The Jon Sanchez Show
11/22 - Wrapping up the week on Wall Street
What if there was a day when we could come together to give to the causes we're most passionate about? Great news! There is! December 10th is Colorado Gives Day, and it's easily the best day to give. All the causes you care about are in one place, so let's start a wave of generosity across the state. Join us in lifting up our local communities. Give now through December 10th at ColoradoGivesDay.org. Good evening and welcome to the Evening After the Creature Habit. Welcome to the John Sanchez Show here on News Talk 780KOH. This is Jason Gaunt. I will be your humble host this Friday, Windy Evening. Hopefully everyone's safe out there, and the roof hasn't blown off their house like the Wizard of Oz. I forgot about this Reno Wind. I feel like we've had a couple decent years of less angry, evil wind, and it's back. It's going to be a stormy weekend, and we will at least give you some color on how this market ended up. It was far from stormy. It was a pretty darn good week. In fact, the S&P was up every single day this week, green across the board, which clearly on the back of a very much excitable risk on market, crypto assets screaming through the roof. You've got some of the more speculative areas of the market acting well, small caps outperformed this week. The dollar has been incredibly strong this week. Really, it very much feels like a risk on oddly enough, like a late cycle move in some of the areas of the market. It feels like, again, I've sort of joked a bit over the last several weeks that everyone fancies themselves a stock picker right now, because it seems that almost every bet is working. It's been favorable, right? I mean, clearly post the election. We talked about it quite a bit that once the election was over, as long as it went quickly, that there would be a buying impulse because of implied volatility being very high going into the election. And once the election happens, much like birthday day or Christmas day, the market, whoever opens their presence, has this sort of palpable sense of like, okay, now what's next? And you start to plan for the future. And clearly given some of the appointments, and we'll get into a bit of them later, and the thought that you will not see taxes going up anytime soon and/or a potentially even more favorable tax environment on the corporate level into 2025, the next leg higher has been there. I mean, the market hasn't gotten back to all-time highs, but the S&P was flirting with that 6,000 level. Dow today closed at 44.296. That was up 0.97% or 426 points. S&P was higher by 20 points to 59.69. That is 0.35% higher. And the NASDAQ up 31 points. It was the lager at the 19,003 level. That is 0.16% higher on the day. Gold has been strong. You know, lagging recently, it has been a little bit higher over the last couple of weeks, but the dollar and gold continue to move up. You've got crypto assets, which unfortunately, I can't really get too deep into the weeds there. You know, getting near the biggest one, getting near the 100,000 level is something that you're seeing a beta chase. I mentioned to the folks in the shop here, that there's an interesting rule that I often reference as the rule of 90, and that it is an uncanny factor that once a stock gets to $90, or in this case, the crypto asset I'm talking about gets to $90,000, I think the hit rate is in the 80% that the stock gets to 100 bucks. And, you know, it was one of the factors, one of the trades that we used at the hedge fund I was at prior. I mean, truly doesn't matter what the stock is, doesn't matter, anything about it, didn't care. Stock up to 90 bucks, we would buy it merely because of the hit rate of stocks going to 100 when they get to 90. So, you know, as I always like to say, do your own research, but that is an interesting one to keep an eye on, as just something to put into your trading quiver. Oil 71-19, right around 1.5% higher today. We got decent amount of economic data. Europe did as well. There's was weak. You had UK retail sales that were incredibly soft and continued that weakness in the euro and pound as Eurozone PMIs, the purchasing manager indexes, were also very weak. That is something that has been fortuitous of a, you know, for dollar holders, you've seen some strength continue to pile on. As I mentioned, that DXY index, which is the index that I track for dollar strength versus other currencies, is up near that 108 level, right? I've heard lots of folks talk about the demise of the dollar and bricks creating their own currency and so on and so forth. The dollar is telling you quite the contrary, that it has been very strong. But the interesting part of, remember, dollar interest rates, gold, one of them tends to go down while the other are strengthening. And you've seen everything sort of rising together. So we're in an interesting market, right? And then I say interesting in that it feels that something is off. And it doesn't have to necessarily be negative, but it's very risk-on. The folks who are clearly happy that we're going to have less of a regulatory burdensome Congress and President over the next four years are cheering. And the market is doing the darn same thing, which is a good thing. I'm never a fan of too much scrutiny and too much regulation and politics on these things. And the market is certainly cheering that on. Advancers led to clienters today by a three-to-one margin on the New York Stock Exchange. It was two-to-one on the NASDAQ. Twenty-five of the thirty Dow stocks were higher today. We got good numbers out of GAP stores, Ross stores as well, R-O-S-T. Those were up, Ross stores was up two percent. GAP was up twelve percent today to twenty-four eighty-seven. On the flip side, and John and I talked about this on Wednesday. Right, I mentioned the NASDAQ was only up point one six percent versus the Dow up point nine seven percent. You've seen tech lag. Meta was down three quarters of a percent today, Facebook. Google was lower by one point six percent. There was some chatter today that Microsoft backed in chat GPT owner. Open AI is looking to develop their own browser. Remember, there's some recent commentary that Congress is looking to get Google to separate their browser from parent company just given all of the antitrust concerns and the big being too big. Time will tell. That's been talked about for quite a long time. I mentioned the likes of a Coinbase micro-strategy. Again, I won't get into the triple levered bet on Bitcoin, but that's what micro-strategy owners certainly talk to. Micro-strategy was up six point two percent to four twenty-one. Coinbase north of three hundred today to three oh four sixty four. Treasuries were mixed. We had the ten year that was two basis points lower at four forty one. The two year settled two basis points higher however at four thirty seven. That was because we as I mentioned Europe, they got some PMIs. So did we we had S&P global US manufacturing came in. It's a preliminary number still still not the final, but it came in at forty eight point eight. Which is on the rise. It had been as low as forty six remember below fifty is still contractionary. Above fifty is a expansionary number, but we'll say it's less worse. And the services PMI unfortunately, which is the one that the Fed had always been worried about. That came in at fifty seven versus a prior of fifty five. We don't want wage inflation. That's the part that is the ugly part that drives prices higher across the board. We also got University of Michigan consumer sentiment today. I know I'm throwing a lot of data at you here, but final came in at seventy one point eight. Essentially pointed to consumer sentiment holding fairly steady in the wake of the election. There were some economic expectations inflation ironically seemed like it was down a touch as far as University of Michigan was concerned. And that's a positive. That's the part that we keep a close eye on. We're going to get October PCE next week. Remember this is the Fed's favorite inflation number that's due out I think on Wednesday. I'll come back and give you the data on that. But it is due out next week in a very light news week. Most of it's going to come on Wednesday. There obviously isn't any on Thursday for Thanksgiving and Friday I believe maybe has one item. So a lot of data dump come next Wednesday and we'll also get the Fed minutes from the FOMC as to their thoughts as they raised rates during the last meeting in November as people push back and wondered why and things along those lines. John and I had a healthy back and forth where he's of the opinion that rates go higher. I think that they go lower merely just because of the fact that the Fed is much more contracting. I'd say they're being heavy handed as far as interest rates are concerned given the fears of inflation picking back up which I understand. But they're given the lag effect if the economy in fact does slow down. I think they're going to be in a better spot to have at least cut rates to at least closer to where inflation is versus the darn near 2% restrictive level they are now. We'll come back in a bit, go through some of the other news worthy items today. But first let's check in with Kristen Snow who I would imagine is busy in the right now traffic center. Welcome back to the John Sanchez show here on News Talk 780KOH. This is Jason Gaunt. Today the Dow finished higher by 426 points. 0.97% to 44.296. The S&P was up 21 points or 0.34% to 59.69 and the NASDAQ higher by 31 points. 0.16% to 19.003. I mentioned gold was higher by $43 to 27.18 now and oil up to 71.20. That was 1.55% higher. Any year the top of the leaderboard is still the NASDAQ of 26.6%. S&P 500 higher by 25.2%. The Russell 2000 small caps which had a great week higher by 18.7% and the Dow Jones industrial average still up 17 and one half of a percent. Quite a few of the President-elect Trump picks he had Kevin Walsh considered as Treasury Secretary. We saw Pam Bondi as US Attorney General. Did see some comments about Kelly Loeffler as Secretary of Agriculture. They made some comments today that they're unlikely to help cannabis industry with the new laws according to Wall Street Journal. There were some negative reactions there. Flipping over the EU Commission did publish findings of some technology and transfer agreement. Trials they have been going against meta, they've been going against Google, been going against several of the US social media companies. So that's going to be a back and forth I would imagine with this administration as well. As far as some of the company's specific news we had Alaska Airlines who estimates that nearly half a million guests will fly between Friday and Sunday with December 1. Expected to be the single busiest day of their entire year. Ally Financial ALOY they're mulling a sale of their credit card unit. Ally a bank not typical not much different capital one the folks that offer high yield savings accounts. Ally has a pretty decent auto loan portfolio that they typically are lending against and that's where they use savings and use deposits to lend against those portfolios but they are looking to get rid of their credit card unit. Apple they're looking at overhauling Siri to catch up in AI. I would argue that's probably my biggest disappointment with Apple is Siri is terrible right. Just relative to some of the other voice led items you know try it on your watch it works one out of every six times. It's going to be amazing when these things really work well but I would say overhauling Siri makes a ton of sense. That's set for next year and then the official launch is going to be at the end of 25 into 26 according to Bloomberg. Brookfield BN we got some of the 13 F filings from a lot of hedge funds those come out of recorder. A lot of them own Brookfield Corp BN Bill Ackman of Pershing Square is also aiming to take a $2.6 billion stake in Brookfield they're an alternatives asset manager that's been an area that's been highly allocated to by investment managers like ourself to get non diversified return streams right stocks bonds alternatives are just non act non simple equity non simple bond portfolios private credit private equity there's all sorts of different alternatives in Brookfield is one of the bigger companies that allocates in that space. Looks like a cattle and CTLT and Norvo Nordisk that deal is going to be approved by EU regulators so that should close I would expect over the next three to six months. CBRE looks like we're alphabetical here approves and expanded authorization for the repurchase of up to five billion shares I think a dollar's worth of shares. I think that's healthy to see commercial real estate companies like CBRE looking to buy back stock shows that they're in a pretty good spot. Remember just a couple years ago everyone thought that this area was left for dead. Nobody was ever going to go to the office no one has ever going to be using commercial real estate and things have certainly swung back the other way which is a positive tapestry in the merger space they were looking with Capri to do a merger and that was denied but they are going to be buying back two billion dollars through an accelerated share purchase. Conoco Phillips announced they've completed their acquisition of marathon oil so you won't hear of marathon anymore. And McDonald's the interesting news of the day they launched their Mick value platform in US restaurants this is going to happen in 2025. Big out cry and I think McDonald's is searching for its identity again right they were sort of the darling as far as below cost space especially as folks were in a tough, tough area for spending. And McDonald's jammed up all their prices across the board too if you've been into McDonald's lately there the textbook of what the new world quick service restaurant is going to be right you've got one person standing in the back and three screens right there's no napkins out there there's no catch up you it's pretty it's pretty interesting how they've changed their whole business model. But on the cost side they're going to bring back different iterations of the value meal. Not as much they said of the one dollar three dollar type things but lots of meals you can buy for a five dollar price tag right whether that's going to be the thing that switches McDonald's back into good graces but it has done a little bit of chop over the last couple years just as they've dealt with the pushback of I mean John's talked about it a bunch of times where you go into your favorite drive through where you used to spend half of what you spend now and unfortunately labor costs inflation food costs they all tend to show themselves right as you walk through the doors or I guess you can't even walk through the doors in most cases but as you walk through the doors of a McDonald's and many of these other quick service restaurants you're going to see more of that less people more screens even though it's disgusting because what's on people's hands is they're touching those screens but we'll get into that later. Have a good article that I was going to read after we get back to the from break sort of focusing on what we do financial planning and the most important unknown unknown and I think it's a pretty good one and you'll dig it quite a bit. But why don't we check in with Jack Saban now who has news traffic and weather how are you Jack. Welcome back to the John Sanchez show here on News Talk 780 KOH this is Jason Gaunt. Happy Friday. Hopefully you all stay safe out there. Looks like Trump is going to tap Wall Street vet Scott Besson to run the Treasury Department. There was back and forth a couple different folks today but it sounds like that is going to be the pick. He was a key square group of former hedge fund manager so at least we're drilling down at least to formally have a Treasury Department nod. Scott Besson who was most highly selected to be the choice but there were some back and forth gentlemen from Apollo you heard a lot of different folks but I think we have finally settled on a pick in this picture here. I'm looking at it kind of looks like a Treasury Secretary so flipping gears a bit mentioned earlier financial planning right it's a lot of what John and I do. You know it's not just building portfolios it's building portfolios with a mission with a goal you're not just trying to beat the market right that's good it feels great right when you you know double what you think you're going to make or you know have a great pick in your personal portfolio but how much risk are you taking and why right what is the goal and I know we throw this word around a lot and it seems sort of cliche but goals are very important in a plan. Right you don't set out to accomplish something without a defined set of goals or you're just roaming around aimlessly and then at the end you're just lucky that good things happen to you. Right so that's why financial planning is important right I'm not trying to build portfolios that you know go up a million percent it's great but that can also create portfolios that can go to zero right you're taking more risk than you need or more risk than a client is comfortable with and so we need to marry a couple different things time I need to get a good sense of how long I'm investing for and that's actually the core of this article that was written by Ryan Zabrowski but it talks about how time is changing that age and the fact that people are healthier and living longer may start to morph what portfolios look like it may morph certain allocations it may create reasons for stocks to be higher trade at higher valuations than they have historically because of there's only a fixed amount of those stocks available and so I thought this was a good article at least just to give you guys a glimpse of what we think about when we're planning and let's get going so financial planning is most important unknown unknown time is the single most important factor in life and in finance the uncertainty surrounding time represents a challenging financial inefficiency because people have an unknown death date as they age they tend to move their money into less volatile investments with lower return potential bonds CDs dividend equities currently baby boomers ages range from 60 to 78 with a lifespan expectation of somewhere between one second and 30 plus years range of uncertainty is that reason financial planning software is heavily programmed on the side of caution for both legal and compliance reasons using actuarial tables that calculate death dates based on just two factors age sex and sometimes even smoker non-smoker they inevitably generate highly conservative spending recommendations that at best are educated suppositions for example on average I tend to plan for a male to live to be 73 years old and for a female I'm sorry 93 years old and for females 94 right a little bit longer than the average actuarial age which is late 80s but that's because I want to be more conservative right I don't want folks to run out of money ever but given a good sense of what the age is if you're doing your own work on your side that's a good time to at least plan as a goal and a date using a calendar to measure someone's life expectancy will become antiquated in the future actuarial tables could be based on new measurements like biomarkers that can calculate lifespans based on an individual's biological age not their chronological age like that would be dynamite if I could have clients come in and you know take a blood test of some kind that would show markers or you know historical data on you know family life and health history not dissimilar to what you would do when you're talking to your doctor right versus just planning for an arbitrary date there may be more information in the future that we could use in our quiver to help adequately plan the science of aging is also changing with remarkable progress being made including genome editing other technological advances that hold the promise of people living longer perhaps many decades longer assuming you believe in Moore's law and scientific advancement the next decade or two should see these problems related to some diseases virtually eliminated health care sector has been under a ton of pressure recently biotech has done a little bit better because of RFK's appointment etc I'm telling you go pick away at this sector go look for names in this biotech specifically if you want backdoor plays on AI that space is going to explode at some point so be doing your work there because that's where the money is going to be made for machine learning and you know whether it's vaccines or you pick but at least disease prevention or disease knowledge there's going to be a lot of great areas there over the next five to ten years according to John Eberth MSPHD and post scholar at University of Kentucky College of Medicine we now can turn specific genes on and off as well as repeat repair mutated genes our grandchildren will likely have the option of gene therapy to repair numerous medical issues with no or minimal consequences technologies only capable steps away from people in the next generation living 125 years or more with the use of AI in medical research because time is the most important variable in all financial calculations investment decisions will have to be viewed within the context of the amount of time in the equation as people live longer their investment horizons will necessarily be lengthened and as their risk of running out of money increases they will have to secure higher rates of return from their investment portfolio or work longer sorry if life spans of 100 to 125 years become common fixed income securities paying a few percentage points of interest will likely no longer meet the requirements of these extended life spans investors will be forced to secure higher returns and portfolio managers will face the hurdle of managing money in a changed financial environment this is an incontrovertible correlation between time and stock market multiples a relationship that will continue as human life expands inevitably increase investors will likely need higher allocations of equities stocks and so equities markets are likely to become increasingly more important in portfolios the conventional method of measuring demand for equities could be thrown out the window stock markets could undergo a major transformation based on investors expectations of an expended lifespan the key is expectations there are reasons why the Fed focuses on investor expectations when addressing issues like inflation it's because those expectations change human financial behavior one of the populace once the populace becomes convinced they are going to have a good health and live past age 100 or even 125 their need for equities is going to increase incrementally I believe the impact will be unprecedented sustainable market or historic proportions largely based on investor expectations almost there stocks should be valued looking out the windshield not looking in the rearview mirror I jokingly say that you end up hitting a lot of trees by driving through the rearview mirror so when you're doing any sort of planning it's helpful to think of things that have happened in the past history never repeats itself it does rhyme so make your decisions based on your goals not necessarily your mistakes right what may appear expensive today could seem cheap tomorrow just as it done since 1900s as people live longer their financial expectations are destined to change if you knew who you were if you knew you were going to die in eight years how much of your portfolio would you have invested in stocks perhaps next to nothing if you knew you were not going to die for another 40 years how much would you have invested in stocks substantially more and the financial significance of rising longevity investors could be forced to own more profitable assets containing greater risk but also subject themselves to more volatility in those portfolio outcomes I thought it was a good read on you know just highlighting what we try to educate you all with as much as possible that you know risk tolerance and allocation are incredibly important as I mentioned I view risk in two simple ways how much can your tummy take of this portfolio going up and down that's clearly key for someone allocating like I am but what is the probability that you're going to be a forced seller of these assets at an in-opportuned time over the next ten years right you could be the biggest bull in the world and you'd be right because we're at all time highs but two years ago if something happened to you that made you have to sell parts of your portfolio when the markets were down twenty plus percent it probably wasn't the best thing you probably had too much risk inside those accounts but if you're younger you can take more risk because you probably don't need those accounts you know try not to trade around those as much let the markets work over time like they naturally tend to do why don't we check in with Kristen Snow again in the right now traffic center welcome back to the John Sanchez show here on News Talk 780KOH this is Jason Gaunt happy Friday hopefully everyone's safe out there this weekend is this wind swirls around outside so odd it's like a fifty degrees it looks like it should be twenty but I think that's coming at some point too speaking of what's coming next week it will be a light news week on the back half because we will have Thanksgiving on Thursday on Monday we're going to get a sixty nine billion dollar two year treasury note auction last couple auctions have been not that great when we say auctions aren't that great it just means that when they decide the interest rate that the bond prices at it's a function of supply and demand the Fed goes out there for example and says we're gonna offer sixty nine billion dollars of two year notes at let's take a look you know interest rates not the two year currently right now are four thirty eight so four point three eight percent they're gonna say we're gonna auction these sixty nine billion dollars worth of notes at that interest rate four two years well if they don't get enough demand they have to slowly raise the interest rate to four point three nine four point four enough that they eventually get enough demand and I'm being overly simplistic at that it goes off at a specific level based on where they can fill all of that demand so when an auction goes poorly it means that they had to basically offer more interest than they originally thought that they wanted to and on the flip side when auctions go well they can the price actually can be lower than where it originally starts so it's just a function of demand it tells us a lot of is the market getting skittish around the Fed are they getting skittish around buying our debt and if rates are offered higher than where you think they were going to that's one of the tells so that's when we talk about good or bad bond auctions that'll be Monday that's one of them going to get a couple this week on Tuesday we're going to get September FHFA housing prices we'll get the case shiller home price index looking for a rise of five point two percent remember that looks at year over year houses pricing so up five point two percent is a pretty darn good move over year over year October new home sales prior was seven hundred and thirty eight thousand and we'll get seventy billion of five year treasury note auctions on Tuesday and we'll also get the minutes from the most recent Fed meeting recall they did lower rates by twenty five basis points the market's right at about a fifty eight percent probability fifty seven percent probability of another twenty five basis point cut at the December meeting we will get on Wednesday a lot of stuff weekly MBA mortgage applications the big one will be PCE that's the Fed's favorite inflation gauge prior was two tenths of a percent core PCE prior was three tenths of a percent and we'll also get the second estimate for Q3 GDP that's two point eight percent so anyone talking recession with a nice high to handle it ain't coming anytime soon get October durable goods we'll get weekly jobless claims and yet another bond auction we'll get a seven year treasury bond auction of forty four billion hopefully those all go well and hopefully you all have a wonderful Thanksgiving next again for listening here from the John Sanchez show news talk 780 KOH talk to you next week 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 at Sanchez wealth management dot com or seven seven five eight hundred one eight oh one John Sanchez offers securities and advisory services through independent financial group LLC a registered broker dealer and investment advisor member FINRA SIPC securities offered only in states John Sanchez is registered in Sanchez wealth management LLC and independent financial group LLC are unaffiliated entities what if there was a day when we could come together to give to the causes we're most passionate about great news there is December 10th is Colorado gives day and it's easily the best day to give all the causes you care about are in one place so let's start a wave of generosity across the state join us in lifting up our local communities give now through December 10th at Colorado gives day dot org [MUSIC PLAYING] (gentle music)