TRANSCRIPT

Jeff Kikel: Good morning, Cents of things.  This is Jeff and Ron here once again for  

another update on what’s going on in the  world, what’s going on in the markets,  

and hopefully a little humor and information  for you as well. Ron, how you doing, my friend?

Ron Lang: Good kind of slow news wise.  

Most earning season’s over Yeah,  not a lot on the economic front,  

Saturday is june if you could believe that and  then the political season heats up, so it’ll be  

time to turn off the tv and all the websites  So we don’t have to see any of that garbage.

Jeff Kikel: I stopped watching regular tv years  ago. So we just watch Basically, I watch old shows  

that have been around for years and binge watch  old shows So it really doesn’t [00:01:00] change  

much for me there and it just makes me  mad to watch the news in the morning. So

Ron Lang: It’s just look if it was all good news.

Ron Lang: Nobody would watch  it. They know bad news sells

Jeff Kikel: Yeah, absolutely. So yeah, it’s just,  it’s crazy. One of the things I watched this week  

I was interested in, Eversoft. I just look at what  happened this day in history and all that. And I  

found some unique things, some very cool things  that actually happened this week in history.

Jeff Kikel: So I wanted to share that with  the audience here. Let me share my screen.

Jeff Kikel: So this was probably the most  interesting, I just happened to pull it  

up and it was yesterday. Edmund Hillary and  Tenzing Norgay reached the Everest summit,  

the first people to reach the summit of  Everest in 1953, this week in history.

Ron Lang: And without a map because all  of all the people that came through since  

have at least had a [00:02:00]  map on where to go I’ve had a

Jeff Kikel: map and those guys did  it with very little oxygen and all  

that I mean it was pretty impressive  less supplies yeah, literally, yeah,  

and not the not a 40 000 people that were  down there as a support team for him as well.

Jeff Kikel: So extremely The last  person I was impressed going up  

to Everest at this point. This  week in history, 1940 or 1848,  

Wisconsin enters the union. And now we had  cheese as part of the as part of our, 50 states

Ron Lang: and milk with your steak. If you go into  a steakhouse there, milk, dairy with our steak.

Ron Lang: Yes. Awesome. I never understood that.

Jeff Kikel: 1917, May 29th, 1917,  Mr. John F. Kennedy was born,  

future president of the  United States at that point.

Ron Lang: And the baseball player  Ted Williams was born that year too.

Jeff Kikel: Really? Did not know that. [00:03:00]  2003, Bob Hope celebrated his 100th birthday on  

May 29th. 2003 they actually renamed Hollywood  and Vine, Bob Hope Square as a result of him.

Jeff Kikel: So, interesting there. He did die  July of that year, so he at least made it to  

100. And then last but not least this Sunday  was the Indianapolis 500. It was the 108th  

running of the Indianapolis 500, and  it began in 1911, this week in history.

Ron Lang: Have you ever been to the  track? I was at the track. I did the tour.

Ron Lang: It was very interesting.

Jeff Kikel: It is. Yeah, it is one of my absolute,  absolute favorite tracks in the world. That one  

in Willow spray. That one, Willow Springs and  a couple of others are my absolute favorite,  

but yeah, it’s just such a neat core. And and  just the history of it is just absolutely amazing.

Jeff Kikel: I love the museum. Yeah. Yeah. Yeah.  It’s really cool. [00:04:00] Okay. As you said at  

the beginning, really not a whole lot of Things  going on. We’re coming to the end of earning  

season. I, what I thought was interesting this  week some earnings came out. It was interesting  

that I, and for purposes of total sharing  with the audience, I do own three of these.

Jeff Kikel: So this is part  of why I was paying attention,  

but we’ve been talking about the.  We’ve been talking about the consumer,  

and we’ve seen almost like a trade down into  to retail, from the higher end stuff down  

into the the lower end, the Walmarts and,  the dollar generals and things like that.

Jeff Kikel: So that’s been an interesting  trend. However, this week, it was actually  

an interesting thing from a point of  view of, like Abercrombie and Fitch,  

that’s a, what I wouldn’t consider it a  high end retailer. I wouldn’t consider  

it a low end retailer. They’re just a  middle of the road, blue out earnings.

Jeff Kikel: This week blew out [00:05:00]  earnings and revenues off the charts. So  

regardless of what’s going on with the consumer,  there are companies that are really getting their  

stuff together. I think Dick’s Sporting Goods  is another really good example of that. It’s

Ron Lang: interesting because  retail’s all over the place.

Ron Lang: Yeah. There’s other retailers have  fallen flat on their face. Home Depot CEO came out  

a couple of days ago and talked about how weak the  consumer is getting. And they guided lower for the  

balance of the year. Home Depot is a pretty good  barometer for what’s going on. And I think it’s a

Jeff Kikel: barometer for the, the I  think real estate sector in general,  

because with, with the lack of, you have  so many people that are staying in place.

Jeff Kikel: In their homes, because, hey,  if I’m going to go and I’m going to move,  

I’m going to leave my nice cushy 3 percent  mortgage and go and get a six or six or  

7 percent mortgage at that point. I think  a lot of those folks also had been the ones  

that. Stayed in their places and said, you  know what, I’m going to upgrade my house.

Jeff Kikel: I’m going to do a lot of fixing up.  They’re done with that [00:06:00] now. So it’s  

an interesting cycle when you have a slowdown in  real estate, like we’re seeing one that doesn’t  

look like it’s going to change anytime soon. And  I, I think one, it is that the consumer saying,  

okay, I just, I just don’t have the money  to make these major renovations to my house.

Jeff Kikel: But I think a lot of it got  front loaded. During the pandemic. And,  

we’re seeing the end of it now where it’s okay,  people aren’t doing big bathroom remodels.  

They’re not doing all that stuff that they did  a couple of years back. What’s your thoughts?

Ron Lang: You’re a hundred percent  correct. In a way you could do it.

Ron Lang: Yeah. They pulled the demand forward  post COVID and even since then, and you’re right,  

because of the high interest rates of people  aren’t moving, they’re investing in their own  

homes. Cause if they do want to sell one day.  As we all know my houses are money pits. You  

got to put money in it at some point I will tell  you advanced auto surprised me because I do have  

some clients in it Yeah, and it’s a turnaround  story the c suite completely changed in the last  

year and a half [00:07:00] and literally this  stock fell off the map before the c suite changed  

and it has come back nicely but this is another  interesting thing because I got two left hands  

when it comes to a car, but people that, keep up  their own cars, they go to advanced auto parts and  

O’Reilly, all of those O’Reilly and a few of the  other pep boys and they go there and they get it.

Ron Lang: And that’s going to continue  to happen because. Cars are so freaking  

expensive right now So people are putting  money into their cars to keep up and as  

you know As opposed to a house car cars  need a hell of a lot more maintenance

Jeff Kikel: than a house and I was  hearing something the other day,  

the average age of a car now is like 12 years.

Jeff Kikel: Yeah. So I don’t feel so bad  because I keep cars forever. I’m like,  

okay, that’s fine. I, for the  1st time in probably 10 years,  

I’ve got 2 cars that are less than,  10 years old at this [00:08:00] point,  

but I’ve still got my truck that I’ve had for,  God is 12 years. I’ve replaced an engine in it.

Jeff Kikel: The thing’s going to last forever. At  this point, and that was a perfect example of, not  

that I couldn’t afford it when, 2020 was rolling  around and I was having problems with my truck.  

Honestly, it was cheaper to every truck that I  looked at that was used. Was more expensive than.

Jeff Kikel: It was basically worse than my truck  at the time and it was a cost of fortune. For  

six grand, I replaced the engine transmission  and rear end. So it was basically an old,  

a new truck with a, an old outside at this point.

Ron Lang: Hey, if I could go to advanced auto  parts and replace my rear end, I’d do it too.

Jeff Kikel: We all have said that. I think,  another interesting one has been Kava. I  

think they’re in the right place at the  right time. It’s a relatively new stock,  

but they are just knocking the cover off. You

Ron Lang: know how you know how those  work. Remember when Shake Shack came out?

Ron Lang: Yeah. [00:09:00] Unless  they’re saying we’re adding 50 new  

locations or 100 new locations this year, the  profitability is secondary to the high growth,  

which is ridiculous. Yeah.  But once they get to scale,  

Now it’s all about profitability.  Prices go up and the consumer suffers.

Jeff Kikel: Yeah, but the interesting yeah,  the interesting thing about them though  

is they’re actually been profitable really  profitable and their revenues have been good.

Jeff Kikel: So I mean that’s  the interest That’s what

Ron Lang: i’m saying now. Now. It’s a  gross story. Not a profitability story.

Jeff Kikel: Yeah, absolutely couple  interesting ones too bank of nova  

scotia royal bank of canada it’s not something  we talk much about here in the united states But  

I mean their revenue or their revenues  were off the charts huge Each of them

Ron Lang: canada only has six bags true  something like that And their banking  

standards are much different than ours And  as far as loans as far as as far as cash  

position things like that They’re typically  always in much better shape [00:10:00] than  

the majority of our banks Especially the  region of the small banks in the regionals

Jeff Kikel: They just don’t have a lot  of small banks and regionals up there.

Jeff Kikel: It’s, and that’s the truth around  the world. You look at, any other of the, the  

countries around the world, pretty much it’s five  or six big banks in each country. And that’s it.

Ron Lang: From what I understand in  Canada, to try to get a banking charter  

is near impossible because of the standards  they have that they wrap a fence around.

Ron Lang: If you don’t have this, you can’t  have a bank, which is good for the consumer,  

which is good for, the lack of loosening of  credit to people that shouldn’t be getting credit.

Jeff Kikel: Correct. Yeah. I think  the only challenge with that,  

and I, that’s the one thing I do  love about our system here is.

Jeff Kikel: That regional bank  is the one that banks you for,  

especially for businesses. Those regional banks  bank the businesses, which, if you’re, if you  

were dealing with a bunch of big banks, they may  or may not bank. They may not take the risk on,  

small companies, which I think that’s the beauty  of our system here [00:11:00] in this country.

Jeff Kikel: Another big one. And  on the downside this morning,  

Salesforce came in just ugly and  that’s a rarity for them. For first

Ron Lang: revenue miss since 2006.

Jeff Kikel: It’s, always consistently.  I think it’ll be one of those ones to  

look at. Because I think the response  was, outlandishly huge on the downside.

Jeff Kikel: I’m looking for another 40 or 50

Ron Lang: point downside before it’s a buy.

Jeff Kikel: Yeah. Yeah. And it’s one  of those, it’s what, when I when I  

look from an option standpoint, it’s  what I call a sunrise or what’s called  

a sunrise demise. And yeah it’s, I think  it’s going to get whacked for a while.

Jeff Kikel: Just from the simple fact of, I,  I think I haven’t listened to the earnings  

call yet. But it’ll be interesting to see  where they’re coming from that perspective

Ron Lang: But remember, I was in  that business for many years. Yeah,  

and for the most part it’s based on users  Yeah, so if companies are laying off Then  

they don’t need as many licenses and that,  that reduces their revenue year over year.

Ron Lang: So that could be [00:12:00]  another canary to look at is wait a  

minute. If user licensing is going  down now, there is competition,  

but Salesforce tries to make you sticky  and can’t get off that platform, so maybe  

the companies aren’t getting off. They’re  just reducing the amount of people, reducing

Jeff Kikel: staff.

Jeff Kikel: Yeah, exactly. And that, and you’re  starting to see that, I was listening to one of  

my recruiters that. Works out of my office here.  And, he was having this conversation and he was  

talking about how companies are starting to cut  things like sales training and things like that  

as it gets tighter, which means that, the  salespeople may be the next people to go.

Jeff Kikel: At that point, which  is starting to cut your own throat,  

as you start cutting Salesforce down salespeople

Ron Lang: producing, you don’t get rid of  them, so maybe they just overhired. Who knows?

Jeff Kikel: Yeah, it could be a couple  of things this week real GDP came in.  

This was the second read. So for those  of you that don’t know during a quarter,  

there’s three different reads on [00:13:00] GDP.

Jeff Kikel: So there’s a first read, a  second read, and then the third and final  

read. So this one is indicating still, and  I think it’s very likely it’s still going  

to continue to be that way, a drop in GDP as  the previous quarter was 1. 6, this quarter  

is reading twice in a row, 1. 3. So it is GDP  slowing a little bit, still moving positive.

Jeff Kikel: The big thing I think for  this week is, and this is really what’s.  

What the Fed looks at is PCE. So personal  consumption expenses they don’t necessarily  

look at other factors like CPI and things like  that anymore. They typically look at PCE and I  

think that’s going to be a big number. It  will be coming out on Friday this week.

Jeff Kikel: We’ll report it next week, but. It’ll  be a big one to look at because although it has  

come down, it came down from a high point of 5.  5% it is still persistently [00:14:00] hanging in  

there around three. And it’s been slowly eking its  way back upward. So this is going to be a big one  

because that is the indicator of, okay, is the fed  going to do anything with an interest rate change?

Jeff Kikel: I personally think it’s going to  flatten out or maybe go up a little bit, which,  

that person, that pretty much takes an interest  rate drop off the table. What’s your thoughts?

Ron Lang: When all these numbers come out  Unfortunately, it’s a headline number,  

right? Yep. BCE. Here’s the number the  problem is that You and I don’t have the  

time to do this. You got to dig down into  the numbers. You got to know what it is  

because You may see a number that may be a  good reading But the underpinnings of that  

of how the sausage is made may not make sense  And from the smart people that I do follow that  

Literally do an autopsy on all this stuff there,  everybody sees the cracks [00:15:00] widening.

Ron Lang: I mean nobody has the timing on it, but  yeah You really see leveling off of a lot of the  

numbers where you’re not seeing major Gyrations  in some of the numbers that’s really when it what  

it comes down to but pce is the they say it’s  the fed’s favorite number over the cpi I get  

it. I truly do but as you know all the financial  media, you know cpi this and cpi that and Just it  

gets a little overwhelming even for the average  individual But the idea is at the end of the day  

to put a bow on it is When we’re looking at these  numbers How do we put that into the crockpot?

Ron Lang: Synthesize a thesis to say, Hey,  this is what to expect. This is why like we,  

we said it before, if I ever come back  reincarnated, one of the three things  

would be as an economist, because  you can ask six, six economists,  

what’s gonna happen six months from now?  You’re gonna get six different answers.

Jeff Kikel: Absolutely .

Ron Lang: So you could get six economists  to look at that PCE [00:16:00] number,  

not the main number, but the internals  of it. They get six different opinions.  

So how do you aggregate all this to say,  okay, this is how I’m going to make an  

investment decision or an allocation  on a portfolio. It’s very difficult.

Ron Lang: Yeah, it is.

Jeff Kikel: And once again, that number that,  

that’s the magic number. I think that’s  the misnomer that you hear in the news.  

Oh the Fed’s looking for 2 percent inflation.  They’re looking for 2 percent on inflation. The  

PC and it ain’t anywhere close. It’s still  running at basically three at this point.

Jeff Kikel: So they got a long way to go to get  down to that too, which it’s been running that,  

back all the way, into the early two  thousands, it’s been running at that 2%,  

between 2 percent and 1 percent back up and  down, and it’s got a long way to go and I,  

this is like that, that last 10 pounds you’re  trying to lose, it’s like next to impossible.

Jeff Kikel: To to get that going it’s a lot  of work that takes to get that pce down again  

And I just [00:17:00] don’t see it  happening anytime soon and all the a lot

Ron Lang: of the fed governors have  come out again. We’ve been saying it  

for a year What have they been saying hire  for longer? They’re still saying that yeah,  

I forget about the two percent target for  the cpi It’s all the other numbers All the  

other numbers that go into that crock pot  that’s saying hire for longer if the economy  

is still running hot and more importantly  People are hired and they’re spending money.

Ron Lang: There’s no reason to reduce  it. Yeah, which is not good for certain  

things I realize that but the idea is you  don’t want to make the economy too hot

Jeff Kikel: No, and I you know, I think the higher  interest rates across the board The interesting  

thing is companies now have gotten used to it  and they’ve absorbed it So you’re still you know,  

you’ve still got companies that are making  their earnings numbers I thought that was the  

thing that, everybody said, Oh, it’s gonna,  it’s gonna cause, companies to just blow up.

Jeff Kikel: It isn’t. They’ve adjusted to it.  They know it’s going to be higher for longer.  

So they’ve just worked [00:18:00] around that. I  think now it’s really going to be that consumer,  

which is a major part of our economy. Yeah. If  

we see increases in unemployment and  things like that’s really where the You  

know that’ll accelerate those cracks  more than here’s the difference with

Ron Lang: the businesses and we can wrap  up on this Businesses borrow to expand.

Jeff Kikel: Yep.

Ron Lang: The reason why there’s not a lot of  business borrowing free throw out real estate  

business borrowing to expand the business  or whatever is because Things are still  

good for them. Yeah revenues coming in. They  have profits out of those profits They could  

use those profits to reinvest and expand  when are we going to see businesses, borrow  

money when there’s a downturn in the economy and  they’re like, hey Let’s invest on the way down.

Ron Lang: We’ll do better on the way up and  that’s the way the smart businesses do it Yeah,  

because it’s just too expensive to  borrow money today rates go back down  

to one or 2%. If we have a major  pullback [00:19:00] or recession,  

that’s when you’re going to see  business borrowing skyrocket again.

Jeff Kikel: Yeah. And it’s just not there.

Jeff Kikel: You had a lot of borrowing going on  over the last, let’s say seven to 10 years as  

rates were so low companies were, big companies  were borrowing, but they were borrowing to buy  

back stock. Yeah. At that point they weren’t  necessarily only had one or two percent. That’s  

free it’s free money basically to be able to go in  there and increase your stock price and everything  

else interestingly enough and we’ll leave on this  Interestingly enough, you know the meme stocks.

Jeff Kikel: I was hearing  something about What is it? Oh,  

good boy. I went down this  path and now I GameStop.

Ron Lang: Yeah.

Jeff Kikel: The means stock  shot up, GameStop, they actually

Ron Lang: sold

Jeff Kikel: a whole bunch of stock in the  market. Made like 900 some odd thousand or  

900 million or something like that. And they’re  using that to reinvest back into their business.

Jeff Kikel: So just that last time

Ron Lang: too, actually

Jeff Kikel: they did

Ron Lang: it to [00:20:00] pay off debt.

Jeff Kikel: Yeah. This time  they’re doing it more for,  

like expansion and adjustment to their business  or whatever, but yeah, it’s. It’s hilarious with  

with that. And you just wonder if there’s some  collusion going on out there with some of that

Ron Lang: stuff.

Ron Lang: GameStop will be around in some form or  

capacity. Movie theaters are going to  go the way of drive ins, unfortunately.

Jeff Kikel: Yeah. And it, it makes  sense. Honestly I’ve been to a one  

movie theater and probably three  years. I just don’t enjoy it, and

Ron Lang: half the time I gotta be  a good movie to make a worthwhile.

Ron Lang: I’ve gone to I’ve gone to see to one  of the mission impossibles and Top Gun Maverick.

Jeff Kikel: Yeah, it’s really

Ron Lang: in the theater.

Jeff Kikel: Yeah, those big ones where  it’s, something big. Other than that,  

I’m like, eh. Doesn’t really, it doesn’t really  excite me to go and see the theater anymore.

Ron Lang: When the movie comes out in the theater  and then it’s back on streaming two weeks later,

Jeff Kikel: correct.

Ron Lang: How did I do that?  If it wasn’t for a great,  

why would I go see a rom  com in a theater? Come on.

Jeff Kikel: Correct.

Ron Lang: Correct. You go watch

Jeff Kikel: [00:21:00] rom coms. Come on. Now you  just stay in your house and watch them, but yeah.

Ron Lang: Yeah. All good.

Jeff Kikel: All right, folks. Thank you for  joining us. Once again, we’re trying to keep  

these a little bit shorter and and give  you just good, quick hits of information.

Jeff Kikel: Please make sure that you hit  that up, up like button. Let us know that  

you’re out there. We love that. And please  make sure you subscribe to the channel. We  

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month or so. So we’re really excited  to have all you new folks in and  

really want to make sure that we’re  putting out good content for you.

Jeff Kikel: So thank you for being out there and  we will see you back here the very next time.