0:03 spk_0
Well, hello and welcome back. I am Kenny Pulcari and this is trader Talk at Yahoo Finance. Today, I’m joined by Stephanie Guild, who’s the CIO at Robinhood, and many of you know Ryan Payne, who is the president of Payne Capital Management and also the host of Payne PaynePoints of Wealth.
0:20 spk_1
the tongue, Ken. Yeah, right, right off
0:22 spk_0
the tongue. Anyway.Thank you very much for joining me today. I really appreciate it. There is a lot going on, right? We’re in the middle of this earnings season. This is, uh, a big week for not only earnings, but for the Fed, for markets, for the economy, uh, because we’re gonna get hit, you know, broadside by a bunch of different things. So, let’s talk first about kind of where you think we’re at, and then, uh, where you think we’re at. Great.
0:43 spk_2
I think we’re in a time period where expectations have caught up to some of the numbers. Like if you look at the over the last quarter, earnings growth expectations increased by 50%, you know, across the board for the S&P 500. When estimates grow by that fast in a quarter, and I know it was coming out of a, you know, a conflict that was seemingly over but now seems to be coming back and forth, not over, that we’re, you know, I think that’s where you kind of get some like concerns like our expectations too high.And I think that’s what you’re kind of seeing from day to day in the market.
1:17 spk_0
Well, and I think we’ve seen that over the last couple of, last couple of weeks. Certainly expectations in the growth in the tech sector were obviously are clearly too high, or at least that’s kind of the sense that we got from the market action.
1:29 spk_1
You know, I think what you’re seeing is, it’s not like money’s coming out of the market, it’s just rotating, right? And that’s what’s interesting because yeah, I run pretty broadly diversified portfolios, and I mean if you look at the last month, you’ve got obviously energy stocks are crushing it.Um, unless you’ve been, except for today, but yeah, but you know, this week, this week, you pick the day really. It’s like it’s up $10 down $10 in oil.Uh, you know, financials obviously have been crushing it. I mean they just blew it out at the beginning of earnings season, healthcare stocks, industrial stocks, um, so it’s material stocks, there you go. So it’s really been a great rotation, which, you know, I love. I mean, it’s healthy to see that you’re seeing money flow to other parts of the world. And
2:06 spk_0
Ithink that’s a key point, right? Because when I talk to clients, people start to get nervous, you know, they’re nervous about market reaction, they see tech under pressure. I go, listen, this is not liquidation.Liquidation would be if you saw them selling everything and throwing the kitchen sink out the window. That would be liquidation. That’s not what’s happening at all. In fact, to your point.Uh, we’re seeing this, we’re seeing money move from these kind of high growth sexy names that we’re probably stretching overvalued into more conservative kind of long-term, might be boring. Consumer Staples is nothing exciting about Consumer Staples yet. Um, it’s a place where, where investors want to put some money. But I think
2:42 spk_2
we’re also, so we also manage, uh, diversified portfolio, single names, um, Robin Hood strategies and.Um, we, we also like, I think the one thing that we, we kind of underlying foundation is that there’s a, there’s a physical nature to what has been growing and that like you, you can’t grow AI without more power, you can’t grow AI without more construction, you can’t go without materials, and so I think like sometimes the market forgets that and then it comes back to it, forgets that and comes backto it.
3:11 spk_0
Well, I think there’s a, you know.It’s funny when you talk about the AI and the data centers and all the kind of the angst that builds up around data centers, right? About what they’re doing to the economy, what they’re doing to the climate, what they’re doing to towns. And I think it’s very interesting because I’m not sure that I, I, I would be on the side that if a data center is well designed and it’s in an area of town that, you know, like out in the middle of the country where they’re making them, right, where they’re not.You’re not disturbing anything. You’re not taking farmland away. You’re not chopping down trees, just kind of the land, right? Uh, I don’t see what the big deal is because if they’re contained, right, the water is contained, that keeps them cool and all that stuff, uh, that’s not drawing on, on, on those resources, um, and somehow they can manage the electricity draw. Uh, I, I, I think there’d be a benefit to communities because they’d bring revenues in.
4:00 spk_1
Yeah, 100%. Yeah, well, I think also, right, it’s more probably politicized and practical than what you’re hearing that these data centers are gonna be bad per se. Um, and I know the argument of like, OK, increases a lot of jobs at first because you got to build these things and then where those jobs go later. But also like what I wonder about is you have this disproportionate amount of capital being spent on AI data centers, and last time I looked, you have all these other inefficiencies in the economy like we need more housing. So, you know, maybe some of that construction.Uh, you know, employment should be going towards building houses because we have like what is it like 2 to 3 million houses short, you can correct me if I’m wrong, um, you know, in this country right now. So I just feel like there is a little bit of a misappropriation of capital when we look at this in retrospect, it seems a little bit like too much capital may be flowing in the same place.
4:44 spk_0
Well, maybe, but AI, it is the theme, right? We’re in the middle of this 4th industrial revolution that’s happening, and so I think like everything it gets caught up.
4:53 spk_2
Yeah, I mean, I think the data like.You could end up seeing that there ends up being like housing growth and stuff like that around the data centers because it creates employment and then you have like, because I think there’s people living, I mean, I don’t know if this is true, but living in like trailers and stuff like that nearby the data centers to help build them. So I think you could end up having a communities built around them, but I, I do think like the environmental thing is something we have to the demand for power because our, our grid is very old. I wrote a piece.About that, and I’m like, there’s our infrastructure isold.
5:24 spk_0
Well, and that, but that’s true, right? Everyone kind of accepts that, which is why it’s interesting because, you know, Elon Musk, if he has his way, he’s going to put him in space, right? So this, then this whole conversation goes away, right, if that happens.
5:35 spk_2
Yeah, and I, I was, I don’t remember who I was talking to recently, so it may not be that helpful, but I think that we already have some stuff in space that is like, actually I was talking to a venture capitalist and stuff, yes, there are still, there are already some things in space.That are working and I, and but I of course then I start thinking like who’s going up there to fix it.
5:55 spk_1
It feels like the long, long game at this point it does feel like a long way, but I feel like, you know, data centers in space are probably a little bit further away than
6:02 spk_2
I think that’s one of the things about this market right now is that like the, the hope and the kind of coolness of what could be in the future is still quite long duration. And then when you come into an environment whereOil prices are higher. Inflation is definitely a risk. You’re seeing it not just in oil prices. Then you start to realize the impact of long duration investment and the relationship to interest rates, and I think that some of that is coming through now.
6:28 spk_0
All right, so let’s get right to it because it is a big tech week, right? We’re going to get 4 of the biggies Meta, Apple, Amazon, and Microsoft. And the first one out of the gate, I believe, is Microsoft. So they’re going to be the first one to react to kind of what we’ve heard from.From Apple last week, the, you know, the, the, the ramp up in CapE spending and all that stuff, that Microsoft is gonna, is gonna come out and they’re gonna have to talk about their cloud and Azure and all that stuff. I, I don’t think they’re going to disappoint at all. In fact, I think Microsoft, I think Microsoft was one of those names that got thrown out the window like baby with the bathwater. It was down 30 some odd%. And I don’t, uh, like, I think it’s a huge buying opportunity.
7:08 spk_1
I mean, I think there will be another rotation into the Magnificent Seven in general, um, and I think like, let’s face it, I don’t think Google actually disappointed. I mean, the revenue is up 24% year over year. So it’s just like when is Wall Street going to get over the fact that the capital expenditure is just going to continue to go higher, and I think right now that’s maybe a short-term issue because it’s been there the whole time, um, but I just think it’s coming to roost this summer, but at some point they might be like, hey, I’m happy with this.Continual revenue growth that you’re seeing, and I think Microsoft might be the only one of the Mag 7 or the hyper scales or hyper-spenders, whatever you wanna call them, um, that may still have free cash flow. Well,
7:44 spk_0
so I guess we’re gonna find out on Wednesday, right? Now look, it traded all the way down to 350, I think now it’s trading above 400 again. So it has rallied some back, and I actually, you know, uh, listen, to be fair, I own Microsoft, the firm owns Microsoft, and you know, I would, I would be buying it on the dip. Like I said, I thought it was a huge buying opportunity, but we’ll see becauseThe next 3 or 4 days are going to be very key to where this market goes.
8:08 spk_2
Yes, I mean, obviously Microsoft got caught up in the whole software, you know, issue, and also their.Their own models like they, you know, they kind of failed at that, um, you know, they’re LLMs, so, you know, there hasn’t been this huge like explosive takeup of co-pilot or whatever, you know, like I think for the record,
8:28 spk_1
but the weakest of the models. I don’t use
8:30 spk_0
co-pilot. I don’t
8:31 spk_1
use it. I like it. It’s sufficient for what I do. I don’t think I need to like, you know,
8:35 spk_0
use the other one, use cloud or GPT.
8:37 spk_1
I use Gemini.Because it’s free. It’s one of my Google, yeah, so I can’t actually hear it, but I think it’s sufficient enough for, you know, a financial guy like me. I don’t think I need the most sophisticated models, but I,
8:47 spk_2
well, so we, yeah, I don’t know. I, this might be where I. No, I think, I mean, to disagree. I truthfully like I, I do see a difference when I want to talk to data with.versus like using another element I’m just a simpler I agree with simpler data, but I think there’s, I do think Microsoft, like the expectations have been low, so they could easily, you know, beat this time around and, and kind of surprise on the upside. You are starting to see more software companies do better in the last like couple of weeks on and off, more so than the Sapocalypse time.Um, but I, I also wonder like what is their growth.
9:30 spk_0
But I, but you see, that’s true because coming into this earnings season, I think the bar was set high. A lot of us talked about that. Stocks were priced to perfection. And so, you know, you, Goldman Sachs and UBS came out last week and talked about just looking at their prime brokerage business, they can kind of see where the flows are going and how all these hedge funds were bailing on large tech. It wasn’t the big, it wasn’t the places like Fidelity or Wellington or Capital Research that were bailing. It was the hedge funds that were bailing.And that makes, and that makes sense because they’re more short term oriented than a long-term asset manager.
10:00 spk_2
But I thinkfor, I mean, I do think free cash, like I don’t think it’s a bad thing if the market starts caring about free cash flow. I don’t I don’t think we should be like, oh, that’s like, but I think it’s, it’s something where profitability, but I, I actually think it’s like a good idea to think about free cash flow and not forget about that because the bet is that longer term they will be positive free cash flow. And if that feels further in the future or interest rates.Higher and thus like it costs more, you know, that that the current value of that is lower, then that’s when it starts to matter and I did a whole deep dive on this actually looking at owners’ free cash flow, which takes out stock-based compensation and it shows you that some of these mag 7 haven’t been positive free cash flow even before the huge capback spending.
10:45 spk_1
And then you want to add on their like their market to market gains, right, because like I think this happened with Google. I own some SpaceX, so that actually was part of my profit.Uh, this past quarter, so, yeah, there is a lot of skew in there. I totally agree with that, but, uh,
10:59 spk_0
Google is the one who just announced that they had negative free cash flow this quarter, right, because of their huge AI Tesla. Well, but Tesla’s had it, right?
11:08 spk_1
That’s true. Tesla’s
11:09 spk_2
had hundreds of pounds earnings. Amazon has never had it either.Right.
11:12 spk_0
Um, but I think that, although Google on the top line, they crushed it, but then after you do all that capb spending, they realize, OK, now they get negative, which I think was part of the reason that they hit the sell button. But, uh, we’ve seen that sell the news reaction.Really since earning season has started, not even just in tech, and kind of a lot of names.
11:32 spk_1
You know what, part of that too is this whole rebound trade is what they’re talking about. So if you’re a hedge fund, you were playing the game of, OK, we’re putting SpaceX into a lot of major indices, so now I have to sell some of the Magnificent Seven because they’re just because they have so the cowboy weight. In fact, I think Millennium, Millennium, that made like $4 billion on that trade. So of course the institutions made money, retail investors didn’t. Story of Wall Street.Um, so yeah, I think that’s also part of this kind of summer swoon, is the fact that you’ve had this big rebalancing where a lot of money had to go into SpaceX and come out of some of these other big names. Well,
12:04 spk_0
so let’s just talk about that for a minute because SpaceX is trading where at 110, I think it was trading, it might be up today, but I think it was, I think on Friday it closed around 110, right, which is down.From traded as high as 2.25%, I think, right afterwards. And, you know, come August 4th, they’re gonna announce their earnings and August 6th, then there’s gonna be up to 900 million shares that are gonna be eligible to come to the market. Maybe they don’t all don’t. Maybe they all do. Um, which I think has also been putting pressure on SpaceX. I wouldn’t be surprised if we saw SpaceX go into the 80s.Before it bottoms
12:36 spk_1
out. Yeah, I totally agree. I, I
12:38 spk_0
think, I think anywhere below 100, I don’t own it yet. I want to own it, but below 100 is when I’d start to,
12:43 spk_1
I wouldn’t touch that, that stuff with a 10-foot pole, Kenny? I mean, I mean, the thing about it, it’s like, is it, you can probably say this more correctly than me, it’s like 80 times sales. OK, the S&P is at 3 times sales, and that’s historically high. Uh, I mean, this company is a mature company. It’s been around since 2002.I think all the good news that we can imagine that this company is going to have in the next couple of years already priced in the stock.
13:06 spk_2
I mean, there is a lot of good news pricing the stock. I, I, I sort of see, like I, I think of SpaceX is the same way as you think of Tesla, and obviously SpaceX has some good, like their, their satellite stuff is very, you know, cash flow, uh, rich, butTo me, investing in either of those companies has always been a lifestyle decision more than,
13:26 spk_0
and I, I never bought
13:27 spk_2
Tesla.
13:28 spk_0
I never bought Tesla. I don’t own a Tesla. I never bought Tesla. I, I, I had that same sense. But I think SpaceX is a little bit different, which is why at some point I’d like to jump in. I’m not gonna, it’s not gonna, it’s not gonna consume the portfolio by any stretch, but I’d like to get, I’d like to be exposed, I think.
13:44 spk_2
I mean, I believe in the space theme, you know, for the, like I believe in it for the long term. I, I, but I, I wouldn’t put all of my space theme money into space.
13:54 spk_0
All right, so let’s talk about Apple and Amazon. What’s, because those come out on Thursday. So talk about concerns and or what you’re looking for.
14:02 spk_1
Well, I think with Apple what’s surprising is it’s the best Magnificent Seven stock this year. It’s up over 20% at
14:08 spk_0
all-timehighs, isn’t it? It’s just right there.Yeah,
14:12 spk_1
I think
14:12 spk_0
you’re right.
14:12 spk_1
I think, I think it’s a value stock. I think you’re correct about that, and I think it’s trading like a growth stock. It trades at like 40 times forward earnings. So momentum keeps pushing the stock, but this is another stock where I’m kind of like, why would you pay, I mean, traditionally I trade like 15 times For earnings, where there’s not that much innovation. The.Phone doesn’t look that much different today than it did the last couple of years. We know China has some great phones we’ll never see which have caught up with the technology, so margins.
14:37 spk_2
I just think about the cost of memory and how that’s impacted them. I know they’re raising prices to cover that, but what they’re also trying to get the government to allow them to buy the Chinese memory makers because
14:48 spk_1
the stock market doesn’t care. It just keeps going higher, which is remarkable because
14:52 spk_2
I guess cash flow.
14:53 spk_1
I
14:54 spk_0
can’t justify it, but I, and I agree. I, I own Apple. The firm owns Apple, but, but I’m not gonna chase Apple up here. So, you know, it’s all-time highs on a fullback. I’d buy more, but I’m not, I’m certainly not chasing it. What about Amazon? What do you think about Amazon?
15:08 spk_2
I’ve always struggled with Amazon because they’re, it’s hard to say like what is Amazon. They do a lot of different things, right? Like they have a consumer retail business. Now they’re gonna have their own shipping business. Now they, they sell like the, yeah, I mean, they’ve got so many different things and I’m like, as soon as I say like, oh, I don’t, I don’t want to invest in this company, someone can give you me an argument about.Something like they’re like, well, how many boxes do you get a day from Amazon? You know, and I’m like, yeah, OK. But I just, but I think like, personally, I’ve really struggled with wanting to, to wanting to invest in this company because one, like their, their free cash flow has been pretty negative, especially when you take stock-based compensation out of it.Um, they do have investments in, you know, some of the private companies that have lifted their, um, you know, lifted them, but, and then also like just when Amazon Web Services, like, is that going to grow or not going to grow in this? I don’t, I, it’s just hard for me to, it’s like investing in an old GE where GEE did like a million things
16:07 spk_0
a million things.
16:08 spk_2
It’s hard to measure it for me.
16:10 spk_0
I, I know, but I, I don’t know. I, I think Amazon tends to be kind of a core holding for a lot of people.
16:15 spk_2
Oh, and it’s, I mean, it’s huge in the S&P, so of course, like, even if you own a little bit of it, you’re underweight, like, you know, you’re, yeah,
16:24 spk_1
I agree with that because I think the, the other component to that is because it’s such a big part of the S&P 500.And I think there is still a lot of retail money out there. We always talk about money market funds at like $7.8 trillion. Invariably if that money comes into the market, a lot is going to go into the S&P 500, which is going to be a bit under all these magnificent seven stocks. So you can almost be like, you almost don’t have to discern to some extent because of that capitalization weighted, you know, the way the S&P is structured, it’s like it’s going to go there anyway. So I think when you get a re-rotation of these stocks, you know, Amazon is going to benefit.You know, Alphabet’s gonna benefit. Meta is gonna be Microsoft, Microsoft’s gonna benefit, they’re all gonna benefit. It’s just gonna be a natural, you know, cause retail money is just gonna go to the S&P.
17:04 spk_0
And I, I, I think, you know, you, you said this, it made me think about it. The S&P is up, was up.8.5%. The eagle-weighted S&P is up 11.5%. It’s really outperforming the the market-weighted S&P which I think speaks to your whole rotation idea that money is not leaving the market, might be leaving the tech, high-growth tech names because that’s what, that’s what’s really driving the market weight S&P, right? But it’s clearly moving into other sectors, which I use as a, as an argument.Um, when I’m talking to clients about, you know, what that are getting nervous, I go, OK, take a look at what’s happening here.
17:42 spk_2
I think that around February of last year, I, I said there’s more to life than the mag 7, and I, I have, I have really like believed that because there’s also like,I had this theme also of investing in the receivers of the capex versus the spenders of the Cabs, which is essentially saying the same thing in a lot of ways. And I think I have this kind of like overarching view that like,now this is not trying to be political, but companies themselves have probably not paid enough in their fair share of taxes, right? Like, and obviously that’s been to make us more globally competitive, and this is almost the way of like the largest companies like paying their taxes, but they’re doing it in building out infrastructure and building out like building out like the future for us. And I, I think.Opportunity,
18:28 spk_0
right,
18:29 spk_2
but that’s why I’m like, that’s what you don’t like you invest where the money is going and not where it’s, and that’s one of the reasons why, but ex Apple, that’s Apple has not been part
18:37 spk_1
of that, where they’re not the hyper spenders or hyper scalers, right? Hopefully they don’t go bankrupt doing it, right? That’s the thing we really hope. But no, no, I think it’s a really good point. But I also think it’s kind of like we don’t really know when the spending is going to turn off on this, this whole, and
18:49 spk_2
I, yeah, every quarter I get nervous about them saying.We’re good on spending this quarter.
18:53 spk_0
Yeah, OK, so that’s the question. Is the AI trade dead in your mind? Certainly not for me it isn’t. No, not at
18:59 spk_1
all. Not at all. I don’t think it’s dead, but I think there’s a lot of risk there where I can just say, hey, I can buy the banks here which trade for like a 40% discount to the S&P. We know the economy is starting to pick up, loan growth is going up, Capital markets are opening up. I’m getting like a 2-3% dividend.So I think there’s a lot of places you can put your money in the market that aren’t predicated on AI, and I think it’s important because if I look at most portfolios, they’re so dependent on that AI trade, whether you’re just owning the hyperspenders directly, you own semiconductor stocks, you own, you know, some of the nuclear plays that are, you know, they’re going to basically electrify these AI data centers, and I think having positions in your portfolio, that if the AI trade does not, if all the spending doesn’t come to fruition.You’re safe, I think is a really important
19:45 spk_2
part of your portfolio. We started doing that in our portfolios. We started
19:47 spk_1
doing like, and he doesn’t agree. I feel like, go ahead. No, no,
19:50 spk_0
no, no, I was gonna say somebody was on, somebody was on TV this morning. I don’t know if it was on Maria or on Varney saying that.You can’t really get away from AI because every industry is now impacted by AI, right? So when you think you’re not getting involved in AI, in fact, when you buy JP Morgan, you’re buying their, their exposure to AI.
20:09 spk_2
I mean, every, right, I think that’s a great buy the banks, when you buy the
20:12 spk_0
industrials, when you buy,
20:13 spk_2
right? And that’s why I’m started saying like, I’m, we started moving away from the semis in June and, and to other things that we think will benefit from AI. And that’s why we started buying like a Shopify, a Visa. I actually think like this whole kind of.Like in financial infrastructure with stablecoin is an interesting part of the AI growth of AI. Well, look
20:33 spk_0
what’shappened to Caterpillar this year. Caterpillar, it’s a great company. There was nothing really sexy about it. It was up 80% or something because it was drawn into the AI ecosystem, right? The turbines, not only the, the, the construction equipment, but now the turbines that they, that they manufacture that are used in the AI trade. And they, the Caterpillar has been.Massivelyoutperforming’s
20:58 spk_1
wild, yeah, but I also think there’s other stories there, right? You have, we just talked about you need to upgrade the grid, right? That’s real. We’re doing all this, this reshoring.
21:06 spk_2
That’s why I was like with Cleveland Cliff finally like there you go,
21:08 spk_1
that’s an old school name. That
21:10 spk_0
is such an old middle name.
21:12 spk_2
Because I was like
21:13 spk_1
the only maker of futuristic,
21:15 spk_2
the only maker of grain oriented electrical steel. Well,
21:18 spk_1
no, it’s a great, great point. Then you have defense budgets going up around the world as well. So when I think about like mining stocks, you think about like owning the emerging markets, all these places are commodity based. So I think.I don’t think all these trades are actually that dependent on just AI, and let’s face it, J&J is up like 50% plus over the last 12 months. That’s not dependent on artificial intelligence. No, that’s not. No, you’re right, yeah, healthcare is a great, yeah, so I think there’s a lot of names you can put your money into that’s not predicated on that. All right,
21:44 spk_0
sowe’re going to run out of time here pretty soon.But I want to get your kind of view on going into August, which tends to be kind of the doldrums of the summer. A lot of people are off, Europe is on vacation, right? So things quiet down. There’s no Fed meeting in, uh, we didn’t pick up, we didn’t pick up on it, but I’m assuming you think there’s no rate hike on Wednesday.
22:05 spk_1
Yeah, I totally agree, right.
22:07 spk_0
OK. There’s certainly nothing in August because there’s no meeting. Doesn’t mean he couldn’t if there’s a, a reason to, but typically there won’t be anything in August. So what are, what should you be looking for? What should investors be thinking about as we move into August and then into the fall, which tends to be sometimes like, uh, a volatile
22:23 spk_2
September tends to be the worst month of the year.
22:25 spk_1
It’s good to know.Writing that down. Not,
22:28 spk_2
not always, obviously, but if you go back over the last, like, you know, many years, like September, um, because people ignore what happens and then they come back to their books and they’re like, they make the changes they need to make, um, I think you do need to watch inflation, what’s happening in, um, in the Middle East. I think those are two, you know.Swinging things and could be combined. Um, I think Jackson Hole will be interesting because is, are, will some of the results of these group meetings, you know, task force, um, you know, will that come out and say actually we’re not worried about inflation, we’re more worried about deflation, and then they end up cutting rates, which the market may have an interesting reaction to if they’re seeing like near-term inflation numbershigher.
23:15 spk_0
Do you think Kevin Warsh is gonna have a press conference on Wednesday?
23:20 spk_2
I don’t know. He, I think he’s still in like trying to figure out what he should do. I hope
23:25 spk_0
he does not have a press conference. I think he’s
23:27 spk_1
gonna have one though. I, I think he is gonna
23:29 spk_0
have one. I
23:30 spk_1
think he is. If I was a Fed chair, I would have one, but he like
23:32 spk_2
he had like, he, he like the last one, he just said
23:36 spk_1
he’s gonna say very little, but he’s gonna say that
23:37 spk_0
press conference. Yeah, you, you won’t remember this.When I came into this business, Alan Greenspan was Fed chair. And Alan Greenspan used to, but Alan, you would remember, right. Alan Greenspan came out, he’d say, this is what the Fed decision is. He’d make the announcement, he’d close the book and he’d walk away. He didn’t take questions. He didn’t sit there and hold your hand. He didn’t ask you if you’re OK. He didn’t ask you, you know, take a Xanax and calm down. Nothing.And I thought the markets did fine. Now, the markets are different.
24:05 spk_2
They were more volatile
24:08 spk_0
in the market. Yes, but there was, the technology wasn’t around, so they weren’t as, they didn’t, it wasn’t as quick
24:13 spk_2
as actually they’re very volatile now too because of the speed ofinformation,
24:17 spk_0
the speed and the technology allows it to be more volatile. Anyway, before we run out of time, what do you think about August?
24:22 spk_1
Ithink cash is trash. I think you’ve seen sentiment get very, very negative in a.Last week because oil prices skyrocketed and usually when you have negative retail sentiment, that’s a good time to buy. Also, I think we’re probably at the higher range for oil prices are. And if you think about it if oil prices start to come down, it disproportionately benefits the foreign markets. So I’m very bullish on the global economy. But
24:42 spk_0
that’s assuming this war isover.
24:45 spk_1
I don’t think even if it’s not over, I could still see prices coming back down into the 70s.That’s right. It could, it could, but I’m gonna say if I was going to be a betting man, I mean,
24:55 spk_0
wethought it was over a month ago. Everything was signed, sealed, and live, and suddenly it was.
24:58 spk_1
I, I don’t, I think it’s, I think it’s gonna go on a long time, frankly, but I, but I do think you’ll see prices come back to the 70s. I mean, you’re, you’re clearly seeing oil come out in different ways. Like Saudi Arabia’s got their pipeline into the Red Sea as long as the Houthis don’t block it. That’s like but I think there’s going to be a lot of creative ways to get oil.You know, out of the Middle East, it’s not going to do that
25:16 spk_2
I thinkone of the things that saved us was the fact that China stopped importing oil, and if they end up needing like to come back out into the market, I don’t know. I just think there was like that really helped us and that we’ll seeif they can.
25:29 spk_1
It was kind of remarkable. We haven’t been over $100 a barrel, you know, since the conflict started, so I think that speaks to there is more oil getting into the market than that.They say that 20% that comes through the strait, and I do think we’re at the higher end, but I think, I think at some point here you land in the seventies, even if the conflict continues, um, and I think that’s the historical average. The last 20 years, like $73 a barrel is when oil
25:52 spk_0
prices is there’s not a lack of supply of oil, let’s be honest. The world is awash in oil.
25:57 spk_1
It is, yes, but also you have to worry about energy security now, right? If I’m Japan, I’m not going to want to get all my oil moves anymore. You’re going to start to reroute it. So I think there’s going to be a premium on oil prices that we didn’t have before. So I think 70s are a normal place and also like keep energy stocks in your portfolios ahead. You just have them
26:14 spk_2
in there. I do agree with that. Yeah.
26:17 spk_1
Robin Hood agrees with me, so, you know, it must be right.
26:19 spk_0
I was so hoping you didn’t agree with him. Finally,
26:23 spk_2
it’s the only thing I’ve agreed with this.
26:26 spk_0
Anyway, listen, I appreciate the time. A half an hour goes by way too fast. I’d, I’d like to grab this group together again, maybe at the end of the year just to see how all this played out and kind of where we, where we ended up versus where we thought we ended up. Just real quick, what do you think, do you have an S&P target?
26:41 spk_2
Yeah, I actually had where it is around here. So, and I’ve just been kind of like watching it go sideways, and I’m like, do I go up
26:48 spk_0
or no, I was in the 75, 76 range, you know, I think, I think, um, uh, there, there are numbers as high as 8000. I think that’s a little aggressive. I
26:57 spk_2
was at 75.100 and I was, yeah,
26:59 spk_1
8500. I think it’s gonna melt up. I think there’s just by the end of the year, yeah, I do. I do.
27:04 spk_0
We’re definitely
27:04 spk_1
coming.
27:05 spk_0
We are definitely coming
27:07 spk_1
and you know what, if I’m right, you guys can take me out to scissor. I’d be happy to
27:09 spk_0
take you out to dinner if you’re right. And if you’re wrong, you’re taking us, you’re taking us out to dinner, you’re wrong
27:15 spk_1
anyway,
27:15 spk_0
done, doneand done, thank you very much for joining us. Until next time, take good care.
