Investor's Edge with Gary Kaltbaum - BEHIND THE CURVE AGAIN WEEK IN REVIEW [08.02.2024]

Episode Date: August 2, 2024

https://garykaltbaum.com/

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Investor's Edge with Gary Coltbaum. Straight talk about you and your money. Now from the BizTalk Studios, here is Gary Cultbaum. And welcome once again to Investors Edge. I'm Gary Coltbaum, your host. A thanks for being with us today. Glad you're here, ladies and gentlemen. Happy that you are listening.

It's Friday. It's August 7th. It's 2024. I'm flying out to New York tonight. I wasn't going to. I switched my mind 14 times because on Sunday We're getting like a, I don't know what the hell is going to hit Florida on Sunday. A tropical storm maybe turn into a hurricane.

Maybe it comes through central Florida. Maybe it's not, but I said, screw it. I'm on my way. Hey, thanks for joining. In case you don't know, this is serious talk about you and everything that affects you. And boy, right now we get a little bit more serious because we know what's going on out there. And we talk about everything. The markets, the economy, jobs, unemployment, tax.

taxes, deficit spending, scam, shams, corruption, you name it, we cover it. And if you do not get this radio show in your city, we'll post it at garyk.com. We'll also post it on our Twitter feed, which is now X. And if you don't follow us on X, you should. And we once had 90,000 followers. And then Bernie Sanders, one of his people, complained to Twitter before Elon Musk about us because we called Bernie Sanders economic policy communism. They shut me down for a day, and then when I came back up, I lost 60,000 followers.

Very weird. I've never tried to gain them back. You know, I don't even really work on it, but hey, we got 30 or 32 or something like that. Whatever. Okay. Let me try and explain. First off, the bad news. The Dow was down another 610.

The S&P was down 100. The NASDAQ was down 417. NASDAQ 100 down 450. The transport's down 430. the good news is the Dow was down over 900, the NASDAQ was down 5-fitt, you get the point it was a little bit off the lows. So what happened today? Well, whatever the market's been telling us got louder today. Remember what we have been saying to you here and we're going to be a little repetitive from yesterday.

We have been telling you interest rates have been plunging, which is fundamentally good news in that mortgage-referral. rates come down, auto loan rates come down, other things come down. Not going to help on your savings because the Fed's going to play catch-up, but on the whole, it's usually darn good news. But there's a problem right now. Jay Powell, the head of the central bank, is, in my belief, the most important financial person on earth. Let's state that for the record. Why do I say that? He had the ability and did print up to $9 trillion of money. It started like it forced. So he printed about $5 trillion come COVID time. But he was printing before that. And for me, I never thought anybody would have that ability, but he did.

And anybody who has that ability, that means, geez, I mean, the guy's powerful. So in a nutshell, listen carefully. And it's so important you understand. understand this, that I'm of the belief and we have been right, that the markets matter more than him. The markets lead. He lags. He was very important when he printed to $9 trillion because that created bubbles, distortions. People were getting 3% mortgages not because of the free market, but because he engineered it by printing money. So what happened was that created inflation. and what happened was inflation showed up. We're on radio every day, telling you every day, inflation, inflation, and you turn on the TV,

and Jay Powell's telling you inflation's transitory. Don't worry about it. We don't see any problem. Janet Yellen, no problem. Joe Biden, no problem. And then interest rates left him behind. What do I mean by that? the real market, the free market, the free market.

That's the buying and selling of the big institutions, the ones that are a hundred times smarter than me or Jay Powell, and they make these gargantuan bets based on what they're seeing and the people they have going out and getting a great feel. They saw the inflation and they were selling bonds off because, number one, they were normalizing because the Fed's out of the way, from printing. So interest rates start skyrocketing. Inflation gets out of control and J-Pow sat there. Picking his nose at 0%. It gets out of hand. Uh-oh. Well, maybe it's not so transitory.

We're going to raise rates. He raised at a quarter point and I'm like, this isn't going to do anything. The market swooned even more. Raised, raised, raised, raised, raised, raised. And all he was doing at the time, listen carefully, he was just playing catch up to the free markets. Remember, if all these people don't have us, they're screwed, but they think they're running the show and are in control. So finally, he gets caught up and finally realizes something must be done about this inflation or all hell is going to break loose. People are paying up crazy on so many products, and they can't stand it anymore.

well they came up with some bull crap oh the inflation reduction act which uh couldn't do uh cut anything down it was a lie it was just a big spending package and joe biden lied about and then came out afterwards and said yeah it really doesn't get rid of inflation but since he stopped printing money and interest rates normalized inflation normally comes down and that's what's happened the rate of inflation has come down but prices have not and you all know that because you're all out there buying things versus Janet Yellen and Jay Powell have their butlers buying things at the store and their drivers filling up the gas and their Bentley's. So he was behind the curve and finally caught up and he finally caught up,

raised his rate. And by the way, his rate is the Fed Funds rate. And all that is is a rate that banks deposit and lend to each other and they all do all kinds of business, but it really does matter. It indicates easier or tight monetary policy from this guy. Fast forward. The 10-year yield was 4.9% a bunch of months ago. He's at 5.5.5.5.

He's in line. Good. Interest rates come down to 4-7. He's still good. The 10-year yield goes to 4-5. He's still good. To be three-quarters of a point above, the free market is still okay. But then what happens? We're here on this radio show saying to you, hey, we'll just let you know,

the services numbers that are coming in are slowing down. The manufacturing numbers suck. We've had manufacturing numbers in recession while Joe Biden's out here telling you how great manufacturing is. And we know this because we see it out there. Okay, but we can have a bull market in jobs, slow manufacturing, a bull market and technology, and still be okay. But then rates come down a little bit more. And we're getting some more indications. What indications are we getting that amazingly, Jay Powell's not seeing? Well, what are we telling you on this show?

Starbucks, the ones we go to, businesses down 20, 25%. Okay. Maybe it's the two Starbucks I go to and then we find out what Starbucks comes out and says, what they said because their prices are too high. That's what they're blaming it on. But then Walmart, they only do $600 billion in revenue comes out and says they're worried about the consumer. You think they know? So we're getting all these tidbits. And while this is going on, interest rates are coming down even more to 4 and a quarter percent on the 10-year yield. And Jay Powell's doing nothing. and he's saying nothing

and we're here saying to you boy oh boy boy oh boy and every time we're on TV we're saying the same thing as long as the job market holds up I think we're okay but if it doesn't

oh man the credit card you should just skyrocketed all kinds of things on savings rates and then we enter this week and then we entered this week. Interest rates this week plunged from 4.2% to under 3.8%. Now, that may not sound like a lot to you. It's gargantuan in the bond markets. And normally we say to you, boy, interest rates are going down.

That's good news. Why? Mortgage rates, loans, things like that. But the problem is the interest rates. rates are definitively going down because the market, not anybody, not Jay Powell, the market is recognizing there is some economic trouble out there. The things we have been telling you, the little examples, the small sampling that we've been saying to you, may be coming to fruition. And recently they're hitting the semiconductors, which are in everything. And like something

like a mobile eye that semiconductors and autos crashes as a stock. And that takes us to today. Up next. Today. I'm Gary. This is the one only Investor's Edge. Hi, I'm Gary Colbaum, hosted a nationally syndicated radio show Investors Edge. We're not just handsome radio people. We manage investors' money for a living, specializing in fee-based discretionary money management. No big commissions, just a fee on the assets that's managed. We also provide a full range of personalized services, including retirement planning, fixed income, and educational needs, all to assist you in achieving your financial goals. Understanding not all individuals have the same needs, we'll carefully evaluate your personal goals to determine a proper investment strategy. If your current approach to investing is not getting you to where you would like to be, call us to make an appointment for a complementary portfolio review.

The number to call is 888-422-559. That's 888-4-22-55-9. That's 888-4-2-2-5-5-9. Investment Advisory Services offered through Call Bomb Capital Management. Guys, it's no use putting it off. The best time for an underwear refresh is now. Tommy John Underwear is designed for a perfect fit that stays put all day. There's zero-chafe thanks to four times more strong.

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every hour. Earn entries all month for your chance to win. Only at Muckleshoot Casino Resort, the biggest and best in the Northwest. It's time to switch on the integrator units and get the brain cells working. You're listening to. Hey, this promises to be fun. Investors Edge. The last bastion of quality programming. With Gary Coltbaum. It doesn't get better than this. By the way, real quickly, I have been mentioned to you people I think you should follow on Twitter.

They don't even know I'm saying it to you. I have no business relationship with them. I don't get paid a dime for it. There's a gentleman my name of Jeff Cooper. And just so you know, I've only met him a couple of times. And we're talking 20 years ago. I haven't seen him since. He was writing for this company,

trading markets.com when I was. The guy's brilliant. So on Twitter, it's Jeff Cooper Live. C-O-O-P-E-R-Live. That's his handle. Go check it out. I got to be honest, some of the things are just way over my head, but the dude is really good. Go check that out. So back to the working this out with you. First off, the way I'm explaining to you, I'm hoping it's coming across because I can't explain it any better. So Jay Powell is sitting at five and a quarter, five and a half on his Fed funds, and we're trying to tell you he needs to be closer to the market. He has to be listening to the market. But the problem is, and again, I'd say it to him, his face, again, these people think they're geniuses. They think they're flawless.

They think they're God. They've played God with the markets, printing to $9 trillion. No, there's no inflation. Everything's fine. fault it was everybody else's fault and we showed you as his fault anyway so yields are dropping like a rock and this week big time on wednesday he had a fed meeting they're Tuesday and he announced on Wednesday they're not making a move even though yields on the 10 year closed at 4.1 percent he's at five and a quarter dash five and

and a half but yields are at 4.1 and we're sitting there telling you that's not good why because he's the most important money man on this planet he's got the market wants him to be right not a doofus now let me stop there here's something i don't understand if little old me that has no other analysts going out to all these companies visiting restaurants and stores and speaking to the head honcho top dog big cheeses, I have none of that. But Jay Powell does. I'm not sure how many he has,

but I'm pretty sure he's got a couple of hundred people that work for him that go out to see the lay of the land on the economy that supposedly he's engineering. Well, the market's yelling at him. And now the job market, the best way I can explain to, here, I'm going to put it in layman's terms, feels like it fell off the ledge a little bit here.

I'm not going to say it fell off the ledge of the Grand Canyon. I'm just saying it fell off a ledge to another level. You had a really bad job market number today, much less than expected. And by the way, every month they come out with a jobs number. They're always changing it lower for the last year anyhow. The other worry, as we said to you, a lot of the jobs have been government, because Joe Biden likes a big government. So that job number had yields crashing again today. And what happened in the last two days? Well, as interest rates were coming down starting July 11th,

they start cracking the technology and buying up the small and the midcaps and the financials and the housing. Why? Because they're very interest rates sensitive. But what happened in the last two, days with the market getting a feel the market reverted from liking the interest rate sensitive areas and noting the interest rate sensitive areas went from that to oh on the economy and just because your interest rate sensitive doesn't mean

you should go up in price because if we go into recession I got new for you. The big banks and regionals that have been acting well, I'm sorry, they're going lower. Less business activity? Forget it. Housing stocks? The Home Depot's, forget about it. People tend to put off things. And what's happened in the last two days is those small and midcaps that house a lot of these things that were had the relative strength got smoked the financials that had the relative strength got smoked the technology continued down and everything economically sensitive you know how we tell you there's these certain names economically sensitive wise well they've smoked them all united rentals that's what's

we always mentioned to you, has gone from not making this up. 760 to 671 in the last two days. Caterpillar, 350 to 320 in the last two days. That's a Dow stock. Goldman Sachs has been leading the big banks. Two days. 514 to 470. J.P. Morgan, a little lower beta name.

uh, 214 to 199. And we had another big down day with a little recovery at the end of the day. And the other part of the equation, remember, we get everything out of the market. What is the market saying to us? Guess what we're strong today? Clorox, post-serial, Pepsi, smuckers, Coke, Merck, Merck, Procter and Games. Campbell. Why are those strong while everybody else is getting crippled? They are what is known as recession resistant. If we go into a softer economy, you still are going to get cereal, pretty much so. You're still going to get soda, pretty much so. Campbell soup. You need Clorox to clean Procter & Gamble with all the household stuff. Tobacco strong because some of you were addicted, not all of you, of course. To tobacco.

another indication from the market that it's really worried about the economy here managed care health maintenance organizations why would they be strong they get paid by the government a crap load of money no matter what boom guess what's really weakened oil why would oil weaken demand for stuff the transports and talk about all over the frickin' map. The transports were 16-334 yesterday. They're down 950 points from the high yesterday. What do the transports do?

They deliver everything. So the market has reverted to economic trouble, potentially, from interest rates coming down. What do I think happens next? That's up next. On this, the one-only investor's edge. Guys, it's no use putting it off. The best time for an underwear refresh is now.

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It comes highly recommended. You're going to feel better if you talk to him. So, I hate to say it. The problem for the markets is Jay Powell again. The most important man on earth in the financial business. That he's screwed up. We're talking markets. here for a second. We'll get to the economy in a second. He thinks he's smarter than the markets. I'm going to do what I want to do what I think, not what the market thinks. I just was on TV twice today and I told Neil Cavuto twice. If they gave me the job of running the central bank today, I would announce over the weekend that new information has come in. We are at five and a quarter, five and a half, but the 10 year yield is under 3.8 percent.

we have room we're taking five and a quarter five and a half to four and a half percent four and a half four and three quarters now there is a certain thought process which is not really wrong if he does that is that is that going to scare the crap out of the market in saying oh my god what's going on here versus hey he's on the game well i can't argue their point my answer is i really do not know but for the account economy, that's what's really a necessity. Because if the job market gets lost, let me explain the job market. Once it trends down, it usually trends down for a while and feeds on itself. Now, the problem is, as I have said, he can't control the economy. This guy, he thinks he can. One person can't control a $25 trillion economy. He can control the market. He can control the market. He can control the market. markets printing to $9 trillion. So we got to deal with some things going forward. And that is, well, the Yutz in the White House with his $35 trillion of debt. Well, he's not $35 trillion. Let's say he has $2 trillion year deficits. The 35 is going to $56, which is really $65 in 10 years. The first trillion is going towards interest, which is a huge headwin on us. Andy wants to raise taxes like a madman. But wait a minute. Joe Biden's no longer running anymore. Well, you got somebody worse. Joe Biden wants to take corporate rates to 28. She's saying 35, unless she flip-flops on that too. But let's go back again.

So a couple of things I think are going to happen here, and I'm pretty sure of this. You can mark these down. One, the central bankers, not Powell. There are a bunch of central bankers that are voting members and non-voting members, they will be coming out one by one talking tax cuts. Excuse me, rate cuts. Not rate cut, but rate cuts.

And they'll be also talking not just quarter a point, but a half point. That's number one. You know, as a registered in the financial industry, I can't guarantee you anything about any stocks. bonds, whatever. I can guarantee you the Mets will not win the World Series this year, though they're playing better. But I could also guarantee you that these central bankers will be out jawboning the markets in order to stabilize the markets. Jay Powell doesn't do that. He gets his people to do that.

That's number one. Number two, if markets stabilize. they'll be able to at least going to try to take it to September 18th, which is a long time, a long, long time before they cut rates. But if that is what occurs, they will telegraph not a quarter point, but more. If the markets don't stabilize and we are predicting nothing because we're in a little bit of no man's land now, If they don't stabilize, I expect some sort of what they call an intermeeting announcement or cuts. With the verbiage, though, everything's okay, but, you know, we're just making sure we want to solidify things.

But there is another problem. It's called the election. Politics. Well, we can throw that out now because the markets are yelling and screaming now. We were always wondering, will he really do anything right before the election? Because the September meeting is right before the election. Well, there's not going to be a choice if this continues and if is getting bold and capitalized now. So as you know, we sold all our tech.

and that's all we own was tech in stocks. Most on the 11th of July, the day it topped. A few days later, we sold our Apple and Amazon, thankfully, you know, we sold our Amazon around 190. It's 168 down 16 today. We sold our Apple at 228, but it's 220 right now. And actually was up five or six today. Only finished up a dollar and a half. I didn't even see that into the close.

They sold it a little bit. But acting pretty damn well. compared to everything else. We came in today 85% in cash in our fully managed accounts. And knocked out a couple of ETFs today. We have absolutely no idea what happens Monday, Tuesday, Wednesday, Thursday, Friday, and next week. There's another thousand earnings reports next week. We do not know what the Fed's going to say or do next week.

We really don't know. And unfortunately, and this is what sucks, we have to depend on what they're going to do, whether they're going to do it, when they're going to do it, how they're going to do it, what they're going to say and how they're going to say it. Unfortunately, that's why I think they should be gone. The technical condition of the market, though, and I have yet to do my full scans, and we're getting on a flight tonight to see my parents. The rock, my mom, is out of the hospital.

Amazingly so, though, you know, the downsides continues. and my grandson, which, by the way, I canceled my flight tonight, but they kept sending me pictures of my grandson. I said, screw this, I don't care about if there's a hurricane Sunday. Beautiful grandsons will do that to you. So we're just letting you know we have no idea. We're in a little bit of no man's land. What I will tell you is this. We keep a legal pad of stocks.

and the legal pad is big with a big list if stocks are good, a little list if stocks are bad. And then big lists turn into little lists if things worsen. Little list turns into big lists as things get better. I can safely tell you we crossed out a crap load of stocks on our legal pad in the last two days, starting with in financials, Bank America and Wells Fargo before today, but a bunch of, and Capital One, today, a bunch more. Any oils that were acting, good night, anything that was trying to come up the right side, bye, buy, and just, market's going to have to, well, we'll see what Jay Powell decides to do. We'll keep you informed, as we have said to you, it ain't going to be easy. Thankfully, the market took us out, and if it keeps going lower, we ain't going to feel it.

And if it turns, we'll deal with it. But, and very simply, and the way to explain this best, when Goldman Sachs drops 30, when J.P. Morgan drops 9, when United Rentals drops 45, when Cummins Inc. By the way, this is after yesterday's drop, when the strongest stocks are managed care, chlorox, and the type. Markets on defensive. And that doesn't mean it can't change swiftly, and we'll be ready to see if it changes swiftly. The other party equation is just so much now is below the all-important 50-day moving average, which means can't ascend, have to get back above before. for ascending and that's that now the best news is it's easiest to isolate strength when the market's very weak why because they end up being sore thumbs well guess what we're not going to

stop we're going to stay focused what stocks refuse to go down what stocks recently had strong earnings and acted well we're going to be on them Up next. What else do I got for you? I'll figure it out. I'm Gary. This is the one only investor's edge. Guys, it's no use putting it off.

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Tommy John, comfort perfected. This message is brought to you by the Capital One VentureX card. VentureX offers the premium benefits you expect, like a $300 annual Capital One travel credit for less than you expect. Elevate your earn with unlimited double miles on every purchase, bringing you one step closer to your next dream destination. Plus, enjoy access to over 1,000. airport lounges worldwide. The Capital One Venture X card. What's in your wallet? Terms apply. Lounge access is subject to change. See Capital1.com for details. This episode is brought to you by Spreaker. The platform responsible for a rapidly spreading condition known as podcast brain.

Symptoms include buying microphones you don't need, explaining RSS feeds to confused relatives, and saying things like, sorry, I can't talk right now, I'm editing audio. If this sounds familiar, you're probably already a podcaster. The good news is, Sprinker makes the whole process simple. You record your show, upload it once, and Sprinker distributes it everywhere people listen, Apple Podcasts, Spotify, and about a dozen apps your cousin's swears are the next big thing.

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One, two, ready, go. Action! So let's play this by the book. Number one, shorter term, it should be easily obvious that markets are very stretched and extended to the downside. That's number one.

Number two, the big dose of bullishness, it's going to turn into bearishness. The oscillators that we look at that we use in our file manager were extreme, read the other way July 11th. Remember we told you that? They're the other way.

now. So shorter term, anything is possible. But also, shorter term, it's going to be very news driven, very mouth driven, because what did I tell you, central bankers are going to be yapping away like there's no tomorrow. Unfortunately, they're not going to recognize that yapping away about lowering rates right now is just playing catch up to what the markets are already telling. And we'll just take that's the shorter term that's the trees the forest ill and just letting you know abercrombian fitch today down 10 dillard's department store down 23 deckers outdoor down 40 pool down 12 lulu lemon 13 target eight and some of these are less price so we're just letting you know these are what we're mentioning is pretty good moves the commodity area hit hard today why worry about commodities

well, demand. Demand. That's all. And of course, that anything reacts badly in the market to earnings. They get wiped out anyhow. Gold, well, we lost money on our latest trade on gold because I'm a doofus. And soon as I sold, it's back up because the scare trade. But it still has not broken out yet and was up strong early, finished down today. I'm not sweating it too much. It's not going to destroy my world. But we're affectionists. But just, ugh, what you're also going to hear is people like Janet Yellen telling you, don't worry, everything's okay. She couldn't tell you what day it is. So don't listen to a word she says. She wants $78 trillion in taxes to pay for climate. She gets zero credibility of my world. The administration is going to tell you, no, don't worry. Don't listen to a word. They have to say, we'll be watching closely. If the job market worsens, what have we told you in the past to each and every one of you? Make sure if you are an employee, that you are a go-to person at your firm, that you work harder and better and smart.

smarter than everybody else that's at your firm and they know it without you touting yourself. That way, if things really turn down, and by the way, we've had good recessions in the past, they cannot afford to lose your talent. You have to remember that. Muwi importante. And then end up you running the show. Japan. A little other way.

worry. Japanese stocks dropped 11% in two days. Do you know why? They raised rates a quarter point off of 0%. We have been worried about Japan. It got back to the old highs of like 30 years ago and you know how it got there? By keeping rates at zero and printing the crap loads of money and I've always questioned well what if that changes? A 11, 12% drop in the market because they raise rates a quarter point, which gives me a big hum, that didn't help. Germany, their GDP went negative. That's not good news. Europe, European markets, not acting well.

We already know China ain't acting well. Now notice, I didn't say we're going into a big bear market, did I? You notice that? I didn't say that. What I am saying is right now we're on defensive. We're off the highs. Some things worse than others. Some stocks very worse than others.

And we'll keep you informed every day. We have no clue about Monday. What else? Do you know there's a 23-floor Manhattan office building just sold at a 97.5% discount? Do you know that's going on at a lot of places across the country? And there's not a lot of talk about that. That's something I'm watching. Not making this up.

Across the country, we're seeing a lot of that. I don't know what it means, and I don't know who's holding the paper, and I don't know who gets hit. Do you also know 120-year-old furniture company, I believe it's Badcock shutting the doors. 380 U.S. stores, Badcock Furniture, and they're here in Florida. That's going on. Just little things. some things because of other things. Not blaming anybody.

Just making the statement. Do you know that retailers are offering major discounts now? They're not nice. They have to. Nike Under Armour, New Balance, Lulu Lember, Abercrombie and Fitch are offering 30 to 50% off entire stores. McDonald's, Wendy's, Burger King, Starbucks, Taco Bell, bought back $5 value meals. I saw somebody with a $4 value meal. Why?

These are the things we watch very closely and we try to put the pieces of the puzzle together. But there's no better puzzle to watch than the markets itself. And boy, did they speak up the last two days. And to repeat, we're no man's land at this second. We have no clue about next week. Zero. And we certainly have no clue if the Fed is listening to this show and says, that Gary Kay is not only handsome and buff, but has a good idea.

And they come in and do something next week. We don't know, but we'll be on top of it. You all have a great weekend. Wish we had better news. Really do. Drive carefully. And when you get home, do like we do. Quite simple.

Make sure you hug your family. Make sure you hug your children. They will feel better. You'll feel better. I promise. I'll be hanging with my grandson this weekend, which I can't begin to tell you how much in love I am. Until Monday, peace out, everybody. Again, appreciate the time and hopefully we're helping out a little bit. Good night. This has been Investors Edge with Gary Cult Bomb on BizTalk. To listen to past episodes or to get in contact with Gary, go to GaryK.com. That's GaryK.com.

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