The Recession That Keeps Not Showing Up | COT 160

COT 160 === [00:00:00] Good morning, folks. Welcome to another  week of The Cents of Things with Ron and Jeff. And  

on today’s show, Ron’s got some cool stuff about  interestingly enough, the earnings rates right  

now are higher than almost they’ve ever been in  history. So he’ll share a little bit of that.   He’s got a little information on kind of the  time in the market versus timing the market.

And I’ll be covering a bunch of stuff on really  kinda my impressions on the economy right now and  

some real key numbers that we’re seeing. So stay  tuned. We’ll be right back on in just a moment

All right, everybody, welcome  to the show. Ron, how are you,   my friend? Good morning. We’re  over the hump with earnings.

As soon as NVIDIA reports, it doesn’t matter  who reports after that. Yeah. Now they’ll just   find something else to worry [00:01:00]  about. It’s, it- the funny thing was,  

as soon as they announced,  the stock was down 3 to 5%,   and then I don’t know- Like- … what else was in  the transcript or whatever ’cause they already…

‘Cause the earnings and the guidance were already  there, right? Yeah. And then of course now it’s   up 7% today or whatever it is, yeah. And it-  it’s like a complete nothing burger across the  

rest of the, the AI spectrum there, and the data  center spectrum and everything else. It’s just,   eh, nobody gives a crap, and then you had  some really good number. It was really  

impressive with with Salesforce and a couple  of the other big players like CrowdStrike.   Those things are up huge today, like  17, 18%. And a funny… Salesforce  

CRM has basically just been in a nasty  downtrend for- Yeah … quite a long time.

They’ve been a lot of that was just from  overextending themselves with M&A and land   grabbing and whatever. But- Yeah … I find the  other thing that’s interesting with going back  

to NVIDIA is that it’s smart to diversify,  but they have their [00:02:00] tentacles,  

in investments with so many other  AI-related companies across the ecosystem.

Yeah. And that thing takes a d- a turn for the  worse, they’re gonna get pulled down. It’s good  

to diversify, but don’t you wanna diversify  in ancillary industries that could complement   what you do? Not exact- So I don’t know if it’s  a good or bad thing in the medium and long term.

Short term, it’s working out, obviously. It’s  interesting enough. It… I actually, I’ve  

been reading Charles Payne’s book, Unbreakable  Investor, and he does a… he… There’s no,  

nothing about NVIDIA in there, but he  did a whole kind of deep dive of Cisco   and its history over time, and I’m at…

i’m literally like, oh, my God, it is  literally the same story with NVIDIA   that Cisco was. I will tell you one difference,  though, ’cause John Chambers ruined that company,  

and he would never [00:03:00] leave.  Of course. He stayed as CEO too long,   and then when people knew that he did, then he  stepped up to chairman, so he was still there.

Yeah. And the problem, what he did was, he  pillaged that company because of the way he  

used stock options. Yeah. It worked from  ’95 to ’99. It didn’t work from 2000 to

2024- And ever, yeah … or however  long he was with the company,   and he diluted shareholder value over two  decades because- He had too much power there,  

and the board was just a bunch of yes men-  Yeah … and women probably, maybe. Yeah. No,  

I agree. No, I’m not… And I’m not saying Nvidia  is Cisco, but it’s interesting to see the history   of the, and the story of them going on these  massive buying sprees of all these companies.

And, it, nvidia’s investing in some of  these other companies. Cisco was literally   just buying all these companies, and what  always ends up happening is the, the Peter  

Lynch de-worsification. They keep [00:04:00]  diversifying until they’re worse than they were   before. Yeah. And then in 20 years, they gotta  break up the company to create shareholder value.

Yeah, because it’s… Yeah, because it’s  now a monopoly and everything else. And   then you actually unlock real value of the  company when they get broken up like GE  

was at that point. Yeah. I think, the, the  other part of that is one of the analysts   who is always pumping up stocks, I think  I won’t even mention the analyst’s name,  

I won’t even give him a little credit, he  bumped up the Nvidia price target to $400.

It’s at around two, two, Nvidia is 223 now.  Yeah, I was gonna say 230, but- $400 makes  

it a $10 trillion company. Yeah. That’s bigger  than the next four or five stock markets in the  

world combined. Now, it’s not going to $400  tomorrow. No. But I’m just saying that this   is how insane… people talk about investing  in Europe, and we’ve gone over this before.

It’s yeah, Europe had a good 12 to 18  months. But go back over the last 15   years. [00:05:00] It’s been horrid. You would’ve  been so behind if you didn’t have the majority of  

your money in the US markets. Sure. And I think  quite often, most of the time, that’s the better,  

the better deal. You do find a select few, as far  as my… I don’t invest in the market in Europe,  

but there are a select few pieces of, great  companies that are there. It’s just they’re few  

and far between is the problem. Yeah. I hear you.  All right. This week in history. It’s actually a  

light week. We’ve had a couple of heavy weeks,  so- let’s get into it. 1888, Jack the Ripper,  

first victim murdered. Ah. I gotta start out on  top here. I was, the funniest thing is my wife and  

I went to we were in London I guess it’s probably  10 years ago, and we go on… They have these   phenomenal, for £5, you can go on these phenomenal  tours with these historians and stuff like that.

And so the guy, the tour we did was, he  basically was the book that they used,  

the [00:06:00] Johnny Depp the, the Johnny  Depp version of the Jack the Ripper thing.   He was the one, it was based on his book and all  this stuff. And so he takes us on the tour and,  

we’re going all around Whitechapel, which is  like a not a great neighborhood to begin with,   and then he just gets done and he’s like okay.

See you guys. Have fun.” And we’re like,  “Okay. We’re in the middle of the worst   neighborhood in downtown London.  Where do we go?” And he’s like,  

“There’s the train station over there.”  So we’re all as a group scrambling to   the train station. Oh, really? He just  dropped you off? Oh, he just left us.

He’s like, “Yeah, okay. Here you   go.” And it was like- Doesn’t he take you back to  the beginning? … in the alley where the… Yeah,   it was like the alley where the last murder  was ta- took place. He just left us in that   alley. Come on. He didn’t take you back  to where they picked you up? Oh, no. No.

No, and they do this. We did  this on the Charles Dickens tour,   too. They just took us around and left us off  in, in this one part of town that was way,  

on the other side of London. So yeah it’s crazy.  All right. But, So when you go back- But these   tours are great … to the Harry Potter  tour, it’s gotta be a different ending.

[00:07:00] Absolutely. Yeah. You end  up in Cambridge. 1897, Thomas Edison   patents the ki- kinetograph- Kinetograph, yep  … which is basically the movie projector,  

and that was one of the ones where you kinda  cranked- Yeah … and then they did the machine.   It was pretty interesting. Which he basically  stole the idea from a French guy, but…

he stole a lot of his ideas. Yeah.  Let’s leave it at that, yes. 1939,   first televised Major League baseball game.  Huh. It was the Reds versus the Dodgers,  

and they showed where these cameras were set  up because you get… televising baseball   through the late ’60s, early ’70s was just so bad  ’cause they didn’t have the telescopic lenses-  

and whatever. They had to twist it to zoom  in- Yeah … or twist it to zoom out. 1944,  

Paris liberated after- Yeah … four years  of occupation. Thank you, USA. Yep 1955,  

I thought this was the most interesting  fact, GM demonstrates first solar-powered   car. Interesting. You wanna talk about being  ahead of its [00:08:00] time, I didn’t know this.

Yeah. I knew they experimented with some EV stuff  in ’70s and ’80s, but solar-powered car in ’55?  

And then you had in I think ’57 or ’58, you had  the Chrysler jet-powered car which you wanna talk  

gas guzzler, it was like gas guzzler- Did it use  plutonium? Yeah. Gas guzzler, plus if you got too   close to it on the freeway, it burned the hood  off of your car, but- Oh, my God Another Pinto.

But Jay Leno- All right, 19- … actually has  one, which is pretty cool. It’s a neat car. Yeah,   being a Beatlemaniac, 1967- Oh …  Beatles manager Brian Epstein dies,  

and I definitely feel like even though  some of the best music that The Beatles   made was after ’66 and ’67- … they lost  their way a bit. No, no doubt about it.

Yeah. For about a year they were a bit  aimless and ’cause Epstein, even though   he didn’t have any major experience managing  a band he was responsible for a lot of things,  

including convincing The Beatles to get rid  of Pete Best. Yeah. [00:09:00] Even though   The Beatles made the decision,  he definitely fanned that fire.

1968, Democratic misspelling- Yep  … national Convention besieged by   protesters. There’s the protest. So it doesn’t  matter who’s president people are just gonna  

find a way to beat the drum. Of course. 1978,  yes, I own the album. Grease movie soundtrack   earns its second number one hit, and who  wrote the majority of the Grease songs?

That was the the Bee Gees Barry Gibb. Barry Gibb  mainly. But yeah- Yeah … the Bee Gees assisted,   but yeah, the B- Barry Gibb wrote most  of that. All right- Yeah … so here  

we go. So coming from Fact Set here is our source   these… This is the highest earnings  growth rate since Q4 2021. I mean- Wow

following COVID, there was all this pent-up  demand, and basically everything got pushed   back. So late ’20 through the end of  2021, everything just skyrocketed. And  

that’s when you had Tesla and Apple, and  I think [00:10:00] Google, they all split.   It was just crazy in that summer of ’21 and  everything else that was just going on there.

But here we are. If you take a look, muted  earnings in ’23 and ’24 and early ’25,   and then things just took off  following the tariff tantrum  

in Q2 2025 until now. Yeah. Obviously,  most of this is tech-driven but crazy.   Obviously you get to see the line graph  on the bottom. What are your thoughts?

The thing is, yeah, we’re seeing the-  I… We’re seeing the growth in the,  

the tech side of it, but if you’ve  watched, and we watched across the board,  

this earnings season was fantastic  across the board. Into healthcare   and finance and everything else,  there were some phenomenal numbers.

So it’s not just the techs that are…  they get the press, but it’s behind   the scenes a lot of companies just doing  extraordinarily well right now. Yeah. Yep,  

pretty good. And then switching gears  [00:11:00] again, we’re all over the   place with these topics. Been holding off on  this one for a couple of weeks, but, a lot…

A- and I just got a call yesterday, too, talking  to a client “I’ve been reading there’s a possible  

recession coming.” And I’m like- Listen, you could  read articles like that every month. Yeah. What’s  

your source? Every… Look I am typically…  I’m not gonna say I’m a pessimistic person,   but I’m certainly leery about the levels  we’ve been at and where we’re at right now.

We’ve had plenty of stats for it, but, the idea is  not that you couldn’t make little left and right   course changes. You don’t wanna make overhaul  changes because you think there’s gonna be a  

recession in six months- … or a year. Look,  the idea is keep the major leaders in the world  

away from the red button and- things will sort  its way out. I’m sure you tell your clients the   same thing. Yeah, absolutely. Because even  if you buy at the high of the market today,  

and we get a 20 or a 30 or a 40% decline-  [00:12:00] Just the, we have all the best   companies here in the United States. Eventually,  you’re gonna made, be made whole and go up.

You wanna buy at a discount, but it’s-  … it’s time in the market, not timing  

the market. Your thoughts? Oh, totally. And the,  how long… you and I think a couple years ago,  

we were predicting a recession that just never  happened. ’23, ’24, yeah. And, yeah, and you look   at consumer confidence, has been horrible, but  people still keep going out and spending money.

You look at the, just the, I think  the business people are a lot more  

positive now than they’ve been for quite  a while. But the, the consumer in general,   the constant incessant beating  the drum of the media of however,  

how bad things are and how bad prices are and all  that, but people keep going and spending money.

You know- Yeah … you can’t just keep predicting  that there’s gonna be a recession coming because   it isn’t showing up [00:13:00] right now,  and you’ve just gotta stay invested. Yes,  

you make adjustments to your portfolio.  Yes, you rebalance as you go through. No,   you don’t load up on eight stocks and,  hope those are gonna keep going up forever.

You balance things out, and yes, sometimes you  might underperform the market, sometimes you’re  

gonna outperform the market, but in the long  run it’s about making money over time and you  

can’t do that sitting in cash which, you’re bl-  slowly bleeding to death that way. Not only that,   too, but just historically the market  goes up seven out of every 10 years.

So- Yeah … again, you got- Yep …  cash on the sidelines in a down market,   you put it to work, definitely in high quality  stuff. So again, switching- … gears again,  

some fun facts about the stock market.  Actually, the stock market is over 400   years old. Wow. It’s obviously not in the it  not, was not in the state that we are in today.

Obviously, the New York Stock Exchange  [00:14:00] was actually started by the   buttonwood tree outside of the, where the stock-  … exchange is now. That’s why a lot of people  

refer to it as the Buttonwood Agreement and  whatever, but that was only for select people   to participate. Wow. Number two, there are  actually more than 60 stock exchanges- Okay

in the world today. Number three,  we’ve just talked about this,  

the stock market is likely to go up 70% in  any year. October is the most volatile month,  

right? Be- and although we’ll probably see  it again. Why? It’s the month before the   election. September is typically- Yep … the  worst performing months, so that’s why when,  

if the market pulls back in September and  October is always known as the month of bottoms.

And the idea is that- Yeah … that’s the time  to buy. So September and October usually are the  

weakest months. The United States- … makes  up more than 40% of the world stock market,  

and probably today it’s probably more than that.  But [00:15:00] that’s what we’ve been seeing.   The bull and bear analogy actually  comes from California with the bear  

with the claws- with the downward  motion, and the bull with the horns,  

the upward motion. The most expensive share  is Berk- Berkshire Hathaway A share. As of  

yesterday, it was $756,000- Yep. Thousand dollars  a share … never split. Nope. Never splits,  

and Buffett started it in the early ’60s. The  earliest investing books book dates back to 1688.

Wow. Shares were traded with fractions until  2001. … During my summer vacations in high   school for three years, I worked  on the floor of the Philadelphia  

Stock Exchange. It was fractions, and  I was decent with- Yeah … fractions,   but you had people that were able to  calculate things- No, I know … real quick.

But that’s also the money makers  and the brokers made money,   ’cause they had at least a quarter  of a point, sometimes an eighth,  

but an eighth to a quarter of a point spread  they made- … [00:16:00] between the bid and   the ask. They were making- Yeah … money hand  over foot if they were high transactions. Yeah.

The first stock market bubble dates  from, dates back to 1720. If you’re not,   if you’ve never heard of this, you should read  about it. The South Sea Company bubble. Basically,  

they had a monopoly on the majority  of the shipping in the world. So it’s   an interesting story if you’ve never heard  of it. And I believe this is the last one.

The New York Stock Exchange was not the original  name. Was New York Stock and Exchange Board,  

and then- Okay … they changed it in 1863.  ‘Cause it used to be all up on one big board, and  

they hand-wrote the whole thing, which was funny.  Basically. Yeah. All right, we got- All right, let   me jump up here and throw up the econo-day.

And, I think it’s just some interesting stuff,   with everybody talking about inflation and  how horrible it is and everything else,  

once again, you’re starting to see the, what  the market says or what the people say and what  

they do are [00:17:00] totally different.  Durable goods orders came out this week,   and it was one of those things everybody just  ignored, but it’s something you just can’t ignore.

You start looking at new orders month over month,   up 1.1%, consensus was .5. So if everything  was so horrible and prices are so terrible,  

why are people buying really big, expensive  things? And this is not only that, but it’s  

all the way up to factories and airplanes and  everything else. So yeah, it’s, i- it’s some

Yeah. It, i- it is bad. Prices are up, but  they’re … people are still making money  

and still doing things. Where the bad part is  really new home sales and existing home sales  

have been down and down consistently, and this has  such a- Follow-through effect to the rest of the  

economy. So I think this is where you’re seeing  the effect of kind of that consumer sentiment.

They’re just not wanting to make [00:18:00]  investment in moving or changing because one,  

everybody’s in the world of, “Hey, I have a  3% interest rate. I can’t move at this point,  

and prices are too high.” But one of the most  interesting things, I was doing some work for   a friend of mine that’s, that I do a real  estate podcast with, and we were doing…

We were looking across the Austin area at  how much prices have changed this year in  

the market here in Austin, and they  have come back dramatically. I think   you’re getting to the point where  people are like, “I gotta move,   and I’m gonna have to just take whatever  I can get for my house” at that point.

Not only that- So the- … but I  just looked it up. The 30-year fixed,   since we talked- Yeah … about  it, what was it, a week or two ago,  

still ranges between 6.53 to 6.78. Yeah. Yeah,  and the, the 10-year’s still up there, 4.60,  

4.70. It’s come back a little bit this week,  and I think we’ll talk about that in a second   with with the Fed and of course we’ve got  Jackson Hole coming up [00:19:00] tomorrow.

GDP, right on the money, exactly where it  should be. Actually up a little bit with   personal consumption and expenditures.  Personal income and outlays, once again,  

nothing off the charts high. The PCE is what  the Fed follows. It’s on par with where it’s   been. Nothing really big and it came out  exactly where people thought it would be.

And jobless claims, that… I think this has  been one of the most interesting things. Now,  

hires have been slower, but the jobless claims  have really been far below or below what had  

been expected. They’ve been expecting 217 to 220  for weeks, and that has come back significantly,   but we’re still in that 200 range,  which I think is somewhat interesting.

And of course, tomorrow everybody’s on edge,  which I think is funny ahead of Jackson Hole  

as Bessent’s market intervention piles pressure  on Warsh. I don’t think Warsh is even remotely  

pressured at this point. He’s [00:20:00] taken  it in stride. And even Scottie Bessent, earlier  

this week, they’ve made these announcements  that we’re gonna do some increased buybacks,   and I thought it was hilarious on Monday, the,  media when he was doing his press conference  

about the economic, things that they’re  doing against Iran, and everybody’s like   do you feel like your buybacks have  th- have fallen apart at this point?”

And he looked at them and he goes, “We haven’t  even started doing anything yet. That won’t start   until September 8th or something like that.”  So nothing is going on yet in the bond market,  

so calm down. Yes, tomorrow is Jackson Hole.  Yes, Warsh is gonna talk. I pretty much   can guess he’s gonna be exactly the same  way he’s been, which is, “You know what?

Figure it out yourself. We’re gonna just keep  doing what we do. You figure it out yourselves   and we’ll go from there.” I don’t think we’re  gonna get anything out of Warsh at this meeting  

that is so ear- Earth-shattering that that it’s  gonna just shatter the [00:21:00] bond market   overnight. No, basically they’re making a big  deal ’cause they need something to talk about.

Yeah. And number two, this is his first  one, so i- they’re like, “Oh, will he   make a splash?” Please, give me a freaking  break. By next Ja- Jackson Hole next year,  

it’ll be just like, “Yeah, we’re covering it.”  They’re not expecting- Yeah … anything major,   so it’s- Well, like I said, every time  he speaks they’re expecting him to, “Oh,  

he’s gonna give us all this information,”  and he’s I don’t know how many times he has   to say it “Guys we’re not gonna be giving all  these, guesses of what we see things going.

We’re just gonna tell you, where we’re at  this point and, what our thoughts are.” But,  

I don’t think that he’s gonna make any illusions  that, “Oh my God, we’re going to raise interest   rates or lower interest rates or anything  like that.” I think the funniest thing- Yeah

is when they do the press conferences  after the Fed meeting, you gotta remember,   they got people from all over the world, every  single, press, and you’re gonna be on the air,  

and you have the ability to ask one question.  [00:22:00] Don’t you wanna ask a question that   they can answer? So I remember even  with Powell and everybody else, they

And I love how the person, “Do you think you’re  gonna raise rates by the end of the year?”  

You already know the answer- Yeah … which  is, “We’ll let you know then.” Yeah. “We   don’t know. We’re gonna look. We’re data  dependent. We’re gonna know.” So I’m like,  

you dumb idiot. Yeah. You’re on air, you  have the ability to ask one- Any question cogent question, and you ask it, and you  ans- and you ask the question that you  

know they can’t answer. Now, was that part  of the plan so you could write it down,   wouldn’t answer? You already know they  won’t answer that. It infuriates me. You   want to get some good information, ’cause usually  they’re gonna keep everything close to the vest.

At least ask- Yeah … something they’re  gonna answer. Yeah, that you know they’re   gonna answer. It’s it reminds me of I think when  when Obama- Oh … was running and that one,  

one like interviewer or whatever,  “Do you like boxers or briefs?”   You’re talking to the president of the  most- I think that was Lindsey Graham

powerful guy in the world- Wasn’t it [00:23:00]  Lindsey Graham? … and that is the best question   you can come up with at this point. I thought  one of the funniest things, and I know we gotta  

wrap up, that Super Bowl, they always ask the  dumbest questions to the players- Yeah … on   that Tuesday before the game, and somebody  said “What was the dumbest question…”

I forgot what player said this. “What was the  dumbest question somebody ever asked you?” And  

they said, “If you were a tree, what kind of a  tree would you be?” “I’d be a weeping willow.”  

What the hell do you want me to s- What does  that matter? I don’t know. It’s just- … like,   all right. All right. Folks, we do  these for you, and for us to laugh, too.

So we’ll talk to you next  week. We’ll see you next time.