WEBVTT 00:00:00.000 --> 00:00:02.339 Welcome back, everybody, to the deep dive. It's 00:00:02.339 --> 00:00:04.620 great to be back. Yeah. We've got a lot to cover 00:00:04.620 --> 00:00:08.179 today. A lot of material. We do, you know, as 00:00:08.179 --> 00:00:11.529 always, we're taking sort of too disparate. sources 00:00:11.529 --> 00:00:13.630 and trying to figure out how they relate to one 00:00:13.630 --> 00:00:17.570 another and what the major takeaways are for 00:00:17.570 --> 00:00:19.429 listeners. Absolutely. We've got some really 00:00:19.429 --> 00:00:22.010 interesting ones this time. We do. This is a 00:00:22.010 --> 00:00:24.629 late March market analysis that we're looking 00:00:24.629 --> 00:00:29.170 at. Kind of bumping up against an early April. 00:00:30.300 --> 00:00:34.020 political rundown from electoral vote news. A 00:00:34.020 --> 00:00:36.039 lot going on. A lot going on. And I think, you 00:00:36.039 --> 00:00:38.060 know, the economy feels like it's at one of these 00:00:38.060 --> 00:00:40.799 inflection points where it's, you know, we've 00:00:40.799 --> 00:00:43.759 got persistent inflation that doesn't seem to 00:00:43.759 --> 00:00:46.380 be abating. Right. But we've also got people 00:00:46.380 --> 00:00:48.880 are making more money. Income growth is strong. 00:00:49.479 --> 00:00:51.340 And, you know, corporations are reporting good 00:00:51.340 --> 00:00:54.219 profits. Yeah. So there's a there's a few different 00:00:54.219 --> 00:00:56.200 things going on here. It's not all bad news. 00:00:56.399 --> 00:00:58.259 Not all bad news. It's not all good news. Right. 00:00:58.679 --> 00:01:01.799 It's a little bit of a mixed bag. And we've got 00:01:01.799 --> 00:01:04.459 to try to kind of untangle all of this and figure 00:01:04.459 --> 00:01:07.540 out what matters most. It's interesting you say 00:01:07.540 --> 00:01:10.400 inflection point, because looking at the economic 00:01:10.400 --> 00:01:13.359 analysis and some of the political stuff, it 00:01:13.359 --> 00:01:15.500 really does feel like we're at a turning point. 00:01:15.560 --> 00:01:18.799 Yeah. And politically, things are as crazy as 00:01:18.799 --> 00:01:22.099 ever. That is always plenty to talk about. Lots 00:01:22.099 --> 00:01:25.140 to talk about. Let's dive right in to the economic 00:01:25.140 --> 00:01:27.519 side first, and then we'll get to the political 00:01:27.519 --> 00:01:31.819 stuff. Sounds good. As mentioned, this is a market 00:01:31.819 --> 00:01:34.620 analysis from late March. OK. And one of the 00:01:34.620 --> 00:01:37.920 things that really jumped out at me is they talk 00:01:37.920 --> 00:01:41.099 a lot about the PCE data, the personal consumption 00:01:41.099 --> 00:01:45.079 expenditures data, and headline PCE was up 0 00:01:45.079 --> 00:01:47.700 .3 % month over month, 2 .5 % year over year. 00:01:47.760 --> 00:01:49.840 As expected. As expected, right. There's no surprises 00:01:49.840 --> 00:01:53.099 there. But core PCE, which is what the Fed really 00:01:53.099 --> 00:01:56.120 looks at to gauge inflation because it excludes 00:01:56.120 --> 00:01:58.159 those more volatile food and energy prices. Yeah. 00:01:58.340 --> 00:02:01.200 And, you know, that's important because we saw 00:02:01.200 --> 00:02:03.359 a lot of volatility in food and energy prices 00:02:03.359 --> 00:02:06.079 last year. So taking those out gives us a better 00:02:06.079 --> 00:02:08.280 sense of what's really going on with underlying 00:02:08.280 --> 00:02:11.960 inflation. Absolutely. And that number came in 00:02:11.960 --> 00:02:15.400 a bit hotter than anticipated. It did. 0 .4 percent 00:02:15.400 --> 00:02:19.139 month over month, which is higher than than economists 00:02:19.139 --> 00:02:21.840 were expecting. Right, and even though inflation 00:02:21.840 --> 00:02:25.479 is starting to trend downwards, it's still... 00:02:25.479 --> 00:02:27.919 Above the Fed's 2 % target. Above the Fed's 2 00:02:27.919 --> 00:02:31.240 % target, and the report really drills down on 00:02:31.240 --> 00:02:35.759 what's driving this persistent inflation that 00:02:35.759 --> 00:02:38.120 we're seeing. The only thing that they highlight 00:02:38.120 --> 00:02:42.849 is... durable goods, prices, things like cars 00:02:42.849 --> 00:02:44.969 and appliances. Those prices have been going 00:02:44.969 --> 00:02:47.430 up. Especially vehicles. They specifically call 00:02:47.430 --> 00:02:50.169 out vehicles. Yeah. And that's partly due to 00:02:50.169 --> 00:02:52.409 supply chain issues that we've been seeing, but 00:02:52.409 --> 00:02:55.050 also this expectation of future tariffs. Yeah. 00:02:55.090 --> 00:02:58.770 So there's a lot of talk about implementing tariffs 00:02:58.770 --> 00:03:00.729 on certain goods, and that's already starting 00:03:00.729 --> 00:03:03.009 to be priced in. Right. And that makes sense. 00:03:03.009 --> 00:03:06.150 To the market. Because if businesses know that 00:03:06.150 --> 00:03:09.689 tariffs are coming, They're gonna start raising 00:03:09.689 --> 00:03:12.909 prices now right in anticipation of those tariffs 00:03:12.909 --> 00:03:15.210 So so the market is sort of forward -looking 00:03:15.210 --> 00:03:17.370 in that way. Absolutely and consumers are forward 00:03:17.370 --> 00:03:19.949 -looking, too Yeah, the report suggests that 00:03:19.949 --> 00:03:22.469 we might be seeing some accelerated buying of 00:03:22.469 --> 00:03:25.969 durable goods particularly vehicles Because people 00:03:25.969 --> 00:03:27.729 are trying to get ahead of those potential price 00:03:27.729 --> 00:03:30.250 increases if those tariffs do come into effect, 00:03:30.349 --> 00:03:32.539 right? So it's like by now by now. Before it 00:03:32.539 --> 00:03:34.539 gets more expensive. Exactly. And we're starting 00:03:34.539 --> 00:03:37.419 to see used car prices starting to come down 00:03:37.419 --> 00:03:40.460 a little bit. Little bit. But new car prices 00:03:40.460 --> 00:03:42.400 still seem to be pretty elevated. Yeah, they're 00:03:42.400 --> 00:03:45.300 still high. And it's interesting because the 00:03:45.300 --> 00:03:48.439 report also talks about how service sector costs. 00:03:48.780 --> 00:03:51.240 Things like transportation, health care. Those 00:03:51.240 --> 00:03:53.560 are sticky. They're not coming down much. Those 00:03:53.560 --> 00:03:57.039 are stoopy. Those are really sticky. Yeah. So 00:03:57.039 --> 00:04:00.439 that's kind of. creating a bit of a... A puzzle. 00:04:00.580 --> 00:04:03.419 A puzzle, right? Because you would think that 00:04:03.419 --> 00:04:05.620 as... As supply chains ease. Right, as demand 00:04:05.620 --> 00:04:07.599 starts to cool off a little bit. We would start 00:04:07.599 --> 00:04:09.819 to see those prices come down. Right, but we're 00:04:09.819 --> 00:04:11.439 not seeing that as much in the service sector. 00:04:12.080 --> 00:04:14.300 Right, and the report sort of speculates on why 00:04:14.300 --> 00:04:15.960 that might be, and they... Well, part of it is 00:04:15.960 --> 00:04:18.279 just that it takes longer for those prices to 00:04:18.279 --> 00:04:20.379 adjust. Right. You know, you've got contracts 00:04:20.379 --> 00:04:23.899 in place, you've got... Labor costs are high. 00:04:23.980 --> 00:04:26.600 Labor costs are high, exactly. So it's not as 00:04:26.600 --> 00:04:28.879 easy to just flip a switch and lower prices. 00:04:29.019 --> 00:04:31.879 Right. And then you've got the fact that the 00:04:31.879 --> 00:04:34.500 job market is still strong. Very strong. Very 00:04:34.500 --> 00:04:37.879 strong. And so wages are continuing to increase. 00:04:38.060 --> 00:04:39.759 And that's putting upward pressure on prices. 00:04:39.939 --> 00:04:43.399 Right. So it's kind of this self -perpetuating 00:04:43.399 --> 00:04:48.120 cycle, in a way. It can be. Where wages go up, 00:04:48.240 --> 00:04:50.259 that puts pressure on businesses to raise prices, 00:04:50.259 --> 00:04:52.910 and then And then workers demand higher wages. 00:04:53.149 --> 00:04:55.370 Workers demand higher wages to keep up with the 00:04:55.370 --> 00:04:57.490 cost of living. Right. And so it just keeps going. 00:04:57.569 --> 00:04:59.589 And so it just keeps going, yeah. It's a spiral. 00:04:59.790 --> 00:05:03.750 It's a spiral, yeah. But then you look at real 00:05:03.750 --> 00:05:07.180 consumer spending. OK. which is only up 0 .1 00:05:07.180 --> 00:05:09.759 % month over month. Which is much lower than 00:05:09.759 --> 00:05:11.459 expected. Much lower than expected, yeah. And 00:05:11.459 --> 00:05:13.740 that's kind of a head scratcher. It is. Because 00:05:13.740 --> 00:05:15.800 at the same time, you've got personal income, 00:05:15.860 --> 00:05:19.000 which was up 0 .8 % month over month. So people 00:05:19.000 --> 00:05:20.680 are making more money. People are making more 00:05:20.680 --> 00:05:22.800 money. But they're not spending it. But they're 00:05:22.800 --> 00:05:26.040 not spending it as much. Right. So that's a little 00:05:26.040 --> 00:05:29.050 bit. concerning. It is concerning. Because it 00:05:29.050 --> 00:05:31.089 suggests that maybe consumers are starting to 00:05:31.089 --> 00:05:33.329 get a little bit spooked. Yeah, maybe they're 00:05:33.329 --> 00:05:35.050 worried about the future. Worried about the future, 00:05:35.310 --> 00:05:37.230 worried about inflation. Worried about a recession. 00:05:37.329 --> 00:05:39.329 Worried about a recession, and so they're kind 00:05:39.329 --> 00:05:41.709 of holding back a little bit. Right, they're 00:05:41.709 --> 00:05:44.889 saving more. Saving more, yeah. It's not necessarily 00:05:44.889 --> 00:05:47.009 a bad thing. Not necessarily a bad thing, but 00:05:47.009 --> 00:05:49.069 it does. It does slow down the economy. It does 00:05:49.069 --> 00:05:51.269 slow down the economy, yeah. If people aren't 00:05:51.269 --> 00:05:53.389 spending money, businesses aren't making as much 00:05:53.389 --> 00:05:57.300 money. and that can lead to job losses and all 00:05:57.300 --> 00:05:59.399 sorts of other problems. Right, so it's a delicate 00:05:59.399 --> 00:06:01.819 balance. It is. You know, you want people to 00:06:01.819 --> 00:06:04.319 be... Spending money. Spending money, but you 00:06:04.319 --> 00:06:06.639 also don't want them to be overspending. Right, 00:06:06.639 --> 00:06:08.740 and you don't want them to be racking up debt. 00:06:09.019 --> 00:06:10.759 Right. And you want them to be spending within 00:06:10.759 --> 00:06:13.160 their means. Right. And saving for the future. 00:06:13.360 --> 00:06:16.139 Right. So it's a tough spot to be in. It is a 00:06:16.139 --> 00:06:18.879 tough spot, yeah. And then you look at the GDP 00:06:18.879 --> 00:06:21.480 numbers. OK, which, you know, initially sound 00:06:21.480 --> 00:06:27.560 good for 2024 GDP was revised upwards to 2 .4 00:06:27.560 --> 00:06:29.839 percent annualized, which is driven by corporate 00:06:29.839 --> 00:06:33.220 profits and consumer spending. Right. So that's 00:06:33.220 --> 00:06:35.500 the good news. That's the good news. The bad 00:06:35.500 --> 00:06:39.980 news is that the outlook for Q1 2025 is not so 00:06:39.980 --> 00:06:43.420 rosy. Not so rosy. Some forecasts are actually 00:06:43.420 --> 00:06:46.579 predicting a contraction. A contraction. Yeah. 00:06:46.620 --> 00:06:50.180 And the report kind of attributes this to a couple 00:06:50.180 --> 00:06:53.199 things. One is those anticipated tariffs. Right. 00:06:53.199 --> 00:06:55.000 We were talking about earlier. Which could lead 00:06:55.000 --> 00:06:57.540 to a surge in imports. Right. So businesses are 00:06:57.540 --> 00:06:59.660 trying to get ahead of those tariffs. Stock up. 00:06:59.759 --> 00:07:02.100 Stock up. Before the prices go up. before the 00:07:02.100 --> 00:07:04.139 prices go up, and so that's kind of artificially 00:07:04.139 --> 00:07:07.920 inflating GDP in Q4. Right, it's pulling forward 00:07:07.920 --> 00:07:10.120 demand. Pulling forward demand. From Q1. From 00:07:10.120 --> 00:07:12.660 Q1, yeah. So we might see a bit of a hangover 00:07:12.660 --> 00:07:15.259 effect in Q1. Right, and then the other thing 00:07:15.259 --> 00:07:17.620 that the report talks about is just this general 00:07:17.620 --> 00:07:20.579 uncertainty. Global trade uncertainty. Yeah, 00:07:20.959 --> 00:07:22.740 surrounding global trade. You know, with the 00:07:22.740 --> 00:07:25.019 war in Ukraine and tensions with China. Yeah. 00:07:25.180 --> 00:07:28.180 Businesses are just hesitant to invest. Right. 00:07:28.339 --> 00:07:30.120 They're hesitant to hire. They're kind of in 00:07:30.120 --> 00:07:32.439 a wait and see mode. Exactly. They're waiting 00:07:32.439 --> 00:07:35.800 to see how things play out. Yeah. And that's 00:07:35.800 --> 00:07:38.300 that's understandable. It is. But it's not good 00:07:38.300 --> 00:07:40.519 for the economy. It's not good for growth. Not 00:07:40.519 --> 00:07:42.660 good for growth. If businesses aren't investing 00:07:42.660 --> 00:07:46.139 in hiring, then the economy is not going to grow. 00:07:46.379 --> 00:07:49.339 Right. So it's kind of this this vicious cycle 00:07:49.339 --> 00:07:52.660 in a way. It can be. uncertainty breeds more 00:07:52.660 --> 00:07:54.600 uncertainty uncertainty breeds more uncertainty 00:07:54.600 --> 00:07:56.319 yeah and then you look at the housing market 00:07:56.319 --> 00:07:59.040 okay which you know is always kind of a bellwether 00:07:59.040 --> 00:08:02.480 a key indicator a key indicator for the economy 00:08:02.480 --> 00:08:05.000 yeah because it's so tied to consumer confidence 00:08:05.000 --> 00:08:07.399 absolutely and to interest rates right and to 00:08:07.399 --> 00:08:10.660 the job market yeah so so many things are tied 00:08:10.660 --> 00:08:12.560 to the housing market it's being part of the 00:08:12.560 --> 00:08:14.740 economy it is a big part of the economy yeah 00:08:15.920 --> 00:08:18.420 And it sounds like we saw a little bit of a rebound 00:08:18.420 --> 00:08:21.379 in February. A modest rebound. A modest rebound. 00:08:21.399 --> 00:08:24.860 New and pending home sales were both up. Yeah. 00:08:24.939 --> 00:08:28.600 Driven primarily by the South. Yeah. Which, you 00:08:28.600 --> 00:08:30.699 know, is interesting because the South has been 00:08:30.699 --> 00:08:33.360 kind of a hot spot for growth. It has been. Over 00:08:33.360 --> 00:08:35.100 the last few years. A lot of people moving to 00:08:35.100 --> 00:08:37.159 the South. People moving to the South. Lower 00:08:37.159 --> 00:08:40.259 cost of living. Lower cost of living. Yeah. Warmer 00:08:40.259 --> 00:08:44.299 weather. Warmer weather. So it's not surprising 00:08:44.299 --> 00:08:46.399 that the South is leading the way in terms of 00:08:46.399 --> 00:08:49.559 the housing market recovery. Right. But the report 00:08:49.559 --> 00:08:52.019 also cautions that, you know, there are still 00:08:52.019 --> 00:08:54.879 some significant headwinds. Yeah, those elevated 00:08:54.879 --> 00:08:56.899 mortgage rates. Yeah, mortgage rates are still 00:08:56.899 --> 00:09:00.899 hovering around 6 .7%. Which is high. Which is 00:09:00.899 --> 00:09:02.879 high. It makes it very expensive to buy a house. 00:09:03.100 --> 00:09:05.519 It makes it very expensive to buy a house, yeah. 00:09:05.940 --> 00:09:07.799 Especially for first time home buyers. Especially 00:09:07.799 --> 00:09:10.220 for first time home buyers, yeah. Who are already 00:09:10.220 --> 00:09:12.059 struggling with affordability. Right. You know, 00:09:12.100 --> 00:09:13.940 they're trying to save up for down payment. Yeah. 00:09:14.100 --> 00:09:16.259 They're trying to qualify for a mortgage. Yeah. 00:09:16.460 --> 00:09:18.019 And then they're getting hit with these high 00:09:18.019 --> 00:09:20.899 interest rates. It's tough. Yeah. It's tough. 00:09:21.080 --> 00:09:23.340 And the report basically says that, you know, 00:09:23.820 --> 00:09:26.929 we're not going to see... a significant recovery 00:09:26.929 --> 00:09:29.070 in the housing market. Until mortgage rates come 00:09:29.070 --> 00:09:31.610 down? Until mortgage rates come down closer to 00:09:31.610 --> 00:09:34.769 that 5 % range. Yeah. Which is still high, historically. 00:09:34.789 --> 00:09:37.049 It is. More manageable. More manageable. Yeah. 00:09:37.070 --> 00:09:42.110 Than 6 .7%. Right. So that's kind of the state 00:09:42.110 --> 00:09:44.230 of the housing market right now. It's in a holding 00:09:44.230 --> 00:09:46.450 pattern. It's in a holding pattern, yeah. Waiting 00:09:46.450 --> 00:09:48.570 for those interest rates to come down. Yeah. 00:09:49.730 --> 00:09:52.649 And then one last thing on the economic front. 00:09:53.289 --> 00:09:56.110 that really jumped out at me was this drop in 00:09:56.110 --> 00:09:58.990 consumer confidence. Yeah, that was a big one. 00:09:59.289 --> 00:10:01.769 The conference board's consumer confidence index 00:10:01.769 --> 00:10:05.190 fell to 92 .9 in March, which is the lowest it's 00:10:05.190 --> 00:10:08.490 been since early 2021. since early 2021. Yeah. 00:10:08.490 --> 00:10:11.090 And that's a pretty significant drop. It is significant. 00:10:11.169 --> 00:10:14.090 And the report attributes this decline directly 00:10:14.090 --> 00:10:17.070 to concerns over inflation and tariffs and tariffs. 00:10:17.070 --> 00:10:19.450 Yeah. So those two things are really weighing 00:10:19.450 --> 00:10:21.509 on consumers minds. Yeah. And it makes sense. 00:10:21.590 --> 00:10:22.750 And, you know, if you're worried about inflation, 00:10:22.750 --> 00:10:24.970 if you're worried about the economy, you're going 00:10:24.970 --> 00:10:27.070 to be less confident about the future. You'll 00:10:27.070 --> 00:10:29.190 be less likely to spend money, less likely to 00:10:29.190 --> 00:10:31.629 spend money, less likely to invest. Right. And 00:10:31.629 --> 00:10:33.750 that's not good for the economy. No, it's not. 00:10:33.950 --> 00:10:37.769 So so, yeah, that's that's kind of a A concerning 00:10:37.769 --> 00:10:41.149 development. It is concerning. Yeah. So with 00:10:41.149 --> 00:10:44.090 all of this swirling economic data, how did the 00:10:44.090 --> 00:10:47.029 markets react? Not well. Not well. The week ending 00:10:47.029 --> 00:10:50.730 March 28 saw declines across all the major domestic 00:10:50.730 --> 00:10:54.649 equity indices. So the S &P 500, the NASDAQ Dow. 00:10:54.730 --> 00:10:57.730 All down. All down. Even mid cap and small cap 00:10:57.730 --> 00:10:59.769 stocks felt the pressure. Yeah. The Russell mid 00:10:59.769 --> 00:11:03.340 cap. The Russell 2000? All down. All down. And 00:11:03.340 --> 00:11:05.059 international markets also experienced losses. 00:11:05.259 --> 00:11:10.159 Yeah, the MSCI EAFE, the MSCI EM. All down. All 00:11:10.159 --> 00:11:11.919 down. So it was a pretty broad -based sell -off. 00:11:12.059 --> 00:11:14.460 Yeah, it was a rough week for investors. It was. 00:11:15.240 --> 00:11:17.480 And bond market... Were mixed. Were mixed. Some 00:11:17.480 --> 00:11:19.620 bonds did well, some bonds didn't. Right, so 00:11:19.620 --> 00:11:21.779 it wasn't a clear signal from the bond market? 00:11:21.919 --> 00:11:24.669 No. But one thing that the report really pointed 00:11:24.669 --> 00:11:27.370 out was this interesting divergence within the 00:11:27.370 --> 00:11:30.269 S &P 500. Yeah, between the mega -cap tech stocks 00:11:30.269 --> 00:11:33.070 and the broader market. Right. So the so -called 00:11:33.070 --> 00:11:36.950 Mag -7. Mag -7 tech stocks. Apple, Amazon, Microsoft, 00:11:37.629 --> 00:11:40.490 Google. Facebook. And Tesla, NVIDIA. Yeah, all 00:11:40.490 --> 00:11:42.509 those big names that have really driven market 00:11:42.509 --> 00:11:44.909 growth over the last few years, they are now 00:11:44.909 --> 00:11:47.570 underperforming. The rest of the S &P 500? The 00:11:47.570 --> 00:11:50.990 rest of the S &P 500. The other 493 companies. 00:11:51.190 --> 00:11:54.570 Yeah. And the report kind of attributes this 00:11:54.570 --> 00:11:57.610 to a couple of things. One is just this valuation 00:11:57.610 --> 00:11:59.950 -driven shakeout. Yeah, investors are starting 00:11:59.950 --> 00:12:02.889 to reassess those very high growth expectations. 00:12:02.970 --> 00:12:05.350 Especially around AI. Especially around AI. And 00:12:05.350 --> 00:12:07.929 other tech innovations. Right. You know, there's 00:12:07.929 --> 00:12:11.970 been so much hype around AI lately. So much hype. 00:12:12.049 --> 00:12:14.730 And I think investors are starting to realize 00:12:14.730 --> 00:12:17.389 that maybe it's not going to be as transformative 00:12:17.389 --> 00:12:19.669 as quickly. As some people were predicting. As 00:12:19.669 --> 00:12:21.980 some people were predicting, yeah. And, you know, 00:12:22.039 --> 00:12:24.179 you've also got increasing competition in the 00:12:24.179 --> 00:12:27.200 tech space. Absolutely. You've got policy uncertainties. 00:12:27.240 --> 00:12:29.000 Right. You know, the government is starting to 00:12:29.000 --> 00:12:30.679 crack down on some of these big tech companies. 00:12:30.840 --> 00:12:33.580 Yeah, there's a lot of talk about antitrust regulation. 00:12:33.580 --> 00:12:36.919 Right. And then, you know, you've just got these 00:12:36.919 --> 00:12:39.580 historically high valuations. Yeah, some of these 00:12:39.580 --> 00:12:42.879 tech stocks are trading at price to earnings 00:12:42.879 --> 00:12:45.710 ratios that are just astronomical. Right. And 00:12:45.710 --> 00:12:47.730 so it's not surprising that we're starting to 00:12:47.730 --> 00:12:50.070 see a little bit of a pullback. It's a natural 00:12:50.070 --> 00:12:52.250 correction. Yeah, a natural correction. After 00:12:52.250 --> 00:12:55.169 such a strong run -up. Right. So where does the 00:12:55.169 --> 00:12:57.909 report suggest that investors might be looking 00:12:57.909 --> 00:13:00.610 instead? Well, they highlight the relative strength 00:13:00.610 --> 00:13:03.289 in more traditional sectors. Like industrials, 00:13:03.629 --> 00:13:05.870 financials, utilities. Yeah, those sectors tend 00:13:05.870 --> 00:13:08.190 to be more stable. Right. They're not as flashy 00:13:08.190 --> 00:13:11.070 as tech. Right. but they offer more in terms 00:13:11.070 --> 00:13:13.889 of dividends and other income generating characteristics. 00:13:14.009 --> 00:13:16.090 And that's appealing to investors in a time of 00:13:16.090 --> 00:13:18.330 uncertainty. Absolutely. You know, when the market 00:13:18.330 --> 00:13:21.190 is volatile, people tend to flock to safety. 00:13:21.509 --> 00:13:23.149 Right. They want to invest in companies that 00:13:23.149 --> 00:13:25.509 are going to pay them a steady stream of income. 00:13:25.710 --> 00:13:27.389 Right. And that's exactly what those sectors 00:13:27.389 --> 00:13:32.070 offer. Exactly. So the report's basically saying, 00:13:32.070 --> 00:13:34.070 you know, if you're overexposed to tech, Maybe 00:13:34.070 --> 00:13:35.570 it's time to take some profit. Maybe it's time 00:13:35.570 --> 00:13:37.610 to take some profit. And diversify into other 00:13:37.610 --> 00:13:40.230 sectors. Diversify into other sectors. Especially 00:13:40.230 --> 00:13:43.549 small and mid -cap stocks. Which might offer 00:13:43.549 --> 00:13:46.129 more attractive valuations right now. Right. 00:13:46.149 --> 00:13:47.929 They haven't run up as much as the large -cap 00:13:47.929 --> 00:13:49.830 stocks. Right. So there's more room for growth, 00:13:50.149 --> 00:13:54.009 potentially. Potentially. Yeah. So as we look 00:13:54.009 --> 00:13:57.149 ahead on the economic front, what are some of 00:13:57.149 --> 00:13:59.149 the key data points that we should be paying 00:13:59.149 --> 00:14:02.039 attention to? Well, the report emphasizes the 00:14:02.039 --> 00:14:04.740 importance of the upcoming JOLTA's report. Which 00:14:04.740 --> 00:14:07.919 stands for the Job Openings and Labor Turnover 00:14:07.919 --> 00:14:10.000 Survey. Right. It gives us insights into the 00:14:10.000 --> 00:14:11.840 labor market. How many jobs are open? How many 00:14:11.840 --> 00:14:14.019 people are quitting their jobs? Right. It's a 00:14:14.019 --> 00:14:15.940 good indicator of the health of the job market. 00:14:16.019 --> 00:14:18.159 Yeah. And then we've got the ISM surveys. For 00:14:18.159 --> 00:14:20.559 both manufacturing and services. Which give us 00:14:20.559 --> 00:14:24.159 a snapshot of business activity. Right. Are businesses 00:14:24.159 --> 00:14:26.860 expanding? Are they contracting? What are their 00:14:26.860 --> 00:14:28.620 expectations for the future? Right. It's a good 00:14:28.620 --> 00:14:31.299 way to gauge the overall sentiment in the business 00:14:31.299 --> 00:14:33.259 community. Yeah. And then of course we've got 00:14:33.259 --> 00:14:35.639 the trade balance figures. Which tell us how 00:14:35.639 --> 00:14:37.419 much we're importing and exporting. Right. And 00:14:37.419 --> 00:14:38.899 that's important because it gives us a sense 00:14:38.899 --> 00:14:41.370 of the strength of the global economy. Right. 00:14:41.649 --> 00:14:43.710 And then last but not least, we've got the monthly 00:14:43.710 --> 00:14:46.669 jobs report. The big one. The big one. Everybody's 00:14:46.669 --> 00:14:48.149 watching that one. Everybody's watching that. 00:14:48.210 --> 00:14:50.009 Yeah. It tells us how many jobs were created. 00:14:50.269 --> 00:14:52.269 What the unemployment rate is. What the unemployment 00:14:52.269 --> 00:14:54.789 rate is. What wages are doing. Yeah. So it's 00:14:54.789 --> 00:14:57.570 a really comprehensive look at the labor market. 00:14:57.889 --> 00:15:00.129 And all of these data points are going to be 00:15:00.129 --> 00:15:02.929 crucial in gauging the underlying strength of 00:15:02.929 --> 00:15:04.750 the economy. Absolutely. And they're going to 00:15:04.750 --> 00:15:07.860 heavily influence market expectations. regarding 00:15:07.860 --> 00:15:09.919 future actions by the Federal Reserve. Right. 00:15:09.960 --> 00:15:13.360 So if the data comes in strong, the Fed might 00:15:13.360 --> 00:15:15.700 be more likely to raise interest rates, which 00:15:15.700 --> 00:15:18.460 would be bad for the stock market. Generally 00:15:18.460 --> 00:15:20.840 speaking, yes. But if the data comes in weak, 00:15:21.399 --> 00:15:23.980 the Fed might be more likely to pause or even 00:15:23.980 --> 00:15:26.320 cut interest rates, which would be good for the 00:15:26.320 --> 00:15:28.889 stock market. Generally speaking, yes. So it's 00:15:28.889 --> 00:15:31.970 a delicate balance. It is. And the Fed is trying 00:15:31.970 --> 00:15:35.169 to walk this tightrope. Between controlling inflation. 00:15:35.470 --> 00:15:37.470 And supporting economic growth. And it's not 00:15:37.470 --> 00:15:40.669 an easy job. It is not an easy job, no. No. All 00:15:40.669 --> 00:15:43.389 right, so let's switch gears now. OK. And talk 00:15:43.389 --> 00:15:45.789 about the political landscape. Let's do it. Which, 00:15:46.009 --> 00:15:48.970 as always, is very interesting. There's always 00:15:48.970 --> 00:15:50.629 something going on. Always something going on, 00:15:50.690 --> 00:15:54.549 yeah. This is a news rundown from early April. 00:15:54.549 --> 00:15:57.070 OK. From Electoral Vote News. It covers a lot 00:15:57.070 --> 00:15:58.710 of different topics. A lot of ground to cover. 00:15:59.049 --> 00:16:02.149 A lot of ground to cover, yeah. But one of the 00:16:02.149 --> 00:16:04.470 first things that they talk about is these election 00:16:04.470 --> 00:16:07.649 results out of Wisconsin, which were held on 00:16:07.649 --> 00:16:10.429 April 2nd. And the Democrats actually did pretty 00:16:10.429 --> 00:16:13.009 well. They did. They won some key races. Yeah, 00:16:13.090 --> 00:16:14.809 they won a seat on the state Supreme Court. Which 00:16:14.809 --> 00:16:17.629 is a huge deal. It is a huge deal. Because it 00:16:17.629 --> 00:16:20.379 flips the balance of the court. From conservative 00:16:20.379 --> 00:16:22.240 to liberal. From conservative to liberal. Which 00:16:22.240 --> 00:16:24.440 could have major implications for a lot of different 00:16:24.440 --> 00:16:27.639 issues. Yeah, things like abortion rights. Voting 00:16:27.639 --> 00:16:30.200 rights. Districting. All sorts of things. All 00:16:30.200 --> 00:16:33.639 sorts of things, yeah. And the candidate who 00:16:33.639 --> 00:16:36.559 won. Susan Crawford. Susan Crawford. She defeated 00:16:36.559 --> 00:16:38.899 the Republican candidate. Brad Schimel. Brad 00:16:38.899 --> 00:16:41.940 Schimel by a pretty comfortable margin. 55 % 00:16:41.940 --> 00:16:46.440 to 45%. 55 % to 45%. Yeah, and this race was 00:16:46.440 --> 00:16:48.990 really interesting because it attracted A lot 00:16:48.990 --> 00:16:51.870 of attention. And a lot of money. And a lot of 00:16:51.870 --> 00:16:55.289 money. Over $90 million was spent on this race. 00:16:55.610 --> 00:16:59.570 $90 million? That's a lot of money. It is a lot 00:16:59.570 --> 00:17:02.230 of money. For a state Supreme Court race. Especially 00:17:02.230 --> 00:17:04.789 for a state Supreme Court race. Yeah. And a lot 00:17:04.789 --> 00:17:07.009 of that money came from outside groups. Yeah. 00:17:07.190 --> 00:17:09.109 Including Elon Musk. Elon Musk, yeah. He was 00:17:09.109 --> 00:17:12.529 a big supporter of Brad Shimmel. He was. And 00:17:12.529 --> 00:17:15.990 so the fact that Crawford won, despite all of 00:17:15.990 --> 00:17:19.049 that outside spending, Is significant. And significant. 00:17:19.170 --> 00:17:20.730 It suggests that money isn't always everything 00:17:20.730 --> 00:17:23.309 in politics. Right. Sometimes voters just don't 00:17:23.309 --> 00:17:24.849 like the candidate. Right, or they don't like 00:17:24.849 --> 00:17:27.410 the message. Right. Or they're just not persuaded. 00:17:27.529 --> 00:17:29.430 By all the advertising. By all the advertising, 00:17:29.490 --> 00:17:32.230 yeah. And this race also had really high turnout. 00:17:32.470 --> 00:17:35.349 Which is unusual for a spring election. It is 00:17:35.349 --> 00:17:37.630 unusual. Yeah, people are usually not that engaged 00:17:37.630 --> 00:17:39.930 in politics. In the spring. In the spring. But 00:17:39.930 --> 00:17:42.849 this race was clearly important to a lot of people. 00:17:42.890 --> 00:17:45.170 It was. And they turned out to vote. They turned 00:17:45.170 --> 00:17:48.230 out to vote, yeah. The report kind of speculates 00:17:48.230 --> 00:17:51.710 on why that might be. Well, part of it is just 00:17:51.710 --> 00:17:53.849 that the stakes were so high. Right. This is 00:17:53.849 --> 00:17:56.890 a really important race. With implications for 00:17:56.890 --> 00:18:00.089 the 2024 presidential election. Exactly. Wisconsin 00:18:00.089 --> 00:18:02.990 is a swing state. It is. And so the outcome of 00:18:02.990 --> 00:18:05.589 this race could have a big impact on who wins 00:18:05.589 --> 00:18:09.160 the state in 2024. Absolutely. And then the other 00:18:09.160 --> 00:18:10.779 thing that the report talks about is the sort 00:18:10.779 --> 00:18:13.619 of backlash against Donald Trump. Yeah, there's 00:18:13.619 --> 00:18:15.799 a sense that some voters are just tired of Trump. 00:18:15.960 --> 00:18:17.880 Tired of the trauma. Tired of the chaos. Tired 00:18:17.880 --> 00:18:20.019 of the negativity. Right. And they're looking 00:18:20.019 --> 00:18:22.279 for something different. They're looking for... 00:18:22.079 --> 00:18:24.539 A return to normalcy. Yeah, a return to normalcy. 00:18:24.599 --> 00:18:26.920 And so they're voting for Democrats. Right. Because 00:18:26.920 --> 00:18:29.579 they see Democrats as the party of normalcy. 00:18:29.779 --> 00:18:32.000 The party of stability. The party of sanity. 00:18:32.180 --> 00:18:34.619 Yeah. At least in comparison to Trump. At least 00:18:34.619 --> 00:18:36.380 in comparison to Trump, yeah. So that's kind 00:18:36.380 --> 00:18:38.000 of the theory. Yeah, and it's an interesting 00:18:38.000 --> 00:18:40.220 theory. It is. And it'll be interesting to see 00:18:40.220 --> 00:18:42.819 if it holds up in other elections. In other states. 00:18:42.900 --> 00:18:47.480 In other states, yeah. 2024. In 2024, yeah. So 00:18:47.480 --> 00:18:50.500 beyond the Supreme Court race, The Democrats 00:18:50.500 --> 00:18:52.980 also won the election for state superintendent. 00:18:53.940 --> 00:18:56.319 Jill Underly was re -elected. Jill Underly was 00:18:56.319 --> 00:18:58.700 re -elected. She defeated her Republican challenger 00:18:58.700 --> 00:19:04.619 by a smaller margin. 53 % to 47%. 53 % to 47%. 00:19:04.619 --> 00:19:07.359 Yeah, so it was a closer race. It was. But still 00:19:07.359 --> 00:19:10.640 a win for the Democrats. Still a win. Yeah. Now, 00:19:10.740 --> 00:19:13.480 the Republicans did secure one statewide victory 00:19:13.480 --> 00:19:16.480 in Wisconsin. They did. But it wasn't for a candidate. 00:19:16.750 --> 00:19:18.869 It was for a ballot measure. A constitutional 00:19:18.869 --> 00:19:21.009 amendment. Constitutional amendment regarding 00:19:21.009 --> 00:19:23.509 voter ID requirements. Right. And that passed 00:19:23.509 --> 00:19:26.990 by a pretty substantial margin. 63 % to 37%. 00:19:26.990 --> 00:19:30.670 63 % to 37%. Yeah. So there's clearly a lot of 00:19:30.670 --> 00:19:33.109 support for voter ID loss. Yeah. And the report 00:19:33.109 --> 00:19:35.829 points out that this support extends beyond just 00:19:35.829 --> 00:19:37.990 registered Republicans. Right. You know, a lot 00:19:37.990 --> 00:19:40.569 of Democrats and independents also support voter 00:19:40.569 --> 00:19:43.910 ID laws. We do. But the report also raises an 00:19:43.910 --> 00:19:45.650 interesting question about whether the evolving 00:19:45.650 --> 00:19:49.190 demographics of the two major parties might eventually 00:19:49.190 --> 00:19:52.190 lead Republicans to reconsider their heavy emphasis 00:19:52.190 --> 00:19:54.690 on voter ID laws. Yeah, it's an interesting point. 00:19:54.809 --> 00:19:56.730 You know, the Republican Party is becoming increasingly 00:19:56.730 --> 00:19:59.730 white. And older. And older. While the Democratic 00:19:59.730 --> 00:20:02.319 Party is becoming increasingly diverse. And younger. 00:20:02.700 --> 00:20:06.079 And so the report kind of speculates that, you 00:20:06.079 --> 00:20:07.700 know, at some point the Republican Party is going 00:20:07.700 --> 00:20:10.339 to have to appeal to a broader range of voters. 00:20:10.599 --> 00:20:12.180 If they want to win elections. If they want to 00:20:12.180 --> 00:20:13.559 win elections, yeah. And they're not going to 00:20:13.559 --> 00:20:16.099 be able to do that if they're alienating minority 00:20:16.099 --> 00:20:19.400 voters with voter ID laws. With voter ID laws, 00:20:19.599 --> 00:20:21.640 yeah. So it's something to keep an eye on. It 00:20:21.640 --> 00:20:24.779 is something to keep an eye on. Yeah. Yeah. We 00:20:24.779 --> 00:20:27.220 also saw some interesting results at the local 00:20:27.220 --> 00:20:30.960 level in Wisconsin. Right. Democrats won some 00:20:30.960 --> 00:20:33.640 key county executive races including an upset 00:20:33.640 --> 00:20:36.640 in Winnebago County yeah the Democratic candidate 00:20:36.640 --> 00:20:39.940 in Winnebago County defeated the Republican incumbent 00:20:39.940 --> 00:20:42.420 who had been in office for 12 years 12 years 00:20:42.420 --> 00:20:44.519 yeah so that was a big upset it was a big upset 00:20:44.519 --> 00:20:48.839 and the report attributes this victory to a couple 00:20:48.839 --> 00:20:51.700 of things. One is the unpopularity of the incumbent. 00:20:51.960 --> 00:20:54.140 He had been embroiled in a number of scandals. 00:20:54.140 --> 00:20:56.359 Right. And he was seen as being out of touch 00:20:56.359 --> 00:20:58.599 with the needs of the community. Yeah. And then 00:20:58.599 --> 00:21:01.299 the other thing is that the Democratic candidate 00:21:01.299 --> 00:21:04.720 ran a really strong campaign. She focused on 00:21:04.720 --> 00:21:07.720 issues like education and health care. Which 00:21:07.720 --> 00:21:09.740 are important to voters in Winnebago County. 00:21:09.940 --> 00:21:12.220 Absolutely. And she was able to mobilize a lot 00:21:12.220 --> 00:21:15.579 of support from young people and minority voters. 00:21:15.680 --> 00:21:17.819 Yeah. So it was a really impressive victory. 00:21:18.059 --> 00:21:19.759 It was a really impressive victory. Yeah, and 00:21:19.759 --> 00:21:22.619 it suggests that Democrats are making inroads 00:21:22.619 --> 00:21:25.500 in rural areas. Which is traditionally Republican 00:21:25.500 --> 00:21:27.960 territory. So that's a good sign for Democrats. 00:21:28.220 --> 00:21:31.460 It is. Yeah. The other interesting local race 00:21:31.460 --> 00:21:34.640 in Wisconsin was in Dane County. Which is the 00:21:34.640 --> 00:21:36.480 most populous county in the state. And the home 00:21:36.480 --> 00:21:38.940 of Madison. The state capital. The state capital, 00:21:38.960 --> 00:21:41.259 yeah. And the Democratic candidate for county 00:21:41.259 --> 00:21:44.779 executive won by a landslide. She got over 70 00:21:44.779 --> 00:21:47.599 % of the vote. Yeah, which is just a huge margin 00:21:47.599 --> 00:21:49.819 of victory. It is huge. Yeah. And that's not 00:21:49.819 --> 00:21:52.359 surprising given that Dane County is a very liberal 00:21:52.359 --> 00:21:55.420 county. It is. But it does suggest that Democrats 00:21:55.420 --> 00:21:58.380 are energized. And motivated. And motivated. 00:21:58.480 --> 00:22:02.380 To vote in 2024. Absolutely. Yeah. So the overarching 00:22:02.380 --> 00:22:05.180 interpretation from the report seems to be that 00:22:05.180 --> 00:22:08.940 these results in Wisconsin could be early signals 00:22:08.940 --> 00:22:12.180 of how voters might be reacting to a potential 00:22:12.180 --> 00:22:15.920 second Trump presidency. Yeah, there's a sense 00:22:15.920 --> 00:22:18.240 that voters are looking for an alternative to 00:22:18.240 --> 00:22:21.000 Trump. They want someone who's more stable, more 00:22:21.000 --> 00:22:23.839 predictable, more experienced. Right. And they 00:22:23.839 --> 00:22:26.420 see Democrats as offering that alternative. So 00:22:26.420 --> 00:22:28.460 it'll be interesting to see if this trend continues. 00:22:28.759 --> 00:22:31.880 In other states. In other states. 2024. In 2024. 00:22:32.059 --> 00:22:34.519 Yeah. All right, let's move on to Florida now. 00:22:34.519 --> 00:22:37.079 OK. Where we saw some special elections for House 00:22:37.079 --> 00:22:40.099 seats. Right. And the picture there is a little 00:22:40.099 --> 00:22:42.640 bit more mixed. A little bit. Republicans won 00:22:42.640 --> 00:22:45.450 both of the races. They did. But their margins 00:22:45.450 --> 00:22:48.190 of victory were much smaller. Than they were 00:22:48.190 --> 00:22:49.869 in the general election. In the general election. 00:22:50.029 --> 00:22:52.069 In November. In November, yeah. So that's raising 00:22:52.069 --> 00:22:54.250 some questions. About whether voters are starting 00:22:54.250 --> 00:22:56.990 to sour on Trump. Or on the Republican Party. 00:22:57.170 --> 00:22:58.650 Or on the Republican Party in general. Right. 00:22:59.230 --> 00:23:02.410 The first race was in Florida's first congressional 00:23:02.410 --> 00:23:04.809 district, which is a very conservative district. 00:23:06.069 --> 00:23:08.609 And the Republican candidate won. But he underperformed 00:23:08.609 --> 00:23:11.130 by 18 points. Compared to the Republican candidate 00:23:11.130 --> 00:23:14.450 in the general election. So that's a pretty significant 00:23:14.450 --> 00:23:17.069 drop off. It is. And it suggests that maybe some 00:23:17.069 --> 00:23:19.650 Republican voters are staying home. Or maybe 00:23:19.650 --> 00:23:21.410 they're voting for Democrats. Or maybe they're 00:23:21.410 --> 00:23:24.339 voting for Democrats, yeah. It's hard to say 00:23:24.339 --> 00:23:26.740 for sure. It's hard to say for sure. Yeah, but 00:23:26.740 --> 00:23:28.279 it's definitely something to keep an eye on it 00:23:28.279 --> 00:23:30.440 is something to keep an eye on Yeah, because 00:23:30.440 --> 00:23:33.119 if this trend continues it could spell trouble 00:23:33.119 --> 00:23:36.900 for Republicans in 2024 in 2024 Yeah, especially 00:23:36.900 --> 00:23:39.019 in swing states, especially in swing states. 00:23:39.019 --> 00:23:40.759 Yeah where every vote count where every vote 00:23:40.759 --> 00:23:43.799 counts. Absolutely The other race in Florida 00:23:43.799 --> 00:23:47.119 was in the sixth congressional district. Okay 00:23:47.390 --> 00:23:51.670 which is a more moderate district. And the Republican 00:23:51.670 --> 00:23:54.009 candidate won that race as well. But she underperformed 00:23:54.009 --> 00:23:56.769 by 19 points. Compared to the Republican candidate 00:23:56.769 --> 00:24:00.789 in the general election. So again, a pretty significant 00:24:00.789 --> 00:24:04.049 drop off. And again, it raises questions about 00:24:04.049 --> 00:24:05.670 whether voters are starting to turn away from 00:24:05.670 --> 00:24:08.509 the Republican Party. Yeah, maybe they're not 00:24:08.509 --> 00:24:10.609 happy with the direction of the party. Maybe 00:24:10.609 --> 00:24:12.950 they're not happy with Trump. Maybe they're just 00:24:12.950 --> 00:24:14.450 looking for something different. Yeah, something 00:24:14.450 --> 00:24:16.369 different. Yeah. So it'll be interesting to see 00:24:16.369 --> 00:24:19.069 how these trends play out in 2024. It will be 00:24:19.069 --> 00:24:22.690 very interesting. Yeah. We also saw a few mayoral 00:24:22.690 --> 00:24:27.369 races across the country. Okay. In Aurora, Illinois. 00:24:27.809 --> 00:24:29.650 Which is the suburb of Chicago. The suburb of 00:24:29.650 --> 00:24:32.130 Chicago, yeah. The Democratic candidate won. 00:24:32.789 --> 00:24:35.109 Defeating the Republican incumbent. Who was aligned 00:24:35.109 --> 00:24:36.730 with Trump. Who was aligned with Trump, yeah. 00:24:37.190 --> 00:24:39.890 So that's a good sign for Democrats. It is. It 00:24:39.890 --> 00:24:40.710 suggests that they're...