Good morning, folks. Welcome to another

week of the sense of things with Jeff

and Ron. We are off and running. We are

in December. I cannot believe it’s

gotten here this fast and it just one

heck of a crazy year. everything from

the new election stuff, the market being

all over the place and crazy tariffs and

rolling into October with a government

shutdown and just all kinds of craziness

when it came to data and everything else

that we used to to figure out where

we’re at. So on today’s show, we’re

going to talk a little bit about some of

the historical Ronald will talk about

some of the historical things going on

inside the market and what what we’re

looking at right now and what he’s doing

personally and his accounts and

everything else or his client accounts.

I’m going to talk a little bit about

some economic data as I always do as as

the economic weenie on board, but

talking a little bit about what we have

to work with going into next week’s Fed

decision. And will we see a rate cut?

Who knows? Stay tuned and you’ll find

out.

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[Applause]

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All right, everybody. Welcome to the

show. Ron, how you doing, bud?

Good morning. Good morning. It was a

good Thanksgiving weekend. I watched at

least Elf and A Christmas Story two or

three times to kick off the holiday

season.

I can’t.

So, it’s all good.

Do I can’t do Elf and Christmas Story

has to be on Christmas for us.

TNT and TBS run a 247

24-hour marathon of it. Yeah. It’s

interesting. This year is they’re doing

like 24-hour marathons of several of the

great movies throughout that time. But

yeah, it was it was our Thanksgiving

movie. So, Home for the Holidays,

Planes, Trains, and Automobiles, Dutch,

which is more of a Christmy movie, but

it kicks off the season for us.

I got to tell you, I cannot watch

Planes, Trains, and Automobiles again.

One time was good enough for me. It’s

just so sad. It’s just so with John

Candy, just so sad. I It’s funny, don’t

get me wrong, but it’s hilarious.

It’s I know, but it’s just there’s

something

But it’s redeeming in the end. He

actually gets to be part of the family.

So,

I get that. I know. But it’s just a sad

thing because of how many people out

there are like that, though. That’s all.

Yeah. All good.

But everybody has a chance to be John

Candy and find a new family on

Thanksgiving. That’s the redeeming

portion of it.

I agree.

All right. Here we go. So, there were

some interesting things in this week in

history. I actually had to pare it down.

There was a a couple of other ones I

would have added in there, but I paired

it down a little bit. So, 1776, George

Washington arrives. Oops, apologies.

I’ve misspell at the banks of the

Delaware. And growing up in southeastern

Pennsylvania, I’ve been to Washington

Crossing many times. And I remember when

I was a little kid, there was a lot of

people out there with metal detectors

thinking that they were going to find

some revolutionary coins or bullets or I

know people have and also I lived out by

Valley Forge and people are out there

with metal detectors all the time.

They didn’t have enough stuff and

actually the way you did that it

actually you just did it in your Philly

accent.

I did.

They arrive on they arrive on the banks

of Delaware there. Philly is more like

water and water

and yeah, it’s little things like that.

I don’t know.

All right. 1787, Delaware becomes the

first state to ratify the Constitution.

Who was the first Who was the first

signer from Delaware of the

Constitution?

John Hancock. Is that what you’re going

to say? I don’t know.

No. Caesar Rodney.

I would not have gotten that.

Yeah.

If you would have given the

Yeah. If you have the the silver core or

the quarter when they were doing the the

state quarter, Caesar Rodney is riding a

horse on the the back of that.

Oh, if you would have given me a 100

names, I would have guessed 99 times out

of those and I wouldn’t have gotten it.

So,

my favorite musical movie of all time,

1776, you will see Caesar Rodney in

there.

Okay, good to know. 1865, 13th Amendment

ratified, ending slavery. I thought this

was I thought this was in June, but

that’s all right. All right.

Well, but wasn’t it signed in June and

then it had to be ratified. So then it’s

got to go around all the states and

everything else by that point.

Okay. Yeah, I should know more history

about that. I don’t.

Yeah.

1884 Washington Monument Monument

complete. And if everybody knows and

anybody’s ever seen the Washington

Monument, it’s actually two different

stones. They got about a third of the

way up and they didn’t have it was

either enough money or enough stone and

then they finished it and you could see

where that line is of the two different

stones.

Yeah, it they ran out of money and then

they started a civil war right in the

middle of construction of it and decided

and if I remember correctly I think the

stone quarry where they were getting the

stone was in Virginia. So wasn’t like

you were just going to be going in there

and quarrying and bringing stone across

the line.

Interesting history with it though.

Yeah, it really is.

1909, the US patent office grants a

patent to chemist Leo Bakeland for

making insoluble products of phenol and

formaldahhide. Plastic.

Okay. Plastic, huh?

And and we have a big plastic problem

today as we have been for the last many

decades.

Yes. So, thank you, Leo.

Thank you, Leo. He could have been

doctor, too. Who knows? 1913 Ford’s

assembly line starts rolling.

Interesting.

Revolutionary way of manufacturing

everything, changing everything. 1941,

Pearl Harbor attack. That’ll be on

Sunday.

1954, Joseph McCarthy condemned by

Senate by a vote of 64 to 22. And then I

added my own line there after he ruined

many innocent lives. And many of these

people took decades to recover. Some of

them never recovered.

And him and Cohen, his attorney buddy.

Yeah.

Roy Cohen. Yep.

1959, Antarctica, God. Sorry about that.

Antarctica made a militaryfree

continent.

12 nations include the United States and

Russia agreed to that. I did not know

that.

I was watching something about that the

other day. the Russian delegation or

their group down there during the I

think it was either the 1960s or 19 or

I’m sorry 1970s late 70s or early 80s

one of the doctors down there that was

with the Russian delegation ended up

with appendicitis and had to operate on

himself.

This is a bad man. You don’t want to

mess with him.

1970, one of the good things that Nixon

did, he started and set up the

Environmental Protection Agency, the

EPA. That opened in 1970. 1979,

my favorite, the last AMC Pacer rolls

off the assembly line.

The Fishbowl.

And then it was remade famous in what

movie?

Oh my god. Wayne’s World, bud.

1992. Absolutely. Absolutely. Bohemian

raps city got a got got a replay.

Yeah. Got another pop in there too. So

it revised two things at one time.

I did not know this cuz

wow

1992 the first me text messages sent

forever changing the way we communicate

in a bad way.

Yes.

I don’t know how that h I’m trying to

think. I remember having a phone in my

car in 1999

and then I remember the big phone. I

don’t remember ever being able to send a

text message from that. I think the

first text message was like that I

remember was 2003 or four and you had to

do all the buttons and like numbers.

Yeah. So you had to hit the button like

twice or three times and then you’d

screw it up. Oh crap.

Yeah. I So I’d have to look into that

maybe. I don’t know how they did it a

message then anyway. All right. My

favorite, somebody was talking about how

their kids are text messaging all the

time and they’re like, “You know what?

I’m just going to give them a flip phone

and make them have to do texting like we

used to have to.” It’s like, “You’re

going to be super short.”

1999 researchers unravel the genetic

code.

Yep. I do remember entire human

chromosome.

Yep. I remember that project going for

that was that I remember at the time

they were talking with biotech and

everything else. That was the key that

was going to unlock a lot and it

honestly has. There’s so many gene

therapies today that came as a result of

that research.

And even with AI back then and

everything else, they still can’t I

don’t know. I’m a conspiracy theorist

about a lot of things. That’s one of

them.

Yeah.

All right. So, stock market cycles. Now,

we’ve done a couple of things on a

couple weeks ago we did like how many

years in a row have we had double digit

gains and then what happened? I thought

this was interesting. This is going back

65 years approximately. And you know

what? There’s always a boom and a bust.

But if you notice that other than a

couple of significant and severe

pullbacks, a snapback. And quite

frankly, if you’re not buying

on the big pullbacks, i.e. buy the dip,

you’ve missed out on a lot. The

psychology is, oh, the market’s going

up, I have to add to it. The market’s

going down, I have to pull out. And

actually in a way it could be the other

way around. When the market goes down,

you should be adding and on the way up

you should be taking some profits

depending on your situation. I just

thought this was very interesting

because the very bottom legend here when

it talks about average return, you had

51 months of average return of higher

average return and only 11 months of

negative returns.

Of negative. Yeah.

But the thing is with Yeah. The thing is

with it, clients see it as, oh my god,

it’s it’s down so much. Yeah. Okay.

We’ve had, look at that string there

from what, 2008 to what, the pandemic,

2020, 400%

run up. And it wasn’t just straight up.

There were time periods

and then you have that dramatic drop

right at the beginning of the pandemic.

And that’s what people remember more

than the 400% that preceded it at that

point.

But here’s the interesting thing. It was

up 400% here. But what if you added new

money down here?

Absolutely.

Think about those returns. So yeah, if

you even if you just stayed with your

portfolio up here, but you were adding

to the high quality positions here, you

would have compounded

big time. You’d have crushed it. Yeah.

you’d have crushed it because you figure

it always is basically if it if the

market’s down 51% for it to come back to

even it’s basically got to double

itself. That’s 100% return there to get

yourself back to just even and then you

have that runup on top of that. That’s

very impressive. So, it’s just calling

the bottom and having the money

available at the time to be able to grab

it. And hopefully those of us that do

this for a living get that right and and

we’re getting our clients moving back in

that direction when it happens. But,

and the other the other last point I’ll

make, the other very important thing to

do when you get these pullbacks, if you

have the cash, do a Roth conversion.

Yeah. Yeah. Even better. Yeah.

Especially when you’re down at that

bottom there, that’s the time to be

doing it. Especially with the new tax

rates and everything else under the one

big beautiful bill. It’s that’s

those are the time.

You’re just going to remove that much

more from the government taken from you

in the future.

Abs freakingutely.

All right. That’s awesome. That’s a

great chart. I like that one.

One more. I’ve been talking about this

for many years and then I saw this on

LinkedIn and I’m like, “All right, it’s

about time.” So, Detroit made a road and

I it didn’t actually specify how long

the road is, but if you have an electric

car and all you do is drive over this

road, it charges your battery. And I

think this is a great way for tax

dollars to be at work. It’ll save people

a crapload of money over time. And not

only that, but it’s got to be energy

efficient because you don’t have to stop

and wait for it to charge or it’s like

filling up your tank of the tank of gas.

And and it’ll be interesting to see how

many states adopt this because I think

the more states that would adopt this,

especially because think about this as

like an HOV lane, right? Remember when I

was a kid, you had to have three three

people in a car and then they realized

that the average is like one and a half

to two. So that’s only two people for an

HOV. But I think this is a great way of

converting those HOV lanes to HOV and

charging lanes.

And charging lanes. Yeah.

On the highways. I think this is a great

idea. your thoughts.

I totally agree. It’s the only way that

you’re going to really make

long distance travel with electric

vehicles possible. We were having this

conversation before the beginning when

my mother-in-law died. We had to

literally the next day pick up and drive

to New Mexico from Austin. And if you’ve

ever driven that route, don’t because we

were having a hard time finding a gas

station out in West Texas. more or less.

If id have had to charge a damn Tesla in

that time period, it would have taken us

close to two and a half, three days to

get to New Mexico because there’s just

nothing in those rural areas. But if if

the state came in and said, “All right,

we’re gonna between Dallas Fort Worth

and the border, we’re gonna make Highway

20 a

or at least have part of that turn into

these lanes or something that would make

this possible.” But I just don’t see

them spending the money to put all this

stuff in, especially in these rural

areas. Yeah, it’d be nice in the cities,

but I think to make long-distance travel

with electric cars possible, it’s going

to have to be they’re we’re going to

have to do some kind of investment like

this, at least on the major highways.

Well, think about I don’t know what it

is like by you, but they’re ripping up

all the roads here, repaving them,

milling them, repaving them, and

whatever. Why not at the same time the

the next iteration of fixing the roads,

put one lane in, do this.

Yeah. put one lane in the left hand lane

is this is electric vehicle stuff which

I think is intriguing you know.

Yeah. All right. What you got?

If we want to spend some actual money,

this is well spent money over the long

run. So

100%.

All right, let’s let’s take a look at

the economic calendar now that we’re at

least starting to get some economic news

coming out. Now it’s mostly delayed, but

we’re at least getting something. Not a

lot this week that came out. We are

going into on the 10th, next Wednesday,

a Fed meeting.

The odds are we’ll probably see an a

interest rate drop at that time. I’ll

show you the one of the key things we

always follow is the is the yield curve.

And we haven’t looked at that in a

while. So, I’ll pull it up in a minute.

I think interesting this week. Whoops.

Sorry, clicked on the wrong thing here.

Interesting. The ADP report. I don’t

know. Once again, we’ve had this

conversation about ADP. It’s It’s hard

to read and I’m sure they I just don’t

get it. It’s so volatile at times. Came

in at -32,000 after a pretty good report

out of September from actual federal

government reporting and everything

else. I don’t know. It’s I think we have

to see what we get out of the government

and see where we’re at. We had jobless

claims today which I haven’t even looked

at actually have dropped. So consensus

was 225,000

or consensus range was 220 to 23 or 230

191. So that means I my guess is and I

haven’t looked at it but I’m guessing

the market’s down because they’re

freaking out because with jobless claims

down then the Fed’s probably not going

to do anything. What we have coming out

tomorrow is consumer sentiment and PC or

PCE,

which is what the Fed watches.

Unfortunately, this is going to be the

September PC and we’re in December. I

think it’s not really going to be what

the Fed really wants to see because it’s

so far out. I think it’s anybody’s game

when it comes to that. If we look at the

Treasury yield curve, we hadn’t looked

at it in a while. And I think the last

time we looked at it, it was almost flat

across here. What we have seen is the

the long-term rates stay up, which makes

sense. For the longest time, the

short-term rates were up and the

long-term rates were down, which usually

signifies a recession, but we never saw

a recession. So, a lot of that, I think,

was manufactured. We’ve seen the Fed

funds rate come down. Another 25 basis

points pulls it down here a little bit

farther. I think we could even stand

getting it down to this 3.4 or 3.2

range, which would normalize the yield

curve to where it’s supposed to be.

Short-term rates are the lowest,

long-term rates are up. It’s still got

this weird little bump at the beginning

of the curve leading out to two years.

What’s your thoughts on that, Ron? The

biggest problem on that yield curve is

the 30-year for mortgages because that’s

got to head down to 4142

4142

for the the 30-year fix to get below

six. And I think you could see if it get

if the 30-year fix gets to about 55 or

below 55, you could see a significant

not only refi market, which would then

put more cash in people’s pocket, but I

think you’d see a boom in housing and in

inventory going on the market. But until

the long end of the curve comes down,

the short end, I think people are just

that’s just the that’s just going to be

money market.

Yeah. And I mean that the 30-year rate

is actually based on the 10-year. So

yeah, it is this is a really steep yield

curve when you come off of the two-year.

So yeah, we need to see this come down

to at the low end of the Fed funds range

here

for it to get to where I think I think

it’s going to take at least another half

point or more here to get mortgage rates

to that point where people are like,

“Okay, I’m going to refi.” I think more

importantly though, it’s going to get

the rates down to the point where

somebody who’s sitting on a two and

three/4er percent mortgage like I am is

going to go, “Okay, I can now make that

move that I’ve been considering it. I

just couldn’t justify getting rid of a

two and three/4% mortgage and then going

into a seven or eight% mortgage at any

time. That may actually get people

moving again, which will increase

inventory.

Yep, I agree.

All right, last one I wanted to cover is

leading economic indicators. And if

you’ve listened to the show for a long

time, this is one of the things I watch

pretty actively. Unfortunately, we

haven’t had an update on leading

economic indicators since August because

the data that they use is was delayed

basically during the month of August.

And I still don’t understand why they

don’t have it through September because

we had data in September. It was October

1st that the government shutdown

happened. So I think that’s just

laziness on their part of updating this.

But just to give you an idea of where we

were in August, it was actually not

looking too overly good. Some of the big

components that we saw, the only things

that were really adding to it were the

leading credit index and the S&P 500.

Everything else was pretty much a

detractor or just nothing going on.

average consumer expectations of

business conditions were really it just

really bad consumer confidence and

everything else and ISM new orders were

down really significantly which if I go

back really quick sorry to jump around

here we did get ISM manufacturing index

which it’s in there

everything under 50 is contraction

yeah it’s contraction so we’re still not

really seeing that that is for November

of 2025 it’s continuing that trend

that we were seeing being down a little

bit. One of the things that it did

signal during the month of August is we

actually signaled a recession. It was a

little bit below the line that they use,

which is neg 5%. It triggered through

there. If I were a betting man with some

of the numbers that I’ve seen here

recently, I think that probably reverses

back above that red line. But it’s

interesting and intriguing and something

we really need to be watching very

carefully as we start getting real

numbers again is okay are we are we

still continuing to see that

recessionary line because that’s never a

good thing when we see it go below there

that is not a good plan. It’s been

pretty bang- on accurate when it gets

below that line.

Yeah. Go back to the first chart.

Yeah.

I know we’ve talked about this before.

Yeah. But that line from 2021 to current

is just trending down. And I can’t

remember what it was, how many months in

a row it has it has contracted and gone

down. I think finally it’s catching up

to the reality of what’s going on in

there in the economy and the

specifically the labor market. Forget

about the overextension in credit.

Yeah. Yeah. And like I said, we’ve been

watching this for a long time. And it’s

interesting that the coincid or

coincident economic index has just

continued to bang its way up at that

point. So that there’s been that weird

divergence for quite a while in there.

And it’s usually the reason that we Ron

and I watch this a lot of times is

because usually when this line when the

blue line crosses the black line that

indicates a recession. And if you

watched our shows probably when we first

started the show in 2023,

we were it was literally okay, we’re

already seeing this and we were

expecting a recession and quite frankly

a lot of people were expecting a

recession and we’ve bang through this

and it’s just kept on going at this

point. So, I think it’s going to be

intriguing to see does this line steepen

at any point? Because that’s usually is

that precipitous drop during a year and

it’s just been this gradual decline.

When does it start working its way back

up the other way? And it usually doesn’t

until we actually bottom in a recession

and start to go the other way. So, it’s

intriguing to me because it’s been up

here way above the line for a long time

except for that little blip during the

time when we were in the in co

and then recovered. But then man, it has

just been on a trek downward and

I just but since co we’ve never had an

economy that we’ve laid that we’ve had

since co as far as what happened the

spring back all the money all the free

money slloshing around and we’ve never

seen that type of a three-year stretch

what happened to our economy and what

the government did to keep us alive

getting but we’ve never seen that. I

don’t know if we’ll ever see it again,

but we never saw it in history. So, it

was a bit of an aberration why we

weren’t officially in a recession, but

people talk about there was a rolling

recession in pockets of the US.

Again, I don’t know. You go to certain

parts of the US, they’re hurting. Like

my area, the restaurants and bars are

filled every Thursday, Friday, Saturday

night, sometimes even Sunday night. It

doesn’t matter.

Yeah. Yeah. and ours. It’s been

intriguing watching our restaurants cuz

some of the really popular restaurants,

I call this the Chewies index. Once

again, Jeff’s non-number, but just just

observing life. And like one of the more

popular restaurants is Chewies, which

for those of you that have not had good

techmex, it’s coming to a it’s coming to

a town near you because they were bought

out by Dar or Darden restaurants.

Chewies is massively popular. were

started here in Austin has expanded

across the country. And if you get there

at or if you got there in the past at

11:05 on a Saturday, you’re waiting in

line for a half an hour to get into the

place. And we’ve been there multiple

times over the last year, I would say.

And we get in right away at 11:00. And

by the time we’re leaving at, let’s call

it 11:45, there’s still lots of empty

tables. I that’s just my own personal

looking at stuff in my life. The

restaurants here are just not as busy as

they used to be.

Interesting.

Over the prior to that, and I would say

this has been maybe a year and a half.

Really at that point when when we saw

inflation really rocket up and prices

just haven’t come back from there.

They’re slowly ekking their way back.

Yeah, we’ll keep an eye on it.

Absolutely. That’s why we’re here every

week, folks. Make sure that you

subscribe to the channel so you’re

getting all these updates. Make sure you

pay attention because I’m going to be

doing some special stuff here and Ron

will as he can on the channel. We’ll do

some short kind of educational stuff

going into next year to help you prepare

and and hopefully learn a little bit

along with the updates that we give you

every week and maybe in some little

shorter term bites that you can take in

between what you’re doing on the

internet in between cat videos and and

watching people do stupid idiotic things

on bicycles. So,

I gotcha. So, thanks a lot and we will

see you guys back here the very next

time.