Jason Jacobi, CFP® (00:01.244)
It’s December 8th everyone happy to be here Jason Jacoby, Mark Boyer, Salt and Pepper coming to you live. Merry Christmas Mark, how you doing today?
Mark Boyer (00:11.31)
I’m doing great. Yeah, Christmas season, I love it. So awesome, I love this time of year, it’s amazing. Yeah, just the cooler weather, the whole thing, right? Christmas lights and music, it’s great, I love it.
Jason Jacobi, CFP® (00:23.816)
Yep. Good food, good times. Absolutely. I’ve been blaring my Christmas playlist. That’s for sure. Playing it when you came in the office yesterday just trying to I got that I probably got the best Christmas playlist out there. It’s just classics. It’s just feels good. It’s a feel good playlist.
Mark Boyer (00:31.019)
Yeah.
Mark Boyer (00:41.11)
Yeah, my favorite movies of all times. My kids and you probably, I’d probably force you to watch this too. When you’re dating my daughter, but the Muppet Christmas Carol’s amazing. So I recommend that to anybody. So that’s kind of a tradition for the boy or family. The grandkids come over and I was like, Papa, we had to watch the Muppet movie. We’re like, yeah, Christmas Carol. It’s so good. So anyway, check it out.
Jason Jacobi, CFP® (00:56.345)
That, yup, that is a…
Jason Jacobi, CFP® (01:04.605)
It is good. Well, we have a light data week for you this week, but some really good numbers that we can dive into. So we’ll keep it short. We’ll keep it simple, but hopefully we can be insightful and entertaining as well. But for those of you that are watching on YouTube or listening via your hosted or your preferred podcast platform, we’ll kind of run through some things. We’ll have an open ended conversation about it. Again, this show is completely unscripted.
We’re looking at data, we’re talking our thoughts and our feelings through. Think of this like financial therapy, one-on-one. So just kidding. But in all seriousness here, one thing I do want to touch on, so let’s talk about the difference, a little teaching moment here, the difference between disinflation and deflation. So Mark, can you kind of break down the difference between those two categories there?
Mark Boyer (01:42.455)
All right. Yeah.
Mark Boyer (02:01.014)
Wow, you’re putting that pressure on me. Okay, I thought you were gonna answer that one. All right, well, let’s talk about what is deflation, right? Deflation, which we’ve heard a lot recently in the news and so forth. We’ve had this inflationary increase over the last two years. It’s been on everybody’s radar screen recently. Deflation is basically the…
Jason Jacobi, CFP® (02:03.404)
Yeah. Ha ha ha.
Mark Boyer (02:29.826)
is interest rates going lower year over year, or the inflation rate dropping lower year over year. So if last year we were at 3% inflation in a particular area, I think you’re showing the durable goods chart right here. Yeah, okay. So it’s up there. All right, there it is. So deflation would be what we’re seeing right now in durable goods.
Jason Jacobi, CFP® (02:51.616)
Yep.
Mark Boyer (02:59.446)
We had a big spike in inflationary, durable goods expenses. You see that, COVID happened. We had that spike in inflation in that, in the durable goods area, above 10%, which is kind of crazy, right? And yeah, the supply chain, all those issues. And so we had just a huge increase in prices. We see the durable goods popped way up. And then now…
Jason Jacobi, CFP® (03:12.306)
Yeah, supply chain, right?
Mark Boyer (03:22.798)
Currently, you see that they actually drop below zero. So we’re actually getting drops now. Deflation is actually that area of rates going down or cost going down and actually lowering prices year over year. So we dropped below zero and we’re actually now going lower. So prices of things in durable goods are actually lower than they were a year or two years ago or whatever that rate or that time period is.
Jason Jacobi, CFP® (03:50.856)
And good point. So just showing this chart, it can kind of break it down even further. So we’ve got obviously disinflation, which means prices are going up at a slower pace, deflation prices are dropping on a year over year basis or whatever it may be. So prices are lower than they were a year ago or three years ago or five years ago or a month ago, but disinflation is prices going up slower. So disinflation is good for the overall economy because obviously it’s
Mark Boyer (04:00.695)
There you go.
Jason Jacobi, CFP® (04:18.168)
is just meaning that the cost of goods are going up slower. That’s a healthy figure. When you get deflation over the spectrum of the full economic kind of playing field per se, to use a sports term, that’s bad because that just means the economy is slowing and coming to a halt, which again, deflation in certain areas, okay, great. We had massive inflation like you just said, Mark, in the durable goods space.
If we’re looking back at this chart supply chain, COVID coming out of that prices were through the roof, couldn’t get goods. I had clients that owned, you know, merchandising or promotional businesses that obviously got hit really hard because they were waiting on, you know, all their product was sitting in the water. All those cargo ships were sitting out in the water. They couldn’t get the goods in fast enough and which obviously jacked up prices across the economy, which obviously we’re still reeling down from.
So disinflation is the top categories there. Your services are still up over 4%. Clothing and footwear still up over two. Groceries still up over two. And again, that’s a all-encompassing grocery bill is still up that much. Obviously there’s certain things like eggs or meat that have experienced larger levels of inflation over the past three years or so. But again,
disinflation is really healthy. We’re seeing that in the economy. It’s been really resilient, which we’ll talk about a little bit later with the latest jobs reports. But we’re getting real deflation in used vehicles and parts, appliances and recreational goods. So that’s a really good point that I think our listeners and viewers can really see that there’s deflation. It’s not widespread through the economy. So it’s not like, you know.
showing signs that the economy is coming to a halt. We’re just seeing it in sectors that have been really hit with supply chain issues, which have obviously eased since then.
Mark Boyer (06:20.582)
Yeah. So Jason, question for you. You always ask the questions. Let me ask you this question. So the Fed has a target rate of 2% inflation, right? So is that 2% disinflation? Okay. Just want to make that clear. So that’s a 2% disinflation number. We want to drop it down to where year over year prices are only increasing 2% per year. That’s the goal of the Fed.
Jason Jacobi, CFP® (06:24.94)
specific.
Jason Jacobi, CFP® (06:49.248)
Yep. Correct. That’s a good point.
Mark Boyer (06:50.25)
Right. Yeah. So that’s, I just want to make that clear. Deflation is when actually it drops, prices have gone down below where they were a year ago. And if you have, the Fed is trying to get there, okay, trying to get Fed, get interest rates lower. Part of that is deflationary. So you have to keep an eye on that. And then that’s where now getting into the markets, the markets are trying to figure out.
you know, always if we’re in into a recession where that that’s where deflation happens, where the economy kind of rolls over and starts being negative. Um, that’s more deflationary. Um, so ultimately the 2% a year goal is, oh, is it, is it disinflationary number, uh, if that makes sense. Yeah.
Jason Jacobi, CFP® (07:36.084)
Exactly. And the feds on a say, Hey, we want inflation to be a negative 2%. That would be deflationary. You know, they don’t want that they want the disinflation of actual positive 2%, which just means the slowing of the rate that the prices are going up. So good point. I like good question. And this Yeah, and this chart, it kind of shows that again as interest rates as
Mark Boyer (07:51.83)
Yeah, all right. Just some clarity there, hopefully.
Jason Jacobi, CFP® (08:01.256)
as inflation falls and we kind of see that, you know, hey, we’re probably done here with the Fed raising rates. Treasuries, you know, yields have come down a little bit. Mortgages have come down, which is nice to see. We’re in the sevens now, lowest print we’ve had in quite a while. You know, I think overall we’ll probably settle in the three to 6% range in terms of mortgage rates and specifically 10-year treasuries would be pretty healthy for 2024.
But again, it all depends on the data and the data that’s coming out of our economy. The Fed could keep these rates higher for longer and obviously that would slow the economy a little bit more, correct?
Mark Boyer (08:43.309)
Correct, yeah. No, and that’s, well, it just, the markets aren’t factoring that in at the moment, and that’s what you’re just talking about. And so, yeah, we’ll see how that plays out, especially now, you know, we just got some job numbers here recently, actually today with unemployment, I mean, dropped, you know, economy looks pretty solid still. So I think it reiterates sort of that higher for longer that we’ve been talking about for a while. And so, you know, we’ll see how that plays out after, after it actually, I think,
You know, this Christmas, like we talked about, we’re in holiday season, you know, early 2024 is going to be a very interesting time.
Jason Jacobi, CFP® (09:23.276)
Absolutely. So I wanna ask you this question. So is the bull market losing its meaning? Is it losing its meaning? And obviously that’s a very open-ended question. I kind of threw that out to you in left field here. So I don’t wanna catch you off guard, but it’s an important question to ask. So I wanna put this, I’ll give you kind of a, a tee ball set here to put the baseball on, right? Like, you know, when we’re kids, you get the stand.
Mark Boyer (09:52.55)
I didn’t need that stand, bro. I just hit it down. Okay. Ha ha ha. Ha ha.
Jason Jacobi, CFP® (09:54.112)
So you can hit a home run. I’m just kidding. I want to put this in perspective for you and then get your thoughts on it. So historically, we talked about the Magnificent 7 last week and how large of a majority of the S&P 500 that seven represents in terms of total return, in terms of weighting. Yep. So historically, the top seven stocks have represented 21% of the benchmark.
Mark Boyer (10:14.498)
30%?
Jason Jacobi, CFP® (10:23.372)
Okay. Considering the end of year averages over the past decade. Okay. Now you’re looking at it over 30%, over 30% and nearly seven of the 500 that are represented in that, in that index. Okay. So to put this in perspective, the S and P up over 19.8% as of the time of recording here this morning, right? If you strip out those seven stocks.
Mark Boyer (10:34.83)
Number 30.
Jason Jacobi, CFP® (10:52.04)
It’s up a mere 8%, which is below the 10% average since the inception of the S&P 500 as we know it today. So my question begs to you, is the bull market losing its meeting?
Mark Boyer (11:08.474)
Well, yeah, I mean, I think it’s a yeah, yes and no. I mean, I think that I think in regards to, you know, bull market is always we’ve talked about this all back and then here’s another teaching moment, right? Where did the bulls and bears come from this idea of like, why do they call it a bull market? Why do they call it a bear market? Remember, we remember a long time ago, we talked about the fact that history or you know, people think in the history is the story is, is that the bull market meant that
If a bull attacks you and hits you, what does that bull do? It stabs you and throws you up, right? So bull market was up. A bear is when the bear comes and grabs you, usually gonna tear you down, right? I don’t wanna be messed with either one of the bears or bulls, but the fact is, that’s where bear was down, bull was up. So markets are either bullish, and that people are moving in the upward direction or they’re bearish. We went through 2022 in a very bearish market.
Jason Jacobi, CFP® (11:43.488)
Yep.
Jason Jacobi, CFP® (11:50.72)
Oh, yeah.
Mark Boyer (12:06.274)
for both stocks and bonds. And we’ve been sort of bullish on the market this year and that’s been true. But going back to the bull bear, and if it’s over, I don’t think it’s necessarily over, but what’s interesting here with the Magnificent Seven is you’ve got stocks like Apple, Microsoft, Alphabet, Nvidia, Tesla, these seven Meta, Amazon, they’re all factoring, they’ve had huge runs and you just made the point that
Jason Jacobi, CFP® (12:25.32)
Yeah, yeah. Meta, yep, yep.
Jason Jacobi, CFP® (12:34.057)
Mm-hmm.
Mark Boyer (12:35.822)
They’re now over 30% of the index. And if we took them out, there’s only 8% return year to date. I think what it says is that it’s gonna be really important for, in our opinions, and as a board of financials, that you kinda gotta rethink how you’re diversified in these portfolios. With that said, you got higher…
Jason Jacobi, CFP® (12:38.732)
Mm-hmm.
Mark Boyer (13:00.27)
PE ratios in these companies. And really, not only those five, I mean, they represent kind of the bulk of it, but there’s a lot of other smaller companies that are sort of benefiting also from what? What is it? What’s the main market right now that everybody’s talking about, right? AI, all right? So AI is just, it’s really, I’ve heard some analysts call it a transformational kind of industry. It’s a transformational change in our…
Jason Jacobi, CFP® (13:18.261)
Yeah.
Mark Boyer (13:28.822)
in our world today, AI is going to be something that just changes our lives over the next number of years. And so it’s a technology change. I remember, I could give you another one, just really the semiconductor. When I was your age, or now I was probably a little younger than you, because you’re older than people think. But anyway, you had phones. You didn’t have…
Jason Jacobi, CFP® (13:36.137)
Mm-hmm.
Mark Boyer (13:56.074)
cell phones things, just in going back to the 80s and early 90s. I mean, there was none of those things. And yet now, you know, our whole lives are, it’s been a transformational change really the last 34 years, but AI takes it even to a new level that you have to be. You know, these technology companies are just on the forefront of that. And these seven specifically are doing that. So, you know, what it means is they are attractive. They’re making good money, but their P ratios are what? 30 plus versus.
Jason Jacobi, CFP® (14:09.565)
Yeah.
Mark Boyer (14:25.23)
versus the S&P 500 that is somewhere in the 17, 18, 19 range. So, yeah, it’s kind of like, they’re expensive and can they keep going up? Yes, but, you know, and I think they’re a part of every portfolio. You just got to be really careful in here that you don’t get overexposed to them because, you know, there could be things that come up. You just, you know, again, just remembering that diversification is really important in here. And that’s…
Jason Jacobi, CFP® (14:28.576)
19. Yep, you’re right on.
Mark Boyer (14:53.166)
kind of what, you know, we can still be bullish. What we’re looking for and been pleased about in this market is that we’re actually getting a broadening out of the movement in the market. You’re starting to see small caps participate, maybe some mid caps, which have much lower PE ratios look to be very attractive in here. Yeah, and you know, even international stocks, and we talked about that for a little while here, you know, you get really low PEs in global, you know.
Jason Jacobi, CFP® (15:12.3)
13 and 14, yep.
Mark Boyer (15:22.07)
think global funds, different places, yeah, that are, that are, you know, another part of diversification. So yeah, I think, you know, as part, enjoy the ride with the Mag-7, but just make sure that you’re diversified in other areas as well, because they might go flat here for a while. Who knows, you’re looking at Nvidia, some of these, you know, they’ve been flat for a while in here, but you know, you’re seeing other things go. So it’s just important to be diversified and spread out a little bit more.
Jason Jacobi, CFP® (15:23.94)
Yeah.
Jason Jacobi, CFP® (15:48.016)
I can’t harp on that enough, Mark. It kind of upsets me these days in a good way, in a healthy way, not maliciousness or hate or anything like that. But I want to harp on this a little bit more in terms of diversification. I’m going to say it again, diversification, diversification. Everybody, no, but there are so many people, again, and it’s part of human emotion, right? People love making money. I mean, it’s
As you get a little bit of a dopamine hit, that’s why you get people that day trade, right? It’s something about it when you’re actively engaged in the market and you’re buying a stock and then it hits, right? And then you’re like, oh my gosh, like you get that high kind of, right? It’s kind of like that gambler’s high basically, which again, I don’t see the markets as gambling when you talk about research analysis, you know, whatever kind of analysis you believe in or utilize.
But a lot of people, it is kind of like gambling, right? You’re buying a company that maybe has no earnings, no revenue. Um, they’re kind of a shot in the dark. And then all of a sudden it hits. So you get those, those companies, um, kind of like the game stop meme, the meme stocks kind of right at that time. All of a sudden it shoots up, you know, a thousand percent. And so you, you sell off and you’re kind of hooked at that point. It’s not just about making money, uh, endlessly or making money.
in one stock and just because it does at one time, doesn’t mean it’s going to continue to do so. Thus, the importance of diversification of research and taking the emotion out of it. So putting it in perspective would be something like Bitcoin. There’s a lot of people, there are a lot of millionaires and billionaires made out of Bitcoin. Remember? I mean, even a few years ago, a lot of people bought homes and
Mark Boyer (17:35.165)
Mm-hmm. Now.
Jason Jacobi, CFP® (17:38.432)
started businesses and we’re all in on Bitcoin and still are. I mean, but then you look at it last year, I think it went down like 80%, okay, 80%. And now it’s reared its head again, if you bought the dip, like any times when markets have down drafts, you get times and opportunities to buy in. And then you go up to three, 400% now because of the spotty TFs of all the big finance companies like BlackRock, investment companies.
Van Ecke or whoever else are trying to get these Bitcoin spot ETFs, which will drive more investors into it, right? Cause it’s easier to get. You can get shares on an open exchange now instead of having to go and get a Bitcoin purse and or mine and do all this kind of stuff. But I’m sorry. I feel like I’m on a soap box. I’m going to stay up here on the soap box for a second. But again, the importance of diversification, whether it’s Bitcoin, whether it’s the Magnificent
our clients, we want people to make money. That’s great. But realizing that, hey, it’s always harder. I mean, you and I have talked about this. It’s always harder to lose money. There’s a stronger feeling felt when you lose money than it is when you gain money, when you make money, right? It always feels so much worse than that high when you actually make money. So it’s important for clients and investors to remember this is, hey, while
riding the high of the magnificent seven or buying the SPY or buying Bitcoin at lows or at down drafts in the market. And you make money and just remember, Hey, I need to stay diversified. I need to stay diversified. I need to stay diversified. So I’m off.
Mark Boyer (19:23.842)
Yeah. So, let me ask you that. I hear what you’re saying. I get it. I’ve seen it in my experience over many years as an investor. And yeah, so I mean, you’re going to have places that really run. So are you saying then that we shouldn’t be taking the risk associated with being a part of that? Or are you saying that it’s good to, obviously we want to make money. That’s the point. But as you make money, then what’s the game plan as those particular stocks might be?
have been beneficial to you than diversification out of them or just to make sure you don’t have all your money in those. Is that what you’re saying? So just diversifying it.
Jason Jacobi, CFP® (20:02.88)
Yeah, I think it’s a lot. Or I think again, I’m not saying you get out completely, right? For example, my favorite company right now, again, personal favorite is Microsoft. Again, just based off of dividend growth, which is kind of our core philosophy. Companies that have growing free cash flows, companies that are willing to pay their shareholders and dividend as a thank you for owning and investing in their company and their innovation and their growth. Um, they have growing revenues, they’re diversified their cloud services. Platform is.
exponentially ahead of everyone else. Uh, obviously everyone uses Microsoft Teams and office and word and, you know, uh, outlook. So that, I mean, their tentacles are so far reaching video games, um, VR, AI, everything. Right. So anyway, my point being is like, yes. So let’s say I bought five for two, two and a half to 5% of my portfolio was, was in, but then it goes up to 10, 15.
Mark Boyer (20:48.01)
Yeah. Great company. Great.
Jason Jacobi, CFP® (21:01.348)
20%, which I’ve seen some equities do like the apples, right? They’ve grown over 66,000% since it came on as an IPO, 66,000%. Okay. So that’s including all splits and stuff. So obviously it’s had a great run.
Mark Boyer (21:10.299)
Hmm. Wow.
Mark Boyer (21:17.441)
Is that why Gates is buying all the land in the world?
Hehehe
Jason Jacobi, CFP® (21:22.722)
Well, Apple’s Steve Jobs, but he unfortunately, we’re talking about Microsoft. Yeah, sorry. I bounced to Apple there. So Apple has been up over 66,000 since its IPO. Microsoft not so much. Obviously, they’re kind of hitting their stride right now. They’ve got some pretty good leadership and CEO. Sandra Nadella, I think his name is. But anyway, trimming that.
Mark Boyer (21:24.398)
Oh, I’m sorry. I thought you were, yeah, but Gates too, right? Or Steve Jobs.
Jason Jacobi, CFP® (21:47.132)
So if my two and a half to five grows to 15, 20, 10, 15, 20, trim the earnings back, man, redeploy that capital into other companies that might fit your goals and aspirations, income needs, whatever it may be, which I think is important. So good question. I’m not saying get rid of it, but let’s keep it diversified. Let’s keep it within your, you know, your two to a half to 5% range, depending on your goals and, uh, and then redeploy that capital or weight.
Mark Boyer (21:53.174)
Yeah.
Jason Jacobi, CFP® (22:15.524)
and wait for a pullback and then deploy it then.
Mark Boyer (22:19.254)
Yeah, that’s good stuff, man. It’s good. And that’s good advice. And yeah, I miss your transition to Apple. It’s talking about Microsoft still, but I think that, and then I’m just seeing where Microsoft with Gates, he’s, uh, yeah, anyway, that’s another subject. But, um, well, if your point is, is that, you know, your point is, is that on some companies, you can really make a lot of money and, uh, and that’s, and it’s good. Um, we’ve got clients who’ve worked for companies like that directly and they, you’ve gotten sock options and done really, really well. Right. So it’s, uh, but.
Jason Jacobi, CFP® (22:32.342)
Mr. Health Professional.
Jason Jacobi, CFP® (22:45.753)
Yep. Mm-hmm.
Mark Boyer (22:47.582)
Well, then we try to do is they transition out is just a, just again, diversification is just making sure you’ve got money in other places, whether it’s other stocks, other industries, other types of investments like fixed income, right? You know, there’s lots of different things, alternative investments, all types of things that in order to diversify. Cause again, that’s just a, it’s a basic rule of history that it’s
Jason Jacobi, CFP® (23:01.452)
There you go. Yeah.
I’ll do this.
Mark Boyer (23:15.534)
It’s wise in managing money to spread your wealth out that way. So that’s what we try to work with. The other thing is, I like working with, in those cases, where we’re putting money into ETFs and things, I think it’s a place for active management. What I love about the fact of having investments where we are using managers who…
have the ability to go out and research these companies that you and I, we can do our research and get as much info as we can on the internet, which has really opened things up. When I first started in this business, they used to have a book called Value Line that you get any info on a stock. Basically, everybody went to the Value Line pages. It was just a book of pages and pages of particular research done on specific companies.
Just all these, you know, it’s just, but now it’s the internet with a click, you can go check things out. But I think what I like about some of the managers we use is that, you know, they’ve been doing it a long time and just the way they’re set up with the money they manage, they’re able to get in and talk to the CEOs and talk to the people, get in and do the actual down and dirty research that can get deeper, deeper into these companies and into their industries that, you know, that we as.
Jason Jacobi, CFP® (24:25.437)
Yup. Good point.
Mark Boyer (24:35.082)
just people on the outside doing our internet studies, we just can’t get. So I love that fact. And then I like the fact that, you know, there’s really good managers out there that do that. So help us again diversifying and spreading our money out. So, but great point, dude. I mean, I think it’s really, that’s really important and wisdom to talk about that diversification. So I’m okay if you have a little bit of edge about you and talking about that subject. That’s good. And that’s wise diversification.
Jason Jacobi, CFP® (25:01.76)
Yeah. And it’s because we care. You know, we say empowering futures, nurturing legacies. That’s our tagline here at Boyer Financial, right? Like our motto, like we care about those, we care most about those we serve. We are servants. We really are. Obviously, we believe in that from a biblical standpoint, but also just who we are as individuals and as a firm. And I know that trick goes down from you.
Mark Boyer (25:11.56)
Yeah.
Mark Boyer (25:19.627)
Yeah, trying to be.
Mark Boyer (25:31.606)
Yeah, for sure. I mean, we want to serve and, uh, you know, do our best with the managing. I always think you mentioned Bitcoin earlier too. Just another, you know, came to mind is that, you know, yeah, you can make tons of money and, you know, uh, you know, Bitcoin and, you know, small little startup companies, things like that. But
But I think in any of those cases, I always tell people that, you know, just be okay. And if you want to invest in this, just make sure that you invest the amount of money that you’d be okay. If that thing went to zero overnight, it doesn’t crush you. And that’s, I mean, that’s really the bottom line of any of these investments. I mean, um, I mean, there’s a lots of companies in Ron, different things back, you know, there’s been a lot of companies that have looked really, really good. And then all of a sudden, you know, um, they’re not so good.
Jason Jacobi, CFP® (26:12.128)
Yeah.
Mark Boyer (26:18.246)
And so, you know, if everything, now you think of Microsoft, they’re so diversified. The, you know, I think about General Electric, though. I mean, you know, it never crushed, but I remember General Electric is sort of this company that can never get hit. And, and man, GE, I love now because of how the new leadership has really divested a lot of industries and that GE stocks amazing. But, but still, I mean, if you bought GE 20 years ago, there was a period that, you know, you didn’t make any money for a long time in a great company, but
Jason Jacobi, CFP® (26:26.247)
Mm-hmm.
Jason Jacobi, CFP® (26:35.173)
Yep.
Mark Boyer (26:47.03)
point is, in the bitcoins and some of these really speculative areas, there’s just a chance that some of them are going to be losers and you just don’t know who those are. So that’s again, you’re trying to diversify so that if you did lose money, it doesn’t affect your whole, just a portion of your investment, not everything you have. So that’s really, really key for people to think about.
Jason Jacobi, CFP® (27:10.188)
Awesome points. I hope everyone listening and watching this takes heed to that. And again, we’re doing this because we care. I get fired up because I care. It’s fun. But yeah, it’s all in good heart and we do care. So if you have any questions, obviously you can reach out to us. We’d be happy to talk in more detail about it or even do a complimentary if you’re not a client, do a complimentary kind of portfolio x-ray.
We’ll kind of go through it, look at it, give you our honest opinions. No sales pitch, no nothing. And, uh, and then obviously maybe see if it’d be an opportunity to work together. If not great, happy trails to you. But, um, but obviously we’d love to look at that. Um, but last thing we wanted to talk about this week was the jobs report. Again, this might be more, more boring, but it affects our economy again. So as the consumer goes, so goes the rest of the economy. So it counts for over 70% of GDP.
the consumer suspender. But in terms of the jobs report and just seeing where we’re going, again, this is looking in a rear, right? So this is last month’s jobs report and total non-farm payrolls with the jolts this week, labor turnover, all that kind of stuff. So we’ll kind of summarize it here just very briefly. And obviously you had, you know, the SAG union and the auto workers unions.
get back to work. So obviously that factors into job growth as well because those numbers were taken into account for unemployment. So unemployment overall dropped 3.9 to 3.7%. And then obviously the monthly change in payroll, the 2023 average sits somewhere along the lines of the mid-200s here, low to mid-200s. We came in at 199,000. So a little bit lower than the average for the year.
But again, that’s not a bad thing. It’s just showing that our economy is slowing. That’s the Fed’s goal of kind of tightening monetary policy and trying to curb inflation and slow the economy without breaking anything that it’s working so far. Again, we haven’t felt the full ripple effects of all the rate hikes, but it seems like the economy is slowing and that potentially if these numbers still continue to be decently strong, we could have a soft landing. But Mark.
Jason Jacobi, CFP® (29:35.2)
Is there anything that you’re watching specifically or maybe that you’ve seen as a concern, right? Because we’re saying, oh, the economy is still pretty strong. Is there anything that maybe on the flip side, if you want to play devil’s advocate a little
Mark Boyer (29:48.45)
Um, yeah. So, I mean, uh, again, so, uh, you know, these are backward looking numbers. It’s important to remember that. I mean, it’s not something that, uh, you know, you’re going back and actually we’re getting a revision of the November number, you know, it’s around 150, I think it before, and then they went to one 99, so they revised them up, but, you know, back to that screen, you just, I mean, what is that three out of the last is higher than, you know, so it’s higher than the last three out of the five of the last, uh, you know, going back five, six months, it’s, uh,
the fourth highest, you know, there’s been a couple other ones in there that have been higher. But anyway, point is, is that, you know, part of this is, I think, you know, just in November, you know, you, yeah, you had unions going back, but also a lot of holiday season, you know, a lot of people working two jobs, you know, picking up things, you know, so those numbers, again, you know, yeah, so as long as just realize that the Fed has been trying to with the reach.
Jason Jacobi, CFP® (30:31.177)
this season.
Well, see you.
Mark Boyer (30:46.418)
I mean, they want to see those that number below the, you know, lower like that. So when it goes higher, you know, there’s all the question becomes like today, you know, markets, the interest rates have popped up, you know, 1% plus today on the 10 year simply because, you know, that looks like, you know, we’re going to have higher for longer. And again, that’s not a surprise to us. And that’s something that, you know, we’ve been talking about that for a while.
But it’s, again, it’s going to be really interesting to see what happens in early, my opinion, early 2024. When people get through these holidays, when they start the new year, it’s going to be interesting to see how, as they look at their pocketbooks, as they look at their expenses, you know, what they decide to do in the new year. You know, student loans are coming to, there’s lots of things that, you know, higher mortgage rates, I mean, they could be, you know, credit card debt. I don’t know. It just depends on if it starts to.
slow down and then again, because the employment numbers are backward, we could see lower numbers, you know, January, February in the first quarter and we’ll see what happens. We wouldn’t be surprised to see that actually and then maybe we’re not looking for cuts anytime soon, but maybe second half of the year. That’s kind of what we’ve been talking about, you know, as it slows down. But yeah, it’s going to be an interesting beginning of 2024.
to see how actually the economy kind of plays itself out.
Jason Jacobi, CFP® (32:13.48)
Yeah. And then we got election year, which is always more volatile. The patient, the patient investor will win when the, uh, when the day on that one, on that front, just being patient with, with volatility and entry points and finding opportunities. Uh, but, but again, just, I mean, you’ve even factoring in a slowing economy right now, which, which obviously we’ve had, um, like you said, it’s a, you know, holiday, if you’re looking at this chart food and drinking places. So like services, um, restaurants, things of that nature, retail jobs.
Mark Boyer (32:15.958)
Well, yeah, for sure.
Mark Boyer (32:20.686)
Ahem.
Jason Jacobi, CFP® (32:44.044)
I saw some pretty good increases in employment gains for this last month here. And then obviously we’ve had some obviously deflationary numbers on the administrative support services, credit intermediation, warehousing storage, building material dealers, manufacturing, things of that nature. So,
Mark Boyer (33:05.538)
That’s an interesting, that first one’s an interesting graph. I mean, administrative support services. So, that’s, yeah, that’s interesting. It’s a big number right there.
Jason Jacobi, CFP® (33:18.032)
Yeah, it is 25,000 of employment losses from October to November. So again, is that due to AI? Yeah, is that due to AI and the optimization of industry potentially that will be interesting to fall along these numbers as months go on and years go on. So, but then again, factoring in geopolitical uncertainty, OPEC.
Mark Boyer (33:21.13)
Yeah.
Mark Boyer (33:25.314)
Is that AI?
Jason Jacobi, CFP® (33:44.724)
oil price of oil there, they pushed back their latest meeting OPEC did because they want to talk about curbing production even more, right? Which kind of prop up oil prices a little bit more moving forward. And obviously if Iran gets more involved, you know, they’re kind of doing the saber rattling thing and attacking our ships in the middle East and bases and things like that. So playing proxy to Hamas. So it’s going to be an interesting year just to see kind of what happens. There’s a lot of uncertainty.
But then there are some global tailwinds. Okay, so there are some tailwinds. Again, if rates do come down, inflation does continue to come down. You’ve got the Eurozone, Germany, UK, China even, like they’re kind of in a recessionary period already. They’re kind of ahead of us in that economic slowdown pattern that we tend to see. So there’s good opportunity there to invest, to kind of look and see where they come out of this.
So there are some tailwinds and the strength of the US consumer. If we can get out of this with a soft landing, then it could be off to the races, right? Depending on, depending on obvious data dependency that we’ll rely on moving forward.
Mark Boyer (34:59.126)
Yeah, so a lot of great points. I would just, in all of it, I would just say it’s clear that nobody, none of us, we speculate, we’ve been pretty good actually. I would say, I mean, I’m bragging, but we’ve done pretty good in talking about the rolling recession, things like that. But we’ve also been wrong in other places. And so the reality is, as good as any investor is, nobody really knows what.
tomorrow brings. And again, you know, I always use the biblical scripture in Ecclesiastes chapter 11. I mean, Solomon, you know, is quoted, you know, basically is one of the smartest guys, you know, that the God gave him great wisdom. He said, look at divide your bread and put, you know, get in the game, basically cash your bread on the waters and then divide it between seven and maybe eight, because you just don’t know which one’s going to work.
And then that gets back to your diversification piece, right? And all this information, why it’s so important to be diligent in your investing, is staying diversified because we don’t know which one’s going to work and what exactly the economy is going to do. We see things and watch it, and we do our best to try to be in the right place at the right time. But again, I think good.
good solid diversification with good active money management managers with who have a history of long-term success, I think is really important for all of us. And yeah, so that’s my take on all of it. It’s been a fun time and an interesting few years, but it comes back down to that is being open-minded as an investor, think outside your box, listen, learn, learn more as much as you can.
Jason Jacobi, CFP® (36:32.076)
Absolutely. Good wisdom.
Mark Boyer (36:50.014)
And then, you know, don’t let fear be your adversary, you know, jump in, let’s go, but do it in a wise way. And that’s what diversification is.
Jason Jacobi, CFP® (37:00.372)
Love it. I love that. Good wisdom. Thanks so much, Mark. So probably back with one more closing bell here before, uh, before we kind of take some time off for the Christmas season and new years, but we’ll be back. Um, and we’ll get to, uh, 2024 outlook once we kind of dive into kind of the macro economic picture and it as things move forward. So, um, thanks so much for joining us on this journey for ringing the closing bell with us. Have a wonderful weekend. Merry Christmas.
Merry Christmas, Mark. I’ll see you in a second. And you’re stuck with me. You’re stuck with me.
Mark Boyer (37:35.031)
That you’re in the next room over? That’s great. I’m okay. That’s good. You’re a good guy. I love it. So it’s fun, but yeah, Merry Christmas and, um, bye.
Jason Jacobi, CFP® (37:42.694)
Likewise, likewise. Alright, we’ll see you guys next week.
