Party Like It's 1999 (FvF Ep. 187)

In Episode 187 of Facts vs Feelings, Ryan Detrick, Chief Market Strategist at Carson Group, and Sonu Varghese, Chief Macro Strategist at Carson Group, ask the question on every investor's mind: Does today's market feel like 1999?

The episode opens with genuine nostalgia. Ryan recalls tripling his play money on Sycamore and Juniper Networks before losing it all on margin. Sonu remembers 75% of his engineering class having job offers by August of senior year. The vibes were very different then.

From there, Ryan and Sonu dig into the numbers raising eyebrows. Semiconductors now make up roughly 22% of the S&P 500, up from around 6% at last April's lows. A telecom ETF built around AI infrastructure is up 44% year to date. These are not boring numbers. But beneath all that heat, sentiment is in the toilet, breadth is holding up, and credit spreads are making new cycle lows in ways that look nothing like the quiet deterioration that began in 1998. Ryan and Sonu make the case that this is not 1999. Not yet, anyway.

Then Sonu drops inflation data that deserves a second read. Computer software and accessories, where AI token and cloud spending shows up in CPI, is running at an 83% annualized pace over the last three months. The Fed has a real problem. Ryan and Sonu walk through why stable jobs plus hard inflation plus a dovish Fed still adds up to bullish for equities, before closing out with a stronger-than-expected labor market update, a preview of the US-China trade meeting, and a record-breaking Uber ride from O'Hare to Cedar Rapids.

Key Takeaways:

• Semiconductor stocks and AI infrastructure names are posting numbers that feel frothy on the surface, but earnings growth and genuine demand provide far more fundamental support than the dot-com era ever did.
• The NYSE advance decline line just hit an all-time high. In 1998, it peaked 18 months before the market did. That divergence is not happening today.
• AI-related inflation is real and showing up in the data. Computer software in PCE is running nearly 60% annualized over the last six months. This is not just an energy or tariff story.
• The S&P 500 has posted six consecutive weekly gains totaling over 16%, the second best such streak on record. One year later, the market has historically been up 17% on average.
• The labor market is quietly stabilizing. Blue-collar sectors that were bleeding jobs in 2024 are turning around, and prime-age employment sits at its highest ratio since before the 2008 financial crisis.
• The longer the Fed delays action on inflation, the greater the Volcker-style risk in 2027 or 2028. The AI capex boom has driven roughly 45% of real GDP growth over the last five quarters. When that fades, the math changes.

Jump to:

0:00 — Welcome and the 1999 Question

2:00 — College Memories and Dot Com Vibes

6:20 — New Highs with Rotten Sentiment

10:30 — Frothy Semis and Leverage Lessons

15:50 — AI Infrastructure Trade and Sector Gaps

22:40 — Breadth, Credit Spreads, and Bull Signals

33:10 — CPI Heat from Tariffs and AI Bottlenecks

41:50 — Fed Risks and When Booms Break

49:40 — Payrolls Update and Blue-Collar Turn

54:20 — China Trade Talk, Travel Chaos, and Wrap

Connect with Ryan:

• LinkedIn: https://www.linkedin.com/in/ryandetrick/

• X: https://x.com/RyanDetrick

Connect with Sonu:

• LinkedIn: https://www.linkedin.com/in/sonu-varghese-phd/

• X: https://x.com/sonusvarghese?lang=en

Questions about the show? We’d love to hear from you! factsvsfeelings@carsongroup.com

Transcript

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SPEAKER_00 0:02

Welcome to the Facts versus Feelings Podcast. I'm your host, Ryan Dietrich, and I'm joined by my co-host, Sony Varke. Cutting through the noise, each quick Ryan Dieter, chief market strategist, and Sonovarge, Chief Macro Strategist, taking out the boring and helping investors focus on what really matters. And we are back, episode 187 of Carson's Facts versus Feelings. Ryan and Sonu always. Sono there's so much to talk about, but this week we're gonna take a blast from the past. Some of the stuff the stock market's doing looks like 1999. So that's the big question. Should we party like 1999? Is uh what we're gonna ask ourselves. What were you doing in 1999? Were you in Purdue by then, or were you still in the Middle East? Where were you? Uh no, not yet.

SPEAKER_02 0:56

I was in India. Yeah, I was in India. I was finishing up college. I was just about applying to I probably applied to Purdue by this time in 1999. Yeah, I was thinking about that. So I was senior year. Yeah, yeah. So everything was done, and yeah, that's that's party time. Really, what about you? Well, you were, you know, we were the same age. You would probably do the same thing.

SPEAKER_00 1:18

Well, not so let's remember, you're older than me. You are you are older than me because Tony had his birthday last week, so he's officially one year older than me. Well, it's not a calendar year, but I'm gonna call it one year older. Yeah, I guess I was at Zave University, so I'd have been a sophomore or junior, one or the other. But I do remember for 99 we went up to Detroit and um Metallica had like a concert at I guess the old Silverdome is like Metallica Kid Rock, um, Ted Nugent. It was awesome. So went up there, went to Windsor. If you've been to Windsor back in the day, you know Windsor, you can do whatever you want, you don't be 21. So that's where everybody went back in the day if you're 18, 19 years old and had a lot of fun. So you can imagine how that went. Um, but yeah, it was a great time. So anyway, well, let's let's get into it, Sony. I mean, let's let's let's save the 99 stuff for a second. Um, inflation just came out this morning, but I don't even want to tie it in. How do you want to start this conversation? Maybe you you go that route.

SPEAKER_02 2:03

Let's start with stocks because it's been screaming high, what 15, 16 new all-time highs, and that will get us talking about AI and CapEx and all of that. So let's start there. Well, let's start there.

SPEAKER_00 2:15

So hmm, let's yeah, I I I can't get this out of my head. Let's uh Podpony, let's go ahead and put the image of the New Yorker up. Now on the YouTube channel, you see here's old George Washington. He just looks beat up, he looks like he's having a miserable time. It says red, white, blue. He's yeah, well, red, white, and kind of blue is what they called it. It's shocking to me, and I got more stats and stuff, but like we're hitting all-time highs. Sonu, people just feel bad. Um, the economy, inflation, we're gonna dive into all this stuff the next 45 minutes. But just from a contrarian point of view, it is so hard for me to think we're like at the peak, right? Like, oh, this is the peak. Um, when I see things like that, and then we're gonna get into some other things. But that that just that gets me, you know, in magazine covers. Listen, there's some that work, there's some that don't. I understand. But if someone gets to travel the country and talk to our amazing, uh work with our amazing Carson advisors every single week and talk to the clients. I mean, you know, we've got some of the smartest, best clients out there, but even then when you do QA, nobody ever asked me, wow, Ryan, this is great. How far is it going to go? I mean, like, I never get asked that question. What are you noticing on a cinema front when you get questions from our advisors or clients?

SPEAKER_02 3:21

I and look, the inflation problem. I mean, that's I think why consumer sentiment is in the toilet, right? I mean, that's a big difference in 99. I like you're not kidding. I actually speaking, you and I were in college in 99. So 99, I was in engineering school in 99. So this is a big contrast to what's happening now. Here, a lot of people are right now worried about oh, my kids in college, will they get a job? 1999, that was not the case. My, you know, like by August of 99, so I was gonna graduate in May of 2000, but August of 99, I just started senior year, about more than half my class, maybe 75% of my class, had found jobs.

SPEAKER_00 4:03

Okay.

SPEAKER_02 4:04

This is almost a full year, and and guess what? They found jobs in it, right? Whether you were in civil engineering or mechanical engineering, I was a mechanical, I knew I was coming to Purdue, and you know, I've got you know, I knew I was going for grad school, but just as a backup, I was like, oh, let me sit and you know, apply for jobs. And I didn't even apply, they kept they come to school, they came to a college and they get ask you a bunch of puzzles and things like that, have some perfunctory interview. And yeah, I swear by August, September of 99, 75% of my class was employed, they had a job. Right. Wow, that's not happening right now. I at least I don't think it is.

SPEAKER_00 4:43

No, I mean, listen, consumer confidence. We talk about this a lot at the all-time peak was like in early 2000s, right? Consumer confidence. Now it's obviously very low. Um, just thinking about the difference then. I mean, I remember like literally Xavier like cutting theology class because some penny stock was supposed to come out on some website. Like that's when I got the bug for this industry, and it was so crazy. Like Joe Fami, we've had Joe on the show before, Joe's a long time friend. I mean, he talks about he used to go out in Vegas, and guys would like be just all in the hot tub and just like trading and making tons of money. And it was just it was so wild. It was wild. I remember I had a uh my dad gave me a little bit of play money, and I like tripled it literally like in a couple of weeks. Just watch CNBC. Wow, they mentioned I I usually we say don't not a recommendation. I don't think these names exist anymore, so I can probably say them. Sycamore Networks, Juniper Networks. I mean, there's there's a handful of Sienna networks, all the and they had network. You watch it on CB. Maria Maria, uh, what'd they call her? The the Money Honey, I think is what they called her. Um, you know, the like the Maria would that was her nickname, and like that she'd say something, it'd just go straight up and you'd buy it, it goes straight up. And I I that's what I learned a valuable lesson, though, because I use a lot of leverage, use a lot of margin. So no, I had no clue what I was doing. I just know this stuff went up every single day. So I was on margin out the wazoo, of course. Yes, then the peak in March, everything crashed. I all the money I lost, or I'm sorry, all the money I made, I lost it all with leverage. And then someone told me, Oh, maybe a month or so later, you know, a lot of people made money on the way down. And listen, I was young. Listen, we all have to make these mistakes. I was like, What? People made money on the way down. I was hooked. I said that was the coolest. I lost, I lost my you know what, but that was the coolest thing I'd ever heard. You can make money on the way up and the way down, you know.

SPEAKER_02 6:12

So anyway, I think that was Cliff Hasbis who made money up the way down.

SPEAKER_00 6:15

Oh, yeah. Well, there's a lot, there are a lot of smart people that took it. I don't heck, well, yeah, honestly, took advantage of dumb people like myself, but that's how markets work, and that's why we do this podcast, try to help as many people as we can. Um, so let me let me just read some numbers. Let me let me I've got them here. If I can let's see here. So these are just some wild, like almost kind of feels like 99 with what I'm about to say, just from that point of view. The SOX, right? The semiconductor index. Okay, uh 36% above its 50-day moving average, up 67% for the year. Uh Intel, which is just, I mean, who knows? Every time you look, it's up another 10%, up 217 for the year. Akamai, I think that's how you pronounce it. 73% for the year. AMD was up 26% last week. Incredible earnings. Uh, that's up 104% for the year. Uh Sand Disk, 467% for the year. Um, uh the QQQ, nine second 100, the last 28 days is up 27%. Uh, Western Digital up 175, and Micron up 137. Listen, there's probably more, but those are the ones that are just, I mean, when I hear numbers like that, that feels frothy. I'll admit that that that feels frothy, just that bucket. But then one more thing, and I'll go to you. Uh, we do a morning call every Monday with our uh Carson advisors, and you pointed out hey, tech's up 20% this year. I think it's like 21 to 22. 22. Communication services is down. Honest to goodness, Sonu, you could tell me about it. You could have told me crude oil is going to have a six sigma event and it's only happens once every 4.2 billion years and the market rally. Honest to goodness, I'd be like, yeah, probably. But I'm telling you, if you would have told me that, were these two things, if you look long term, they kind of trade together. We call the communication services tech adjacent, what we always call it. Yet one's up 22, the other's down. What's going on there? And then any thoughts again, more on 90, this 99 discussion.

SPEAKER_02 8:18

It's the infrastructure stuff, right? To add on to all the stuff you uh said. Yeah, Samsung. I'm looking at my screen, 100 111 year to date, year to date, right? Uh SK Heidex, also memory chip story there, up 168. With these two stocks make up a big portion of the South Korea index. They are, right? They are this is a stock market. I mean, individual stocks, okay, 150, 100, 200, whatever, right? It happens, but yeah, yeah, exactly. It happens. The South Korean stock market, the MSCS South Korea index, you know, the ETF is up 78% year to date.

SPEAKER_00 8:55

Um, just quickly, it had a two-day bear market. Literally, when all this stuff happened, it went down 20% in two days, and now it's just come roaring back. But go ahead, Sarah.

SPEAKER_02 9:04

That's crazy. And to your point, technology, the SP technology sector is up. I'm looking at my screen, 23% year to date. Wow. Right this morning, stocks are down a little bit. You know, this is we are recording this on May 12th, Tuesday. But to your, as you were saying, communicate. And so when I prepared the numbers for our morning call on Sunday night, uh, I was like, no, that can't be right. Something's wrong with my numbers.

SPEAKER_00 9:27

It cannot be when you said I was like, Oh, he's wrong. I've never seen Sonda wrong. You can't have that one right now.

SPEAKER_02 9:31

Like, I checked my I swear I checked my numbers four times. I was like, it can't be F 23. Just three or four weeks ago, it was like flat or you know, like it was down. I mean, it was down, yeah, yeah. Yeah, it's crazy how much it's come back over the last five weeks. And then communication services, on the other hand, is down two percent as of this morning, year to date. Right? The mag 7 ETF. So this is the MAGs ETF, not a recommendation. It's up 5.6 percent the SP 500 is up eight percent year to date, right? So the mag 7, because you know that has alphabet and meta and all that, Tesla, Amazon, yeah, uh, Microsoft, Microsoft's lagged as well. Microsoft's, I I think negative 10, negative 12, 13, something like that. But yeah, all the action is in the stuff that you need to build beta data centers, not just chips, you know, cables and optical cables and networking equipment, communication equipment, memory chips. It's all of this stuff. It's going nuts. You and I have talked about the telecom ETF, which we've had since October. And you know, telecom, you think about your father's telecom, it's like superprint and next to I don't even know, ATT, Verizon. Like the telecom ETF we have doesn't have any of that stuff. It's all geared towards the AI infrastructure stuff, right? It's not chips, but it's networking equipment and communication stuff and cables and all it's I stuff I kind of understand, right? Like, but the basket is levered to that AI play. That's gone crazy this year, too.

SPEAKER_00 11:06

Well, that one is I think the definition of I'd rather be lucky than good sometimes. Because when we added that late last year, we looked at it kind of like uh maybe it's like a diversifier to tech. Maybe if tech sells off, this is kind of supposed to be a little more defensive, hangs in there. That's not been the case at all. I mean, that it's literally gone vertical, and it's it may be the best trade we've ever made in a six-month period. I don't know, at least relative to what we expected it to do. I mean, you always think you're you're investing. Yeah, between that and gold, right? Like, yeah, exactly. Yeah, I mean, it's just incredible.

SPEAKER_02 11:33

That ETF is up 44% here to date. I just checked. This is not again, not a recommendation, full disclosure. We hold it, XDL, right? This is the SB telecom ETM. It doesn't have your, like I said, your ATTs of the world. So something big is happening, and something I would argue maybe even bigger than 1999 with the scale and amount of money that's pouring into this stuff, right? But then you have this massive dispersion across, let's look at some other sectors, right? Communication services, we already talked about, down two percent, healthcare down seven percent year today, financials down six and a half percent year today. In 1999, I think everything is just going up. Like you said, you throw a dart, it's going up, right? Except maybe a few value stocks. And then the other side of the story is energy is up 29%. Oil's coming back up. We we can talk about the crisis and things like that. It's getting a little tedious now, but so I guess it's happening, so we have to talk about it. Materials up 15%. These are top three sectors technology, energy, materials. If you look at SP 500 earnings estimates, that's gone vertical. Forward-looking estimates, it's being driven by these three sectors. Energy, we know why, but tech. Tech is not a small sector, it's not three percent or four percent of the index. It's over, it's like a third, right?

SPEAKER_00 12:53

Let me jump. I'm gonna move by memory here, but B Spoke had just a wild stat. April of last year, at the lows of uh Liberation Day, that near bear market, uh semiconductors were about six percent of the S P 500. Just like as of Friday, it's up to like 22 or 23 percent of the overall weight of the SP 500. But all those numbers I just listed a little bit ago kind of makes sense, but that's just an amazing stat from our friends over at B Spoke.

SPEAKER_02 13:15

I I think overall, the I I think our colleague Barry was telling us, right? I forget the stat exactly, of all the semiconductor firms in the SOX index. I think it's in SOX, right? Nvidia is the only one underperforming, or something like that, something crazy like that.

SPEAKER_00 13:31

Right.

SPEAKER_02 13:32

Yeah, that is insane.

SPEAKER_00 13:33

It is.

SPEAKER_02 13:34

Um, it is, but but something big is happening for sure, right? But the dispersion, there's a lot of dispersion as well. You have to sort of pick and choose.

SPEAKER_00 13:42

Well, no, that is very true. You know, the couple of things on cinnamon here that just struck me. Um, if you look at like the AAI cinnamon, and I get it, it's there's potential flaws with this. Nonetheless, last week, even though we're hitting like new highs every day, it feels like um, the bowls went up to just 38.3 percent from 38.1 percent. Barely moved. Okay, that's that's uh you know, that that surprised me a little bit. You look at things like the various Gallup polls, and it seems like there's a Gallup poll come out every week now. And listen, I don't even know who does these polls. I'll be honest.

SPEAKER_02 14:13

I've never I thought they stopped polling, but I guess they did.

SPEAKER_00 14:16

I guess they're just making it up now. I don't know because there's definitely a Gallup poll that comes out. But I mean the recent one was 80% of the economy. I'm sorry. Um, like 80% of the people polling has said the economy is either fair to weak. So, you know, there you go. And like over half the people think the stock market's a bad place to invest over the next 12 months. You know, are they looking at what's going on here? I I don't know. Um, then another one from Goldman Sachs, the Prime Book, which is really some cool data, uh, looks at what hedge funds are doing. Like hedge funds are decreasing their allocation to tech stocks the last two weeks, like one of the largest levels ever. Now, maybe tech they've made money on the way up, uh I don't know, but those are just some interesting things that, again, to me, do not reek of 1999, is what I what I want to point out there. Now, one more thing, we could put this one up, uh, Connor, on six-week win streaks on the S P 500. So the SP is up six weeks in a row. That's that's happened a good amount of times, but I said, oh, this one's up a lot. This one's up, as you can see on YouTube, over 16% during this six-week win streak. That's like the second best um six-week win streak ever. Only coming off of COVID do we have a larger six-week win streak. So I looked at all the times, and there's only nine others. This is the tenth one, where the SP 500 gained at least double digits during a six-week win streak. As you can see there, six months later, pretty solid returns. But one year later, the stock market's up 17% on average a year later. And the only time it was down was 70 years ago. So for the last like 69 years, if you had a signal like this going out a year, you're usually pretty strong. And listen, that's oh, what's that thing you say? Oh, that's right. Momentum begets momentum. Um, you know, that's just another layer of that. Now, one more from me, Sonia, and I'll let you chime in. Uh, I was on uh CNBC's um morning call in this very chair. I don't know, it felt like 19 hours ago. I don't know, it's very I it was early. It's early. I get up and do that and take a little back, go back to snooze for a little bit. Um, but I was on there and I mentioned that particular stat. And the other one I mentioned, because I thought it's interesting, and we put this one up, Connor, on the uh YouTube channel. It is rare to see the SP 500 peak for the year in May or June. Last 76 years, only twice has the market peaked in one of these two months. Again, just little nuggets, little clues that I think you know, this is still a bull market, but still probably going higher. Um, but just some things to think about. And and shout out to Morgan Brennan, who I'm on her show. Feels like about every week anymore. And next week I'll actually be in New York City um with her. Now, the cool thing, it's really cool. I love doing that stuff. Love doing the live stuff and getting the meet the anchors that I've talked to all the time. Um, but here's the catch. I I'm assuming I'm gonna be on pretty early, so like maybe 5 a.m. eastern time or something. Oh, goodness. Um here's the thing. They send a car, and usually they make you get there like an hour early. So I'm doing the math, and I'm like, oh, do I even go to sleep? I don't know. I should party all night and let's go to CNBC headquarters in New Jersey. I'm sure they'd love that. I'm sure they yeah, I just cross the rest of the day. Yeah, but actually, shout out to Frank Capillary. I'm supposed to meet Frank. We're gonna go to dinner over in New Jersey uh Sunday night. So then I told Frank, Frank's done the early slot before. He knows how it works. So Frank, early dinner, early bed, because I'm gonna get up really early. But anyway, that's that's that's somebody who looks like you know, he he it's like fresh as a daisy, as they say.

SPEAKER_02 17:20

Yes, probably doesn't want me to call him a daisy. I'm not calling him, but he looks he looks pretty close great every time he's on TV.

SPEAKER_00 17:27

That early on the well, you know why you're not by the no, that's not true. You know why he looks good because he does it and they give him all the makeup and doing things. When you see me, I'm like I literally roll out of bed 15 minutes earlier. I put some water in my hair and I'm sitting in the chair.

SPEAKER_02 17:39

Did they send you a makeup kit?

SPEAKER_00 17:40

They did. I've used it a little bit, but I don't know what I'm doing. I I shouldn't podcast on this thing. I need to have my wife show me. They did send me a makeup kit, and I was like either that's um a big insult or they're trying to help me. I'm I'm not sure. You're laughing. You did TV, you did TV last week. You did good, but you might need some makeup someday, mister. You just watch yourself now. I've probably need a mask. Forget makeup. That's true. That's true. I need to turn a camera off half the time. Do a phoner, do a phoner. All right. Um, so I talked 99. Let's talk, let's kind of wrap up the equity discussion. What else you want to talk about here from 99 point of view, Sonu?

SPEAKER_02 18:12

I mean, equity the other thing is well, this ties into the whole inflation story and things like that. I don't think anyone is talking about bonds and the Fed, and you know, because it was party time, right? Here, I mean, you were talking about consumer sentiment. I mean, there's so much to the crisis in the Middle East. I mean, I guess in 98 you had the crisis in Kosovo and you know, all that Serbia, and that was happening with NATO. But that seems, I mean, it is very far off. I mean, the Middle East is even further off, but it just looms so large in our daily lives. Of course, prices are the pump too, so there is a direct impact. But yeah, there's so many things to you know sort of worry about in terms of even the bond market, right? You look at bond yields, the 10-year yield is at 445 or so. I think yeah, 445. The 10-year yield at 445, the two-year yield is close to 4%, which means the market is saying we expect short-term interest rates, which is basically the Fed's policy rate, to average about 4% over the next two years. Where is the policy rate today? It's 360, 363, which means the market's expecting rate hikes, you know, generally at some point, so that the average is what close to 40 basis points higher. So there's a lot of, you know, this is another place where things are really different from 1999. It's the inflation story.

SPEAKER_00 19:37

Well, two more that I'll wrap up, but maybe we can move because we've got a lot of other stuff we want to talk about. Uh advanced decline lines, right? You can look at the New York Stock Exchange Advanced Decline Line, which is a cumulative basis, how many stocks go up versus down every single day. I've talked about this a lot, and it's one of the indicators I do have in my um you know kind of bucket uh things I look at, uh tool tool toolbox, I guess is what we call that. And just on Wednesday of last week, the New York Stock Exchange advanced decline line hit a new all-time high, right? Um, listen, that tells you breadth is okay. I'm not saying breadth is great because it is some certain groups are doing a lot better than others, but breadth is pretty good when you see that. Sonu in 1998, we saw a major peak in late 98 in the advanced decline line. That advanced decline line went down for like a year and a half, give or take, until the ultimate peak in the stock market in March of 2000. Um, so again, it wasn't like we had broad base participation, then it was tech, lover things doing well. And I'm from Cincinnati, so like Procter and Gamble, PG, kind of boring, but a company makes a lot of money, very innovative. I remember hearing people say, Oh, PG can't go anywhere because all these tech stocks are going up back in the day. And I'm like, Yeah, because they're the ones going up. So that's what I'm trading. And then you know what happened? All the ones I was looking at trading and investing all went down 98%, and PG did really well that next decade. So that's how that's kind of how that works. Um, live and learn. But but the reality is advanced decline lines are still solid and in credit markets. I mean, we've talked about this a lot. This is a shout out to Scott Brown over at Scott Charts, but buddy of the show. He had his in his note just yesterday, looked at um, you know, spreads on like high yield spreads, right corporate spreads continuing to make new cycle lows. And again, historically, you tend to see more stress in the credit markets when trouble is coming. The credit markets sniff it out, um, in essence. So we're not seeing the credit markets worried, we're not seeing advanced decline lines breaking down. To me, those are two major differences. Listen, those numbers I just listed do I hate to say scare me. I don't want to say scare me, but they they catch my attention. Now, you can't see on the youth. I have very big ears. You can't see on the YouTube channel because they're covered. My big ears are listening and seeing, wow, these numbers are nuts in some of these names. But big picture, listen, maybe tech just hands back the baton to financials. You mentioned financials down six percent. Their earnings are pretty good. There's still some reasons to think the consumer comes back. Maybe that could be the case, right? And maybe tech takes a break. Honest to goodness, after the numbers we just mentioned, maybe tech should take a break. It's almost scary to think about.

SPEAKER_02 21:46

Like our I mean, without giving too much away, our mid-year outlook would look very similar to our full-year outlook. Yeah, because our full-year outlook is inflationary growth, that's pretty much where we are. So, why rewrite something for which we weren't wrong about? We were gonna write about that. Yeah, we we didn't predict the crisis, but to your point about credit spreads.

SPEAKER_00 22:05

Well, let me jump in. I I made a joke to the team. I said we should just call our media outlook. We were right, and then you open it up and say, Go read what we said six months ago. Because literally most of what we said is kind of played out. There you go. There you go. It'd be a lot easier for everybody, yeah, anyway.

SPEAKER_02 22:16

But to your point about Credit spreads. I I mean the full disclosure, like in one of our portfolios, last week, you know, recently we put a position, we took a position in loans within our fixed income part of the portfolio. Right. Right. I I mean, taking a position in loans is not something you do if you're expecting a recession, which clearly we are not, right? Right. We have a fiduciary obligation. We would not do that. So yes, but the an inflationary growth period is where you expect I I mean, you know, consumer spending was I I think it was nominal spending. Real spending is a problem here, right? But nominal spending, we live in a nominal world. Nominal spending was like 8% or something in Q1. That's crazy, right? And that is a situation. Look, loans are made being made. Uh people pay back the loans. Of course, it's not great from an inflation adjusted perspective, but if you're just looking for, you know, a tactical play, you know, which is what we are doing in our you know, unconstrained portfolios where we can go zero to 100, 0% equities, 100% equities, we're bullish, we overweight equities by quite a bit. And we thought, you know what? Let's get some exported loans as well. And, you know, should do well in an inflationary growth environment with no recession.

SPEAKER_00 23:31

And hopefully people appreciate that because we we we we get to talk to a lot of people about this podcast and we pontificate just as much as the next podcast. But uh you know, we also then try to spin it a little bit and say, here's what we're doing with real money. We're not gonna give it all away, right? We we we do that for our financial advisors, but we tease a little bit. But we we do think um if the world's not gonna end, loans might be a place to uh potentially look at on the fixed income side of things. So let's take a break. How'd Mother's Day go?

SPEAKER_02 23:54

Uh it was good. I be better for brunch. It's always a bit of a coordination issue. So I'm allergic to flowers, the pollen. So we don't get flowers, so that's out. Wait a minute. I just thought I knew you were logic.

SPEAKER_00 24:06

I knew you're allergic to wine. Wine, did I not really? Wine and flowers, you're not a romantic sonu.

SPEAKER_02 24:11

I tell you, but you make up for it with chocolate.

SPEAKER_00 24:13

There you go.

SPEAKER_02 24:14

The chocolate, the chocolate. Yes, uh, definitely. Yeah, it's a chocolate. Uh, but no, it was uh fun with Mother's Day brunch, the usual thing. I cooked for my wife in the evening, and then Monday rolled around, and I think we were on a team meeting, and I was just so tired because I was doing so much, but it was fun.

SPEAKER_00 24:32

What about you? You were a mom for one day and you just couldn't hang, huh? So I couldn't hang. I couldn't hang with it. Yeah, it's all right. Well, no, yeah, shout out to all the moms, obviously. Um, yeah, we were just busy with sports. I mean, it wasn't that different than a lot of the Gus said two basketball games and a flag football game and uh this and a that. So we we were we were a little busy, but um yeah, I lost my mom. I guess it'd be three years ago. So if you have a mom, you're lucky. Give her a call and say uh you know say you love her and do something with her. Because, you know, I don't know. I don't want to get too on my high horse, but sometimes people say, Oh, my mom did this, my mom did that. Listen, someday they won't be there. And just remember that. That's all I'm gonna say. I'll just get off my high horse and just point that out. Um, let's see what else. Uh I mean, CPI came out this morning. You want to go that route? Uh yeah, let's do that.

SPEAKER_02 25:13

And I'll connect it with the cat uh AI Capex boom, right? The AI Capex boom. Again, this is what's different from 1999, right? And Warren Pies, I've read Warren Pies had a series of tweets yesterday talking about why this why he thinks this time is different. I mean, not in so many words, but that's always a scary thing to say. But no, there are we just laid out a few differences too. The other difference, as I pointed out on you know, Twitter, is this time we have inflation in the 90s, late 90s, prices for all these IT stuff was falling. Right? CPI came out this morning, computer software and accessories. This is where you'd get you know stuff like, oh, you're buying tokens to do AI, you know, use cloud and things like that. This is where it shows up, computer software and accessories. It was up six and a half percent in February, one month, six and a half percent, four percent in March, five percent increase in April, the annualized pace over three months is eighty-three percent. Oh my okay. 83. That is something we did not see in the late 90s, right? The CapEx boom is creating bottlenecks. Demand is it tells you that demand is so much greater than supply and why these stocks are doing well, because we can't get enough of the materials required to build out all the AI that we need, right? Data centers, things like that, right? And uh, we can put this chart up, Connor. I'll send it to you. This is the personal consumption expenditures index. That's a chart I have. It shows PCE for computer software. So this is within the so within PCE, which is what the Fed follows, the personal consumption expenditures index, computer software and accessories has a much larger weight. So it actually matters more for PC. In CPI, it's like 0.2% or something like that. It's not that big. But in PCE, it's much larger, it's closer to 1%. PCE, computer software, last three months, it's up about 59% annualized. Last six months it's up 47% annualized. So the inflation story is not just about energy, it's not just about tariffs, it's about other things happening too. Oh, you're gonna make so many people mad, Sonu, because a lot of people don't say that. A lot of people don't say that. So, but again, let's let's start with headline, right? April headline CPI was up 0.6%. Okay, right? That's like 8% annualized for in case it's one month.

SPEAKER_00 27:43

Sounds sounds bigger when you put it like that. Yeah.

SPEAKER_02 27:45

But last three months up 7.6%, last 12 months 3.8%. This is slightly harder than expected. Uh expectations for headlines is 3.7% year over year. Core 0.38%, right? And last three months it's up about 3.2%. The tariff impact is still showing up by now. Look, the tariff impact should have been done with. Okay, but it's still showing up in places like Apparel. Apparel is up 12% over the last three months annualized. That's all tariffs. I already talked about computer software and things like that. That's on the good side, right? So, like, okay, you know, energy, we know. Okay, let's look through that. Tariffs, boom, let's look through that. AI, hopefully, because of all this new supply coming in, maybe prices go down. Okay. Then you look at core services, housing set that aside. Housing's normalized, you know. There's some funky things that happen within CPI housing. I want to get into that. Forget that. Let's look at core services outside of housing. This is actually close to 50% of PCE, but in CPI it's much smaller. That was up 0.45% in April for if you annualize it. That's five and a half percent. Last three months, core services excluding housing, was up four percent. Last 12 months it was up 3.4%. It is the highest since February 2025. I I mean, we have a broad inflation problem here. I just described a bunch of things that are not energy.

SPEAKER_00 29:13

Right, I guess we did.

SPEAKER_02 29:15

I mean, I haven't gotten into like food prices, that's also high. Airfares also up.

SPEAKER_00 29:19

Oh, what it what it oh Sam Rowe made a joke. He said, I think what were tomatoes up like 15%? I mean, it was a crazy number. He said tomatoes are going bananas, anyway. That was his joke. It was something you know, I I can look well, you know. Yeah, yeah, Sam always.

SPEAKER_02 29:33

Yeah, tomatoes are up just one month, 15%. Okay, just in April. Yeah, and that's and that's on the back of March, 15.3. I'm looking at it.

SPEAKER_00 29:43

And that's that, and that is bananas. That is bananas. Yeah, that is bananas.

SPEAKER_02 29:46

Year over year, tomatoes are up 40%. So if you're having tomatoes, yeah, yeah, 40%.

SPEAKER_00 29:53

Well, see, again, what everything we're talking about. I mean, is some of that due to fertilizer? I mean, what or just it's poor inflation? It's fertilizer score, right? I mean, that's what that is.

SPEAKER_02 30:01

Yeah, let lettuce is up eight percent, year over year. Other fresh taste any good. That's fine. Other that's why I don't have salad. It's uh you can't blame me for this because I'm not eating any of this stuff. There's no demand for me.

SPEAKER_00 30:14

They have milkshakes in there by chance.

SPEAKER_02 30:17

They have dairy. Yeah, that's not up a lot. So you and I are not contributing to this. Ice cream's not up, but ice cream's up 2.7 percent year over year. But other fresh vegetables, right? Other than lettuce, tomatoes, I guess potato prices have come down, so people aren't having enough fries. Go have fries, people.

SPEAKER_01 30:38

No, no, I was kidding.

SPEAKER_02 30:41

I'll get in trouble for this stuff, but other fresh vegetables are up nine percent year over year, right? So you know, but even canned goods. I mean, canned fruits are up nine percent. So I guess if you're doing a lot of baking, maybe canned vegetables, I guess it's like peas and stuff like that. It's up six percent. Yeah, so I mean, this is all I mean, it's like I said, it's not just energy, right? And the fertilizer thing, yes, fertilizer prices are up, but that should impact food prices like nine months from now. It shouldn't impact food prices today, if you think about it. So, you know, yeah, we got a lot of problems. The Fed has a lot of inflation problems, I guess that's why consumer sentiment is a like I said in the toilet.

SPEAKER_00 31:21

Yeah, uh, well said, and again, these are concepts obviously have exploded more since uh the the war started. But you were talking about this earlier this year. I mean, this is what theme that we wrote in our outlook. You wrote our outlook. We wrote the outlook like back in November around Thanksgiving time, right? And you were talking about this, you know, potentially more inflation, but solid growth. And listen, probably a tad more dovish fed than what the market expects. You stack all those three things on top of each other and it still equals a bull market. And what was the phrase you used? Something plus something something. How did you put it? Um, and I get you on the spot here.

SPEAKER_02 31:49

No, no, no. Hard inflation plus stable jobs. We could talk about payrolls, okay, plus a dovish Fed. Because if you know, normally if you have stable jobs, hard inflation, what does the Fed do? You would expect the Fed to be hiking rates. Yes, I don't want the I'm we're overweight equities. I don't want them hiking rates, right? So, but that means they're dovish. Policy is getting easier. So stable jobs plus hard inflation versus dovish Fed, that's bullish for equities.

SPEAKER_00 32:17

Uh, equals bullish for equities. I mean, there you go. Um, you know, yes, we manage money. Yes, we're $60 billion RAA with you know almost 600 financial advisors all across the United States. I think we're in 43 different states, service over 60,000 families. So you could say we kind of are hoping the market goes up. I mean, let's be honest, you know. But listen, we we manage money, and if it doesn't, if the data changes, we can do tilts and changes in our portfolios. But everything you just put right there, yeah, we're gonna be right. I mean, everything just listed there probably says the market keeps going up. Now, I guess the worry we're talking about 99. Okay, well, listen, the NASDAQ like doubled 99, okay, and it went up like 25 or 30 more percent the first quarter in 2000. Then trouble came. And you know, you talk about these concepts. What about the Fed though? If the inflation keeps heating up, we have new Fed leadership coming, like I think this week, I think is when uh war shall be confirmed, I think. So I think so. He's he's probably not gonna hike because he's not gonna hike, at least initially. What if they're way behind the curve and they have to start hiking into next year? I mean, that's a problem for then, but it's something we need to start thinking about. How worried are you that they're gonna be way behind the eight ball when they have to start hiking? It's gonna be a problem. I'm not saying a lot 22, but honestly, 2021 was a silly time. People made a lot of money, people were day trading, make money in crypto. If money was too easy, spacks, IPOs, all this stuff. The Fed probably should have been hiking a couple times in late 21. Not a whole bunch, but it's a couple times. It's a little frothy. I mean, I'll never forget when you know, oh, what's his name? Portnoy, Dave Portnoy is doing that Davy Day Trader thing with this slamming everything. And he looked out his window and he saw a deer. He goes, A deer, it's a sign he bought deer ahead of earnings and it worked. Okay. Listen, that's when you're getting a little silly. Um, so my worry is as we move forward, do we get a little silly time the rest of this year? And for our portfolios, we'll take it. But that's what does worry me about next year. Talk to me about that one, Sonia.

SPEAKER_02 34:00

Yeah, next year, or even could be 2028, right? If they say, you know what, they're gonna sit on our hands, we're gonna look through all this inflation. And when we had the social hour with Talman and Josh Schaefer, Talman from the New York Times, Josh Schaefer from Barons a few weeks ago, it said, yeah, I think last year's rate cuts, again, the benefit of hindsight, especially, probably a mistake. And and and this is where people argue, even Fed members, I I forget which Fed members is my there's a article of one of the previous Fed members, and then a current Fed member. They're like, the Fed can't solve for bottlenecks, right? They can't produce more chips, they can't open the strait of hormones. I get all that, but yeah, then what why are you in the in the business of raising and dropping interest rates, right? What are you even doing if you know you I get that the only tool they have is interest rates? We can argue about balance sheets and stuff like that, but set that aside for now. And balance sheets act through demand, it doesn't increase supply, right? But you know, usually an inflation problem is shortage of supply, right? Whether it's chips, whether it's tomatoes, whether it's lettuce, whatever, whatever it is. I get that. But so yeah, I I I think uh two risks as I see. One is as you said, every day the Fed doesn't hike, the policy is easier, which is tactically, I mean, there's a reason. We're bullish, right? And I would say there's good reason to be bullish in this environment, given you know, everything, all of what we talk about. But the longer they wait, the further they probably fall behind the curve. Suddenly they look back, let's say they get to 28, and suddenly we've gone eight years, inflation's averaged three and a half percent. It's like, wait, we've been 1.5 percentage points above target. What are you even doing? Maybe it's not Kevin Walsh, maybe it's the next Fed chair. Somebody else comes in, it's like your Paul Volcker equal it. He comes in and says, you know what, we need to take inflation down. That's when you have to put some pain on the economy, the stock market. We saw this in 1980, 81, 82 with Volker. That's what that's the risk here. I I'm not saying I I don't think it's gonna happen in 2026. Okay, 2027, I don't know. Maybe it's 27, 28, right? The other risk is all this AI stuff, right? Over the last five quarters, GDP growth has averaged about two percent, real growth. About 45% of that, 90 basis points, has come from AI, capex, and software spending.

SPEAKER_00 36:38

I think I mentioned that to Morgan this morning on um CNBC, so thank you for the stat.

SPEAKER_02 36:43

So now think about when that stops. When it goes the other way, suddenly you don't have that contribution, you don't have this AI spending. They're like, you know what, we've spent enough, we've got enough data centers. Maybe that's only in 2028 and 2029. But you can see where you have suddenly two risks sort of building, and risks build only during expansions, right? It's actually when what's the saying when Buffett when everyone's fearful, that's when you buy. During a recession, risks actually start to fall because everyone's panicking and things like that. It's during an expansion, it's during your 1999s of the world that risks sort of build up, right? As you were saying with you know, socks. I mean, and this is where I think Jeff DeGraf has put out, I think, a bunch of pieces about, you know, like talking about bubbles, how to think about bubbles, and you can't protect yourself in a way by looking at fundamentals, and this is where you have to pay attention to the tape, right? What technical technicals and all of that.

SPEAKER_00 37:43

I mean, I'm curious what you think about well, the famous, yeah, the famous George Soros quote, and I'm assuming he said it because people use it all the time. He's like, I'm looking for a bubble and I rush in, you know, because just because it's a bubble doesn't mean it's gonna end right away. I mean, let's be very, very clear. Um, you know, and we don't I don't think we're in a bubble. I don't. I mean, these we I mentioned all those stocks a little bit ago, those crazy numbers. Well, we just as easily could talk about their earnings growth the last five quarters, the last six quarters, last eight quarters, and it would, you know, maybe it's a little frothy, but in a lot of ways would justify kind of where where we are with a lot of this stuff. So, yeah, I mean, listen, I I hate to sound like a broken record, but I just like to keep it simple, right? I'm from the Midwest. I like my steak and potatoes, I like my burgers, you know. I like to keep it simple, not that smart. By the way, we talked about your grades. Did you ever get a B in college? I've I've never asked you this. Let's ask if you you said your grades, how were you ranked? Where'd you rank? I mean, where were you? You had to be pretty smart, right? I mean, you Yeah, it was okay.

SPEAKER_02 38:36

You know, I've gotten I I've gotten B's. I mean, I think more at least.

SPEAKER_00 38:42

It's probably like in gym class. I mean, that doesn't count. So I'm no offense. I've seen you, you're not the best athlete, and that's okay. I'm talking about a little bit of soccer, mad at it, right?

SPEAKER_02 38:50

Yes, yes. No, uh I think in my senior year, I slacked off a little bit. Like I said, you know, I was applying to grad school and things like that.

SPEAKER_00 38:59

Well, my daughter, like we talked about, she graduates like gee, really soon, a couple Saturdays. Um, and yeah, she's kind of stopped. Like I think they all have, they've all kind of stopped. I said, but the year's not over yet. You go, Dad, it doesn't matter. I said, huh, well, all right.

SPEAKER_02 39:10

It's like you are graduating, right? Oh, yeah.

SPEAKER_00 39:13

I looked, it's like she had some C's. I was like, some C's? What do you do? Oh, it doesn't matter, Dad. I've already got I'm already, you know, you want to pay the state, whatever. Yeah, yeah. Good stuff. I don't know. Anyway, um, well, yeah, keep it simple with me. If market breadth starts to deteriorate and credit spreads start to show some worry, and then you look at some of the macro stuff, we see trouble, then we'll go there. And listen, I I I I get aggravated to a degree because sometimes, oh, Carson guys are permables. I'm like, yeah, because we're in a bull market for three and a half years. So yes, we are kidding. And part of me, I'm not gonna put it like this, not looking forward to, but I am anticipating when we start to see changes, we will make changes, we won't be so bullish, we will do things in our portfolios, owning maybe more bonds or more gold, more different things instead of being overweight equities or simply bring your equity back down. And that's the easiest way to do this. Um, but the reality is we're not seeing those signs yet. So these are things that we talk about every day on our team. We talk about in the podcast here as for listeners out there. Oh, one more. And again, this is um a la to a degree 99. We have some huge IPOs coming out. SpaceX is gonna be like a one and a half billion dollar IPO Clawed. Um, um, oh, what's the other one? Clawed Open AI. And then I saw Dunkin' Donuts, which I think it's called Dunkin' App. Really? Were they were private, then they were public, then they're for they're coming back. So there's a lot of IPOs popping out. That's a lot of supply coming on with a lot of people that made a ton of money that might want to sell. I mean, SpaceX is gonna be like some of those IPOs I just listed, they're gonna be like two or three percent of the SP 500 when they come out, right? So that again doesn't mean it's the peak because I remember '99, these IPOs came out and those stocks all went up. Mark kept going up. But I'm just saying, that's like an IPO, three IPOs a day or something. Yeah, was it Blackstone that came out in 2006 or 2007, right at the peak with the real estate? Yeah, they did their IPO. It's like, oh, here you go, bag holders, and they did their IPOs. So yeah, I don't know. Um, but those are things that that catch my attention when we talk about 99 and some potential worry signs, these huge IPOs. Now, just as easily, I may I don't know if SpaceX makes a ton of money, but there's other ones do. I mean, the other ones are growing faster than that. See, that's the thing, right?

SPEAKER_02 41:14

Nobody knows about like like there's so much a demand for the SpaceX saying the as Nasdaq's changed its rules, changing or changed its rules to include SpaceX when it comes out, SP 500 to do the same thing, but you know, like whatever. Like that's a whole other thing. We won't get into that, yeah. But the other side is, you know, we don't know much about these companies, and in SpaceX, I'm not quite sure that it's actually making a profit from what I've seen, but it's all you know, we'll find out if it's a point. Yeah, so I'm more interested in the Duncan Donuts. By the way, my kids and my wife gave me a gift card to Dunkin' Donuts for my birthday. So I am a Duncan Duncan now.

SPEAKER_00 41:52

I don't think it's called Dunkin' Donuts anymore. I think it's just Duncan. That's what they call it. Duncan. Just Dunkin', but um, yeah, I'm not a huge Duncan fan. I don't, I think it's better donuts. You're a hot chocolate guy, right? So you like the Starbucks. Yeah, I go, I go like you're in say you're in New York City, running around somebody, hey, let's get coffee. Yeah, sure. And you get there and they order a you know, latte, blah, blah, blah, grande. I don't even know what this stuff means. I'm like, medium hot chocolate, please. I I drink like a six-year-old. Uh, you mentioned Warren Buffett, a couple quotes. I mean, the my favorite Warren Buffett quote ever was he looked at the actual actuarial tables. I think I said that word right, actuarial tables. And he realized um that six-year-olds have the longest life expectancy. So he started to eat like a six-year-old. That's my that's my theory with hot chocolate and coffee. So anyway. All right.

SPEAKER_02 42:36

Well we've uh Warren's not putting pressure on tomato and lettuce prices.

SPEAKER_00 42:40

And he and he wasn't and he wasn't at the um 40th and dodge uh McDonald's two years ago when we were looking for him. Do you want to do uh a little personal thing here? Shout out to Cam Derrickson, he's Sebastian's friend. Uh, he listens to us a lot. I said I'd give him a shout-out. So there you go. I forgot last week. So thank you, Cam, for uh for listening to uh the Facts Versus Feelings podcast. So if you're listening this week, um all right, so let's wrap it up, Sony. What else do we want to hit on before we finish things up?

SPEAKER_02 43:04

Should we talk about the payroll? Do you want to do payrolls or gas prices? I guess gas prices we've got a lot of, but like payrolls we have.

SPEAKER_00 43:10

Payrolls. I mean, yeah, the monthly payroll came out better than expected. You've been all over this, better um labor market potentially under the surface. And honestly, the last couple months of data, it looks like it might be happening. What did you find when you dug in?

SPEAKER_02 43:22

Look, we got a lot of labor market data last week. We got April payrolls, March joles, the job openings, labor turnover survey, initial claims, initial claims you get every week, and they're all only going in one direction. Yeah. Okay. You know, but the big picture is labor market is fine. We could just call it a day and leave it there, but like some details. But payroll growth came in at 115,000 in April. That took the three-month average to about 48,000. I mean, look, these things can get revised. That's why you use the three-month average, right? And uh, Connor, we could put the monthly payroll growth chart. And 48,000, like a year and a half ago, two years ago, three years ago, if you would have looked at that number 48,000, you would have been like, this sucks.

SPEAKER_00 44:05

Well, we were averaging like 400,000 jobs in 2022. Then they revised it lower, but but yeah, yeah.

SPEAKER_02 44:11

But that's the thing the break even, like the uh number of jobs the economy has to create each month to keep. Up with population growth because of the collapse in immigration, population growth is not much. That break-even, I mean, it's it's people throw out all sorts of numbers. That could be close to zero. Yeah, which is incredible, right? Like the economy does not need to create any jobs to keep the unemployment rate steady. And right now it's creating about 48,000 jobs, last three-month average. Right? We're seeing some breadth improvement as well. So year to date, again, I'll use year to date instead of April because you know it's less noisy. So four months, right? Jan through April. 304,000 jobs created in four months. That's no great shakes. You look, take out the government's dragged a little bit by about 41,000 jobs. So 345,000 private sector jobs, averaging about 86,000 per month, like I said. Not great. But then, you know, maybe that's more than you need right now. Healthcare. Now the the bad news here is that not bad news, it's fine. It's sort of like, you know, you want some sector to be creating jobs. You don't want every sector to be lagging, right? But healthcare has been leading over the last two years, and that continues. 64% of your today's job growth has come from healthcare. It's about 221,000 jobs. But Ryan, the other thing is several cyclical sectors are seeing gains. Professional and business services, 73,000, retail, 53,000, construction, 49,000, manufacturing, 16,000. Last year, manufacturing lost about 113,000 jobs. You're seeing a reversal. So one thing is the labor market is definitely stabilized recently. And what's interesting, Mike Kongzill, who's an economist, he wrote a nice piece on this. A big part of that is a turnaround in blue-collar jobs. Basically, these were sectors that were bleeding jobs last year. That's stopped right now. We're losing fewer manufacturing jobs, construction payrolls, as I've said, more solid gains. Within professional and business services, you have something called temporary workers, right? That's essentially a proxy for manufacturing employment. That's rising as well. That's a positive. And look at the unemployment rate. If you had to just look at one indicator for the labor market, take the unemployment rate. Yep. 4.3%. Last year it was increasing. We can put this chart off uh Connor of the UE rate, the unemployment rate. Last year it was rising, right? Over the first nine, 10 months of 2025, but things are stabilized. That's what was happening. We were seeing actually that stabilization when we wrote the Outlook, as you mentioned, back in November. And now it's sort of like, oh yeah, okay. You know, we saw it, now it's actually happened. Look at the prime age 25 to 54-year-old employment population ratio. Yeah, it's like watching paint dry. It's at 80.7%. You can put this chart up, uh corner, prime age employment population ratio. It's just flat, 80.7%. But that's important because it's higher than at any point in the 2010s expansion. Higher than at any point in the 2000s expansion. More people, I know I've said this before, but I'll repeat it. More people in their prime age working years are working today than they were, and this is a percent of the population, working today than they were in the 2010s expansion or the 2000s expansion. That's positive as far as the labor market goes. I mean, you know, I I know I've been saying this for a while. I think the labor market is stronger. I don't think it's as great as it was in 2023, 2024, maybe early 2024, or even 2018, 2019, but I don't think it's in, you know, the labor market's cracking or the, you know, any of that, right? I think we are in a pretty stable place with respect to employment.

SPEAKER_00 48:00

Well, exactly. You look at the jolts, labor, or what's job opening, labor turnover survey. I'll get there. Um, a little bit of a jump in hiring, a little bit of a jump in quits, right? You probably wouldn't quit if you didn't have a better opportunity. Layoffs, yeah, there's still what 1.8, 1.9 million layoffs every month, but you pointed out that's pretty normal, right? It's not like we're we're still in a relatively low layoff world. So those are positives. The ADP, maybe there's some flaws in the ADP report, but still three months are been pretty positive. Last month was positive, and it's saying a lot of the jobs growth coming from small businesses. Uh call me an old school guy, but I think if small businesses are doing well, then America's probably doing well, and our country is probably doing okay. So that's those are some, again, some positives then to put a bow on it, cherry on top, we're gonna call it initial jobless claims there's 200,000. They are 190,000 the week before. We're not seeing a spike in initial jobless claims, and those continuing claims have been drifting lower as well. So it's not a perfect scenario, but I think the labor market, and you do too, I know, is in better shape. And maybe one of the things, because everybody knows about the second half of the year, oil, the war, the Fed, blah, blah, blah. One thing, and I I did a call the other day, and this kind of came to me just live when I was doing it. I said, one thing no one's talking about is a labor market. Maybe that can be the surprising aspect of next year. I'm sorry, the second half of this year. Yeah. If the labor market gets better in the second half of the year, that'll help the consumer. That'll help consumer spending. You you talked about it. GDP of two percent recently, not that great. The the the the um consumer consumption was was kind of a tad week, right? Well, if the labor market gets better, maybe the consumer keeps in real terms, right? Well, they're still spending right in real terms, but AI is yes, AI is great, you know. It's it's like, okay, that's good, but we'd still like to see some other things like the consumers kind of pick up as well. Uh, what do we want to finish with, Sonu? Anything uh president uh president Trump goes to China to see President Xi by the time most people listen to this. I don't know. I mean, he's a deal maker, it's in a midterm year. I think he wants to make some type of deal. I don't know what it is. What do you you anticipate anything there?

SPEAKER_02 49:53

I think we'll probably get a few orders for Boeing planes, some orders for soybeans. So if any of you are in Iowa, it'll probably get for you. I think that's what he'll say. Like, you know, he's uh like to your point about uh it's very transactional, right? You now there was some noise around Trump potentially asking China for uh I think a trillion dollars or something to set up car businesses, you know, to set up auto plants in the US. And I think there's a huge massive hue and cry for the populists on both sides, left and right, say, oh, we don't want that stuff. So I don't I don't think that's going to happen because, like, no, we don't want Chin the Chinese to invest here in America, we just want them to buy our stuff. I get that. So I think we'll see, you know, uh headlines around them agreeing to buy some stuff, but what do we give in return? We've already given them a lot in return. We've put lower tariffs, relatively speaking, on the Chinese than we did on Vietnam and Feo Philippines and you know all these other countries, right? And a lot of like iPhones, for example, comes from China, no tariffs on that. A lot of the stuff that is AI related, right? Now I know it's not just China, but you know, competence that you need for the data center build-out. No tariffs on any of that. It was all exempt, chips exempt. And so China's got a big reprieve in the tariff war. And I think they'll probably say, you know what, just don't do anything crazy on the tariff front, and we'll buy more planes and soybeans. That's it.

SPEAKER_00 51:26

Planes and soybeans. There you go. Um, you mentioned Iowa. I was in Cedar Rapids last week to see the Carson Wealth team there at a really cool event, and I might have set a company record. I don't know. Let me know, but I might have set a company record for the longest Uber. So I went from Cincinnati to Chicago, then it was Chicago to Cedar Rapids. Now, my flight, I just kept getting the alerts. It's delayed 30 minutes, it's delayed now.

SPEAKER_02 51:48

Chicago did its thing to write. Chicago did its thing.

SPEAKER_00 51:50

The next day was very smooth, by the way. So the travel gods got me back, which is nice. But I just kept getting these alerts. I'm like, okay, now I'm getting worried because I had like six hours. I was, you know, had time, but then the next thing you know, the time keeps going. And now I'm realizing my flight's probably never going to happen. Then there's another flight going that I could have made it in time, going to Cedar Rapids. Everybody went to try to do standby. I was the third, there are 19 people trying to do standby on this little plane. I was third. I said, Think I'll make it. She goes, probably not, but you can try. Well, I didn't make it. So now I had a decision because I was not going to make it. I said, I can get a rental car. I look to get a rental car. One-way rental car was like $1,100. Ooh, that's pricey. But I mean, I don't want to miss this event because they've got 110 people apparently. They won't. I mean, you know, I don't want to riot in Iowa because I'm not there. I don't want the fine people I would get mad if I didn't make it, you know. So then I said, Well, let's check Uber. It was $310. Now I'm not saying that's cheap. I'm not saying that's cheap, but I'm like, but that's the air. I did too. I said, Well, I don't miss the event. We don't have you know disappointed advisors and disappointed clients, and I get to just chill and Uber. So I mean, I was kind of sick of being in the airport. So I go out there, push a couple buttons within seven. You talk about productivity in this day and age. Okay. I push a couple buttons, this car comes up, this dude rolls up, and I go, I got in. He didn't seem like he wanted to talk much. That's fine with me. I didn't either.

SPEAKER_02 53:06

Well, we won't complain. You and a be you and I have were in an Uber recently where they wanted to talk.

SPEAKER_00 53:10

She didn't show up. Son and I were exhausted, and she's telling us everything. We're like, please stop talking. You kept talking to her. I just stopped talking. I was like, I'm not talking anymore.

SPEAKER_02 53:18

She's trying to be polite.

SPEAKER_00 53:20

I was done being polite.

SPEAKER_02 53:21

And I was half asleep. And yeah, but I guess your driver to Iowa didn't want to talk about.

SPEAKER_00 53:26

I just said, I just said, You okay to go to Iowa? He looks at me and goes, Iowa, sure. That was all we said for four hours. And he just drove, and this dude flew. It was supposed to be four hours. We made it like three and a half, and I didn't even realize we were there. He's like, We're there. And uh that was it. We didn't talk, but yeah, so I mean gave a 25% tip. So at the end of the day, it's over 400 bucks. But that's pretty cool that I could get from O'Hare to Cedar Rapids and check it out. It's not close. Um, by pushing a couple buttons, and it really in the whole scheme of life, hey, the event still happened and things happened. And if you travel, nobody cares and you travel and have issues. I get it, but that was my uh record-breaking Uber drive uh last week. All right, so new last comments. What are we gonna watch this week? What else has happened and then we're done?

SPEAKER_02 54:05

Uh PPI comes out tomorrow. I guess the episode will be out tomorrow, too. So CPI plus PPI gives us a good glimpse into the personal consumption expenditures index, the inflation metric the Fed follows. And look, that's going to be hot as well. We know what that that's going to do, but it's going to be hot even outside of energy and things like that, right? Of course, CPC is going to be hot. I think all eyes that the Fed has a decision to make. Like and I from the and this is gets back to why we're bullish. We think the Fed is not going to do anything this year. Right? I I don't think they're going to hike rates. Normally, we'd be probably talking about rate hikes. I think there'll be a few people on the committee who want to increase interest rates. But Kevin Walsh is the chair, so he sets the agenda and the tone and things like that. So I don't think we're getting rate hikes this year. But going back to something we talked about, the longer they wait, the further they are behind the curve. Eventually, when it happens, you know, it becomes more problematic.

SPEAKER_00 55:07

You know, when they have the first Fed meeting and the doors are closed, I wonder if he like brings out donuts or something. I I would do something like that. Try to get him by his good side, you know, bring out some donuts or something.

SPEAKER_02 55:15

He's married to like the Versace family or something, so he can do better than donuts. Estee Lauder, Estee Lauder. Estee Lauder, not Versace. Yeah, I don't know my French houses.

SPEAKER_00 55:28

Yeah, I don't either.

SPEAKER_02 55:29

Um, but but he yeah, he should be doing better than donuts.

SPEAKER_00 55:33

Maybe he should get like some a nice package of stuff for all the television. I think I think if you give everybody a donut and a milkshake, I think they're gonna be like, This guy, I like this guy, this guy's pretty good.

SPEAKER_02 55:44

Anyway, get Brian Dietrich on the FOMC committee episode.

SPEAKER_00 55:50

I'll just call Sonu. Sonu, what should I do? Okay, yeah, good. Thanks. All right, yeah. Um, anyway, all right. Well, listen, uh, this was episode 187. Party like it's 1999. Uh, there's there's some some potential worries, still more positives than not. Uh, we appreciate everybody listening to these. If you missed last week, please check it out. We got Jeff Hirsch over from uh Almanac Trader or the Stock Traders Almanac, I should say. Almanac Traders is X handle. Um, just an amazing discussion on seasonality. He and his father literally created Celemago Way, so that was a really good one. We've got a lot of good downloads on that, so it's nice. Um, you know, if you uh like this, share it, subscribe, give us a like, give us a follow. Good review, bad review, can't leave the witness. We just like interaction, which is awesome on those comments on YouTube. It goes a long way with those algorithms. So, with all that, Sono, I'm sure you and I will chat soon. Thanks to Podpony, our producer, as always. And we will, yeah, it's just you and I next week. We might have a guest sooner and later, but yes, you and I next week. So yeah, we'll um we might have a live stream coming up too. We'll just put it out there if you heard anything on that by the way? Have you heard anything on that by the way? No. Okay. Crossing my fingers there. We're hoping we'll have a live stream coming up, which will be neat if it happens. We're pushing for it. So all right, everybody, we'll we'll see you next week. Have a good week and take care. Thank you. Information provided on facts versus feelings with some of our geeks and Ryan Dietrich are for general information only and are not intended to provide specific advice or recommendations for any individual. The statements and opinions of show guests may not be reflective of CWM LLC or its affiliates. Past performance is no guarantee of future results. All indices are unmanaged and may not be invested in directly. Investing involves risk, including possible loss of principal. No strategy assures success or protects against loss. To determine what may be appropriate for you, consult with your attorney, accountant, financial, or tax advisor prior to investing. Guests on facts versus feelings are not affiliated with CWM L L C