know  where he got the alligator.

Ron Lang: I think this guy needed attention. I  probably didn’t even have a ticket for the game.

Jeff Kikel: And the good thing  is nothing. Nobody actually put  

him on any news channels that I could  see. It was just this one little post.

Ron Lang: It had to be a joke. That’s,  that’s all it could be but it’s funny.

Jeff Kikel: I love it. Interest me. So a couple  things on the on the economic front [00:03:00]  

yesterday. So once again, really quiet week.  I think probably the only thing I saw other  

than these couple things I’m going to cover  mortgage applications were up a little bit,  

which, we’ve had the kind of flight to safety  where people are buying us government bonds.

Jeff Kikel: And that’s pulled the 30 year or  the 10 year rates down and got people going.  

But this week, I think the biggest. Shocker.  I think for a lot of people was the the PPI,  

which came in, consensus was 0. 3 and it came  

in at 0. 5. So it was way at the top  of the consensus range. So year over

Ron Lang: year was out of range

Jeff Kikel: too.

Jeff Kikel: Yeah. Significantly out of range for  year over year. And this, it was 2. 7 percent X  

food and energy, which energy prices have been  way the heck up. Yeah. In year over year with  

energy and trade services in their ex food,  energy and trade services up 2. 8%. Once again,  

we’re seeing these kind of numbers were,  producer price indexes are [00:04:00] way up.

Jeff Kikel: And if you looked at CPI this  morning, CPI came in above consensus and  

way the heck at the top of the range there again.  It was within range of With the year over year,  

but the month over month was way at  the top of the range. That still gives,  

I think the fed the ability to say,  hey, this is not under control.

Jeff Kikel: And we’re going to continue  to have to be vigilant and tighten.

Ron Lang: There’s no doubt. This  gives them essentially the green  

light for another quarter point rate  hike, whether it’s November, December,  

but there’s no doubt is this basically gives them  the green light to do that. I can’t imagine that  

another number is going to come out next month  and it’s going to be significantly different.

Ron Lang: All this is still riding their trend  of higher for longer. But I think 1 more rate  

hike. And let it lie until Q1, see if there’s  any drastic effects and go from there. I just,  

I don’t see anything [00:05:00]  different at this point. Yeah.

Jeff Kikel: And I think, it’s  going to be interesting to see  

how the situation in the middle  East, if it gets out of control.

Jeff Kikel: If more people get involved,  I think it’s a foregone conclusion that  

Israel is going to go in and just  completely pound on Gaza and they’re  

going to eliminate them. Yeah, it doesn’t  you have to, these are animals. And you’re  

going to have to do that. But how does  that then affect all the relationships?

Jeff Kikel: The

Ron Lang: problem with insurgents and  that is they’re not wearing uniforms,  

right? They’re wearing street clothes.  So how do you decipher who’s somebody  

good and who’s somebody bad? I have no  idea. But look, Hamas doesn’t have any  

manufacturing resources. So they got the  missiles and the ordinance from somewhere.

Ron Lang: Yeah, and there’s only one of  three, maybe four places they could have  

gotten them. Let’s say it’s not  China. It’s either Iran, Russia,  

North Korea. That’s it. Yep. And Iran has  been known to finance them and Hezbollah and  

whoever. So if they do link it [00:06:00] back to  Iran, sanctions, aren’t going to work this time.

Ron Lang: Actually that’ll work ever,  

but they’re certainly not going to work  with them. So what, what’s the, what’s

Jeff Kikel: the ripple effect here? Yeah.  And I think what’s the ripple effect amongst  

the Arab community and everything else.  They’re, they’ve been working for so many  

years on the Abraham accords and starting  to pull, pull some coalitions together.

Jeff Kikel: And how does this break that up  and throw it off track, and we get back to,  

we get back to status quo that’s been for  the last 50 years. In the region of that  

just destabilized environments and, the  us against them. So I think that’s going  

to be intriguing to see how that affects.  We’ve seen the market up and I know you’re  

going to do a little piece on, the market  and what’s been going on with the S and P.

Jeff Kikel: It’s been shockingly  up this week and I would have never

Ron Lang: expected that. I agree. So  let me get into a few slides because  

my last slide is talking about the S& P Yeah,  

so this just came out [00:07:00] this morning.  We had an 8. 7 increase in social security this  

calendar year They now announced it 3. 2 for  next year, which is still You know above the  

norm because in the past it was always either  around two percent or zero So to get an 8.

Ron Lang: 7 one year and 3. 2 the next year  That’s a pretty good bump I mean if you’re on  

a fixed income and unfortunately if you’re only  relying on social security You need every basis  

point jump for yourself And on the bottom  there. I thought this was just interesting  

because what does that really mean? The average  estimated increase is about 59 bucks a month.

Ron Lang: So maybe a gallon of gas for a  midsize car I don’t know but okay yeah,  

it was it was a little 529. I filled my  car up yesterday. It was brutal Arizona  

just surpassed california as having the  highest average gas prices About a week  

or two ago. I don’t know where it stands  now, but Whatever it is, it ain’t good.

Ron Lang: I know in Texas,  it’s [00:08:00] probably the

Jeff Kikel: cheapest. I filled  my car up yesterday for 2.

Ron Lang: 89. Sorry. 289. Are you sure you  don’t have a decimal point problem there? No,

no.

Jeff Kikel: It’s 289. Yeah, it was and I did it  at a place where I don’t get a discount. We have  

a grocery store that we shop at that gives  us credit every time we buy right for gas.

Jeff Kikel: And, I had, I filled  my truck up a couple of weeks ago  

and it was a dollar off. So I think I  filled up for a dollar 89. That’s funny.

Ron Lang: All right. So that’s social  security. Let’s move on. So I know we  

have talked a little bit of, or at least  I have to add nauseam about our debt. No,  

no politician is talking about how  the, how do we cut this thing in half?

Ron Lang: Here you go folks. Forget about  all your all the social BS issues for the  

election. Here’s the problem. Here’s the  biggest problem of them all. This is what’s  

causing inflation. This is what’s causing  a lot of problems. And this is what’s also  

going to [00:09:00] create a higher poverty.  We’re spending more on just paying interest.

Ron Lang: Are dead than what  we’re paying for national

Jeff Kikel: defense. Yeah. And that  I’d seen something about two months  

ago that was saying this was going to  be like 2035 when this happened. And  

all of a sudden now it’s got shot forward to here.

Ron Lang: Here look at the  bottom sentence, 2 billion a day.

Ron Lang: And just interest.

Jeff Kikel: Yeah, we’re having  to fund, now helping out Israel,  

which we should, but we’re helping Israel.  We basically got a blank check written for,  

brain and we’re just plowing money  out left and right. Not to mention  

what we’re doing internally, but it’s,  that gets, starts to get scary here,

Ron Lang: It does. And it’s look, I don’t have  the answer. And even if I was a, even if I was  

a politician, I had the answer, nobody would  listen. Yeah. [00:10:00] They’re too focused  

on trying to kill and destroy each other that  this is what’s going to probably end up killing  

and destroying the United States. This is what’s  going to end up killing our reserve dollar status.

Ron Lang: If we can find a way to halt and reduce,  not just halt, but we need to reduce it. And look,  

raising taxes is one way cutting spending  is another. But when you got the top,  

cost being. Social security military and, other  entitlements where do you cut? Where do you cut?

Ron Lang: And I’m not, I look, I don’t have the  answer, but I need to write, I’m just putting  

this out there to raise attention  more because. Some politician look,  

they’re not going to make it their number  one factor because they’ve done all their  

polls and studies and surveys, and this  is not top of mind to the average person.

Ron Lang: Now, the average person is trying to  pay their bills. If you think about it they’re  

trying to do what the United States is  trying to do. They’re just trying to,  

they’re just [00:11:00] trying  to get to the next month. It’s

Jeff Kikel: sad. It’s sad. Basically what  we’ve done as a country is basically what  

a lot of people have done, which is  they’ve charged up their credit cards  

and now the credit cards are up in  the 26 percent range, credit cards,

Ron Lang: there’s a credit limit, our debt limit,  

which is going to come up again next month and  that you thought it was a bloodbath last time.

Jeff Kikel: Yeah. Oh, it’s just, like I said and,  you’ve got people that are just not going to budge  

and nor should they. Somebody’s got to stop this  at some point in time. And, I think what we have  

to do is investment advisors is we got to, we  always have to think ahead of what’s happening.

Jeff Kikel: And sometimes it’s hard to do when  you’re looking at, okay the market just keeps  

going up up and up. And, how do we plan ahead for  that future, that eventual future that You know,  

we know is going to have, it’s going  to come to roost at some point here. I

Ron Lang: agree. So this is just  something else that was interesting.

Ron Lang: I’ll leave this up for a minute. We’ll  look at it. [00:12:00] We’ll talk about it,  

but this is talking about who owns our debt And  you know some of the big countries have sold it  

off in the last couple of months, which is what  drew has driven yields quite a bit higher. Yeah.  

But I just think it’s very interesting that  foreign governments and private investors  

are one of the biggest holders of public  debt owning 8 trillion of the 33, right?

Ron Lang: Which is 25%. I don’t know how  this is sustainable. This is frustrating.

Jeff Kikel: You just don’t, yeah.  Okay. So that’s 8 trillion out of  

33. Who’s going to who’s going to  be the one that rescues it when,  

it just keeps ballooning up if these  foreign countries are like, it’s not so good

Ron Lang: and they can’t keep printing money.

Ron Lang: That’s the solution to  everything. And it’s not going to be,  

I don’t know how reserve currency  actually gets taken away from you,  

but maybe it’s when you can’t pay this  debt anymore. I don’t know. I don’t  

know. [00:13:00] All right. So my last slide  here, and I clean this up a little bit. So for  

those people out there that are not technical or  don’t understand technicals let’s just go by this.

Ron Lang: This is as of an hour ago. Yeah.  So the blue line is the 50 day moving  

average. This is where traders will trade  along, right? Whether it hits up against,  

or if, as a resistance or hits  it on the top side. For support,  

the 200 day is really what you want to be more  concerned about because this is institutional.

Ron Lang: This is where the,  the big companies, the big boys,  

the big girls out there are looking to say,  hey, when it gets down to a certain level,  

it’s stronger support. When we had that pretty  nasty pullback in the last month in September,  

all right, we went down to. The 200 day we pulled  down above this was the job report on Friday,  

which I think shocked a lot of  people because it wasn’t great.

Ron Lang: So you would think that,  wait a minute, that should be one  

of the [00:14:00] recession signals saying  we’re going to have. Higher unemployment,  

right? Maybe they’re looking  at higher unemployment means,  

okay maybe we’re at the end of the rate height  cycle. Now they’re going to start to lower rates.

Ron Lang: I don’t know the mentality. All I  know is they use the 200 days support. Look  

what happened in the last three days. , it bumped  up against the 50 day. So my little thesis here  

is that I think the, these bands, the two, the  15 to 200 are gonna narrow, the stock market  

will trade within that band. And then one of  two things is gonna happen in late November.

Ron Lang: If we get the debt, if we  get the shutdown averted. One thing,  

one of two things are gonna happen. It’s gonna  pop like a coiled spring to 52 20 and end the  

year. Or we’re going to pull down to the 50 to  4, 100, 4, 200 level. I don’t, I’m sorry. The 4,  

100 level, I think is more realistic. We’ll have  to see, but you know what folks, technicals.

Ron Lang: Don’t lie, right? [00:15:00] Because  the next resistance line up here is this trend  

line here which is around the 4400 4450  level. We’ll have to see, but I think  

that the technicals tell a bigger story right  now than a lot of the economics because We all  

know that two thirds to three quarters of the  trading that’s done is done by computers, right?

Ron Lang: All those algorithms out there and  they’re trading on technical levels. They’re not,  

the, these algorithms aren’t trading  on fundamentals. They’re not trading  

on economic factors. They’re trading  on technical levels. What are your  

thoughts on this? I don’t know  how often you follow technicals.

Jeff Kikel: I am a big technical guy. I typical,  I typically do it more off of the individual  

securities that we’ll, we’ll hold, but yeah,  I agree with you. I think it’s intriguing to  

me to see how fast this trend snapped back.  It was pretty much a pretty straight downward  

trend there for a while, and then all of  a sudden it just snapped back like crazy.

Jeff Kikel: Which typically [00:16:00] means,  

from my perspective, you see a little bit of  profit taking. Happening, but, do we bounce  

off that 50 day and bounce back down to the  200, and just keep this. Wave back and forth,  

I personally think that’s where we’re  going to be for the next several months.

Jeff Kikel: I don’t know if we’re going to.  I don’t know if we’re going to shoot to the  

high side, something dramatic is going to  have to happen there. But I personally,  

I think what is happening is. Everybody  is so hyper focused on what the Fed says.  

And if the Fed says, okay, we’re done for a  while, at least there’s some certainty there.

Jeff Kikel: And then it’s going to be okay. What,  

6 months down the road. Do you feel like  they’re going to start lowering interest  

rates? And then the market’s going  to basically have a big guess. At

Ron Lang: that point the fed futures market is  indicating Starting I think it’s july next year  

It’s not over 50 But I think june july and  august next year is [00:17:00] about a 40 to  

45 percent or a lower percentage that’s when the  first rate cut may be remember we were talking  

about this three months ago, people were talking  December, which was ludicrous, but now it’s pushed  

out the next summer, which kind of makes sense  because the lag effect here, so we’ve already  

seen it, it just hasn’t affected employment,  employment, when it affects employment.

Ron Lang: That’s when the cards will  drop. But until then, strong, it

Jeff Kikel: seems. Yeah. And I don’t think the  fed governors have been tight lipped about this.  

I remember I’ve, I heard Neil cash, Carrie the  Chicago fed head of Minnesota or Minnesota. He  

talked about this. 6 months ago. Yeah, he  was like, hey, it’s going to be higher for  

longer and until we see unemployment start to come  down, that’s, we have to keep vigilant with this.

Jeff Kikel: We have to keep these  rates higher for longer. So I  

think the reality comes a [00:18:00]  little bit of the craziness out there,  

regardless of where interest rates are today, at  least some of the craziness might calm the bond  

market down a little bit because that, like  I told you, before we got on, I had a client  

come over from another firm where they had been  holding, basically been holding a portfolio of.

Jeff Kikel: Bonds and a portfolio of bonds,  largely a conservative portfolio coming in and  

the thing was literally down 29 percent some  of the positions. Down 29%, that’s insane,  

this has not been a place you could go. And  hide and say I’ll just buy bonds or whatever.

Jeff Kikel: You’ve literally had to hire have  cash. Over the last year, unless you were in the

Ron Lang: stock market. And it’s amazing that he  was down that much because the market was down  

22 percent last year. The bond market did  have a recovery this year. But then again,  

with yield spiking the last four months,  he could be there, but the fact that they  

didn’t make any changes, other than set it  and forget it, [00:19:00] it’ll come back.

Ron Lang: It’s ridiculous.

Jeff Kikel: Not so much. But, like I said, I think  it’s been an intriguing couple of years. And if  

you weren’t in those 7 or 8 stocks that were  really running the show. If you look through  

a little bit to that, the S and P yeah, we’ve had  this big pop up. But once again, it’s been those.

Jeff Kikel: Eight to 10 stocks that have really  driven everything and they’re driving it again,  

you’ve seen Facebook and alphabet  and all those up But if you were  

to look at the equally weighted  index, it’s down for the year.

Ron Lang: Yeah. Yeah again we’re about flat  on the day today. Yeah, but you’re right.

Ron Lang: I think it’s going to be employment  And it’s going to be those top stocks that that  

that’s going to be your canary, but right now  it’s long and strong. It seems got to get past  

that 50 day and we’ll see what happens here up.  I think, things may moderate to say a wait and  

see between the government potential shutdown  next month and what happens in the Middle East.

Ron Lang: And if either 1 of those [00:20:00]  truly get worse, for lack of a better way  

of saying it. I think we’ll get our, I  think we’ll get our factor here. Where  

the market’s going to go by the end of the  year next year. Who the hell knows, but yeah.

Jeff Kikel: And it’s going to be crazy  next year because we’re going into a,  

probably a pretty contentious.

Jeff Kikel: Presidential

Ron Lang: cycle, pretty  contentious. It already is content.

Jeff Kikel: That’s true. But it’s, it gets worse  as we it hadn’t got worse yet. It’s going to get  

way worse, as we roll into next year. I would  say a lot of opportunities for up and down  

and craziness, and, I may need my emotional  support alligator before it’s all over with.

Ron Lang: I’m going to go for the  peacock because somebody tried to  

bring that on a plane about a year ago.  I think that might be more interesting,  

quite frankly. At least it’ll be  more colorful if it gets angry.

Jeff Kikel: I’m thinking so.  I’m just thinking that I’ve  

already got somebody sticking their feet  through the seat and things like that.

Jeff Kikel: I can’t imagine a peacock getting  hit by peacock feathers while on a plane.

Ron Lang: It’s insane. I hear you. We’ll have to  

see how things pan out over  the [00:21:00] next week.

Jeff Kikel: Awesome. Folks, thank you for being  on. We do these shows for you as always. So  

make sure that you subscribe to the channel and  make sure that give us a little thumbs up there.

Jeff Kikel: We’ve been getting more and  more of those lately as I’ve been asking  

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So thank you for watching and we will  see you back here the very next time.

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