Hello everybody. Welcome to another week of the sense of things with Jeff and Ron. We are here. It is summer. I think

Ron said it’s actually cooler in Arizona and in Texas, we are just getting rained on non-stop, which in the middle of July

is a welcome site. So today on the show, Ron’s got a ton of stuff I can’t even cover, but it’s things like what kills a

bull run, innovation cycles, earnings, funds underperforming. So we’ll get a good swath of that. I’ve got a really

good kind of trend on where interest rates are currently and then also what

what may affect the Fed’s decision one way or another at the end of this month.

So stay tuned. We’ll be right back on in just one second.

Hey everybody, welcome to the show. Ron, how are you my friend? Doing well. By the way, it’s Shark Week. I’m kidding. It’s earning season.

Started this week.

Not quite shark week. It’s the early shark week on Nat Geo, which we’ve been enjoying. And then Shark Week starts the 27th. Man, I watch it every year.

I hear you. Yeah, it’s been interesting so far with the earnings. This is the financials usually come out this week.

Obviously JP Morgan, otherwise better known as the bank. Uh obviously they had good earnings. They always find a way to

make money and with their size and influence, they’re able to make money in almost every single area.

Big four. Yeah, big four look great.

Goldman, JP Morgan, Bank of America, and even Wells Fargo, which you know, typically is a a bit of a mess. All of them had phenomenal earnings.

Yeah, the semis are sliding, but there was such an air pocket in there. You know what? I can’t tell you when’s going to be the right time to either add or

initiate a position, but you could nibble on the way down because these are all going to go up. The numbers are supporting themselves almost to a point

where their PEG ratios and other information is making them almost look like a good buy or fair value, which is insane where it was in the last month.

What? Nvidia I was just I right as I pulled in this morning they were talking about Nvidia and actually Nvidia is 21

PE on a stock that’s growing at 56% per year.

Yeah, it’s a it’s a place to as long as you’re not overweight, it’s a good place to add. All right, here we go.

It’s it’s one you got to hold your nose and hold your stomach because it flips around a lot. But other than that, a lot of these a lot of these semis there’s

just opportunity because we’re that’s where we’re moving.

As I tell my clients with those type of stocks, if you’re going to hold it for the long term, there’s a lot of EKG in there. You just gota you just got to be

able to look at it every now and then, not every day. Absolutely.

All right, we got a small week here in this week in history, but a couple of good ones.

1799, Rosetta Stone found. And I was actually reading this article. It was interesting because the Rosetta Stone

was essentially supposedly the key to interpreting hieroglyphics. And I thought it was I thought it was pretty

interesting. It was a good article. You know what? I got to tell you, I’ve got to go on YouTube or something like that and watch a full history of it because I

love cryptograms. I love puzzles and stuff like that. I just thought it would be interesting to figure out how they did that back in that day

because it had the hieroglyphics, but it also had Greek on there. So, they were able to interpret the Greek and then

infer the hieroglyphics from it. So, yeah, it’s pretty cool. I actually saw the real one at the British Museum in London, which is cool.

Nice. 1862, President Abraham Lincoln signs into law for awarding the US Medal

of Honor, Army Medal of Honor. Then the next year they just changed it to Medal of Honor to support all military branches.

Yeah. But the interesting thing is it’s still even though it is the Medal of Honor period, the Congressional Medal of Honor, it actually there is a version for each of the services though.

Oh, I’m sure.

Like Silver Star and thing that for bravery and above and beyond. So I get it. Yeah.

1881, Billy the Kid is shot to death. I just think it’s amazing how many movies and books and what TV shows are based on

Billy the Kid and it’s like everybody loves the village of look at the Sopranos and everything else. It’s just this all this guy did was go around and

shoot people. I you know steal he was really a despicable individual basically it is he was but I’m just saying it’s

just it’s almost like glorified and young guns and back in the day and just ridiculous.

1903 Ford Motor Company takes its first order. Huh.

Wow. I didn’t realize it was that far back, but I guess so. Yeah.

The car had many versions of it in the late 1800s, but Ford was the first one,

as we all know, to start and perfect at that day, the assembly line.

But if you remember, it was I watched a really good documentary on it. There was supposedly a patent on the car that prohibited him from making his own car.

There were two or three people that said they had the patent on a car and he I I don’t know if he went all the way to the

Supreme Court, but it went very high up to basically say it was and then once they went away then he obviously got the funding to do his own manufacturing.

It’s pretty interesting just how back in the day, you talk about the swindlers today and how people control markets.

Back in the day, it was the wild west in every area of business.

1930, the first World Cup tournament begins and we’re down to the final two. Argent

I only watch it every four years obviously or soccer in general every four years and I enjoy it. 1935, world’s first parking meter, and this surprised me. Installed in Oklahoma City.

Oklahoma City.

You would have figured it would have been Boston, Philly, New York, you know, one of those. But no, 1935.

Of course. Of course. You tied your horse to it, but other than that, it was Yeah, it was 1935, not 1835.

It’s 1978.

Henry Ford II fires Lee Aoka. And I remember I was 12 years old. I think it

was either 79 or 80 when Iok was made CEO of Chrysler and I remember buying 10 shares of stock, my own money in

Chrysler and I think it doubled or tripled. I remember that back in the day and and do you do you remember what the stock symbol was for Chrysler?

Wasn’t it C originally or C? Yep. Yeah.

And I remember back back in the day the internet I remember PBS at 4:15 had this scroll. was all in alphabetic order and

you had to just watch it. So we were videotaping it and we knew at 12 minutes in the C would go across to see where it closed.

Yeah.

Anyway, 197 I thought this was a fun one. Jimmyi Hendris drops out of being the opening act for the Monkeys.

Now, first of all, do you really want to be the monkeys following Jimmyi Hendrickx? And if you go back to the Monterey Pop Festival, Jimmyi Hendris

and The Wholy got almost into a fist fight, but a spirited argument about who’s gonna headline. Yeah.

And Jimmyi Hendris won.

Yeah. And I can clearly imagine him going, I’m not going to open for the Monkeys. It does not matter.

And I believe this was right before Monterey Pop. I I I was I was reading in the article and I can’t remember exactly when Monterey pop was, but I think this

was right before and I think the Monkeys had just come out. It was their first season. They had a couple of those big hits like Last Train to Clarksville to

ride the Beatles coattail, but it was pretty good.

1969 Apollo 11 takes off towards the moon. Yeah, I just heard that this morning.

You know what’s going to be in two weeks in this week in history is going to be what?

We landed on the moon. We landed on the moon, my man. Yeah. 1985. I still kick myself for this. Live aid.

Live aid begins in Philadelphia and London. And it was the last concert at JFK Stadium, which held over a 100,000

people where the Army Navy game was played in Philly for decades. And I lived less than a half an hour away. And

I I didn’t go. And a lot of my friends were telling me, “Oh, this is the Woodstock of our generation.” And this I could have gone. I could have gone and I

did not go and do and I kicked myself for it. Okay, here we go.

Or La Palooa. You go to Laoo La Palooa. There you go.

Or no, you go to Oh, what’s it? What’s the fair for the ladies? Lilair. Lillair. There you go. Yeah.

All right. So, what kills Bull runs through history. We’re going to pop through this pretty quickly. If you look through this, you can see where the legend is on many of these things. And

you can see back down here, right? It’s not saying the bull run is over. We’re 225% in from the COVID bottom, not the

2022 October bottom, but the COVID bottom. And it’s pretty interesting because we don’t know what’s going to kill it. And I think it’s pretty

interesting here, right? It’s looking at the 02 to09, the speculative bubble, but if you look

at it, this was one of the least or the smallest bull runs. Yeah.

Compared to other speculative bubbles and other runs, what is your take on this before I move on? I just saw I think it’s interesting when everybody’s, “Oh my god, the this

thing’s going to end.” And I’m like, it’s really an average bull run at this point. It’s really not. And a big part

of that came off of a big old whack when the when we got CO. Really, if you look at the bottom of COVID and up, eh, it’s not that big of a deal at this point.

Certainly the the 90 Yeah. the 90 to 2000 bull run. That thing just kept going and going. But there was a lot of Ugg in there too early 90s.

But if you say this starts in of March or April of 2020, that was only a six-w week pullback of 30% and then we spring

coil to the upside. The bigger difference was here when we had 17 months

from peak to trough in October of ’07 to March 9th of ’09. That was just a steady 66%

fall then falling off the cliff downside over those months. So yeah.

Yeah. What’s going to happen next? Who knows? But this pullback in semis as we were talking and a few other things, these are healthy pullbacks. You know,

if you’re a trader, tough crap. But if you’re a long-term investor, hang in there. Yeah.

All right. So, also with this innovation, how does the AI boom compare with boom bus cycles of other major in

innovations? By the way, I had to look it up. Do you know what the canal mania was?

No, not really. I not even I know what it is. It’s Panama Canal, but I don’t know.

The dumbest thing, my man. I mean, back in the day, this was a speculation of canals that

were going to be built throughout Britain and the UK that people were just buying and most of them were never built.

So, there was all this hype that, oh, because remember, they didn’t have cars, so they had horses and the obviously ter, you know, bad terrain. Oh, we’re

going to build all these canals and connect them together. And there was all this speculation. It was almost like tulip mania which should have been on here too.

The funny Yeah. The funny part with that we love the canal. There’s a show with a couple that a couple of actors that they

did all these canal journeys and so many of those canals. It took so stinking long to build them that by the time that

the canals were done, railroads popped up and it just killed all of these things at that point.

They also didn’t have the technology that we had today to just dig and dredge.

Yeah. But to me, you could compare this a little bit to the.com boom, but probably the railway mania. And I don’t

know why it said it was only around 10 years because yeah, it took a long time to build the intercontinental railroad and then other railroads to connect other cities.

Really?

But what I don’t like about this is the trae trajectory. I would have liked to see a more smooth line, but you don’t get that with speculation.

No. No. And this is a whole another different level of speculation.

Yeah, we’re going to go through this quickly. We did a couple of charts on this last week. So on the left we have the expected earnings growth

year-over-year by sector. We had talked about information technology. Obviously energy is really big. Not necessarily oil and oil drilling and production.

This is more on the grid.

Y then we get the revenue growth. As you can see, even though they got big earnings growth, they’re not the biggest when it comes to revenue growth. Info

Info Technology is going to blow them away. And it’s more than twice the earnings. On the right side, we have the estimate versus actual. I mean, is this

not ridiculous as far as these gray areas for estimates? And look where the hell we are. almost 50% higher than last

quarter and almost 2third higher than Q4 2025, six months ago.

Yeah, this is insane.

Yeah, by the way, did you hear any market strategists back in January or February saying, “Look out for Q2. We’re

going to have unbelievable revenue and earnings in these sectors.” No. All of them.

Yep. Not in the slightest. Once again, every time I keep hearing people, this is just the.com bubble all over again.

Oh, no, it’s not because these companies actually make real money. There’s a difference. Yeah.

So, it’ll be We’ll see. We’ve got first week of earnings. We’ll see how it progresses. I thought this was interesting because everybody’s if

you’re in a fund, mutual or ETF, you’re paying a fee. UITS, you’re paying insane fees, but this is percentage of large

cap domestic US-based equity funds underperforming the S&P. Last year,

again, if the last three years, we have had doubledigit gains in the S&P. And you have an average, if you just add

this up, right, 66% 67% underperforming. They are not beating

the S&P. Now, all all these similar strategies as far as growth or whatever, that’s why you need a portion depending

on where you are in your life stage and how many years to go. You just need to be in some index funds keeping up with

the market because you’re going to underperform. You need to be diversified, but you got to have a percentage in your portfolio of just a

regular lowcost index fund because if this chart doesn’t prove it, folks, nobody else is going to convince you.

Yeah. And I think like I said and it’s not for the average person because they’re not going to put in the work but I for me I changed

a lot from my perspective of we always have a large se or section of client portfolios that are in individual stocks

because this diversification of just have everything in the market. Okay, that’s great. But you’re never going to

outperform the market if you don’t tighten that up a little bit and choose the best of the best. Yep. All right, we’re wrapping up here.

Just this is a very quick slide.

This is basically your ultimate conundrum.

The market is going up and consumer confidence is lower than it was coming out of the financial crisis in ’09 and 10.

Yeah.

Now, is this all media BS? Is this all social media crap? or is this really the general? Again, we don’t know political

views of this number, but this is probably a broad-based number across both and we’re at the lowest consumer while the S&P is near an all-time high.

We got to revisit this at some point across other across other podcast, but we’ll see. And yeah, once again, I keep saying the fact

it’s just it’s the what they say and what they do are two different things.

So, yeah. So, I actually had someone call me last week and say, “I know you told me to hold off on buying SpaceX. Is now the

time to buy?” And I said, “Not yet.” Yeah.

So, this was the chart we showed back in the day about, you know, big names, a lot of hype behind these companies and where they

were after one week to 12 months and what the one-year drawdowns were.

Here we are, SpaceX. And as we’re talking right now, it is under the issue, not the opening price, the issue price of 135. It’s selling at 13465.

So folks, in my opinion, which means absolutely crapola, it’s going to go lower before it gets higher.

So I’m not saying this isn’t going to be a great company in five years. It’s just not a great company to potentially buy right now. Your thought? And very few

companies you look at the names on that list which they’re phenomenal companies today

I they all of them there’s so much hype going into them at the beginning and

this one was hype beyond hype. So it’s great for the company because they got a lot of a lot of money in that they can

use but it’s not necessarily great for the stock in those cases. No, I agree. What do you got?

All right, let’s quickly run through this. Oops, lost my thing here. Okay, so let’s get started with a little bit of

what’s going on in the economy came out today or a couple days ago, excuse me.

PPI final demand actually came in, which is really interesting. We came in below PPI down.3.

PPI year-over-year, which was expected to be 6.2, 2 came in at 5.5.

So once again, PPI, for those of you that don’t know, is the producer price index, and that’s the front side of the

buying conversation. So this is saying that we’re actually seeing a a decline

in inflation a little bit, at least from the producer perspective. Once again, it’s one month or whatever, but it’s an

interesting look at, okay, what’s going on? And the theme in the market is, oh, there’s probably going to be at least

one raise by the Fed, I would argue probably not at that point. Looking at a couple of other things, Empire State

Manufacturing Index, whatever is going on in the world is not necessarily affecting manufacturing. It was expected

to come in at 8.6. It almost doubled at 15.6.

The really interesting one actually came out this morning, which was the PhillyFed manufacturing index. The consensus was 14. It came in at 41.4.

So that says, “How are you so far out of bounds there?” Gee whiz.

Yeah. Once again, it’s I throw a dart and totally missed a dart board with that.

I want to be a a weatherman or a weatherman, an economist or a stock analyst when you come back. I know.

Yeah, because I can still keep my job if I’m really wrong. So, yeah, once again, two Fed or two manufacturing indexes

that are really rocking it. Jobless claims came in 208. Consensus was 220.

I’ve heard even 217. So, this is the second week in a row that they’ve come in or third week in a row that they’ve

come in pretty much below where estimates were. Retail sales came in this morning a little light. two X

vehicles, it was actually in the negative. X vehicles and gas, it was up 04. It was a little higher on one side

of it, a little lower on the other side of it. Something to keep an eye on, I think, at that point. This is the big number. And this is once again, I’ve got

a really close friend that I film another podcast with that we talk about Austin real estate and investing and

things like that. And this, I will tell you, is a major factor that’s affecting the economy. Month overmonth, pending

home sales actually dropped and it’s largely interest rate and just uncertainty based. Are you hearing the

same thing out there or the interesting thing about the housing market here is there are pockets that

are still do still doing well. The pockets are just the luxury homes, the high end, the low and the medium are still

struggling for whatever reason because a lot of the luxury either the home builders are either financing it themselves or they’re paying cash.

Yeah. Which you got a lot of people moving in from California still. All over. Yeah. Yeah.

They’re still building here. Even on the outskirts of Phoenix and Scottsdale, they are building cuz they’re going out because the houses are a little more

reasonable and whatever, especially outside of Scottsdale. Scottsdale is insane, especially with taxes, too. Not as bad as taxes in other areas of the country,

but but that’s where they’re getting more bang for their buck. So, yeah, it’s still struggling here, too.

Yeah. Yeah. here for the longest time it was people moving farther and farther out for affordability but that also I

think bit a whole bunch of people because they assumed that they would be working from home forever and all of a sudden companies are like no we need you

back in the office so now you’ve taken yourself from a 30 minute commute to an hour and a half commute now

at this point only things left for this week housing starts and permits tomorrow and industrial production those are the only things that are anything of

interest and I really I would assume housing starts and permits are probably down as well. Industrial production I would guess would be up even though the

market kind of shrs all that stuff off and ignores it. Last thing on the the list, we haven’t gone and visited our old friend, the Treasury yield curve, in

a long time. And I think the last time we looked at it was probably about 8 to nine months ago. And yeah, probably

short end was way up here and long end was way down here, signifying a recession that never happened. This is a

what I would consider a sort of more normal yield curve, although it is pretty steep. The big number that you

really want to see here, this is the 10-year. This is what all mortgages are based on is the 10-year. And it’s

sitting at about 4.5 right now, which means you figure about two points on top

of that. We’re at sixes, low fives or high fives and low sixes when it comes to mortgages. And I think that’s having

a pretty pronounced effect on the market. people are looking at. I if I’m going to sell my house and I’ve got a

2.75% mortgage, holy crap, I can’t I can’t go out there and get a 6% or whatever mortgage. I just can’t.

Yeah. Right now, the 30-year fixed is right around 6.64.

Yeah. Yep. Until that kind of calms down, that’s not going to move the needle.

Yep. It ain’t going to move the needle yet. People are moving, but they It’s because they have to move, not because they want to at this point. And I think

that’s trickling down. And that trickle down effect from people buying and selling houses means that it affects all

the other stuff downstream like Home Depots and Lowe’s and all those kind of things. So just something to keep an eye because it it is a major factor that

affects a lot of other pieces of the pie.

Yeah. Next couple of weeks should tell us a lot more with the earnings. We’re going to get more financials. We’re going to get manufacturing and then the

tech stocks start to release it. And I’m sure they’re going to bang it out. But the problem is if they don’t hit on all cylinders, they’re going to get whacked by Look what happened to IBM.

The worst day in history as far as down 25%.

Yeah. Yeah. And that I think that’s the big problem with a lot of these stocks.

We try and before reporting or I always keep a little cash on hand during these time periods because on a day like that,

Big Blue is still an awesome company. We don’t own it, but it’s an awesome company. And if I was looking to buy, that’s a great day to buy when these

markets just get waffleed like that or when these stocks do. I hear you.

Yeah. Great time to kind of keep an eye out for some buys when when the market drops or when when the stock drops. So folks, as always, make sure that you

subscribe to the channel. We occasionally do an extra show here and there like we did this last week. If you didn’t catch it, we launched a special

episode on Monday which went over the half a year our predictions versus what the market predictions were and are

railing on some of the analysts as always that keep changing their minds just to make themselves look good. So stay tuned. We’ll be right back next week and we’ll see you then.