Investor's Edge with Gary Kaltbaum - THE WEEK IN REVIEW [12.15.2023]

Episode Date: December 15, 2023

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 Colpom, I'm your host. A thanks of being with us today. Glad you here, ladies and gentlemen. Happy that you were listening.

It's Friday, December 15, 2023. Hope you're having a good day. Want to thank Adam Sarhan for doing the show yesterday. Get a lot of compliments from the audience. when he does because he is much nicer than I am. What can I tell you? And he stays away from a lot of things that I delve into. I can't blame him.

Actually a smart move, but I'm a little bit more insane. What can I tell you? It's Friday. Good week in the market. We're going to cover it. But first, 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.

If you want to follow us on Twitter, which is now X, you go to Twitter or X, put our name in and follow us or press the button at garyk.com and also at garyk.com. You can email me. Just be nice. Do you know why? If you hear pounding in the background, by the way, we just have gremlins here. That's all I can tell you. Just be nice because we're nice. It's pretty simplistic, okay?

Last night, we had a boys and girls clubs of Central Florida aboard Get Together at a gentleman's, by the way, his name of Brock Nicholas, if you ever meet this man, one of the great menches of Central Florida. and we were given out, it's a calendar, but it's also a big statistic thing of a Bob. In 23, we had 12,069 total club members, 83% eligible for free and reduced lunch, 63% families earning less than $40,000. A hundred percent of the club seniors graduated. 85% are attending college, vocational tech school or join the military. 97% of the members are promoted to the next grade. 71% earned 3.0 GPA or higher, 29% 4.0 GPA.

87% feel a strong connection with a trusted adult. 94% feel emotionally safe at the club. it was a magnificent stats, especially when, listen to this. Nationally, 75% of public school eighth graders are not proficient in math, and 70% are not proficient in reading. And as I'm reading this, I'm thinking to myself, you know, we have somebody the head of the teachers union, whoever it is. I know it's a woman, whatever, and the right hates her. That's not my point. I don't care. What I care about is how to hell do you have the same people running our education system? This is the United States of America. The biggest economy in the world. In case you don't know, our economy is, I think it's $25 trillion. I believe China's $18.

Japan is number three at like $4 trillion. How is it possible? 75% of public school eighth graders are not proficient in math and 70 in reading. And when New Jersey tried to get much more charter schools that have much better scores, New Jersey shot it down. Do you know what the first thing I would be doing as President of the United States? It's this. This can't be.

You know how they say there is a huge gap between the rich and poor? Do you know why that is? Schooling, education. And I'm reading these numbers, and I, Can't use the words I said when I read these numbers. More than a third of all American youth grow up without someone they consider to be a mentor. I don't think any of these politicians have done crap about this. Not a lick.

Have you seen it? Have you seen them talk about education? Somebody tell me, who is yelling and screaming about these numbers? I think some people are. Let me read that again. 75% of public school eighth graders are not proficient in math, and 70% are not proficient in reading. Now, I don't know what their definition of proficient is,

but this can't be good. We're up to 40 clubs now. 40 clubs. If you go to BGCCF.org, you can check out the program. grams that they have. And by the way, there's so many different chapters around the good old US of A. 75% of public school eighth graders are not proficient in math and 70% are not proficient in reading. Behind the eight ball before they even get started. That's what I was thinking about today. If I was president, what would I be addressing? You know what I'd be addressing.

There are a few things I'd be addressing. That would be one. The border two. I'd solve the border within a year. Three, every dime accountable. We just signed an $860 billion defense bill. Just 20 some odd years ago, it was only 300 or 250. The Pentagon has admitted in an audit they cannot account for a trillion or two in what they have

spent. Yet we just throw the money at them. 860. And you know me. Number one job of the government is to protect the citizen. So yeah, okay. Where the hell's the money going to? Accountable for every dime. And the next part of the equation, if I was president, I'd get off your butts. I'd get off your you know what. Leave you alone. You know. You ever go into a business. and see what the regulations are and what you can and cannot do and how you can and can do things. What do you think is telling you that? These Nekam poops in D.C. Anyway, I just had to start with that because I was just like,

I couldn't believe these numbers on reading and math. You know, with my sons, I'll tell you flat out. One son went to high school, public, went to, started, and there were fights every day in drug busts. I said, screw it. We just took him out, put him in private. My other son was in elementary school, and two kids bullied him and broke his arm.

And they didn't care. Move them to private school. Best thing I ever did. Best investment I ever did. I would be addressing that big time. Israel News. We tell you the good, bad and ugly, and we pull no punches any which way, the IDF by accident killed three hostages

that were running a certain way and they thought they were the bad guys. And, you know, I saw somebody say war as hell. I go more, I think it's just tragic, absolutely tragic. Two of the three presidents still have their job. And they're shooting the middle of the middle of finger at those colleges, at Jewish people. Up next, big week in the markets. We'll get right on them. I'm Gary. This is the one only Investor's Edge. Hi, I'm Gary Kallbaum, 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

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You bring the fire, APU will fuel the journey. Learn more at APU.apus.edu.edu. Today, we're exploring deep in the North American wilderness among nature's wildest plants, animals, and cows? You're actually on an organic valley dairy farm, where nutritious, delicious organic food gets at start. But there's so much nature. Exactly.

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It doesn't get better than this. And we'll once again to Investor's Edge. Okay. Let's walk you through it. From July to October 26th, the market was getting trashed. We had basically three legs to the downside from July to the end of October. During that time, the 10-year yield went from, let's call it 3-8. up to a high of five.

As yields rose, the dollar rose with it, the markets got trash to the point where 1,000 stocks were at new yearly lows. The Russell 2000 was at bare market lows? the Russell laden with smaller banks, smaller companies and beats the hell out of us, what else? The mid-caps were not far behind the small caps at New Yearly lows, but I do not think whether they had bare market lows. They were above bare market lows. in the couple of days leading up to November 1st, the 10-year yield started backing and filling. I take that back. I got to get my date right. On that 26th, you had a drop in yields, but on November 1st, that was the day where I considered yields

confirmed they wanted to go lower. How much I had no idea. How much I had no idea. But I thought we had a confirmation and the market had that confirmation day. And if you don't know what that is, you owe it to yourself to go look up the words, follow through day, confirmation day. it's just a characteristic that potentially can turn the market up. We came on the show that day and said these words. We had a confirmation day, a follow-through day. Just because you have one does not mean it will be successful. Every bull move started with one, but not every one of them led to bull moves.

the next thing we said is how will we know usually you get some serious selling within the first few days after one that tells you this ain't happening subsequently on november 2nd the 10 year yield opened up down big and the market started to get on the move that was a third Thursday, gapped up very nicely. Friday, gaped up again as yields dropped from 4.65 down to about 4.55. It was at that point in time where the yield sat for about a week. And then we had an inflation number on November 14th. And it came in friendly. So on November 14th, yields went from a high of 4.61 and finished at 4.44, the market gaped up. And what was moving best at the time? The small and midcaps. And let me explain why.

Because I haven't heard enough explanation. So you understand what exactly is going on. When the regional banks and the banks got trashed, it was because Jay Powell, with his taking rates down to zero, in order for these banks or anybody to make any little bit of money on their income investments, they had to go long-dated securities. If you bought a 10-year at the lows, you were getting 3 tenths of 1%. so all these banks and the regionals went very long dated and the longer you go out when things go awry and things go the wrong way and yield spike you can lose a lot of cake in the near turn

and due to the fact the inflation Jay Powell caused caused rates to go higher and had Jay Powell kicking and screaming because he didn't want to raise his rates he was forced to raise his rates even though the market the tail was wagging the dog so if these regional banks bank america had a 180 billion loss at one time i was reading on long dated and if you hold them to maturity you get all your money back but it's so far out long it takes a while to get it back but what happens when the bond market cooperates, does better? Well, that's what's happened. The 30 year has gone from 515 to 4.02.

That means the price of those bonds have gone up markedly in the last six to seven weeks. What does that mean to the banks? They're making back a ton of their money. What happens to their stocks? They go on their way. And where are those small banks in the Russell 2000, in a big way? And then the big banks, like a Bank America, what's that in? Well, that's the XLF.

The KRE is the regionals. And that's what's happening here. Simple as that. A crash, I call it a crash. I call it a crash and I use it nicely because it's yields. A crash in yields has these financial soaring. But what else was soaring? The most interest rate sensitive areas, the housing stocks and housing related.

So the housing stocks got going. The Home Depot's and the lows got going. Things got so crazy in the last week. a restoration hardware housing related gaps down 30 points on a 42 cent loss 14% drop in sales terrible guidance gaps down to 240 finished a 308 this week back up 68 points still way off the highs though why yields much lower again this week The yields went from 4-3 on Monday, 392 at the close today. Up next, we'll explain more. I'm Gary.

This is the one only investor's edge. 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.

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Investors Edge. He's got to be pleased with that. The crowd is just on his feet here. He's a Cinderella boy. With Gary Colbomb. It comes highly recommended. You're going to feel better if you talk to him. So, what else did the trick with yields?

Well, let me give you an example. Rocket Company, I'm just giving you one. I guess they used to be, maybe they were called Rocket Mortgage. I'm not sure. I've heard of Rocket More. Anyway, what it says about the company provides digital solutions to get a mortgage for homeowneress and financial freedom. Well, from the high in August, it went from 12 down to 7.

New Yearly Lows, one of those names. All the real estate stuff, all the mortgage stuff, was blasted. Why? Who the hell's going to even move homes? Remember what we told you? Jay Powell, another one of his distortions, and it continues to sicken me

that he gets any credit whatsoever for anything. Because he kept rates too low, People were just redoing their mortgages at three and less. Any new mortgages, three or less? And then at this point, who the hell wants to sell when mortgages are up at eight? I'm not selling my house that has 2.9% mortgage to buy another house. I don't care. I have to get 8%.

So the mortgage business went to hell. Rocket mortgage, 12 to 7. Yields go from 5 to 3.9. direct correlation Rocket mortgage has gone from seven to 13 and three quarters since the low at the end of October

other real estate investment trust did the same why because these companies are real estate and their borrowers boom they're in lies crash yields ramp market simple as that an unprecedented crash in yields in the short period of time did it and the question remains now how much lower yields are going to go are they going to bounce don't know but I'm letting you know the direct correlation is there and I am letting

you know under no uncertain terms. If yields, and just an if, we're going to start with the negative, if yields go back to four and a half or five, all bets are off. If they stay right here, good. If they go lower, better. That's the story. Always shape or form. Part of that also is the dollar. If yields go down, the dollar goes down. Commodities rally. Simple as that. The dollar's been rocked. Also, multinationals do better.

And that's what we've had happen. Now, there is a concept out there that the reason why yields in the oil are going down because it is presaging, telegraphing a bad recession. well here's how it will work listen carefully because if we pre if we presage a recession if we're getting one you know how we'll know we'll be on this show and tell you this rally we've had has hit the wall and we're going to start telling you whoops the rails are breaking down, the truckers are breaking down, the economically sensitive stocks are

breaking down, oh, that's breaking down. That's what we'll be doing. We can safely tell you we are not there at the close of today. And that is the story. Now I know you heard oh Wednesday

Jay Powell now is basically telegraphed three rate cuts and that's why this is going on. No. He would just be playing catch-up. It's been the free market. The free market is what's trashed the market because of his inflation.

The free market is what's rallying the market right now because inflation came down for whatever reason, though prices are still up. And there are a few questions I have. What if the yield market wakes up one day and realizes the government has to redo $7 trillion this coming year. Is that going to affect things? There's all kinds of things to be watching. But we're just letting you know the free market has done the job.

That's who does it. It did it when the market was trashed as yields went up. It's doing it now as it's come down and the market's gone higher. And as I always tell you, I have no idea what happens six months from now. It is December, and you know what you're going to be hearing from strategists. Their target for 2024, they don't know. They don't have a freaking clue.

Not a lick. And neither do we. You think I know where things are going to be at the end of 24? Somebody needs to tell me what I'm having for dinner tonight. But what we do is what we did on. November 1st we think the market's turning here we're not sure we need more cards coming out of the deck and another one of our famous lines but yields one plus one equals two just like in July we said oh so stay in touch be in touch and

though we've had this romp for six weeks do not think it's gonna be so easy as we move forward. They can make it easy for a little bit of time. They don't make it easy for a long bit of time. And again, we have no clue where things are going to end up in 24. We just know what's going on now. And if things change, we'll let you know. Now, we had triple witching today, options related. I got to tell you some weird action at four o'clock today, but that doesn't matter when all said and done and we do our scans, we do our screens, we drum, everything gets drummed out and we'll take a look. We will tell you there's some things in the market topping out. We can tell you that insurance stocks are topping out here. Manage care stocks are topping out.

Some strong drug stocks like McKesson, Eli Lilly, topping out. Some other medicals topping out. oils have not made it yet. They had a good day yesterday, but... Gold teased the breakout, but that ain't happening just yet. So when we do our scans this week, we will do them with no bias. Oh, in Hershey's... I don't know what's going on in Hershey's, but that's at a new yearly low. Again.

And, you know, it was interesting. You know, as I go through Publix, I check things out. After Halloween, they're giving two-for-one Hershey's out. though the bags are 30% higher than a couple years ago. So when we do our scans this weekend, we're going to do them without any bias, and we'll see what we can find. Now, where do we stand on a couple of things that I've noticed? The small caps and midcaps that went from new yearly lows up to new yearly highs

in a matter of six to seven weeks, they are now at massive resistance. So if I was doing the show yesterday, I would have told you we'll probably stall a little bit here. The best thing to happen would be to stall, pull back, not a ton, controlled, and then rifle through to the upside. Like, go to the high and then draw you over the next couple of weeks and then bust through the you to the upside. That's what you'd want to see. and that would mean rates continue to do what they cooperate and the banks and regionals keep on keeping on and then of course the third week of October it'll be earnings time but potentially guidance gets better now why why would guidance get better why would companies that maybe didn't have a great

core to say, well, things may get better. Oil prices and yields are down. Cost of capital, cost of energy. What better can you have? Especially if you like a cruise line or an airline. Up next, today's numbers. I'm Gary. This is the one only investor's edge. 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. APU.orgas.edu. Today, we're exploring deep in the North American wilderness among nature's wildest plants, animals, and cows?

Uh, you're actually on an Organic Valley dairy farm, where nutritious, delicious organic food gets at start. But there's so much nature. Exactly. Organic Valley's small family farms protect the land and the plants and animals that call it home. Extraordinary. Sure is. Organic Valley. Protecting where your food comes from.

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In The Gester's Edge. With Gary Culpa. Okay. So, the Dow was up 56. It was all in the last few minutes. It was triple witching. Things are all over the map. S&P was flat, though.

NASDAQ 52, NASDAQ 185 on the back of a few names. Transport's 100, but advanced declines 1327 on the New York, 1625 on the NASDAQ. Guess what that means? Mid-dips were down a percent. small caps were down almost a percent. So the broad market had a little pullback today. That's just fine. That's just fine.

Now, I didn't do my 1,500 stock scan yet. I'll do that later. What I am noticing going into next week, and when I say this, we say it with the words, we are not telling you to buy, sell, short a cover. We're just letting you know some things that really didn't do much this week have setups. And we'll see if they do next week. Amazon right at the highs.

Facebook getting close. Nvidia in that six-month trading range. Apple right near the highs. Even Tesla, which is not near the highs, is just above the 50-day moving average. looks like it wants to make a move. We'll see. If they start to move, well, there's some of the big caps. Big caps, those are the gargantuan caps.

And again, we don't know if they're going to move. We're just letting you know they're up that we call the tips. Tips meaning near their old highs. And we'll see. But I hope I explained it. Well, I think I did on why. and we don't mind doing the wise every now and then. We're big believers in price,

but there has been this such a one-to-one direct correlation between these yields and the market. And again, it was a crash in the yields. This is a crash. And that's good news. From July to the end of October, what's the opposite of a crash for something? So, soaring, and that's bad news. So to be watched very closely, if I had any worry, if I had any worry,

there's a lot of people on their comfy couch now. You know, we kind of tend to watch the masses and read about what they're saying and stuff, and all of a sun, oh, yeah. 24 is going to be great. Oh, yeah. Oh, yeah. Told you so. Six weeks ago, they were all on Xanax.

Russell 2000 again at bare market lows. Midcaps close. A thousand new yearly lows. Yeah, sure, everybody predicted this, right? We didn't. The only thing we said was we think the market's turning and we'll see what it has in store. So that gives you an understanding about what we're watching, what we've been watching.

Yields today were actually down a little on the 10 year and down a little on the 30 year. The dollar was stronger today. That did not help. The dollar also, not as direct a correlation, but pretty much in there. Now, we also get emails from people on the things I think. say on earnings. I go on this show and I say, oh man, stock was up big today, their earnings suck. That's still going on. And remember, when all is said and done, the market will, just remember, the market determines valuation. Not me, not you, the market. And at any given point in time,

it's reality. You know how they say something's overdone or undervalued or overvalued? We don't look at it that way. We believe whatever price something is at at that point, is what the market believes, and that's all that matters. But we're also in recognition as we go back to 99, as we watched stocks that had nothing double and quadruple, knowing that there's going to be hell to pay one day, well, if we start to think valuations out of hand, and just so you know, markets have a normal valuation,

price earnings multiple, usually within a certain range, And when it gets above that range, you got to think, okay, earnings better come on. When it gets way below that range, you're thinking, oh, value. So we're going to be watching because a lot of companies have earnings and sales down 50. Micron, the semiconductor stock is at a yearly high. Their sales are down 50% over the last year. Their business was cut in half. They lost crap loads of money, which means their value.

If you could even put a valuation to it when all four quarters have lost money. What if they don't start making money? What's the market going to do? Those are the things we're going to be watching for as we head into the new year. And we're looking for also guidance. Like Micron is expected to lose another dollar in the next quarter. Is the market finally going to say, screw you. there is that possibility

so just a lot of but just remember when we talk noise we're going to do our scans this week and we're going to find what we find and as we just said a few minutes ago we're already kind of in preparation knowing there's some mega cap names that have really done nothing

because the market went after small and midcaps and maybe they're going to get their turn maybe not don't know and as we go through our screens this weekend, we'll look for, okay, what else is possibly next? Or, as we said, manage care. Some of the drugs and stocks that have been working, other medicals, there are areas that are topping out.

Oil's not going anywhere. Don't need to own. So stay tuned. It's going to be an interesting end of year. And next. You'll have a great weekend. Drive carefully when you get home to like we do. Quite simple.

Make sure you hug your family. Make sure you hug your children. They will feel better. You will feel better. I promise. I'll be driving down the turnpike to South Florida tomorrow in the midst of rain and wind. I can't wait. Have a great one.

Everybody will be back Monday. Peace out all. Bye, bye. This has been Investor's Edge with Gary Cult Bomb on BizTalk. To listen to past episodes or to get in contact with Gary, go to Gary K. That's GaryK.com. 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. EDU. Today, we're exploring deep in the North American wilderness among nature's wildest, plants, animals, and cows? Uh, you're actually on an organic valley dairy farm, where nutritious, delicious organic food gets at start. But there's so much nature. Exactly. Organic Valley's small

family farms protect the land and the plants and animals that call it home. Extraordinary. Sure is. Organic Valley. Protecting where your food comes from. Learn more about their delicious dairy. at ov.c-o-op.