Jason Jacobi, CFP® (00:01.316)
Everyone welcome to the closing bell. It is May 3rd. We had April showers. Hopefully it brings May flowers almost Mother’s Day. Got some awesome mothers to shout out to all the moms out there.
Moms. I miss my mom. My mom was amazing. Passed away about eight years ago now, 92 years old. You knew her, Grandma Boyer. She was amazing. So I miss her, but I got a mother -in -law that’s still with us, Jan and I. And then I’m always amazed with my wife, Jan. My girls are all mothers. Yeah. And, uh,
Mark, how you feel?
Mark Boyer (00:41.902)
Got a daughter -in -law who’s going to be a mother soon, Cassidy. A lot of things going on, so I like the mothers. I celebrate moms. Yeah.
Absolutely. You know, they are superheroes in their own right. I can’t I couldn’t imagine doing what they do, whether it’s work and taking care of kids, which is itself the most important job, right. So it’s it’s crazy. Plus dealing with us lugheads, you know.
Yeah, for right, right. Childlike husbands. Yeah. So anyway, yeah, we’re paying in the rear as well. But yeah, they always man it when I especially and you know, because you got your wife’s you know, Melissa is pregnant and you just you just like thinking man, I’m glad I’m not a I’m glad I’m not a girl. I’m not near as tough as they are and all the stuff they got to do multitasking all the things. So we’re blessed. We’re blessed.
Yeah.
We are, we are. But we’ve got some good stuff. So obviously the saying goes what? Sell it and may and go away. So that’s kind of our theme here.
Mark Boyer (01:32.654)
Go away. Yeah. So, all right. So explain where that comes from, Jason. Yeah. Tell us where, why do they say that?
So typically the best months for the market would be November through April, right? And then they say, you know, from May to October are kind of historically the months for bears. Although if you look at the S &P ranging from, you know, the last few decades, it’s actually averages about 1 .8 % up. So hardly. Yeah. Yeah.
Which isn’t bad. I mean, that’s pretty good. Almost 2%. You know, so.
Exactly, exactly. But historically, that’s just the months that kind of bring the most volatility. Could we see more of it because election season? Absolutely. But but yeah, hopefully, hopefully May is a good springboard into some more optimism. I had a great year so far, you know, just to give a quick recap here, Mark, before we kind of get into the technical talk. Year to date, NASDAQ’s up 7 .61, S &P up 7 .51, Dow up 2 .66.
Small cap is up 0 .21%. So all up for the year. April, we were down 4%. So why don’t you talk about kind of where we’re sitting right now and the trends you’re seeing.
Mark Boyer (02:49.998)
Yeah, I mean, so we were talking about in prior months, I mean, you know, markets had a huge move since November. I mean, it’s like, you know, and there was a bit of time there where it’s like we hadn’t even had a 2 % pullback. So, you know, it’s way overdue. And so, you know, investing is an interesting deal. Like you just like you want to see it go up, up, up all the time, you know, because that’s a feel good thing. But yet long term for really long term, you know,
capital for growing your money long term. It’s really, you’re going to see, especially in the stock market where it’s volatile. I mean, it goes up and down. Sometimes it’s pulling back and we were waiting for that to happen and it did. And so actually, that makes it, it’s actually really healthy when you get pullbacks where there’s profit taking, where there’s any kind of bad news, somebody misses an earnings, whatever it might be. In this case, it’s always been about inflation, not coming down enough, inflation reports that are still high.
higher for longer, Fed’s going to keep, all these things that the media jumps on and everything, it becomes kind of the word for the day at the time. But it allows people to sell for some reason and take profits. And we’ve had a big pullback, AI stocks, NVIDIA, Supermicro, some of these stocks have really come back down to earth and then yet showing strength.
And actually, you know, again, now that this this week, so yeah, so that pullback, you know, the last this last month or so has been, you know, actually really healthy, I think, for the market. It’s actually really healthy. So it’s interesting where we find ourselves, you know, now. So yeah, but that’s, you know, that’s part of it. So.
much.
Jason Jacobi, CFP® (04:32.42)
Good points. And this week, like you said, we’re up the major industries, small cap, Nasdaq, Dow Jones, all up, excuse me, over 1%, almost 1 .5%. S &P is kind of hovering around half a percent right now. But we’ve been talking about the tale of two economies, right? Corporate earnings, 80 % of the S &P.
that have reported we’ve had half about half of the S &P 500 report earnings so far for for this recent most recent quarter and Yeah, 80 % are beating estimates earnings estimates. So that’s a good sign and then you have you know, big tech, you know, it’s kind of like okay, like now it’s time to put your money where your mouth is, you know, everyone’s been AI this theme it’s the world’s changing and evolving and growing and lots of money’s poured into microchips and semiconductors and
you know, cloud software services, you know, financial systems, AI has kind of worked into that as well. But then you’re seeing these companies now it’s like, okay, well, there’s been a lot of money flow into these companies and CapEx capital expenditures into these, these kind of new sectors, AI specifically, and that that cloud space of growth. Now, what are we going to do with it? Well, now Google,
you know, they’ve, they spent a ton of money on AI. They’re actually paying their first dividend, right? So now they’re going to kind of go into the voter Apple and Microsoft, these big tech companies that are starting to reward their shareholders for, for investing in owning their company. And so they can kind of fall in that, hopefully dividend growth category, like some of these other big tech firms. That’s always really exciting for me to see as, as an investor.
Yeah, that’s cute.
Mark Boyer (06:21.134)
Yeah, so I mean, there’s a company there that now has profits. They’ve grown tremendously. And you get to a point where a lot of times with companies, they’re in the growth mode. They’re growing, putting money back into their company, blah, blah, to increase their size exposure all around the world, all the things they’re doing. But then they hit a place of maturity where they’re not doing that quite. They don’t need to do that as much. And so…
That’s when they start paying out these dividends and that’s a huge, that’s a huge deal to see that this week. Um, and we love that. We love dividends, right? So that’s a good thing. And so that’s, uh, that’s, you know, that’s the sign of that company actually getting into a very mature state that, uh, will be kind of moves it into really another realm in the markets, you know, value play, you know, they’ll, they get, you know, when you start paying dividends, they get into different types of, you know, money managers out there that are,
dividend oriented that if they start increasing their dividends, so that’s kind of the maturation of a company from small to through the process to a larger dividend, multinational dividend payer stock. So it’s interesting. The AI stock, you’re not going to see that with Nvidia right now, they’re just growing so quickly and all that’s going back into research and development. They’re not going to pay the benefit to the shareholders and then it’s just capital appreciation all the way in the stock.
that’s the goal.
Cash flow behemoth, absolutely. So it’s very interesting. You look at the most recent numbers, inflation, Fed’s preferred gauge is hovering around 3%, give or take, right? I looked up the last 100 years of CPI inflation. We’re averaging about 3 .1 % annualized. So we’re right there. And the Fed has this kind of, they’re hell bent on getting us down to 2%. It’s like, well,
Mark Boyer (08:03.534)
Yeah, yeah, yeah. Yeah, interesting. Yeah.
Jason Jacobi, CFP® (08:12.548)
Maybe we’re just reverting to the norm here of 3%. And I know you’ve talked a lot about this.
Yeah, we said a lot. I mean, yeah, I think that’s a great place. I mean, that’s a place that you can land long term. It’s been 100 years. I mean, really, I mean, that’s been our Nash, you know, our average rate of inflation over that period of time. Now, there’s a lot of differences now in the way they, you know, they printed money and the, you know, the debt levels, all those things. But, but that’s, you know, really interesting. We’ve said that last, really, Jason, last 12.
you know, 18 months is that, man, was that 2 % really, you know, why is that, you know, why is that the number that the feds shooting for? And it’s kind of in there crawled to make that happen. But, you know, right now, uh, you know, that 3 % seems to be kind of where it may, it may land and it may be hard and sticky to get to 2%. And, um, that’s, what’s going to be interesting. That’s why we’re in this period right now. It looks like higher for longer. Um, so yeah, we’ll see how that plays out.
It’s very interesting. So the US economy, people don’t realize this, the US economy can easily handle 3%. That’s a very doable rate. If you look at, so last quarter GDP growth was around 1 .8, which was softer than normal, which was part of the reason for the pullback economy seemed to have been slowing. But if you kind of dive into that report, consumers are still spending on goods and services, specifically services. That’s kind of been the hot sector. We call it fundflation, right? People are still spending a lot of money going out.
traveling, concerts, games, venues, all that kind of stuff. But actually, if you look at us compared to the rest of the developed world, you look at Europe, you look at Japan, Europe, 0 .8%, economic growth over the next year, 0 .9 % for Japan, even us, we’re looking still, we’re kind of that shining city on a hill per se, 2 .7 % is kind of the newest annualized performance for GDP growth over the next…
Jason Jacobi, CFP® (10:14.052)
this next year. So with that being said, we can handle this. Again, we can get into the nuances, but based off of where we’re going with the latest job numbers, it was 170 ,000 jobs added this week according to the most recent payroll.
today, right? Came out today.
they were expecting quite a bit more than that, 240 ,000. And that was even, you know, we had upwardly revised last month of around 315 ,000 in March. So 175 ,000 down from 315 ,000 from March. So slowing down in a good way. Yes, that’s what the Fed wants to see. So.
Are we still expecting one to two rate cuts you think at the end of the year? Are we lucky if we get that?
Uh, you know, I don’t really know what, I mean, we will probably be lucky. We think it’s going to be, we’ve, and again, um, we’ve been higher for longer, for awhile. We’ve been talking about that. The rate cuts are, you know, once at the beginning of the year, it looked like it was going to be a lot of rate cuts. And then now, uh, the way, the way the numbers have come and it’s clear, it’s going to be, it’s going to take a longer period of time for that. But what’s interesting is that it really doesn’t matter like today. So.
Mark Boyer (11:29.582)
today, right? We get these job numbers and the markets rallied today. It’s big, you know, NASDAQ, NASDAQ actually interesting is up above its 50 day back above its 50 day today. Gapped, gapped there, which is a really good sign off of earnings yesterday, what Apple and some other. Yeah, so, you know, just just gapped up based on these numbers. You know, we’re above 16 ,000 again. And
Well, what S &P is right, the 50 day was at 16057 and we’re, you know, we’re 61 51 as of this recording. So if it holds that, that’s going to be very solid. You get back technically above a 50 day. That’s a big, both it’s funny that both the S &P though, and the Dow are right at the 50 day. So they got a little bit more work to do to get above it. And so for those two, you know, we might be at a little resistance and maybe get a little pullback here. Let’s see what happens. But all that to say is that, um, you know,
Interest rates, it really, so again, and some people don’t realize this, I think, is we wait for the Fed to drop rates. But the reality is, is that the market itself on a daily basis is adjusting rates. And then today, based on those numbers, we had the 10 year, we’ve talked a lot about the 10 year in this, on these podcasts. The 10 years, you know, is currently right now as of this, it’s at 4 .5 and it was just at 4 .7, you know, 7 .4.
just back on April the 25th. So not very long ago. And now, based on these numbers, the interest rates, 10 years dropped tremendously, which is good for a fixed income, right? So that’s all good. So point is, is that the markets are basically adjusting to, and showing that they’re thinking that the interest rates are gonna be coming down in there as well. But in the meantime, those are your adjustable rates and all that.
They kind of adjust as they go, you know, it’s interesting. So markets doing that on a daily basis kind of factoring those numbers into.
Jason Jacobi, CFP® (13:30.468)
Yeah. And somebody brought up a good point to me yesterday. We were talking about bond market and how they’re so highly correlated right now. And that’s kind of the new era of this, how they’ve been acting. So today even stocks are up, bond prices are up, it’s good for bond holders, good for stocks. It’s quite interesting though, is you look at the bond market like you’re talking about. It’s traded. There’s a lot more bond traders out there that are more active these days than in years past. So.
Yeah.
Jason Jacobi, CFP® (13:59.364)
That’s why you’re seeing yields drop dramatically. I mean, down even just today, 1 .38 % for the 10 year, like you were talking about. Five years down even more, 1 .68. So again, it’s very interesting to watch this. So again, the whole importance of diversification. That’s why we’ve been talking about kind of that alternative sleeve lately is something that again, can kind of help.
Mm -hmm. Yeah.
Jason Jacobi, CFP® (14:24.516)
lower the correlation of a portfolio in times of volatility or uncertainty. But good point. I think that’s really key to our listeners and viewers here is bonds are actually moving. We don’t need to wait for the Fed to move. The rates are going to probably before that as soon as it starts signaling that they could potentially do that.
Yeah.
Mark Boyer (14:36.878)
Correct. Yeah.
Yeah, so anyway, it’s interesting to see and we’ll watch and see if we can hold these 50 days. That’ll be important right now for this this next week coming going forward so.
Love it, Mark. We’ll let our listeners go for this week. Again, hopefully April showers bring May flowers. We’re always optimistic here, but we want to be realistic. It’s always great to break things down with you, Mark, and we’ll see you next week.
Likewise. See you, Jason. Bye bye.
