The Jon Sanchez Show

08/02- Markets in turmoil

Today, we suffered a major market decline. This week, investors have digested a mix of corporate earnings, with misses in some of the major technology names. In addition, economic data is showing a slowdown in the labor marker as well as our factories. So what does this mean for your money?

Duration:: 38m
Broadcast on:: 03 Aug 2024
Audio Format:: mp3

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Good Friday, even the two. Welcome to the John Sanchez Show on new stock 780K, which is a pleasure to be with you. Pleasure to say it's five o'clock on Friday. Lord knows, Mr. God, that we are happy that this week is behind us. Are we not my friend? Yes, yes. We definitely are. Oh, not a fun one. No, I don't think anyone had much fun this week. Yeah, yeah. Well, the short, short boys and girls did, but everybody else, no. Yeah. I don't think there's many of those. It felt like there weren't very many of them at all. That's why I got acted the way it did. Absolutely. Well, happy Friday to you, my man. Yeah, you too. Thank you. All right, Jason, I have our hands full this evening bringing you up to date on what the heck happened today, this week, what this market is telling us at this point. And oh, by the way, this little tiny report called non-farm payroll members all came our way today. So before we get to enlightening you on what the damage was today, I want to do a quick reminder, quick reminder, it's kind of a sentimental night for me, Jason. I have to admit. I know how many. I was trying to remember when the show moved from Saturday to five o'clock Monday through Friday, I'm going to guess it was somewhere around 2010, somewhere around there. So yeah, we're talking a little bit of time here. Space Odyssey. Yeah, space Odyssey. And so just the reason I'm bringing this up, if you have not heard, we are moving the show to 3 p.m. Monday through Friday, starting on Monday. Greg Neff and Reno Live is going to be moving to four o'clock. So make sure you just keep your dial right where it is and never change it, right? But again, we are really looking forward to going to the three o'clock hour. And again, we've only had one angry email. Only one. That's not bad. That's not really good. Yeah. Okay. That's not bad. Yeah. Yes. Thank you for bringing that up. Hopefully we have been, for all these years, we have been a part of your life. We hear the stories that many of you, especially on big days like today, you pull up to the garage and hit the remote control and you sit in your car, hopefully you don't have it running, but leave the door open. Exactly. We don't want any. Yeah, exactly. Exactly. But the stories of people sitting in their driveways listening when Jason and I are on a roll and you want to hear the information. And again, from the bottom of our hearts, we are so grateful to have been a part of your life for all of these years. And if we don't fit into your schedule anymore, because I know, obviously, like I said, we've been a part of your life at five o'clock for all these years, don't forget that does not mean you're going to miss the information. Don't forget you can always listen to our podcast, right? You can find it at iTunes and Spotify and everywhere that podcast are distributed. If you missed anything, obviously, Jason and I, our life is you and our client. So there's anything that we can ever help you with on a one-on-one basis, you just pick up the phone and call our office and we will do everything we can to help you in any facet of your monetary life. So just again, from the bottom of my heart, I'll let Jason wrap things up. Just from the bottom of my heart, I am so grateful to KOH. I am so grateful to all of you who have become our family. And hopefully you can maneuver your day around a little bit and move on down to three o'clock and be with us live each and every day. But again, I know many of you have job commitments, et cetera. So if you can't do that, again, please just listen to the podcast, at least. The podcast, for sure. Exactly. It'll be out there as soon as we're done, I mean, you literally just have play in your car. Yeah. It's the same. Good point. Good point. So any final point you want to mention on that? No, I think it's that. Sort of as I've mentioned, please, if anyone has any issues or isn't comfortable with the whole podcast world, I've talked to a couple of people on how to do it and set it up and it's super easy. And just give us a ring. Yep, absolutely. You bet you can. So again, thank you for all of your years of loyalty and being with you. It's literally our honor to do this show each and every day. We are grateful to all of you that have become clients and hopefully many of you that will become clients over the years. We're hardworking guys, our staff is incredible, and you are our family. When you become a client at Sanchez Wealth Management, you are our family. As a radio listener, if we never get the opportunity to meet or become clients of ours, you're still our family. And we cherish the opportunity to be with you each and every day. We take it very seriously. We try to have a good time, but as you all know, we do take what we do very seriously. We're talking about your money. It's not about us. It's all about you. It's the reason we do this show each and every day. So again, thank you, thank you from the bottom of my heart for the opportunity to be in your life and be a part of your life for so many years at five o'clock and look for do, you know, hopefully 10, 15, 20, 30 more years of being part of your life at three o'clock. Hey, Greg, you're behind the mic right now, aren't you? Nope. He's doing calisthenics for his show, you know, if he's got to get ready for it for next week. I'm going to show it again, we'll be up four o'clock. So anyways, so thank you, there's the housekeeping out of the way before I forget. Now Mr. Gaunt, it's Friday. We made it through. It was a tough week. This market is throwing curveballs left and right. The economy by many takes are is throwing the economy is throwing curveballs left and right. It's our job to make it a fastball and understand everybody. What the heck is going on at this point? So before I turn it over to you, I want to kind of set the table up a little bit here. Remember folks, we have cautioned over and over again that we've got to be careful hoping praying for a situation where we want to fit interest rate cut, right? It's not always a guarantee that things are just going to accelerate when we get a cut. It's all about the verbiage and so on and so forth. Well, it looks like at this point, and I'll just kind of let the cat out of the bag on this before Jason gives us his great overview of the day, the CME FedWatch tool is now showing a 71 and a half percent probability, not of a quarter percent cut, not of a quarter percent cut, but of a half a percent cut at the September meeting. So that is one of the things among many that changed dramatically this week. We've gone from nearly a hundred percent probability was in the 90s as high as about 96 at one point of a quarter percent cut in September to now because of what has happened this week, a half a percent cut. Jason, I want to just throw this out there while we're on this subject. I told you this and I don't know if you agreed or disagree, I don't know if you gave me your opinion on this. I think we have a very, very strong probability as all of you will learn after we share with you this non-farm payroll number and go over some of the data of the week. I think we have an extremely strong probability that we are going to get a surprise interest rate cut before that September meeting, your opinion. I'm going to take the other side of that trace. For all the reasons of this Fed wanting to be as transparent as they can and not spook the markets. Let's take a hundred and whatever, 12 was 120,000 jobs or 110,000 jobs. Where the heck the number was? 114. Prior to the last two years, that was a good number. We're at 4.3 percent unemployment. We're not in 10, right? The world isn't ending and the deceleration has been, I want to say swift, remember? Government jobs also have made up a decent amount of the last couple months of ads and they weren't there this one. You also had the storms that were going on, Hurricane Beryl or whatever, which play into this number as well. These aren't catastrophic numbers. You've had ISM has been weak for some time. Leading indicators have been terrible for a long, long, long, long, long time, even to the point that they're not even notable anymore. I do think that the Fed probably goes 25, 25, 25. I wouldn't be surprised to see better numbers later in the year as far as jobs, et cetera, but I'm of the opinion that there's more macro things going on right now. The jobs number today just didn't provide a catalyst to buy the dip, right? I think that's part of why we just continued to melt in the direction that we did. Again, you and I both talked about the seasonality and strength of the first half of July, right? All the way up until July 17th, 20th time frame, you tend to have strength and then you have volatility for the next three to four weeks. Exactly, and driving over here and thinking to myself, I get so frustrated when the damn market does exactly what it's supposed to do, right? It's too easy, you kind of feel like, "I'm not going to do that." That's always happens and it just does. I think that's more part of what we're seeing. Lots of things will go through, but yeah, the Bank of Japan, they made the changes this week. At the end that's moved 9%, this is a currency, has moved 9% in less than two weeks, right? There's this thing we talk about, this carry trade and what the heck is it? It's very simple, right? Basically you borrow yen and it doesn't cost you a lot to borrow it because Japanese rates are low and you go out and buy other higher yielding currencies or invest in go-go tech stocks or whatever you want because the borrow is super cheap to just sell yen to fund your trades and what happens when yen goes 9% against you, you get squos, especially if you're using leverage. The yen move is a lot of what caused, you know, this, you know, and earnings didn't help, but, you know, I mean, just talking about who had bad earnings. Didn't we have a bad, I don't think anyone had bad earnings. They're all lower than expected, number of them didn't. Who was lower than expected? John, Microsoft, Google. Amazon numbers were better, they were in line and they were in line and they just talked about slowing consumers, so there was some narrative, but nobody whiffed, right? Nobody whiffed, though. I'll give you that. Apple was green today, right? I mean, I think at the end of the day and I know it's odd to feel like we're switching chairs here, but, you know, I just, you know, I, again, I think this is more of a macro trade, which can feed. I told you offline, these are the ones that tend to hurt the most because they don't have a, they're, they're like a, what the heck's going on? They're, they're more mechanical. They're not emotional, right? And those are sometimes more difficult where it's like, oh my gosh, something bad happened let's sell. This is more of like just this wise, deeper than that, though, it is. That's what I'm saying. When you have the, when you have the Nikkei plummeting was it, 2,200 points or something like that? It's the, yeah, exactly. Exactly. They're not falling apart. Everybody's falling apart. Yeah. Everybody's falling apart. And Europe, they've already started cutting, right? They've already started cutting. Bank of England cut today, too, right? And because they've been high for a while and, you know, like I said, the fear of the Fed being too slow, but I just, you know, I think things would have to be really decelerating. We need way worse data before the Fed, this Fed decides to cut, you know, intermediate. I just, that's just what I think. Yeah. Exactly. All right. We'll talk about it when we come back. That's a good discussion. In the meantime, speaking of discussions, let's say how we're doing on the highways is fine Friday. Let's turn it over to Kristin Snow, the right now traffic center. Hey, Kristin. Welcome back to the John Sanchez Show, a new stock, 780K, which was Jason Gunner, Sanchez wealth management. All right. We're going to get back to our discussion here in a moment with the Fed should be doing. I guess it's a good way to summarize it. But here's the damage of the day, 600 and 11 point loss on the Dow, 1.51 percent. That closed at 39,737, the NASDAQ gave up 418 points, 2.43 percent to close at 16,776. NASDAQ now in correction territory defined as a 10 percent or more decline from its high. And we are there now. NASDAQ, by the way, is down about 1,800 and 95 points or so from that high that was hit in July. Matter of fact, most of the major indices hit those highs in July. S&P for the day down 100 points, 1.84 percent to 5,346. All right. Jason and I are having a good debate about what the Fed's next move is. He thinks the Fed's going to wait till September. I think they're going to give us a surprise rate cut. So here's my case, Jay. Here's my case. All right. Let's go to the bond market first. Okay. So here's, here's my situation. Now the bond market has done a lot of work, a lot of work for the Fed. Listen to these numbers today, folks, after this week are then expected non-farm payroll numbers, yeah, yeah, after this week are then expected non-farm payroll numbers and some of the weaker data of the week, et cetera. We lost 18 basis points today on the tenure yield, bringing it down to 3.79 percent. But you think that's a major move. How about this number, folks? The tenured treasury yield down 41 basis points, almost a half a percent for this week alone. I mean, I didn't get a chance to go back into the history books, Jay, but that's got to be up there in one of the largest weekly moves that we have seen in a number, number of years. So the bond market is saying, uh-oh, there is something wrong. There's something going on in this economy. The bond market's saying the Fed's too late to the game. I agree with that. And that's one of the reasons I think that the Fed is going to give us a surprise cut before that September meeting. Now we got a long ways to go. When's that September meeting? I think September 18th and 19th, if I remember correctly. Yeah. When's Jackson Hole, do you know? It's end of this month, obviously, but I don't know. I can look it up at the break. Yeah. Are you looking up with the, uh, with the exact date is, but, you know, you and I discussed this a few weeks ago when we had market volatility. I just don't see Powell. I know some former Fed heads of, uh, and leaders have made major interest rate decisions, but I think you and I both agree. Powell just doesn't seem to, he's not that kind of guy. He's not going to surprise everybody at, at a Jackson Hole, you know, fight an economic summit and say, oh, you know, we're going to get cut rates. We hold hint on it at that point, but I frankly, I think we're going to have a surprise cut before then. Now, let me go to my other point. All right. The street as we said at the beginning of the show, the street is now saying, you know, over 70% probability, 71.5 to be exact and this number changes day by day, hour by hour, but as we close today, 71 and a half percent probability of a 50 basis point cut. That is again, pricing everything into the calculation of the Fed, which, uh, watch tool. That is, again, has increased dramatically from 25 basis points to a half a percent to a basis point. A half a percent is very severe. Now, I think we would have a lot of problems, Jason, if the Fed does give us a half a percent cut in September. Okay. I think, I think to your point, I think that would spook the market much more so than the Fed coming out and going, and this is what you and I were discussing. So let's share a conversation with our audience. I think the Fed can come back and remember, folks, the Fed, they have an ego. I hate to say this. The Fed has an ego. They are human beings. They don't want to be criticized. They want to kind of make everybody happy. The Fed could come out very easily. Let's just say on Monday, just hypothetically, I don't think anything is going to have money, but they could come out and money and go, you know what, based upon what we're seeing in the bond market, but more importantly, we had a very weak non-farm payroll number of only, you know, once again, 114,000 jobs created, uh, I think our monthly average last time I checked a couple of months ago, I think we're still north of 200,000 as a monthly average. So it has been decelerating. You know, we, uh, we had 185,000 in, uh, in June. So we dropped from 185 down to 114 as Jason correctly mentioned, you know, we didn't get a lot of government jobs, which has really been the savior in 2024. There's been a lot of government jobs created, right, but not, uh, not in July. So I think they can use this week number as, as one of their, you know, again, kind of a crux to say, all right, you know, it's time we need to, uh, we need to address this. I frankly, I don't think the market would, uh, would, would, would, would panic on it. I think that's what you were inferring. I think the market would applaud it because you and I both know we're hearing this over and over again, people now are saying the Fed has been too late. The Fed is too late to the game. They should have cut at this meeting, um, this week. They didn't do that. Of course. So I don't know. That's just my theory. I could be completely off base, but I, I think they can make a case for it. I don't know. It's a long time. Yeah. It's been a long time. Uh, I think it was 2020. It was during COVID, uh, August 22nd through the 24th is Jackson Hall. Okay. Okay. Okay. So yeah, well that's past the meeting. So yeah, deal there. Yeah. No, no, pardon me. No, September 18th. Right. There isn't one. Yeah. So this Jackson whole basically is the meeting. That's the meeting. There you go. So that could be, you know, if they're going to do something around that, if they decide to, but again, we'll get some data prior to that too. Oh, yeah. But, but most of the data is, is coming down. You know, that's the thing and, and now what we have not seen again, and maybe it's a little too soon based upon the recent week economic data, but what we have not really seen is a big pullback in inflation, right? So there's to your argument, you know, the Fed has not seen a big decline in the inflationary data at this point, but I think if they stood back and said, you know, are we in a slowing economy? I think the answer, if you had a gun to their head, I think the answer would be absolutely yes, the economy is slowing down. And you know, when you get a company like Intel, it says, hey, guess what, world, we are laying off 15% of our workforce or 15,000 people, that has to make the Fed kind of sit up and go, okay, we are definitely starting to see a slowdown of the labor. Market. So, yeah, it's going to be interesting as, say it again, or like Intel sucks. Yeah, yeah, right. Exactly. Exactly. They could be that too. Now, if we had the boys on the real estate boys on tonight, Dwight would have a massive smile on his face today, there's his groups going to be hiring 10,000 people. Oh, yeah. Oh, he doesn't have a great mood yesterday. Yeah. He was in a great mood yesterday. I'm sitting there crying the blues after the yesterday sell off. Yeah. But like we said, 18 basis point declined on the 10 year today down 41 basis points for the week. Next to you on a national basis, according to mortgage news daily, that the 30 year fixed mortgage dropped 22 basis points today, almost a quarter percent in one day, in one day, 30 year fixed now, 6.4%, the 30 year VA, 6.12, a 30 year FHA, 6.1. I mean, these numbers are coming down very nicely, but I think Corey and I had a pretty good session talking about this last night, Jason, and that is, you know, we got to be careful of what we wish for if people are starting to worry that they're going to be the next round of layoffs, et cetera. It doesn't matter. You can see 4% mortgages and people are not going to go out and commit to a $600,000 mortgage. So, you know, the bottom line, we are in this balancing act as always, but I think right now we are really walking the tightrope. Are we going to decelerate or is this a short term, you know, slow down, et cetera? It's hard. It's too early to tell, but I think we have to look at all the different possibilities that are out there. Yeah, I just, you know, it's been four months, I mean, four months ago we were like, "Oh, my gosh, they need to raise and inflation is rising." You know what I mean? It's crazy. We got to just kind of, you know, I think the market in general needs to maybe stare at the middle and stop expecting the extremes all the time. And unfortunately, you know, that's sort of where, yeah, that's sort of where folks have gotten, right, where it's like, you know, either we're going to die this way or we're going to die this way. Right. It is. It's, you know, unfortunate and kind of crazy. Yeah. Real quick before we go to break, again, there was some damage done this week, Russell 2000, which again, this rotation where the money was flowing to, boy, you gave a lot of that back this week, 6.67% loss on the Russell 2000 this week, S&P down 2.06 Dow, gave up 2.1, Nasdaq down 3.35, but I'll tell you what, Jason, we should have, you know, popped the champagne bottle when we were enjoying a Nasdaq that was up over 20% because we have cut that almost in half, up only 11.8% year to date, S&P now has surpassed the Nasdaq on a year to date basis. It is up 12.1%, Dow's up 5.4, Russell up 4.1. So once again, there was a lot of damage done this week, you know, and again, affecting the year to date numbers too. So all right. We drink the toys instead of champagne, right? There you go. There you go. Exactly. All right. We'll continue our discussion when we come back. Let's turn it over to Greg Neff. Hey, Greg, welcome back to the John Sanchez show on his talk, 780, KOH with Jason on a Sanchez wealth management. We finished down 6.11 on the Dow, the Nasdaq fell 418, S&P gave up 100 points. All right, Jay, before we get to the non-farm payroll data, let's talk a little bit about Amazon Intel, Apple, three big names that reported after the close yesterday and had a major influence on today's action. They certainly did. Yeah, I mean, Apple overall, I think left the door wide enough that, you know, people were comfortable with, I would say, waiting to see what the next iPhone's going to look like and what the AI build out is going to be. The interesting thing that Apple has the luxury of doing and historically, they don't try to have the first move or advantage, right? And I think that benefits them and that, you know, their CAPEX was actually guided down, I think, 25% or something for the next year because, you know, they'll wait and use Google's large language models or they'll use, you know, the open AI's language model, you know what I'm saying? So they're kind of saying, look, here's the toolkit that they've started to open up to folks to go out and build out what Apple will eventually use and monetize. But they don't really have to go do it whereas a Google or an even Amazon or some of these others are saying they're going to spend, you know, five plus 10 plus billion dollars to go out and, you know, acquire all this stuff. So I think that's why, you know, and we talked about it before, people don't like when tech spends. Unfortunately, that's the case, even though try to defend it to say, look, probably in the future, you want the ones that have spent like a Google or their cohorts. But remember, Amazon, again, shifting gears here a little bit. They talked about the consumer. They talked about the consumer trading down. They obviously have the best lens in the whole wide world to that, you know, if things get tough, right? Let's pretend that, you know, people lose their jobs or, you know, they're going to go looking for the cheapest thing. Where are they going to do it? Amazon, right? I mean, it's sort of an interesting sell the news type feel. It had a decent bid to it, but unfortunately, they've got both things right now. They've got consumer. And they also have, you know, I'd say AI exposure, cloud exposure, and they have the momentum on one side and then, unfortunately, if you're concerned about those things, Amazon, unless they hit the ball out of the park, we're going to strike out and I think that's part of what we saw too. Yeah. Cloud growth was only 19%. That was in line with expectation, but not, you know, not obviously good enough. People wanted more than that. It's crazy, right? I mean, just when you think about some of those numbers, they were only up 60% like that. Yeah, exactly. But remember, you need to know when you buy a stock what the market is expecting. If you're buying something at 20, 25, 40 times, like an Nvidia forward, right, you have to make some pretty aggressive assumptions of them continuing to grow like the weed that they are. As soon as you see any sort of flutter, people freak out and go the other way. And I think that's part of what you saw. I mean, momentum came out of Nvidia, right? Absolutely. I mean, that now people are, you know, oh my gosh, and where's it going to, how low is it going to go? And those are the times where you want to start picking at those names. But it couldn't do, could do no wrong. And then all of a sudden it could do no right. That's what we said. He doesn't wake up one day and then all the parties over, exactly. Hey, let's leave on a positive note on the individual stock side, DoorDash, $8.92 rise today up, 8.24%, 117 12 closing level. This one had everybody scratching their head like, wait a minute here, if the consumer's slowing down, boy, DoorDash's numbers did not show that whatsoever. Yeah. And that's part, there were part of Shake Shack. They had good numbers. There were other companies that have really good numbers. So again, I'm interested to see whether this sort of month, these numbers, even earnings are sort of a blip in a larger, you know, a larger trend, but time will tell, for sure. We could see a deceleration, you know, I mean, ultimately this market's been fed by liquidity. We all know that. And the Fed's saying, look, you know, remember, when Fed lowers rates, what happens, you know, tends to maybe be favorable for some areas of the market, but they're, you know, obviously trying to toy with liquidity as well. Well, you know, the boys brought up a great point last night. I want to, I want to compliment this, compliment them on this. And that is do I say, look, we're starting to see a little bit of a pickup and refi activity. And Corey's like, yeah, there's a lot of cash, you know, with home value still up there very nicely. A lot of cash people are sitting on, if they start to smell that there's a slowdown in the economy, and now that we have the interest rates, you know, rapidly falling, at least for the moment, you could see a big surge in refi, people get that money, and then they put it back into the economy in most cases. So that could fuel the inflation fire just a bit. And the Fed is two and a half percent restrictive sort of to your point, right, that, you know, if they do make changes, it's not, and we've talked about this before, if this economy does decelerate and Fed rate cuts are tinder for a fire, at least they're at five and a half percent, right? Sure. And you're like, you know, we have no real ammo left, right? We probably don't have much buying that we can do in terms of the government balance sheet, but we certainly at least have the Fed interest rate policy to help protect some of that downside. Absolutely. All right. Great summary of my friend. Let's go to the non-farm payroll numbers, another catalyst of today's market weakness. Now once again, this is the crazy thing about Wall Street, right? The Fed's been raising rates, they've paused, and now everyone's upset that the job market is starting to weaken a little bit. I mean, this is what the Fed wants, right? They want to see this number come down, and boy did they get that wish come true. So once again, we had the non-farm payroll numbers released this morning for the month of July, only 114,000 jobs were created. If we go back again to the previous month, we had 185,000 jobs created, and I did dig up in the BLS report, Jason, I was unsure of the number, I was pretty close. Let me, of course, I can't find it now. Our average monthly job numbers, yeah, it was just a little bit north of 200,000 is what we're still averaging on a year-to-date basis, but so here's Wall Street's perspective on this. Wait a minute here. Only 114,000 jobs. Uh-oh. The consumer's weakening. Uh-oh. That means they're not going to be spending money at stores. Uh-oh. There goes corporate earnings, right? Yes. Right, we get to the painful end, oh my gosh, this is the, you know, I don't know, a host of analogies I can come up with, but Wall Street always tends to extrapolate, oh, if this, if this, if this negative, or if this, if this positive versus you're going to have noise in some of these numbers, but they have been slowing down, again, very much to your point by design, right? You can't be like, oh my gosh. Now it's, oh, this is terrible. They're getting what they were looking for, right? Uh-oh. It's sort of, again, damned if you do damned if you don't, but could they be late, right? But don't you think, yeah, we will know later, absolutely, and we'll know later for interrecession right now. I mean, here saying we are in a recession, uh, the data's actually shown it, if you look at GDP as your thing, but we won't know until later when the other calculation comes in. And what's GDP now, though? Isn't like two something? Uh-oh. Yeah, I just look at 2.3% or something like that. Yeah. Right around there. We, uh, I looked at it last night, uh, when we had this discussion with the boys and, um, well, let me throw a question and I'll dig that up for you. Here's the thing, though. Okay. If we only had 114,000 jobs now, the major work groups, you know, is typically, you know, healthcare led everybody as they, as they usually do and so on and so forth. But you know, why is it that I don't think, I really don't. I don't think that, that corporate America, and I'm going to say corporate America slash small business because small businesses, the job creator, not corporate America anymore, did interest right, you know, higher interest rates higher for longer, did it really impact their hiring? I don't agree that it did. I think they're seeing a business slowdown and therefore that's where the job cuts or why the job cuts are happening. I think by now they become accustomed to higher rates and so on and so forth. They're making money in their money markets, if they're cash, you know, positive, et cetera. But I really think it's more, they're looking down the road, could be the election, could be a number of different things, but that's the reason the job market is just really stalled out at this point. What do you think? Yeah. Yeah. I think you're right. I definitely do, you know, but it's, it's also the length of time that, remember we talk on like return of invested capital, right? The longer that rates stay high, even if it may not make you go higher, more people, you know, if rates are down 25 basis points, over time it makes the cost of capital more expensive or cheaper, right? And small caps, right? That's the perfect, you think that with rates come in, you know, rates coming down as much as they have, that would have been a catalyst for small caps, but it shows you that the fear of a slowdown far exceeds, again, to your point, what borrowing rates are, right? Absolutely. And it drops 100 plus basis points in what a month and, you know, small caps had four days of rally and they basically shot that trade in three days, right? Yeah. And so, yeah, it's, it, it, I, I go back to try to be mildly bullish is that my biggest concern is twofold, one geopolitical, China, Taiwan, Israel, Hamas, Gaza, those are the things that concern me because it's an unknown, unknown. The other part is commercial real estate, things along those lines that could be in a bad situation if inflation stays high. Well, if inflation doesn't and interest rates can come down and you've got now a hundred to 150 basis points lower of environment for these companies to refinance that debt into, for these corporate stuff, it can extend the duration by three to five years of that pain trade because if it didn't happen and they had to refi, they'd be doing it at eight nine, 10% and it'd be a game over. Right. Did you, did you see that? I think it was in the Wall Street Journal yesterday that a building in New York, pretty dollars or something. Yeah. Nine, like 9.9 million it's sold for where, not that long ago, I'm going to say maybe seven, 10 years ago, it's sold for 330 million. And it's just because it's antiquated. It's an older building. It's antiquated. And you're hearing that more and more of these buildings are selling for since on the dollar, basically, compared to where they were, because they're antiquated and, you know, developers are going, I can't, I can't make a pencil. Yeah. I don't know what to do with it. Do I level it and build again or I don't want to do that because rates are too high. So yeah. It's, it's like the mall effect, right? I mean, like the beta, you know, beta versus VHS type, you know, things change eventually that the old, what are we going to, you know, again, not to get into some different conversation, but there's all kinds of structures, you know, you drive around and there's that came art in your town, right? Everyone listening, knows of that came art, wherever the heck it is, or see her, right? That it's, it's sat empty for 15 years, right? And yeah, they've done Halloween stuff there, but I mean, it's, it's a useless thing, right? And so, you know, maybe some of these, you know, skyscrapers and stuff as folks can be more zoomable or, you know, consolidate their efforts. Yeah. They may be relics of, you know, yeah, yeah, past this. Yeah. This wasn't a small building. And like I said, a pretty good location, et cetera. I found it. Our average monthly job growth is right now, we're at 215,000. That's our average for the last 12 months. So here we get only got 114,000. So period is significantly below the monthly average. All right, we will come back and continue to talk about non-farm payrolls. I'm going to hit the unemployment number, which, oh, by the way, unemployment rates shot it pretty nicely. But first, Kristin Stone is going to wrap us up in the right now, traffic center. Hey, Kristin. Welcome back to the John Sanchez show on Newstalk 780 kilo, which with Jason Ghana, Sanchez wealth management. All right. Once again, we're going through the non-farm payroll numbers, another catalyst to today's 610 point decline on the Dow down 418 on the NASDAQ on 100 point loss on the S&P 500. All right. The unemployment rate, this number came in much hotter than expected. They were looking for this number to pretty much about stay the same, maybe bump up 1/10th of a percent. But it was much worse, unfortunately, unemployment rate jumped up to 4.3%, still not a bad historical number. But it jumped up from 4.1%, again, most estimates were about 4.1 to 4.2%. So this was significant. The number of unemployed people increased by 352,000. We now said it's 7.2 million. These are much higher than a year earlier, Jay. And I want to throw this out and it will probably be our final point a year ago. So here's the interesting part, a year ago, the jobless rate was three and a half percent. Again, we're 4.3 now and the number of unemployed people was 5.9 million. Again, we're now at 7.2 million. There's a significant increase on both of those data points in over a year. The big buzz word is the Psalm rule, S-A-H-M. I heard that for the first time today. And I'm like, you know, seeing me, he said, what the heck is that? I had you heard of that before? Yeah, I had, but it's not very, very common. But essentially what it says is the economy is in recession when the unemployment rates three-month average is a half a percent above its 12-month low, right? So it's, you know, it's, and you have French fries for breakfast. No, it's, right, it's kind of more of one of those showing of a massive rate of change. And I'm looking at the chart going back to 1967 of unemployment and, you know, sort of that rate of change. The line I'm looking at for unemployment seems like it hovers around, you know, five to six if I was going to draw a line through this sucker for the normal level. And your extremes are when you're, you know, with a forehandled to the downside, you know, to the, to the good, right? So like I said, I just feel like we're coming off of absolutely crazy, quote unquote, and then everyone's like, whoa, it depends on how you count on unemployment and listen, however they're counting unemployment, uh, we have moved now, 0.9%. I went back to that 1% thing that we've talked about a lot. Every time the unemployment rate has gone up 100 basis points, 1% has been followed by a recession, 100% of the time. So that's also part of what obviously people are concerned with. Yes. Yes. It's amazing when times, you know, get volatile, all these crazy acronyms and statistics come out of the woodwork that have been doing this a long time. I've never heard of that when I had to do a double take on CMC today when they said that. And, you know, so anyways, well, she's still alive. So it's not a whole time. How do you spell the acronym? Claudia Psalm. It's her name. S-A-H-M. She's an economist. She's developed, uh, developed the rule, uh, you know, several decades ago. Yeah. So pretty cool. You know, there's always something new. Right? Always something new. Love to learn. All right. Once again, folks, we will be back with you on Monday. The clock is our new time. Greg Neff, of course, Reno Live, starting at four to six o'clock, of course. So don't miss either of the shows. Once again, we just want to remind everybody. We are here for you. We can be of assistance. Give our office a call. We'd be happy to sit down and speak with you, but right now, you know, we've got some volatility. Jason, I both feel this is not over yet. We're probably getting a little bit close to it, but a few more days of it, at least, uh, but, you know, we will see what happens. See if we get any comments out of the Fed, if they're going to let this thing just kind of fall apart. We'll see what happens next week, but I don't know, Jay, always like when we see these significant drops and bond yields, uh, to me, it always excites me that there's a rally down the roof. Yeah. The VIX spiked so much. Rates have gone so much. Yeah, we're due about it. You got it. You got it. Have a great weekend already. Have a great weekend, Jay. We'll see you on Monday on the John Sanchez Show at three p.m. God bless. This program was sponsored by Sanchez Wealth Management. The material in this program was intended as general information only and should not be taken as specific investment tax or legal advice. None of the information on this broadcast was intended to be a solicitation for the purchase or sale of any security. Further information is available by contacting john@sanchezwealthmanagement.com, or 775-800-1801. John Sanchez offers securities and advisory services through independent financial group LLC, a registered broker, dealer, and investment advisor. And for FINRA SIPC, securities offered only in states, John Sanchez is registered in Sanchez Wealth Management LLC and independent financial group LLC are unaffiliated entities. Hey, there it is Ryan Seacrest with you. You want to make this summer unforgettable? Join me at Chumbak Casino. It's the summer's hottest online destination. 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