Jeff Kikel: Good morning, sense of things. It is Jeff and Ron here for another week of

Fun facts the markets and what’s going on in the economy. Ron. Good morning, sir.

Ron Lang: Good morning Not a big news week. Cpi came out today a little hotter three three

versus three one but you know what the political hot stove is heating up and get your popcorn

ready Keep off the social media folks or don’t read all the texts from the Far far left wing

people in your life.

Ron Lang: Live your life. Rest, relax in the

Jeff Kikel: center. And yes,

Ron Lang: yes. Do your own research. Find, reach, find your own facts that makes sense.

Don’t interpret other [00:01:00] people’s BS.

Jeff Kikel: Absolutely. Absolutely. And so I thought this morning to kick this whole

thing off, we’re kicking off political season.

Jeff Kikel: Monday is the Iowa caucus and all that. And what And what I continually

hear is how there’s all this discourse and how, it’s way worse today than it ever was.

So I thought what I would do is share a little bit of history. Cause I am a student of history,

a woman and we got to.

Jeff Kikel: So let me share here with my screen. Okay, here we go. So back in the early 1800s,

about 1825. Was that

Ron Lang: the last presidential election? Oh, I think

Jeff Kikel: Yeah, it was pretty close to the last presidential election. But this was actually

in the 18 1820s. Senator Preston Brooks from the South went into the Senate chambers and

beat the living tar out of [00:02:00] Senator Charles Sumner because they disagreed.

Jeff Kikel: Just a few things. And, one was a slavery advocate and one wasn’t. And

Ron Lang: Was it a social media post that he was upset about?

Jeff Kikel: Yeah, I think so. It was probably a social media post. They posted it on their

wall, which at that time, you just literally took a push pin and put something on there.

Jeff Kikel: On your wall. But yeah, definitely it could be worse. And of course the funniest

part about this is. The one thing about politicians that is still true. He almost beat the guy

to death. He was Sumner was unconscious for several days. Didn’t go to jail at all for

it. Didn’t even get it. Didn’t even get prosecuted for it.

Jeff Kikel: So I thought that was just absolutely hilarious. Justified

Ron Lang: homicide. I think that’s what it was, right? Burr

Jeff Kikel: Hamilton duel. So the sitting vice president of the United States murdered

in a duel, the former secretary of the treasury, the first secretary of the treasury once again,

didn’t get [00:03:00] put in jail.

Jeff Kikel: Really didn’t end his political career very much at that point, but things

could be worse.

Ron Lang: Hold on before you go to the next one. Yeah, I found this out by watching pawn

stars years ago at that time and before there were actually there was this a kit that was

sold with what was called dueling pistols.

Ron Lang: Yep, there were two pistols in there. So this way, it was an equal caliber, equal

weighted, equal type of a pistol. And that’s how they solve result disputes. Was actually

through dueling and they actually had dueling

Jeff Kikel: pistols that yeah, so you didn’t they brought them You know one of the people

brought them and it was yeah, it was exactly the same Yeah, beautiful kits of them too.

Jeff Kikel: A lot of them are beautiful weapons. Oh very you know Presidential comments about

others. Andrew Jackson said that he had two regrets that he didn’t shoot Henry Clay, who

was a senator. And he hadn’t hanged John C. Calhoun, [00:04:00] who was his vice president

for the first administration of the Jackson administration.

Jeff Kikel: He was a little testy of a guy. Theodore Roosevelt talked about William McKinley.

McKinley had no more backbone than a chocolate eclair. Henry. I

Ron Lang: used to love those when I was a kid. Yeah.

Jeff Kikel: President Henry S. Truman on Dwight D. Eisenhower. The general doesn’t know any

more about politics than a pig knows about Sunday.

Ron Lang: That sounds like a current day quote. It is.

Jeff Kikel: It’s very much then, Dwight D. Eisenhower. So next president in line on Richard

Nixon’s contributions as his vice president. If you give me a week, I think I might think

of one. I don’t

Ron Lang: remember. I’ve seen the video of that. That’s very interesting. And I think

that hurt him also.

Ron Lang: Yeah, obviously. LYndon Eisenhower was very well respected and that was, that

would have been a great endorsement.

Jeff Kikel: Yeah, exactly. Lyndon B. Johnson on Gerald Ford. This probably is, yeah, this

tells me Lyndon B. Johnson growing up in [00:05:00] Texas. Jerry Ford is so dumb. He can’t fart

and chew gum at the same

Ron Lang: time.

Ron Lang: Hey, listen, isn’t that with most politicians? Yeah,

Jeff Kikel: I think that’s, it’s pretty much a

Ron Lang: given, but the other way around. Okay.

Jeff Kikel: Yeah. Yeah. He was just stating the obvious. Now, if you’ve ever been to the

LBJ library here in Austin there is actually a photo of him sitting in the bathroom on

the toilet, talking to his cabinet at the time.

Jeff Kikel: So he was a different animal. And I think the last quote, I couldn’t fit

it on this page, but I thought it was very funny. It was Jerry Ford then saying about

pardoning Nixon that he knew he was going to be going to hell because he’s pardoning

Nixon. Although we have a lot of discourse today and we have a lot of fighting and infighting

in the parties and everything else.

Jeff Kikel: It’s not changed since the beginning of this country, and it hasn’t changed probably

since before that. Even well, if you

Ron Lang: think, if you think about it what was the mode of [00:06:00] communication prior

to 1900? For the most part, it was newspapers. Yeah. And the majority of the newspapers were

corrupt.

Ron Lang: Absolutely. They were paid off. Politicians had a slant depending on who owned

them. Hearst didn’t go on

Jeff Kikel: yellow journalism and everything else. Yeah, basically they were the cable

channels of their day. It was, there was a ton of newspapers and they were all fighting

to, get subscribers to their newspapers and everything else.

Jeff Kikel: No different from all the different cable channels today and all

Ron Lang: that. So I think it’s interesting. I love documentaries, especially bio documentaries.

And I believe there was one on Hearst that I forgot who he had discourse with all his

rhetoric that he put in through the papers created. I think it was the Spanish American

war.

Ron Lang: Probably without, I think it was either that or something else. I’m upset.

I’m not a hundred percent factual about that, but he did create a war. I think it was the

Spanish American war [00:07:00] because of the lies that he went through and people just

believed it. So the rhetoric, it grew and grew and then politicians believed it.

Jeff Kikel: He created the whole thing. I think it all related. Yeah, it all related

to the USS main incident that his newspapers were like, oh, it was blown up and all that.

Now what they’ve found throughout history and reviewing the wreck and everything else,

they realized it was just somebody probably smoking in a powder magazine or something

like that, that caused the thing to blow

Ron Lang: I, I hear you. All right. Here got old war around the world about this. I got

a good fun fact and then we got some interesting either economics or something we typically

don’t talk about very often. Let me know when you can see the screen Yep, it’s up. I saw

this. It’s not a pretty visual of the one that I saw on tv But the market cap combined

of the stocks that everybody’s aware of microsoft apple google amazon NVIDIA facebook and tesla

is greater than the stock [00:08:00] markets of the following countries combined.

Ron Lang: Seven stocks are more than Japan, Canada, and Britain, UK combined. And actually

I’m not sure, but I believe Microsoft is about to surpass Apple today. They’re neck and neck

for 2. 8 trillion or whatever, wherever the hell they are greater than three countries

combined, which is another reason we brought it up last week in our podcast, that the top

10 stocks in the S and P were responsible for 75 percent of the index has moved.

Jeff Kikel: It’s just logical because you’ve got now so many index funds and everything

else that they have to, it’s just a self perpetuating thing that’s going to be there. Yeah. Yes.

They’ll be volatile and they’ll move up and down a lot, but the underlying part of it

is.

Jeff Kikel: Until we have some kind of major pullback in the markets, they’re going to

just continue or the market, S and P again, tries to rejigger it a little bit and re,

Ron Lang: in a way they have [00:09:00] to, I logically they have to, but obviously the

fund managers don’t want them to, because they got all the inflows, they got all the

fees.

Ron Lang: It’s almost like a cannibalizing situation. Yeah. All right. We have some other

good stuff here. So just digging into the numbers, and I don’t care what administration

is in the White House, the actual number here that everybody sees, right? This is what’s

reported. Do you got to dig into those numbers?

Ron Lang: So again, these are estimates. I’m not going to go through every single one of

these, but I’ll go from the bottom up 683, 000, fewer people employed, 676, 000 people

left the labor force. So think about it for a second. That’s another 3 million people

that aren’t getting a paycheck every week or every two weeks or whatever it may be.

Ron Lang: We know about temporary jobs, right? I was surprised that they were let go in December,

usually [00:10:00] seasonally they’re let go in January. So it should be interesting

to see how this progresses over the next couple of months, because usually, January is a big

month for getting rid of seasonal workers.

Ron Lang: And when manufacturing and tech, they start to clean house. Actually, Amazon

just announced they were laying off. There was several hundred or a thousand jobs across

several divisions. So I don’t know whether that’s the snowball effect or what, but we’ll

have to

Jeff Kikel: say, I would say, just from talking to tech recruiters and things like that, what

they’re seeing is that the tech companies are getting back to their normal cycle, which

is.

Jeff Kikel: They every year, what was nor what’s normal in the tech industry is every

year they get done with the end of the year. And they look at the dot, the bottom, let’s

say 10 percent of performers in their companies and they just let them go at that point. And

so that’s somewhat normal. And then, you’ve got people then they, okay, they get laid

off from one, they bounce to another tech company and all that, and if they really suck,

they get.

Jeff Kikel: [00:11:00] Let go another year later at that point. And if

Ron Lang: they’re a growing company, right into coattails of what you said, they’ll get

rid of the bottom performers and they upgrade. They’re bringing in people that have more

potential, better experience, more capability. So that’s why a lot of the tech companies,

if they’re doing well, they’re either maintaining or growing, but they’re replacing under performers.

Jeff Kikel: And I’ll have to get the actual facts on this, but I heard a comment or on

the news the other day, talking about the same thing, the jobs report, but what she

was saying is the real glaring thing about the current, the most recent jobs reports

is. That the amount of temporary jobs that are available has been the fastest declining

thing.

Jeff Kikel: Temporary jobs are typically that foot in the door. Okay. I get in and I get

hired on. And that’s been the [00:12:00] thing that’s come off the, it’s come off the scenes

much, much faster. But don’t forget

Ron Lang: a lot of those temporary jobs, part time jobs. Those are also second and third

jobs for people who are side hustles.

Jeff Kikel: That’s exactly it.

Ron Lang: Yeah. All right. So the next thing is we follow the PMI for the folks that aren’t

familiar with PMI. This is tracking manu manufacturing in the U. S. 50. 0 is the beltline above 50

means manufacturing is doing well and expanding. Below 50 means there’s a contraction and I

think that this is interesting.

Ron Lang: Lynn Alden. I pulled this from her newsletter. It’s an excellent newsletter.

It’s free. She does it every 6 weeks. She’s like a data scientist. She really digs down

a lot of numbers. You can go. I’m pitching her. You go to our website and sign up for

a free newsletter. So she put this together and you can see there’s been contraction here

for over a year.

Ron Lang: Now, I know that there are sections, New York and Philly, and, different metro

areas have their, this is [00:13:00] aggregate for the U. S. and I think this is interesting

because typically manufacturing is to is a sign, either in the beginning stages or early

stages of a major contraction in the economy and or recession, so I have to see how this

pans out here in the 1st Yeah, federal debt held by the public.

Ron Lang: This is disgusting. We’ve talked about this several times. This is just another

chart showing our percentage of gross domestic product GDP of the debt. This is the projected

for where we’re at the end of 2023. tHe next 2 generations behind us. If they don’t understand

what’s going on, they’re going to be pissed when they become mid midlife crisis or whatever,

somebody is going to be paying.

Ron Lang: Remember, we talked about it a couple of months ago, just that what we’re paying

on our debt has surpassed our military budget. That’s how horrible and disgusting this is

and neither [00:14:00] side on the political spectrum is doing a damn thing about

Jeff Kikel: it Yeah they just it’s it seems like once again, it’s always going to be You

know the until something massive happens and you know what the massive happens is credit

crisis Yeah, credit crisis where the, the international countries around the world go,

you know what, we’re not going to deal with you anymore.

Jeff Kikel: It’s very much like what happened to Japan. Japan went through that period of

time where they were, ruling the world or were controlling a lot of things. People just

stop buying their debt.

Ron Lang: Also, I think it was early nineties, right? I think that they were, their debt

levels were two to 300 percent of GDP.

Ron Lang: Look where our numbers are. We’re creeping up there pretty darn quick. I wouldn’t

doubt if we accelerate faster than this, if it’s not under control. Yeah, and obviously

back here. This was where this was wartime, right? But we paid that off through business

expansion and not printing money. Yeah, [00:15:00] so we shall see what happens All right So

I thought this was another thing from our federal reserve at st with st Louis the percentage

of equities held by the wealthiest 10 This is the last 35 years folks this is unbelievable.

Ron Lang: Obviously you need money to make money, but you know what? That means that

the wealthiest money is their money’s in the stock market. They’re in those top seven to

10 stocks. They’re adding to it and they ain’t selling it. And they’re just riding the wave.

And

Jeff Kikel: You gotta think too. This is the period of time where interest rates have been

exceptionally low right after 2008, interest rates went to zero.

Jeff Kikel: So the only game in town was, stocks of people were having to take more

risk, put money into more stocks and less into bonds and things like that. It really

makes sense. While we’re here, you know why

Ron Lang: we’re here and we could see it, right? This was the dot com bust people got

out of equities And by the time they got they by [00:16:00] the time they got back in if

you remember The bull market started again in late 2001 and 2 so by the time the money

came back in it was late Obviously the financial crisis here, we troughed out March 9th of

2009.

Ron Lang: And this was actually late. So this was late to the table again, consistent contributions

and the wealthiest people just kept their money in and wrote it out. If you notice here,

there wasn’t mad, much of a pullback in 2020, although it was short lived, right? We had

a 30 percent decline in six weeks. We bounced right back pretty quickly.

Ron Lang: Yep. And then just to wrap up here. I thought this was interesting. Two reasons.

One, you’ve heard it over the years about CEO C suite pay. And obviously on the left

side here, we talk about stock awards, and this is also the propping up and the manipulation

of stock because, oh, by the way, we’ll issue a, you another million shares of stock.

Ron Lang: If you get it above 50, it’s a [00:17:00] 38. Now, what are you going to do between

here or there? Do a secondary manipulate other numbers, push off debt, increase dividend,

whatever it is, I buy back their

Jeff Kikel: bogies. Yeah. Buy back shares is really, you figure most of what happened

over the last.

Jeff Kikel: let’s call it seven, eight years, you had virtually zero interest rates. So

companies could go around, borrow at 0 percent interest rates or minimal interest rates,

turn around, buy back their stock and prop the stock

Ron Lang: up at that point. I think this is comical because it’s no. Oh, I’m only making,

I’m only making, sorry about this.

Ron Lang: I’m only making seven, 100, 000. Yeah. But you’re getting 10 million, in compensation,

end of year bonuses, stock awards, RSUs, restricted stock units, warrants, whatever you want to

call it. I’m only making a hundred thousand dollars. Oh, there are middle managers making

a half a million.

Ron Lang: Okay. Okay, great. I actually liked

Jeff Kikel: the chart on the [00:18:00] right though. That’s the median CEO.

Ron Lang: Yeah. And this is, that’s just crazy. And that just look I totally understand C

suites people. I’m very much into meritocracy. I know we’ve talked about this before, but

that kind of pay. Is absurd and I think it started 30 years ago.

Ron Lang: If you remember with Eisner of Disney. Yep. When he cashed out, when he left, he

had like almost a half a billion dollars. That was 30 years ago. And it was just like

people were like he was only paying a couple of million dollars. He was right in line.

Nobody really knew the back end of that.

Ron Lang: And of course, when he, through growth and stock and everything else. His

compensation overall went through the roof and he walked away with four or 500 million

or whatever the hell it was. Anyway. Okay. So that was me.

Jeff Kikel: Excellent. I think we you brought the point up.

Jeff Kikel: There was very little of anything this week when it came to [00:19:00] economic

data, but I think, the only real thing economic data wise this week is, we go to a kind of

day jobless or excuse me, not jobless claim CPI. Yeah, jobless claims basically right

on track with whereas. CPI.

Jeff Kikel: Hello. Come on. There we go. So CPI, the consensus was 0. 2 percent came in

at 3 percent out top of the range. So it was at least within the range. But we’re still

pushing on, with X food and energy year over year, we’re still pushing it 3. 9%. So when,

when the administration and everybody talks about this stuff is coming down.

Jeff Kikel: What you have to think about though, is we were piling another 4%. On top of the

already 22 percent over the last three years. So it’s not getting better. And it’s, it,

the administration and Congress and everybody can talk about [00:20:00] we’re doing stuff

to fix the problem, but it doesn’t fix the problem for the people that are out there

in the real world who are having to buy things, and pay, and I’ve

Ron Lang: heard market strategists talking about.

Ron Lang: Look for a spike in inflation in the beginning of the year. And I don’t know

if that was because. December, people were charging more for certain goods during the

holidays, food services, whatever it was. I’m not really sure, but I think it’s interesting

why, I know in the seventies inflation came down, spiked up again, but are we really going

back to 45, 50 years ago to, what happened then?

Ron Lang: To compare it to today’s economy. I don’t know if that’s realistic. Yeah.

Jeff Kikel: And it’s interesting to see that. Typically the Fed will tell you, oh, we, we’re

trying to soft landing and everything else. I think what people have come to realize is

they really don’t have much control over things at this [00:21:00] point, because you’ve got

2 things fighting against the other, you’ve got.

Jeff Kikel: The you’ve got the Fed trying to slow things down, but then you have the

federal government and this is not a one political party or the other one. They’re both as bad

as the other one. They’re just pushing as hard as they can because we need to get reelected.

So we can’t cut money back from anybody.

Jeff Kikel: We have a system where Congress, every two years, the House of Representatives

is reelected. So they’re perpetually in this cycle of getting, you’re trying to be reelected.

So they’re always trying to push things to make themselves be electable. The challenge

is we’re just, we keep pushing, it’s like pushing on a string.

Jeff Kikel: From the fed’s perspective of trying to slow this beast down and it’s just

getting worse at that point. So I don’t want to be Debbie Downer, but the reality is this

stuff ain’t slowing down and things are not getting any cheaper

Ron Lang: for people. So let’s wrap up on this. So I’m going to ask you a question [00:22:00]

to get your opinion.

Ron Lang: How does all this number one affect the market? Because we can’t time it I was

3 to 6 months behind. I thought we’d get a major pullback or a recession end of 23 like

a lot of other people did. Maybe I was 3 to 6 months behind. It’ll happen to 1st half.

But let’s say it doesn’t happen in the 1st half or the 2nd half of 24 because it is a

presidential election year.

Ron Lang: aT some point, the dam’s got to break. So how does all this impact it? Us

being portfolio managers and wealth managers and just pundants of what, what’s going on

in the U. S. and the world. How does this affect our economy and our markets? Because

ultimately our clients want to know.

Jeff Kikel: Yeah, and I look at it.

Jeff Kikel: I’ve you know, I literally I manage more on a monthly basis now than I ever have.

Before you could count on it, we’ve adapted our trading style a little bit. And I do say

trading style [00:23:00] because we do, in our company, we trade. The market a little

bit, we’ve adapted our style to say, okay, there’s this stuff can reverse very fast too.

Jeff Kikel: You think about September, October, really August, September, October it reversed

very fast, very quick, 11 percent pronounced, very pronounced. And then, what happens in

November, it flips around the other way and it goes the other direction. I’ve had to adapt

my style a little bit to say, okay, we’re going to, if things are starting to pull back

quickly, we need to be, we need to act on it more quickly.

Jeff Kikel: I can’t just. let it go and say we’re just going to see what happens at the

end of the year.

Ron Lang: Yeah. And you want to put new money to work where you do it at market highs with

everything that we know that’s going on. Do you just go into short term try? I know every

client’s different.

Ron Lang: You manage it similar to us, but at the end of the day, people are like why

am I sitting in cash? Hey, look, can’t be market timers.[00:24:00] You know what buy

on the I think this is a buy as long as nothing major crash, breaks or cracks This is a year

of buy the dip, right five or eight ten percent dip, whatever it may be Keep adding more on

the way down.

Ron Lang: I don’t think you want to add more on the way up We’re you know, we both agree.

We’re probably going to end up higher at the end of the volatility Possible government

shut down again. We’re going to deal with that bs in another what eight weeks or whatever

No, you don’t put you don’t chase. You don’t chase the market returns at this level.

Ron Lang: We got a double top formation Oh, you know the technicals, that’s one of the

worst formations to put new money to work. Yeah, and we you know, we might have a blow

off top I think we’re looking at 12 percent pullback before we go higher pending no crack

So yeah, I just think how do we?

Ron Lang: Synthesize all this information to say, what does this mean for our clients?

What do we do today?

Jeff Kikel: And you and I spend most of our lives putting the [00:25:00] shows together.

So we’re, I think we, we are a little bit more aware than most of the, the street advisors

that are out there and, I just look at it as we’ve got to be nimble when we have to

be nimble.

Jeff Kikel: And we’ve got to be willing to say, okay, I might give up a little bit on

the upside to protect the downside because the town, the downside is the one that hurts

the most. Absolutely. anD so we’ve, I’ve adapted my portfolios to where we’ve got a lot. We’ve

shifted a little bit more money out of the bond market.

Jeff Kikel: We’ve got some bonds, but we’ve shifted more money out of the bond market.

And we have a little bit more exposure on the credit side of things, senior credit.

Because, if rates go down, which they’re likely to at least that is something that’s a higher

yielding credit, right? It’s higher yielding.

Jeff Kikel: It doesn’t really matter about credit ratings. It’s all about the individual

companies that. That are, that have that debt. That’s really 1 of the shifts we’ve made to

say, okay I [00:26:00] just want, 1, I don’t want to sit here and bonds making 4 to 5 percent

for the rest of our lives.

Jeff Kikel: I want to do something that’s doing a little bit better. And it’s something

I feel is going to do better if rates start to go

Ron Lang: down. Over a hundred percent. Yeah. You could finally, we actually have another

choice other than equities to invest in right now. And I like preferred stocks, which acts

like a bond.

Ron Lang: You could double dip, right? You get a nice five and a half plus percent dividend

yield, which is only maxed at 20 percent taxes. And you’re going to make money on the capital

appreciation side. So it’s a, now it’s not just an income play. It’s also a capital appreciation

play.

Jeff Kikel: So we don’t have, yeah, if you don’t have interest rates pressing against

you where they’re going up and, rates are going up and preferred rates are stable and

those stocks were going down for a while, just for the simple fact of.

Jeff Kikel: Okay rates are going up, so I can buy bonds that, 7 and 8 percent versus

the 5 percent dividends. Now, with that stable, and potentially going down, those become [00:27:00]

extremely attractive and especially the convertible ones. Yeah, because you get a double whammy

on them.

Ron Lang: We shall see what I’ve got some more economic numbers over the next week and

earning starts. Yeah. So we should have some additional fodder for next

Jeff Kikel: step. Tomorrow. Yeah. All the big banks go through tomorrow. So that’s going

to be interesting. We’ve got PPI coming out. I don’t really expect much of a change.

Jeff Kikel: I think it’s probably going to be about where the expectations were. Just

like we saw with CPI, it’s basically on the top end of the range. I would expect the same

thing on the PPI side. So nothing. I don’t think shocking about that. I think earning

season’s always crazy. And this is the, this typically is the good earning season.

Jeff Kikel: Cause this is the one where you’re getting, the fourth quarter numbers. But it’s

going to be interesting because it can be all over the fence.

Ron Lang: Gotcha. Yep. No, I hear you. Until next episode, we’ll figure it all out between

now

Jeff Kikel: and then we’ll figure out how to fix the world between now and next.

Jeff Kikel: We only need a week. Yeah. [00:28:00] All right, guys. Thanks for joining us on

the show. We thank you for being here every week and listening to us babble on about this

stuff. And hopefully you enjoy the things we bring that are a little funny and make

sure wherever you’re watching this or listening, make sure that you hit that subscribe button,

hit that up vote, and please make sure you turn that little.

Jeff Kikel: Thing on that lets you know the reminder that lets you know these shows are

out there. We do one per week for you. So thanks a lot. And we’ll see you guys back

here the very next time.