Investor's Edge with Gary Kaltbaum - The Next Leg?

Episode Date: September 13, 2022

Follow Gary on GaryK.com or http://garykaltbaum.com

At CVS, it matters that we're not just in your community, but that we're part of it. It matters that we're here for you when you need us, day or night, and we want everyone to feel welcomed and rewarded. It matters that CVS is here to fill your prescriptions and here to fill your craving for a tasty and, yeah, healthy snack. At CBS, we're proud to serve your community because we believe where you get your medicine matters. So visit us at CVS.com or just come by your food. store. We can't wait to meet you. Store hours vary by location. Investors Edge with Gary Cultbaum. Straight talk about you and your money. Now from the BizTalk Studios, here is Gary Cultbaum. So I hope you don't mind me starting off this great radio show.

That's also a podcast because podcasts have proliferated. I said the word, proliferated without stumbling the first time. So I am sitting here in my chair, in my office, it's four o'clock sharp. I turn to my right to look at the television and as always at 4 p.m. is Fox News Channel with the greatest business anchor in the history of business anchoring Neil Cavuto. And on this show, they just switched and they're going over today's market. But before that, they had Joseph Biden, the president of the United States. On the White House lawn, first they had James Taylor singing Fire and Rain. By the way, who doesn't love James Taylor?

A musician icon. of extraordinary proportions. What they are doing today is celebrating the Inflation Reduction Act. And as you know, and we pull no punches, they're lying. The bill is just a big gigantic spending bill where money is being handed to a guy in John Podesta, who is a democratic hack.

and when I use the term hack, that goes for the Republican side too. And what that simply means, he's a hack. He's a one-sided hack on the Democratic side, and he has his hands on 350 billion of our tax dollars to dole out on climate, an invisible BS that's going to go to nothing. productive it's going to be grants to friends affiliations lobbyists relatives peeps and nothing good some of that's gonna be tax credits hey go buy an electric car the taxpayer is gonna give you 7,500 bucks yay buy some solar panels

we'll give you some money taxpayer of course. But the irony and the ironic part of this, I just watch five minutes of Joe Biden. Everything he said was a blatant middle finger lie to the American public. Everything he said. As you know, there's no inflation reduction in this act. It's just all spending. They went into a room. The marketers and the politicos sat there and asked the question, what is our worst polling? And they said inflation, good, let's call it the inflation reduction. Screw with American public.

We'll just lie to them. And our side will be okay. Their side doesn't care anyhow. So we'll just lie. And then he's saying he's lowered the deficit. He's lowered the debt. Blatent lie. Blatent lie.

We know as a fact, all of it is, they spent an extra $2 trillion on COVID, and now that's going away. In case you don't know, the deficits can be $1.3 trillion in the fiscal year. That's after COVID spending. So Joe Biden is a liar. And I might even say the worst lying president we've ever had in history. And that's hard to come. I mean, that's after what we've had.

But I digress. He's doing this celebration of the Inflation Reduction Act when we had an inflation number today. And by the way, inflation numbers are moving targets. You know that. And what's interesting about today's number, more than anything, is that we told you in June, we said technically, technical, that the commodity inflation had topped. And we were right. In June, oil prices topped. And came down pretty decently.

Corn? Topped. Though it's been bouncing up a little, but still never got back. Wheat topped and badly. Copper? Big top. Bad top. How about cotton?

Topped. CRB indexed 19 commodities. Topped. And a lot of it's come down and we know energy is a big part of it. Yet, we came out with an inflation number. And just so you know, it's the core inflation. And I'm just telling you how they report it. It excludes food and energy. It came in much worse than expected. Much worse than expected. And I was listening to somebody on TV. Well, here was the reason why. People are paying more for rent. And some other things, I'm like, wow, so commodities? I thought commodities ruled the roost. Tomorrow we get producer price inflation. And we'll see what comes of that.

But under the auspices of it's not the news, it's how markets react to the news. and under the auspices of, remember what we've been saying to you, watch yields. Why? Let me give you the straight on that, on why it's so important. Jay Powell, our central banker, and we've done this a thousand times, creative massive asset bubbles because he printed up to $9 trillion. He got the European Central Bank to follow suit. Japan's been doing it all long anyhow.

We're talking not record amounts, but far, unbelievable amounts, where we called bubbles upon bubbles and we pose the question, well, if all bubbles popped and this time we had the most gargantuan money printing in history, could that possibly mean in the end? Well, we found out. A ton of bubbles are down 90 to 100%. There's 20,000 coins, I would guess, 90% of them are zero, if not more. The NFTs, the business is shot to hell. The marijuana stocks, the 3D stocks, the no sales stocks, the hunks of junk that we coined that phrase, the SPACs, the redempts, the redacts, the redacts, the redact. ridiculously price IPOs, all destroyed, bubbles. And we've been worried about the ultimate outcome during the bare market.

And we've had counter-tren rallies, and we've called all of them. Some lasted days. Some lasted a couple of weeks. Some lasted, I think the last one, lasted about six weeks until we had this drop recently. but never broke the lows. And over the last few days, we've been rallying up again. And you keep fingers crossed and you hope, knowing that, as we have stated, the big picture. And when we did our webcast last night, you know how we started our webcast while the market's been rallying?

With like 150 stocks that look like crap. And I stated, you know, there's probably a thousand of these. So we'll keep our eyes peered because there's a clear lack of. of leadership as we rallied up, but you always hope. And we have stated the one thing missing in this market is the real meltdown at the end. And we've been worried off the lows because we've had massive froth and speculation over the last few weeks. So we came into today every index back above the 50 day. Good news that has to stick. Up next, the bad news.

I'm Gary. This is the one only Investors Edge. Hi, I'm Gary Kalbaum, 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.

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That's 8-8-5-59. That's 888-4-2-2-2. 5559. Investment advisory services offered through call bomb capital management. Hello, hello. I'm Malcolm Gladwell, host of Smart Talks with IBM. I recently spoke with IBM's new director of research, Jake Embatta. We discussed his vision for the future of quantum computing. At IBM research, what we always do is answer what is the future of computing, whether it's coming up with new algorithms, coming up with better AI, coming up with quantum or coming up with just how do different accelerators go together. It's our DNA to answer

the question of what is the future. Isn't it a perfect problem for IBM because you kind of need to have a legacy of building stuff? Yes. Building actual physical machines. Yeah, it's why I came to IBM. I wanted the experience, the culture of building hard things that others have not done before. Where do you imagine we are in the timeline of this technology? There will come a point when it will mature. Right? My cell phone is a mature technology at this point. How far are we from that point with quantum?

By 2029, we'll build the first fault-tolerant quantum computer. That is one that can run a very, very large, large problem. To learn how IBM is building the future of computing, visit IBM.com slash quantum. Success starts with your drive, and American Public University is here to fuel it. With affordable tuition and over 200 flexible online programs, APU helps you gain the skills and confidence to move forward. Whether you're changing careers, starting fresh, or pursuing a lifelong passion, our programs are designed for people who never stop.

You bring the fire, APU will fuel the journey. Learn more at APU.APUS.edu. 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. So let me just read to you. I'm just going to read this to you. The Consumer Price Index report released today by the Bureau of Labor Statistics showed that prices on all items in the U.S. increased from last August. year over year 8.3% with the price of gasoline rising 25.6% year over year. Price of electricity, 15.8% year over the year. Price of food, 11.4% year over year. The report indicated that the 11.4% year to year increase in the price of food was the highest in 43 years.

The food index continued to rise increasing 0.8% over the month, month to month, as the food at home index rose 0.7%. The food index increased 11.4% over the last year, the largest 12-month increase since the period ending May 1979. Overall, the price increases from August to last year to August of this year were slightly less than the increases from July to July of last year. It's not the news. It's how the market reacts to the news.

It's one of our top five mantras, mottos. You know the other Motos. When wrong, be wrong fast, be wrong small. In bare markets, surprises happen to the downside. In bull markets, surprises happen to the upside. It's easiest to isolate strength when the market's weak. It's easiest to isolate weakness when the market's strong.

Some of our mottoes. There's a few others. The market wrap is brought to you by Investment Dash Models.com. That's Jim Roarback, one of the great market timers. no gray areas with the man you're either in or out of the market, but his proprietary indicators, go check it out. Investment-models.com. The Dow down 1,276 points. The S&P down 177.

The NASDAQ down 632. The NASDAQ 100 down 706. The SOX down 168. The transports 540. Advanced declines and up-down volume were gross. New highs picked up. excuse me, new lows picked up, hardly any new highs. And man, the last four to five days,

let's just say the NASDAQ 100 is almost back to that low that held. Remember that Wednesday we said we think maybe a low is being put in for now? Another counter trend. The NASDAQ is back to those lows. The S&P getting close. The Dow, almost all the way back to the low. of just last Wednesday. So that nascent rally after a 12 to 14% drop, excuse me, 10 to 12% drop,

just absolutely kicked in the teeth. We made, I'm trying to measure my words here. We may be headed back to the June, July lows here. And then of course, re-evaluate. But the big picture never really changed. It's been bare market with counter-trend moves with very narrow. How many times have we used the term narrow leadership even on the rallies? How many days have we said there's hardly any new yearly highs? How many days have we said it's mostly things off the lows trying it to repair themselves? Well, we've yet to scan, but I am looking at my screens. not very good. So I really have nothing great to add at this point in time, nothing

redeeming at this juncture. But hey, the president's out there telling you, don't worry, the Inflation Reduction Act is going to cure everything. The irony of him holding this today on such a day is stunning and I want to add something else that adds a little worry for me Ukraine is kicking Russia's ass there has been a thought process

and we don't think it's a wrong thought process that some of the inflation some of the market was just that but now if Ukraine is kicking Russia's ass I said ass twice now three times. Huh. The market still did this today.

The 10-year yield, 3422 now. It was a little higher during the day. I will tell you the old high was 3483. Let me see if this is a new closing high. Yeah, it is.

Let's see. Yeah, it's a new closing high for this cycle. In those days where we hit 3483, we close. lower. Let me make sure I got that right. No, I got that wrong. 3-4-8-3 is the high. If we break above that and higher, it forces the central bank's hand even more. And I'll post it again on my Twitter feed tonight. I have this little chart of central bank money printing and the markets, and you will see that direct correlation.

and now they are forced to do the opposite, catching my drift, liquidity up, taking liquidity way down. So not only did I lose my fantasy league because all the injuries I had this weekend during the games, but man, a real piss poor day. And again, I have nothing, nothing. I can say good about today's action. You know, some real bad days I can come out and say, well, but they got it all. And a fragile market already, with a not-so-great technical condition on an average stock crisis, with a clear lack of leadership, well, one of those mantras in bare markets, surprises happen to the downside. Oh, I'm surprised about today.

Not that we went down. That's a lot. Open wide, let it slide. And we'll see what tomorrow brings. We have another inflation report. All the people on Twitter saying the market's bottomed. And because this happened, the market's going to be higher at the end of the year. We'll pay attention to today.

Up next, more on the markets. News of the day. Whatever else today, I'm Gary. This is the one on the only Investor's Edge. Hello, hello, I'm Malcolm Gladwell, host of the podcast Smart Talks with IBM. I recently sat down with IBM's chairman and CEO, Arvin Krishna. And I asked him, how can companies use AI to its fullest potential to create smarter business? My one advice to that, pick areas you can scale. Don't pick the shiny little toys on the side. For example.

If anybody has more than 10% of what they had for customer service 10 years ago, they're already five years behind. If anybody is not using AI to make their developers who write software 30% more productive today, with the goal of being 70% more productive. Yeah. So we are not asking our clients to be the first experiment on it. We say you can leverage what we did. We're happy to bring out all our learnings, including what needs to change in the process,

because the biggest change is not technology, is getting people to accept that there's a different way to do things. To listen to the full conversation, visit IBM.com slash smart talks. Success starts with your drive, and American Public University is here to fuel it. With affordable tuition and over 200 flexible online programs, APU helps you get,

the skills and confidence to move forward. Whether you're changing careers, starting fresh, or pursuing a lifelong passion, our programs are designed for people who never stop. You bring the fire, APU will fuel the journey. Learn more at APU.apus.edu. OnDEC is built to back small businesses like yours. Whether you're buying equipment, expanding your team, or bridging cash flow gaps, on deck's loans up to $400,000 help make it happen fast.

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Investors Edge. He's got to be pleased with that. The crowd is just on its feet here. He's a Cinderella boy. With Gary Carl. By the way, I was rippin'all By the way, so, as you know, I was ripping biting at the beginning of the show for the lies,

just blatant lies. And, you know, after the last guy, you just don't want lying anymore, and they're just, this is really bad. So I mentioned James Taylor, and the irony of, you're supposed to be talking inflation reduction act and this, that, and the other thing. And you're supposed to celebrate. They're trying to celebrate it.

So they have James Taylor there, and they probably paid him with taxpayer dollars. They have them singing Fire and Rain. It's a song about suicide. And I'm thinking to myself, so not only do they lie, and I mean blatantly lie, they bring in James Taylor to sing a song about suicide.

So you say to yourself, yeah, so he's done everything wrong. It continues. Shouldn't they be bringing in what's celebrate good times tonight? Who sings that one? So I don't even know who. Anyway, so since it's a morbid day, let's discuss what we discussed. What days today? Tuesday? I think I did it Friday. Or did I do it yesterday at the end of the show? Boy, the days are going quick. One of our big worries, and we've done this before, but we have to do it again. Now, we believe that a decent part of the economy has been the wealth effect.

When Jay Powell reversed his raising of rates rightfully so in Christmas 2018, and then started money printing again October of 19 before COVID and then the printing of 9 trillion bucks up to he didn't do total of 9 trillion he started at a certain number and then went insane we believe that was part of the economy getting better the wealth effect and what do we mean by that well if your 401k goes up 100% because he prints nine trillion dollars up to nine trillion with Europe and the rest you feel wealthier right

of course you do if your regular account is going up if your house is going skyward you feel wealthier what are you more apt to do take some vacation spend a little more hey you know that car you're going to buy i'm going to buy the with the with the with the additional features. You're apt to spend more. Let's go out to that nice dinner this week. You're apt to spend more. The wealth effect. Millionaires became two times over. Billionaires became ridiculous. I've mentioned on this show, homes in San Francisco that were shacks were going for 900,000. People were jumping over each other to outbid each other on homes. I told you about what my house went up 40% in like four months.

Sell! I'm smart. We were going to move anyhow. Well, now we're seeing savings rates, plunge, credit card usage skyrocket. That's happening right now. Also happening right now is housing prices. So I'm looking right now. at a website, at a website, just housing prices in a certain area.

And here's what's showing up. And I'm starting with high priced. I'm not an elitist, but I'm making a point. Here's a house they're trying to sell for $2.6 million. But you know what it says? They just lowered the price $150,000. Here's one going for $1.9 million. Oh, but they just lowered the price $350,000.

Here's one going for 1.5 million. They just lowered the price $201,000. Here's another one going for $1.5 million. Just lowered the price for $100,000. Here's one in three. That's feeding on itself. What else is feeding on itself is days to sell. The reverse wealth effect.

Well, the NASDAQ's down, what, 26, 27% from the high, the reverse wealth effect. S&P's only down what, I think only down 15? 16, but a lot of growth mutual funds are down 30, 40, 50. If you're loaded up with Facebook, you're down 60. If you're loaded up with Netflix, you're down 75. The reverse wealth effect. If you have coins, I don't even want to go there.

So my worry, and it's a logical worry, If I'm right that a lot of the economy was the wealth effect, what about the reverse? Now, our central bankers are telling us they expect a soft landing, but I must tell you this, and I say this with no joy. I wouldn't trust them to tell us the time or the day or the month. Yes, that's a little bit of sarcasm, but I'm making. a serious point. One of two things,

either they don't have a clue or they're full of bull crap. Either one is not a good scenario. And today was a real bad day. And all I can tell you is if we get follow through and we head back to the June-July lows and break them, remember what we've said about,

bare markets usually have a third leg down, if not more. and usually the later legs are really vicious. We don't mention the VIX a lot, the volatility index. But that has never spiked. We'll watch that. Just a word to the wise, this little four-day nascent rally. That ended today.

And we'll see what the next inflation report is. But watch that 10-year yield if it goes over 3.5. That will not be good news. What's interesting right now I'm Googling two-year yield. You ready for the two-year? 3.75. Holy smokes. The three-month treasury bill, which was zero a year ago, 3.25. That's stunning. It's stunning. And I've not many, three words yet I don't think I've mentioned this once I will mention it for the first time in this bare market competition for money if you can now get 3.7% risk-free we think it's risk-free government stuff

on a two-year risk-free if you can get 3.26 on a three-month T bill and just roll them over competition for money. The market hasn't had to deal with that either. That's now come up. More on this. And whatever else. I'm Gary. This is the one and only investors' edge. Hello, I'm Malcolm Gladwell, host of the podcast Smart Talks with IBM.

I recently sat down with IBM's chairman and CEO, Arvin Krishna. And I asked him, how can companies use AI to its fullest potential to create smarter business. My one advice to them, pick areas you can scale. Don't pick the shiny little toys on the side. For example. If anybody has more than 10% of what they had for customer service 10 years ago, they're already five years behind it.

If anybody is not using AI to make their developers who write software 30% more productive today with the goal of being 70% more productive. Yeah. Wow. So we are not asking our clients to be the first experiment on it. We say, you can leverage what we did.

We're happy to bring out all our learnings, including what needs to change in the process, because the biggest change is not technology. It's getting people to accept that there's a different way to do things. To listen to the full conversation, visit IBM.com slash smart talks.

Success starts with your drive, and American Public University is here to fuel it. With affordable tuition and over 200 flexible online programs, APU helps you gain the skills and confidence to move forward. Whether you're changing careers, starting fresh, or pursuing a lifelong passion, our programs are designed for people who never stop. You bring the fire, APU will fuel the journey. Learn more at APU.APUS.edu. OnDec is built to back small businesses like yours. Whether you're buying equipment, expanding your team, or bridging cash flow gaps, OnDex loans up to $400,000 make it happen fast.

Rated A-plus by the Better Business Bureau and earning thousands of five-star trust pilot reviews. OnDec delivers funding you can count on. Apply in minutes at on deck.com. Depending on certain loan attributes, your business loan may be issued by On-Dec or Celtic Bank. On-Dec does not lend in North Dakota all loans and amounts subject to lender approval. You're listening to What are we waiting for? Well, what are you waiting for? One, two, ready, go. Action!

In The Wester's Edge. With Gary Kulpach. By the way, I do not watch award shows, but I love Kenan Thompson. Saturday Night Live. In case you don't know, he used to be on this show,

Keenan and Kel. I used to watch religiously when my kids were young. One of the great, brilliant talents on this earth. Brilliant. Has me in stitches at all times. He can just stand there and I'm laughing my you-know-what off. So he hosted last night.

So I decided to tape it. And what I do is I fast forward just about everything except him. I did not fast forward through Steve Martin and Martin Short, though. two other comedic geniuses, and they were in great form, as usual. But if you have a chance, watch Keene, just he's, I mean, we need some laughs, right? So if you have a chance, check him out. He's that good. I mean, just brilliance.

And you know, some people have to work at it. you know a comedic stand-up you work at it this guy's natural he's one of those naturals so I'm sure it's somewhere on the web you can go check it out I love him the coolest

I didn't really see who won anything but I heard something about Lotus something or other I may have to watch that it looks interesting it's only six parts I'm not into these long-winded ones As I told you, I just watched the offer. It was 10 episodes on The Godfather. Making the Godfather was fantastic.

I'm hearing this Lotus thing is pretty darn good. Let me see if I can figure out what the name of it was. Lotus TV show. The White Lotus. I guess people check into a hotel in Hawaii and all kinds of crap goes on. And I think Stifler's mom won an Emmy last night. You know Stifler's mom, right? And that's my entertainment portion of the show today.

Check out Keenan Thompson. It's just awesome. I would love to meet him one day. I don't have much else to expound on. Today was a real crappy day. And it was not Aunt Mary and Uncle Bob selling. It was the institutional crowd doing what I call a little more of the reckoning. the reckoning of what higher interest rates, a lying sack out of the White House

that all he's done is just created another gargantuan spending bill and screwing the taxpayer. By the way, you know what there really is no talk of, raising taxes on corporations coming out of pandemic and with an economy that arguably is in recession, if not worse, with the wealth effect going by-bye, we'll see. And just to give you an idea on,

today. Costco is down $29. Decker's outdoor down $24. Poole Inc. down $22. By the way, that's retail. Let's see what else I can find here. Old Dominion Freight down $15 today. Martin Marietta

Materials 15. Sherwin Williams 12. United Rentals, 18. World Pool 13. Chipotle, which has been strong. Down 46. Domino's $1,700. Domino's Pizza, 14.

In the Dow today, nothing was up. Microsoft down 14 today. And may I state for the record, Microsoft finished at close to yearly lows. Boeing down 11. Home Depot down 19. I just bought a refrigerator at Home Depot for my parents in New York. They were excellent. Maria at the Home Depot, the appliance part in Lake Mary, Florida, fabulous.

Goldman Sachs, 14, and that acted best on earnings that were down 40%. United Health. The HMOs were holding up, down 17 in the Dow. Do I need to go further or am I going to depress you more? Black Rock, important, down 52. to 644 down 7.5%. And on percentage basis, NASDAQ today, 5.16%. S&P, 4.33, Dow, 3.94. Did I get that right? Yeah.

Russell 2000, 3.90. The financials, 3.75. 3.77. The midcaps. 3.72. All right, I'm depressing myself. Anyway, we'll have one hell of a webcast tonight for our membership. If you'd like to join, go to Convictionleaders.com or GaryK.com. Press the button one month free.

We show you the roadmap. And due to the fact that we just went from the indexes up above the 50 data right back below in a nanosecond, it's not very good news at all. And again, we have yet to scan. It's going to be one hell of a scan tonight. And as I'm looking to my left and looking to my right, yikes. Again, we wish we had better news. But our big picture has never changed since last November.

Short-term moves aside. And every time we thought the short-term moves were over, we told you. Today was not hard to tell you. Again, wish we had better news. By the way, we'll be on with Charles Payne tomorrow at 2 p.m. on Fox Business Network. And until tomorrow, same time here, you have a great evening, drive carefully. And when you get home, do like we do. It's quite simple.

Make sure you hug your children. You hug your family. They will feel better. You will feel better. I promise. Exercise. Stay in shape. try to keep a smile on your face.

And as always, we're honored by your presence. Thanks for joining us. Peace out all. Bye-bye. 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. Success starts with your drive.

An American Public University is here to fuel it. With affordable tuition and over 200 flexible, online programs, APU helps you gain the skills and confidence to move forward. Whether you're changing careers, starting fresh, or pursuing a lifelong passion, our programs are designed for people who never stop. You bring the fire, APU will fuel the journey. Learn more at APU.apus.edu. Guys, it's no use putting it off.

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