The Jon Sanchez Show
7/22 Biden out, potential nominee Harris inherits his economic record
It's time for today's Lucky Land horoscope with Victoria Cash. Life's gotten mundane, so shake up the daily routine and be adventurous with a trip to Lucky Land. You know what they say. Your chance to win starts with a spin. So go to luckylandslots.com to play over 100 social casino-style games for free for your chance to redeem some serious prizes. Get lucky today at luckylandslots.com. Available to players in the U.S., excluding Washington and Michigan, no purchase necessary. VGW Group, void reparhibited by law. 18+ turns in condition supply. Good evening and welcome to the John Sanchez show here on News Talk 780KOH. This is Jason Gaunt. I will be your humble host tonight. I believe John's voice has disappeared on him for the evening, but hopefully he gargles with some saltwater, does whatever one does to get their voice back, and he's back in the saddle tomorrow morning for you. But we did get a market today that was nice and strong on the back of, a little bit of news this weekend, I guess. We had a Dow that closed higher by 127 points, or 0.32% to 44.15. The S&P was up 59 points, or 1.08% to 55.64, and the NASDAQ up 280 points, 1.58% to 18,007. Been quite a wild ride over the last, I would say, week or so. You've had a fair amount of factor moves underpinning this market, as it was very overbought. We had talked quite a bit about how the strongest two weeks in the market just ended on the 17th historically for the year. I'm going to get into a little bit more of that in a bit. We'll also touch on the obvious news, and I'm not going to pound on it too much because I, for one, have heard enough near term, but clearly the announcement over the weekend as far as Biden and Harris, and at least near term being the front runner to head towards that democratic nomination. CNBC had a decent, at least a little bit of, I would say, notations on how Biden's economic record could be a challenge, well put, for Harris. I was going to go through that a little bit later in the show, but we had a very strong day today with the markets. As we talked about again, despite the seasonality of the last couple weeks, you've also got a market that I think predominantly had priced in a Trump victory, I think as far as some of the sector rotation we had seen over the last couple months, and if it's now a Harris potential, who knows, what other areas of the market can bounce back do well. She has a bit of a different record than I would say Biden did as far as technology stocks. There was some chatter today around that, you know, the Harris administration may be a view the mega caps, the meta's, the Nvidia's, et cetera, with a more favorable lens, certainly from M&A standpoint, at least the comments that had been thrown around prior, obviously she's from California, so probably has a year for technology companies in general, and I think that's a bit of what we saw today with Nvidia up north of 4%. Meta was up about 2%, and Microsoft up 1.3%. Nvidia shares are flat for July though, so it's been a tough month for two months really for some of the moves that Nvidia had, but today was a big move back. Meta shares are down 3% for July, and Microsoft's down about a percent. Technology, communication services, those areas were the strongest today. Energy was the biggest lager, I would say. It was down about 3/10 of a percent, again, I think some of the repositioning around this weekend's announcement. Clearly, there'll be more jaw boning and gyrations of the market. Again, mentioned it many times. Historically, it doesn't matter who wins the election. Red, blue, you, presidents often inherit economies as much like it takes the Fed six to nine months for their changes to make any real direction or affect changes at the corporate level. Oftentimes, the tax positioning or changes that presidents have done take years to get into the economies and effect change. The Obama administration was benefited from things prior, just like Bush, just like Trump, and just like Biden. They can often create some lasting pain that hurts into the next administration, but clearly, again, we'll go through some of the multi-trillion-dollar surges in the debt and deficit problem under Biden and how that would equate into the next administration. The Trump administration cut taxes. If you're going to cut taxes and income goes down yet, even if spending stays the same, you need to raise debt in most cases and clearly, the prior administration or current administration didn't have a very difficult time on the debt side. We'll get into a bit of that later, but for this first part of the show, I wanted to talk a little nerdy here, equityclock.com, which is one that I track quite a bit, talked about this market today with the S&P 500, as I mentioned, back above that 5,500 level. That's the 20-day moving average. That's probably one of the shorter moving average lines that I keep an eye on, and we were able to now get back above that 20-day moving average today, which is healthy. But I think the more concerning part is where we lie on the calendar. Coming off of that two-week period that tends to be the strongest of the year, reasons being it's the end of the buybacks into earnings for the second quarter that we're going into now as far as results. It's a quiet time of the year, which creates buying in the options market if nothing bad happens. Every day that that insurance policy of puts that are out there in the market, if something bad doesn't happen, the market makers need to buy back some of their hedges, which creates buying underneath the market. Well, these two weeks tend to be fairly uneventful as far as the markets are concerned, and that is a decent reason why it tends to be a strong period of time. Unfortunately, after this tends to be a fairly volatile period. As August, September, and October, typically, if we're going to say a quarter, and I know that's a wide window, tends to be the largest increase in volatility as far as markets are concerned, the average low for the volatility index in the market is July 22nd. Guess what today is? And then that rises on average until October 11th, for all the reasons that we mentioned. You've got people coming back from historic use air quotes, summer vacations, where start to make changes in portfolios. You've got the second quarter earnings and the backside of earnings season in a lower volume environment normally, because most folks are out and about during the summer, so volumes tend to be lower. And those are some of the things you want to keep an eye on when it comes to portfolio positioning. We've told clients here internally that I expect volatility this summer. I still think that the markets are higher than here at the end of the year, just given the positive tailwinds of, you know, we're seeing more and more and more that the probability of a September rate cut is now close to 100%. And the probability of an additional rate cut or possibly even to this year on the back of that is well north of 75%. So the market's pricing in inflation coming down. The market's pricing in a more dovish fed as they look to lower interest rates, given that they need to position this economy, that is slowing, not stagnating, but slowing from what were aggressive levels of growth that we've seen over the last couple years. Stimulus spending, we talked about a lot, but the Fed is now seen and we will get PCE on Friday, which will give us another view into the Fed's quiver as to that confidence building or not to continue to cut rates or again, continue to move forward with their assumed rate cuts later this year. And that can be stimulative for the market. Well, when interest rates go down, there's the other part of that pendulum. And that is the bond market, right? The bond market typically ends up being the safest bet through the remaining of the third quarter, given that volatility and equities that leads in August and September, going hand in hand with the view that the Fed could be cutting interest rates. That'll also help bond. So right out of the gates, if you've not been paying attention to that bond part of your portfolio, because equities have been doing so well, we might be coming into both a seasonal, as well as Fed period where interest rates could be lower. It could make sense to take a look at bonds inside of your portfolio. But we've got lots more on the show, but first, let's check in the right now traffic center with Kristin Snow. How you doing, Kristin? Good evening. And welcome back to the John Sanchez show here on News Talk 780KOH. This is Jason Gaunt. Today, the Dow closed higher by 127 points, 0.32% to 4415. Man, I love Steely Dan. S&P was higher by 59 points, 1.08% to 5564. The Nasdaq higher by 280 points, 1.58%, 18, 007. Gold is higher by $3 here in the news session to 2397. Oil 79.95. That's down 0.22%. For the year, the S&P is higher by 16.7%. Nasdaq composite higher by 20%. S&P mid-caps are higher by 9.7%. And the Russell 2000 that had a stellar last week and a half is up 9.6% on the year. Heard some calls for the Russell to be up as much as 40% to 50% this year as interest rates come down and sort of stimulate some of the smaller cap stocks. It seems like an aggressive assumption, but I would be happy to see it. Looking at some of the news items today, again, the one we can't ignore with Biden exiting the 2024 presidential race endorsing Kamala Harris, who will seek that democratic nomination and claims most of the delegates she needs from what I see here. Senator Joe Manchin, who was thrown around this weekend says he is not going to be a candidate for president and that he doesn't need that in his life. PBOC switching gears here, China. They cut interest rates just on their 70 reverse repos and their one-year prime rates, but they've been doing stimulus for quite a few months now as their economy is looking more like ours from a 2008 standpoint with housing and buildings and so on and so forth. That could at some point either create some strength and consumption there or at least help mend some of the slowdown that could be another tailwind to consumption domestically here. Israeli Prime Minister Benjamin Netanyahu is going to address Congress on Wednesday according to Politico. Maybe we see Biden at that point or prior. The crowd strike disaster piece looks like about 1,600 flights were canceled on Saturday amid ongoing effects from that outage according to CNN. A couple news as far as earnings, etc. Banks, they had their report about the bulk of them over the last week and a half. One notable change Bank of America, Berkshire Hathaway sold about almost 34 million shares of their position, cutting it pretty dramatically over the last three months. Also in banks, Charles Schwab indicated higher as their chief executive officer and president spent about $2.3 million buying shares of the company. Back to crowd strike, they said they continued to focus on restoring all the systems that had issues as soon as possible. About 8.5 million windows devices were impacted with the problems that happened late last week with crowd strike. Delta says people are working 24/7 to restore full operations, but in most cases, they are back. Speaking of some of the other big caps and video I mentioned, Microsoft workers at Microsoft Bethesda Game Studio have unionized with CWA becoming the first wall-to-wall union at Microsoft. Bethesda is a big game producer, someone who was purchased by Microsoft years ago for kids play video games. They definitely know Bethesda Studios. Nvidia says they are going to introduce artificial intelligence chips for the Chinese market specifically over the next year. Recall, that's been clearly a big lightning rod with the Biden administration around China and their usage of Nvidia chips that the H100, H200s and Nvidia as a counter is going to look to produce chips that clearly have different technologies. Are they going to be inferior? Time will tell, but they are looking to create AI chips specifically for China. And what will a Trump administration look like in that standpoint? I think Trump made a comment the other day that President Xi sent him a lovely note after the assassination attempt, and there were some comments back and forth today as to, does Trump have the same rhetoric with China if he becomes the president again? Obviously, the second largest economy in the world. That's going to be important as far as how the two nations communicate, how consumption occurs on both sides of the pond. Clearly, China is in a tough spot, much tougher spot than they were during Trump's time now with all the housing well and the slowdown that China's seen for some time. So maybe they're more apt to want to open up and not be quite to what we've had in the past. And then finally, Disney software cats, who was the CEO of Oracle, is going to be leaving their board of directors. You've seen quite a bit of turnover at Disney with Nelson Peltz when he had a large stake and then sold his stake in the company. You're going to see some of these changes too as we go into the election, not uncommon to see board changes as a function of presidential changes. Even though, again, we talk about the the presidential change in general doesn't tend to affect the market quite as directly it often causes volatility and some fear for investors or some fervor for investors. But over time, they tend to, you know, any big moves prior tend to get corrected on the other side of the election. And that's why, like I said, if we can stress anything, making decisions based on one politician or the other winning the election, I would more than recommend not to do. Don't, you know, your, your emotional decision-making, as we've talked about quite a bit, John and I, is the thing that is the one you want to try to get rid of as much as possible when you're investing in, unfortunately, politics for far too many tend to have far too much of an emotional response. But when we get back speaking of politics, let's take a look at the CNBC article about how Biden's record could certainly be a challenge for Harris. But why don't we check in again here with Kristen Snow, who has news traffic and weather. How are you? Welcome back to the John Sanchez show here on News Talk 780KOH. This is Jason Gaunt. Today, the markets finished nice and green. The Dow was higher by 127 points or 0.32% to 4415. The S&P was higher by 60 points, 1.08% to 5564, the NASDAQ up 280 points, 1.58% to 18007 gold right now, just flirting with the 2400 leather oil down a touch to 7995. So the news of the weekend clearly was Biden stepping away and at least for the nomination for another four years. And CNBC had an article out, myriad of them out there. I just thought it was a good once over as far as Biden's economic record could be a challenge for Harris. And I was going to go through and highlight some of the notes in here and then Adwyr could be helpful on the stock side. So as the forerunner for the Democratic Party nomination, Kamala Harris will have to run for better or worse on President Joe Biden's economic record. I'm not trying to get anyone angry or frustrated. This is just what the article is about. That could be problematic for the vice president who's being regarded as the near certain replacement for Biden on the party ticket. While Biden, Harris can lay claim to a number of achievements their legacy on inflation, it is what's being remembered most by voters who generally pan the administration's record. It would be just one challenge Harris will have to overcome to defeat her Republican opponent, former President Donald Trump. She's got to bear some responsibilities since she works for the administration, says Greg Valerie, Chief U.S. Policy Strategist at AGF Investments. It's going to be hard for her to come up with a new plan and it could be viewed as disloyal. She's really stuck in a bind right now, he says. Despite historically low unemployment and macro growth that's been defied, that has defied rather long held expectations for a recession, the economy is Biden's soft spot. Just 37% of Americans approve of the president's handling of the economy according to Reuters. This number has moved a little in the later years of the Biden presidency with consumers revolting over the high costs of pretty much everything, even though inflation numbers have eased in recent months. There's also the debt and deficits problem. Federal Inc has surged about 7.2 trillion under the Biden-Harris watch, an increase of more than 25% as the administration has set this year to run up a budget shortfall approaching $2 trillion. I don't think trillion will ever not sound like a pretend number. Those issues pose particular problems for Harris, whose economic ideas, assuming she is the Democratic nominee, are expected to mirror what Biden has done for the past three and a half years. I don't see a lot of daylight between her views on economic policy and those of the administration according to Mark Zandy, the chief economist at Moody's Analytics, a Democrat who has advised administrations of both parties. She was part of the debate and discussion around setting those policies, so they're her policies. Here are some of the positives and negatives. Any delineations Zandy added would be slight. Harris likely would continue Biden's efforts on a number of fronts and would be expected to lead the charge to end Trump's 2017 tax cuts when they sunset in 2025. Remember, some of those are potential estate tax changes. Some of them are potential 22 and or 24% bracket becoming 28% bracket. There's quite a few. Maybe the differences will be around emphasis is emphasis compared to the president and how things are framed, Zandy said. But in terms of the actual policies, in terms of tax policy and policies to address the housing shortage, other cost of living issues, consumer protection to antitrust, I just don't see a whole lot of difference between the two. There were some comments out today, Kramer, some of the others saying that her antitrust views could be a little bit different than the Biden administration, just given some of her background, certainly more California favorable potential. So I'll say that could be a little bit. And you saw some of the large cap acquirers type spaces do okay today, too. To be sure, Harris will have positives for the economy on which she can't campaign. The unemployment rate, though on a gradual upswing, is still at 4.1% low by historical standards. Remember, we got down to, I believe, three and a half percent. And the Fed started their conversation and then immediate push on the rate hike side. And now we're at 4.1%, but that's still historically low. With non-farm payrolls rising by more than 1.3 million in 2024 alone, consumers who power about two thirds of the $28.3 trillion American economy have been resilient as recent retail sales have climbed 2.3% over the past year. But it's inflation. And that's the problem, which has been the biggest driver of voter dissatisfaction. Here's some good numbers. The inflation rate as measured by the CPI ran at 3% in June, a third of its mid 2022 peak, but more than double the 1.4% rate Biden was handed when he took office in 2021. Food costs are up 21% since Biden and Harris took office. Energy has soared by 33% and the median home price has also surged by 18.5%. It will be difficult for Harris to run away from that. Though she could tout the progress that's been made in taking inflation to the lowest it's been in three years, it's still a very high number. The fact that there's not much time between now and the election wouldn't make it particularly feasible to change the economic blueprint in any appreciable way, says Joe LaVornia, who served as chief economist on Trump's National Economic Council when he was office. There was an economic reticor that she'll run on that she'll have some claim to. I think whatever happens in her administration would be effectively some pruning on the side here or there, but basically President Biden's according to LaVornia. One note, possible change is at the Fed. One area of difference between Biden and Harris, which Trump has talked about recently saying that he would let Jerome Powell run out his current tenor, but not get a chance to get a tap again in 2028. Harris, back in 2018, voted against Powell's nomination to serve as the chair. She was one of just 13 senators to do so. At any time when the American people are deeply concerned about an economy that works for everyone and a financial system that is fair and transparent, I have serious concerns about Mr. Powell's commitment to strengthening rules to protect consumers and ensure the stability of our economy, Harris said at the time. Remember, Biden renominated Powell in 2022 and the Senate confirmed him by a vote of 80 to 19. Powell's term, sorry, ends in 2026, not 28. And it's unclear whether the 71 year old policymakers would even want to serve a third four year stint. Trump, as I mentioned, already said he would not give him another term. A decision not to reappoint Powell wouldn't necessarily have anything to do with the feds independence, which is what Trump has talked about, but rather a desire to inherit a Fed chair from two presidents ago is what some say, naming a different Fed chair then might also not mark a policy difference, but rather a desire for a fresh start to the central bank, which is expected to start lowering interest rates, as I mentioned earlier, in September. My sense is Harris vote against Powell was just more of a political statement. It's pretty clear he was going to be appointed and her vote wouldn't make much of a difference one way or the other back in the day said Sandy. When she was when she was general, sorry, Attorney General in California, she was very aggressive in pursuing financial institutions that went off the rails in the lead up to the financial crisis and shows she has a very skeptical view of folks who come from Wall Street. Sandy also acted or added rather. So, you know, not a shocker as far as the article's concerned in general, I thought the inflation numbers are going to be very difficult for either Harris clearly Biden to escape when it comes to the election and debates, et cetera, if we get any. But, you know, this at least points out that some of the things, if it's Powell, that would line up with what Harris would potentially do as well. But either way, I still expect a lot more saber rattling until we finally get a decision as far as Harris is concerned. But given the amount of money that's been raised over the last weekend, odds are it seems that many are already starting to put their money where their mouth is and, you know, things are moving to the right, as I mentioned, with the she has most of the delegates she needs for that Democratic nomination as it is going to be an exciting couple months, for sure. But why don't we check in again, finally, with Kristen Snow and wrap it up for this session. Welcome back to the John Sanchez show here on News Talk 780KOH. This is Jason Gaunt. Taking a look at the futures here, we've got the Dow futures down 21 points or .05 percent. S&P futures lower by 8 points or .15 percent. The NASDAQ futures down 63 points .32 percent lower 19 937. Looking over at the 10 year bonds today, we've got the 10 year right now at 424. That is lower by two basis points. Tomorrow on the economic side, we're going to get June existing home sales consensus is looking for 4 million versus a prior of 4.1 million. We're also going to get about 69 billion of two year treasury note auctions. So that'll be one to keep a close eye on as far as interest rates are concerned. Some of the heavy hitters kick off tomorrow on the earnings side as well. Tomorrow morning, we'll get General Motors, UPS, Lockheed Martin, Coca-Cola, Philip Morris, Sherwin Williams, Freeport. In the afternoon, here's where the fund starts. We're going to get Google where we're looking for $84 billion, 84.2 to be exact. Street's looking for $1.84 versus a year ago number of $1.44. So that's some growth on the earnings side. We're also going to get Tesla looking for 24.3 billion. Consensus looking for 61 cents on the earnings side a year ago, 91 cents. Also get results from Chub. Remember Chub is the company that Berkshire Hathaway had been acquiring shares of over the last year or so. Capital One, Financial, Visa, etc. Later in the week, Wednesday is going to set us up for AT&T, Boston Scientific THC. After hours, we'll get a Mariprise Ford, Las Vegas Sands, Terradine, Thursday, AstraZeneca, Harley-Davidson, Valero, Juniper, Novartis, National Oil Well. And then on Friday, we'll get 3M, Bristol Myers, Colgate, Newell, T-Roe. But tomorrow's earnings are going to be, I would say, the first from the fangs that can get things moving around. Google will give us a good look on what consumption's looking like on the advertising side and clearly Tesla. I mean, that stock has had a wild first half of the year for sure, but has rallied quite a bit over the last couple of weeks. So I'm going to be keeping a very close eye on both of those, much like the market will, too. This earnings season is still set to be a good one. The market is expecting a growth, and that is why we've seen as much strength as we have over the last quarter. Earnings growth, particularly on the mega caps, is something that we're going to need to see follow through to keep this market moving in the way it has, and hopefully a lower interest rate environment with the expectation for September coming down by 25 basis points. And December, the next one, I don't know if they're going to cut right around the election. It would be surprising, but never, never shocked when odd things like that happen, but we'll be keeping an eye on it. And obviously, for folks out there, as I mentioned, key takeaways from the show, keep an eye on your bond portfolio. Rates are coming down, and seasonally, the next two months are a good time to be a bond investor. You should start picking away at duration in your portfolio that hopefully can help you out, especially if equities get a little bumpy. Thanks again for listening. This is Jason Gaunt. John and the boys will be with you tomorrow night here from the Office of Sanchez Wealth, News Talk 780, KOH. Judy was boring. Hello. Then, Judy discovered Jumba Casino.com. It's my little escape. Now, Judy's the life of the party. Oh, baby, mama's bringing home the bacon. Whoa, take it easy, Judy. The Jumba life is for everybody. So go to Jumba Casino.com and play over 100 casino style games. Join today and play for free for your chance to redeem some serious prices. Jumba Casino.com. No purchase necessary for you. We're prohibited by law, 18-plus terms and conditions apply. See website for details.