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INVEST LIKE BUFFETT | INCOME FOCUSED INVESTING $OMAH $QUSA
Recorded: May 7, 2025 Duration: 3:39:48Space Recording
Short Summary
In a dynamic discussion on Stocks on Spaces, participants analyzed the implications of the FOMC meeting, highlighting trends in market volatility, potential partnerships influenced by political statements, and the impact of economic indicators on crypto growth and yield opportunities.
Full Transcription
Thank you. Thank you. What's up everyone?
Good afternoon.
Welcome in to Stocks on Spaces.
We are early today because we are going to cover the entire FOMC live right here.
The decision will come out and then when Jerome Powell comes out, we will listen in on that for a little bit.
There are some headlines hitting right now. Most of you probably have your charts pulled up and are looking at it.
And you'll notice some volatility right now, a little pullback here.
Trump is making comments at the swearing-in of the U.S. ambassador to the People of the Republic of China.
The big comment he just made, not open to pulling back 145% tariff.
So no to potential, he said no to potential for pulling back tariffs on China. Trump on possible
Mideast ceasefire. You'll know in 24 hours. I've got him playing here on the other screen here,
watching that, watching some of the headlines. Let me work on getting some of these invites sent
out. We had a, space is like the last last 30 minutes because our other space had the same issue.
We had a couple of technical glitches, I think, that kind of rubbed some of these spaces.
So let me double check here real fast.
Blake, I saw you jump up here.
How are you today?
Doing well, guys.
How are we feeling on a big day?
Well, I don't know how I feel.
The only feeling I had was that Trump was going to try to come out and one-up Powell somehow.
And here he is sending us to the gulag.
He does before.
He just can't help it.
Can't let someone else have the spotlight.
No, never.
Yeah.
Not open to pulling back on 145% tariffs with China.
That's the headline that's causing this.
He said a few things there.
The other thing he did say,
they asked him about exemptions.
I believe Besant asked this in the Senate hearing, maybe for baby items or car seats, things like that.
He said, I don't know, he really didn't want to open that door, basically, is what it sounded like there.
So he doesn't want to put tariffs on and then start just exempting everything out. So I don't know if the market maybe is looking at that a little bit here,
but obviously that big headline right there was the not open to pulling back the 145% tariff,
which I guess makes sense in a way to say that, whether you believe it or not. When
you're going into the negotiations, basically this weekend, I heard this morning it was going to be Saturday over there in Switzerland.
Greer and
Bessette are going to meet
with China.
Blake, what's been on
your mind today? Anything hitting your radar
as you watch this?
I saw Disney earnings were good this morning, but
other than that, it's just kind of been
a little bit of a sell-off.
We bounced back, and then just that entire bounce back we had.
Trump just undid all of that.
Yeah, I mean, look, we're getting we're going to get this announcement here in the next, what, four minutes.
So and as we know, there's the there's the statement.
But the real the real show starts at two thirty when, you know, after we get the prepared marks, we go into the Q&A.
And that's where you start to really parse through and we'll overanalyze every single interpretation of a nuance and, you know, how he's, you know, what is his body posture and this and that and everything.
how he's, you know, what is his body posture and this and that and everything. I think it was
instructive for me last week on Thursday, Treasury Secretary Besson was commenting about looking at
the two-year yield. Now, if we back up, they've been talking about getting and hammering those
longer term rates down, right? You know, the big focus is on getting the tenure down.
And of course, what's happened is, you know, the reverse of what everyone was expecting
and yields have been moving higher, not lower, given the uncertainty and the equity sell
off and so on and so forth.
But if I'm taking Besson at face value and he's talking about the two-year yield, basically
what for those that didn't see his remarks, he was essentially saying that two-year treasuries are signaling the Fed should be cutting.
And the reason for that is if you think of the two-year yield as just, you know, eight quarters worth of Fed funds rates, right?
We're just kind of looking on the future.
It's like our market-based measure of where monetary policy should be. And he's arguing that, you know, the two-year yield,
which is about, at least as of yesterday, I didn't look this morning, but we're 68 basis
points below where the Fed funds rate is. So the market is telling us the Fed is essentially two,
is. So the market is telling us the Fed is essentially two, almost three cuts behind.
Now, again, the market's not always going to be in exact tandem with where policy is.
The bond market's been wrong quite a bit over the last few years. But if we're just taking
it at face value, two-year yield is roughly three cuts below where Fed funds.
And then I also think it's really...
And then we're one minute out to the print. Go ahead.
One minute out to the print. We're one minute away, so just-
And the other thing that's really on my mind is just like with inflation. Inflation at this point,
for me, is a non-issue. And if we're looking at like where the Eurozone, which has been cutting
rates a whole bunch for the last year, nine months from like four to I think two and
two and a quarter. And if you look at our interest rates, there is our inflation data.
It's about the exact same. They use this harmonized index of consumer prices.
We can use something like X shelter. And when you're looking at a comparable measure of them
cutting rates for a year, and we really haven't done much of anything since the token cuts we got last fall.
I just think that the risks are rising, that the Fed is continuing to fall behind.
And with all of this uncertainty with tariffs, I feel like they got to open the door right
now at this meeting.
All right, Blake, I'm going to cut it in right here because we're getting this.
Numbers are going to be coming out.
2 p.m. Eastern, initial market move is higher.
Unchanged.
Unchanged, there we go.
So as expected, now let's read into what's changed from the last report.
But as expected, leaving rates unchanged between 4.25% to 4.5%.
I'm seeing the note on here now.
Normally, the difference between the last one.
No descent.
Initial move on the markets.
I wish we would have been able to talk about this.
So, listen, everyone knew this was going to happen.
There was no summary of economic projections on this one.
This would kind of tell you,
the move here at 2 p.m. Eastern
shouldn't really matter too much to you.
And that 2.30 p.m. Eastern press conference
is really what we're looking for,
for listening to what Jerome Powell is going to to say i imagine we might get a trump trump is
speaking right now too for anyone who doesn't know he just he just finished i was calling out
those comments okay did you see that comment he made the uh not open to pulling back 145 percent
tariff was the big news uh headline that sent us down there.
Said risks of higher unemployment, higher inflation have risen.
Inflation remains somewhat elevated is some of the language there.
That last commentary that some of those risks have risen is a little bit new, which maybe makes me think there will be a little bit of a tone that's different.
Okay.
Although swing, there is
a lot of differences on this one, actually.
Give me a second. I want to get it
a little clearer way.
Nick Timrose is usually pretty quick.
If you look at his Twitter,
it'll show all the changes in the statement.
There's actually quite a number of them.
Yep.
Can someone
pin that to the top?
I'll find it.
He is known as the Fed
Whisperer.
What do they
call him for a while? Nicky Le there you go yeah well that's where the
that's where they would whisper things out to the fed whisperer i'm pinning that right now
you're good i got okay um all those swings and net net exports have affected the data
recently is something they added.
Insertainty, that's just a little bit different.
Outlook has increased further.
And the community is attentive to the risks that to both sides of its dual mandate.
And then they added this in and judges that the risks of higher unemployment and higher inflation have risen.
This is that's a little bit more of a hawkish comment.
Absolutely. And then they took out
something about their taking off the the that was really the only other commentary here that
was different the rest is about your kind of mortgage-backed securities and how that's going
to be a roll-off and also just some language at the bottom yeah that it's really that one headline
there is everything that this change was, and judges that risks of higher unemployment and higher inflation have risen.
That is the difference.
I think markets got to call BS on the inflation portion.
I mean, we all know tariffs will be inflationary up front, but that's going to have second order effects that are not inflationary.
The committee will continue to reduce holdings of treasuries and MBS at current pace.
So that's the $5 billion a month?
Is that what it was?
I believe that's correct.
I was hoping that they would actually take that all off the table at this point and begin
kind of QE in that way.
But here's the thing.
I just want to double...
...acted.
The language, the only thing...
...about...
Are we losing Evan?
Yeah, it is.
You rugged, yeah, rugged for just a second.
You're good now.
But yeah, so I...
Oh, you're ragging again
traders continue to see fed rate cut likely by july is what i'm seeing on the wires here now
if that's what they're saying then you already know we're one beta print away from June.
Stock talk.
What's cracking?
Can you guys hear me?
I can.
What's up? Okay, perfect.
Any initial thoughts here?
Nothing burger kind of.
Yeah, nothing burger besides that statement, like you just said.
I'm looking at what they're pricing in.
They're still pricing in three rate cuts, July being the most likely first one.
Yeah, like Logical just said, between now and then,
if we get another negative print, that probably means you get one in June.
Let's see the FedWatch tool.
Usually takes 10 minutes or so. I think it's 10 minutes behind.
Yeah, it takes a little bit to update.
So we'll hit that here in a few minutes as well.
I am curious to see how that moves. I don't know how much it'll move now because obviously it could look
much different after
Al speaks here in a little bit
with his purple tie and says good afternoon.
Yeah, going into Powell's
comments, we have
hold at
71% for June
and then cut at
55% for July.
So we'll see how those probabilities change.
I mean, it's kind of surprising to me that,
I shouldn't say surprising because it hasn't moved yet,
but I would expect the June odds to move up substantially
with that statement, to be honest.
Because if the Fed is willing to say that now, that means they're pretty close to getting to the point of acting on it, or else they wouldn't say it.
The Fed doesn't make explicit risk statements like that if they're not ready to react to them, because they understand the consequence of saying that.
We talked a lot last year, we were deeper in the cycle, about this idea of the Federal
Reserve using rhetoric as a tool, and they're cognizant of the impact of their words, or
cognizant of the impact of their words, or at least Powell is. And, you know, saying,
at least Powell is.
hey, we think there's higher risks to both unemployment and inflation. You can't just
make that statement and then be like, yeah, but there's no shift to our actual policy action path.
Those two things go hand in hand. So yeah, I mean, I would imagine that there's going to be a rate cut pretty soon if, you know, data gets any worse from here.
We still haven't even seen a lot of data or data for April when all of this stuff was even in here.
Yeah, that's the problem.
You know, like we were like, we were sort of using that as a defense.
Like people were saying, well, oh, well, the hard data hasn't fallen off yet, so the tariff policy must be working or isn't having the impacts that people think. But that's a really, really bad defense because the soft data, the survey data has been bad. The hard data has held up, yeah, but we've seen spots of weakness,
depending on which set of hard data you look at.
And that's all without any real tariff impact.
Like, you go through the earnings calls,
and yeah, some companies saw some Q1 impact.
So I have a question.
Do you think that that statement
is them anticipating what's going to happen?
I feel like a lot of people who don't like Powell
are going to say he's too late,
but is this them setting themselves up to maybe potentially cut right when they maybe should
or i mean yeah we'll see i don't know what the data is going to look like post cut but um
i feel like the data we get over the next couple weeks for april it's just going to be absolutely
wild maybe i'm wrong and it's just not going to have big of an impact,
but the amount of fear, uncertainty,
any survey, any like hard data,
like people pausing back,
I don't know how big of a change it will be,
but it feels like April
might be some interesting data
that if people do want to overreact to,
it's going to be a good month
for overreactions.
Market making new lows here.
Yeah, market is peeling off pretty hard here
um yeah yes that's not really where my line of thinking is though i think for me
this is the way it kind of goes down every time and if you studied past cycles
there's always like this uh you can call it like the last whisper of optimism before data falls
off a cliff. That's like almost universally true. You always see people like hanging on to the last
thread of hard economic data. Like, oh, well, look, the unemployment number still haven't
fallen off a cliff. And then you blink your eyes and two months later, there's an enormous drop off
in employment. That's how it happens. Like it, it never happens to where somebody is like, Hey guys, the economy is about to get weak. We should
get prepared for this. And then the economy gets weak. Like that's not how it works because people
don't know when this stuff is going to happen. And everyone wants to stay,
everyone wants to keep the momentum going. So people don't like to say the party's over before it's literally over in the hard data. And so it's really hard for both markets and the Federal Reserve to move
off of soft data. And that's sort of the position we're in right now. We're kind of in between a
rock and a hard place because I'm sure there's members of the Federal Reserve that are like,
hey, we are on the precipice of a recession. And there's other members of the Federal Reserve that are saying,
well, the data has not reflected that yet.
But of course the data isn't going to reflect it until you get the recession.
That's the hard part of the link between hard economic data and slowdowns.
It's really, really, really difficult to project.
And there's a lot of people on Twitter that think they're geniuses and they can tell you exactly when an economic slowdown is coming um you know sorry to
burst your bubble but no one can and not the best the best economists in the world can't do it
you know if they can't if they could they'd be hedge fund managers so um yeah the best you can do is wait for the Federal Reserve to react to this.
And that sounds shitty, but that's literally the best you can do.
You know, as an individual trader and investor,
there's not a whole lot you can do to, like, predict the policy path.
The CME FedWatch tool is going to tell you what's going to happen at each meeting,
you know,
roughly 72 hours before at least it's going to have 100% certainty of what's going to happen at a meeting.
It hasn't been wrong once this cycle.
So check the FedWatch tool going into the next few meetings and just hope that they
cut rates in time.
That's the best you can do at this juncture.
But yeah, I do think a rate cut is needed, especially if Powell's willing to make that statement.
And considering the impacts of tariffs,
that, again, this is where the lack of logic is to me,
is that people know what is going to happen.
Like, you know the procedural events
that are going to happen here from tariffs
if they stay in place,
but still people are refusing to acknowledge that until their hard data reflects
it. So I think that's a problem, but I can't really do anything about it because it's the
way it's always been. Yeah, it's interesting that they're calling out weakening private sector
confidence, and I think that's definitely a factor. They really have dual risks here.
They're calling out inflation still being at a relatively elevated level, risks of further price
increases driven by tariffs. And at the same time, while the labor market is looking pretty good
today, if you have weakening confidence, if you have a tough impact on these tariffs, you could be in a situation where the labor market is weak, but you also have prices growing.
And they're really still in this policy fog.
Nobody really knows quite how all of this is going to play out.
Things can do a 180 every day based on some random tweet Trump posts or something like that.
So it's really difficult for them, I think, to understand the balance of where this is going with the labor market,
with inflation and how they set policy.
I just wanted to jump into, I mean, it really feels like Fed, I mean, J-PAL is someone who
like waits for it to show up in the data.
And that's why he was late to inflation.
And, you know, maybe he's going to wait to see the hard data and be late to, you know,
a slowing economy, potential recession.
And, you know, maybe he's going to be criticized for that.
But, you know, that's the script that he's been sticking to.
And I don't see there's a reason why he would deviate.
What I could see potentially happening, I would say generally, though, he's been a pretty good chair.
I know he gets a lot of criticism, but I think he's handled it pretty well,
considering the insane exogenous shocks that the economy's had over the last few years.
What I could see happening happening because it seems like
their statement is, I don't know if hawkish is the right word, but I mean, they're still talking
about stagflation, which would definitely not be, is definitely hawkish. You know, if I'm a reporter
out there and I'm asking a question, I'd probably ask if you got some data between now and the, you know, if you get like a soft April CPI, if you get a week employment data print, I mean, does that change the calculus on, you know, when you expect your first rate cut?
And is June rate cut possible? I feel like Jay Powell's perfect response because he's really good at speaking and playing politics with his speech.
Powell's perfect response because he's really good at speaking and playing politics with
his speech.
Yeah, he's probably going to say, we'll continue to be data dependent.
And I feel like that market will probably proceed that pretty well.
I'm just kind of, you know, because that kind of confirms that they are willing to react,
you know, as needed.
And yeah, so one thought is also if they did like a rate cut today, which obviously they
weren't going to, nobody thought they were going to, but if they do cut too soon or they get too aggressive, we all know
that market would have probably ripped.
And that kind of reignites the fears of reflation and it kind of does harm to a lot of the progress
that they've done and they've been so patient with for some time now.
So I don't think they want to be quick to undo a lot of the progress
they've done which is why they're kind of waiting as long as they possibly can before doing it
before we go on to someone else and we can jump in i want to know i want to hear from everyone
else down below in that bottom right of your screen there's a purple six i want to know what
kind of a logical said there i want to know what question if you guys were asking jerome powell
question what you guys would uh would ask um and maybe what you think the answer might be but yeah I would love
to hear that in the bottom right of your screen that purple six I'd be
interested to hear what you guys are saying I'll read a couple of them out as
we get closer as well
and we're gonna be listening to that report in here I'm just gonna be
playing it live through here we might have a crying kid in the background or two,
but that is,
you know,
that just adds to the character and spaces.
If you ask me,
I don't have to blame now.
I was trying to blame it was Elon's kids the last time,
but who knows,
maybe I'm getting set up over here.
It could be a bring your kids to work day in the,
in the power press conference.
You never know.
It's also,
yeah.
So I just wanted to point out,
since we were talking about price action,
obviously equity is taking a quite a dive here.
Maybe stabilizing, maybe not.
But, you know, TLT was green all day and it actually spiked on this.
That typically means lower rates.
So bond market is telling you lower rates and, you know, maybe he walks that down or whatever.
But I'm just saying that's the initial reaction in the bond market.
What's the, what do we, what was the old saying around these FOMC events?
The first move is the right move every single time?
No, I don't think it was that.
I think it's the opposite.
That was a joke.
It is the opposite.
Are we closing the day higher today?
There's like three fake moves.
There'll be another move when Powell starts.
There'll be another move when he finishes.
There always is.
I had some commentary about, you know,
you're going to get absolutely no changes at 2 p.m. Eastern,
and there was a slight change.
I think that commentary, I take that comment,
that one-line change about, you know, higher risk and uncertainty
is actually a change at that 2 p.m. statement.
So maybe I trust this move a little bit more,
but also inverse Evan is a real thing on these spaces.
Let's not jinx the Knicks tonight.
13 minutes, so that comes out.
I think one more thing.
Amp, you were saying that just before this we had Trump comments about some China stuff, tariff deals.
Is that right?
And that's what kind of took the market lower.
They were asking questions when they were at that swearing in of the U.S. ambassador to China.
And they asked him one thing, the two things that stuck out.
One was the exemptions.
Asked him about exemptions for possible like baby items or car seats and things along those lines.
And his response was he did not want to start exempting things.
He didn't really want to open that door. The other comment was he was not open
to the 145% with China, which I guess that's what number we're back to at this point. He was not
open into budging on that either. The point I wanted to make was that equity markets reacted
to that. I want to say as much, if not even more so than the FOMC.
So it's pretty interesting that market is reacting more to the tariff narrative than
the Fed at this point, but maybe I'll eat those words, let's say.
It was more of a tell of what they were going to do, in my opinion.
Like he goes out and he's that brazen moments before the announcement.
They get a read on what's going to happen. Like he's that brazen moments before the announcement.
They get a read on what's going to happen.
Like he's not finding out when we find out.
So I think it was more of a I could be aggressive here.
Basically, I think so.
A couple of things. I think there's a real like below the surface, you know, battle between the administration and the Fed. And even if it's not
vocalized explicitly, you're going to constantly see things like this happen. That's number one.
Number two, this is not the same rate cycle like it was a couple of years ago or when we were cutting a year ago, this is more
driven by policy on the short run and then having to weigh the economic results of that policy.
So you're going to have an inverse reaction on the front side on an inflation standpoint where it spikes.
But the argument is it spikes from an economic standpoint is it spikes initially.
And then on the back end, it's actually deflationary.
But that shock on the front end with inflation being higher
kind of Fs up their dual mandate situation,
which is, I think the majority of what he's probably going to say
is we're going to stick to the data, we're going to be data dependent,
we're going to be data dependent.
But the data dependency here is not necessarily just economic data.
The wrinkle is the data dependency that we're going with
is how exogenous or how explicit the administrative effects are from a tariff standpoint, from a policy standpoint, from onshoring, from protectionism, etc.
So that's the rub here, in my opinion.
And then the secondary part of it is there's a populist movement with some of these policies that are happening, like wanting to onshore jobs, that labor data that we see, you know, where it's like an economic one.
Like, what's that lifespan of it? Because if they do actually onshore jobs, then there will be more jobs.
So they might be worse jobs. Right. But there will be, you know, in theory, more jobs down the pike. So that's like
the push-pull. And I just, the main thing I want to see from a takeaway here is I don't think,
I don't think Powell, I've been saying this for a few months now, I don't think Powell and the Fed
are going to be on the same timeline that the administration and particularly Trump want.
So I, you know, it's so far, it's like murky, kind of like in the shadows, battling between the lines stuff.
But how and when does it like take center stage?
And then now you have the administration battling a tariff front, trade front, and a Fed front, like explicitly.
And that's why I think things can get a little hairy.
So like the important part of the conversation to me today is when he's asked about, you know, tariffs, when he's asked about policy, when he's asked about Trump, when he's asked about all this stuff, is he as sharp?
all this stuff, is he as sharp, you know,
does he sink his teeth into it as aggressively as he did when he had that
morning conversation a few Fridays ago,
or does he navigate it like softly and just kind of like takes a, you know,
read between the line stance.
That's kind of like the thing I want to pay attention to.
You know, when I'm thinking back to previous fomc meetings
um i feel like he generally except for that one uh jackson hole meeting i think he generally has
taken this after to softer tone especially around trump 100 100 the the second exception was
again i think it was two fridays ago or not two, three Fridays ago, whenever they had that
economic interview that he had, and he was very sharp with how he worded things. And he was
basically saying, hey, I'm standing on my legacy. You're not going to F up my legacy because you,
that's like the read-through I got. I'm going to F up my legacy because you want to push things a certain way.
And he was a lot more direct
with how he said things, in my opinion.
So that's the thing.
I'm with you, Evan.
In these Q&As, he's often more measured,
purple tie, don't want to disrupt everything.
But at some point, if they don't cut because they want to stick to
that dual mandate and the administration wants them to cut so they have the ammo to lean into
some of these trade things that they want, I think there will be that battle. And so hopefully
he's still measured and he just uses the non-FOMC days to kind of say the sharp stuff, but we'll see.
All right, we're about seven minutes away, Stock Talk.
I want to throw it back to you, and then we can keep going around here.
But have you got any thoughts on what you're expecting
Jerome Powell to say here?
Maybe what question you would ask if you were going up there?
What would i ask i think the the hardest part about but where we are right now is the fact that the impact to
consumer goods the inflationary impact consumer goods, the inflationary impact of consumer goods, and are at odds with each other when it comes to monetary policy.
So I'm curious as to how he's going to attack that lack of balance.
He said previously that they may look at the balance sheet as a tool of responding to a slowdown in growth or demand while being more
patient on the rate cut side. I don't think that's the right decision, mostly because I don't think
that the QE, the expediting QE is going to provide the necessary support they need to subvert a recessionary impact.
So that's what he said before, but I'd like to see him be asked that maybe in a different way,
because, again, the reason the Fed is always late, it's not because of Powell.
People like to blame Powell. People are like, oh, Powell sucks.
That's why the Fed is always late. No, the Fed is always late in general because they're dealing with a
lagging data set, right? Like the economic data we get is generally at least 30 days lagging,
okay? So put yourself in the shoes of somebody who is trying to forecast what is going to happen on a forward basis and take action as
a consequence of that. But the only data available to them is backwards looking data.
That's a really, really hard job description. That means you have to say, I think the economy
is going to slow down before it actually slows down.
And you have to do that based on some sort of aggregation of the soft and hard data available
to you. But that's a really subjective decision to make. You know, if you're a third party,
you could say, well, I think there's maybe two months of room left in the labor market for strength, which means we don't have to cut at the next meeting, but maybe we'll cut at the meeting after.
That's playing it really close to the belt.
Like, you know, you're basically making a decision on the precipice of economic collapse.
And that's what happens every cycle at the end of the cycle, or at least the ones that have yielded a recession, because not every cycle has yielded a recession.
There's been like three exceptions. So outside of those exceptions, every other cycle has yielded some kind of economic slowdown.
And that's concerning, again, because it's a really hard balance to attack, or I should say lack of balance to attack.
hard balance to attack, or I should say lack of balance to attack. So yeah, I don't know. I don't
know what his decision is going to be. But I mean, based on the statement they made today,
based on the macro backdrop, I think it's probably time to cut rates. So I don't know,
he may really want to skip that June meeting, because the line of thinking for the Federal
Reserve is going to be, okay, if we cut in June and that's too early,
then we add to the inflationary impact from tariffs on consumer goods and we risk a second
wave of inflation combined with an economic slowdown, which everyone knows what that is,
that's stagflation. So they're trying to avoid that, but they're also kind of, you know,
missing what's happening in the background,
which is that, you know, clearly we are headed for a major economic slowdown if these tariffs
remain in place. And based on Trump's commentary today, you know, he was sounded pretty upset that
China said that he, he wanted the meeting. He was like, you need to reconsider that.
And he said he wanted to keep 145% tariffs in place. So I don't know what's going to come
out of the Switzerland meeting this week, but I assume they're still flying over there.
That's supposed to be on May 9th. So we'll see what happens. Maybe we get good news over the
weekend. Maybe they all parties fly out of Switzerland with no resolution whatsoever.
That'd be the worst case scenario. And in that scenario where they
leave Switzerland on May 10th and we don't have any positive headlines, I think markets will trade
materially lower because all of this optimism and this rebound that we've seen has been on the
speculation that negotiations are coming and that the environment for negotiations is going to
improve rapidly. And if that is not the case this weekend in Switzerland,
then I think markets would trade lower off of that.
So, yeah.
One thing, yeah, I want to cut in really quickly.
I want to give a shout out to Omar.
We have that William, my boy account up here.
This Omar is a great tech guy.
Somehow he got it.
So it's like actually going through the computer.
This is going to be the best sounding call in all spaces if anyone is listening else is listening to the drone power press
conference it's going to sound better on here thanks to homar's blog going to follow him great
guy great tech tips great test the guy so i just want to make sure uh give him a shout out for that
because whenever william my boy is in here no that's going to be the best sounding spaces
appreciate you omar logically got your hand up we do have like one minute so you're probably that's going to be the best sounding spaces. Appreciate you, Omar.
Logically, you got your hand up.
We do have like one minute,
so you're probably going to get cut off here.
Yeah, I just wanted to say,
like if we were talking about earlier with Wolfie,
like the Trump comments around tariffs are the reason why Fed can't cut or get softer.
Then like, why not just not be so tough
on some of these 145% numbers?
It's ridiculous.
I mean, he'd get what he wants.
It just seems silly to me at this point.
But anyways, I'll wait till the call.
Anyone have any predictions or anything?
I have an answer for that question real quick.
Because his goals aren't running
with the economic goals of rates.
That's why. So he's trying to do something that
moves separate from a rate thing. But the rates in their policy give him the ammo. So I'm going
to stop though because he's about to come out. give me good vibes give me an apple ipad maybe make an amazon purchase nike shoes during it
i think let's go all in american consumer
by the way if i'm looking at polymark, once he comes up, oh, there he is.
Purple tie.
Good afternoon.
Good afternoon.
My colleagues and I remain squarely focused on achieving our dual mandate
goals of maximum employment and stable prices for the benefit of the American people.
Despite heightened uncertainty, the economy is still in a solid position.
The unemployment rate remains low and the labor market is at or near maximum employment.
Inflation has come down a great deal,
but has been running somewhat above our 2% longer-run objective.
In support of our goals, today the Federal Open Market Committee
decided to leave our policy interest rate unchanged.
The risks of higher unemployment and higher inflation appear to have risen,
and we believe that the current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic developments.
I will have more to say about monetary policy after briefly reviewing economic developments.
Pardon me. Following growth of 2.5 percent last year, GDP was reported to have edged down in the first quarter,
reflecting swings in net exports that were likely driven by businesses bringing in imports ahead of potential tariffs.
This unusual swing complicated GDP measurement last quarter.
Private domestic final purchases, or PDFP, which excludes net exports, inventory investment, and government spending,
grew at a solid 3% rate in the first quarter, the same as last year's pace.
Within PDFP, growth of consumer spending moderated,
while investment in equipment and intangibles rebounded from weakness in the fourth quarter.
Surveys of households and businesses, however, report a sharp decline in sentiment
and elevated uncertainty about the economic outlook, largely reflecting trade policy concerns. It remains to be seen how
these developments might affect future spending and investment. In the labor market, conditions
have remained solid. Payroll job gains averaged to $155,000 per month over the past three months.
payroll job gains averaged 155,000 per month
over the past three months.
The unemployment rate at 4.2% remains low
and has stayed in a narrow range for the past year.
Wage growth has continued to moderate
while still outpacing inflation.
Overall, a wide set of indicators suggest
that conditions in the labor market are broadly in balance
and consistent with maximum employment.
The labor market is not a source of significant inflationary pressures.
Inflation has eased significantly from its highs in mid-2022,
but remains somewhat elevated relative to our 2% longer-run goal.
Total PCE prices rose 2.3% over the 12 months ending in March.
Excluding the volatile food and energy categories,
core PCE prices rose 2.6%.
Near-term measures of inflation expectations have moved up,
as reflected in both market and survey-based measures.
Survey respondents, including consumers, businesses,
and professional forecasters, point
to tariffs as the driving factor. Beyond the next year or so, businesses, and professional forecasters point to tariffs as the driving factor.
Beyond the next year or so, however, most measures of longer-term expectations remain consistent
with our 2 percent inflation goal.
Our monetary policy actions are guided by our dual mandate
to promote maximum employment and stable prices
for the American people.
At today's meeting, the committee decided to maintain the target range
for the federal funds rate at four and a quarter to four and a half percent
and to continue reducing the size of the balance sheet.
The new administration is in the process of implementing substantial policy changes
in four distinct areas, trade, immigration, fiscal policy, and regulation.
The tariff increases announced so far have been significantly larger than anticipated.
All of these policies are still evolving, however, and their effects on the economy remain highly uncertain.
As economic conditions evolve, we'll continue to determine the appropriate stance of monetary policy
monetary policy based on the incoming data, the outlook, and the balance of risks.
based on the incoming data, the outlook, and the balance of risks.
If the large increases in tariffs that have been announced are sustained, they're likely
to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment.
The effects on inflation could be short-lived, reflecting a one-time shift in the price level.
It is also possible that the inflationary effects could instead be more persistent.
Avoiding that outcome will depend on the size of the tariff effects,
on how long it takes for them to pass through fully into prices,
and ultimately on keeping longer-term inflation expectations well anchored.
Our obligation is to keep longer-term inflation expectations well anchored
and to prevent a one-time increase in the price level from becoming an ongoing inflation problem.
As we act to meet that obligation, we'll balance our maximum employment and price stability
mandates, keeping in mind that, without price stability, we cannot achieve the long periods
of strong labor market conditions that benefit all Americans.
We may find ourselves in the challenging scenario in which our dual
mandate goals are in tension. If that were to occur, we would consider how far the economy is
from each goal and the potentially different time horizons over which those respective gaps would
be anticipated to close. For the time being, we're well positioned to wait for greater clarity before
considering any adjustments to our policy stance.
At this meeting, the committee continued its discussions
as part of our five-year review
of our monetary policy framework.
We focused on inflation dynamics
and the implications for our monetary policy strategy.
Our review includes outreach and public events
involving a wide range of parties,
including Fed Listens events around the country and a research conference next week.
Throughout this process, we're open to new ideas and critical feedback, and we will take
on board lessons of the last five years in determining our findings.
We intend to wrap up the review by late summer.
The Fed has been assigned two goals for monetary policy, maximum employment
and stable prices. We remain committed to supporting maximum employment, bringing inflation
sustainably to our 2% goal, and keeping longer-term inflation expectations well anchored.
Our success in delivering on these goals matters to all Americans. We understand that our actions
affect communities, families,
and businesses across the country. Everything we do is in service to our public mission.
We at the Fed will do everything we can to achieve our maximum employment and price stability goals.
Thank you. I look forward to your questions.
Steve Leisman, CNBC. Thank you, Mr. Chairman, for taking my question.
A lot has happened since the last meeting. There's been terrorists put on,
terrorists taken off, and even though there's a bill advancing in Congress,
and I just wonder if I could press you on the last part of your statement. Are you any closer
now to deciding which side of the mandate is going to need urgent care first?
of the mandate is going to need urgent care first? Well, so as we noted in our statement,
post-meeting statement, we've judged that the risks to higher employment and higher inflation
have both risen. And this, by the way, of course, is compared to March. So that's what we can say.
I don't think we can say, you know, which way this will shake out. I think there's
a great deal of uncertainty about, for example, where tariff policies are going to settle out,
and also when they do settle out, what will be the implications for the economy, for growth,
and for employment. I think it's too early to know that. So, I mean, ultimately, we think our
policy rate is in a good place to stay as we await further clarity on tariffs and ultimately our implications for the economy.
Hearing you describe what you're looking for in terms of being able to make a decision,
it sounded like that's a long-term process before you sound like you're going to be comfortable or the committee would be comfortable to act on what the data is telling you.
I don't think we know.
You know, I think, look where we are today. We have an economy that if you look through,
you know, the sort of distortions in Q1 GDP, you've still got an economy that looks like
it's growing at a solid pace. The labor market appears to be solid. Inflation is running just
a bit above 2%. So it's an economy that's been resilient and is in good shape.
And our policy is sort of modestly or moderately restrictive.
It's 100 basis points less restrictive than it was last fall.
And so we think that leaves us in a good place to wait and see.
We don't think we need to be in a hurry.
We think we can be patient.
We're going to be watching the data.
The data may move quickly or slowly, but we do think we're in a good position where we
are to let things evolve and become clearer in terms of what should be the monetary policy
response.
Nick.
Nick can ask the role, speech, Colonel? Check out, there's actually a lot of GDP around 2021 in supply shocks.
But there are some who argue that the current situation has notable differences.
Energy costs are down.
Housing imbalances look nothing like they did four years ago.
Labor demand appears to be gradually cooling with wage growth running below 4%.
What do you see right now that could nourish higher inflation beyond a rise in goods
prices this year? I think the underlying inflation picture is good. It's what you see,
which is inflation now running a bit above 2%. And we've had basically decent readings in housing
services and non-housing services, which is a big part of it.
So that part, I think, is moving along well. But there's just so much that we don't know. I think,
and we're in a good position to wait and see, is the thing. We don't have to be in a hurry. The
economy has been resilient and is doing fairly well. Our policy is well positioned. The costs of waiting to see further are fairly low, we think. So that's what we're doing. And,
you know, we'll see the administration is entering into negotiations with many countries over
tariffs. We'll know more with each week and month that goes by about where tariffs are going to land.
And we'll know what the effects will be when we start to see those things.
So we think we'll be learning.
I can't tell you how long it will take.
But for now, it does seem like it's a fairly clear decision for us to wait and see and watch.
So when you say that you don't need to be in a hurry, does th
the outlook change in such
in your stance could be w
next meeting? You know, as
um, we are comfortable wi
We think the right, we're
and see how things evolve
need to be in a hurry. We
feel like it's appropriate to be patient. And when things develop, of course, we have a record
of we can move quickly when that's appropriate. But we think right now the appropriate thing to do
is to wait and see how things evolve. There's so much uncertainty. If you talk to businesses
or market participants or forecasters, everyone is just waiting to see how developments play out.
And then we'll be able to make a better assessment of what the appropriate path for monetary policy is.
So we're not in that place. And, you know, as that develops, and I can't really give you a time frame on that.
Janelle.
Janelle Marte with Bloomberg. So many economists have been pricing in higher odds of a recession, and several are noting that it is more difficult for the Fed to cut rates preemptively
given the higher risks for higher inflation. So given the outlook, do you still see a path for a soft
landing? And what does that look like? Well, let me say, I mean, so let's look back
and see where we are. So go through 2024 up to the day. We've had, you know, unemployment in
the low fours for more than a year.
We've had inflation coming down in the now in the mid to low twos. We've had an economy growing at
two and a half percent. So that is the economy as we see it now. What looks likely, given the
scope and scale of the tariffs, is that we will see certainly the risks to higher inflation, higher unemployment
have increased. And if that's what we do see, and if the tariffs are ultimately put in place at
those levels, which we don't know, then we won't see further progress toward our goals.
But we might see a delay in that. I think in our thinking, we would never do anything but keep achieving those goals.
But we would, at least for the next, let's say, year, we would not be making progress toward those goals.
Again, if that's the way the tariffs shake out.
The thing is, we don't know that.
There's so much uncertainty about the scale, scope, timing, and persistence of the tariffs.
of the tariffs. So that's that. In terms of preemption, you know, I think you can look back
So that's that.
at the 2019 cuts as preemptive. I wouldn't say that what we did last fall was at all preemptive.
If anything, it was a little late. But 2019, we did cut three times. But the situation was you
had a weakening economy and you had inflation at 1.6%. So that's
a situation where you can move preemptively. Now we have inflation running above target. It has
been above target for four years. It's not so far above target now. And we have an expectation
conditional on what happens that we'll see upward pressure on inflation. If you look at where
forecasters are, they're all forecasting an increase in inflation. So it makes it, and then we've also got, you know, forecasts of weakening
in the economy, and some have recession forecasts. We don't make a, we don't make a, publish a
forecast about that. We don't publish a forecast that assesses how likely a recession is. But
in any case, it's not a situation where we can be preemptive because we actually don't know what the right response to the data will be until we see more data.
Colby Smith with the New York Times.
How much weakness does the committee need to see, though, in the labor market and the economy more broadly to lower interest rates again? Is it about a certain increase in the unemployment rate over a period
of time or perhaps a certain number of negative monthly job reports? I mean, how are you making
that assessment? You know, so first of all, we don't see that yet, right? We have 4.2 percent
unemployment, good participation, wages behaving very well, participation, I mentioned
it at a good level. So, you know, with the labor market, we would look at the totality of the data.
We'd look at the level of the unemployment rate. We'd look at the speed with which it's changing.
We would look at the whole huge array of labor market data to get a sense of whether conditions
are really deteriorating or not. And at the same
time, we'd be looking at the other side of the mandate. We could be in a position of having to
balance those two things, which is, of course, a very difficult balancing judgment that we'd have
to make. On that point about balancing, I mean, you've mentioned that the committee would consider
how far the economy is from each goal and the time it would take to kind of get back to that point.
But what does that mean in practice?
I mean, how much of that assessment will be rooted in a forecast versus data dependence?
It would be a combination of the two.
I mean, let's just say this would be a complicated and challenging judgment that we would have to make.
And we're not in this situation, but the situation
is if the two goals are in tension. So let's say that unemployment is moving up in an uncomfortable
way, and so is inflation. Not the situation we're in, hypothetically, but we would look at how far
they are from the goals, how far they're expected to be from the goals, what's the expected time
to get back to their goals. We'd look at all those things and make a difficult judgment. And that's in our framework. It's always been in our thinking. We haven't faced
that question in a very long time. And so, again, difficult judgment to make. And not one that we
face today. And we may never face it, but we have to be keeping it in our thinking now.
face it, but we have to be keeping it in our thinking now.
Edward.
Edward Lawrence with Fox Business.
So we had the CPI report that came out that showed month over month the first decrease
in inflation in about three years.
The jobs report, you said solid, that we saw.
At the same time, we have those new tariffs that we're living under.
So given this, should the Federal Reserve be cutting rates at all this year?
You know, it's going to depend.
I think you have to just take a step back and realize this is why we are where we are,
is we're going to need to see how this evolves.
There are cases in which it would be appropriate for us to cut rates this year.
cases in which it would be appropriate for us to cut rates this year. There are cases in which it
There are cases in which it wouldn't.
wouldn't. And we just don't know. Until we know more about how this is going to settle out and
what the economic implications are for employment and for inflation, I couldn't confidently say
that I know what the appropriate path will be. So following on that, just, you know, so then how
does President Trump calling on you personally, as well as the Federal Reserve, to make rate cuts
affect your decision today and affect your job difficulty? Doesn't affect our doing our job at
all. So we're always going to do the same thing, which is we're going to use our tools to foster
maximum employment and price
stability for the benefit of the American people. We're always going to consider only
the economic data, the outlook, the balance of risks, and that's it. That's all we're going
to consider. So it really doesn't affect either our job or the way we do it.
Hi, Howard Schneider with Rututers, and thanks for the time.
I'm wondering, I mean, given the complexity about the first quarter GDP and what lies ahead,
I'm just wondering what your intuition tells you about the underlying direction of the economy right now.
Many of your colleagues have said they feel growth is slowing.
If so, do you have any sense of by how much, to what degree the slowdown may be?
What does your gut tell you about how things are evolving out there?
My gut tells me that uncertainty about the path of the economy is extremely elevated
and that the downside risks have increased.
The risk is, as we pointed out in our statement, the risks of higher unemployment and higher inflation have risen, but they haven't materialized yet.
They're really not in the data yet.
And that tells me more than by intuition, because I think it's obvious, actually, that the right thing for us to do is we're in a good place.
Our policy is in a very good place.
And the right thing to do is await further clarity.
And, you know, there's usually things clarify and the appropriate direction becomes clear.
That's what usually happens.
Right now, it's very hard to say what that would be.
In the meantime, the economy is doing fine.
Our policy isn't, you know, it's not
highly restrictive. It's somewhat restrictive. It's 100 basis points less restrictive than it was
in, you know, last summer. So we think it's in a good place. And we think the appropriate thing
is for us to wait and see and get more clarity about the direction of the economy.
Well, let me press you on this idea of the economy being fine, let on this idea of the econo now because reading the be
time around, there was a
stuff, negative sentiment
I know that everybody's l
right now. You mentioned
the sentiments sour. But
talking about, you know,
layoffs in some industries in prices rising in some places, and an awful lot of investment decisions being pushed to the sideline.
Doesn't that point to a slowdown?
It may well.
It just hasn't shown up yet.
And, you know, we all look at all these sentiments and read many, many individual comments just to get a better feel.
And, you know, businesses and households very broadly are concerned and, you know,
postponing economic decisions of various kinds.
And yes, if that continues and nothing happens to sort of alleviate those concerns,
then you would expect that to begin to show up in economic data.
It wouldn't maybe show
up overnight, but it would show up over weeks and months. And that may be what happens, but it
hadn't happened yet. And also there are things that can happen that will change that narrative.
I mean, they haven't happened, but it's possible to imagine things. But in the meantime, yes,
we're watching extremely carefully like everyone is, but don't see really much evidence of it in actual economic data yet.
And by the way, consumers keep spending credit card spending.
It's, you know, it's still it's still a healthy economy, albeit one that is shrouded in some very downbeat sentiment on the part of people and businesses.
Michael McKee.
Michael McKee from Bloomberg Radio and Television.
The Fed's been criticized recently by a former governor
for what he calls mission creep.
You take on more problems, use more tools,
and then end up building tools to deal with the fallout of those tools,
which then makes it a given that you will act more aggressively in the future.
Is that a fair critique?
And is that something you would be looking at
in your framework review?
Sorry, say the critique again?
That the Fed has been involved in mission creep,
gets involved in using too many new tools
to deal with problems and to go too far.
Is that something that the critique was based around the fact that you did
QE and QE and QE and went beyond the narrow confines of your mandate?
So, well, I mean, there are a couple that's not really beyond the confines of our mandate.
Look, I would say this. We, you know, we did things.
Essentially, we're on an emergency footing for a couple of years in the pandemic.
And it's very fair and very welcome for people to look back over what we did and say, hey, you could have done this better and different.
And one thing we hear a lot is we could have explained QE a little better.
We did think we were explaining it in real time.
I completely accept the thought that we could have explained it better. We did think we were explaining it in real time. I completely accept the thought
that we could have explained it better. There's a lot of thinking that we went on too long with QE.
I can tell you that the reason we did was we were concerned that we didn't want a sharp
tightening in financial conditions at a time when we thought the economy was still vulnerable.
And so we did hold on for
a long time to QE, and we, of course, tapered and everything. And then we immediately went into
QT, and we're down a couple of trillion. But I get that we certainly, with the benefit of
hindsight, could have tapered earlier or faster. That's absolutely right. But this is all very
welcome. We knew doing this in real time that we weren't going to get it perfect.
And that those kind of those kind of, you know, after action kind of looks are essential.
And we're doing the same thing in our review. So on some issues there.
The other part of that critique is that you've taken on topics that are outside of the mandate,
such as climate change and trying to ensure that certain groups are benefited by your
economic policies in terms of employment, et cetera.
So, okay, on climate, you've heard me say over and over again that we will not be climate policymakers and that our role on climate is a very, very narrow one.
And I think that's what we've done. We've done really very little on climate.
You can say that little bit that we've done was too much, but I wouldn't want to give any impression that we've taken climate and it's something that we're spending a lot of time and energy on. We're not.
We have very, very narrow things. We did one thing, one guidance for the banks, and then we did one,
a one-time stress analysis, climate stress analysis, and that's it. And, you know, we dropped
that as a network of green, the financial system.
So we didn't do much on climate. And I do think,
and I've said this publicly several times,
I think it's a real danger for us
to try to take on a mandate like that,
which is very narrow application to our work.
And, you know, the risk is if you go
for things that are really not
on your mandate, then why are you independent?
And I think that's a very fair question.
I do think we've done a whole lot less on climate
than some people seem to think we did.
Anyway, that's what I think.
Should you have taken on the question of bringing
unemployment rates down for specific categories?
We didn't do that. What we said was that we never targeted any unemployment rate for individual racial or demographic groups.
What we said was that maximum employment was a broad and inclusive goal.
And I think what we meant by that was we're going to consider the totality of the country as we look at at our maximum employment goal of course we were
never going to target any any individual group with that but i think some people you know wanted
to hear it that way but that's that's not at all what we meant uh but um so that's just not a
correct reading of of our but i can see how you, maybe people found that confusing and, you know, we have to take that into consideration.
Jolene.
Hi, Chair Powell. Thanks for taking our questions today. I'm Jolene Kent with CBS News.
You've said wait and see and the economy is doing fine today, but the impact of tariffs are already showing up at the ports.
Businesses, big and small, are telling us that they feel it. And most
importantly, consumers say they feel it, that the challenges are here and there's no waiting and
seeing. For Main Street, what is the breaking point? What would have to happen to prompt a rate
cut specifically? Well, you know, so we really don't see in the data yet big economic effects.
We see sentiment, there are concerns that higher prices may be coming or things like that.
So people are worried now about inflation.
They're worried about a shock from the tariffs, but that shock hasn't hit yet.
So we're going to be looking at the, not just the sentiment data,
but also the real economic data as we assess what it is we should do. And remember,
there will be two effects. One of them would be weakening economy, weakening economic activity,
which translates into higher unemployment, and the other would be potentially higher inflation.
Again, to say it again, the timing, the scope, the scale,
and the persistence of those effects are very, very uncertain. So it's not at all clear what
the appropriate response for monetary policy is at this time. And by the way, our policy is in a
good place. So we think we can wait and move when it is clear what the right thing to do is.
we can wait and move when it is clear what the right thing to do is. Really not at all clear
what it is we should do. So people are feeling stress and concern, but unemployment hasn't gone
up. Job creation is fine. Wages are in good shape. You know, people are not layoffs or people are
not getting laid off at high levels. You know, initial claims for unemployment are not increasing
You know, initial claims for unemployment are not increasing, you know, in any kind of impressive way.
So the economy itself is still, you know, in solid shape.
Just a quick follow-up.
President Trump now says he does not plan to remove you as chair.
When you heard that, what did you think?
I don't have anything more for you on that.
I've pretty much covered that issue.
Thank you on that. I've pretty much covered that issue. Thank you.
Chris. Hi, thank you. Chris Rugeber, Associated Press. Well, I just wanted to follow up earlier.
It sounded like you said it was unclear how the Fed, you know, what kind of interest rate decisions
you will make later this year. So does that, you know, in March there was guidance that two cuts might happen, you know, two cuts were penciled in for this year.
Is that now, that guidance from the last press conference, has that been overtaken by events
at this point? You know, we don't do a summary of economic projections at every meeting, as you know,
as you know, we do it every other meeting.
but we do it every other meeting. And so this was the meeting when we didn't do it.
And so this was the meeting when we didn't do it.
And I, you know, we don't also kind of poll people.
So I really wouldn't want to try to make a specific projection
for where we are relative to that.
We will, in six weeks, we have the June meeting
and you'll have another SEP.
I'm not going to hazard a guess here today
as to what it would be.
Again, what it would be.
Again, what I would say is that we think our policy rate
is in a good place.
We think it leaves us well positioned
to respond in a timely way to potential developments.
That's where we are.
And that, depending on the way things play out,
that could include rate hikes, sorry, rate cuts.
We conclude us, it could include us holding where we are.
We just are going to need to see, you know, how things play out before we make those decisions.
Great. And just to follow up on that, I mean, when you address the issue of how the Fed would
handle both rising unemployment and rising inflation, how are you thinking about the fact
that addressing one could exacerbate the other? So a rate cut to reduce unemployment could worsen inflation and
vice versa. How do you handle those challenges? You just captured this is the issue with
the two goals being in tension. It's a very challenging question. Now, there can be a case
in which one goal is very far. One variable is very,
very far from its goal, much farther than the other. And if so, you concentrate on that one.
And frankly, that was the case. Well, it wasn't a case where they were really in tension. But if
you go back to 2022, it was very clear that we needed to focus on inflation. The labor market
was also super tight. So it wasn't really a trade-off.
You know, I think you know what our framework document says. It says we'll look at how far
each variable is from its goal, and also we'll factor in the time it would take to get there.
So, you know, that's going to be potentially a very difficult judgment. But the data could break in a way that it's not.
I just don't think we know that.
The data could easily favor one or the other.
And right now, there's no need to make a choice
and no real basis for doing so.
Victoria.
Hi, Victoria Guido with Politico.
I wanted to ask, Congress is currently debating spending cuts alongside extending the tax cuts.
And I know you've talked many times about how the path of the debt is unsustainable.
But given that we're also talking right now about the economy slowing, potentially even recession,
I was just wondering, is there a danger that spending cuts now could slow growth a
lot more? We don't give Congress fiscal advice. We take what they do as a given, and we put it
in our models and in our assessment of the economy. So I wouldn't want to speculate on that.
I think we do know that the debt is on an unsustainable level, on an unsustainable path,
not at an unsustainable level, but an unsustainable path.
And it's on Congress to figure out how to get us back on a sustainable path.
And, you know, it's not up to us to give them advice.
Well, do you think that they should take macroeconomic conditions into account as they look at this?
I think they don't need my advice and our advice
on how to do fiscal policy any more than we need their advice
on monetary policy.
Andrew.
Thanks, Mr. Chairman.
Andrew Ackerman with The Washington Post.
In your Jackson Hole comments last year,
you said you would not welcome further cooling in labor market
conditions.
The unemployment rate then was 4.2 percent, which is what it is now. Forecasters, many forecasters now predict a higher jobless rate. How has your tolerance for weakening labor market conditions
changed compared to a year ago? So it was quite a different situation. What was happening last year is that over the space of six, eight, seven months, the unemployment rate went up by almost a full percentage point.
And it was click, click, click, click, click each month.
And, you know, everywhere people were talking about downside risk to the labor market.
At the same time, payroll job numbers were getting softer and softer.
So there was a really obvious concern about
downside risk to the labor market. And so at Jackson Hole and then in September,
we wanted to address that forthrightly. We wanted to show that we were there for the
limit. We'd been there for inflation for a couple of years, and we wanted to show also that we're
there for the labor market. And it was important that we send that signal.
Fortunately, since then, the labor market has really, and the unemployment rate, have really been moving sideways at a level that is, you know, well in the range of mainstream estimates of maximum employment.
So that concern has gotten a lot less.
So, you know, you're at 4.2 percent unemployment.
I think we were in a very different situation.
Now we have a situation where, you know, the risks to higher inflation and higher unemployment have both gone up, as we noted in our statement, and we've got to monitor both of those. We actually
have a potential situation where there may be a trade-off or tension between the two, potentially.
We don't have it yet, and we may not have it, but that's what we have, and that's why i think it's a very different different situation i mean i guess i want to follow up
by asking how much of a rise in the jobless rate you would you could tolerate it i can't i can't
give you a you know i'm not going to try to give you a specific number i'll just say we're got we
have to now be looking at both variables and which of them is is you know demanding if one of them is
demanding our focus more than the other,
that would tell us what to do with policy.
If they're more or less equally distant
and equally or not distant,
then we don't have to make that assessment.
The assessment is you wait.
So I'm not gonna try to be really specific
about what we need to see in terms of a number.
But look, if we did see significant deterioration in the labor market, of course, that's one of our two variables.
And we would look to be able to support that.
You'd hope that it wasn't also coming at a time when inflation was getting very bad.
And again, we're speculating here.
We don't know this.
We don't know any of these things.
It's very hypothetical. We're just going to have to wait and see how it plays out.
Thanks.
Great.
Claire Jones, Financial Times. In terms of getting some clarity, we've got some talks at the weekend in Geneva between the US and China. A lot of
economists are attaching an awful lot of importance to what we hear from those talks. How much
importance are you attaching to them in terms of judging what will happen to the US economy going
forward? And just in a similar vein, some economists are saying it's days, not weeks that we have until we start to put the U.S. economy at risk of seeing the sort of pandemic era shortages and higher prices.
If we don't kind of soothe relations between the U.S. and China.
So it'd be good to have your view on that, too.
So, you know, these are not talks
that we're in any way involved in, so I really can't comment directly on them. So, but what I
will say is this, you know, we had coming out of the March meeting, we, the public generally had
an assessment of where tariffs were going and then April 2 happened and it was really substantially
larger than anticipated in the forecast I've seen and in our forecast.
So and now we have a different we're in a new phase where it seems to be we're entering a new
phase where the administration is entering into beginning talks with a number of our important
trading partners. And that's that has the potential to change the picture materially or not.
And so I think it's it's going to be very important how that
shakes out. But we simply have to wait and see how it works out. It certainly could change the
picture. And we're mindful of not trying to make conclusive judgments about what will happen
at a time when the facts are changing. And just on the falling shipping volumes from China over
these tensions, I mean, do you share that concern that we could start seeing good shortages and
higher prices in the coming weeks if this isn't resolved very quickly? You know, I don't want to
get my, we're not, we shouldn't be involved even verbally in the questions about the timing of
these things. Yes, we're, of course, we follow all that data, we see the shipping data, we see all that, but
ultimately this is for the administration to do. This is their mandate, not ours. And I know,
as you can see, they're beginning to have talks with many nations, and that has the potential to change the picture materially.
So we'll just have to wait and see.
Yes, thanks.
Kosuke Takami with Nikkei. Thank you for doing this.
The volume of imported goods increased significantly
in the first quarter. you think the decision could
cause a delay in the impact of tariff on inflation and does this mean that it will take longer time
to reduce uncertainty the decision we made today which decision? So the future decisions.
So the volume of the imported goods
has increased significantly.
So the impact of the imported inflation may delay.
So what is the impact to your future decision?
Okay, so I mean, I think we think that the, you know, there was a big spike in imports, right?
Very big, historically large, really, and to beat tariffs.
And now that should actually reverse so that it's the difference between its exports minus imports.
So and imports were huge. And so that it conveyed a very negative contribution to US GDP,
annualized GDP in the first quarter, as we all know. So that could in the second quarter
be reversed so that we have an unusually large contribution to the unusually positive.
That's very likely as imports drop sharply.
You could also have, very likely you'll have restatements of the first quarter.
It'll turn out that consumer spending was higher.
It'll turn out that inventories were higher.
And so you'll see those data revised up.
It may actually go into the third quarter, too.
And so I think this whole process is going to a little bit make it harder to make a clean assessment of U.S. demand.
I mentioned private domestic final purchases, which doesn't have inventories government or inventories government. Anyway, it's a cleaner read on private demand. But that,
that too, probably was flattered a little bit by, you know, by strong demand for imports to
beat tariffs. So that might overstate. It's a really good reading, 3% PDFP in the first quarter. That
might actually overstate. So it's not really going to, I don't think it's going to affect
our decisions. I will just say, though, that it's a little confusing. And it's probably
less confusing to us than it would be to the general public as we try to explain this. You
know, it's complicated. And, you know, GDP is sending a signal, PDFP is sending a signal.
It's a little bit confusing,
but I think we understand what's going on. It's not really going to change things for us.
Courtney.
Courtney Brown from Axios. I guess, you know, we talked about some of the indications of potential
layoffs, price hikes, and economic slowdown all being evident in the soft data. I'm curious why
the Fed needs to wait for that to translate into hard data to make any type of monetary policy
decision, especially if the hard data is not as timely or might be warped by tariff-related
effects. Are you worried that the soft data
might be some sort of false warning? No. Look at the state of the economy. The labor market is
solid. Inflation is low. We can afford to be patient as things unfold. There's no real cost
to our weighting at this point. Also, the sense of it is we're not sure what the right thing
will be. There should be some increase in inflation. There should be some increase in
unemployment. Those call for different responses. And so until we know, potentially call for
different responses. And so until we know more, we have the ability to wait and see. And it seems to be a pretty clear decision. Everyone on the
committee supported waiting. And so that's why we're waiting. Just a very quick follow-up.
There was this sort of vibe session, if you will, where the sentiments expressed in soft data did
not translate into the hard economic data. How are you thinking about
that when interpreting some of the signs in the softer survey data? You know, I think going back
a number of years, the link between sentiment data and consumer spending has been weak. It's
not been a strong link at all. On the other hand, we haven't had a move of this, you know, speed and size.
So it wouldn't be the case that we're looking at this and just completely dismissing it.
But it's another reason to wait and see.
You're right that we had a couple of years during the pandemic where people were saying just very downbeat surveys and going out and spending money.
So that can happen. And that may happen to some degree here. We just don't know.
This is this is an outsized change in sentiment, though.
And so none of us is looking at that and saying that we're we're sure one way or the other.
We're not.
Matt.
Thanks, Chair Powell.
Matt Egan with CNN.
So you mentioned earlier that you're monitoring the shipping data, and we have seen in the
shipping data that imports from China into the Port of Los Angeles have plunged, and
that has raised concerns about potential shortages.
What tools, if any, does the Fed have to ensure that prices and inflation expectations don't get out of hand
if tariffs do cause significant supply chain disruptions?
I mean, we don't have, you know, the kind of tools that are good at dealing with supply chain problems.
We don't have that at all.
That's a job for the administration
and for the private sector more than anything.
You know, what we can do with our interest rate tool
is we can support, be more or less supportive of demand.
And that'd be a very inefficient way
to try to fix supply chain problems.
But, you know, we don't see the inflation yet.
We're of course reading the same stories and watching the same data as everybody else.
And, you know, right now we see inflation, you know, kind of moving sideways at a fairly low level.
If I could follow up on that, President Trump has indicated that he will likely name a replacement for you when your term as chair expires next year.
But your position on the board runs through January 2028,
I believe.
Would you consider remaining on the Fed board
even if you're no longer chair?
So I don't have anything for you on that.
My whole focus is on, and my colleagues' focus is all on,
you know, trying to navigate this tricky passage
we're in right now, trying to make the right
decisions. You know, we want to make the best decisions for the people that we serve. That's
what we think about day and night. And this is a challenging situation. And that's 100% of our
focus right now. Let's go to Jennifer for the last question. Thank you so much, Chair Powell.
Jennifer Schoenberger with Yahoo Finance. Public records of your schedule so far this year show no meetings with President Trump.
Past presidents Obama, Bush and Clinton have all met with Fed chairs.
And you met with Trump during his first term.
Why haven't you asked for a meeting yet with the president?
I've never asked for a meeting with any president and I never will.
It's not I wouldn't do that. There's never a reason for me to ask for a meeting. It's, and I never will. I wouldn't do that. There's never a reason
for me to ask for a meeting. It's always been the other way. So would you want to meet with him,
if given the opportunity to get more information? It's never an initiative that I take. It's always
an initiative. I don't think it's up to a Fed chair to seek a meeting with the president,
although maybe some have done so. I've never done so, and I can't imagine myself doing that. I think
it always comes the other way. A president wants to meet with you, but that hasn't happened.
And I could just ask one question, a monetary policy. When it is time to cut rates, how will
you determine how far down rates will have to come to try to keep a balance on the inflation mandate
as employment weakens? You know, I think once you have a direction, a clear direction,
you can make a judgment about how fast to move and that kind of thing. So it's really the
harder question is the timing, I think, and when will that become clear? And fortunately,
as I mentioned, we have our policy in a good place, the economy is in a good place,
policy in a good place, the economy is in a good place.
And it's really appropriate, we think, for us to be patient
and wait for things to unfold as we get more clarity
about what we should do.
Thanks very much.
All right, that was Jerome Powell. One more time shout out to omar homar's blog up here for
helping us play that through the uh william my boy account crystal clear quality i think
definitely the best one you're listening to there um i'm curious if anyone had some uh
takeaways stock talk co-hosts mr weekly you got any initial thoughts here we'll kick it over to
you i mean i don't think i have too many more thoughts than Powell himself had,
which was not many.
Well, listen, 2 p.m. Eastern markets,
it looks like we're basically exactly where we were then.
So, I mean, that's the conclusion.
Everyone's happened a little bit, a little lower, a little higher.
I mean, I think Stock Talk summed it up well in a tweet.
The TLDR of the meeting was IDK law.
Yeah, exactly. You didn't answer any questions at all. I don't necessarily blame him. Like,
I mean, are you going to like, how are you going to answer a question about where economic
confidence is going to be in three months if you don't know where tariffs are going to be in three months. So from that standpoint, you know, I understand the use of the word
uncertainty, which I think he used probably 30 times in that series of comments. So that was
really the thematic, right? Like he's like, we're uncertain. We don't know where tariffs are going
to be in three months. Survey respondents are telling them the same thing. They don't know
where tariffs are going to be in three months or six months or a year from now.
And so that makes it hard for them to make projections. And it seems like, you know,
if I had to speculate based on the weight of what he did say, which isn't much,
it seems like they're going to wait for real economic turmoil to cut rates.
It seems like the soft data and the for real economic turmoil to cut rates.
It seems like the soft data and the cues that we're getting so far aren't enough to push the needle.
And to be honest, I think this would be different if there wasn't an inflation story still in the background.
Like we still didn't have inflation hovering a little bit above 2 percent.
And the Fed felt that that was still a concern.
Then I think we would have cut rates, maybe even at this meeting, at the very least at the next. But because that
boogeyman is in the background and they don't want to wake the inflation story back up, I think that's
where the hesitancy is coming from, if I had to guess. But he did not sound tremendously confident
on any of the questions he was asked. He answered very few of them.
I think he answered like two questions directly.
He didn't tell us what the rate level would be.
He didn't tell us how far rates would come down when we do cut rates.
He didn't tell us what the unemployment level he's looking for is.
He didn't tell us what would be considered a risk to inflation if it turns back around.
His answer to all of those questions was, I don't know.
And those are the important
questions. Well, I think it really just highlights that they're in a policy fog driven by this
administration and particularly their trade actions. They don't know what the policy is
even going to be long term, let alone what the weight of those effects is on the labor market
and on inflation. So I think the onus is really
on the administration to provide some clarity, not just to the Fed, but to the private sector as well,
who, you know, things may look good on paper, the labor market may look strong on the streets,
you know, and this sort of goes to the data being lagging as stock talk said on the streets people
are are very confused they're panicking they don't know whether to invest they don't know what to do
so it's really I think going to be up to the administration to kind of give some clarity one
way or another whether that's through their messaging or some trade deals or something but
right now we're just in this policy
fog that it's really impossible for anyone to see through even the fed
you know he said wait and see 20 he said wait and see 22 times
and and similar to that he even i'm reading a transcript right now like good position to wait
that even i'm reading a transcript right now like good position to wait can be patient um
i mean i bottom line i think the fed believes it has more time to decide on its next move
than it probably does i think the the communication we heard today suggests that the door
for a june rate cut is likely shut.
So in my mind, the Fed is probably more optimistic about the current state of the economy
than I think we all are.
We've been talking even before he went to speak
an hour ago that they're looking at all this data
that's completely in arrears
and with all this uncertainty in front of us,
I think they're conditioning themselves to be lit again.
Sam, I see your hands up over there.
Well, excuse me.
I was just going to say that like StockTalk was saying,
pretty much what everyone's thinking is that they're going to remain patient throughout the whole thing.
What I've noticed is that the bond market has been around in the last few days.
And I'm not saying that's going to speculate exactly what's going to be happening. But when I see that happening, also, the true
inflation data is not really the most concrete data that's out there. But we can already see
that there's factors that are in the inflation of CPI reports and PC reports that are showing
that inflation is most likely going to be transitory and will pull
back a little bit, which will eventually green the green light. But I'm somewhat a proponent that
if there were no tariffs or if there was no mention of tariffs, we would have been cutting by now.
I'm not sure exactly how far we'd be cutting, but we certainly would have cut in 2025 by now.
Well, Powell is basically saying that he's going to wait and see. It literally is just one guy in the entire world that can say one thing that will just
give Powell the green light to cut.
It's not as simple as that, but at the same time, he did two cuts September and they did
one cut in November, another cut in December, and it just flat out stops.
And what conversations have been materialized and been brought up a lot more, and especially since April, since that's happened?
It's just been tariffs.
You're literally throwing uncertainty into the market.
We've had confirmation that tariffs are an inflationary act.
At the same time, from what we saw in the jobs before last Friday, we don't see the economy basically, or the job market basically falling apart. I don't think it's going to fall apart,
but I think it's going to be continuing its downtrend as we see initial jobless claims,
continuing jobless claims continue to trend upward. And that's not necessarily a pain and
good sign for the economy, especially when growth is somewhat slowing down. But at the same time,
if these 145% tariffs do come in which we've seen from
they aren't going to start talks that doesn't mean anything though at least right now he's
going to wait and see if he if powell continues to cut rates and the tire is going to affect
he might be stuck and i mean right now like it's just it's better to just wait and see
and i'm someone who said i'm someone who would rather wait and see what happens or wait and see. And I'm someone who said, I'm someone who would rather wait and see what happens or wait and see until
we get more data versus quickly making a move.
And I'm Powell has proved that he is that way for quite some time.
So I would say just wait and see what happens,
wait and see what the data and that's what he's going to do.
We're going to see what's going to happen with the rate cuts in June.
Right now we're about 30% chance.
And then we're about two to three rate cuts for the
entire year. But in the summary of economic projections that we got in the last meeting,
they were about one to two rate cuts by the end of the year. So that may very well be,
but at the same time, that could pretty much change. So.
Yeah, it's interesting that the president has been pressuring Powell to bring down rates.
And Powell says, well, you know, look,
I'm going to do my job. I'm going to look at our dual mandate. I'm not going to look at what the
president's saying. But really the reason why he isn't bringing down rates further is driven by
the uncertainty and maybe the lack of understanding of the trade policy. Okay. Is unemployment going
to be more of a factor here or is inflation going to be more of a factor here? Or is inflation going to be more
of a factor? He doesn't know. So I thought that question about the meeting was actually kind of
interesting. Maybe it is time for President Trump to call Powell in for a meeting and give him just
a candid perspective on what the policy stance is going to be here or how he envisions it.
Maybe that would give the Fed some greater clarity in terms of what to expect going forward.
It's one of the FedWatch tool, just kind of looking at the movements here.
I also wonder if that
puts some pressure on Trump to say
something about it, because maybe
the way she worded that question,
and Jennifer's actually on the space
lot, so maybe we'll ask her about it, but it was more
the ball was in Powell's court, but he put the ball
back into Trump's court, so I wonder
if he's going to talk... I'm expecting
a truth social post any second here
about how bad and how late Powell is going to be.
But I wonder if he takes him up on that deal and we see him in those white Oval Office chairs in the next couple of weeks.
You have him you have him calling Powell in to have like a friendly conversation over using his bully pulpit.
using his bully pulpit?
Yeah, I mean, I think the thing for Trump is
he's not going to get Powell to lower rates
by threatening him or calling him a name
or threatening to fire him.
He's a guy who's looking at the dual mandate.
He understands the importance of the separation of the Fed,
and I think he's doing his job well.
What actually I think could get Powell to lower rates is some clarity on where they see federal policy going.
And that, I think, would be why it might be important for them to meet.
The Fed's not going, listen, he didn't raise rates in a quote unquote fast time.
And he didn't lower rates in a quote unquote fast time.
They gave you the dual mandate.
Their dual mandate is the dual mandate.
And he's got basically a year left in his tenure unless something exogenous happens, right?
And so as long as that's the case, and he's given us a playbook for almost a decade now,
he's not going to be in front of anything.
So the concept of Powell not lowering rates actually gives Trump the cover that he needs
to kind of push the blame. Because
if things get ugly, they could really just try to start hammering this rhetoric to the base.
It's not to anybody who's an economist or a trader or anything like that, just to the base.
Hey, part of the problem that we have right now is we're trying to exercise this plan and we can't
because they're not doing this thing that we need.
So it kind of gives Trump the cover.
And they're trying to, quote unquote, negotiate with China,
and two days before they're supposed to meet, he's slamming a hammer,
breaking things before it even happens.
If he's doing that with something that's already on the table,
like he's not going to disrupt the cover that he could get from Powell,
in my opinion.
Like the dual mandate is a dual mandate.
You get one thing because Powell also addressed it.
There are two sides to it.
If he worded it basically like if one thing goes one way, we'll react a certain way. If
it goes another way, we'll know to react the other way. So he's giving you the playbook. I just don't
think anything's going to give them the reason to do the cut unless something like really bad happens really quickly on a job front or unless
like this like people just stop consuming to a point where inflation just kind of you know falls
off a cliff it's not i don't think this is going to be like a political like a politically um clean
thing that that trump does with powell and then everything else he does is just use the hammer, use the hammer, use the hammer.
Interesting stat here from Bespoke or Bespoke Invest.
The S&P 500 is currently on pace for in that final hour of trading power hour following a Fed press conference.
This would be the ninth time in a row that that power hour following Powell has been read.
Interesting little tidbit that I didn't know existed or means anything. Maybe it means nothing, but that
not, it was, would be the ninth time in a row where we're read on the same day following Powell.
And I cut you off a little bit before you were talking about what the Fed funds rate was kind
of pricing and I'm curious on how that's changed. Are we still maintaining three rate cuts this
year? The next one, next meeting we might be cutting?
Yeah, that's basically, I was looking out,
June, basically from even from a day ago,
dropped from 30 down to 24% now for a 25% basis cut.
Obviously, the hold where it's at moved up.
However, July has not really moved. It's still the 25 basis point cut moved from 56 to 54, 55 basically.
So almost unchanged.
So it looks like the bets are all on for July right now.
And then as that spreads out throughout the year,
highest probability is that final,
that third cut happening in December.
third cut happening in December.
So three cuts being priced in currently.
So three cuts being priced in currently.
You know, by the way,
there are earnings coming up after the close,
which we're going to be live on the spaces for.
Arm Holdings, Mercado Libre is popular,
IonQ, Axon,
Robana, I don't know,
Fortinet, there's a bunch of them reporting earnings.
So definitely.
You forgot Crocs, Evan, aren't you a big Crocs guy um I saw these someone was wearing like actually
kind of cool Crocs they were like actual shoes I was impressed now I was
actually very I would never wear them myself they were kind of cool oh very
cool you're gonna say accidental also reports earnings but um what was your
question I was at the mall the other day
and there was on the escalator,
there was a sign that actually said no Crocs.
Dangerous Crocs.
My question was,
aren't you a big Crocs guy?
No, I think it was answered something before that.
But yeah, so watch out.
We're going to be live on these spaces
for a lot of those.
Talk through some of those live numbers as well um yeah hang with us well with the back and forth i'm not sure
who all uh had the chance to speak so far evan are you as do we know who we got around to on the
panel nope if they want to cut in they can i'm excited for these i don't think we've heard from matt
uh and that's that's kind of why i was throwing that out there i was hoping somebody would throw
a hand up matt would love to get your thoughts around uh fomc or just marketing in general
things going on in your world sure thanks for having me guys um no so you know i i think you
know the markets obviously uh have been weak uh going into uh all of this that that plays on
people's emotions gets people very pessimistic with a lot of worry and uncertainty.
But I think the big upside that people are kind of ignoring is, again, some people love
Trump, some people don't like Trump, whatever, but he is a dealmaker.
And I think what people are kind of not taking into account is how there would be such a
very large tailwind if deals were made.
So now, first of all, not only does he like to make deals, but, you know, Charlie Munger is famous for saying, you know, if you show me the incentive, I'll show you what people will do.
And I think both for the president, you know, President Trump and also President Xi from China, both of them are going to want to make a deal.
I think the high tariffs, you know, is obviously going to impact the to impact the US with higher inflation, keep rates higher and all the rest. China already has economic
kind of issues and slowdowns and high youth unemployment and the rest. So both sides are
really going to be incentivized to make a deal. China may not like it. The US may not get everything
they want. I don't know how it ends up. But ultimately, if we do get some kind of a deal,
that's an improvement from what it was. Not only is that kind of like a net positive overall,
because there's different elements to trade, but I think that would then give the Fed
the clarity to be able to cut rates. I mean, the Fed is purely on hold. I mean, they're saying it
in the most direct, indirect way possible is that we want to see what happens with tariffs,
and we don't want to do anything until then. So if a deal is made, not only will we get the
optimism of tariffs, the tariff situation
clearing up, risk goes out the window because people have a little more certainty.
The worry of tariffs and higher prices goes away because a deal is made.
And then on top of that, the gravy would be that now you go from having what's been a
hawkish Fed to suddenly an accommodative Fed.
So for me, it's looking at second half of the year.
I see what could be a really incredibly powerful tailwinds. At what point they hit or whatnot, it's looking at second half of the year. I see that what could
be a really incredibly powerful tailwinds at what point they hit or whatnot, it's a bit hard to tell.
But obviously, you know, just from a kind of political perspective, you know, anyone who
comes into government is going to want to do the hardest stuff early. And, you know, for sure,
before the midterm elections come in, because, you know, then there's a little more, they want
to have things already on the mend to ensure that, to ensure that midterms go the best way possible for their party.
So a lot of the hard part is being done now,
and everyone's gotten so pessimistic.
And if you look at surveys and all the rest, people are so concerned.
But if we start to, so much negativity is priced in.
At the same time, a lot of stocks are acting great.
But if you kind of just look at both sides of the coin
and take out the negative spin on things,
you're like, well, we get a deal made.
Not only is that net positive, then you have the Fed coming your way.
And that's like a win, win, win.
And that really reminds me a lot also of like 1998.
There was like long-term capital management that was blowing up.
It was a big issue.
And then the Fed kind of finally stepped in and helped them.
So not only did the problem of that hedge fund blowing up went away, then you had an
accommodative Fed.
And then behind all of that in 1998 was that you had this massive new technology and this
productivity boom, which was the internet.
I mean, now it's kind of been shelved, all the AI stuff, because it's being digested.
And there's all the millions of startups working on nice new ideas that are still not yet in
the market because stuff is moving so quickly.
But not only will you, if trade deals go well,
will you have a better economic backdrop,
you'll have an accommodative Fed,
and then you'll be able to sprinkle on top of that,
the AI boom and all the excitement and development
and new innovations that will come from that.
So I can see second half of this year
getting really wild to the upside in a great way.
I think people are just, you know, it's always normal.
Every cycle is the same. I've been trading for 20 years. I've been pro since 08.
In more down markets, everyone can just see bad. In good markets, everyone can just see good. But
for me right now, I'm looking at this as a really potentially big opportunity. And if some deals
are made, I think the market goes much higher than most people expect. So I think today Powell
is just saying what he's been saying. I think he'll keep saying it. But I think if people just look at it from an objective point of view and say, what if, and we get something that goes our way, the upside I think is much larger than what's priced in the market right now.
So that's my two cents, and that's how I'm positioned.
Yeah, I just want to add on to that one too.
2018 is probably the last time a lot of us remember the trade war happening. And that was
actually around the time when Powell was actually hiking rates, or actually started a rate hiking
cycle, and did a few did a few hikes and then ended up doing the infamous Powell pivots in December,
during Christmas time, which completely reversed
the market from a near bear market drawdown. And it was a much different environment. But I think
a lot of people, like Matt was saying, is that if we're investing in secular trends,
a lot of the macro that's existing today is not going to diminish the returns of a secular trend,
especially when you think about what's happening with AI. And I know it's like a very blanket
statement to say what's happening with AI, but it really is going to change technology as it is
today. It will continue to change technology for the next few decades, much like how the internet
did in the 2000s. And whether there is a big blow up in everything like a dot com bubble and so on, I think it's
good to understand, you know, which sectors or which secular trends are growing the most.
And when I think about this, I think about cybersecurity, I think about data related
companies, and of course, big tech as well.
I mean, obviously, we're not seeing such good moves when it comes to the ad portion of tech with Google, especially with the cases that are happening.
But at the same time, there's been many companies that have been able to weather the storm no matter what the storms were.
And a lot of the big tech companies are holding their valuations for a reason, or at least most of them are for a reason, because they have proven case in case that they can weather through whatever storm
we're going to go through. And it's not just the big tech companies. There's actually many other
smaller mid-cap companies as well that have weathered multiple storms. And I feel like
when it comes to the real investing, that's what you really need to focus on.
Macro is definitely important. I mean, you could have the best company in the world, but the market's going to go down like 10 or 15%.
Like that company is going to go down as well.
But look at the companies that did recover very quickly.
You had cybersecurity coming back very quickly.
You had Axon Enterprises, which is going to be reporting this afternoon, come back very quickly.
You had a lot of other names come back very quickly.
And then you had other names that just have not recovered. And then you start to wonder, why haven't those
names recovered? And if you look under the rock with those companies, they have issues that were
probably already present before the tariffs even came to effect. And I feel like if you're looking
for, if you're an individual stock figure, which this is not an easy game at all, that is kind of what you need to hone in most of your focus on.
But also keep an eye on the macro or how it might affect your company long term.
But when you really think about the push for AI, like that story has not ended at all.
There's a lot of distractions of macro on the market right now.
And I was even talking to Shai and Logical actually can record tonight's episode of investing with the boys
that we're going to be releasing on Friday, we're going to be rewarding it tonight.
And it's actually pretty interesting because there is a lot to talk about in terms of macro,
but man, we really, it's so difficult to not focus on macro. So it would be prudent to
continue to remind yourself like, like hey the micro is very
important too and i guess what i'm trying to say to this is like i i really want to go back to
focusing on the micro the micro because the macro has just really taken over a lot of fence weight
and everything for the last couple of months and it would be really nice to go back to the micro
but at the same time you know if you think about if there were no tariffs, like I mentioned before, I think the S&P are probably trading much higher than it is right now.
And we probably would have had much less, much more rate cuts priced into the market and actually in the market than we do today.
So once the resolution of the tariffs will come, which it will come, like look at 2018.
If you guys remember, in 2018, they had that big meeting where uh the vice
premier lou and all these people came to uh the white house they met with the president and
everything and it was like it was all great and dandy the next thing you know we're at all-time
highs of course kovic came right after that but that is gonna happen at some point we just don't
know when uh one second trump to rescind global chip curbs amid AI restrictions debate.
Market just pumped.
Okay, well, there you go.
AI has to be at the forefront of all this.
One thing I will say, I want to see more clarity on this one,
and I apologize for interrupting you here.
I'm very curious because there was comments about this one
specifically being around the UAE and stuff like that so i want to see what nations this is
my guess is china is definitely not involved with this
sorry for interrupting you sam no investment boys yeah man shout out investing the boys
throw that episode on there that was an amazing episode you guys had with uh
with with the uh robin Robin Hood chief strategy officer.
Man, I wish I was there for that one, but we're definitely going to have a lot more episodes coming up.
We're going to be interviewing some big people, CEOs and stuff.
So really looking forward to those events as well.
And also shout out to the other podcast too, TechMT.
It also says, including the-era AI diffusion rule,
officials are preparing to repeal
as NVIDIA reportedly pushed back hard
against the rules, Tariff Lobby.
NVIDIA seems to be moving on that one.
Guess you invest a couple hundred billion in and then you
go in there where's nvidia at i literally bought 120 nvidia calls like not two minutes ago oh my
god you need a new keyboard or a mouse or something because you're banging that thing now
i just was screaming over here actually to be 100 honest i'm trying to manage some positions but
i so my literally thought process and i think a couple of you alluded to this I just was screaming over here, actually, to be 100% honest. I'm trying to manage some positions.
So my literally thought process, and I think a couple of you alluded to this.
We were talking about it, though.
Trump came out right before Powell, dropped some bad news,
and then right after Powell, dropping good news to save the market, right?
That's such a Trump move.
Looks like A-Lab is back to green. don't you know bump it up we got a couple earnings come up arm holdings about a report earnings so a little bit of a better backdrop from in there
nvidia moving up about 2.6 percent they did announce that what was it like five billion
dollar charge 5.5 billion feels more accurate uh so maybe that's in in some area i want to i want to keep digging deeper into
this one though uh his own bloomberg story
your appeal seeks to refresh in a policy launch under president biden that created three board
uh broad tiers of countries for regulating whatever. Trump will not enforce this so-called AI diffusion rule
when it takes effect on May 19th.
Or sorry, May 15th.
I'm surprised markets still respond so hyperbolically to these headlines.
I mean, obviously, it's a good thing if that's true.
But how many exemptions have we heard about in the media that were denied by Trump quite a few
What about the one that you posted as well? I thought was interesting about car seats. Yes strollers
Yeah, I didn't know that 97% of strollers using the United States are made in China. It's pretty shocking
and the thing is that applies to a lot of categories, right like I
heard somebody Mike and I heard somebody I heard somebody in my, not heard somebody,
I read somebody in my comments that said,
well, you know, this is like zero-based budgeting where you cut everything and then add back the things that are necessary.
That is a remarkably stupid way to think about this.
You can't just say I'm going to put tariffs on everything and then wait and see which
companies call me and say they can't deal with the tariffs and then exempt those companies
specifically. That's like, I mean, that's just extraordinarily stupid. There's no other way to
describe that. What you should instead do is analyze which industries need tariffs to have a reshoring impact and institute tariffs on those industries specifically.
That is a much more sane approach to this whole thing.
And part of the problem is, is that there are going to be industries that do not have lobbying power.
not have lobbying power. Okay. Industries that cannot make direct calls to the White House
industries that don't, don't have, you know, full-time multimillion dollar lobbyists who
are on Capitol Hill at all times. Those are industries like cars, you know, the airplane,
the airline industries, the gun lobbies, the oil and gas lobbies, these guys can call the White House literally and say, hey, we need exemptions in these categories.
Please consider them. Please change policy.
If you go down the ladder and go to companies that don't have multiple hundred billion dollars of exposure to the U.S. economy, they don't have the power to do that.
They don't have the lobbies to do that.
And so those
companies will have to eat it on the chin right and that's the concern here is that in the in the
effort of protecting or providing exemptions for the big dogs for the tech companies for nvidia
for the oil and gas companies for for the car makers, that's great
that those exemptions are being provided where needed. But for the broader economy, and especially
for American small businesses, which are really the lifeblood of growth in the American economy,
that is not going to cut it. That's not going to be enough.
They're also the lifeblood of employment.
Yes. Yes. I mean, the lifeblood of the American economy from a growth standpoint, from an employment standpoint, from an incremental
budgeting and spending standpoint, like small businesses are America. And the idea that they
have to take a little pain and just ride it out is crazy. Many of them will not survive.
it out is crazy. Many of them will not survive. And so unfortunately, those small businesses don't
have a line to the White House. And, you know, that's concerning to me. Because yeah, maybe this,
I don't know what influence Graco has, or if they have a lobby, or maybe they,
maybe one of the executives at Graco made a donation. I don't know how Grocco got on the phone with the White House to get a stroller exemption.
But, you know, this whole thing is just silly to me.
It's like such an unnecessary mess that could have been executed so much better, but we'll see.
Man, there's so much back and forth a lot with the uh with the google cases as well as the news from today um you can already see that while the market's picked back up oh we actually pulled back
a little bit pretty much google and apple are just flat on the day uh still down actually google has
not necessarily recovered really wonder what's come from that one
uh my bad stock sniper i know you got all the numbers stuff go ahead no you're good you're
good you can finish what you're saying no that was really okay awesome um you know i i just wasn't
sure if my hand was up i wasn't trying to spam anything um but you know uh the full earnings
schedule is posted in the comments below in the spaces. So take a look at that.
But I'm just going to briefly touch on Apple 11, Carvana, and Arm Holdings, because I feel like those are the ones that everyone's here for.
I'll talk a little bit more about AMC later.
They're not reporting for a while, though.
But with Apple 11...
Can I give you, honestly, full transparency, I think Arm Holdings and Melly are the two ones that people care about the most.
What did everyone else think?
Kratos. They care about the most. What did everyone else think? Kratos.
I care about Kratos.
Okay, well, we're talking about everyone.
Melly's a core position for me.
I'm excited for that one.
Okay, yeah, that one's actually also got some crazy numbers.
But, yeah, so with Apple 11, our expected move is $46.86 or 15.9%.
This name is absolutely on fire.
The last four reactions are crazy.
24.02% reaction plus 46.27 plus 14.2 plus 14.45.
But since the last report, the stock is down 22.5%.
Coming into this with $371,984 open interest.
With Carvana earnings, our expected move is $28.10 or 10.92%. Previous reactions,
we could see a minus 12.10% downside reaction, a plus 19.29% upside, plus 9.98, and then a
legendary plus 33.77% upside reaction. Those two, and the third ones, we have a $9.32 implied move or 7.73.
Previous reactions, we can see minus 3.34% plus 4.13% minus 15.72% minus 2.34%. And since the
last report, it's down 30.14% coming into this earnings report with 782,410 open interest. I'm just noticing I forgot
to post MercadoLibre. I'll get that out in just one second. But just to go over the numbers really
quick, we have a $141.07 implied move or 6.24%. We could see the previous reactions at plus 7.09%, minus 16.21%, plus 10.59%, plus 8.27%.
Since the last report, MercadoLibre is up 7.17% and coming into this report with 34,110 open
interests. Keep in mind, MercadoLibre has some really expensive premiums. So 34,000 open interest
could be a lot heavier than 100,000 on some names.
But that's pretty much one of the higher value stocks, you know, definitely one of the larger
implied moves that we'll see throughout the entire earnings season coming into this report at $2,250.
Let's just round it. I mean, call it that. But we also do have AMC and I will touch on that a
little bit, probably around like 410, 412-ish, because we were expecting that one at 415.
And I know a lot of you guys are here for that as well.
I'm going to say it.
I'm going to say no one is here for AMC.
And if you want to hear it, you have to say down below.
You have to comment something down below in the spaces chat.
I'll put a poll out.
That's how we profile people around these parts.
You never know if someone's like full port AMC.
Someone could be a major example.
Nah.
The MOC here was a sell side, by the way.
It was about $2.5 billion on the sell side.
But most of those orders were probably put in well before this news.
So I'm expecting this to get bought right back up.
Everybody check out the poll I just put out, and please vote which one you are the most excited for
to prove me right.
Evan, I heard that Google and Apple news mentioned a little bit there by Sam.
What are your thoughts around that when those headlines came out today?
What were your thoughts around that when those headlines came out today?
So, okay.
So where these headlines came out today were Google is having an antitrust trial about, I think it's their search browser.
They had Apple's head of services or something like that come on, Eddie Q.
I should know his position a little bit more.
So that was something he said, and he had a lot of commentary around something we probably already knew,
that they're looking into AI agents, that they're looking into perplexity and grok. They
listed some names, which I thought was interesting. One thing that I, but they also said they're
kind of moving away from Google a little bit. Um, I don't know. It's stuff that we knew,
but it's also different hearing the company themselves say that. So, um, yeah, that was
one thing that I definitely came in and
noticed in that one. But also one other thing, this is an antitrust trial for Google. And I
think they did a great job defending why they are not a monopoly here. Talking about the kind of
like why. Yeah, I think they did a good job defending why they're not a monopoly here.
There's a lot of panic about it. A lot of stocks move lower on an intraday one. And I don't see how this is a net loss for everyone. You know, Apple might have a
transition period where they're not getting $20 billion a year anymore from Google. Google might
be losing their thing, but there's some net winners in here somewhere. Maybe it's smaller companies.
I don't know. But I did definitely think that was a very intriguing headline. We've had some
We've had some interesting headlines in different directions today.
interesting headlines in different directions today.
We had a pretty big move in Reddit.
I'm still trying to figure out how that comes into play here.
5% move is no joke, but also that it's been moving in tandem with Google as well.
Yeah, so we got five minutes to the close here, by the way. So
a lot of these earnings are coming up. Farm Holdings should
be out at 4.02pm Eastern and Mercado Libre, which was the
other one that I think that a lot of people are watching 4.01pm
Eastern. So you should be looking for a lot of those
names.
I talked young in the initial thoughts on these earnings,
any ones that are in more focus than others for you?
Just Kratos.
It's not even on here.
Yeah.
Do you have that in your long-term position swing trade?
What's Kratos for you right now?
I don't really categorize positions that way,
but I've owned it for a while.
I've done really well on it.
I think it's a
company that's very, very broadly exposed to all of the defense themes that I think are important.
And it's a five and a half billion market cap. So I think there's room for upside in the longer
term. But I mean, I don't know what's going to happen on these earnings particularly, but yeah,
I am a fan of Kratos as a company. And yeah, I do have a position currently.
So we will see how that report goes.
I also have a position in CoreCivic, which reports after hours, which is a U.S. border play.
But the other U.S. border play, Geo, did not have a great earnings this morning.
It was down.
So I don't know if that bodes well for CoreCivic, but we'll see.
I know those aren't super popular names, so we don't have if that bodes well for CoreCivic, but we'll see. I know those aren't super popular names,
so we don't have to cover them explicitly,
but those are the two I'm watching.
Gio's been on quite a run.
Is Burry still holding that?
I don't know.
I don't know.
We will get his portfolio updated next week, for the record.
I'm going to look as of last time.
Evan, check out the poll when you have a chance.
Burry did not own GeoGuessr
as of last time.
Well, you tweeting it out isn't
the example of what people in the spaces think.
It's pinned in the net above.
Burry does not own it though.
Mark the closing in three minutes.
And like I said,
next week you should be getting
a lot of the 13Fs.
You're going to see more
of Buffett's portfolio as well.
This last one of his last updates.
All right. all right uh two and a half minutes here until the close market is pushing back up a little bit we are green believe it or not microsoft tesla netflix meta amd amazon broadcom nvidia all very
green a couple of those names we were just mentioning it was a quite make it back
we were red coming out so that that bespoke or would bespoke
stat that they had that the last eight times before this was negative in the power hour
following Powell we were going that direction without this completely
yeah it was it strikes again it accurate, but you're welcome this time.
That's part of my confluence for buying two minutes before that news.
I also did turn on the Champions League game,
so now expect no scoring in the second half. I'm sorry.
Probably PSG's up two goals total,
so they're probably just going to pack it in.
I'd love to see Arsenal win it.
None of that actually care.
Yeah, our friend CryptoCam's an Arsenal supporter, so...
That's a joke, by the way.
If he's listening.
Anyone have any more thoughts heading into these numbers?
Like I said, a lot of these, the Arm Holdings, Mercado Libre,
Apple 11 should be out around 4.05 p.m. Eastern.
IonQ, 4.05 p.m. Eastern.
I don't know if anyone cares about earnings on those ones, actually.
4.15 for Occidental.
90% of the time, most of your numbers are going to be out
within the first 15 minutes of numbers being released.
As always, we're going to try and dig through these as quickly as we can.
We have the expectations up.
I'm using Earnings Hub.
Shout out to Earnings Hub.
Great calendar.
You see us post about it a bunch.
If you're not using it during this craziness,
you are missing out.
Also, just a quick mention,
a lot of names reporting earnings tomorrow morning.
Shopify, Crocs, I actually have us tomorrow morning.
Peloton, Warner Bros, Yeti, et cetera.
So a couple names could be moving
or are going to report before the markets open
again.
But yeah, closing here
on the day.
On a long way to go
nowhere.
Actually,
I don't think we talked about last night's news that came out
right at futures open we didn't mention that oh yeah trade talks are happening and then it was
actually confirmed this time it was a little weird and then I also thought it was funny the
China embassy account in US or whatever it is they were memeing for a while and now they're like
putting the flag up and trying to bring it together i just thought it was kind of funny uh that the it's definitely more anecdotal than
everything but just like the visuals it gave to me market did just close there expect a lot of
these numbers out any second here it looks like arm holdings and mercato libre would be up pretty
close to the uh the market being closed so i'm pulling up arm holdings here seeing how that is
moving let's just moving once it starts
uh i'm good with a little here yeah great us out
they miss yeah i'm still waiting to see some stuff updating i haven't seen too much here yet but
um and also sometimes the numbers don't come out that second
uh marcado libre is out what's. MercadoLibre is out.
What's Melly doing?
This is one of those ones they're saying,
hey, the numbers are on our website.
Normally it takes an extra two to three minutes to update there.
So my guess is Melly, those numbers will come up slowly.
Axon just reported earnings.
What is Axon doing?
5.9 billion for Melly versus 5.5 nice i haven't seen eps sometimes it takes a
while axon though also numbers are out not too much of a move on that one initially move is up
about 0.6 but i'll check back that uh in a couple minutes
i'm not seeing arm just yet i am i think filtered by 10 billion plus by the way so if there's any smaller companies than that i am not going to catch it in here right now
and feel free to jump in i'd rather honestly at this point have a little bit of silence in between
as opposed to going to you guys and having to cut everybody off uh skyworks announces leadership changes this is an apple
supplier and nothing big oh wait new cfo skyworks beat epsp revenue
revenue there I'm now my car Libre's arm holdings looks like it's out as well it's down five six
knots back it's all over the place it was down initially broadcom still moving higher here they
put revenue over 1 billion dollars arm and this their first time over 1 billion looks like it based on the way they're saying it um well she was expecting 1.23 billion
arm holdings i didn't get that notification down 1.2 or no down sorry down five percent after hours
i think kratos had a double beat.
I'm sure Stock Talk will give us an update in a minute.
Yeah, a double beat.
12 cents EPS versus 9 expected.
302.3 million versus 292 million expected.
But stocks like flat, down 0.17% after hours.
But I don't expect there to be too much of an after hours move.
Who knows down about 1.5%. Oh, maybe not back to flat.
I don't know. We'll see.
There's not going to be much liquidity on it after hours.
I mean, it's a $5 billion stock. It's not a hundred billion dollar stock.
So you're not going to get a ton of move,
but maybe on the call we'll get a little bit more color. I don't know.
We will see
loving that McCall
Libre move man this company's on
fire
yeah Mellie is one that gets
talked about a lot in a positive light on these spaces
5% move here
new all time high
2300 no stock split was announced
did they? I'm saying I'm just asking New all-time high? $2,300. No stock split was announced?
Did they?
I'm just asking.
Oh, no.
Don't get me excited.
Me and Sam have been asking for that for like six quarters.
I would love to sell a cover call on this. I do not have a multi-billion dollar portfolio to sell a cover call. yeah that's uh new all-time high yeah by a dollar right now on melly
all right we're getting here to 405 one of the more popular times for numbers to come out
if you're watching your name.
Expecting maybe a second here.
Three, two.
You know, maybe we should change the title
to live earnings or something.
Jerome Powell is no longer live.
I don't know.
The Spaces title game is difficult.
Stock talk, I know he puts in a lot of hard work on the Spaces titles,
but sometimes that one slips through.
So Ackman once called Howard Hughes potentially the next Berkshire.
I think he invested in it.
Missed by 90 cents.
Well, he wants to turn it into the next Berkshire.
It is not the next Berkshire right now. That's how he worded it? I'm sorry. But they missed by 90 cents well he wants to turn it into the next berkshire it is not the next
berkshire right now that's how he worded it i'm sorry but they missed by 90 cents for what it's
worth parvana's out here too uh their earnings let it come through i don't i don't need to defend uh
bill ackman old willie no getting it right is correct i do not read a single one of his long
posts if i am being real sorry to be that guy I just
don't have the time if shy was up here I'll tell that to his face too and stock talk every single
one you drop you drop a bomb and you're like this is a great threat I'm like yeah it probably is
sorry everyone all right um Viva also uh then that's when they're gonna be reporting I was
just trying to go for a quick pivot there uh Parvana though and Fortinet also reported earnings
I'm going to go for a quick pivot there.
Carvana, though, and Fortinet also reported earnings.
Ooh, Mercado Libre continuing now at $2,400.
Let's go.
CBNA initial move a little bit higher.
Arm holdings.
Arm was a double beat.
Was there some type of – there must be an issue within those numbers.
Guidance or something, because that's rough.
Carvana beat?
Double beat.
Splat.
I actually think Mercado Libre is going to be a bigger position than Amazon
my portfolio at some point.
All right. Axon numbers. Fiscal year 2025 Q1, revenue 604 million, beat estimates of 586.
Growth rate is 31%. I believe that is a re-acceleration beating guidance.
Their guidance, they did raise their guidance,
$2.6 billion to $2.7 billion for full year.
Adjusted EBITDA margins at 25.7%.
Income margin, 14.6%.
ARR, annual recurring revenue, 34% growth.
Net retention rate,
one to 23%.
Man,
this is a solid company.
How's it moving?
okay.
Wait,
wait,
wait,
here's the arm holdings thing.
EPS expected to be a dollar 60 while she wanted $2 revenue expected to be
like 4 billion while she was 4.9 billion.
So large,
large,
like a,
like a stock talk size missed on Arm Holdings.
That's a big drop in guidance
there.
Just to be clear, Stock Talk was actually
in better shape than me. Just so we're on the same page.
But, I'll let it go.
There's only so many. You can make jokes, but
Arm Holdings, though. That is
what's moving us lower.
That was Skip Black Day every time, though time though I get them too cocky there we go car
runner numbers yeah massive EPS beat I see $1.51 EPS first 65 cent expectation revenue at4.232 billion versus $4 billion expected.
Way to kill the time over there. curve on his numbers right shouldn't have
literally just messing around it was just silent I thought it was a funny thing sorry guys some
people can handle it some people can't no I'm kidding uh Fortinet they raised their EPS and
revenue guidance for the or raise EPS guidance affir. Their revenue guidance for the year.
Flutter Entertainment released a form 8.
That is FanDuel.
It's been a shareholder letter or something.
Maybe this is their earnings. I'm not seeing the Apple 11 earnings. I'm not seeing the Apple oven earnings. They're down 7%. Yeah. I haven't seen numbers yet, though.
We'll give it a couple more minutes on these earnings.
And I do want to talk about the big headlines from last night.
There's also apparently an earth-shattering announcement coming in the next couple days.
I don't know what that's going to be.
We'll talk more about that one.
There was a couple different directions.
Headlines that have now been forgotten at this point.
I don't see Apple Evans even out yet, but big reaction down here.
Yeah.
Weird. weird I'm not seeing Oxy right now either
Oxy's 415. No, I. there's the app 11 it's out and it's up now up two percent three percent um if i can find the numbers here
that was a massive double reversal there. Yeah.
Well, I don't understand why it reacted down.
If somebody knows, let us know.
But the numbers just now came out.
Did somebody say the Mercado Libre numbers are ready?
Yeah.
Okay, my bad.
No, you're good.
What was EPS on those? I only saw the revenue.
$9.74
beat S&M to $8.27.
My god, do they just keep blowing out
every quarter? So I got Apple
11, $1.67
EPS, and
I got a $1.484
billion revenue.
Stock is stock is moving up now it's up four percent 317 a share through almost 320 this name has a crazy streak of earnings it's got 47 consecutive crazy reports
that's wild i don't know why it was down,
but it was down like 12%.
Now it's up 8%.
Yeah, it seems like it was down, I guess,
because they were late to a report or something.
I don't know.
Those numbers definitely came out later than expected.
All right, let's start to shift the conversation here.
If some more numbers come out, we can circle back on them.
Another day of live earnings.
Tomorrow is actually gonna be pretty crazy too.
So first of all, it doesn't mean we have to fully move away
from the live earnings or like, well,
the earnings part of it.
Definitely, if you're digging in,
feel free to bring us back. Tomorrow have names like coinbase trade desk draft kings
rocket lab cloudflare affirm so many names reporting after live in the space so i'm excited for that
one i want to shift the conversation and talk about what i was saying about there earlier
yesterday after the close we were up about a percentage point when there came out headlines
that hey trade talks are going to start this weekend in Switzerland.
There's no advanced discussions here.
It's kind of just a start.
It's between percent and I think it was the vice premier on the other side.
China actually came in and confirmed that was happening.
It wasn't this kind of he said, she said thing.
Stock talk.
I want to go to you first in this one.
There's a couple of things back here of like, I don't know, what what's the wind condition here what are they going to say coming out of this like
clearly it's just the first one i don't know how much the market is really putting this back on
this but um yeah yeah i kind of want to start your there your kind of general thoughts and
i don't know how you how you feel like the market's taking it when conditions that type of thing
that seems like uh it's going to be a very wind conditions from like this weekend yeah i don't know how you feel like the market's taking it, wind conditions, that type of thing. That seems like it's going to be a very big thing.
You mean wind conditions from this weekend?
Yeah, I don't know.
And you can also see who is that wind condition for.
But my perspective is going towards the markets.
What does the market come out of this and say,
hey, we're up 1%, 2% on Monday or whatever it is,
is what I'm kind of writing that question.
Yeah, I think you just need softness all around.
What I mean by that is just really like a suspension of egos,
a willingness to discuss,
because, I mean, there is still a tremendous amount of ego at play here.
And I'm actually not just saying that about Trump.
I know everyone thinks, like, it's all Trump's ego.
It's not.
I mean, China has a tremendous amount of political ego as well,
right? I mean, there's been, like today, there was literally a spar, I don't want to call a spar,
but there was a back and forth in the media where a reporter asked Trump, hey, China said you wanted
to meet. And then if you look at the look on his face, he was like pissed off that he asked of that.
He was like, well, China needs to reconsider who asked who to meet.
So like we're still at the point of this negotiation process where neither side wants to concede that they want to talk because it's a perceived point of weakness.
Right. It's like, oh, I need to have negotiations with you because our economy is unraveling and I really need to talk. Like, neither side wants to say that.
So, I don't know.
The sentiment going into it isn't great, but I will say this.
I am glad that it's not Trump and Xi on a phone call.
I know a lot of people wanted that.
They're like, I want, you know, Trump and Xi to get on a phone call.
I'm glad that that's not what it is because I don't think that would go well.
Instead, we're having the vice
premier who if you've heard his comments before he is incrementally more reasonable than the rest
of the ccp apparatus and i'm somebody who follows chinese politics very closely i like read their
news articles and translate them and so i like to think I have a good feel for that. Do you, but just in general, do you agree with what a lot of what they say?
No, no, I don't, I don't, I mean, obviously I'm, I'm an American and I'm not like,
you know, I do think a lot of what they say is propaganda, but I'm also not naive. A lot of what
we say is propaganda too. Um, you know, even though I am an American and I'm pro American,
I mean, it's not like we don't have our own propaganda. We do. But, you know, there's a fine line in between coming out of that meeting with
a positive tone and saying the discussions went well and then coming out of that meeting saying,
yeah, we chatted, but there's no deal. Like those two things are just,
those two outcomes can be basically a couple of words apart
from each other, right? Like maybe the meetings start well, and there's an acknowledgement that
something needs to be done. And, you know, both sides are on the page about getting a deal done.
I mean, that's fine. But kind words are really all you're going to have to lean on in that kind of scenario. Like the markets will have to be fine with the idea that some sort of softening in the language
is a good enough reason to bid the markets up.
And I think for the last couple of weeks, that has been the catalyst.
It's been this idea of like more exemptions getting announced.
You know, Trump continuing to use the word deals are coming.
You know, Besant's interviews where
he basically said we can't have tariffs at 145 percent. They're not sustainable. These little
cues are, I think, what has offered the market support in the last few weeks. So I don't know
if those same cues being regurgitated are going to be enough. I think what you'll need to see is
meaningful resolution towards the point of a deal. And even if we do get that, a deal will take years.
And so what you really need to see here is you need to see positive commentary out of the meeting.
Then you need to see either a delay or suspension of the tariffs in the interim. So in the negotiating
interim, you have to see a willingness for both sides to say, okay, we're going to take tariffs
back to pre-April 2nd levels while we talk this out.
And then third, you need to see that deal come together as quickly as possible, whether that's six months, 12 months, 18 months, whatever.
I mean, that's generally the timeframes we're looking at when you're talking about trade deals.
So, you know, in the case of the UK and India, it took three years.
So, you know, three and a half years.
So it could take a lot longer.
But yeah, those are the three things I'd like to see.
I'd like to see a suspension of tariffs in the interim while we negotiate.
And I'd like to see positive commentary come out of the meeting.
I may be asking for a lot by wanting those things.
But I think that's what you need to see for the markets to have a sustained rally above the 200-day moving average and to really turn this thing around.
Because, yeah, it's been a hell of a rally off the lows,
but we still haven't reclaimed the 200-day.
You know, I think that UK-India one is actually a little bit of an interesting point.
And I guess if you're trying to look like a glass half-full type of person
and you're a big kind of global trade thing you know i wonder how
enjoyer i wonder if like that uk and india trade deal which anyone doesn't know like you were
saying they were trying to get a free trade deal done in certain areas for three four years
and they finally got it done now right as all this stuff is happening will this end up with
an outcome where a lot of the world goes close to a free trade. U.S. in three years goes close to a free trade,
and it kind of ends up in a place where more people ended up wanting.
As crazy as I have an unexpected thing that could be right now,
it can totally surprise me in the next couple of years.
It's not like an investment thing, but I don't know.
Well, I mean, U.S. policy,
yeah, I mean, obviously U.S. policy, trade policy will change
as presidents change naturally.
So, yeah, within four years, whether it's another Republican or a Democrat in the White House,
I mean, there will be some sort of adjustment to trade.
My kind of question is if we see the rest of the world getting closer on free trade over the next six months,
which they'll have taking years to get through.
Yeah, they have to.
They'll have to. It's an it's an unintended consequence of of this policy.
And this is another one of the
many reasons why this was not a smart policy approach, in my view, to begin with. But yes,
that is another unintended consequence, because by virtue of losing the U.S. consumer, which in
many cases, there's effectively an embargo on trade between these countries, right? Like,
if you have tariffs over 100%, there are some goods that you outright will not ship. And it's the reason why there's so many
ships stuck in the port of Shanghai. There's a reason why there's so many ships that should be
in Los Angeles port that are not there because shipments have halted in a lot of categories for
new inventory because people do not or cannot pay 100 to 145% tariffs.
It's like not feasible. You know, in the case of a lot of small businesses, those products are
shipping. Why? Because the small businesses don't have a choice. They still have to operate, right?
So a lot of them are taking it on the chin. Some may or may not go bankrupt, but they don't have the liberty in the cash pile.
If you're a small business who has $20,000 in cash and eight employees and your cost of goods go up by 130%, your alternative is shut down the business or eat the 130% cost.
eat the 130% cost. And in many cases, people, at least for the current quarter are saying, okay,
hopefully this won't last. We'll take the $220,000 customs charge and get those goods imported anyway.
And hopefully, you know, the business can live to see another day and maybe by next quarter,
tariffs will be softer. That's literally what a lot of small businesses are thinking at this
juncture. Now, if you put that in the lens of other countries,
they kind of have to think the same way. Because if you're a country that depends on the U.S.
consumer as an outlet, which is a lot of countries, I mean, we make up, you know,
30 or anywhere from 25 to 30 percent of global consumption any given year. I mean,
it can get closer to 30% on certain years
where there's economic weakness internationally.
It can get closer to 25 when the international economy is doing good.
But 25 to 30% of all global retail consumption
comes from one country, and that's us.
And so you create that vacuum,
and yeah, you're going to create a scramble
between those other nations to find outlets
for their goods.
And that means trade deals between those nations.
Yeah.
If the U.S. is not willing to grant market access to some of these countries, they will
attempt to find market access elsewhere.
Now, am I saying the U.S. economy is replaceable?
No, it is not. Even in the cases
where people do look for other outlets for consumption, they will not be able to find
consumption at the magnitude that it exists in the United States. It exists nowhere else in
that magnitude. Even if you compiled the next five countries in line for consumption power, it wouldn't come close. Because the thing is,
goods aren't consumed equally through all categories, but the United States consumes
goods broadly through most major categories. Even if you have a country that, let's say,
has a high level of consumption power relative to its overall economy, that doesn't mean they're buying everything.
They may be heavy consumers of goods in a particular industry.
Like a country may be an extremely heavy importer of steel, let's say, which is important for a lot of industries, right?
That doesn't mean they're going to buy your cheap plastic Chinese computer accessories,
but Americans will.
Americans will buy almost all of them,
actually. You know, that's why when you look at some of those stats, we're talking about
strollers earlier, you know, 97% of American strollers are made in China. You know, you go
through most everyday plastic goods, you'll find similar numbers, you know, computer, plastic
computer accessories, things like, you know, headphone holders, webcam stands, the little thing that blocks your webcam.
These things that people don't think are big industries but are actually multibillion dollar industries, plastic computer accessories, that's like 95% source from China.
You're not going to be able to find an outlet by saying, OK, you know, I'll find five countries and pile them all together and then maybe I'll have somewhere close to the U.S. consumer's consumption power.
Yeah, but you won't have the U.S. consumer's discretion for goods, which is a much wider and more liberal discretion for goods than almost any other country on Earth.
People just don't buy shit, literal shit we do we like americans love to buy
things that they think add a perceived level only in america did you actually literally buy like
elephant poop though is that you know that is we buy we actually buy shit too like fertilizer but
yeah i mean like we buy a bunch of... Well, that's different.
But I'm talking actually as a gift.
I will buy you an outlet.
Send me your address.
Okay, I will. But my point I'm making is that you're not going to be able to find an outlet for those things.
And so, yes, you might be able to find someone else who will buy 5% to 10% of your, I don't know, auto components that the
United States is no longer buying. But like, good luck finding somebody who's gonna buy 100% of them
and good luck finding somebody who's gonna buy across multiple industries broadly in the it to
the tune of multiple billions of dollars. Like that's just not there's no one else on earth that does that. No one like literally not one country. And so, yeah, they need us. And if we aren't willing to come to the table, then they will have to scramble to find outlets. of these sort of haphazard trade deals. Although I don't think India and the UK is a good example of that
because that's been negotiated for a long time.
But if we take that out of the context and say, you know,
will we see some sort of shorter term trade deals
or a greater willingness for these countries
to engage with each other for trade deals,
I think you could pretty confidently say that, yeah, that will happen.
And so that's an unintended consequence of this policy, I think.
Hey, I just want to talk really quick and mention, because there was 29% of people that are here for
it, but AMC reported their earnings 862.5 million versus 837.05 expected. EPS minus 58 cents versus minus 41 cents expected. Oxy also
reported their earnings revenue at 6.803 billion versus 6.91 expected. EPS at 87 cents versus 76
cents expected. And that's pretty much all the relevant earnings today.
all the relevant earnings today.
Evan, it was interesting,
the timing of that announcement last night.
We were down there,
kind of in the depths a little bit yesterday,
and it was literally,
that headline came within 20 seconds
of the futures market opening.
I mean, I just started spam clicking by.
I told Sam about this,
but it was really
interesting timing and then of course today we slowly gave the entire thing back dipped a little
bit below it and kind of held the same area all right so you're nancy pelosi's uh account strategy
or something i i think i've just figured out the Trump playbook at this point. By the way, Politico is saying that big announcement that Trump was hyping up is going to be Medicare drug price plan, is what Politico was saying.
I'll dig a little bit more into that.
I'm also seeing another Trump headline saying, can't predict whether the U.S. and China will get along.
So I guess it's taking some questions somewhere.
Yeah, he's made a few comments.
Big meeting on Saturday in Switzerland.
We want to have a fair deal.
Please say it in the accent.
Big meeting.
Big meeting on Saturday over in Switzerland.
We want to have a fair trade deal.
It's been far too long.
The last four years, terrible.
Where have you been in Switzerland?
What's up, Kevin?
Occidental earnings, Kevin.
Oil, gas, energy, fun times.
Yeah, I actually haven't looked at the numbers.
What's happening with lean hogs in Western Texas?
Lean hogs.
They're shooting a lot of Apaches.
All right.
Lean hogs are actually kind of hinging a bit, but the price has been pretty stable.
Is my mic good, or is it?
Yep, you're good.
You're good.
All right.
Yeah.
Oil made that move back to the downside here today, You're good. You're good. All right. Yeah.
Oil made that move back to the downside here today.
So some of that enthusiasm has been taken out a bit.
I'm just kind of curious to see how we actually resolve this.
If that $55 level is going to get hit again,
it probably could be another scout point for an upside move.
But once again, if you kind of look at a longer-term trend chart,
it's moving to the downside.
Now, the EIA report today, I don't think there were any real surprises.
It didn't really match up with the IEA or the API number that we got yesterday.
But overall, the energy complex is just a tough trade.
I'm a little bit skeptical of natural gas. I'm always going to be anytime it's above 350, 360, but it has been holding up pretty well for the most part. That's going to be an inflationary factor, but that'll be a problem down the road that we will kind of figure out. I know you guys probably already talked about the Fed commentary. Sorry, I couldn't come up earlier.
I don't think there was anything that was a surprise with Powell's commentary.
It's been pretty much on par for anybody that really kind of follows this stuff.
We got to wait for the data.
That's not surprising.
The Trump 145% tariffs, not considering taking that off.
I thought it was interesting that that was announced like
literally two minutes before I think the presser. So I think that kind of put some pressure on the
down on the markets here, but we've been able to hold the 5,600 level. I do have to say, I mean,
market breadth looked good today, but when you kind of look at the price action, it looks like
we were, it was about to be very ugly for that close without that headline so
um if you look at the daily chart and you look at stochastics or you look at the cci both flashing you know sell signals small pullbacks i'm not saying we're getting back to to new lows within
this market but it's kind of signaling that but it's going to be very hard to try to trade that
technical signal if you're going to get this kind of leaking out of the white house of sporadic data or sporadic information whether good or or bad so i would just be
you know try to stay tactical there outside of that everything that i'm looking at as far as the
sectors there's nothing that really kind of looks great from a technical standpoint i mean we're all
basing out when it comes to macds and things of that nature on the weekly,
but we're all testing pretty key moving averages outside of energy,
which I think is testing the 200 week.
If you had to have a sector, I would say industrials kind of look decent.
That's also kind of a tough one because we had really good performance for some industrials,
like GE Nova and things of that nature and then if you look at like union pacific or if you look at tps those ones look you know fairly depressed but the
chart setup for the xli looks actually pretty decent here um so that's kind of what i have
man i don't i don't have anything else uh unless you guys have like some questions to kind of jog
my thoughts here but uh overall it was a decent recovery, but it was looking pretty ugly there at the close.
It looked like we had some pen action at 5,600, probably had some stops being rolled up, blown out for that 50-point move.
And then we kind of subsided from there.
And I think we got to get more clarity, too, because I'm from Bloomberg's reporting is that they're going to eliminate the
Biden rule, but put new rules on. And so maybe I didn't, maybe there's another report that says
something different, but there might be something else that comes down the line here. Cause I would
be very shocked if they kind of remove that and completely open up that technology to China. And
if that is going to be the case, then that could be a major gesture for trade talks.
And if that could actually change the whole dynamics.
I think there's no way they get opened up to China. What I'm interested in is those Biden
era ones were just honestly kind of weird towards the end of it. That tier two of countries is where
I think the question is, why are we having those Q2 ones are those the ones
that are going to be taken away like I can't imagine there's any change to the policy of China
on semiconductors especially it'll probably get worse I agree I think they actually did mention
oh yeah go ahead you're gonna say what UAE well I was gonna say this AI diffusion thing that came
out it was supposed to take effect on the 15th which would be next week from just a week away uae was the one i was pointing to though my guess i didn't even look
was it yeah yeah so it seems like there's probably a deal to be made here for the ai technology for
some middle eastern countries i'm not sure if it covers china or not so that's what i mean once
again it's a headline that we have reported but we we got to get more clarity. Because I mean, if it's a complete removal, that would be a huge,
huge win for NVIDIA, right? And NVIDIA, probably, in my opinion, would be completely undervalued
compared to the opportunities that they would have there. I doubt that as well, though,
Evan. I think there's going to be an adjustment to the rule. Maybe they're saying that they're
going to eliminate the Biden rule and then implement the Trump rule.
That's kind of my leaning, but we just don't know.
Yeah, just so we're clear, there's been a lot of headlines about Chinese AI chips being able to be competitive with NVIDIA chips.
Those are their holdback, the kind of like lower quality ones that they're allowed to have in the Chinese market.
If you fully unleashed NVIDIA in the Chinese market um that would be a be quite the move on
the stock but i i think that how much move you had today versus what that would mean tells you
uh there's nothing no comments about china but i don't think he's gonna come
or maybe yeah maybe maybe saturday descent you want to just say something i don't need it to
actually happen well actually by saturday the market will forget by monday yeah maybe it might be a decent little futures pop
on sunday um you know it does kind of open us up though to having these tier two countries if you
will um being utilized as like intermediaries for uh china right i think that's one of the
allegations that you have against nvidia and the Singapore sales, which looked a little bit outsized compared to their market.
And so that also could be a thing. That could be a backdoor item. Once again,
that could be a gesture though, right? So we'll see. But I mean, it was a hell of a pop. I didn't
even know what was going on. I was just like, bye. And then I, so I scalped the buy, ample of this.
I scalped the buy, rolled up on ES Futures,
and it hit top tech and gave like half the profits back.
So that kind of sucked.
But, you know, it was a decent little run.
Nice little squeeze.
And that news came out last night, Kevin.
I just started market buying all the way up.
Yeah.
Sometimes you just, you know, headline like that, you just ride that wave as far as it'll go.
Yeah.
Yesterday was actually very interesting, though.
I mean, it didn't really play out for these bulls yet.
But, like, what I saw from a flow standpoint, somebody went in and bought,
and they might've still made money because you could trade SPX 24 hours a day, right? So who
knows? But somebody came in and bought the 5,700 calls for SPX expiring today. They bought them
for like $5.50. That happened in the morning yesterday, actually. So those were kind of
drawn down, but then you had that pop. So if they got out or they spread it off, it would have been pretty decent trade. But there was also a lot of aggressive, you know, long options positioning for the MAG-7 names.
situation here, right? And I'll try to talk about a high level where you try to go along the
components. So let's say you go long MAG-7 and you short, say the S&P 500 or you short NASDAQ.
And the goal of that trade is for a couple of things to happen. One, if you're selling premium
in that type of trade, you have vol crush. If vol crushes, you have MAG-7s outperform or technology
outperform or what have you compared to the broader base index.
So you lose on shorting the index, but you win.
And the alpha is actually going along those specific companies.
And that trade was definitely being put on yesterday.
The put call ratio for every MAG7 in a day like yesterday was all well below one.
Right. So a lot of activity was taking place where that probably that probably got blown up though was the whole Apple Google situation. I mean, imagine if we didn't have the Google news
where the index would be. If we didn't have the Apple news, imagine where the index would be here
today. We probably would have gotten fairly close to 5,700. So I'm not sure if the trade's still on
there, but that's something to kind of keep in mind here. I feel like, and it's probably going
to be like the, it's going to be bottom line. I feel like that price action today, one was pretty much
contained and in range normal for FOMC meeting. It looked a lot heavier on the downside than upside
here. And we continue to test this neckline of 5,600. And we broke below it, but we didn't
break below it with a lot of conviction here.
So maybe we had some buyers kind of stepping in.
Maybe they're going to continue to defend that line here. But if we don't, I feel like we have a little bit of a small pullback here.
And if we're going to keep the 145 tariffs on after the weekend, because I think the market kind of is expecting that we were going to see these tariffs coming down over the next two weeks.
And if that's not going to be the case, I find it very difficult how we still hold up here.
I think the market is trying to trade ahead of these trade deals as much as they possibly can.
But if we're not going to budge, China might come back and say, hey, like, once again, we're going to tell you again, like, we want you to show, give us a gesture that you're
you're willing to do something here. And we've done a couple of things in the back end, right?
Like silently lowered or exempted, you know, certain products and things of that nature. China
has done the same exact thing, but it hasn't been a really big overture being signaled yet. And I,
I believe that maybe we do see tariffs kind of being rolled back a little bit
post this meeting. If that's not the case, I'm not sure how the market's going to really kind
of hold up for that. So that's kind of my two cents on it. Even though I will contend, you know,
the weekly chart still looks bullish and we're about to probably have a MACD cross here in the
next couple of weeks. If we break through a lot of these resistance levels for
these sectors, and a lot of them are hitting the 50-week moving average or their 20-week moving
average, one of the two, kind of just depends on the chart. If they're able to break above that,
that's also going to confirm the MACD crosses for a lot of the indexes. And the index components
showing bullish signals should also then lead the index higher so I want to kind of say pull back
in my head for now but I also am aware that the technical setup kind of says if the bears don't
really step in here in the next week or so I don't see us even probably even getting I don't
see getting close but I don't see us making any form of new lows in this whole cycle outside the
next couple weeks yeah on the technical side of things i mean it
almost looks like a kind of little three-day pullback maybe a little mini flag we're
consolidating above the 50-day the low of day today to the exact wick on spy was the daily
nine ema and i believe on qqq it was like just a tad below it but essentially the same thing there
QQQ, it was like just a
tad below it, but essentially the
same thing there. Just worth
pointing out on that daily. Yeah, look at
the highs, though, too. Okay, yeah,
and I can say the same thing for the highs. So pull up
an hour chart or a four-hour chart.
I mean, look where we literally stopped
dead at the trend line
on the top-tick highs, right, the WIC highs,
not closing highs.
So, you know, it's an interesting formation.
Yes, it's technically a consolidation here.
I kind of go back and markets can trade on whatever the hell they want, but I kind of
look at it and say, no budget on tariffs for China. Maybe this diffusion rule kind of gives
you a little bit of optimism here, but we're kind of waiting and waiting. And I'm a firm believer,
you got like two more weeks until you really have supply chain issues. And I'm a firm believer, like you got like two more weeks until you really have
supply chain issues. And I feel like that probably would then kind of command the news flow rather
than these China discussions. But that just might be me. So you hear Powell's comments around that,
around the supply. He kind of shrugged it off. He was talking about everyone that kind of bought ahead of all this stuff,
and then he said we should see the other side of that,
and it should kind of just balance out is the way I took it.
Yeah, rightfully so.
Everything that he said today was not wrong.
I mean, I've even had battles on the network where people are like,
oh, Powell's getting political.
There's nothing political about this.
Even resorting to we had tariffs in the last, we did have tariffs.
We went on 45%.
Okay.
Right.
So at the end of the day, no one knows what the hell is actually going to happen here.
Do we actually see a deflationary type of pressure here where you have, they're so high
right now and you've crushed sentiment so much that people just kind of just ramped
up and bought in Q1 and then just stopped consuming?
That could be the case. It could be the same situation where consumers continue to utilize
credit, as you talked about, and continue to just buy, even with prices being higher,
which would be inflationary, which we won't even see as of yet. Q1 GDP most likely will be revised
higher. The average or the mean here, when you're looking at revisions
for GDP for the first revision, it's 0.5%, 50 basis points. It's not outside of the realm of
possibility that we get a revision that shows you a 0.2% increase for the quarter. It's not
outside of the realm of possibility. And then what Paul was also talking about when you look at GDP, he's absolutely correct. Right now, there is in the GDP number, there's a
disconnect between imports, inventory and consumption. If you add the numbers up,
they don't add up. And the reason is because you have intermediate goods that are not being
counted into the GDP print. Those intermediate goods will probably flow into the inventory portion in Q2. And then
we'll show a massive buildup in inventory in Q2. We'll probably see a significant drop-off in
shipping in Q1. And then net-net Q2, you could see a 2.5%, 3% growth just because of how GDP is
calculated, which makes it very difficult. Potential contraction
in Q1, maybe a two and a half, three percent growth in Q2. Inflation that we don't really
know how that's going to hit, supply chain where we don't really know how that's going
to hit. I mean, there's a lot of factors out there that makes it very difficult for the
Fed. And I've been a guy that says, hey, Fed should cut in June, Fed should cut in December.
But that was before tariffs actually went into place. I did not think that President Trump was actually going to pull
this up, not as aggressively as we probably would have seen, right? If we were in like
a world without tariffs, yes, they should cut in June. I don't think there's a question around
that, right? A maintenance cut seems likely here. But the cut in June, and if you do see it a an inflationary shock even
though it's probably going to be temporary i don't think it's going to be that long
but i think it will be temporary the optics of that looks very bad and that's where the fed
would you call it transitory i think yeah i mean i mean if the tariffs come off at some point, yeah, and, you know, it's a boogeyman word, but, yeah, eventually.
Tariffs should front load, tariffs should actually front load demand, which we've seen, right, in shipping and imports.
We should have then a buildup in old inventory.
We should have then prices for that inventory that was being purchased, being reflected
in final products, which we as a consumer as well as producers,
which producers are already feeling the hit,
and producers are making adjustments.
And the adjustments are lowering production
and canceling orders, which is why we have the shipping issue
in the first place.
And then at that point in time, you're going to see a shock, and then you're going to see
demand crack.
People are not going to buy those goods.
Now, what will be actually very interesting, though, and I think this is something that
you got to keep in mind, demand for goods might substantially be lower in the latter
half of this year.
Talk about maybe mid Q3,
maybe Q4. But the experiences economy might still thrive. I mean, that has been very resilient since COVID-19. People might still be like, you know what, YOLO, right? Like, I might not be able
to buy this new car, but I'm going on a cruise. And these cruise liners are kind of showing that
within their guidance. So it doesn't mean like we're in the great depression and we're in like all eating and
you know soup kitchens and anything of that nature but you might see a drop off in consumer
discretionary x tourism and travel that might be the case uh you will see an impact josh talks
about this he's not up here i don't think but josh talks about this as. You will see an impact when it comes to the energy market as well. You're
going to see lower production here in the United States, but you're also going to probably see
lower exports and oil exports and petroleum exports around 8% to 10% of GDP, depending on
our production levels and demand in the market. And demand in the market really is, it's not really the outstripping
anything that's like just grandiose in that manner.
So, you know, you're also going to have
that kind of impact when it comes to GDP.
So the economy itself is going to kind of realign itself.
But yeah, I do believe it's going to be,
I do believe it's going to be transitory in some respects
because there is a put, in my opinion, from this White House.
And the closer and closer we get to midterms, I think that put strike gets higher and higher.
You know what I'm saying?
And so I think we'll see, you know, we're calling each other bluffs right now.
I say you got two or three more weeks until consumers actually start to feel it.
And you'll probably start seeing it in like automotives.
You know, cars will see it.
And unfortunately with cars, and I'll kick it back.
Unfortunately, with the automotive side of it, especially if we don't figure out this parts deal thing, is that one, that's going to have a direct impact when it comes to car insurance.
Higher prices for a car, higher your insurance cost goes up.
And that does not come down. And that has been an issue since COVID-19.
And that's the, that's one of the problems.
Home building probably will slow,
but price for inputs for homes are going to go up from every,
pretty much every type of material that is out there.
And then unfortunately that goes up cost per home kind of goes up.
And what happens when your cost per home goes up, your insurance for your that goes up. Cost per home kind of goes up. And what happens when your cost per home goes up?
Your insurance for your home goes up.
And I have never experienced my homeowner's insurance ever going down.
So those are kind of going to be the longer term ramifications that I think the Fed is well aware of and why they are cautious.
So we'll see.
We'll see how this all pans out.
Kevin, another interesting piece that came out today was they were asking Trump.
It's when he made that comment just before Powell about not budging on 145 percent.
But the other piece of it was interesting about it.
Basically, they were trying to find out if he was going to start exempting things.
And he shied away from that completely about trying to start making these exemptions
even though we've seen and heard rumblings of it um and then the the point used was like uh baby
strollers and car seats right um if something like that would be exempted and he he completely
kind of shied away from that which was different than what we've seen over the last couple weeks
which has been sounded like there were going to be some exemptions in there. I don't know. Any
thoughts around that piece? Yeah, well, there are exemptions and we pretty much probably get
exemptions every week. Right. The fact that we announced them publicly, right, like unless you're
like a huge nerd and you're going through all of these, you know, port statements and things that probably not.
But yeah, we do have exemptions that are being put in place.
China is doing the same.
China is actually walking back a lot of these tariffs that they have on us because they need it for their manufacturing.
So I think that you probably will see exemptions pulling at the heartstrings for strollers and things of that nature. I don't see them budging on that unless somebody walks up in the White House and makes a deal. But I could see exemptions for semiconductors. I could see exemptions for automotive parts. I could also see exemptions for energy materials. Yeah. Yeah. I could see like, Hey,
we're going to produce auto parts here, but can we get the materials in without paying extra?
Yeah. I would see that. Yeah. I could see that. And I think you actually are seeing that being
priced into copper. So if you guys look at copper prices right now, like kind of fell off a little
bit of a cliff here.
And I think copper is really kind of reflecting
the backing off of tariffs on that product offering
because one of the real drivers for copper,
I mean, it's been demand and yada, yada, yada, right?
But one of the bigger drivers for price action for copper
has been the tariffs because we import like 40%,
35, 40% of all the copper that we consume on a yearly basis.
The copper, you know, you tariff copper at 20% or whatever,
it's really not gonna be, it's not sustainable
because we need it.
Same thing with like uranium, which like no one,
no one cares about that, but like uranium,
it's kinda like, all right,
are you gonna actually tariff uranium?
Because like, we don't really have that supply here in a manner that we're accustomed to.
Now, that's going to be a product that's not like every single day, like we're trying to figure out where uranium is going.
If you're looking out a year, two years, which is how the order cycle goes for that type of material, that's where it gets a little bit concerning.
So, yeah, I think uh so yeah i think you will
i think you will but he's got a you know once again you water it down too much then
um kind of call you know somebody's gonna kind of call your bluff right and that's
this is the last thing too what makes this very odd is that best of a cent keeps coming out and
is like oh yeah these are completely unsustainable
and it's like you're saying that publicly like you know china wanted to stick it to you and they know that in the next two to three weeks this whole thing is unsustainable could they wait it out
they could right they can make an overture they can make a gesture that hey like let's meet but
it doesn't mean like because they're meeting that we're going to have a deal um you know the last try to deal with what that took like a year year
and a half or something yeah about a year and a half so i don't i you know sometimes it's kind
of the messaging just seems like it waters it down even more it's like just don't tell them like
in your mind say that you're going to roll them back in two weeks but for now if you're trying
to get them to the table and do something then then kind of hold the line. That's how I look at it. But if you're going to tell everybody in the
world, yeah, this is unsustainable, they're going to just wait it out until the pressure
kind of hits you. And then you'll see a form of resolution. What do I know? I'm not a trade
representative. We'll see what they kind of pull off here. One thing I got to give the White House credit for is that they are known for making deals,
right? I got to give them credit. Now, like the validity of these deals, you know, that's here
or there, we won't go down that route, but they will try to make a deal at some point in time,
whether above border or not. So, you know, I would put it in the ball. I put the ball in their court
to say, okay, let's see what you got. I would also then be skeptical though. If you hear anything that's
kind of like a, like a non-binding trade agreement, a purchasing arrangement, those are some of the
language that we heard in Trump 1.0, those aren't, there's no accountability there. And so it might
be decent for a symbolic look. Yeah, we did
something and on a campaign trail, it might sound great, but materially, it might not even change
anything. And so I'm looking for something that's actually binding agreements, at least with China.
I'm not too concerned about like the EU, even though the EU low key is getting ready and geared
up to slap some tariffs on. But I think the China side side of it if it's some weak flimsy deal it would be
completely pointless and i think i just think it would be off or not right um this whole ordeal
that we've been going through but i do see josh up here now so maybe he's got some thoughts yeah i
summoned josh up here because i want to see what his thoughts were around what you were talking about there.
Yeah, well, I heard some of it.
I had to drop off briefly for a call, so I might have missed some of it.
But, yeah, I mean, I think I just posted this thing up in the nest.
Even Bloomberg is calling out Powell on his economic assessment.
So I guess in that part, I sort of disagree, Kevin,
with that specific aspect of what you're saying.
I think generally we agree on sort of what a mess this is and sort of the poor way that is being negotiated.
But I mean, there is hard data that shows that there are economic issues.
issues and even Bloomberg is talking about it and uh you know it's it's sort of obvious that
And even Bloomberg is talking about it.
it's an issue I mean when you have fewer boats and then you have lower utilization on trucks
uh you know it's sort of magical thinking to think that it's not going to lead to
uh less sales at stores and various other sort of knock-on effects. So it's a weird situation.
Yeah. Let me kind of push back on that because I appreciate that commentary. And I think for
those that are up here every single day, yes, I've been harping about the economic data for
a very long time here, right? It's just not the data that the Fed cares about. The shipping side
of it is something that, yes, it's a concern. I think we all see the writing on the wall.
these tariffs down to 5% or 10%, right? Then you kind of like, you pretty much put a match in a
trash can then, right, on the inflationary front. And I think that's where you lose the credibility.
So I'm there with you. Like the writing's on the wall, but you got to get something that's
on paper to say, okay, here's the signal. And for me, I think that's labor. If you get the labor market to show any type of signs of cracking in the government statistics, I think that's going
to be enough for the Fed to actually take action. I'm right there with you. Credit card utilization
rates, way too high. When you're looking at the credit card data for revolving and non-revolving
credit, we've seen two contractions since November,
which is recessionary. I've been harping about this for a very long time.
So I'm right there with you. But I do believe that there is a risk. How do I say this in a nice
way, Josh? Because I'm trying to... There is a risk because of the volatile volatile nature of the administration's policies right now.
There is a risk that you try to accommodate the economic weakness that the writing is on the wall.
And then the administration completely does like straight up just, you know, very accommodative policies on the administration.
They pull back a lot of
the policies that we are concerned about. And then the Fed's going to look like
they're basically going to look like shit. There's nothing, no better way. So I think
there's a risk there. I agree with you, but you kind of see the other side of that too, right?
But you kind of see the other side of that too, right?
Like, that's how I kind of looked at it.
I just want to give it a reason.
Give us a reason.
If there wasn't tariff policy, I would say cut.
Yeah, they should be cut next month for sure.
Maintenance cut at least.
But the tariff policy and the volatile nature of it, I think it makes it very hard for them.
Yeah, I don't know. I'm not that sympathetic.
They've sort of blown it the whole way through.
So I'm not saying that they need to go crazy with it,
but they're running QT and keeping rates pretty high after, you know,
raising them by what was like 400 basis points over a short amount of time,
you know, in the midst of all this, I think it's a mistake. And the reality is, look,
like they can keep these things in a range without it being catastrophic if they lowered rates a
little and said, hey, we'll lower rates more if there isn't a reasonable
tariff deal. And if there is, then we might raise them back. I don't know. I mean, I just
think that would be horrible necessarily. Yeah. Yeah. If they turn around like that,
that would be crazy. I mean, I think like just generally these, these central banks have been, they're like too slow to
react to material economic changes and then they're too dramatic in how they react.
And so I think we're seeing the too slow aspect right now.
And I think frankly, like the evidence that there was a problem was actually with Silicon Valley Bank was a couple of years ago now, where there's enormous unrealized losses on commercial
real estate.
There's huge issues in the housing sector and by raising rates the way they did, and
then how they've navigated with QT,
they've exacerbated these issues. And I think they recognize that when they cut
right before the election and then, I don't know,
to me, it just seems like they know what they're doing
at this point, which makes it even worse.
And there is a formula that they're choosing to ignore
in order to achieve a political goal. And I think
if you look at it purely with open eyes and say, hey, what should you do? You say, hey, when we
have a bunch of banks go under all at once, and then we sort of patched it up, you try to figure
out, hey, what do you need to do different? And I think Trump is really messing this up with his
tariff policies. But I think interest rates right now for the current state of the US economy are too high.
And I think it's wild that they're doing QT in the middle of this. So what do they need to do
in order to address it? Cut rates and stop doing QT at the very least. And then what do they do if
things change? Respond accordingly. So I don't know. I think trying to break the future or trying to
know what Trump will or won't do or whatever, no one can know, but you can know what's happening
right now and they can address what's happening right now and they're choosing not to. And it's
very similar to the other policy mistakes that they've made for the history of the Fed.
Very, very interesting. Appreciate those thoughts, Josh.
Gav, so you joined us up here this afternoon.
What's up?
What's going on in Gav's world?
Things are doing good.
Things are doing good.
Yeah, listen, I've been following along,
just listening in the background.
I always love listening to Kevin, Josh,
so many others that add so much on these stages.
So thank you, everyone that's on here. Sam, Sniper, Evan, Stock Talk add so much on these stages. So thank you, everyone that's on here,
Sam, Sniper, Evan, Stock Talk. I just love these conversations. And I know that we had a
conversation planned here for 5 p.m. Eastern today with that VistaShares crew. The ETFs that
they've been dealing with have been absolutely killing it. We talked about that OMAH one, the
Omaha ETF, just about a few weeks ago.
And for anyone that ended up following along with it, it's really been killing it.
I saw that their AUM is already at 135 million AUM.
So, I mean, when we talked about it, it was at like 10 million AUM.
So, crazy to see the interest that's coming in with that.
And I know that we're pulling them in for another convo.
Emp, is there anything that you wanted to hit on?
Obviously, huge thank you to our speakers that have been here.
I think we have some new ones coming up on stage.
But anything else you wanted to touch on before we rotate it into that next convo?
No, I think we covered it really, really well today.
Appreciate everyone joining, all the panelists and stuff.
And I'm excited to roll into this.
I know Adam just jumped up on stage, and this new ticker, QUSA, has my attention here.
So I'm excited to talk about this. Adam, how are you this afternoon?
Oh, there we go. I'm doing great. I had trouble with my mute button. Thanks a lot for having me
on, guys. Yeah, always glad to have you on these spaces here from you and the team over there.
Adam, if you don't mind,
will you give a brief introduction of yourself for the audience here today?
Sure. So Adam Patti, I'm the CEO of a company called VistaShares. We are an ETF issuer.
We formed the company about a little over a year ago. We launched our first product in December,
which is AIS, our artificial intelligence infrastructure ETF, which actually has been percolating up recently. Thanks, had a little rough go during the tariff tantrums,
but performance has been up over 20% over the past month. So that's looking good. And then we
launched our second ETF, which is OMAH. We launched that early March and that ETF has just been going
bonkers. I mean, it's really, of course, that's a technical term. It's really resonating with
investors, retail, institutional. It's really grown quickly. And then we just launched, yesterday,
we launched our third ETF QUSA, which we could talk about. I've been in the ETF market for a long, long time.
I started a company in 06 called Index IQ, which I sold to New York Life.
So my whole background is in developing institutional class investment strategies
and embedding them in the ETF structure.
Love it. Adam, appreciate the initial intro here.
Me and you have obviously spent a lot of time talking. I'm pretty fascinated with the stuff you guys do. There's been a huge movement here towards these income-focused ETFs. And I literally just have people all the time now commenting. I see Mike Schammer in the audience. I know that he's all the time talking about this stuff. go for it i thought this headline was actually pretty interesting today if i'm not correct i was still in eric belchunas tweet that uh spider who is like a
they've like the sector sector shares etfs and this is kind of like more of an old head traditional
etf company they actually launched covered call etfs on their i think um 11 different sector
funds or something which i saw saw Eric was talking about,
he was very unexpected on,
but I thought that that was,
as we're talking here and talking about that,
I thought it was a very interesting headline.
Yeah, I mean, the income space has definitely
become something very interesting and important to investors
for a variety of different reasons.
Some investors have really taken the strategy of,
you know, just kind of dripping into investments every day, every week,
small amounts to build for retirement. Then, of course, there's other investors that are
using income strategies as a large part of their core investment strategy or their portfolio,
just to kind of add some ballast to their portfolio in these volatile markets. So I think
there's a lot of different use cases. And, you know, certainly for us, it was really about trying to find the white space and
not really come out with something that everybody else is and try to create some value.
So let's talk about the value that gets created. We can talk. Do you want to talk QUSA first,
since that's new? Sure. Sure. I'd love to. I'm really excited about this one.
You know, it's really interesting when you launch a new product and, you know, it's hard
to get a gauge if there's going to be interest or not from the first couple of trading days.
But, you know, once in a while you get one and you're like, wow, this thing is really
resonating.
So, you know, we launched it yesterday.
So what QUSA is, so, you know, we all know over the last few years, we've been largely in a momentum driven market.
But, you know, the switch has flipped and now we're really more in a value or quality driven market.
And if you're looking kind of the factor tilts of what is going to drive returns over the coming year, two, three years.
two, three years. So, you know, what QUSA is very simple. It's the first ETF to use a quality
factor model to identify companies that, you know, we would deem as quality. And I could talk about
what those metrics are. And then we, so there's other quality ETFs out there, but this is the
first to use that quality portfolio and then overlay an option strategy to create or to look to generate 15% income annually.
And we pay that out monthly.
And our goal is 1.25% each month.
So it's a very new type of strategy in terms of what the market has seen, never been done before.
The factor-based ETFs have a massive asset base behind them, hundreds of billions of dollars.
I mean, the iShares quality ETF alone has, I think, 60 billion in it.
So, you know, factor investing is something that's very important for investors.
But now we're providing it with this income overlay, which is very novel.
Can we talk a little bit more about factor investing, just for those that are
not familiar with this and really like, what should they expect in the makeup of a portfolio
like this? Sure. So look, if you look at the kind of the core factors and factors is just a fancy
way of saying we use different financial ratios and metrics to sort companies, to identify companies that have certain types of attributes.
So, you know, the four core factors that people look to are quality, value, momentum, and low
volatility. So those are kind of the four biggest ones that people use in their portfolios. And you
use them in different market environments. You generally use them as core equity holdings,
and you use them to
tilt your portfolio towards the factor that you think is going to create the most excess returns
over the coming period. Quality, of course, being the largest one in terms of assets in the ETF
market. So for us, there's a lot of different ways to get to this quality tilt. But we're using a very standard factor model, which focuses on three things.
High profitability, stable earnings growth, and low leverage.
So three kind of categories.
So in terms of profitability, we're looking at companies with strong ROE, strong ROA, and strong EBITDA margins.
So that's kind of the first thing we'll look at.
Then we're looking at companies that have stable earnings growth or what they call low earnings variability.
And what that is, is we're looking at the earnings per share growth in the current period.
And then we're looking at the average earnings per share growth over the last five years. So we want companies that are consistently growing their
earnings. The last thing is leverage. You want companies with not a lot of debt or at least not
overwhelming debt on their books because, of course, that is not necessarily a healthy company.
So we're looking at book value leverage. We're looking at market value leverage.
And then we're looking at debt to total assets. So at the end of the day, we're looking at book value leverage. We're looking at market value leverage. And then we're looking at debt to total assets.
So at the end of the day, we're rolling all these metrics up.
And this is all done behind the scenes.
It's just looking at the different financial metrics to identify these companies.
So we're looking at highly profitable companies that are growing their earnings over time
in a consistent fashion and that have low leverage.
So it's pretty straightforward.
Appreciate that.
I did go ahead and just pin up to the top of the space,
the post that you made that outlines the details here.
So walk us through just, you know, on the income side of things,
where's the risk within this?
Like what's the upside, the downside?
What should people be aware of?
You know, there's a ton of people that I think have learned about this
through stuff like
YieldMax, but they're still just new and different pieces to it.
Yeah, I mean, this is very different than the YieldMax strategies.
Those products have a use for different market environments or different type of portfolio
uses.
These are really more core holds for an investor looking to build a long-term diversified portfolio.
So, you know So you start with the
portfolio, as I just designed, as I just talked about. For us, it's 27 companies. And they're
mostly companies that many of you've heard of, but probably a lot of investors don't own in
their portfolio. So it's a nice diversification tool right there. And then in terms of the options
overlay, we're very fortunate to work with a very
experienced team to run these strategies. They run over $10 billion in ETF income strategies
currently. They also run our Omaha OMAH strategy, and they've done very well with that.
So what we're doing is we're selling out-of-the of the money calls on each name in the portfolio.
And we're also using call spreads.
And that's kind of novel in the ETF market.
And why it's important, particularly in volatile markets, is that when you have a market that goes down and then snaps back up, like we've seen, traditional just selling a call out of the money may not capture that upside for sure.
It's just not the nature of that strategy. But using a call spread, you can really kind of capture more of the upside potential when the market snap back.
So, you know, we're selling these out of the money calls and we're trying to generate one point two five percent that we could distribute on a monthly basis.
The key, of course, is that we're not
running this like cowboys or cowgirls. We're not waking up in the morning and say, let's trade this,
let's trade that. What we're doing is very data-driven. So once we hit that 1.25 percent
on any given position, we're out of that position and we'll re-roll it into a new position. So
one of the risks in, you know,
writing calls is that you have the securities called away from you by holding onto the position
for too long. So we avoid that or we attempt to avoid that by, you know, closing out positions
the minute we get to our 1.25% and re-rolling. If there's a case where we end up making more than our 1.25, we're still only going to pay
out 1.25. We're looking for consistent monthly income generation. We're not looking to blow the
doors off on any given month. So if we do make more, we're rolling that back into the NAV,
which is important for investors because they don't want to see NAV erosion or too much of that.
So you're not going to see much of that with a 15 percent earner anyway.
But even so, if we're making more, we're rolling it back in.
And another note is that the 15 percent is exclusive of the dividends that are generated by the underlying portfolio on a normal basis.
So if the portfolio is generating dividends, that's going back into the NAV as well.
So, you know, it's just a nice,
consistent, conservative strategy for use, you know, as a core holding.
I like that. I appreciate the answers there. I guess, how did you settle on the 15%? Was there a mathematical equation around that? Because you're saying if you make over that, you know,
you're still just aiming to target 15%. We just thought it was a good number to target from an investor perspective. We always do a lot of research, talking to
investors and trying to understand what they're looking for, what's out in the market currently,
what don't they like about it, what would they like to see. And then we design around that.
It's just a very research-driven product you know, we've used for many, many years and, you know, multiple companies.
And we're doing that here at VistaShares again as well.
So there are a number of products out there that are paying in the 8 to 10 percent range.
Then there are some of the 12 percent range and so forth.
And then, of course, there are the ones that are paying out 100 percent and things like that.
that are paying out 100% and things like that. And we're not, again, in that bucket at all.
And we're not, again, in that in that bucket at all.
So 15% was an attractive number where we kind of differentiated ourselves from the market pretty
significantly in terms of yield generate or income generation, but not too high where we're
stretching ourselves or perhaps getting into that NAV erosion instance, which is just something that
investors really
don't want to see, particularly in a kind of core portfolio holding. So, you know, we like that
number. One thing to note in terms of risks, which I should have mentioned, is that, you know,
for people who aren't familiar with kind of options, is that when you have a portfolio,
you know, we are, there's no free lunch on the income generation. So, you know,
we are not necessarily, if you, if you match up our portfolio with the options against the
identical portfolio, we're never going to keep up in a, in a bull market, right? So investors
should expect somewhere between 70, you know, 70, 75% of the upside. But that given the nature of
kind of options trading, you know, you're probably looking at 85 to 90% of the downside. So it's a little more constrained portfolio because of the option strategy that overlays it.
like AIS, the picks and shovels of AI, the comment you just made, was it investors and fans looking
for this type of product? What was the idea for the shift here from that type of product into
this one? Or is it just broadening the wings? Oh, no, it was all part of the product development
strategy. So what's important, at least I believe is important in building a company like this,
is to have different types of
products for different market environments. You don't want to stake your claim on one type of
strategy because frankly, it's not for everybody. So AIS, in my opinion, is the best way to get
exposure to AI infrastructure. It's the only way to get exposure to AI infrastructure in the ETF market.
So that's probably a three to 5% allocation for most investors. Then we've got our income
strategies that is more of a core equity holding, which could be a much larger percent of their
portfolio. And then we're actually coming up with a third family of products that are
completely different as well. And they have a very different use case.
So, you know, we don't want to be everything to everybody, but we and we can't be.
But we want to have different products or different market cycles, different market conditions
and, you know, provide investors the tools that don't exist in the market today
to manage market volatility over time.
Real quick on the Omaha, we have somebody here who traveled to Omaha recently.
Evan, do you have any thoughts here?
I did.
I did.
I did go to the Warren Buffett Berkshire Hathaway press conference this past weekend.
So it's a funny time, or annual shareholder meaning.
It's a funny time to be having you guys guys in the space and i'm excited for it but um yeah it was a pretty
pretty crazy weekend listen also just throwing out there i'd go listen to greg abel speak if
that's what's happening next year give me an omah shirt we'll uh i'll fly myself back out there for
the weekend um but i'm curious about a little bit more about that strategy if you can just explain
kind of like how it works a little bit i know it's going to take me a little bit about the uh
the buffett's largest holdings and then i'm curious uh if we can talk through i i want to hear more
about that that q usa the uh the new etf there and just kind of the holdings in there and like
actually i know we were talking about the concept but i'd love to like dig through some uh one or
two of the bigger ones.
I could talk about specific ones, but if there's any kind of interest in why maybe like how you went about weighting, it seems like we're around 5% on all the holdings.
I'm curious on that one.
But just talk through the holdings and how you picked them for both ETFs.
Sure.
I mean, so Omaha, I mean, what a great product this is.
And this was really about talking to investors and trying to understand, again, where the white space is in the income space. And, you know, you know, there's obviously
a lot of Berkshire Hathaway fans out there, a lot, you know, the stocks are, the stock is extremely
widely held. Of course, Warren Buffett is the best investor in the history of the world. And,
you know, we believe Greg Abel will be right behind him since he's been steeped in his strategy since 1992. But, you know, really Omaha has two use cases. And as you
mentioned, you know, so what in terms of the portfolio, you know, we start off with Berkshire
B, that's our top holding. And we and then the next 20 holdings underneath that are the 20 largest
publicly traded holdings in Berkshire Hathaway.
So there's 21 equity holdings.
We rebalance that.
We rebalance it quarterly.
And that's really just to get the weightings back in line.
And, you know, of course, monitor if Berkshire Hathaway is making any significant changes in their top 20 holdings.
We want to make sure that we're responsive to that, to, you know, cut the holdings or
add to a new company if they make an acquisition. So, you know, it's that this is a really, you know, look, it's a Warren Buffett
portfolio. It's value tilted. It's a blue chip portfolio. I mean, our second biggest holding
behind Berkshire is Apple. And then we've got American Express and VeriSign. We've got Kroger
and Bank of America, Citigroup, Visa, Coca-Cola.
So these are companies that people want to own.
And it's clearly Warren Buffett likes to hold them.
So why wouldn't we?
So this strategy is about investing like Warren Buffett, but giving you that 15% income on an annual basis paid monthly.
So I think it's very unique.
It's certainly resonating with investors.
And the asset growth has been phenomenal since we launched it.
So we're obviously very humbled and appreciative of that.
Stock talk.
I want to check if you have any questions or thoughts here for Adam on either ZTFs, QUSA or OMAR.
questions or thoughts here for Adam on either ZTFs, QUSA or OMAR.
I'm sorry, my mic was muted there. Yeah, I mean, I think it's actually really smart what you were saying earlier about this idea of, you know, having different products built for, for different market environments, as opposed to adjusting those products dramatically when you feel like the market environments have changed.
And I feel like that takes a little bit of onus off of you guys from having to make those
forecasts, right?
And having to make those predictions like, hey, we think the market environment is going
to change.
So we're going to dramatically change these products.
I am curious, what do you see as the role for these sort of, I guess, I mean, you can call them tricky market products in a way.
I don't want to call them bear market products.
What do you think the role is for these products as the market turns?
Do you expect that people that are customers and clients of yours that are using them will sell them or reallocate?
will sell them or reallocate? Or how do you kind of see the shift in client positioning
using these tools as the markets rebound? Let's say, you know, we're 10% higher from where we
are today, a month from now, how would that change your outlook? Yeah, I think these products are
designed for all market conditions. And, you know, whether it's a bear market or a bull market, and,
you know, whether it's a bear market or a bull market. And, you know, it's an interesting
question. So, you know, we can't, you know, forecast, of course, when the market's going
to turn. So, you know, to your point, having products with very different portfolios, we think
is important. So just to answer your question with a kind of more illustrative view of the
portfolios themselves themselves and to answer
the prior question a little more fully that I missed. But, you know, Omaha and OMH and QUSA are,
you know, we use the same exact options overlay strategy. So it's the same strategy run by the
same team. But the portfolio holdings are completely different and they will perform
completely differently in different markets and
on different days. So, you know, we just talked about the holdings in Omaha.
The holdings in QUSA is, you know, our top holding is Arthur Gallagher, you know, which is,
you know, an insurance company. We got P&G and Sintas and CME Group and Microsoft, Costco.
So it's a very different, it's going to provide a very different
pattern of performance over time than the Buffett portfolio. It'll outperform in some markets and
underperform in others. But, you know, we just, we firmly do believe though that we're, you know,
kind of out of a momentum driven market right now, at least for the time being, and into this
quality and value tilted market. So we think that having these, you know, more stable, high quality portfolios is really important.
One thing that scares me,
and, you know, investors should really be looking
at their portfolios is, you know,
everyone owns the S&P 500.
You know, in the old days, the Qs were, you know,
the tech-driven NASDAQ, right?
Or they used to call it the tech-heavy NASDAQ, right they used to call it the tech heavy NASDAQ.
But you look at the S&P 500 now, that is extremely tech heavy.
So many investors may believe they're getting kind of a stable core holding,
but the reality is that a huge proportion of their investment is higher beta, more volatile tech names.
you know, you know, higher beta, more volatile tech names. So, you know, we're trying to do
the opposite and provide something that they can add to that portfolio to almost counteract
what the S&P 500 is at this point. I mean, if you look at our, you know, exposure in terms of sectors
on QUSA, you know, our top, our top sector is industrials followed by financials. So, and of course, Buffett is heavy in financials,
that's 50% of the portfolio.
So it's a very different feel,
very different pattern of performance.
And we think it's important to diversify your portfolio,
even in your core,
you don't just wanna have the S&P, the Qs and the IFA,
you wanna have some other things in there
that have a very different feel great questions there from stock talk as well snipe
if you end up having any feel free to throw a hand up no worries if not adam i'm curious what
do you think um was so successful about omAR that drew so many investors to it?
And how are you trying to replicate that with your future ETFs?
Well, I think firstly, the income space is just exploding generally.
So it's not just us.
There's some other income players out there that have been very successful.
For us, though, we are firmly going to, and we'll always do this,
try to bring unique products that fill that white space that aren't just another S&P fund,
where you're going to compete on fees or kind of marginal differences in performance over three
years. We think it's important to, you know, give investors choice and bring stuff out that have clear use cases. So,
Omaha, for instance, OMAH, there's two clear use cases. There's the use case where you just use
it as a core holding for your equity. And if you're an income investor, it's a core holding
for income. But the other use case is if you own Berkshire Hathaway, of course, Berkshire Hathaway
doesn't pay a dividend, which was something that a lot of investors were talking about.
They wish there was some yield on there.
So you can use OMAH to create a synthetic dividend exposure if you add it to your BRKB holding.
So it's about clear use cases, and it's about bringing something unique to the market.
So I think that combined with the excitement in the income space, and of course,
and frankly, look, I mean, it's a simple product to understand. And, you know, of course, who
doesn't want to invest like Warren Buffett, but with income. So I think that resonated with QUSA.
I think it's a similar story. You know, it's, you know, quality U.S. companies with 15% income.
It's a very, you know, very simple story,
you know, versus, you know, something more complicated that would take more explanation
for investors. So, and that's where we got, we want to try to keep it simple because we're,
you know, we're talking to all investors, you know, we're talking to retail investors and
trying to serve their needs. And we're also talking to, you know, RAs, family offices and
serving their needs. So we're trying to develop a product that has that institutional quality, that's
bulletproof, where we can withstand due diligence by the most sophisticated investors, yet has the
clear use case and is easy to understand for the less sophisticated investors, whomever they may be.
well put well put um i know we're coming in with a few more minutes here i'm glad we're able to
really drive into qsa understand omar you did go through some of those top holdings can you just
discuss how you're actively managing these how often investors can expect to see changes and
you know in tandem with that who's doing that process?
Correct. Yes. Thank you. I should have mentioned that. So similar to OMAH, QUSA,
we rebalance quarterly. So we will rerun our model. The model, again, being the metrics I mentioned early on, profitability, stable earnings and low leverage.
So we will rerun that quarterly and we're running it against a universe of generally
the Russell 1000.
So large and mid caps with there is definitely a skew to large caps, but we are looking into
the mid cap space as well.
So we're doing that.
We'll rebalance the portfolio each quarter where the holdings could change pretty drastically or not, really
depending on how the companies have stacked up on their metrics. And so we're doing that in-house.
We run that in-house with a model that we built with some partners. And the options are run daily.
I mean, it's an active strategy. So we you know, we have a team that is reviewing the
options portfolio on a daily basis. They're making trades daily and, you know, scraping that 1.25
off the positions that have, you know, achieved that, rebalancing and reallocating as necessary
and rolling those option contracts. So, you know, it's a very time-consuming strategy to run.
And there are those two components. It's the equity portfolio and then it's a very time-consuming strategy to run. And there are those two components.
It's the equity portfolio and then it's the option strategy on top of it.
And it was a question earlier on in terms of the weightings.
So, you know, we're going with QUSA.
We decided to go more of not quite equal weight, but more of an equal weight portfolio.
So, you know, if the scores are wildly divergent,
because we have 27 holdings, if they're wildly divergent between the first and 27th holding,
they certainly won't be equal weight. But if the scores are very close, we're going to,
we're going to weight those companies very, you know, more of an equal weight fashion. So,
you know, our top 20 holdings are, you know, all generally around that 5% range. And, you know, that was by design.
I love that. It's very well thought out the way that you've gone about it. I encourage everybody,
if you're in the audience, go ahead and give Adam a follow. Make sure that you're also checking out
that Vista shares ETFs account as well. It's a good one to be following. They provide a lot of
great information around ETFs. And these ones are just really interesting to me with everything they're doing.
So again, you could take a look.
The market has obviously been pretty interesting this year.
And I think it's giving people cause for thought, right?
Hey, maybe I should be looking at some different ETFs to work them in, especially if you have
trading profits or you're looking to rotate into something.
There's a few different ways to continue to watch this market here.
So keep your eye on OMAHah that's something we talked about and then that new one that just launched today q usa or just launched
yesterday apologies um and so that one is already up one percent nice start to the launch really good
stuff adam any other comments you want to share with us today no i would just say if you know
definitely give us a follow but if you have a a chance, go to our website at VistaShares.com. You know, we're very
into content and educational content. So we do newsletters, we do research papers, we have white
papers on our website, you know, all, you know, non-salesy stuff. It's not about the product,
it's about educating the investor around the strategies, around the portfolios, around the
space. You know, for instance, for the portfolios, around the space.
For instance, for our AI product, every other week we do an AI investor digest that summarizes
all the important news in the AI space. So we're just trying to get out there and educate people
and hopefully build a company that people look to for information for the long term.
Perfect. Thank you so much, Adam, for the long term.
Perfect. Thank you so much, Adam, for coming on today. Appreciate you. Thank you to the whole panel for being on.
Looking forward to the next one.
Well, thank you very much for having me, guys.
It's always a pleasure.
Perfect. Take care. I'll turn it back over to you.
Yeah, great having Adam on. Great conversation there.
I definitely want to echo what Adam was saying there at the end.
Go to VistaShares.com and check out these,
these different ETFs and the holdings in them.
It's one of my favorite things to do is go see what's,
what's being held.
What are the,
what are the professionals putting together in some of these things?
So definitely go check that out.
I was pulling up this one,
the QUSA,
a couple of familiar names in here and a couple I'm,
I don't see quite as often.
It's very,
very interesting.
Definitely on my
radar now. Appreciate everyone that tuned in today. We had a longer show today. Got to hear
from Jerome Powell earlier, had some great thoughts around all of that. And then of course,
finishing it off with a great conversation here with VistaShares and Adam Patti. We appreciate
everyone that tuned in. We will be live first thing in the morning over on Wolf Trading for
Live Trading All Day with some other great conversations mixed in. As always, hope everyone has a great rest of their
Wednesday evening. We will see you guys tomorrow. Take care, everyone. Thank you.
