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Stocks powered higher this week, shrugging off the recent sell-off. Is the rally back on?

Portfolio manager Lance Roberts & Wealthion’s host Adam Taggart discuss those developments in this week’s Market Recap, along with:

  1. Is the rally in stocks back on?
  2. is the jobs market finally cracking?
  3. Lance reacts to Luke Gromen’s negative outlook for long duration US Treasury bonds
  4. Student loans finally go back into repayment. What will the repercussions be?
  5. Lance’s trades for the week


Adam Taggart 0:04
Welcome to Wealthion. I’m Wealthion founder Adam Taggart welcoming you back here at the end of the week with my very good friend who is counting the seconds until he can escape this conversation to make it to his Labor Day long weekend with his family. Lance, how you doing, buddy?

Lance Roberts 0:19
I’m ready to go on vacation?

Adam Taggart 0:23
No, you know what we I think folks feel you know that they missed their Lance last week, because we had the really good end of life webinar with the great certified financial planners at your firm, Danny and Richard. So I think we got to give folks a little bit extra today just to make sure that you know, they don’t feel too too neglected with their, you know, the market junkies out there. Look, there’s a fair amount to talk about here. There’s some things that are starting to really pick up steam here in an interesting way. First, let’s just start with the market action this week, it has been an up week for the markets. They are they’re still trading a little bit at the time you and I are talking about here, but they’re up about 150 ish s&p points so far for the week. You have been telling us to expect this sell off that started to probably be a relatively shallow one. Probably going to pick steam back up again. Is that indeed what we’re seeing here? You think?

Lance Roberts 1:23
Yeah, absolutely. I mean, you know, as we went through the month of August, you know, we had a really good first five months of the year. And I find it kind of interesting, because during the five, but first five months of the year, really, you know, February, March, April, May, June, you know, markets are accelerating rough 15%. For the year, nobody’s like, oh, stocks can only go higher from here ain’t nothing gonna stop this train now. And now we’re saying, hey, look, you’re gonna have a bit of a correction here. And so as soon as you get into a little bit of a correction, we say, you know, three to 5%, completely normal any given year, then you have everybody come in, I was like, Oh, my God, Stacia never gonna stop going down again, it just you’ve got to have a little bit of perspective and just say, look, what goes up has to come down a bit before it can go up, you know, we talked about stretching a rubber band, you know, historically, you know, it just stretches as far as you can, One Direction gotta relax it before you stretch it again. So you know, what we saw over the last month completely normal, we got down to, you know, really good level sport, if you’ll let me share my screen real quick, we can just take a look at a chart. So you know, this is just basically kind of a short term look at the markets going back to, you know, kind of July of last year. But you can see we’ve been in this very defined bullish trend every time that it really you could draw these trend lines all went back to October. But you know, we’ve just been this very defined little bullish rising trend channel markets got really overbought back in June and July, you see by the lower band here, this relative strength index was was above 70. And that tells you that rubber bands, you know, stretched a little bit too far. And this is why we were sitting there going, Hey, look, you know, you’re gonna get a little bit of a correction here because you got to relax that rubber band a bit. And as you can see, you know, we worked off a bit that sell off and August worked off a big chunk of that overbought condition, the markets held the bottom of that bullish trend. The top chart is just our basic buy and sell signal is turned back onto a bullish buy signal from a fairly low level as far as a normal oscillation occurs. So everything right now is all completely normal. And you’re getting this kind of of push higher. We broke out of this downtrend that started back in July. So you had this downtrend and stocks, like every day, it was just selling off every day, we, you know, the media was like we can’t we can’t have more than one day of a rally and then the market sells off against terrible, you know, that normal be corrected back to that support line. And now markets rally again. So again, absolutely nothing wrong with the market. Technically, fundamentally, it’s, you know, sure it’s overvalued, there certainly longer term concerns, economically speaking. We’re writing a couple of articles on this as we speak. But you know, Jerome Powell did a big favor to the markets last Friday talking about, you know, the fact that the neutral rate really isn’t an issue for the Fed, they’re not really paying attention to that their long term goal is 2% inflation. And so that’s all very bullish for the markets in the near term. And that’s why some markets respond in kind.

Adam Taggart 4:19
All right, well keep this chart up for a few seconds here. So you know, you’ve you’ve been saying for a good while here, and I’m overgeneralizing. But the bull case is the technicals. The bear case is the fundamentals. And the market continues to look technically bullish here for the reasons you just mentioned. And I do want to give you props, you know, when the market was down at the bottom end of that trading range, you were pointing our attention to both the the RSI indicator there at the bottom and the MACD at the top but you were saying look this, this this RSI down at the high 30s here is showing that the rubber band is now getting stretched pretty far to the downside And you were saying I expect that it’s probably more likely going to start reverting, and you were positioning as such, and kudos to you that that seems to be where the markets have continued to go. So they are continuing to kind of behave in a way that ta would expect them to. Right. And look TA is one of the guidelines you use, it’s not the only one ta isn’t a bullet proof predictor of where things are going. I just want to underscore that, that a the market is still behaving technically, as expected. And right now, we’re in an environment where, again, let let you confirm this. But were you think the more likely trend in the near term is higher still?

Lance Roberts 5:41
Well, yeah, a couple of things. You know, and this is, this is always the thing that kind of baffles me about investors in general, and, you know, even professionals, you know, when you talk to a lot of professional investors, they’re like, oh, fundamentals, the only thing that matters, you know, technicals or voodoo? It’s just prices, right? Who cares about prices? You know, it’s just it’s a fundamentals only thing that matter. Or vice versa? You got other people say, hey, technicals are all that matter? And fundamentals are, you know, poopoo, right. So it’s the way I look at it as simply as that little fundamentals matter. You know, what you buy, what you pay for the valuations you pay for things certainly matter in the long term, right? So and think about this is as if you’re driving down a road. And, you know, I know for a fact, because I’m driving a robot, you know, I can look down the freeway, and it can be perfectly straight. If you’ve ever been on ITN going from Florida to California, it’s perfectly straight in a lot of areas. I mean, you can just look for miles and nothing, nothing turns. But you know, eventually there’s going to be a turn in the road. So you know, fundamental investors, they look at that road and go, I know that road is going to turn up there. So I’m going to turn now and so they go driving off the road into the ditch, a technical investor goes, Look, I know the road is going to turn up there. But I’m gonna watch the signs that point me to say, you know, curve ahead, right and, and I’m going to turn when I see the curve. And that’s it. That’s really the important thing about managing money is understanding that look, long term, we know that things are going to happen in the short term, things can defy the fundamental logic, we know that road is going to turn up there somewhere. We just don’t know where it’s going to turn. So for now, we just have to watch the signpost which right now tells us the road is straight. So you know, keep driving ahead. It’s fine. I mean, look, you know, we bought Nvidia last Monday, and Vidya had a very nice correction after their earnings. And so we added a little bit of Nvidia to our portfolio, we owned it before we sold it had made 100% gain on the stock stock kept running up. So we’ve been kind of waiting for an opportunity after earnings for the stock to pull back, give us an entry point, the stock is stupid, overvalued. Right, it trades at 43 times sales, it is completely ridiculous, the valuation the stock trades at but technically right now, that’s where the market is hiding out, right, everything’s hiding in these top 10 Liquid stocks. And we can talk about safety and liquidity, you know, as a function of what’s driving markets. But you know, so we have to own it. Because we need participation in our portfolio, we need our portfolio to participate with the markets. But we also have on the other side of that ledger, we have a bunch of other fundamental stuff out there that it’s not performing now. But we know that eventually it’s going to perform well. So we’re willing to have that component in the portfolio waiting for that to perform. But in the near term, we also have to create performance for our clients. And so that’s when we own things that don’t fundamentally make any sense. But technically, they’re doing fantastic, right.

Adam Taggart 8:34
Okay. Yeah. So this is back to the old you trade the market, you have not not the market sort of you you wish you had or you think there should be just to build on your your i 10 analogy there. You’ve got a straight road ahead of you. You’re going through the West Texas scrub, right look like the moon out there sometimes. And that and you know, maybe you’ve driven the road before, you know, you’re gonna have to turn right at some point. Right, right. But right now the road is straight. So you’re going straight. So it’s like even though you know, the road is going to turn to the right. At some point. You wait until you get to that crossroads to take the right you just don’t take a right on the straight part and start going through that moonscape. Right. Right? Yeah, yeah,

Lance Roberts 9:15
in that’s in that end, look. And I think that’s the biggest mistake that both investors and analyst and and everybody else makes it? Look, I’m guilty of it too. Right. I mean, you know, if I could have had perfect prediction coming into this year, I would have sold everything in my portfolio and bought 10 stocks. Right. That’s not prudent, that’s not smart. That’s, you know, that’s not being a good fiduciary for our clients to do something like that. But, you know, you know, looking at the data that certainly would have suggested that was the right thing to do if I just wanted to try to beat the pants off the market. But, you know, again, we have to pay attention to these other things and understand that, you know, predictions are only good for so along and you know, we’ve talked about this before, is that, you know, people that are making prognostication, saying, hey, in 2024, you need to be here, because this is what’s going to happen or in 2025, that that’s pie in the sky, there is no way anybody can predict that far ahead with any accuracy at all. So because things happen, it’s

Adam Taggart 10:23
very, you’re right, you know, yeah, predictions are hard, especially about the future. Right,

Lance Roberts 10:27
exactly. It’s funny, while we talked about this, let me see if I can find a chart. Can you keep talking? And I’ll see if I can find this other chart, I’ll show you but

Adam Taggart 10:37
okay. Well, look, I mean, if if, you know, if we want to say, you know, if we had perfect vision, I mean, you should have taken all your clients money, and, you know, walked into the casino yesterday, and put it all on the Roulette Wheel number that was going to come up, right, but we don’t live in that world. And, you know, you especially as a fiduciary, and maybe we’ll talk about that just for a quick second, at some point here. You know, you don’t have the luxury of, you know, taking sort of wild ass guesses and you know, running on a hunch, with your clients capital, you actually have to, you’re held to a professional standard, right, that basically says, Look, I have to follow these certain disciplines, and be able to demonstrate that to a regulator, that, hey, you know, the decision I made here on this, this portfolio allocation was based in this data, given these probabilities, and you really need to be able to defend that to a rational arbiter, that, hey, you were really taking, you know, a measured and risk appropriate approach when making a decision, right. So you in many ways, you even if you wanted to do something wildly, nuts, because you have a strong gut feel, you really can’t and that’s one of the benefits of working with a professional advisor is they are bound to that responsibility.

Lance Roberts 11:59
Well, and look, and that, you know, that’s, you know, it’s always a part of the view about what you consider being a fiduciary, I, you know, I can make the case that I’m a fiduciary by putting you all into an s&p Index Fund, because you’ll never do worse than the market, you’ll never do better than the market, but you’ll never do worse than the market. So, you know, and for me, that’s not really being a fiduciary, because you’re not really providing any service. Right? Yeah,

Adam Taggart 12:25
you could just tell that person to go into index fund, you don’t need that siphon off of that. Yeah,

Lance Roberts 12:29
exactly. So you know, so you got to be careful with that fiduciary term. Because again, you know, technically, under the SEC, if I just stick you into a bunch of index funds, and then charge you a management fee for that, I’m being a fiduciary, because I’m, you know, giving you some advice, and I’m not doing anything that’s going to cost you a big chunk of capital. And the beautiful thing about that, is that if the markets down 50%, and you’re down 50% of your portfolio, that’s okay, according to the SEC, because you didn’t do any worse than the markets, the risk comes in, for an active manager like me, is that the market is down 50, and you’re down 60, because I made really bad investment decisions. Now I’m responsible, because I would have done better for you just by sticking you into an index fund. So you know, it’s you gotta be real, you know, that term for the people throw that around a lot. But I think it’s really important to focus on what does that actually mean? In terms of what am I doing with your money, and not just your money, but the overall service, you’re planning everything else that goes into that whole financial service that you’re providing? Which is why in our shop, you know, we spend so much time on financial plan long term, you know, those type of things, to really make sure we’re providing that fiduciary service to our clients.

Adam Taggart 13:42
Yeah. And just just to help people understand, so let’s say I’m, in my late 70s, right, and you take my money, and you put me all in half in Gamestop and have in Shiva II knew nothing. What would happen, you know, in those crater, right, I mean, what would happen in that case? I mean, would you get a call from a regulator? And basically, did they audit your, your, your books, and, you know, like, what happened if they were to say, you know, what, that was a wildly inappropriate allocation for fiduciary.

Lance Roberts 14:14
So So in that situation, if that happened, so first thing we do is that the client, right would go to a lawyer, and they would say, I am suing my advisor, because, you know, he put me in these wildly speculative investments, even though I told him I really wanted these, he put me in them. And they lost a bunch of money. And I don’t like the fact that I lost money when I thought it was gonna make a bunch of money. So now when assuming so he files a lawsuit with the lawyer against the firm, and then that’s going to get picked up by the SEC when that occurs. So they’re going to launch an investigation into what’s this lawsuit about, and then that’s going to wind up in front of an arbitration board or is going to wind up and generally these things wind up in settlement. So as soon as you get into a settlement, the client says, Well, yes, I actually asked for those stocks, but they lost a bunch of money. So when I want my money back, so the insurance company will say, okay, Pam, and so now the advisor, regardless of whether he recommended these or not, they’re gonna have a ding on his record for making this recommendation, the fine, the firm’s gonna get fined for making that. And if it was insidious across the whole firm, the firm stands a risk of also losing their ability to practice and the advisor. Okay, and that’s making it very serious.

Adam Taggart 15:28
Yeah, that’s where I’m going. So let’s separate two things, because then I know you’re saying it, because it happens a lot where the client actually asks to do something. harebrained right, but putting that aside for a second, if the authorities determined that the firm really acted against their fiduciary responsibility, you’re saying that the consequences are actually pretty darn severe.

Lance Roberts 15:50
Right, there is, and the reason I brought up the client saying, you know, because we get this all the time, and clients come and say, Oh, and look, I get emails from from even, you know, people that watches this channel that I, you know, respond back and go, we’re not an advisor for you. Because they are, they’re asking for things that are absolutely non realistic. You know, I want you know, I want to quintuple my money in five years, right? So I want you to manage my portfolio. You know, that’s not realistic. And by accepting that type of view into our firm, it’s, you know, we’re having to put what is fiduciary? correct for that person, you know, out the window to try to generate this five times return over five years thing, and that’s not being a good fiduciary, our responsibility is to look at you and say, That’s not a realistic goal, that’s not good for you, and we won’t do it. You know, as a firm, we will not honor your wishes of buying you AMC and GameStop. We’re not gonna do that. Because it’s not, it’s not right for you, you’ll need to find another advisor.

Adam Taggart 16:51
Right. And so you’re trying to do the right thing for the person in you, you’re honestly trying to protect your firm because you’re held to these higher standards. Okay, dude, I’m gonna rattle on this, but really interesting. I got a number of things I want to get to. But real quick, I think you were searching for a chart, did you find it?

Lance Roberts 17:04
I found it. So here, let me just let me share this here real quick. And the reason I’m bringing this up is because again, we were talking about predictions, right. And this is an I’ve brought up this example in the past, and I actually just recently the daily shot published. This, this this chart, and it was from about weather forecasting accuracy over time, and I brought up the fact that they used to do a survey of everybody that made predictions, meteorologists, psychologists, you know, psychics, all this other stuff. And media, and meteorologists were the most accurate for three days in advance. And I thought was interesting, because they shot just published this chart last on Thursday. And this is weather forecast accuracy based on air pressure, and they are nearly 100%, accurate, three days ahead. Once you get to 10 days, that accuracy falls to 50 50%. So they’re only a coin toss 10 days into the future. And so I’ll bring this up is the reason this is important is because you hear all these people on TV, the media, financial analysts, etc, going, Oh, well, next year earnings are going to do this, and the economy is going to be here and because of x, y is going to happen. And this is the result of this. You know, it’s some of that’s based on data, a lot of it’s based on historical past data. But if if weather forecasting, which is based on real time data, is only accurate 50% of the time today’s in the future, how when you’re talking about 365 days in the future, five years in the future, How accurate do you think that really is, and particularly in an environment that is impacted by so many different variables from economics, to politics, geopolitics, to monetary policy, to fiscal policy, you know, all those things can change from one month and one year to the next is going to completely change the outcome. But whatever prediction is today, so my point is, is making any bet longer Mrs. White, right, I bought in video, I can’t believe he bought in video, it’s so overvalued, even he says it’s overvalued he bought it is because it’s going up. And I need to own those top 10 stocks right now, because that’s what’s driving the bulk of the returns in the market this year. I know it’s overvalued, but this is what the data is saying right now. And that prediction is gonna be right for about 10 days to 30 days. But when that when that data changes, I’ll sell it and I’ll move on to something else. But you know, this is, you know, this is why it’s important when you start talking about very long term outlooks on things, oh, I’m convinced that, you know, the world is going to be like this and five years, maybe, you know, this is the whole problem with you know, people talking about climate change. And, you know, 1980 We were talking about the world was going to be on fire by 2000. And we’re still talking about this or underwater by 2020. But yeah, yeah, and Plymouth Rock is still in the same place. It wasn’t 1620. So, you know, it’s the water level is still the same. So the point is, is that you know, all the events can certainly take pay place, right? You know, these things can certainly happen. But timing of those events and the actuality of how the event turns out can be very different things because of all these different impacts that occur over time. And, and things that will change, you know, will the Fed cut rates? Will they start doing QE? What was that gonna mean? The markets? You know, that’s, that’s what we’re gonna be dealing with.

Adam Taggart 20:24
All right, great point. Great reminder. I don’t want to get into yet but I do want to get into it very soon. There’s now a lot of I would say diverging opinions on what’s going to happen with long treasuries, right, just to show how you can have smart people look at the same environment and come to very different conclusions. Right. So we’re gonna dive into that. I see. You’re kind of smirking there. But the charts for you. Okay, good. Good. Before we get there, two questions, one, just about Nvidia, because I’m sure some people are listening to this or thinking this switches. Okay. You know, I get Lance’s making a technical taking a technically based position here with Nvidia. Hey, what happens if he’s wrong? What happens if he’s top ticking and video right now? So what sort of defense do you have in place for that?

Lance Roberts 21:19
Well, so the stock add had had spiked up on earnings, right, and then sold off entirely on the day of earnings came back down, tested, had tested reasonable support, it’s been in the consolidation range now for about three months, broke out of that consolidation range, or actually, I sorry, came back down and retested and held that consolidation range, which gave us the entry point we’re looking for it got oversold, that triggered a MACD buy signal, just like the market. And so it made a decent entry point. So if it takes out that stop level will sell the position.

Adam Taggart 21:54
Okay, so basically, you’ve got to stop level in place that you know, okay, great.

Lance Roberts 21:58
Yeah, we okay, but we never buy a position without having a stop on.

Adam Taggart 22:03
I imagine that, but I’m glad that you’re specifying that here, right. Yeah. And I’m giving you this instructively so that people realize and learn what a professional financial advisor does. He just doesn’t take a willy nilly long position, right. There’s a lot of logic behind it.

Lance Roberts 22:16
Well, yeah. And look, it’s simple. Well, you know, you’re down on TLT this year, and you know, you haven’t been stopped out of it. Yeah, our stop loss is actually a lot lower than where it is now. Because you got to break a whole bunch of economic trends to hit that stop level. We’re not there yet. So yeah, the positions down. But our thesis on long term treasuries still holds. And in fact, where we are going to sell TLT. And we talked about this, not last Friday, because I wasn’t here, but the Friday before, we are going to sell TLT probably going to do it on Monday, because REITs have now gotten to the to kind of our ideal entry point that we’ve been looking for. So we’re going to basically sell TLT and then buy an equivalent 20 year treasury bond, and replace that ETF in all of our portfolios with an actual treasury bond and lock in that rate that we’ve been looking for, that we think will probably be the top taking rates here for quite some time.

Adam Taggart 23:06
Interesting. Okay. Again, I want to wait to really get to this conversation, because there’s one more I want to have before but just to clarify for folks, because I think the other week, you guys were still contemplating selling TLT. But because you were gonna buy it, perhaps another ETF that was even further out the duration curve, but sounds like you’ve made the decision Nope, we’re just gonna buy the bonds themselves.

Lance Roberts 23:28
Yeah, and that’s it, it really came down to a couple of different factors. You know, one was, you know, there’s a couple of things that drive portfolio allocations. And, and portfolio changes. One of those is sizing. We have portfolios that range kind of all across the gamut. And this is why when you talk to most financial advisors, they typically have a minimum asset size, like, hey, we’d love we’d love for you to be a client, but you got to have half a million dollars for a suit. And it’s not, you know, there’s there are a couple of business reasons for that it’s very hard to be financially efficient, in terms of running a business with very small investment accounts. But it also comes down to position sizing. You know, sometimes if I’m trying to buy like a Chipotle Mexican row, right, that stock trades at about $1,690 A share last time I checked. So if I’m gonna buy one share of that at $1,690 a share. And if you have a $10,000 account, all of a sudden, I’ve got 16% and one stock, one share of one stock makes up 60. Yeah, so that just doesn’t make sense on an allocation basis. And that’s why, you know, typically, you need larger amounts of dollars to do a proper allocation across, you know, so many stocks and so many bonds. But anyway, long story short, we were working through all the math, and we have long conversations with our broker dealers that we work with, and we were able to work out a position to where we could buy and sell very large blocks of an actual treasury bond, even in smaller accounts that it made sense It’s too rather than buying another ETF. It’s just swapping all of our ETFs for an actual bond.

Adam Taggart 25:05
Okay, all right. I’m sure we got people’s attention with that. So okay. We’ll revisit that a little bit later on this conversation if need be. Before we get to the long bonds, I just want to talk about some more market news this week, which is jobs. Right, looks like we may be finally seeing some fracture lines that that matter, beginning to appear in the jobs market. So we had the jolts report recently. And that was disappointing, right jobs openings. So we’re beginning to interviewed Stephanie Pombo recently, and she said she has a whole report out there called Title the report Jaws, because we have so many data points where we have these like big divergences going on that create these alligator jaws that are now beginning to start starting to close. So we’re starting to see that that disparity between job openings and job applicants begin to narrow hasn’t closed yet. Right. But that’s something that’s been persisting for a couple of years now. And it seems like the Fed is finally beginning to make progress towards starting to cool off the jobs market. Now that’s beginning to start to close. But more more more meaningfully was today’s nonfarm payroll report. Alright, we’re actually the August number was a beat, right? And we’ve had beat, you know, pretty much, almost every month, this year, this year, this year, almost every month has been a beat versus expectations. But then, you know, they give them the rosy new number, right? Oh, this was a beat. And then they go and you know, behind the scenes, and they, they revised down the previous numbers, right. And let’s it’s gotten to the point now, where they have now revised down every single month payrolls for this year for 2023. Right. And let me just read this real quick July was revised down by 30,000. Jobs. June reserve was revised even more by 80,000, which means that a number that was originally reported as 209,000, as a big rosy number has been revised 50%, lower to 105,000. And a collapse versus the original expectations of 230. So you know, we’re just seeing one this, this sort of, you know, false window, painting lipstick on a pig, look how great the current month’s numbers are. And then, of course, those numbers get revised, as soon as the next month’s numbers are out. What’s really important about this is with these revisions, the unemployment rate is now beginning to move, right, and it hit a pretty big jump month over month from 3.5% annually to now 3.8% annually. So we’re beginning to see that number, which was, you know, super rock steady for so long, begin to start to move higher. At the same time, wage growth is continuing to slow, right, I think we’re at like, 4.3% year over year right now, but you can definitely see the trajectory is, you know, the beginning of the the balloon is beginning to sink here. So we’ve got, you know, more people not working now, jobs numbers really beginning to look a lot weaker than they have in the past. The, the monkeying with the data, which you and I have have said we thoughts going on behind the scenes, definitely. Now we’ve got proof that really is going on. And, and the wage pressure, you know, we hit we had a little bit of a moment there where it looked like workers, you know, might be beginning to get some bargaining power. Seems like that’s sort of fast dissipating. So I mentioned all this, because you and I have spent a lot of time talking about the importance of employment, where it’s sort of, you know, Michael Kantrowitz, and his hope framework that’s been the last bulwark against entering into recession. We’ve been watching that closely. Because if that starts getting wobbly, that makes the likelihood of a recession more probable. How much has this data caught your attention?

Lance Roberts 28:59
Um, and it’s great for bonds, by the way, because this is, you know, going back to our bond thesis is that weaker economy is exactly kind of what you’re looking for. But now let me

Adam Taggart 29:08
start interrupting. The stupid thing is, it’s good for stocks too, right? I mean, stocks have jumped on the news, because hey, bad news is good news. Right?

Lance Roberts 29:16
Well, yeah, we actually had had that discussion earlier this week on our podcast, which is, you know, this we’re back to that bad news is good news thing. Why? Because bad news means that the Fed is unlikely to hike rates further from here. And so that also means that we’re closer to rate cuts, which, in theory, this is the mistake the markets making, is that in theory, rate cuts are great for stocks, right? More monetary liquidity reversal of Qt back to QE. That’s why everybody’s kind of open for 12 years of stimulus was was all great for stocks. What everybody forgets, though, is that initially when the Fed starts cutting rates or cutting rates because they’re trying to stop something from breaking, or they’re trying to fix something that’s broken, and that’s not going to be good for stocks at all, and you’re gonna see a big decline in the markets at that point. And again, this is, you know why we pay such close attention to the data. But you know, that’s, you know, you know, look, the numbers are still positive. Right. So first of all, let’s not get the cart too far ahead of the horse. Yes, employment is slowing. It is certainly concerning that it’s slowing. And a lot of the stuff that we’ve been talking about for a while is certainly starting to kind of show up in the cards, right? We’re starting to see weaker growth, weaker job openings, those type things, but it’s not recessionary yet.

Adam Taggart 30:29
So above water, it’s struggling. Yeah,

Lance Roberts 30:32
it’s struggling. And but no, but this is good stuff to pay attention to saying, hey, look, they’re certainly going back to your jaws analogy. There’s fins in the water. Don’t jump in the water. Probably mean, stay in the boat. But it doesn’t mean you got to get out of the water, right is you say in the boat drop back into shore, it’s your it’s your leisure. Just don’t try to swim. But you know, this is, you know, this. Look, all this stuff is kind of playing out, you know, this lag effect that we’ve talked about, you know, ad nauseam for months now we’re starting to see that begin to actually take root. And again, we talked about 2022. Everybody was expecting a recession. And we said, hey, you know, everybody expects a recession. Bob Farrell says if everybody expects him to have probably not going to happen. Now, nobody expects a recession, earnings estimates are getting dragged higher economic analyst are ratcheting economic growth rates higher. And that’s exactly kind of what you want to see. Because now we have all the experts on this on one side of the boat again, say Oh, well, we’re not going to have a recession, which actually in the air, in theory, kind of sets us up to have the recession now. So maybe in 2024, we actually see kind of the early maturation of that recessionary environment.

Adam Taggart 31:48
All right, yes. We’ve talked about that. That is beginning to build the slope of hope, right, that a bear market likes to go down? Yeah. You mentioned the lag effect. And man, I talked about it all the time. But it blows my mind how the market is totally ignoring it on both sides. Right, which is the lag effect of all the tightening in hiking, that’s been done. Right. So you know, that’s what’s likely what you and I think fundamentally is likely to kind of drag things down from here, right. And that’s the gravitational effect of that is likely going to get stronger. The further we go in the timeline here is the lag effect, fully expresses that full magnitude. But also, if the if and when the Fed pivots, I mean, the Fed will pivot at some point in time, there’s a lag effect to stimulus, right, it takes quarters for that stuff to start getting expressed in the economy, which is why as we’ve talked about a lot, when we enter into, you know, a recessionary period where the Fed starts cutting, going into it like, Okay, we see the recession, now it’s time to start cutting. The markets usually go down for several quarters. Yeah, right. But the markets ignoring both of those. Well,

Lance Roberts 32:58
and again, you know, again, let’s go back to the highway analogy, right, the market, the market is aware of this stuff. And again, as we talked about before, you know, the stuff that we talked about now, is already getting priced into

Adam Taggart 33:09
the market. And I don’t have any data that the full market has. So we get it. Yeah. Well, and

Lance Roberts 33:13
but you know, everybody’s talking about stuff, right? So everybody’s talking about, you know, whenever you want to go to China or, you know, Europe or whatever it is, housing, whatever, whatever the issue is, you’re is that everybody’s stressing over the markets already pricing that in, right. And so here we are, we’re on the freeway, and it’s perfectly straight right now. And that’s what the markets see. And so the markets are just basically playing what the environment is directly ahead of them. And remember, remember, I’m writing an article on this for Tuesday after next talking about portfolio managers. You know, the reason that the top 10 stocks continue to perform the way they’re performing is because everybody’s piling into those top 10 stocks because they’re safe. They have tremendous amounts of cash on the books, think about how much cash Apple Microsoft Google have on the books like billions and hundreds of billions of dollars, just between them. You take a look, you know, we you know, we talk a lot about money market fund balances and is like, oh, everybody’s piling into money markets. That’s not retail. Retail is a very small chunk of money market fund balances is mostly pensions, major corporations, you know, hedge funds, mutual funds, etc, that have billions of dollars in cash and money markets. That’s where most of that money market piles coming from. And these companies like Apple, Microsoft, Berkshire Hathaway, Warren Buffett, they’re just they have nothing to do with cash right now. This works out. So they’re just shoving it into 5% Money Market. Why wouldn’t I? Right? I mean, it’s, I’m getting a great return on my cash, why not just stick it there. So, you know, for investment managers, they’re going okay, I need a place where I can stick money, that it’s easy and easier. I can I can put $10 billion to work in apple today. And I won’t move the price of the stock and I can yank it out tomorrow and it will Move the price of the stock because so much money trades in Apple every single day, you try to do that with a small cap company, you’re gonna send the stock price either rushing off to the crashing one of the two, you just can’t move that much money in and out of stock. There’s no liquidity. So when I’m in an environment where I’ve got to have money, like I gotta have money invested, we talked about career risk before if you know if I’m, if I’m not, you know, performing with the market, I’m gonna suffer a bad quarter lose clients. Yeah, yeah, I’m either gonna lose clients or my job, how bad the performance was. So career risk is a very real thing. So as a portfolio manager, I’ve got to have exposure to the market, the markets are going up. I keep piling into those top 10 stocks because easy and easy out. Furthermore, if you take a look at interest coverage, and I put some charts out on this on Twitter last week, I’m gonna, I’m actually covering this in this weekend’s newsletter on the website, real investment So, if you haven’t subscribed, you should subscribe there.

Adam Taggart 36:01
Everybody go go go to real investment. Absolutely.

Lance Roberts 36:04
So but this weekend’s newsletter covers this. Andrew Lappe, thorn over society generale, and I have a good, good buddy of mine, Albert Edwards society general, we put out some fantastic research but Andrew platform did some really interesting coverage. One of the things that’s been kind of a phenomenon over the last couple of years is that interest service of companies is actually declining, even though interest rates have been going up. And so it’s kind of a head scratcher. And what it

Adam Taggart 36:34
turns we’ve talked about this, but people have forgotten so to this is really interesting.

Lance Roberts 36:38
Yeah. So that the head scratcher about that was is how can that be if interest rates are going up and interest coverage, you know, interest service should be going up, not down? Well, it’s because all these big major companies Apple, Microsoft, Google, they went and finance zero rates, they were out bought, you know, Apple was borrowing billions of dollars to do share buybacks and virtually zero interest rates. And so now they don’t have any debt maturities. And there’s no reason for even though interest rates are going up their interest services is basically coming down because they don’t have any refinancing. However, once you drop out of that large cap and go to mid cap and small cap, there’s real problems there. And they have a tremendous amount of term loans coming due in 2024 2025. And they don’t have the interest service coverage to cover that. So now back to why am hiding in mega cap stocks, if I buy small and mid cap. And by the way, if you haven’t looked at the mid cap index, it’s gone nowhere since October, the s&p large cap index and NASDAQ large cap index, they’re up 15 30% for the year, mid cap, small cap nowhere, just flatline. Because nobody wants to be there because that’s where the risk is. And if they can’t cover their interest service, and if they come up on refinancing and 2024 2025 and they can’t refinance, you’re gonna see bankruptcies really start to rise, bankruptcies are up 71% year over year. Now that sounds like a lot. But when you know, it’s math, but if you had zero bankruptcies last year and one bankruptcy this year, that’s 100% increase, right? So it sounds like a lot. It’s like, wow, they’re up 71%, the world’s coming to it. No, you had virtually no bankruptcies a couple of years ago, now you’ve got a few, but that is going to start to accelerate in that small and mid cap space. If a interest rates don’t come down soon, before they have to refinance, or if they have to refinance and cannot get financed, then you’re going to have a real problem on that. So that’s why there’s no money flowing into a small and mid cap stocks. And that’s why they’re underperforming. And that’s why money’s just piling in large gaps in safety and liquidity.

Adam Taggart 38:41
All right, I got we are not going to make it through my list. Because I gotta ask a question around this. So, you know, market, and you made a great explanation for why this is happening. But but many market participants are kind of seeking the safety hiding out in these large cap stocks, and, you know, in this year, getting appreciation, right, those stocks have been performing well, right. You know, that old saying, like, trees don’t grow to the moon, right? Like, you know, how long can this persist for where these top 10 companies really become more and more and more of the market, right end of the economy? Right? And kind of around that, like, what, what would it what will it take

Lance Roberts 39:28

Adam Taggart 39:30
you know, if they begin to hit limits, what will it take what would actually have to take a recession? Will these companies just have to start making less for this this trend to begin to break up?

Lance Roberts 39:40
Well, remember, it’s, it’s always always about earnings and earnings expectations. Right now the stocks are going up because expectations for earnings growth is fairly strong going forward. You know, look, let’s take video as the kind of the darling of everything right now AI is going to rule the world and so you know, It was interesting in their last earnings report. So So go back to quarters, they had an earnings report, they said we expect ourselves to grow by 50% over the next quarter. Okay, so 50% growth. They they nailed that. But they did that well, because they had orders coming in from Elon Musk, they could see it. Yep. So they knew what was coming in. So says our sales growth will be up 50% over the next quarter. Okay. Adam, you’re pretty good at math. What’s 50% times for? 200. Right, so 200%. So if I annualized 50%, sales growth over the next four quarters, that’s 200% sales growth, wow, I certainly want to own a company that’s growing their sales at 200%. So stock runs up. When they announced the quarter in the latest quarter, they said we estimate our sales growth annualized to be 170%. That’s actually a slower rate of sales growth than what they reported the previous quarter. So it’s still strong, I mean, you cannot deny 170% sales growth, but it is getting weaker. So at some point, if the economy slows down, and all of a sudden, these, you know, this, this piling into AI, as an example, everybody building out data centers and all that there’s going to be a point of maturation where you get to kind of peak AI, right, and we’ve seen this with, bubble and everything else, there’s not your point trees don’t go to go to the sky, there will be an end to this. And so what is going to drive money out of these big mega cap stocks. So two things for two things. First of all, we’ve got to reach the point to where people start to question the earnings, right, or actually earnings decline, you know, Apple’s comes out and says, Hey, you know, we only sold 40% of what we we thought we’d sell on iPhones, you know, last quarter, and Nvidia comes out says, well, we screwed the pooch, we only sold half of what we thought we were going to sell a big order fell through for whatever reason, that’s going to cause those stocks to come down rather sharply. Because again, I’ve got to start repricing those, those valuations right, the stock price versus what I’m actually paying for that’s got to get repriced. So that’s going to cause money to flow out of those assets. But here’s the other problem. Where’s it going to flow to money? So it you know, money is like energy? You can’t you can’t destroy energy, it just changes form. But energy is always energy. So money’s got to go somewhere. So money’s coming out of the top 10 stocks, and you’re in the middle of a recession. Because look, if Apple it let’s be honest, that point cutting it, nobody else is either most likely. So where’s the money going to go to? Well, if your thesis is that in a recession, that interest rates are going to be taken off to the moon, and it can’t go to bonds. So money’s got to go somewhere, and it’s not going to go to cash. So again, money because money, you’re not gonna pay a mutual fund or hedge fund to be in cash, right? So they’ve got to invest that money somewhere. So you got to make the premise. And I’m not I’m not denying the fact that ultimately some this rotation will occur. But when this rotation occurs, and while it will be during a recession, you also got to understand where will money flow to? And be early to that bet? All right,

Adam Taggart 43:03
well, that’s a good segue then to the next topic here, right, which is treasuries, okay. In that type of environment, I would think that a good chunk of that money, you know, recession, trouble in the big darlings, money is going to be freaked out, it’s going to seek safety. Right. So that’s an argument for going into the the US Treasury bonds. as I as I said, back earlier in this video, you know, we’ve had a number of people on this channel of late, I would say, you’re probably that the front of that crowd, you know, waving the flag, saying, Hey, we think this is a really good time to be looking at long duration treasuries, right? You give a nod earlier to some of the decisions you’re making, you know, in real time around this. We had Luke Roman on this channel earlier this week, who really had a very different thesis. And I love that because it’s a thoughtful thesis, you may disagree. And you know, that’s what makes a market right is when intelligent people come up with different opinions. But don’t know if you had a chance yet to look at that segment at all. But if so, you know, how would you react to Luke’s argument, which was sort of heavily based in the price of oil? Right, where, you know, he basically says, Look, you know, oil is going, we’ve sort of seen Peak Cheap Oil, he expects oil prices to go higher from here. Oil will almost sort of be the new Fed funds rate, right? It’ll be the limiter on the economy, but it’s one that the Fed really can’t control. And in fact, he thinks that if we get into a rough patch economically, and the Fed stimulates, that’s going to boost the economy, which will then increase demand for scarce oil shooting oil prices, even higher having that act as an even greater break. So you know, sort of his outlook is based in that. What’s What’s your general reaction to him?

Lance Roberts 44:59
So Uh, you know, I never disparage anybody. So if your point, you know, your his views are just as valid as my views versus anybody else, because as I said earlier, unless we’re predicting what’s going to happen in the next 10 days with the weather, nobody has any idea. But you know, I think there’s a few things that we have to think about, right. So. So first of all, let’s, let’s go under the assumption that, you know, oil prices are going to rise dramatically, right? We’re going to let’s just throw out a number, let’s say $300 a barrel. Okay. So let me ask you a few questions to be Armageddon. Let me just ask you a few questions. Okay. So if oil prices go to $300 a barrel, what happens to economic activity? Yeah, grinds to a halt. Right? If economic activity grinds to a halt, then what are oil producers going to do? If they’re not selling oil?

Adam Taggart 45:57
Well, they’re certainly going to stop drilling for it, they stopped producing it.

Lance Roberts 46:01
Right. And so you’re gonna have a cut production. So if oil prices are high, but they’re not shooting off to the moon, right? And if and if oil prices are rising in a kind of a normal fashion. And the price of oil is at a good level, what oil producers is going to do? They’re going to produce more. Right, right. So one of the thesis that that we brought up, and I thought it was interesting, because he talked about shale production, which is been declining as of late. And that’s a true statement. It’s interesting that post the kind of economic shutdown, we did have a recovery in the number of drill of drilling rigs out there. But drilling rigs didn’t actually retrace back to the number of drilling rigs didn’t retrace back to previous peaks where you thought they would be. But a lot of this has to do with the current administration, which is, you know, restricted a lot of drillings won’t give permits the permits, they do give or in areas that they don’t want to drill and a whole variety of issues.

Adam Taggart 47:03
A lot of uncertainty as to whether the oil companies will get back your investment and also higher interest rates. Net since this has gone up. It’s more expensive to drill and a lot of the guys only long because of the cheap money. Yeah.

Lance Roberts 47:15
And also don’t forget higher labor costs, right? So WAGES OF SIN all this right. So a lot of reasons why economically, we haven’t seen the number of wells come up. So you know, the point though, is if you have high oil prices, ultimately you’re going to have more production. If you have more production, then demand is going to you know, you’re you have a supply demand balance that’s going to keep oil prices kept at some level, right? So just it’s always about production supply. And I just wrote an article, Friday’s article on our website is about Jerome Powell last week, and I’m a quick deviation. But I’m gonna come back to Luke’s point, because it’s actually touched on this a little bit in that article, but it’s talking about Jerome Powell, who was very disingenuous, and really went out of his way to obfuscate the cause of inflation he blamed the Russia Ukraine war. And he said he’s, uh, you know, this Russia, Ukraine war created the supply demand imbalances does create inflation. And that’s, that’s as much as I can never hear from any one person in one speech, because it is simply a function of economics 101, you have little too little demand because the government literally shut down the economy and sent everybody home and said, do not come to work. So you shut down the economy. So you have this contraction in supply. And then you send those those same people that you sent home from work and said, don’t work, I’m going to send you $5 trillion in cash to go spin. So you have this massive surge in demand, and against the backdrop of man made created supply contraction. And so you had inflation. And as Milton Friedman once said, and you know, inflation is always everywhere, a monetary phenomenon. So blaming the Russia Ukraine, war was very disingenuous by Powell, but I get it right, he’s got to protect himself. He’s got to protect the administration. So he can’t lay the blame at the feet of the people that responds to which is the government for doing the monetary policy in his own feet for doing the fiscal policy. So, you know, I get it, right. We got to we got to obfuscate the truth. But again, you know, when we take well, and specifically in that article, I go through some of the impacts. So if you’re gonna blame the war, right, you have to So what does Russia and Ukraine provide to the world? They provide? What primary oil and what comes out of Ukraine? Wheat, right. Yeah. Right. So we’ve, what are the two things that we exclude when we calculate inflation?

Adam Taggart 49:41
Yeah. Energy.

Lance Roberts 49:44
So if you’re looking at Core inflation, which is what the Fed looks at, behind you, and you strip out food and energy, that whole argument goes right out the window, because we’re talking about core inflation. We’re talking about everything else that’s in the economy. Okay. But here, let me share it. share with you a few charts here. I even presented I even did a little PowerPoint presentation. I’m joking. But

Adam Taggart 50:05
I said, I appreciate that. And while he’s pulling this up, folks, yeah, I had a lot of people email me after Luke’s interview saying, hey, you know, can you really make sure to dig in with Lance, to get his thoughts? You know, on the other side of Luke’s argument, so when it’s being the star pupil he is put together this PowerPoint presentation. Yeah.

Lance Roberts 50:23
So hold on, let me see if I can get it to actually cooperate me. Okay. So this is a long term history of oil prices, going back to 1946. That’s as far back as I can actually get oil prices. And look, through time, we’ve had a ton of reasons why we’ve had surging oil prices for one reason or the other. The Iranian Revolution back in the late 70s, when the early 80s, we had this big spike in oil prices, of course, interest rates went up at that time, very different environment, we had no deficit, debt to household income was extremely low debt and the overall economy was was very nascent corporate debt was very low. So you know, higher interest rates at that point against a backdrop of very strong economic growth rates running at eight 9%, very high savings rates back then, high interest rates were not really a problem. But that was a function. And we’ll get we’ll have some comparisons here with interest rates in a second, so just bear with me, but you know, we did have that big spike in oil prices. And then oil prices go nowhere for about 20 years. And this is the hard part for people understand is that this is 2023. And we’re worrying about oil prices that 80 bucks, or 100 bucks, 120. But everybody forgets that in the turn of the century in 2000, oil was $20 a barrel. So all this all this stuff that’s happened since the turn of the century. And really, really, the phenomenon of higher oil prices has been a function of really post financial crisis events, what has all been in common with that era of our financial situation? And that’s been the Fed injecting

Adam Taggart 52:06
literacy yet low interest rates, record low interest rates, right record

Lance Roberts 52:10
low interest rates and quantitative easing. There’s a very high correlation between inflows and outflows of quantitative easing. In other words, you have a QE program, you don’t you have a QE program you don’t and oil prices, because again, there’s a very direct correlation between the amount of drilling that happens when you have monetary impacts into the economy from the Federal Reserve, and then ultimately, what happens world prices. But let’s go back to 2008.

Adam Taggart 52:33
Hey, sorry to interrupt, but I just I want to build off that observation for one second. So there are two things that a lot of people in the macro world point to, as just sort of see changes that then influence, you know, markets, economies, world events. One is Nixon slamming the gold window shot in 1971. And you can kind of see that here on the chart. Well, very soon after that oil prices really started rising, right. And then there’s the era of QE, right, which is correspondent there with the jump from, you know, average $30 oil to now average at dollar oil.

Lance Roberts 53:13
Right? Yeah. And the gold window, you know, certainly is a viable argument, but it kind of loses a lot of its metric, considering that oil prices were at $20 a barrel for 30 years. You know, so So again, you know, the whole gold ore relationship kind of falls out of bed in the 80s. And the 90s. Monetary policy holds a lot better correlation, recently, in the last 1015 years, but, you know, we can debate that till the cows come home. But I think the most important one is that spike and 2008, where we have peak oil, a lot of people probably don’t remember the fact that everybody’s running around with their hair on fire, talking about peak oil, we’re running out of oil, we’re not producing enough oil, there’s simply not enough oil on the planet to meet our demands. And the world’s going to end because of this. And then all of a sudden, we had this miraculous invention called shale, oil drilling, and the more on then all of a sudden, we have more supply than we knew what to deal with. And so, you know, we go through these phases of, you know, we’re running out of oil, we don’t have enough oil, and now we’ve got too much oil. And that’s just a function of how economies work over time. If there is a deficit of anything. Somebody’s going to step in and fill that gap, somebody’s going to step in and fill the void that exists. That’s how capitalism works. And that’s why capitalism works over time. And it creates massive wealth within within within countries. But importantly, just like aI right now, you know, there’s a there’s a deficit of GPUs in the AI space, if you’re building out cloud data centers and all that there’s simply one guy to go to right now. And that’s Nvidia, and they kind of cornered the market. They’ve got a big moat, but eventually that deficit we talked about this before is going to drag in more and more competitors. There’s going to be a new car Put a you have never heard of this is going to show up in the next couple of years, it’s going to make the best GPU on the planet, and everybody’s going to shift to them because it’s gonna be a better GPU and a cheaper price. Who’s gonna make it I have no idea the company identity exists yet. But that’s what’s going to happen some or somebody’s going to come up with something better than a GPU. So just like we had, you know, traditional oil drilling back in 2006 2007, we’re running out of oil, simply not enough oil out there. And then some Yahoo in Texas sits there and goes, you know, what a bet I could get some oil out of the cracks in the ground, and they come up with Shell drilling. And, you know, we have a whole new economic environment for producing oil and gas. But here’s the here’s the important part about this. Let’s keep moving on. So this is oil. This is the history of oil prices. Going back. You can see the spike in the Russia Ukraine war, obviously concerns and I remember also very quick, there’s very important part as we talked about all this oil prices are not set by supply and demand. Oil prices are set by Wall Street and the NYMEX these are these are oil commodity futures traders betting on the price of oil over a set period of time with futures and that’s what drives the actual price of oil that that’s traded on a daily basis. So again, you know, this is very important. Remember, this is a function of finance of what happens on Wall Street okay. So, this is oil prices relating to kind of the economic situation. So, you know, we have backwardation that occurs in oil prices and then when that backwardation corrects itself, you then typically when you have that backwardation, you are in a problem of some sort, like a financial crisis, a manufacturing recession, the Brexit tape, taper tantrum issue, the trade war, you know, with President Trump, when you get these backwardation, then you have this unwinding. And that leads to this collapse in oil prices that occurs on a regular basis.

Adam Taggart 56:51
I’m sorry, can you explain for folks what backwardation is?

Lance Roberts 56:55
So yeah, that’s a good question, Adam. So backwardation is when the current price or the or the spot price. So again, we’re just talking about a second ago that that really the price of oil is driven by the futures market and what’s happening on Wall Street more than anything else, but it’s when the current price or what we call the spot price of crude. In this case, that’s the underlying and you’re gonna have backwardation in any asset, but the frequent guys oil is higher than the prices that are trading in the futures market. And that can occur from time to time again, because how does that happen is because you have speculators on both sides, some people bidding a single higher, some people’s gonna go lower, and then there’s the actual price of oil is trading in the open market. So it’s just again, it’s a function of what happens, you know, with this, you know, movement in oil prices over time, and people speculating on what the outcomes are going to be. So when you get when you get these backwardation ‘s that occur those eventually, and you know, you’re talking about the jaws between economic data, it’s like, oh, you have GDP and GDI, which there’s a big gap between those two and that shouldn’t exist. So when you get these backwardation those prices, eventually have to correct themselves. And that’s why after every one of these backwardation is you basically have a collapse in oil prices. All right,

Adam Taggart 58:11
and just to help folks think about it, the way I think about it is, it’s almost like with the inverted yield curve, where people are saying,

Lance Roberts 58:18
you’re, you’re willing to pay more for short term certainty, because you’re nervous about what’s going to happen in the long run. This generally is where people are freaking out that okay, oh, my gosh, supply is getting low, and prices are going higher, I need to get my hands on it right now. So they’re willing to pay a lot to get it now. And eventually that that panic ends, right. And then the price corrects downwards. Right, right. So so again, so this is what’s going on oil prices. Now, again, to the the now back to the more important part, right, the interest rate, inflation, you know, environment and what drives ultimately bond prices. So, you know, if we, if we look at, you know, GDP as a function of what happens whenever you have, and this is, the blue line is a three year average GDP growth, and then the black line is oil prices. And what you’ll notice is that when you have these big spike in oil prices, you also have a growth and economic growth rates. And again, so back in the 70s, everybody, everybody wants to go back and revisit that period, like, oh, my gosh, remember, in the 70s, when we had, you know, spiking interest rates and spiking oil prices, it was terrible. We had back to back recessions, and we did, but again, oil, you know, back then three year average growth rate of GDP was there. 12%. So very different environment than where we’re going today. At you know, on average since 2000. We’ve been growing close to 2%. Now, this is nominal GDP not real. So this is three year nominal GDP. We were growing on average at about three 4%. You know, from 2000. We’ve had this spike up recently to about 8%. Because of all that money we injected into the economy, so that’s why we got inflation, right. You had this big surge in economic growth, because you had all this activity of shutting down the economy, just demand that then required this big massive increase in activity to meet that demand. So you had this big surge in economic growth, but that’s unsustainable. Because you don’t have the monetary inputs anymore. Those are that liquidity slowly coming out of the system. But that’s also why when you had that big surge in economic growth, you subsequently had the big surge in oil prices as well, because you have more demand for oil coming in and what the supply would be. So as that normalizes, and as GDP slows, oil prices will slow as well. And again, you see this back in 2008, we had peak oil, or GDP was growing, it was going higher. And then as soon as we popped the market, we have a big, big decline in GDP, because of the financial crisis and oil prices crashed right along with it exactly what you expect. It’s all about supply and demand, ultimately, and imbalances that occur, deficits also matter. When you have big surging deficits, you’re gonna have, you know, you know, oil prices moving. So again, you know, whenever we’ve had, you know, big deficits, we we’ve seen spikes in oil, that causes some type of, you know, economic yield event, and then we have to do more deficit spending to try to bail everything out. And that’s when oil prices are collapsing, and then back, we slowly get back on our feet, oil prices rise, we have the next event, we have to go into more deficit spending. And it’s just a cycle we keep repeating. And, you know, we’ve recently had this big surge in spending with the inflation Reduction Act. And we saw that spike in oil prices again. So you know, this just this kind of cycle will repeat with with, you know, over time, and this is with inflation, again, a very high correlation with oil prices and inflation, inflation is coming down, oil prices are falling along with it. So yes to Luke’s point, if we do get higher oil prices, inflation is going to take up. But again, that’s not the measure that we really look at an inflation because we talked about core, which is x food and energy. And if we take a look at this relative to interest rates, we can see that even during these periods where we had spiking Peak Oil, yes, interest rates ticked up somewhat in 2006 2007, interest rates were rising. And then when oil prices collapsed, so long did interest rates as well. And that’s, that’s kind of Banda’s consequences. We have the trade war back in 2017 2018. Under the Trump administration, interest rates were ticking up the Fed went to their taper tantrum, you know, we’re nowhere near the neutral rate. And then when everything kind of wheels came off the card economically, oil prices collapse. So again, we’re gonna see the same issue here, when we hit a recession, interest rates are going to fall, oil prices are gonna climb because of lack of demand, and you wind up in the same boat. I mean, the recession is going to be the thing that cures all of these inflationary evils.

Adam Taggart 1:02:48
Okay, so what I hear you saying from all this data, is already if you’re taking the Groman approach, you’re saying, hey, there’s actually lots of reasons to expect it, at least in this part of the cycle for oil prices to be coming down, right as GDP mean, reverts downwards, as inflation, dis inflates, etc, right. And so, if you’re going to make a bond yields tied to oil prices, arguments, with oil prices, from your Outlook here, more likely to moderate going forward from here, at least in the nearest term. And that’s going to bring bond yields down. Sorry, yeah, down with it, raising bond prices, right. So you’re not exactly getting your your argument here. I just want to say that Luke, I think, was making more of a secular commentary about bond yields. While he did say, I’m not going to buy him right now. He also did say, hey, these guys might be right in the short term, right. And I kind of think that maybe that’s it’s almost sort of semantics, where I think you and your partner Mike Liebowitz are saying, hey, yeah, we think in the relatively near term, next six months, two years, we don’t know exactly what’s going to happen. Those moderating effects are going to happen that you mentioned, but probably something’s going to break. And the Feds going to have to step in with easing and pivoting and all that stuff. And that’s going to be the opportunity to ride the long bond. I don’t necessarily hear you saying, Oh, we’re buying these, you know, we’re selling TLT to get into longer term bonds themselves, and then we’re going to hold them for the next 20 years. To me, it feels like you’re gonna hold them until you get this price reversal that you’re looking for. And then you’ll probably sell them and put that capital somewhere else.

Lance Roberts 1:04:35
But yeah, but think about this. So So again, let’s go back to our thesis earlier. So you know, if you’re expecting a recession and a crash in the market, then money’s got to go from equities to somewhere, right. So it’s it money can’t evaporate. So it’s got to move somewhere. So it’s going to move to the safety of treasuries and that’s going to be the case. And now if that’s occurring, then yields are going to come back down towards zero like they did during the pandemic. The price of bonds are going REITs maximum price level. And again, unlike a stock bonds cannot go up in price forever. So a stock can theoretically in theory, the price of the stock can go up forever, right, and there’s no limit to how far price of a stock can go. As long as willing people are willing to pay up for it. With a bond, though there’s an absolute price peak, because interest rates get to zero. So, you know, they cannot be priced into infinity, because of interest rates eventually stop going down at zero, they you know, so that’s going to be the issue. So when we get down those very low yields, sorry, when we get down to two very high bond prices, very low yields, there’s gonna be no reason. So if I own a 20 year bond, as an example, and at 10 years to maturity, the price of the bond, the price of the bond is maximized, the yield is near zero, there’s no sense in holding that bond for the other 10 years, because I maximize my gain for that 20 year periods in year. So yeah, you sell the bond. And at that point stocks, you’re going to be you know, bed, you know, out with the bathwater at that point, where all my opportunity to buy cheap value stocks, etc, are going to exist. So yeah, I’m going to sell all those bonds, I’m gonna go 100% long equities at that point, and probably leverage at that point, because the opportunity is going to be the, you know, it’d be the crisis moment of 2008, where, you know, you’ve got nothing but upside, and equity prices. So, you know, and I’m just waiting for everybody to be, you know, convinced that when we’re on the show, everybody’s like, Oh, stocks, you’re going to zero when you

Adam Taggart 1:06:34
don’t ever touch a stock again, yeah,

Lance Roberts 1:06:36
I’m gonna buy everything I can buy with both feet and my neighbor’s hand. So, you know, this is going to be that way. But yeah, you know, it’s just a function that even if we look back, you know, in, in so to the premise that oil prices are going to drive yields higher, it never happened. In 2008, you had oil prices surging to the moon, the belief was, is that peak oil was here and oil price was going to $300 a barrel, and interest rates moved up a little bit, but they didn’t go shooting off to the moon, right? Because there’s a limit of where interest rates can function within the economy. And interest rates are a reflection of economic growth, wages and inflation. So in the latest economic report, what happened to wages?

Adam Taggart 1:07:20
They are softening.

Lance Roberts 1:07:22
They’re softening. What happens? What is happening right now with inflation? Is it strengthening or softening?

Adam Taggart 1:07:29
Well, it depends. The trend is softening. It bounced up last month. But yes, I know what you’re saying. Okay, nine to

Lance Roberts 1:07:35
three. Okay. Weakening. So an economic growth is slowing down, right. I mean, from where we were back in 2020.

Adam Taggart 1:07:43
I mean, not if you look at GDP now for the current quarter, but you and I know that that’s probably not gonna.

Lance Roberts 1:07:48
It’s also remember, that’s nominal, and it’s annualized. But if we look at the trend of economic growth, it is slowing from that 32% quarter that we had back in 2020. Right. So look at the trend of economic growth. So if economic growth is slowing, if inflation is declining, and wages are slowing, interest rates cannot go

Adam Taggart 1:08:07
up. Okay. All right. Good. I think we put a really nice bow on this. Thank you for actually doing all the pre work for this. So you know, folks clearly know where you are, you are still playing for this opportunity, which I’m going to call a near term opportunity with a generous definition of what near is, right? We know, a quarter could be a year and a half. We don’t know. Right?

Lance Roberts 1:08:29
I want to be clear, I want to be really clear about this. Because I don’t want anybody coming back on you or me. When I talked about this two weeks ago, I said my and I remember I wrote the article, I said why I doubled my bond position, my outlook is 18 to 36 months. So if you want to call that near term, it’s fine. But my term for this trade is 18 to 36. Months.

Adam Taggart 1:08:49
Okay, great. So year and a half to three years, right? So, yeah, so, okay, and you’re you’re you’re waiting to play for this opportunity that we talked about, right? All the reasons. yields have come down, price will go up. At some point, you’ll say, Okay, I’ve gotten everything I can get out of this trade. There’s now way better valuations appearing and other assets. I’m gonna rotate out of that into those. Last question, it could just because I’m curious if, you know, I think Luke is making a case for secularly higher interest rates. He didn’t say this, but I’ll say, you know, for the next decade or two, relative to where interest rates have been for the past decade or two. Do you have an opinion on that? Yeah.

Lance Roberts 1:09:36
So again, let’s go back to what drives interest rates, economic growth, wages and inflation. So if and look so the argument is if you’re if you want to have sexually higher economic growth, so instead of growing at 2%, as we’ve been doing since the turn of the century, we’re now going to grow at 3%. Okay, so at 3% economic growth, interest rates should be somewhere between three and 4%. That should be where that is, if interest rate of economic growth is now 4%, then we should be somewhere between, you know, three and 5%. Somewhere in there, interest rates are gonna be fairly close within a percentage point up over below the current economic growth rate in the economy. So, you’ve got to make so now go back to the issue, what is going to be the driver for higher rates of economic growth in the future, and the ability to sustain that rate of growth with higher interest rates when you have a five to one leverage ratio in the economy?

Adam Taggart 1:10:37
Right. So I don’t I don’t think that we’re going to have higher average GDP growth going forward than we’ve had. But I guess maybe a counter argument is, we had interest rates at sort of artificially low levels for the past couple of decades, right, there was a lot of intervention to keep them low. Are we going to be able to have that going forward, especially with debt levels as high as they are where the world is just sort of waking up to the fact that you know what, there’s just sort of more risk baked into the cake, and the Fed can’t intervene with impunity, as much as it did, because it’s going to create things like inflation?

Lance Roberts 1:11:12
Well, again, you know, we had no inflation for 12 years, because the Fed was doing quantitative easing, you know, one bout after another and keeping rates artificially suppressed, and we had no inflation from 2009 to 2020. The only reason we have inflation now, this is the one thing that everybody keeps mistaking is the only reason that we have inflation today is because you shut down the economy and gave $5 trillion worth of money to households.

Adam Taggart 1:11:40
Yeah, it’s the fiscal because that goes straight into the veins. Yeah, that that’s it.

Lance Roberts 1:11:45
If if the if the government would have just done nothing, right, let the economy do what it’s going to do. Look, and we look, we have the flu every year, we’ve had pandemics in the past, when we had the Spanish flu, we didn’t even shut down the economy. If the economy would have been left alone. Yes, you know, we would have gone through this whole pandemic issue, we could have worn masks, we could have done vaccines and robots, there’s really no reason to shut down the economy. But assuming we didn’t, the economy would have slowed down, inflation would have come down, some interest rates would have come down some at that point, because it had a recession, we would have gone through it, we would have been back on a normal track. And we still wouldn’t have had the level of inflation that we saw, because you shut down the economy and put in $5 trillion with the debt, maybe inflation would have been 4%. Maybe it would have been 5%, at most, but I doubt it would have even been that because the economy was not growing that strong back then again, we’ve been running a 2.2% growth rates of the century, there was nothing to change that dynamic. And so except for the shutdown of the economy, and 5 trillion and checks, so if we just get back to normalcy now, right, and the Fed is doing nothing, we’re going to be growing somewhere below between 2% and 1.8%. Even the Feds own long term projections for economic growth is 1.8%. Now, and with the debt problem that we currently have, it’s probably going to be somewhere closer to one and a half percent. That’s just a function of debt on economic growth, right? You just, you know, you can’t just magically create economic activity, when you have high interest rates, it’s already curtailing the spending of consumers, they’re already being impacted by higher interest rates. So it trying to look what’s happening with mortgages on homes. Can you imagine trying to maintain a seven, eight or 9% mortgage rate in an economy and trying to sell houses at the same time? You know, that’s one of your bigger inputs into the economy, and it’s just not going to be sustainable.

Adam Taggart 1:13:38
Okay, all right. I there’s more to dig into there. But we gotta leave that for a different show. Yeah, that is a whole show. All right. So there is a piece you wrote, where I’m just going to tell folks to go read it, it’s germane to what we’re talking about here. But you wrote a piece called the deficit surge will lead to lower rates, not higher rates going forward. I think it’s really important for folks to understand that we don’t have time to dig into it today here because I gotta land the plane. And we got a few other things we got to mention first. So let me just jump to remind everybody that last one of the shoes that I think you think when it drops, which it is about to could actually be really meaningful in the story of how perhaps we get from here to a potential recession, which is student loan repayments resuming. And here as of the first day of September, student loans are officially now we’re accruing interest again. And those interest payments will have to start and servicing payments will have to start 30 days from now our beginning of October, right?

Lance Roberts 1:14:46
Gonna say something really quick. Oh, absolutely. I got a great email. So my son has a Sallie Mae loan for his college, and I got an email from them because I had to cosign for him. loan. And they sent me an email and said just a reminder, Sallie Mae is not a federal student loan. So anybody that has told you there’s been any sort of forgiveness or or are any reduction and the payment that Joe is incorrect, your loan is accruing interest, your first payment is due on the first day of October because we are not part of the federal loan. We are a private loan committee through Sallie Mae. So it was my point was, is I thought it was interesting day. I mean, immediately, they sent an email saying you are you know, that you’re on the hook, buddy, yeah, you have to pay this loan. And so don’t think you’re getting off on a you think so. You know, and there’s a lot of these, you know, private loans that are out there that, you know, were put together that people owe money on and they and they’re, you know, going oh, well, I don’t have to make a payment on it. Because it’s a federal loan. It’s not you owe the money on it. Well, it’s

Adam Taggart 1:15:53
so I chuckle they’re just because these these GSEs these government sponsored entities, they just love to have their cake and eat it too. Right? You know, when they want to be bailed out? Oh, we’re a public entity. You got to bail us out. Right. But then what their money is

Lance Roberts 1:16:08
on private? Yeah, alright. Anyways, I

Adam Taggart 1:16:15
just want to let folks know that we’ve been talking about this. It’s been academic for just quarters and quarters of discussion on this channel, it’s now beginning to become actual. Alright. And I can’t remember I actually don’t think we talked about it last week, because we had the end of life presentation. But um, there was a survey that came out last week, that CNBC reported, and I’m gonna forget the numbers, exactly. But there was some large percentage north of 50% of survey respondents who said, I’m actually going to be like deciding between, you know, food and making this this payment, right, I’m probably going to be at least reducing the food I buy, it’s gonna be cutting that deep into my essential spending. Good.

Lance Roberts 1:17:00
That’s a very critical point. And I think it’s something that has been overlooked by the meat look, I’ve been I’ve written about this already. You’re talking about a 12 to $15 billion hit on a month. The thing about student loans is is they are not dischargeable through bankruptcy, right. So when you’re having to make that decision about what do I pay and don’t pay, you don’t get out of it by filing bankruptcy. So if I’m going to if I think I’m going to wind up having to file bankruptcy at some point, I’m not gonna pay my credit card, I’m not going to, you know, pay other debtors, because I got, I’ve got bankruptcy protection on those things. I’m going to pay the student loan because I don’t have bankruptcy protection on that. So I think we might see some of the spread. Yes, to your point, see a reduction on maybe eating out as much. You know, we’ve seen a lot of millennial spendings on, you know, entertainment and experiences versus durables. We’ll see we’ll see a cut there. But we can also see those bankruptcies and credit card delinquencies really starting to pick up.

Adam Taggart 1:18:02
Yeah, well, that’s a great point, right? Which is you what debt do you default on what you default on the debt that you can discharge in bankruptcy, right. So you know,

Lance Roberts 1:18:12
nobody cares about credit card, you know, back in the day, when you were growing up, if you if you, you know, didn’t pay a credit card company, then you couldn’t get credit for like seven years. If you declare bankruptcy, it was like 10 years before anybody would give you credit. Now everybody’s like a badge of honor. is all your fault bankruptcy. Oh, here’s more credit.

Adam Taggart 1:18:28
Right, exactly. I know people in the years declared bankruptcy and like literally the next day, they’re getting credit card. It’s ridiculous. Nobody cares. But But yeah, to your point, the pressure on the student loan side could actually manifest in you know, higher delinquency rates and other types of of debt. So important reminder that it’s not dischargeable in bankruptcy. But what was interesting is another stat in the same survey, it was something like 45% said that they expect their loans to go delinquent, when they go into repayment where there is at least I took it as sort of, like, I’m just not gonna be able to pay him, right. Like, I’m just I know, at some point, I’m just not be able to make these payments. I don’t know if there was also a an element in there of just like, hey, screw the government, if we all hold hands and don’t pay, we can stick it to these bastards, right. And there’s a lot of that going on, and sort of, you know, internet chat rooms and tick tock and stuff like that. So it’ll be interesting to see. But as you and I have talked about, that’s a pretty big risk, because your opponents, the government, and this stuff isn’t dischargeable in bankruptcy. So you know, you could have a really unforgiving lender in this story.

Lance Roberts 1:19:37
But it was, it was it was just real fast. I mean, it was a really bad precedent that the government put out in the first place saying, hey, you know, we’re going to forgive these loans and blah, blah, blah. You know, because again, it gave people hope that Oh, I took out you know, I’ve got 100,000 in student loan debt that I took out, you know, I took it out, I signed the paperwork. I went to the classes, I did all that. That was all that was all on me. And now out the government saying they’re gonna give to me for free. That’s awesome. Yeah, it’s just a bad precedent, if they were going to do this, they should have done it behind closed doors, it should have never announced it and made sure that it was all legal upfront, and then say, Okay, we’re gonna forgive student loans.

Adam Taggart 1:20:12
Yeah. Now, you know why this was such a politically motivated? Yeah,

Lance Roberts 1:20:16
but now you’ve created the whole environment where guys are going, you know, again, I was like, you know, we’re gonna hold hands and join in solidarity and all defaults on our lungs at the same time, you know, you’re gonna do so much financial damage to yourself. It’s just, it’s just the same thing with people skate, you know, doing, you know, what’s the word I forgot? Where people were basically delink, you know, basically pushing out their mortgage payments on their, on their houses. And when the moratorium but, you know, they were going through this whole premise, like, Oh, I’m gonna negotiate with the bank, and I’m not going to pay any mortgage payments for this period of time. And all that interest was accruing the whole time, right. And this has just come back to bite these people terribly, you know, in this, and this is all part of what we created during that whole economic shutdown. And we just, we just proliferated a whole bunch of bad financial policies for people trying to in the name of trying to help them right. And again, you know, I get why we did it. We were trying to help people, that we’re in a state of trouble because we shut down the economy. But human nature is is Oh, great. I’ve got an I’ve got an ability to go spend money on something else that I want, rather than paying my bills. And now it’s all going to come home to roost at the worst possible

Adam Taggart 1:21:31
time. Yeah. And this, I had different rants, but but least a mini one here is politically, I don’t know exactly. Really, when this started, maybe it’s been going on forever. But we have this almost sort of like policy creation process via hostage taking, right, where we basically will have whichever administration’s in power. And I’m trying to make this partisan, because I think both sides are guilty of it, they’ll come out and they’ll say, Hey, we’re announcing massive program x, right. And, you know, they get everybody to give a public bite into it. And then they turn around to the opposition and say, Well, of course, now you get to pass this thing, because we have all these people that are now at risk, right? And I’m probably gonna get a lot of blowback for this. But with the Affordable Health Care Act, you know, we expanded health care coverage to millions 10s of millions of people. From the from the heart perspective, very noble, you know, these people, it’s an essential benefit for them, right. But we had no plan how to pay for it, right. But we got the people insured. And then we basically turned around and said, Okay, well, how are we going to finance this, right? And all of a sudden, anybody opposing that is, is against pulling healthcare away from these people. But it’s like, wait a minute, no, you gave it to all them without a plan, right. And now you’re holding them hostage to us that we’ve got to find some way to afford this, which of course, it’s not economically sustainable. And so we have to rack up more debt and tax more people and, you know, jack up rates for the people who are paying full freight. And, you know, again, I’m not trying to make it a partisan comment here. But we, we create this hostage and then try to figure out, you know, how it’s going to be debt funded, as opposed to saying, hey, what’s a economically sustainable way to do the types of things we want to do?

Lance Roberts 1:23:26
We spent hundreds of billions of dollars on those health care exchanges, that all went bankrupt, we, you know, we raised the cost on everybody that was there was healthy paying insurance. So now health care costs have risen dramatically. And ironically, the 20 million people that were supposed to be covered, still don’t have coverage. So the whole premise never worked. The way that it was that it was said that it was going to work. It just raised health care costs. And and we’ve and to your point, we spent billions of dollars on stuff that now we have to wind up paying for. And we still haven’t solved the problem, which is unique. If you want to fix healthcare, you’ve got to fix tort reform, you’ve got to fix the medical billing practices, you’ve got to get government out of the middle of it. Again, when you put the government in the middle of anything, it’s going to drive costs up. We’ve talked about student loans for that function, and efficiency down. Yeah. And again, you know, there are there are places where you pay cash for healthcare and healthcare is extremely cheap. So you know, plastic surgery is a good example, non elective surgery, compact competition keeps prices down, quality of health care goes up, you know, that’s the model that we need to be implemented. You know, a $25 copay. Sounds great, but it drives up the cost of health care for everybody. So there’s very simple fixes, but we don’t want to tackle those. It’s just like fixing Social Security, right? Nobody wants to fix all security, because nobody wants to do what’s required to do it, but eventually it’s going to fix itself because security’s gonna run out of money. So we’ll be forced to fix those security in a very painful manner, at some point down the road rather than doing very small fixes right now. Just raise the retirement age, increase, increase contribution limits on Security payments. And so being capped at $137,000.40 1000 income, you know, everybody, no matter how much money you make you pay into Social Security, very small changes you can make that would bail out Social Security and Medicare and make it sustainable for decades. It’s not sustainable long term because of the birth birthright population. But we can certainly extend the extended for five decades by small changes today that we’re not willing to make.

Adam Taggart 1:25:24
No, all right. Well, look, you and I could rant about that. I’m sure for another three hours. I’m going to basically jettison everything else I have on the next week. It’s all good stuff. Yeah, it’s all going to next week. But But of course, last we got to talk about trades, right? Can’t leave without talking about trades. What have you guys done, if anything over the past week or so? Don’t you? Well, I

Lance Roberts 1:25:44
did, really, so. So you know, over the last during this, that whole correction process, and we were talking about taking advantage of the correction to buy stuff. And so we did quite, you know, we added to Apple and Microsoft and Google and, and those companies. So now we’re down to the part just we kind of just, you know, kind of rejiggering, you know, balances within the portfolio to take advantage of opportunities. So this past week, we had, we’ve owned AMD for quite some time. So we added Nvidia to our portfolio this week or early on Monday. And then we added to our small regional banks this week. So we had bought back during the financial crisis back in March. You know, if you want to call it that, the savings crisis, whatever. Back in March, you know, we bought small starter positions and truest financial and PNC Bank. And we added just a little bit to those this week, because they have nice little run a pullback to support. So we just add a little bit more continuing to kind of build our position there. If interest rates come down, those banks are going to do very well.

Adam Taggart 1:26:52
Okay, great. All right, we’ll look in wrapping things up here. I want to remind folks that tickets are now on sale and selling fast. For Wealthion online fall conference on Saturday, October 21. The faculty continues to just build out at a great, amazing pace. It’s definitely the best faculty that we’ve ever had for one of these events. And if you’ve attended one of them, you really have a good sense of what I’m talking about here in terms of the high caliber of guests. Real quick, let me just run through the big names. We got Lacey hunt, kicking it off, he’ll be delivering the keynote is if you’ve watched these in the past, you know that his keynote is worth the price of admission in and of itself. We’ll have Jim Grant there the godfather of interest rates, we’ll be talking about what he sees where he sees them headed and 2024. We’ll have Mike Kantrowitz, they’re talking about the hope framework with their laser focus on the E element that Lance and I were talking about earlier in this conversation. We’ll have Kyle bass, they’re talking about the biggest geopolitical risks that he thinks are going to impact the economy next year. Stephanie Pomeroy will be back giving us her latest on how she sees the forces of inflation and deflation resolving. We’ll have IV Zelman they’re talking about the housing market will then be a reaction to Ivy’s presentation from housing analysts, Nick Gerli. And Amy Nixon. We’ll have Lance’s partner in crime there, Michael Liebowitz, they’re giving us the latest outlook on bonds. We’ll have Rick Rule giving his latest stock picks in the Natural Resources space. on the energy side, we’ll have Bloomberg there talking about the global energy situation he’ll be joined by Justin Hewan of uranium insider to talk about the specific opportunities that are emerging in investing in nuclear. Of course, we’ll have our advisors that are like Lance, and the guys from new harbor. And Jonathan, welcome from up there in Canada, we’ve got one or two other guests that we’re landing right now we’re going to add some other big names to that list. But anyways, that sounds of any interest to you go to And you can learn more about the conference. But but if you’re interested register soon, because you can claim our deepest discount, which is the early bird price discount, which is about 30% off the full price for tickets. And if you’ve been an alumnus of one of our conferences in the past, check your email for me because you’ll have a discount code to get an additional 15% discount off of that 30% discount. And then just in wrapping up as we do every week, I highly recommend to navigate the environment that’s most likely to be coming ahead that you do so in combination with a financial advisor who understands and takes into account all the issues that Lance and I have talked about here. If you’ve got a good one who’s doing that for you’re great stick with them. But if you don’t, we’d like a second opinion from one maybe even Lance and his team, they’re at real investment advice. I then consider scheduling a free consultation with one of the financial advisors that Wealthion endorses, just fill out the short And we’ll set one up for you. These consultations they are totally free. There’s no commitment to work with these guys. Just a public service that people with golden hearts like Lance offer to help as many people as possible position as prudently as possible in advance of what may be coming. And if you enjoy Lance and I kicking back and having these conversations a week after week after week after week, please let us know by hitting the like button, and then clicking on the red subscribe button below as well as that little bell icon right next to it. Blanche, you get the last word, but

Lance Roberts 1:30:14
have a great Labor Day. Enjoy your weekend next week will be a shortened trading week. So we’ll have less to talk about next week. Right?

Adam Taggart 1:30:21
All right. Oh, I forgot to mention this too. Yeah, one of the things I was going to talk about was the importance of keeping play in your life. As folks are watching this when it releases on Saturday. I’m going to be annually, my funnest day of the year, which is the gentleman’s Olympics, which is where I get together with a bunch of guys. We dress up in kind of old timey clothes, and we do all these different kinds of yard games, everything from you know horseshoes to darts to Bochy to pool to ping pong to axe throwing. So I’ll have a lot to report from that when we come back on next week, Lance. Sounds fun. All right, everyone else have a great, long holiday weekend. Thanks so much for the great week, Lance, everyone else thanks so much for watching.


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