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Noah Brooks:
Welcome everybody, to this week’s installment of the Market Enthusiast. I’m Noah Brooks and with me, Chris Needs. Let’s just get right down to it. Last Friday, the Dow, the S&P, and the NASDAQ, all closed at all-time highs, each one of them. We had Dow, 40,000. Right? I don’t hear anybody cheering.
Chris Needs:
I heard some cheering.
Noah Brooks:
Did you hear some cheering?
Chris Needs:
I heard a little bit of cheering.
Noah Brooks:
I feel like everybody’s poo-pooing it.
Chris Needs:
You didn’t get me my 40 K hat.
Noah Brooks:
So interesting, right? Everybody talks about the Dow Jones hats. I went on eBay and I was looking for… I thought maybe I would buy one and they were on there, but I kind of fell down the eBay rabbit hole. I’m looking for Dow 40,000 hats and I saw a Dow 10,000 hat.
So a few weeks ago I had said that we were at 25-year marker from Dow 10,000, right? So it was March of ’99, and we were getting close to Dow 40,000 and certainly 25 years out. So I’m on eBay and I find this Dow 10,000 hat. And the next thing you know I find a Dow 15,000 hat, and it took me a second or two, but the Dow 10,000, we know, right? That was mid-March of ’99. When do you think the Dow 15,000 hat was produced?
Chris Needs:
Not in the lost decade, I would guess.
Noah Brooks:
Not in the lost decade. It was from 2013. And so I went back, I obviously did a little math, did some calculations. But it took from March of 1999 to the middle of 2013 to go from 10,000 to 15,000, 50%. So it’s kind of… 14 years for that to happen. In the interim, we made it up to, I think it was 12,300, and then all the way back down to 6,666 from… What was that? March to March 9th, 2009. That wasn’t good.
Chris Needs:
Third times.
Noah Brooks:
Yeah. So it was just interesting to see that timeframe between Dow 10,000 and Dow 15,000. I always use this analogy, if you fall asleep and you’re Rip Van Winkle, well you wake up and it’s out 15,000. You think, “Hey, it’s 14 years and we’re up 50%,” not a great return. The money doubles every 10 years at a 7% return. So that timeframe was obviously less than that 7%. But yeah, that was my little down the rabbit hole on eBay. Kind of nutty.
Chris Needs:
Nostalgic.
Noah Brooks:
Yeah, definitely nostalgic. So that’s it. We have all-time highs. That’s where we are now.
ON THE APRIL BOUNCE BACK
Chris Needs:
Markets behaving like a bull market seems like it’s rotated a little bit. We’ve seen that in a different composition of returns than we’ve seen over, it seems like the previous decade. It was all tech, all the time accounting for most of those returns. But it’s behaving well. That post April bounce back has been pretty strong. I’ll throw this scenario out to you. If we look back to early 2022, we had the two negative quarterly GDP prints.
Noah Brooks:
Yeah.
Chris Needs:
Normally would be considered recession. Now we didn’t have job losses then. We’ll chalk that up to being skewed by the COVID effects obviously.
Noah Brooks:
Yeah, COVID rebound.
Chris Needs:
But say that was the recession. We had 2022 where value outperformed. That’s normal coming out of a recession. And then, since then we’ve seen an earnings expansion on growth stocks, on everything, but on growth stocks primarily. And now we’re seeing some strong earnings coming out over the last six months.
So if that was our recession, it would make sense why we’re moving along like this in the market. But everybody… It wasn’t technically labeled a recession because of the job loss is not being there and it seems like it’s been… We always talk about the most hated rally. It seems like another one of those scenarios. It’s like the most hated rally.
Noah Brooks:
There’s no question about it. I mean, I did a little bit of chart work over the weekend and I kind of went back seven years or so and went back to look at some of the drawdowns because there’s been so many reasons. And I always say this to people, to advisors, to clients. “You sound really smart when you’re telling people all the reasons that they should be selling.”
I just did a little bit of homework. We had a 10% drawdown in January and February of 2018. We had a 20% drawdown between September and Christmas Eve. That was the bottom in 2019. So September to December market S&P was down 20%. We had COVID. Right? Market was down 34%. 2021 did not produce any 10% downturns. I mean, I think the biggest one was a four and half percent, kind of crazy. That doesn’t happen too much.
And then as you just pointed out, 2022 down year, maximum drawdown was close to 23%. And then before we made new highs, we had another 10% drawdown in 2023 back ending in October. And everybody wants to like… They want to time the market. They want to say, “Hey, it doesn’t feel good,” or “Look at all this data that’s being presented to me. I should sell.” And I go back to here we are at all time highs and there’s been a million reasons that the pundits have said to sell. There’s been a million… I mean look what’s going on geopolitically. We have an election coming up. I know you’re going to follow that one pretty closely, right?
ON THE UPCOMING DEBATE
Chris Needs:
June 27th, we have the first debate. Biden and Trump, mano y mano.
Noah Brooks:
I got to tell you, I am not looking forward to that in any way.
Chris Needs:
Well, I was joking. Cannon was telling us apparently during the Trump administration they had high usage of prescription drugs being doled out. Apparently this Modafinil or something like that that’s used for jet pilots.
Noah Brooks:
Yeah, jet lag.
Chris Needs:
Yeah. So apparently that was just given out like candy. And then sometimes I see Biden talk and he’s not blinking. I’m like, “Is he on Modafinil? I don’t know.” But I think if we just juice them both up, let them go at it on Modafinil. I mean-
Noah Brooks:
What did I hear yesterday about it? It was something that they wanted to make sure that they were both going to be standing. That was the ground rules that they had to be standing. And I thought, “My God, where are we?” Growing up bill Clinton was my president, if you will. He was in office from ’92 to 2000, and I just looked him up the other day. He currently is younger than both of our candidates, today, right now. May of ’24, he’s younger than both of our candidates and he left office 24 years ago.
Chris Needs:
Need some young blood in here.
Noah Brooks:
Yeah, I’d like to think that that was going to happen, but either take your pick from either side. Neither one of them are young.
Chris Needs:
Yeah.
Noah Brooks:
Yeah. So what else do we want to talk about today?
Chris Needs:
Something interesting. Three of the top five S&P 500 in terms of year-to-date returns are utilities. We talked previously about the rotations and how you utilities getting some love finally, after it seems like forever. Three of the top five.
ON THE ENERGY SECTOR
Noah Brooks:
I had an email blast from The Fool. I subscribed to them. I look at some of their stuff here and there and they wanted to just tell me what the next best energy company was. And I was like, “That’s not normally something that they come out with.” And so their position and, I think this is what’s drawing people to utilities or the market to utilities, right at the moment. They’re talking about the energy consumption levels of data centers. And AI, they require those chips, whether it’s the NVIDIA chips, the AMD chips, it doesn’t matter, but they all require a lot of energy. And so, I think you had a stat, what was the CAGR?
Chris Needs:
For the intermediate term, 15% compounded annual growth rate in energy usage as a result of this AI boom or AI revolution.
Noah Brooks:
How do we power that?
Chris Needs:
Nuclear.
Noah Brooks:
Nuclear?
Chris Needs:
Nuclear.
Noah Brooks:
But realistically, I mean, I think there was one new nuclear plant that came online in the last 30 years, if I’m not mistaken. It was just recently. It was in the last six months or so. I mean, do we get there? Is it just more of the same? Is it more natural gas or is it more solar? Or is it a combination of everything?
Chris Needs:
I think it’s an all hands on deck. I think everything’s going to have to contribute. Obviously those are… You think about how old our energy grid is, our electric grid and how much work’s going to be done to sort of modernize that. There’s going to be a lot of opportunities for companies to take advantage of that as sort of outlay more wire and come up with better production means as well.
ON COPPER + COMMODITIES
Noah Brooks:
Copper?
Chris Needs:
Copper. Hey, I’ve been dabbling in copper lately.
Noah Brooks:
I think copper had a big move last week, actually. We don’t need to talk about commodities, but I’m pretty sure it had a big week. Now you mentioned utilities were up. I had a note here that says year-to-date up 15% in utilities and they’re leading for the quarter. They’re up 10% for the quarter. So I mean, they’re catching fire right now as we’re talking. They’re catching fire. I don’t know about today specifically, but they are catching fire. And that leads me to my next note that I have here. Every S&P sector, it’s a little bit longer term, for the last 12 months is up double digits with the exception of real estate, Telecom and consumer staples.
When you look at the big index indices like the S&P 500 or the Dow, whether it’s the Russell 1000 growth or values, small caps, S&P 600, the Russell 2000, it doesn’t matter. Every one of those is up double digits in the last 12 months. And so if people have been sitting out on the sidelines waiting for the time to get in, they have done themselves a little bit of injustice. I mean, if you’re a bondholder and you’re in bonds, okay, no problem. But if you’ve left the stock market and waiting in cash or something else, I mean you’ve missed a big move in the market.
Chris Needs:
5% money market rates look good until the market goes up 30%. Then you’re kicking yourself.
Noah Brooks:
Yeah. The opportunity… And there’s a place for that.
Chris Needs:
Certainly.
Noah Brooks:
There’s a place for emergency funds, there’s a place for cash on hand. There’s a place from a liquidity standpoint, so not poo pooing, the idea of having cash on hand, earning 5%, it’s a great return. But if you’ve taken money out of the markets and gotten scared out, here we are all time highs once again. And the question that I have for those people, whether they’re advisors or whether they’re clients is, when do you get back in, if you’re out? It’s easy to stay in. It’s easy to stay in. It’s hard to get back in. It feels cold when you get back.
Chris Needs:
When we had my daughter in September… You know me, I trade a lot personally and I had totally gone cash, sitting out in cash. And even for me looking at markets every single day, I was like, “Oh, what do I do? How do I get back in?” Rarely am I ever 100% cash. And it was like, holy cow. And things were just coming down. Luckily, timing-wise it worked out that time because we bottomed in October and it’s been kind of up ever since. But it was tough.
Noah Brooks:
Getting back in is hard.
Chris Needs:
It was scary.
Noah Brooks:
Yeah, it’s like at the pool, once you get out and you dry off and you get up and get back in that cold water again. I just came up with that. I don’t know.
Chris Needs:
That’s a real thing.
Noah Brooks:
Yeah. Speaking of the pool, we took the boat out for the first time this week. So here in Pennsylvania we’re having a little bit of a heat wave. I got the boat out of storage, just this little small boat, no yacht or anything, tiny little lake. And of course, we get out there and… We get out there and the dog jumps in the water.
Now he has a life vest on and I hadn’t really felt the water. He swam around the boat, he’s okay. His life vest on. He kind of knows what’s going on. I grabbed him and put my arm in the water. It’s freezing. Checked it, it’s 58 degrees and it would be hard to get back in there. What else do we have economic wise?
ON ROARING KITTY’S RETURN
Chris Needs:
Well, you want to talk about your dumb money? You mentioned them a few podcasts ago. Roaring Kitty is back.
Noah Brooks:
Yeah.
Chris Needs:
Or he was.
Noah Brooks:
He was back. Is he back today?
Chris Needs:
Maybe he disappeared again. I don’t know.
Noah Brooks:
So he did some posting last week?
Chris Needs:
Yeah.
Noah Brooks:
Give us the background for anybody who’s not familiar with him.
Chris Needs:
So during the meme craze, Roaring Kitty, aka Keith Guild, random guy, I don’t know. He was sort of the face of the GameStop meme craze and got tons of followers on social media and everything like that. And he had gone dark for a while and I think it was like maybe nine or 12 months he hadn’t posted anything.
And then he just randomly came on to Twitter or X and posted that meme of a video gamer leaning forward to insinuate getting serious. And then boom, next thing you know, two days later at its peak, GameStop was up 271%. AMC was up over 300% at its peak and dumb money.
Noah Brooks:
So what happened? Now we both know, but for our listeners, what happened after GameStop went through the roof?
Chris Needs:
They issue more shares.
Noah Brooks:
They issued more shares.
Chris Needs:
Dilute.
Noah Brooks:
I mean, if you were the CFO, you got to take advantage of it. So do you-
Chris Needs:
It screws the shareholders.
Noah Brooks:
They have that on the shelf ready to go for when the stock pops. Do you think they are colluding with Roaring Kitty?
Chris Needs:
I joked with you via text. I’m like, “Roaring Kitty, he’s getting a million of those shares.” I don’t know. That would be… I think the SEC would be knocking. He didn’t even say AMC. He just… Picture leaning forward and stock goes up 270%.
Noah Brooks:
That’s kind of crazy.
Chris Needs:
I wish I had that kind of sway.
Noah Brooks:
Yeah, neither… Together we don’t. I don’t think we do. Now I’m not a gamer. Are you a gamer?
Chris Needs:
I play some games. I used to.
Noah Brooks:
You used to.
Chris Needs:
I mean, I still pay annually-
Noah Brooks:
Before kids-
Chris Needs:
I still pay annually to be able to, but I never do.
Noah Brooks:
Yeah, it seems to me though GameStop, which is a gaming store, you go in, you buy-
Chris Needs:
I pay them every year, too even though-
Noah Brooks:
Do you?
Chris Needs:
I don’t…
Noah Brooks:
You do?
Chris Needs:
I don’t use… Yeah.
Noah Brooks:
So you can go in, you buy a used console, you can sell your games, buy new games, things like that. It seems to me they’re the same thing as AMC, right? The movie theaters, people are just not going out. If I want to buy a game, I can download it instantaneously on the device itself. So to me, the draw of going into a store… And I get you go in and there’s people there that you can talk to, you can associate with, you can ask them questions. You can also do that online and most gamers do. I don’t see how… I mean, what are they going to do with this money? So if they issued… How many shares did they issue?
Chris Needs:
45 million.
Noah Brooks:
45 million shares. And, I don’t know when it’s coming out, but they’re going to issue this money. What could they possibly do with the shares unless they completely change the structure of their business?
Chris Needs:
They already have an online store, but it’s not getting the traffic or getting the revenue they were hoping it was going to get. I don’t know what they’re going to do with those shares there… Those shares just give them a little bit more flexibility, I guess, because them and AMC were both… I would say near bankruptcy, not near bankruptcy, but stocks going down. They’re not doing well. And like you said, they’re kind of prehistoric when it comes to the evolution of games.
Noah Brooks:
Yeah. When was the last time… Now, you have kids, maybe it’s a little bit different. But when was the last time you sat down in a movie theater?
Chris Needs:
The last Harry Potter movie. Not Harry Potter, the Fantastic Beasts trilogy.
Noah Brooks:
Okay. How long ago was that?
Chris Needs:
Two years, I think. And it was empty. It was opening weekend. I think it was actually a Thursday night and there were probably 10 people in there. Me, Lex and eight other people. So that was IMAX, too.
ON SEEING A MOVIE AT THE MOVIES
Noah Brooks:
Okay. I was having this conversation the other day. I don’t remember if it was you or somebody else, but we were talking about the new theaters where they have the food and drink.
Chris Needs:
Movie Tavern, yeah.
Noah Brooks:
And Movie Tavern. Was that us?
Chris Needs:
Yeah. I wanted your take on Movie tavern.
Noah Brooks:
I haven’t been to one recently, maybe five or seven years ago, pre-COVID we were at one. But the entire time that you were talking about it, how you can go there and they have the recliner and you can order food.
I just think to myself, “I can do that at my house. I don’t have a reason to go out and to do that there.” Granted, it’s a monster screen. I mean it’s massive, especially if you’re in one of those IMAX things. And so I get the allure of there’s certain movies that you’d want to see what you were raving about Dune two the other day.
Chris Needs:
Yeah, I loved it. That’s a great… That was probably the first great movie I’ve seen in probably 10 years, in my opinion. 94 out of 100.
Noah Brooks:
I feel like I said this the other day, I saw Dune as a little kid when it first came out. I don’t know what year it was. It was like 1983, 1984. I didn’t have any idea what was going on. It was way, way over me, and I didn’t care for it.
Chris Needs:
That’s how I felt watching the first one. This was one of the first movies I went to see of the fantasy genre that I hadn’t read the book previously, like Harry Potter, Lord the Rings, et cetera. And I watched the first one. I’m like, “I don’t know what just happened. I didn’t like that.” Then I watched the first one again. I’m like, “Oh, that was actually a pretty good movie.” And then Dune two was a great movie, in my opinion.
Noah Brooks:
Yeah. You said you’re a gamer. Did you ever play Fallout?
Chris Needs:
I did not play Fallout.
Noah Brooks:
No?
Chris Needs:
Cannon has gone at length about it. So he loved it.
Noah Brooks:
So my wife and I, we started watching Fallout on one of the streamers. Maybe it’s Hulu-
Chris Needs:
Prime.
Noah Brooks:
Maybe.
Chris Needs:
Prime.
Noah Brooks:
Yeah, I think it’s Prime. And I didn’t realize it, but Cannon said to us, “Hey, you should check it out. It’s based on the Fallout, the game.” And at first I was like, “Ah, it’s not really my style.”
We watched it. We binged the entire season, maybe 10 or 11 episodes in three days. It was one of the best shows that I have watched in years and years and years. Little bit Sci-Fi, not too much gore, but definitely some weird stuff happening there.
Chris Needs:
I’ve only watched two episodes. My time has been taken up with this whole CFA thing right now. But I mean what an opening scene.
Noah Brooks:
Right?
Chris Needs:
Oh, my gosh. I was hooked on it right there. Granted I’m only two episodes in because I get five minutes a day to myself, but…
Noah Brooks:
So I won’t spoil it for anybody, but it’s a cross between 1950s Cold War style and 2020… Wait. ’24, 20-
Chris Needs:
200 years later.
Noah Brooks:
Yeah, 200 years later. What happened after the nukes went off, I guess is, I could say it right. Fallout’s the name of the show, so I’m not going to give that away. But really interesting for anybody who wanted ever to live underground. I don’t know if anybody out there ever wanted to do that. But again, when I was growing up, the bunkers were the rage. Even at school, you would go and they’d teach you how to lay under your desk for that.
Chris Needs:
That’ll work.
Noah Brooks:
For the blast.
Chris Needs:
That’ll work.
Noah Brooks:
Yeah, because that’ll work.
Chris Needs:
I mean, I don’t want to give too much away. It’s the opening scene. It’s not giving away when the daughter says, “Is it your finger or mine?” I’m like, “Oh, man.”
Noah Brooks:
I think everybody got that. I think I got chills when we watch that. Speaking of risks, there’s a little bit of a bird flu kind of going around these days.
ON THE BIRD FLU THREAT
Chris Needs:
Yeah. Just what we need. Egg prices going up and then apparently it’s spreading or can spread to cattle.
Noah Brooks:
Yeah. Yeah. And there was a gentleman in, I think Texas who… If I’m not mistaken, it was transmitted from animals to human. It’s one of the first kind of transmissions that we’ve seen. That could certainly be something on the radar as a risk if it becomes… I guess popular is not the right word, but if we have an outbreak.
Chris Needs:
I mean, breakfast foods have been going up, OJ’s breaking out again. I feel like OJ’s been breaking out a lot over the last few years. I don’t know if-
Noah Brooks:
I’m trying to cut back. There’s too many calories in OJ for me.
Chris Needs:
Too much sugar.
Noah Brooks:
Too much sugar.
Chris Needs:
Not for me, but…
ON INFLATION
Noah Brooks:
So let’s talk inflation a little bit, right? We had CPI that came out 3.4% year over year, up three tenths month over month. So the month before was high and we were talking about the possibility of rate increases. So this came in… I think it’s in line, but back down to reasonable levels if you will. And we’re starting to see… I mean, was it Target came out yesterday? And they said that they’re going to have 5,000 different items that they were going to be lowering prices on.
Chris Needs:
I didn’t see that report, but I mean that’d be nice. I mean, that in line seemed a lot better after what we’ve had the past several months. And then we actually had sort of a hot PPI number two days before or the day before. And so after that PPI report in line looked really good and the market really jumped on it.
Noah Brooks:
Yeah. I would just love to see, as would the Federal Reserve. I’d love to see prices just maybe flatten out for a month or two instead of continuing to rise up. And I suspect that we’re just in a little bit of a lag. And I could be wrong on this, but I suspect in six or seven months from now this year, we’re going to see those numbers starting with a two, maybe not 2.0 like the Fed wants, but I think that 3.4 is going to be coming down.
If nothing happens with hydrocarbon with oil and gas, right? Meaning if the current Middle East crisis that’s going on doesn’t get wider and oil stays approximately the same dollar amount, I could see CPI we’re starting with a two later this year.
Chris Needs:
Definitely. Yeah. Us equal, like you said, bar sort of those extraneous things, it should be where we end up.
Noah Brooks:
So on that path, if I can visualize that and the data is kind of looking like that. Well, the Fed can also, right?
Chris Needs:
Yeah.
Noah Brooks:
So then the question is, when do they lower rates? Is it going to be in 2024 or is it going to be in 2025?
Chris Needs:
I think we’ll see a cut this year.
Noah Brooks:
How many?
Chris Needs:
One.
Noah Brooks:
One cut? Okay. What month? Before or after the election? Never mind. It’s going to be after.
Chris Needs:
It’s going to be after.
Noah Brooks:
It’s going to be after, yeah. It’ll be the day after the election or… I wonder if they would delay it if there wasn’t a result that night.
Chris Needs:
No, they’re apolitical.
ON THE AURORA BOREALIS
Noah Brooks:
All right, so just a few other things that I have on here. Did you see the Aurora Borealis?
Chris Needs:
It’s too cloudy where I was at, but saw the awesome pictures out there.
Noah Brooks:
I saw tons and-
Chris Needs:
Really-
Noah Brooks:
… tons-
Chris Needs:
Beautiful things.
Noah Brooks:
… of pictures. Yeah. Here in Pennsylvania where we were, it was complete cloud cover. My feed was filled with people showing wonderful pictures. Even Northern Pennsylvania, we’re kind of southeast Pennsylvania, even northern Pennsylvania, I think out in Pittsburgh, they were seeing it. I had a friend send me some pictures from down south. They could see it. Well, Tennessee, I guess it would be. I’m trying to figure out where everybody is these days.
Chris Needs:
Southwest.
Noah Brooks:
Yeah. So I missed it. But it’s one of those things where, I mean, people are out there looking for this stuff. Now, I didn’t really hear about it until maybe two or three days before it was supposed to happen. But the way I heard about it was that we were going to have this massive solar storm that could potentially knock out GPS and telecom systems and all that. And to my knowledge, none of that happened.
Chris Needs:
Yeah. Luckily, no issues there ’cause we don’t want to start dealing with that as a variable in markets and things like that. Or just for a living ’cause…
Noah Brooks:
My concern is… And it is not for the company that we are here that we work for at Good Life. My concern is for the infrastructure. If we were to be without internet, I mean, occasionally our internet provider goes down for a few minutes. And it’s like you fly into a rage, you can’t use the phone, you can’t do anything. The only thing… You can use your cell phone. You can work on your Excel spreadsheets, right? But you can’t really do anything because everything’s internet based. I can only imagine what an internet blackout would look like for even multi-days, two days, three days. It would be nuts. There would be with rioting in the streets.
Chris Needs:
You have to have redundancies in the system somehow. I know Elon Musk mentioned Starlink satellites. They were affected, impacted by it, but they weren’t down. So I don’t know what that means. If they powered them down temporarily to avoid something getting circuited, I don’t know. But they’re still working and functioning apparently.
Noah Brooks:
I mean, I would have a satellite phone or satellite internet, but I have Comcast. I don’t need one. I would have a backup, if I could.
Chris Needs:
Internet generator, the equivalent internet generator.
Noah Brooks:
Yeah, but I mean, look at those undersea cables.
Chris Needs:
Yeah.
Noah Brooks:
Somebody goes down, cuts a cable or two, you can’t fix that in a day or something. I mean, there was a report out this week that there was a Chinese… Was it cable laying ships that they were suspected of cutting some cables near South Africa.
Chris Needs:
You have to use our cables now.
Noah Brooks:
It’s crazy. Crazy stuff.
Chris Needs:
All right, how about Red Lobster? You said you’re trying to keep them going?
Noah Brooks:
Oh, man. Oh, geez. I grew up on Red Lobster. They declared bankruptcy this week. Some group of banks that were their lenders to begin with, I think are going to buy them and they’re going to keep them open. But they did shut down a number of stores in the last-
Chris Needs:
I think I saw eight.
Noah Brooks:
… six months.
Chris Needs:
Yeah. The craziest part of that for me was, well first of all, they’ve had five CEOs in five years.
Noah Brooks:
Yeah, that’s not good.
ON RESTAURANT SALES
Chris Needs:
That’s crazy. Sales are down 30% since 2019. But the crazy part is Thai Union, the seafood company who also owns Chicken by the Sea… If you have tuna, if you like, that kind of stuff. Not I, but they became… I guess they own like 500 locations or something like that. They’d become the sole supplier for them through the arrangements and the power they had owning that many to be the sole vendor of shrimp. And they had this endless shrimp deal that they apparently lost over a billion dollars on, but they think that Thai Union used that to dump their low quality or expiring shrimp on them as well.
Noah Brooks:
Oh, I did not read that. Wow.
Chris Needs:
So there’s a bunch of things going on there. And they were overcharging for shrimp and like I said, they weren’t doing quality checks on it, they were just sending them out.
Noah Brooks:
That’s a vote against vertical integration then.
Chris Needs:
Yeah.
Noah Brooks:
During COVID, I got to tell you, we did a fair amount of Door Dash at that time and we had just got the delivery service to our area. And one day I’m scrolling through the restaurants and it was Red Lobster. It’s like, “Are you telling me I can have a Fisherman’s Platter delivered to my house?”
Chris Needs:
Can I have those biscuits, please?
Noah Brooks:
Holy cow. My grandmother used to stuff the biscuits in her purse. It was one of those things where you’re like, “Are you really?” She was like, “Yeah, I’m taking them with me.”
Chris Needs:
Get your money’s worth.
Noah Brooks:
I don’t know. What else we have? Do we have anything interesting? Here we are the end of May though, and markets are up, right?
Chris Needs:
Yeah.
ON ALL TIME HIGHS
Noah Brooks:
So obviously all time highs. S&P’s up close to 12, mid-caps are up 10. Small caps still the under performer at just over 2%. And the bond market, the bond ag that we look at is still down. It’s still down about one point a half percent. Rates seem to be stabilizing, but the real… I would say, the real focus is on money flowing other spots. Obviously utilities is one of those spots. But there seems to be a broadening, we’ve talked about this a number of times here. There seems to be a broadening going on of money flowing into other places than just tech.
Chris Needs:
And internationally, MSCI China is now outperforming S&P 500 year-to-date. They’re up 30% off of their January lows.
Noah Brooks:
I looked at that when I was looking at the numbers for the 12 month numbers. For the 12 month, they’re still negative.
Chris Needs:
Yeah, well-
Noah Brooks:
So big rally this year.
Chris Needs:
… they’ve been going through it, but yeah.
Noah Brooks:
Yeah, big rally this year.
Chris Needs:
Looks like a bottom’s been put in. Whether they can sustain it and keep going upwards, that’s a whole nother story. But it looks like a bottoms in. Because they were free-falling for the longest time.
Noah Brooks:
Yeah. All right. Well, let’s wrap up. I’m just going to say this, “Don’t bet against America, everybody.” Dow 10,000, now we’re at Dow 40,000. Does it get any better than that?
Chris Needs:
No, sir.
Noah Brooks:
Thanks everybody for joining us. We’ll see you next time on the Market Enthusiast.
Disclaimer
The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual to determine which strategies or investments may be suitable for you. Consult the appropriate qualified professional prior to making a decision. The economic forecast set forth may not develop as predicted, and there can be no guarantee that the strategies promoted will be successful. All performance referenced as historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Good Life’s Investment team keeps you up-to-date with timely market insights and updates to help you navigate the investment landscape.
Noah Brooks:
Welcome everybody, to this week’s installment of the Market Enthusiast. I’m Noah Brooks and with me, Chris Needs. Let’s just get right down to it. Last Friday, the Dow, the S&P, and the NASDAQ, all closed at all-time highs, each one of them. We had Dow, 40,000. Right? I don’t hear anybody cheering.
Chris Needs:
I heard some cheering.
Noah Brooks:
Did you hear some cheering?
Chris Needs:
I heard a little bit of cheering.
Noah Brooks:
I feel like everybody’s poo-pooing it.
Chris Needs:
You didn’t get me my 40 K hat.
Noah Brooks:
So interesting, right? Everybody talks about the Dow Jones hats. I went on eBay and I was looking for… I thought maybe I would buy one and they were on there, but I kind of fell down the eBay rabbit hole. I’m looking for Dow 40,000 hats and I saw a Dow 10,000 hat.
So a few weeks ago I had said that we were at 25-year marker from Dow 10,000, right? So it was March of ’99, and we were getting close to Dow 40,000 and certainly 25 years out. So I’m on eBay and I find this Dow 10,000 hat. And the next thing you know I find a Dow 15,000 hat, and it took me a second or two, but the Dow 10,000, we know, right? That was mid-March of ’99. When do you think the Dow 15,000 hat was produced?
Chris Needs:
Not in the lost decade, I would guess.
Noah Brooks:
Not in the lost decade. It was from 2013. And so I went back, I obviously did a little math, did some calculations. But it took from March of 1999 to the middle of 2013 to go from 10,000 to 15,000, 50%. So it’s kind of… 14 years for that to happen. In the interim, we made it up to, I think it was 12,300, and then all the way back down to 6,666 from… What was that? March to March 9th, 2009. That wasn’t good.
Chris Needs:
Third times.
Noah Brooks:
Yeah. So it was just interesting to see that timeframe between Dow 10,000 and Dow 15,000. I always use this analogy, if you fall asleep and you’re Rip Van Winkle, well you wake up and it’s out 15,000. You think, “Hey, it’s 14 years and we’re up 50%,” not a great return. The money doubles every 10 years at a 7% return. So that timeframe was obviously less than that 7%. But yeah, that was my little down the rabbit hole on eBay. Kind of nutty.
Chris Needs:
Nostalgic.
Noah Brooks:
Yeah, definitely nostalgic. So that’s it. We have all-time highs. That’s where we are now.
Table of Contents
ON THE APRIL BOUNCE BACK
Chris Needs:
Markets behaving like a bull market seems like it’s rotated a little bit. We’ve seen that in a different composition of returns than we’ve seen over, it seems like the previous decade. It was all tech, all the time accounting for most of those returns. But it’s behaving well. That post April bounce back has been pretty strong. I’ll throw this scenario out to you. If we look back to early 2022, we had the two negative quarterly GDP prints.
Noah Brooks:
Yeah.
Chris Needs:
Normally would be considered recession. Now we didn’t have job losses then. We’ll chalk that up to being skewed by the COVID effects obviously.
Noah Brooks:
Yeah, COVID rebound.
Chris Needs:
But say that was the recession. We had 2022 where value outperformed. That’s normal coming out of a recession. And then, since then we’ve seen an earnings expansion on growth stocks, on everything, but on growth stocks primarily. And now we’re seeing some strong earnings coming out over the last six months.
So if that was our recession, it would make sense why we’re moving along like this in the market. But everybody… It wasn’t technically labeled a recession because of the job loss is not being there and it seems like it’s been… We always talk about the most hated rally. It seems like another one of those scenarios. It’s like the most hated rally.
Noah Brooks:
There’s no question about it. I mean, I did a little bit of chart work over the weekend and I kind of went back seven years or so and went back to look at some of the drawdowns because there’s been so many reasons. And I always say this to people, to advisors, to clients. “You sound really smart when you’re telling people all the reasons that they should be selling.”
I just did a little bit of homework. We had a 10% drawdown in January and February of 2018. We had a 20% drawdown between September and Christmas Eve. That was the bottom in 2019. So September to December market S&P was down 20%. We had COVID. Right? Market was down 34%. 2021 did not produce any 10% downturns. I mean, I think the biggest one was a four and half percent, kind of crazy. That doesn’t happen too much.
And then as you just pointed out, 2022 down year, maximum drawdown was close to 23%. And then before we made new highs, we had another 10% drawdown in 2023 back ending in October. And everybody wants to like… They want to time the market. They want to say, “Hey, it doesn’t feel good,” or “Look at all this data that’s being presented to me. I should sell.” And I go back to here we are at all time highs and there’s been a million reasons that the pundits have said to sell. There’s been a million… I mean look what’s going on geopolitically. We have an election coming up. I know you’re going to follow that one pretty closely, right?
ON THE UPCOMING DEBATE
Chris Needs:
June 27th, we have the first debate. Biden and Trump, mano y mano.
Noah Brooks:
I got to tell you, I am not looking forward to that in any way.
Chris Needs:
Well, I was joking. Cannon was telling us apparently during the Trump administration they had high usage of prescription drugs being doled out. Apparently this Modafinil or something like that that’s used for jet pilots.
Noah Brooks:
Yeah, jet lag.
Chris Needs:
Yeah. So apparently that was just given out like candy. And then sometimes I see Biden talk and he’s not blinking. I’m like, “Is he on Modafinil? I don’t know.” But I think if we just juice them both up, let them go at it on Modafinil. I mean-
Noah Brooks:
What did I hear yesterday about it? It was something that they wanted to make sure that they were both going to be standing. That was the ground rules that they had to be standing. And I thought, “My God, where are we?” Growing up bill Clinton was my president, if you will. He was in office from ’92 to 2000, and I just looked him up the other day. He currently is younger than both of our candidates, today, right now. May of ’24, he’s younger than both of our candidates and he left office 24 years ago.
Chris Needs:
Need some young blood in here.
Noah Brooks:
Yeah, I’d like to think that that was going to happen, but either take your pick from either side. Neither one of them are young.
Chris Needs:
Yeah.
Noah Brooks:
Yeah. So what else do we want to talk about today?
Chris Needs:
Something interesting. Three of the top five S&P 500 in terms of year-to-date returns are utilities. We talked previously about the rotations and how you utilities getting some love finally, after it seems like forever. Three of the top five.
ON THE ENERGY SECTOR
Noah Brooks:
I had an email blast from The Fool. I subscribed to them. I look at some of their stuff here and there and they wanted to just tell me what the next best energy company was. And I was like, “That’s not normally something that they come out with.” And so their position and, I think this is what’s drawing people to utilities or the market to utilities, right at the moment. They’re talking about the energy consumption levels of data centers. And AI, they require those chips, whether it’s the NVIDIA chips, the AMD chips, it doesn’t matter, but they all require a lot of energy. And so, I think you had a stat, what was the CAGR?
Chris Needs:
For the intermediate term, 15% compounded annual growth rate in energy usage as a result of this AI boom or AI revolution.
Noah Brooks:
How do we power that?
Chris Needs:
Nuclear.
Noah Brooks:
Nuclear?
Chris Needs:
Nuclear.
Noah Brooks:
But realistically, I mean, I think there was one new nuclear plant that came online in the last 30 years, if I’m not mistaken. It was just recently. It was in the last six months or so. I mean, do we get there? Is it just more of the same? Is it more natural gas or is it more solar? Or is it a combination of everything?
Chris Needs:
I think it’s an all hands on deck. I think everything’s going to have to contribute. Obviously those are… You think about how old our energy grid is, our electric grid and how much work’s going to be done to sort of modernize that. There’s going to be a lot of opportunities for companies to take advantage of that as sort of outlay more wire and come up with better production means as well.
ON COPPER + COMMODITIES
Noah Brooks:
Copper?
Chris Needs:
Copper. Hey, I’ve been dabbling in copper lately.
Noah Brooks:
I think copper had a big move last week, actually. We don’t need to talk about commodities, but I’m pretty sure it had a big week. Now you mentioned utilities were up. I had a note here that says year-to-date up 15% in utilities and they’re leading for the quarter. They’re up 10% for the quarter. So I mean, they’re catching fire right now as we’re talking. They’re catching fire. I don’t know about today specifically, but they are catching fire. And that leads me to my next note that I have here. Every S&P sector, it’s a little bit longer term, for the last 12 months is up double digits with the exception of real estate, Telecom and consumer staples.
When you look at the big index indices like the S&P 500 or the Dow, whether it’s the Russell 1000 growth or values, small caps, S&P 600, the Russell 2000, it doesn’t matter. Every one of those is up double digits in the last 12 months. And so if people have been sitting out on the sidelines waiting for the time to get in, they have done themselves a little bit of injustice. I mean, if you’re a bondholder and you’re in bonds, okay, no problem. But if you’ve left the stock market and waiting in cash or something else, I mean you’ve missed a big move in the market.
Chris Needs:
5% money market rates look good until the market goes up 30%. Then you’re kicking yourself.
Noah Brooks:
Yeah. The opportunity… And there’s a place for that.
Chris Needs:
Certainly.
Noah Brooks:
There’s a place for emergency funds, there’s a place for cash on hand. There’s a place from a liquidity standpoint, so not poo pooing, the idea of having cash on hand, earning 5%, it’s a great return. But if you’ve taken money out of the markets and gotten scared out, here we are all time highs once again. And the question that I have for those people, whether they’re advisors or whether they’re clients is, when do you get back in, if you’re out? It’s easy to stay in. It’s easy to stay in. It’s hard to get back in. It feels cold when you get back.
Chris Needs:
When we had my daughter in September… You know me, I trade a lot personally and I had totally gone cash, sitting out in cash. And even for me looking at markets every single day, I was like, “Oh, what do I do? How do I get back in?” Rarely am I ever 100% cash. And it was like, holy cow. And things were just coming down. Luckily, timing-wise it worked out that time because we bottomed in October and it’s been kind of up ever since. But it was tough.
Noah Brooks:
Getting back in is hard.
Chris Needs:
It was scary.
Noah Brooks:
Yeah, it’s like at the pool, once you get out and you dry off and you get up and get back in that cold water again. I just came up with that. I don’t know.
Chris Needs:
That’s a real thing.
Noah Brooks:
Yeah. Speaking of the pool, we took the boat out for the first time this week. So here in Pennsylvania we’re having a little bit of a heat wave. I got the boat out of storage, just this little small boat, no yacht or anything, tiny little lake. And of course, we get out there and… We get out there and the dog jumps in the water.
Now he has a life vest on and I hadn’t really felt the water. He swam around the boat, he’s okay. His life vest on. He kind of knows what’s going on. I grabbed him and put my arm in the water. It’s freezing. Checked it, it’s 58 degrees and it would be hard to get back in there. What else do we have economic wise?
ON ROARING KITTY’S RETURN
Chris Needs:
Well, you want to talk about your dumb money? You mentioned them a few podcasts ago. Roaring Kitty is back.
Noah Brooks:
Yeah.
Chris Needs:
Or he was.
Noah Brooks:
He was back. Is he back today?
Chris Needs:
Maybe he disappeared again. I don’t know.
Noah Brooks:
So he did some posting last week?
Chris Needs:
Yeah.
Noah Brooks:
Give us the background for anybody who’s not familiar with him.
Chris Needs:
So during the meme craze, Roaring Kitty, aka Keith Guild, random guy, I don’t know. He was sort of the face of the GameStop meme craze and got tons of followers on social media and everything like that. And he had gone dark for a while and I think it was like maybe nine or 12 months he hadn’t posted anything.
And then he just randomly came on to Twitter or X and posted that meme of a video gamer leaning forward to insinuate getting serious. And then boom, next thing you know, two days later at its peak, GameStop was up 271%. AMC was up over 300% at its peak and dumb money.
Noah Brooks:
So what happened? Now we both know, but for our listeners, what happened after GameStop went through the roof?
Chris Needs:
They issue more shares.
Noah Brooks:
They issued more shares.
Chris Needs:
Dilute.
Noah Brooks:
I mean, if you were the CFO, you got to take advantage of it. So do you-
Chris Needs:
It screws the shareholders.
Noah Brooks:
They have that on the shelf ready to go for when the stock pops. Do you think they are colluding with Roaring Kitty?
Chris Needs:
I joked with you via text. I’m like, “Roaring Kitty, he’s getting a million of those shares.” I don’t know. That would be… I think the SEC would be knocking. He didn’t even say AMC. He just… Picture leaning forward and stock goes up 270%.
Noah Brooks:
That’s kind of crazy.
Chris Needs:
I wish I had that kind of sway.
Noah Brooks:
Yeah, neither… Together we don’t. I don’t think we do. Now I’m not a gamer. Are you a gamer?
Chris Needs:
I play some games. I used to.
Noah Brooks:
You used to.
Chris Needs:
I mean, I still pay annually-
Noah Brooks:
Before kids-
Chris Needs:
I still pay annually to be able to, but I never do.
Noah Brooks:
Yeah, it seems to me though GameStop, which is a gaming store, you go in, you buy-
Chris Needs:
I pay them every year, too even though-
Noah Brooks:
Do you?
Chris Needs:
I don’t…
Noah Brooks:
You do?
Chris Needs:
I don’t use… Yeah.
Noah Brooks:
So you can go in, you buy a used console, you can sell your games, buy new games, things like that. It seems to me they’re the same thing as AMC, right? The movie theaters, people are just not going out. If I want to buy a game, I can download it instantaneously on the device itself. So to me, the draw of going into a store… And I get you go in and there’s people there that you can talk to, you can associate with, you can ask them questions. You can also do that online and most gamers do. I don’t see how… I mean, what are they going to do with this money? So if they issued… How many shares did they issue?
Chris Needs:
45 million.
Noah Brooks:
45 million shares. And, I don’t know when it’s coming out, but they’re going to issue this money. What could they possibly do with the shares unless they completely change the structure of their business?
Chris Needs:
They already have an online store, but it’s not getting the traffic or getting the revenue they were hoping it was going to get. I don’t know what they’re going to do with those shares there… Those shares just give them a little bit more flexibility, I guess, because them and AMC were both… I would say near bankruptcy, not near bankruptcy, but stocks going down. They’re not doing well. And like you said, they’re kind of prehistoric when it comes to the evolution of games.
Noah Brooks:
Yeah. When was the last time… Now, you have kids, maybe it’s a little bit different. But when was the last time you sat down in a movie theater?
Chris Needs:
The last Harry Potter movie. Not Harry Potter, the Fantastic Beasts trilogy.
Noah Brooks:
Okay. How long ago was that?
Chris Needs:
Two years, I think. And it was empty. It was opening weekend. I think it was actually a Thursday night and there were probably 10 people in there. Me, Lex and eight other people. So that was IMAX, too.
ON SEEING A MOVIE AT THE MOVIES
Noah Brooks:
Okay. I was having this conversation the other day. I don’t remember if it was you or somebody else, but we were talking about the new theaters where they have the food and drink.
Chris Needs:
Movie Tavern, yeah.
Noah Brooks:
And Movie Tavern. Was that us?
Chris Needs:
Yeah. I wanted your take on Movie tavern.
Noah Brooks:
I haven’t been to one recently, maybe five or seven years ago, pre-COVID we were at one. But the entire time that you were talking about it, how you can go there and they have the recliner and you can order food.
I just think to myself, “I can do that at my house. I don’t have a reason to go out and to do that there.” Granted, it’s a monster screen. I mean it’s massive, especially if you’re in one of those IMAX things. And so I get the allure of there’s certain movies that you’d want to see what you were raving about Dune two the other day.
Chris Needs:
Yeah, I loved it. That’s a great… That was probably the first great movie I’ve seen in probably 10 years, in my opinion. 94 out of 100.
Noah Brooks:
I feel like I said this the other day, I saw Dune as a little kid when it first came out. I don’t know what year it was. It was like 1983, 1984. I didn’t have any idea what was going on. It was way, way over me, and I didn’t care for it.
Chris Needs:
That’s how I felt watching the first one. This was one of the first movies I went to see of the fantasy genre that I hadn’t read the book previously, like Harry Potter, Lord the Rings, et cetera. And I watched the first one. I’m like, “I don’t know what just happened. I didn’t like that.” Then I watched the first one again. I’m like, “Oh, that was actually a pretty good movie.” And then Dune two was a great movie, in my opinion.
Noah Brooks:
Yeah. You said you’re a gamer. Did you ever play Fallout?
Chris Needs:
I did not play Fallout.
Noah Brooks:
No?
Chris Needs:
Cannon has gone at length about it. So he loved it.
Noah Brooks:
So my wife and I, we started watching Fallout on one of the streamers. Maybe it’s Hulu-
Chris Needs:
Prime.
Noah Brooks:
Maybe.
Chris Needs:
Prime.
Noah Brooks:
Yeah, I think it’s Prime. And I didn’t realize it, but Cannon said to us, “Hey, you should check it out. It’s based on the Fallout, the game.” And at first I was like, “Ah, it’s not really my style.”
We watched it. We binged the entire season, maybe 10 or 11 episodes in three days. It was one of the best shows that I have watched in years and years and years. Little bit Sci-Fi, not too much gore, but definitely some weird stuff happening there.
Chris Needs:
I’ve only watched two episodes. My time has been taken up with this whole CFA thing right now. But I mean what an opening scene.
Noah Brooks:
Right?
Chris Needs:
Oh, my gosh. I was hooked on it right there. Granted I’m only two episodes in because I get five minutes a day to myself, but…
Noah Brooks:
So I won’t spoil it for anybody, but it’s a cross between 1950s Cold War style and 2020… Wait. ’24, 20-
Chris Needs:
200 years later.
Noah Brooks:
Yeah, 200 years later. What happened after the nukes went off, I guess is, I could say it right. Fallout’s the name of the show, so I’m not going to give that away. But really interesting for anybody who wanted ever to live underground. I don’t know if anybody out there ever wanted to do that. But again, when I was growing up, the bunkers were the rage. Even at school, you would go and they’d teach you how to lay under your desk for that.
Chris Needs:
That’ll work.
Noah Brooks:
For the blast.
Chris Needs:
That’ll work.
Noah Brooks:
Yeah, because that’ll work.
Chris Needs:
I mean, I don’t want to give too much away. It’s the opening scene. It’s not giving away when the daughter says, “Is it your finger or mine?” I’m like, “Oh, man.”
Noah Brooks:
I think everybody got that. I think I got chills when we watch that. Speaking of risks, there’s a little bit of a bird flu kind of going around these days.
ON THE BIRD FLU THREAT
Chris Needs:
Yeah. Just what we need. Egg prices going up and then apparently it’s spreading or can spread to cattle.
Noah Brooks:
Yeah. Yeah. And there was a gentleman in, I think Texas who… If I’m not mistaken, it was transmitted from animals to human. It’s one of the first kind of transmissions that we’ve seen. That could certainly be something on the radar as a risk if it becomes… I guess popular is not the right word, but if we have an outbreak.
Chris Needs:
I mean, breakfast foods have been going up, OJ’s breaking out again. I feel like OJ’s been breaking out a lot over the last few years. I don’t know if-
Noah Brooks:
I’m trying to cut back. There’s too many calories in OJ for me.
Chris Needs:
Too much sugar.
Noah Brooks:
Too much sugar.
Chris Needs:
Not for me, but…
ON INFLATION
Noah Brooks:
So let’s talk inflation a little bit, right? We had CPI that came out 3.4% year over year, up three tenths month over month. So the month before was high and we were talking about the possibility of rate increases. So this came in… I think it’s in line, but back down to reasonable levels if you will. And we’re starting to see… I mean, was it Target came out yesterday? And they said that they’re going to have 5,000 different items that they were going to be lowering prices on.
Chris Needs:
I didn’t see that report, but I mean that’d be nice. I mean, that in line seemed a lot better after what we’ve had the past several months. And then we actually had sort of a hot PPI number two days before or the day before. And so after that PPI report in line looked really good and the market really jumped on it.
Noah Brooks:
Yeah. I would just love to see, as would the Federal Reserve. I’d love to see prices just maybe flatten out for a month or two instead of continuing to rise up. And I suspect that we’re just in a little bit of a lag. And I could be wrong on this, but I suspect in six or seven months from now this year, we’re going to see those numbers starting with a two, maybe not 2.0 like the Fed wants, but I think that 3.4 is going to be coming down.
If nothing happens with hydrocarbon with oil and gas, right? Meaning if the current Middle East crisis that’s going on doesn’t get wider and oil stays approximately the same dollar amount, I could see CPI we’re starting with a two later this year.
Chris Needs:
Definitely. Yeah. Us equal, like you said, bar sort of those extraneous things, it should be where we end up.
Noah Brooks:
So on that path, if I can visualize that and the data is kind of looking like that. Well, the Fed can also, right?
Chris Needs:
Yeah.
Noah Brooks:
So then the question is, when do they lower rates? Is it going to be in 2024 or is it going to be in 2025?
Chris Needs:
I think we’ll see a cut this year.
Noah Brooks:
How many?
Chris Needs:
One.
Noah Brooks:
One cut? Okay. What month? Before or after the election? Never mind. It’s going to be after.
Chris Needs:
It’s going to be after.
Noah Brooks:
It’s going to be after, yeah. It’ll be the day after the election or… I wonder if they would delay it if there wasn’t a result that night.
Chris Needs:
No, they’re apolitical.
ON THE AURORA BOREALIS
Noah Brooks:
All right, so just a few other things that I have on here. Did you see the Aurora Borealis?
Chris Needs:
It’s too cloudy where I was at, but saw the awesome pictures out there.
Noah Brooks:
I saw tons and-
Chris Needs:
Really-
Noah Brooks:
… tons-
Chris Needs:
Beautiful things.
Noah Brooks:
… of pictures. Yeah. Here in Pennsylvania where we were, it was complete cloud cover. My feed was filled with people showing wonderful pictures. Even Northern Pennsylvania, we’re kind of southeast Pennsylvania, even northern Pennsylvania, I think out in Pittsburgh, they were seeing it. I had a friend send me some pictures from down south. They could see it. Well, Tennessee, I guess it would be. I’m trying to figure out where everybody is these days.
Chris Needs:
Southwest.
Noah Brooks:
Yeah. So I missed it. But it’s one of those things where, I mean, people are out there looking for this stuff. Now, I didn’t really hear about it until maybe two or three days before it was supposed to happen. But the way I heard about it was that we were going to have this massive solar storm that could potentially knock out GPS and telecom systems and all that. And to my knowledge, none of that happened.
Chris Needs:
Yeah. Luckily, no issues there ’cause we don’t want to start dealing with that as a variable in markets and things like that. Or just for a living ’cause…
Noah Brooks:
My concern is… And it is not for the company that we are here that we work for at Good Life. My concern is for the infrastructure. If we were to be without internet, I mean, occasionally our internet provider goes down for a few minutes. And it’s like you fly into a rage, you can’t use the phone, you can’t do anything. The only thing… You can use your cell phone. You can work on your Excel spreadsheets, right? But you can’t really do anything because everything’s internet based. I can only imagine what an internet blackout would look like for even multi-days, two days, three days. It would be nuts. There would be with rioting in the streets.
Chris Needs:
You have to have redundancies in the system somehow. I know Elon Musk mentioned Starlink satellites. They were affected, impacted by it, but they weren’t down. So I don’t know what that means. If they powered them down temporarily to avoid something getting circuited, I don’t know. But they’re still working and functioning apparently.
Noah Brooks:
I mean, I would have a satellite phone or satellite internet, but I have Comcast. I don’t need one. I would have a backup, if I could.
Chris Needs:
Internet generator, the equivalent internet generator.
Noah Brooks:
Yeah, but I mean, look at those undersea cables.
Chris Needs:
Yeah.
Noah Brooks:
Somebody goes down, cuts a cable or two, you can’t fix that in a day or something. I mean, there was a report out this week that there was a Chinese… Was it cable laying ships that they were suspected of cutting some cables near South Africa.
Chris Needs:
You have to use our cables now.
Noah Brooks:
It’s crazy. Crazy stuff.
Chris Needs:
All right, how about Red Lobster? You said you’re trying to keep them going?
Noah Brooks:
Oh, man. Oh, geez. I grew up on Red Lobster. They declared bankruptcy this week. Some group of banks that were their lenders to begin with, I think are going to buy them and they’re going to keep them open. But they did shut down a number of stores in the last-
Chris Needs:
I think I saw eight.
Noah Brooks:
… six months.
Chris Needs:
Yeah. The craziest part of that for me was, well first of all, they’ve had five CEOs in five years.
Noah Brooks:
Yeah, that’s not good.
ON RESTAURANT SALES
Chris Needs:
That’s crazy. Sales are down 30% since 2019. But the crazy part is Thai Union, the seafood company who also owns Chicken by the Sea… If you have tuna, if you like, that kind of stuff. Not I, but they became… I guess they own like 500 locations or something like that. They’d become the sole supplier for them through the arrangements and the power they had owning that many to be the sole vendor of shrimp. And they had this endless shrimp deal that they apparently lost over a billion dollars on, but they think that Thai Union used that to dump their low quality or expiring shrimp on them as well.
Noah Brooks:
Oh, I did not read that. Wow.
Chris Needs:
So there’s a bunch of things going on there. And they were overcharging for shrimp and like I said, they weren’t doing quality checks on it, they were just sending them out.
Noah Brooks:
That’s a vote against vertical integration then.
Chris Needs:
Yeah.
Noah Brooks:
During COVID, I got to tell you, we did a fair amount of Door Dash at that time and we had just got the delivery service to our area. And one day I’m scrolling through the restaurants and it was Red Lobster. It’s like, “Are you telling me I can have a Fisherman’s Platter delivered to my house?”
Chris Needs:
Can I have those biscuits, please?
Noah Brooks:
Holy cow. My grandmother used to stuff the biscuits in her purse. It was one of those things where you’re like, “Are you really?” She was like, “Yeah, I’m taking them with me.”
Chris Needs:
Get your money’s worth.
Noah Brooks:
I don’t know. What else we have? Do we have anything interesting? Here we are the end of May though, and markets are up, right?
Chris Needs:
Yeah.
ON ALL TIME HIGHS
Noah Brooks:
So obviously all time highs. S&P’s up close to 12, mid-caps are up 10. Small caps still the under performer at just over 2%. And the bond market, the bond ag that we look at is still down. It’s still down about one point a half percent. Rates seem to be stabilizing, but the real… I would say, the real focus is on money flowing other spots. Obviously utilities is one of those spots. But there seems to be a broadening, we’ve talked about this a number of times here. There seems to be a broadening going on of money flowing into other places than just tech.
Chris Needs:
And internationally, MSCI China is now outperforming S&P 500 year-to-date. They’re up 30% off of their January lows.
Noah Brooks:
I looked at that when I was looking at the numbers for the 12 month numbers. For the 12 month, they’re still negative.
Chris Needs:
Yeah, well-
Noah Brooks:
So big rally this year.
Chris Needs:
… they’ve been going through it, but yeah.
Noah Brooks:
Yeah, big rally this year.
Chris Needs:
Looks like a bottom’s been put in. Whether they can sustain it and keep going upwards, that’s a whole nother story. But it looks like a bottoms in. Because they were free-falling for the longest time.
Noah Brooks:
Yeah. All right. Well, let’s wrap up. I’m just going to say this, “Don’t bet against America, everybody.” Dow 10,000, now we’re at Dow 40,000. Does it get any better than that?
Chris Needs:
No, sir.
Noah Brooks:
Thanks everybody for joining us. We’ll see you next time on the Market Enthusiast.
Disclaimer
The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual to determine which strategies or investments may be suitable for you. Consult the appropriate qualified professional prior to making a decision. The economic forecast set forth may not develop as predicted, and there can be no guarantee that the strategies promoted will be successful. All performance referenced as historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
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