So, we've kind of been consolidating this rally this week. We've seen a good bit of volatility. Um, it's made it difficult for trading this week, just simply because, you know, you're up two days, you're down two days, you're up a day, down a day, up a day. Headline driven. You know, we're extending a ceasefire, we're not extending a ceasefire. You know, somebody's shooting somebody, whatever. You know, that just throws the market all over the place. That makes it a bit difficult. But stepping back, you know, the momentum and the bullish trend are still there. When we get to the technicals here in a minute, we've got some very good technical developments that are occurring. Breadth is rising. The number of stocks that are participating in the market is rising. It was very, very low. That's increasing. And moving averages are starting to turn back up. So, we're starting to get a positive trend to moving averages, which is also bullish. So, there's no reason to be overly bearish here. Um, but I would still be a little bit cautious.

Welcome to Thoughtful Money. I'm Thoughtful Money founder and your host, Adam Tagert, welcoming you back here at the end of the week for another weekly market recap featuring my good friend, the portfolio manager with the green eyeshade, Lance Roberts. Lance, how you doing?

I am doing very well today. How are you? Actually, actually, that's actually, Adam, that's a lie.

That's an absolute lie. I'm grumpy. I am angry because my wife has me on a keto diet. So, it's no carbs and no sugar for the next month and a week. I'm counting the days until we go on vacation. So,

And of course, you know, it's not for me. I'm at weight, right? I look good in my speedo, right? This is all for her, but I have to do it because she's doing it. So,

Well, that's, that's, look, that's rule number one of husbandry is back your wife up in whatever she wants to do.

Absolutely.

And is this health at all related or is it literally just to look good?

It is literally to be speedo ready by the time Italy rolls around. So,

Okay. All right. Well, look, I can understand that want to look good on the beaches of Italy.

And you look good, Lance. You're going to look even better. But yeah, we'll see you get even more and more chiseled, I guess, over the next. But like I said, I'm very grumpy, so be careful.

Well, so they say misery loves company, and for the next like week, um, I'm not going to be keeping you company. I'll probably be eating all the carbs while you're not.

Um, but, uh, I have a, you know, relatively large birthday coming up, uh, in the summer, and my goal is to try to get to fighting weight for it. And, uh, that all starts, the nutrition part of the cut all starts, uh, May 1st. So I'll be pretty miserable along with you, but for 3 months.

Yeah. So is this your 50th? What birthday is it?

I wish it's my 55th.

55th. That's not a big birthday. It's 50th and 60th.

Well, I said kind of.

55th. That's kind of like, yeah, whatever. I'm in the middle.

But anyway, so viewers, we're giving you fair warning here. The next couple months, we might be extra irascable here on the program.

Exactly.

Um, all right. Um, but no, I knew you were feeling pretty good even though it's kind of blurred out behind you because you got the bull behind me.

I did. Sorry, I can fix that real quick. Hold on.

You don't have to fix it. I just.

No, no, I did that for another interview. I was, I had a client interview earlier this morning. So, anyway, there, there's our bull.

Well, why don't we pick up where we left off last week. So last week, um, my takeaway was, which we, I titled our video was, um, don't chase this rally. So you were skeptical. I don't want to say skeptical, but, um, that the rally had been so ferocious off of the lows that you basically said, look, um, this thing is going to pull back, just period, because big, big moves like this tend to pull back. Um, but also, don't put words in your mouth, but I think you're sort of like, look, there's, you know, reasons to be optimistic here, but this is not necessarily, we haven't really gotten the full all clear yet to get everybody back in the pool.

So, do you still feel the same way this week or has anything changed?

No, no, not at all. Um, so when we, when we start talking about trades, we did a lot, we did a good bit of trading this week. Um, just kind of working around the edges of the portfolio a bit. Um, but, you know, you know, pullbacks. So we had this really strong run and so when we talk, and and I probably should have been clearer last week when I said, hey, the market's going to pull back. Pullbacks occur in two forms. Either in a price decline or in a consolidation. So what we've seen this week is market sold off Monday and Tuesday. We rallied on Wednesday, sold off on Thursday. Rallied, you know, this is early Friday right now. The markets are up right now, um, you know, on Friday morning. Um, but, you know, that's working off that overbought condition. So a consolidation is, is for all intents and purposes the same. The reason you want a price pullback is to work off overbought extensions and conditions, allow moving averages to catch up. A consolidation will do that, too. It just takes longer to get there.

Semiconductors are just going crazy right now. Um, they're very overbought, very extended. You know, if there's, and this is kind of some of the workaround we did this week, for example, G Vernova had an earnings report and the stock was up like 14% on Wednesday.

Same with Intel, right?

Yeah. Yeah. And so, we're just. So, we went in and took profits there and we're kind of adding some money to some other areas of the portfolio. We can talk about that, but, you know, don't forget that if you're long semiconductors, it's fine. The story is very bullish right now, but those stocks are very extended. And if you take a look at more of a longer-term picture, it kind of looks like what we were talking about with gold when gold was just going straight up. It's like, hey, when you get these parabolic moves, you're going to get a correction at some point, which will give you a better buying opportunity. But I would definitely be taking some profits here and kind of just rebalancing. That doesn't mean sell everything. Just rebalance back to target and take some profits, take some money off the table.

Okay. Um, so very much to talk about there, but let's start with the breadth. So, um, you know, couple weeks back it was sort of like, yeah, markets are moving, moving fast. Um, people were cheering that, but people were looking at it and saying, well, hey, this looks like the old script that we've had over the past couple years where it's a few companies that are dragging the indices higher. It's not super broad. You're saying you're starting to see more breadth coming in.

Yeah, just over the last couple of weeks, you know, and again, we were when we were at the kind of the bottom of the market, we only had about 30% of stocks trading above their 50 and 200 day moving average. So that we had that nice big correction. Now that's recovering. Again, we're not, you know, if you looked at the market like right now and said, what's the breadth today? We're at about 53, 54, 55% of stocks above their 50 and 200 day moving averages. That's not fantastic. That's not a broad rally, but it's better than the 30, right? So, the breadth is improving as the market's rising. And so that improvement can continue. If the market continues to go up, we can see that breadth improve. What we don't want to see and the things that we want to pay attention to is if that breadth starts to decline and the markets are still trying to rise.

So, we start seeing that breadth roll back over and the markets are still trying to go up. That's not a good sign and that's probably going to suggest a bigger correction, you know, sooner rather than later.

Okay. Um, I want to get to the, uh, the, um, technical analysis charts and why don't you pull them up while I'm asking questions.

I'm sorry. I'm sorry. Say what?

Pull up the TA charts.

Oh, okay. Yeah. Yeah. Yeah. Um, so first off, uh, you know, you and I have been talking about a theme over the past couple months here, uh, is that going into this year, uh, analysts, Wall Street analysts have been raising their earnings estimates for 2026. Then we entered the war. Everybody got real concerned about the economic impact of the war, but earnings estimates have not come down much and I think they're back on the rise again.

True.

Yeah. Yeah. And actually, I just, interestingly enough, let me, uh, um, I actually just posted a graph on this this morning on our X, X, X account. I still want to call it Twitter. I don't know about you.

We always will, I think.

Exactly. But this was, this is a chart of earnings estimates. And what's important is is that Q1 is now, so the quarter we're in right now, that was actually coming down while Q3, Q4, Q and, uh, Q2, 3 and 4 were on the rise. Q1's actually started ticking back up because a lot of these earnings reports that are coming in are better than expected. So we're seeing a pretty decent beat rate on Q1 earnings. But most importantly, you can just look at the acceleration of earnings expectations, you know, for the rest of this year. Now, having said that, let me give you another chart here because this was also interesting this morning. Um, let me see if I can find. Yeah, right here. This was from Lisa Abrams this morning. Um, if you'll take a look, this is loans to commercial and industrial companies. This blue line, this is how this, this is money creation. This is how money is created in the economy. Money is not printed. Money is lent into existence. And when you loan money into existence and you increase the money supply by adding loans to the economy, that money is going into a business that's then reinvesting that capital, payroll, construction. You know, this is a lot of this is data center buildouts, etc. But that's feeding through into the economy, creating stronger economic growth. And that's why the look ahead on forward earnings is, this is going to help support economic growth, which is going to lead to a higher rate of earnings. So we're seeing a lot of activity underneath the surface of the economy that is much more bullish than not.

Okay. And that's sort of where I'm going with all this. So, um, you know, you've been saying for a good while now, hey, Wall Street is expecting the economy to perform well this year, right? That's why the earnings estimates are going up. Um, I've done recent interviews with people like Craig Fuller, CEO of Freight Waves, who has said, "Hey, look, I was despondent at the beginning of November last year. Now I'm the most bullish I've ever been. All my data is showing me that the, at least the part of the economy that deals in real things, industrial production, transportation, manufacturing, it's booming. In many ways, it's getting some tailwinds from this war. And I don't see any signs right now of it slowing down. Um, obviously the administration is telling us to expect things to get better from here. You know, a lot of people expect them to, of course, be the cheerleaders. There's some data I'm going to pull up in a little bit that's going to show, um, the oil boom that America is experiencing right now. Um, we're now at record high exports. Um, we have just tons of the world, you know, rushing here. Maybe it's a sugar rush, like maybe this dies down after the straight support moves opens back up. But America is definitely producing more and selling more oil and probably gas. I don't have the stats for gas, but it's probably similar than it ever has before. And I've made the argument that even if the rush subsides, it's probably the baseline will probably be higher than it was pre-war because people are, other countries are going to say, "Look, if I was 100% dependent on the Straits of the Persian Gulf before, I don't want to be 100% dependent on anymore."

I don't disagree with that argument at all. In fact, Monday's article, by the way, that'll come out Monday morning is discussing it's called The Strait of Hormuz. Why is the market ignoring it? Because there's a lot of people out there that are making these claims that, you know, the Strait of Hormuz, you know, it's going to destroy China or this is going to happen or that's going to happen because of this closure of this 20% of oil being shut in. But when you actually start running through all the numbers, you know, what you're looking at is exactly what you're just saying. And this is why the markets are looking through this whole short-term crisis. They believe it to be short-term. That's first of all. So if it's not short-term, that is a different story. And you know, we could see a different outcome. But right now, the markets are pricing in that this will be a fairly short-lived event. Maybe another month or two and it'll be passed. But if you take a look at global oil supplies, China has went into this crisis with months upon months upon months of supply. They had already been shielding themselves against this potential possibility.

Yeah. They had the world's largest strategic petroleum reserve, I believe.

Yeah. And so there's, so what the article goes through is kind of the four key reasons why the market's not paying attention as much as it probably, you know, as much as people think it should to this potential problem and it's focusing more on the earnings side of the story. But anyway, that's going to be the article for Monday morning.

Are you saying it's ignoring it or you saying it's actually realizing that the problem's not as big as other?

Yeah. Yeah. I mean, you know, people say that the claim is is that, oh, the markets are ignoring the Strait of Hormuz. They're not ignoring it. Um, there's a great. Did have, have you ever seen the movie called A Knight's Tale with Heath Ledger?

Gosh, I did see it, but I don't remember it much.

So, well, he gets knocked. So in one of the scenes he's jousting and he gets knocked off the horse by the Black Prince. The Black Prince comes over and he looks down at him, he puts his foot on his chest and says, "You have been weighed and measured and found wanting." And so, what the markets do is they weigh and measure these events in real time. And so, they look through these events. They say, "Okay, what does this mean for earnings? What is this going to mean for the economy? What's this going to mean for this?" And they're looking at who's producing the oil, who's benefiting from the oil price, all those type of things. That's all getting priced in real time. And so the, the, the point of the article is is that the markets have already looked at this issue, weighed it, measured it, and said, "Okay, I know what the price risk of that is." That was what happened in that 10% decline we had back in late March, early April. They've already factored that in. They're now looking, they've now priced that in. We've reduced earnings valuations by 18%. So we've got a margin of safety here and the markets are now starting to look forward at the companies that are generating the most earnings.

Okay. So a couple quick things. Let me just pull up the, uh, data I was talking about. Um, so here's the chart, right? So you can see that oil exports, uh, oil, sorry, oil exports are at a fresh record high. Um, so highest they've ever been. Um, and just a couple things here. So, uh, total US oil exports have surged 2.5 million barrels per day since the Iran war began. Um, uh, crude oil and petroleum product exports have doubled since January 2022. That's pretty huge actually. U, number of other stats here, but basically world demand for American oil is skyrocketing. And, um, look, the, uh, oil industry is not, uh, you know, the totality of the American economy. Um, but we're seeing here that, you know, the economy, real things are doing really well. The energy sector is doing well. Um, the other parts of the economy that drive total earnings for the S&P, this is largely the growth companies, those appear to be doing really well because analysts' earnings expectations for those keep rising. And so where I'm going with all this is, um, totally understandable. Uh, I think a lot of people's reaction to this war, which is, look, it's creating an oil price spike. It's global uncertainty. You know, it's pinching Americans' pockets here at home, but man, it's walloping a lot of other countries around the world even more so. And they're going to, they're going to rein in their spending on US exports. Um, so I think there's an understandable sense of like, hey, this is going to be net bad for the economy and the markets should follow at some point this year. And I'm just saying there's a lot of data out there that shows that the economy, the American economy especially, is proving a lot more robust than I think what people's fears are here. And, you know, I've had people on this channel when the war came out who made these cases, you know, the Lacy Hunts, the Luke Gromans of the world who are very smart people and may still be proven right. We'll see. We don't know anything yet for sure. But, you know, sort of expected an inflationary impulse that then leads to demand destruction and then there's, you know, economic slowdown following that. I'm not yet seeing that in the data is what I'm saying. And so, I'm just saying as an investor here, you know, we, we got to be eyes wide open to what is happening versus what we think should be happening. And if what we thought should be happening isn't getting supported by the data, well, that's when you really have to start, you know, if you're a dispassionate investor, you know, that's where you really have to start revising your thesis, right? And and very particularly, let me just say this one thing. If if you're somebody who just hates this war for philosophical reasons because you're anti-war or you don't like Trump, just be very careful about that clouding your investing decisions here because if indeed the data proves to continue in the direction it's continuing in, you're going to get steamrolled if you've let your personal bias against the war or the president or whatever cause you to go real bearish, real short, just go all to cash or whatever. And if the economy continues at this trajectory, you know, you're, you're, you're potentially putting your own best financial interests at risk here. And again, folks, I don't know what's going to happen from here. I'm just telling you that the data we're seeing right now does not seem that this war is materially handicapping the economy.

Yeah. No, absolutely. It's a great point. Um, you know, people let, you know, people too often let their political biases affect their, you know, kind of their investing proc, you know, kind of view, which tends to work out badly. You should never let politics drive your investing. Keep those separate. But, um, you know, I think the risk, and you were talking about this, is that the risk to the US economy, I think, is much less than what people expect. The, yes, there's a, there's certainly a lot of indicators right now. The consumer spending is, is dropping back here a bit. Savings rates are declining. I've been saying since the first of this year, I think the economy will grow weaker than what a lot of the estimates are right now. And I do think that the increase in the price of gasoline at the pump, we just saw a decent retail sales number, but that was all gasoline sales, right? And that just means you're paying more for the same amount of product. And that means you're also taking money away from other stuff that you would have bought previously. And we've had this conversation, you know, many, many times in the past because people conflate rising retail sales when it's driven by gasoline as really good for the economy, but it's not. High prices are a cure for high prices. So, I do expect that the economy may underperform later this year, but I think the real underperformance is in the area that people are chasing right now more than anything else is everybody's piling into this emerging markets theme and they're saying, "Oh, emerging markets are going to outperform the US, etc." The growth rate in the US is two times that of most other developed countries. But here's where I think the real oil impact comes in. This is a chart I posted this morning on our X, X feed. This is the estimated strategic crude oil inventories as of the end of last year, December 2025. China had 1.4 billion barrels of strategic reserves. Now, the reason that's important is there's been a lot of commentary that, you know, when this oil impact hits China, they're going to have to spend all their money, you know, buying oil and they're not going to be able to ship product to the US and that's going to really create this economic downturn, etc. There's, they've got plenty of supply. The United States has 43 billion barrels. When you start getting down into the emerging markets, that really becomes a much more different story. India is a good example, which is part of the BRICS. They have, they don't have a lot of excess oil strategic reserves. They can't go to their strategic reserves and try to offset the risk of higher Brent crude prices to the impact to their economy. So.

Right to interject, but Australia, I know we have some Australian viewers, they have like none.

Yeah.

And they import like 90 plus percent of their energy. So this really caught them flatfooted.

Exactly. And so, you know, that's where I think a lot of people chasing this emerging markets trade. And I'm not saying this is the case. I'm just saying this is a risk to that thesis is emerging markets are dependent upon exports to the industrialized developed economies. There's an old saying that goes when the US gets a cold, emerging markets get the flu. So, if we get a recession, they get wiped out because they ship all their exports. Their whole economy is export-based. So, you know, they're at the most risk right now of this impact of this shuttering of the Strait of Hormuz. And so, if there's going to be a fallout, it's very likely could be in the one place nobody expects right now, which is emerging markets.

Yeah. Um, I wouldn't say nobody expects it, but, um, because I.

Saying there's a lot of thesis that emerging markets are going to just. And look, look at the market right now. Uh, we've had this nice rally from the lows and emerging markets has basically paced the technology index. I'm just saying a lot of people are piling into that trade. I'm just saying be careful. I'm not. I agree with that point. I just again wanted to say that it's not that nobody's not thinking about it.

Yeah. Yeah. Yeah.

I'm not saying the thesis is wrong either. I'm just saying be careful.

Yeah. Yeah. Um, and I think an important thing to note here and I've mentioned this once or twice in the past is that markets are reflexive. Right. So, Lance, you talk about how, you know, I've scratched my head a lot over the years about like, oh my gosh, because a bad thing happened, like, how is it that the people at the lower echelons of the economy are still holding on here? How come they haven't completely broken yet? And you're like, people are really resourceful, right? They'll find ways to get money by hook or by crook. Um, and I think the world is very similar with oil. So, you know, first off, there has been a buffer and China's buffer has been massive and I believe China's actually been selling some of its SPR to its neighbors in Asia. Um, so, you know, that has been a big shock absorber. Um, secondly, yeah, there was 20% of the world's oil and gas coming out of the Persian Gulf, but the other countries around the world that are next exporters, and I just showed you the case with America, are increasing their production. So that gap that the world had in total output is closing. Now, it's probably not going to fully close here, but it's not going to be as bad as people think. Um, there were also a ton of tankers out there in the world that, you know, sort of shadow fleets and things like that where there was just a lot of inventory in tankers that were in transit as well. Some buffer in the system. Now, the longer the strait remains closed, the more that that buffer gets dwindled away and then could create bigger issues down the road. But the point is, is there is some shock absorbency and ability to change behavior in the world that is perhaps minimizing the full brunt of the oil price shock that folks were afraid of. And look folks, I'll be the first to say I thought that the impact of this oil price shock was going to be much larger on the economy than has manifested so far. Now, there's a bunch of thesis out there that, well, hey, the worst is yet to come. And obviously, this all depends on what happens from here with the war. The longer the strait remains closed, if the region gets more kinetic again and they start blowing up additional oil fields in the Gulf or energy facilities in the Gulf, that can make all this stuff worse. Um, uh, but until and unless you know that happens, um, you know, oh, and also another big issue, Lance, too, that folks like Brent Johnson have been warning about that I'm now seeing more in the headlines is with the fertilizer flows being interrupted that may affect harvests and we may actually have food price inflation, maybe even food shortages in six months from now. So that's, we won't know the answer to that until TBD. But until and unless those things materialize, you know, I'm just saying the data here, especially in the US, is actually still pretty bullish for the economy. I mean, I said at the beginning of the year, I was going to take the over on economic growth. Um, and was very clear to say that doesn't necessarily mean the markets are going to have a blockbuster year, but they still could. I don't think they're going to have the same kind of year they've had the past three years. I'm not sure this is going to be a 20% up year, but, you know, I'm not going to say never either. You know, we'll watch things out here. But I'll end this. But again, I just, I think it's very important if you very understandably reacted, you know, over the past couple months to what's going on with the war and said, "Wow, I got to get a lot more defensive in my portfolio." Nothing wrong with that, but just be cognizant of the fact that there seems to be a lot of resilience and dare I say underlying strength right now in the economy. And let's say this war does hopefully end soon and well, meaning, let's say the US walks away from this saying we got what we wanted more or less. We got the concessions out of Iran. It's not going to be nuclear. It's not going to be as much of a sponsor of terror around the world. You know, whatever, whatever, whatever. And then, you know, all the focus and cost and everything of the war right now diminishes and we can really focus on putting momentum behind the US economy. Not saying it's going to happen, but I'm saying there's certainly potential that, you know, the US economy could end this year in a really good spot. Now, a lot could happen between now and then, but again, I'm just warning if you are pessimistic, which I think I have been at times given this war and I think a lot of people watching have been, you got to be cognizant of the facts on the ground as we see them so far.

No, look and look, things are going to change. And again, this is also really important to your conversation specifically. What we see right now happening in the economy can and will change. So in six months, we may be talking a totally different tune. We may be saying, "Hey, you know what? This oil price spike created a lot more demand destruction than we thought it was." Blah, blah, blah. Markets are downturning. Whatever it is, this is what we got to do to protect capital. Um, you know, so but, you know, based on kind of where things are right now, at least over the next month or two, things are okay. And, you know, the important thing to remember about markets is that I've told you this before is that, you know, they did that whole study about forecasting and weathermen were the most accurate for three days out of everybody that does forecasting. So forecasts more than about a week or a month are really fairly useless because the market is dynamic. The economy is dynamic. Things are constantly changing. Consumers, as Adam said, consumers are constantly changing. If I run out of money, I go, "Oh, look, I can go get, you know, a pay now, buy later, a buy now pay later thing and I can just get some more stuff today."

Right? Or sign up for government assistance or be it from a family member or become a cat burglar. I mean, there's just, there is a lot of, not advising all this, but there's a lot of options out there, right?

And and that's what consumers do. So, so be careful. The whole, the whole point is just be very careful with getting yourself locked into a forecast that you absolutely think is going to, this is guaranteed, this is going to happen. You know, in an isolated static world, that may very well be the case. But the market is not isolated and it's not static. It's constantly changing. It's dynamic. It's adjusting. It's looking forward. It's making estimates. It's making assumptions. So whatever you think is going to be the case today may very well turn out to be different. So, just be able to be nimble enough to change and just follow. Let the market tell you what it wants to do rather than you trying to force the market to do something it doesn't want to do because you're going to lose that fight.

That's like, that's like being married.

So.

No, I I totally agree with that point and that's very consistent with the message from the video I released earlier this week with Mark Newton, um, who is, he's Tom Lee's research partner there at Fundstrat. And what's really interesting, it's I sort of see them as like the odd couple, you know, the Felix Unger and Oscar Madison. Yeah. Um, because, you know, Tom, I mean, I'm sure Tom has his own methodology and everything, but Tom is, people will say, the biggest bull ever out there.

And Mark is like Mr. Spock on on Star Trek. I mean, he just tries to be a Vulcan and said, "Look, I have all sorts of opinions on the macro situation, but I leave them at the door because I just look at what the market is telling me, right?" Um, and what the market is telling him, just for those that haven't watched that yet, is, um, he thinks this year will continue to be a volatile year. So, kind of a year of chop. Um, but if he had to, kind of, you know, right now the best prediction he can make given what his models are telling him is that there'll probably be a pullback at some point by the end of May-ish, early June-ish. He thinks because, because the market has, you know, risen as much as it has, as you and I have talked about, Lance,

Um, he thinks once that pullback happens, there's a setup for a pretty strong summer. Um, so he expects the summer to be pretty good. Um, and then obviously you get into the uncertainty of the elections and stuff like that. Um, he feels like all things being equal, he expects the markets to end the year higher than they are right now. He's not saying it's going to be a barn burner move from right now. And again, there's, you know, it's going to be volatile. It's going to go down. It's going to go up. It's probably going to go down again, come the election. So, um, you know, uh, again, to your point, Lance, he's just like, "Look, I especially in a year like this, I'm not going to tie myself to any sort of philosophical mast. I'm just going to be looking at what the market is telling me and trading accordingly along the way."

I I absolutely agree with that view. That's, you know, what we've been talking about for a while is that I think we're going to get some more volatility this summer and that that's going to, you know, set up, you know, for a nice trade into the year end. And again, you know, whether we end where we are now or, you know, a bit higher would not be surprising at all.

Yeah. And what's funny, he's like, "Look, Adam," because I listed a whole thing of possible concerns out there, um, war and otherwise. And he was like, "Yeah." He's like, "I'm, I'm, I've got worries about that stuff, but until I start seeing it matter to the markets, I'm not going to let it affect my positioning." Um, and look, folks, I'll just, I'll just wrap this up. And again, let's, I think I pulled you off of going through the technicals and seeing where the DMAs and stuff like that. So, pull that up.

The, the, the one thing I want to just end here on is that people might be listening to my diatribe here and saying, "Oh my god, I can't believe it. Like, Tagert's gone to the dark side. He's an Uber bull." And again, I try to be honestly focus.

Dark side. You come to the light side. This is the light. Come to the light.

No, I mean, I'm trying to emulate you, Lance, and I think I try, I think I do this normally is I try to be impartial or the eagle that you would say, right? And all I'm saying is right now when it comes to the economy, this is less so the markets, but when it comes to the economy,

It's not necessarily that I'm becoming a raging bull. I'm just finding it more challenging to be bearish is probably a better way to say it.

Yeah. No, I agree. And, you know, one of the, you know, concerns that I had early this year and, you know, it's just coming into this year, you know, we've had these two big barn burner years. It's been great. And kind of my concern coming in this year was that, you know, we might see a reduction in that kind of kind of exuberance in the markets. We haven't. I mean, retail investors are just going crazy. I mean, just we wrote an article on Monday about Avis car rental car as the symbol and this was just one of those meme stocks kind of going straight. It went from like 150 to a thousand. And I wrote, I tweeted out on Tuesday. I said if the CEO doesn't issue shares right now, he should be fired because they should just be doubling their shares outstanding. And I took a bunch of heat for that. Like, oh no, they can't do that. They won't do that. And then of course on Wednesday they made an announcement they're kicking off the earnings and the stock's down like 70% since then. But it's just.

Okay. And that's Carbonic because I know Avis did the exact same thing.

No, this was Avis.

It was Avis. Okay.

This was Avis. But the other thing is that people were making this case for the market to not perform well this year because companies were going to have to cut back on share buybacks. Now remember, corporate share buybacks since 2000 have made up 100% of the net purchases of equities in the markets. It's kind of hard to wrap your head around, but there's been so much buying by corporations of repurchasing their own shares. That's been a massive support to the markets, particularly over the last 10 years. So, the expectation was this year by a lot of people expecting a tough year is that they were going to have to be have to cut back on those share buybacks in order to fund all these data center buildouts. Uh, that is not the case. We're currently on track for 2026 for a record year of share buyback announcements. And so that's a, right now we're in blackout. We are just starting to open up that buyback window which will go from basically the end of this month into about halfway through June before we start the second quarter earnings announcement. So there's a big tailwind of these buybacks that are about to start hitting the market as well. So there's another source of buying to potentially hold and support the markets over the next month and a half while we get into summer.

Wow. So is, um, and again, folks, this is something you just can't ignore.

No, no, keep that up for a second.

So is this, I'm wondering where's the money coming from to do this, right? Because, you know, if it's a, um, zero sum game, well, I'm taking money I used to give to buybacks to build data centers and stuff here. So I'm guessing this is much more debt financed than in years past. And maybe they're not raising debt to buy back their shares, but they're raising debt to build their data centers.

And then using what's left over to buy their shares.

Yeah. But you got to remember that some of these companies that are buying shares, they have just so much cash flow, right? Take a look at Nvidia as a good example.

No, no, I get it. But they had a ton of cash flow last year that they're using for buyback. So just mathematically, if you're using that to build much more data centers.

That you got to fill that gap somehow.

Right? But they're not using, but they're not using, they're making so much cash they can fund data centers and buybacks and not going to debt. This is Nvidia. They have a 0.06% debt to equity. They have no debt, right? That's how much cash they're making. When you look at the, you know, you look at the sales growth of this company and they're generating $218 billion in sales a year.

You can fund, you can fund, I could fund building Manhattan and data centers and still do share buybacks.

Okay. But but these guys are selling the chips for the data centers. What about the guys that are building the data centers, the Google's, the Apples, the Microsofts?

Great question. So Google has 0.15% of debt to GDP. Sorry, GDP.

Debt to equity.

So used to saying the other way. Here's Microsoft, uh, 28%.

Yeah. And are those, are those rising? Do you happen to know? I mean, my guess is yes.

Yeah, they picked up a little bit, but I mean, when you're talking about a 28 debt to equity ratio, they could basically pay that off with left pocket change.

Okay. Yeah. I just, I maybe I'm the only one, but I'm just looking at that record buybacks this year given how much capital spending they're doing and just being like, "Wait a minute, where'd that money come from?"

Yeah. Yeah. Well, no, it's just because they're selling that much product. I mean, you know, income's 119 billion and you've got a profit margin of 39%. Do the math, right? They're, they're just these guys are literally printing money.

Okay. So, let me, let me just, um, ask you this for a second and then folks, I promise we'll get to the S&P T.

I'm going to bring it up. Here's the S&P.

Okay. Um.

Ask your question.

So, what's it's really more of a point. So, headline I just saw, um, AI related stocks now reflect a record 45% of the S&P 500's market cap. Right? So, you know, we've been worrying over the past couple years about how much these hyperscalers are becoming the total market, right? And now they're getting close to about half of the total market value in the world.

Then more so, furthermore, a record 15.4% of investment grade debt is now tied to AI, making it the largest sector in the US credit market. So, here's a key point. Never before has a single theme dominated both US equity and credit markets to this magnitude. So if there is an axis that these markets revolve around these days, it is AI. Um, which, you know, as long as the AI trade continues to build from here, fantastic. You know, happy days ahead. But if anything happens with AI, we are very, very vulnerable to it.

Yes. Span here. Let me see if I can find this chart real quick because there was a really great chart out earlier this week. Sorry, I'm about to run you through my Twitter feed real fast.

That's right. Well, folks, you're seeing both you and I make the sausage in real time this week.

Exactly. But there was a really, but but this is what you just said is a super important point because when we look back and we say, "Wow, we're spending so much money on AI." Remember, this is the largest single industrial. Oh, here it is. This is the single largest industrial revolution that we've probably ever had, right? I mean, you know, on terms of just magnitude and size and the amount of money going into it. This top line, this kind of goldish line, this is US railroads. So, this is data centers versus mega projects. Annual spending is a percentage of that year's US GDP log scale. So, railroads as a percentage of the economy was a huge investment and that was massive industrial revolution. We can now move product all across the country. It was phenomenal. Um, but, you know, when you start talking about data center capex, you know, it's here and it's in the very early stages, so it could certainly rise some more. But again, when you start talking about the people that are spending the money, you have to, this is like when people talk about M2, they say, "Oh, M2 is going up." Okay, yes, but you have to compare it to something, right? The number by itself.

doesn't mean anything. Are we spending a lot of money? Yes, we are spending a ton of money on data centers. But you have to compare that to either the economy or to the, you know, the company's cash flows, those types of things. And when you start doing that and start comparing these things to the things that matter, you know, the the the size of the debt growth of of, you know, of money being invested in in, uh, AI data centers is negligible compared to the amount of money these companies are making, if that makes sense, right? I'm just saying you have to have some type. You can't just say debt growth is 15%. It's larger than it ever was before, maybe, but you have to compare that to something.

>> Yeah, sure.

>> To have validity in the measure.

>> Okay. So, is the point you're making here that maybe we're not as vulnerable as the point I was making because?

>> Because you're not, you're not. Look, if if we looked at, I would agree with you in a heartbeat if we looked at Google's balance sheet and Google had four times, you know, four times debt to equity, right? You and I would be on the same page. Yeah, this is this is terrible, right? Yeah. But when these companies have no debt and they're taking on a little bit of debt as a percentage of their equity,

>> You know, that's a very, that's what I'm saying. That's trying to compare it to the size of this project.

>> I don't disagree with this. This is of a magnitude we haven't seen

>> Since the railroads.

>> Okay. So, all right. I kind of hear you saying two things, which is this is big, but it's not crazy big for each individual company given how ferociously profitable they are. I I don't disagree with those points, but the point I was making is that we've never had this point here. We've never before has a single theme dominated both US equity and credit markets to this magnitude. Right? So, let me just throw a hypothetical. I would probably argue that if we went back and look at railroads.

>> Okay.

>> I I this is just the I'm quoting the Kobe report here. Um,

>> They're always bearish.

>> Uh, I don't know about that. But anyways, um, so Deepseek just, you know, China's Deepseek just announced its latest model today, I think, right? Or yesterday, but this week. Um, I I don't know what the reviews are of it yet, but um, certainly it's being touted as, you know, much more powerful than the previous Deep Seek models. And Deepseek is open source, right?

>> Um, and it is much cheaper, uh, to run, we'll put it that way. Doesn't doesn't require the massive horsepower. Now, it might not be as good as the best US um AI solutions. I don't know, is my point. But let's just say it it gets there, right? All of a sudden, China Deep Seek becomes the the lead sled dog here, right? And everybody puts their fears of it being Chinese spyware aside, and all of a sudden, companies just start adopting it in mass. The damage that that would do to the the capital markets in the US could be tremendous if all of a sudden, you know, 40, 50% of the market valuation of the AI complex gets wiped out. Now, folks, I'm I'm not saying that's going to happen, but I'm saying if it did, the market is is more dependent on that one sector than it's ever been on any sector in the past. So that's my point, which is just we have to be aware that this the getting is great right now, but there is a we're trading off the vulnerab a vulnerability there that I just want to make sure we're not underappreciating.

>> Well, so two things. First of all, just think about US companies. So let's just talk about the US for just a moment. And you have to think about national security issues, all these other types of factors. So, are you going to trust Deep Seek over say, an Anthropic?

>> Sure.

>> In my story, etc.

>> In my story, let's say it's a German firm. I mean, it doesn't have to be China, right?

>> Okay. So, are you are you going to trust a German firm over over, you know, when you're talking about national security of data? This is all data, right? So, are you going to trust a model that was developed in some other country that you don't have control over? Maybe the answer's yes, maybe the answer is no, right?

>> Well, I mean, we're super dependent still on chips from Taiwan, you know.

>> Well, no, it's true. But when you're talking about open source, you know, there's a lot of other vulnerability risk that come into open source because again, it's open source. It's not a controlled source. So, you know, I I think you have to look through that. And this is why we had our Deep Seek moment previously, right? You know, LA last year Deep Seek came out, markets all sold off, and then everybody looked through it and said, "Yeah, that's not the threat we thought it was." And then markets ran right back up again. But but it was a threat that nobody saw coming at the time, right? But now the markets know it, right?

>> This is a threat.

>> I again, I'm not necessarily making the case Deep Seek's going to do it. I'm just saying if there is a surprise to this market,

>> The market is made up so much of AI right now that if anything challenges the faith in that, it is going to have a vastly disproportionate impact on the market than say the energy sector, which makes up what of the S&P?

>> Three percent.

>> Yeah.

>> Yeah. So, no, no, no, you're absolutely right. I mean, look, if if if tomorrow morning, for instance, you know, Anthropic comes out and says, you know what, AI doesn't work. It's just really smart. It's a really smart video game.

>> AI causes cancer.

>> AI causes cancer. Yeah. Whatever it is, um, yeah, you know, you've been, if you've been wanting a 50% correction in the market, you're going to get it pretty quick,

>> Right?

>> The but you have to you have to look forward through this and look at where this is going to wind up down the road. And just the adoption rate of AI in in the economy is at 53% and growing rapidly. You know, this th this, you know, this this revolution, this industrial revolution that we're going through, this is the same as it was with the internet. Everybody remember, you know, back

>> No, I think it's bigger, is what you're saying.

>> Well, yeah, but just remember back in 1999, oh, the internet's a fad. Nobody's going to get on the internet, you know, and we had we had the.com crisis because we had companies jumping in, changing their name to dot coms that didn't have a business plan. We're seeing that today. Um, we just saw a company, uh, last week, um, just say that they're they're they're moving, um, it's a shoe company. What was that shoe company's name?

>> Alberts.

>> Yes, Alberts. We're we're going into, we're we're giving up shoes and going into AI and the stock was up like 180% or whatever that day. No, I I want to say I think the stock went up like six times.

>> Yeah. Yeah.

>> It was it was crazy. Whatever it was, simply by saying they're going to AF. They know nothing about AF, right? They're just going to go rent some stuff and lease it to other people. But, you know, that's that's what got us in trouble in the dot crisis. But the internet was still valid. So, some companies went away for sure because they were all trying to jump on. And look, there's going to be a lot of AI companies that we have right now that are going to go away. Um, there's companies out there that are doing, oh, okay, come come use our software to build your website. It's all AI-driven. Just tell us what you want. AI will build your website for you, or, you know, do this over here. We'll handle your marketing for you. Whatever. Those are going to go away. So, do not invest in those companies because those companies will not be around because AI will do that in totality. You don't need a specialty company to do that. So, companies with bad business plans are going to go away. We are going to have, let me be clear, we are going to have a downturn in AI at some point in the future. Maybe next year, maybe the year after, but there's going to be a realization that a lot of these companies that are coming IPO to market are not going to make, you know, and that's that's a potential risk, you know, for a lot of people. Very excited about the SpaceX IPO. Well, SpaceX also owns XAI, which is Tesla's AI AI software. What if XAI doesn't work, right? What if SpaceX is doing fantastic, but they get laden down by XAI? I'm not saying that's the case at all, but you know what if, right? What if XAI is not the model and Anthropic dominates the whole market or or Google's um um I forgot what they call theirs? It it dominates.

>> Gemini.

>> Yeah, Gemini. What if what if Google's Gemini is the AI and and they win the race? This is a foot race, and whoever wins that race, that's where you want to be invested. But there is going to be casualties along the way, and the market is going to take a a part of that when those casualties all show up because they're going to show up all at one time.

>> Okay. And so we'll get off this in just a sec, folks, but this is really why I'm raising this point, right? So just as we had in the internet where a lot of the early players weren't the long-term victors, right? Um, that may happen very well happen here, and you're you're making a good case for that. Um, uh, and also like every other technical um revolution we had, um, you know, nobody knew what the right size of it was. So everybody overbuilt, right? Um, and then you had this period of absorption, right, where a lot of the capacity layow. You can make an argument that's not going to happen with compute, or you can you can make an argument that it's going to happen even more with compute because these chips go obsolete so much more quickly. Right.

>> Um, so, so, but to your but but just to your point, so what happened to the NASDAQ between 2000 and 2015?

>> Yeah.

>> Right. It went nowhere. In fact, it went down, and it only it took like 15 years to get back to to where it was at the height. Right. And so, all I'm saying is is, you know, there's a lot of reasons to believe that AI is going to continue to be a juggernaut for the foreseeable future, but, you know, you think may very well may happen here, Lance. If it does, it's just such an unprecedentedly large percentage of our capital markets right now that that is going to be really painful if and when it does happen.

>> Yeah. Yeah. And and look, and and I fully expect, you know, I don't know, you know, we'll call it the AI crisis or whatever. We're going to have that shake out at some point. How big that is. And and here's the kind of here's kind of a shock.

>> And how long?

>> And how long? But here's kind of the shocking point. The market could crash by 50% from here. We could have an AI crisis. The market goes down 50%, and we're still in a bullish trend from 2009. I mean, that's that's that's the hard part to wrap your brain around.

>> It is. And I think it's really important for you to keep reminding people about. But at the end of the day, Lance, if and when that happens, nobody's going to care. It's going to feel like a catastrophe to them.

>> Absolutely it is. Absolutely does. Well, let's let's get to the technicals because, uh, you know, we've been trying to get there for a few minutes. So this is a chart of the S&P going back from the lows that we set in, uh, on in April. And then of course, uh, you know, April 6th, we started adding exposure to the portfolio. We've had this very nice rally. And so last week, we were right here, and I said, hey, you know, we're probably going to have this kind of a bit of a correction issue. Um, and as I said earlier in the show, corrections can happen two ways. Either you have a pullback, or you consolidate sideways. And when you're in a really strong trending bull market, pullbacks are very quick. If you take a look at even this kind of this topping process, just, you know, back from December to January, markets don't really go anywhere. But you'd have these pretty strong rallies. You'd have short pullbacks, another rally, a short little pullback. And so the markets didn't give you a lot of opportunity to invest in the markets. And that's particularly the case, if we stretch this back here a little bit more, that's really the case when you're in a strongly trending phase of the markets. These pullbacks that you get are very shallow. Uh, they typically don't last long, and so your opportunity to gain exposure in that rally. In other words, what I'm trying to say is, if you're expecting the market to pull back 5% or to give up half of the recent rally so you can get into the market, that's not going to happen. Not not likely anytime, at least for the next couple of months, probably. You're probably going to have these little periods of where the market sells off for a couple, three days, and then the markets rally again. And and what normally happens, and you can take a look at relative strength, is a really good indicator of this. Let me move this over just a little bit. Relative strength is this graph on the bottom. And if you're looking for an entry point into the markets, what what gives you kind of an ideal entry point is when the market goes from overbought back to about 50 on on the relative strength index. Only during bigger corrective periods and when it falls below 50 that you want to be a bit more concerned about where you're allocating capital, right? And be more concerned about the depth of the pullback. But as long as relative strength remains above 50, pullbacks in the markets are going to be shallow opportunities. So again, when you take a look at where, you know, we were right here, um, you know, this was, uh, you know, back in in July of 25, you had this real kind of sharp two-day selloff. This was the yen carry trade blow up. We went from very overbought to about 50 on the index, and that was your buying point, right? Just that quick. And most of these occur that same way. These pullbacks are very shallow. So when we start talking about where we are today, and you're going, well, if the market pulls back to the 200-day moving average, I'm going to get in, right? Because I missed this rally. That's probably not going to happen here for a couple of reasons. One, this consolidation process is already starting to reverse. We are overbought, relative strength overbought here. If we're going to pull back to 50, you know, we could consolidate for another week or two, pull this back a bit more, and then be in a good position to add exposure. But the 20-day moving average, this purple line, is accelerating sharply. This is is pretty much your kind of bullish or bearish trend line. So, you know, worst-case scenario, you get a pullback at this point to the 20-day moving average. That's going to pull you back to about 6850-ish because the 20 days is going to keep rising here. But that's going to be your first kind of, you know, real, you know, mega support level. Right now, temporary support levels are going to be here at at these previous all-time highs around 7,000-ish, a little bit higher. So, your first pullback, anything that gets you towards previous all-time highs, you buy there. Anything that gets you back to the 20-day moving average and potentially the uh the 100-day moving average, which is this black line, that's a definite buy. When you got the 20 and 100 sitting right on top of each other, this is really, really strong support. And also, as I said earlier, these moving averages are now all trending higher. That's also bullish. So any pullbacks that you get are going to be buying opportunities. So anything that you get back to around 6950, 7,000, or or you just get a consolidation that lasts another week or two that pulls back this relative strength indicator, that's going to be a much better point to add exposure to your portfolio if you need to. But right now, there's no reason to, you know, we've had a very strong rally. Certainly take some profits here. That's what we did this week. We took profits. We rebalanced a variety of our portfolios this week. Uh, for instance, in our in our small and midcap uh thematic portfolio, we had two stocks up 500%. So we reduced those back to market weight. So, you know, those just take those types of actions, capitalize on on the markets that what it gave you, and then put that money to work at a time, hold that cash for now, and then and then look to put that money to work on, you know, opportunistically at better prices.

>> Okay. Um, but if we just go sideways from here to you, that's bullish, right?

>> Yeah. Yeah. Absolutely. A sideways market is very bullish because that means that you've got buyers and sellers all sitting at the same level. Right. But also the consolidation allows, as you were saying with the RSI, the the it allows the market to burn off the overbought condition. Right.

>> Unless unless those moving averages catch up. So remember, one of the one of the biggest things in the markets and and you don't have to be a rocket scientist to do this is that if you if a stock is just really accelerating, go take a look at a moving average relative to that stock over time, right? Just pull up a chart of any stock. Just say it's Nvidia or whatever it is. And what you'll notice is is that whenever there's a big deviation between the underlying moving average and the price of the stock, that's a really good indication to take profits and and reduce your risk.

>> Because you can't have an average unless that stock price is traded above and below that price. And so so that acts like gravity. So

>> It's reversion of the mean. I mean, literally that's what it is. Yeah.

>> 100%. So right now when you look at the markets, we've got a fairly decent deviation. We're five, six% above the moving averages. So there's a reason. So in order to correct that deviation, either stocks have to go sideways and the moving averages close the gap, or stocks pull back to the moving average to close that gap. But one of those two things is a

>> Well, or the or both.

>> Or both. Yes. You can meet in the middle.

>> Yeah.

>> Yeah. And that's generally the consolidation process. Slight pullbacks, mark moving averages catch up, they meet in the middle.

>> Okay. Um, all right. So, we're obviously going to get to your trades in a little bit so you can get specific with folks about what you're doing. But kind of high level, take some profits here if you're sitting on some big gains in the near term. Build a little bit of cash, uh, in case it is the price that drops down to the moving averages. So, you've got some dry powder to deploy. But I get the sense, Lance, that you're, you know, while yes, it's going to be volatile, you're expecting the trend here to be higher, you know, in the foreseeable future.

>> No, not not so much. You know, you know that I don't really expect the market to do anything, right? I'm just trying to navigate for what the market's doing. And right now,

>> You have your three-month headlights that you're

>> Yeah. Yeah. Yeah.

>> And so, I don't I'm not expect, you know, from where we are right now, there's not a lot of upside. You know, we could maybe get another 100 points of upside because markets are deviated. They're extended. You know, they're very bullish right now. So, we've kind of all that fuel, right? So if we go back all

>> But that's why you're taking profits and building a little bit of cash.

>> Exactly. Right.

>> Because you go back to to you know why did we why were we buying stocks April 6th, April 7th? Because we had investor confidence was at extreme. We we had the lowest level of investor bullishness since the bottom of the April tariff lows in 2025 and and not far off of lows that we saw in the 2020 crisis. So you had extreme bearishness. Stocks on a technical basis. We have a composite indicator that we run in our newsletter every week. It's our technical gauge that had gotten down to levels that normally mark bottoms. And so there was a there was from a technical and sentiment basis, there was a lot of reason to put capital to work. Those are good contrarian indicators. Now, those have all reversed and and very sharply. So we've got a lot of bullishness coming back to markets. Investors are now back to being greed factors. Tech technicals are getting pretty overbought already, and that was a very fast rally, uh, just two two three weeks.

>> Right. Right. Right.

>> Right. So what that what that says is that doesn't mean the markets have to crash here. We don't need to have a big pullback, but it's also means that the upside is is limited. So we're being a little bit more cautious now. We're taking gains, a lot of our our tech winners, adding a little bit of value back to the portfolio, just kind of adjusting that risk model um in the portfolio a bit to hedge against any potential pullback. And if the markets rally some more from here, fantastic, we're going to participate. But if the markets pull back, we're kind of hedging that pullback risk.

>> Okay, totally get it. And maybe it just wasn't clear. So, totally get that. That is your immediate strategy. But when you're looking out the next couple months, right, you know, you you're a meteorologist example, right? You've got you you've got higher confidence in the next couple months than you do in the next couple of quarters. And I don't hear you saying, "Oh, well, we're reducing our overall equity exposure in the portfolio because we're worried about some big shoe to drop here." You're still planning that the trend will be higher over the next couple months.

>> Uh, especially if we have a little pullback here that takes some of the exuberance off and and lets things catch up.

>> Yeah. Yeah. And you'll remember that prior to the Iran crisis, we were doing that. We were raising cash in the portfolio. We had brought our portfolio weightings down before the crash. We did that some more during the Iran the early stages of the Iran crisis, and now we're back up to target weights. So, you know, we've we've made that rotation from being underweight equities back to being target weight equities.

>> Okay, great. So, my understanding was

>> And and the point is is we'll do that again. So, when we're on here in the future and I start saying, hey, you know, we cut exposure by 5%. We're starting to look at risk, you know, to the downside,

>> Right?

>> But you're not there right now is

>> Not there yet.

>> Yeah. Um, and let me just make one comment here too. Um, the long-term bears are probably hating this, uh, this conversation because I'm I'm being more bullish than bearish. Um, but, uh, you know, entering this year, I ring the bell I always ring, which is just like, hey, Lance, you know, how worried are you about valuations? They're still at crazy levels, blah, blah, blah. And they still are. It is still a richly priced market. Um, and it has been frustratingly a richly priced market for a long time. And this is why you and other analysts say, don't ever use valuations as a timing metric because the old adage, the market can remain, um,

>> Irrational longer than you can remain solvent. Right?

>> Um, and look, folks, I share the concerns and I share the frustration. Um, and I do believe at some point, you know, valuations will matter. Question is, we don't know when. And Lance, when I see the um earnings estimates rising and rising at the speed at which they've been rising,

>> I think as someone who's concerned about valuations, you have to take that into account as like, you know what, that's that's making that's reducing the valuation risk, right? This thing that I'm very concerned about. I got to be honest with myself. If if the E are going up, right? If if um, you know, these are ratios that people are worried about, right? And they're generally some form of price to earnings ratio. It's essentially what the the Buffett indicator is. Um, if the E is getting better, well, then the multiple is coming down. It is showing that the, you know, there is less, there's still froth, but there's less froth than there were before. And so my my point is just, if you're one of those people, and I generally consider myself in that camp, that just says, "I'm real worried about the I'm suspicious about the markets because they're, you know, extremely overvalued and I just don't think that can last forever." Well, if the ES are improving and they're improving at an the the quick clip they are right now, that does reduce the risk of some sort of valuation driven correction. Am I am I stating this correctly, Lance?

>> Yeah, you're absolutely right. And and understand this though, this is earnings estimates, and estimates have a very large potential to be wrong historically speaking, going back to 1960.

>> But they are what drives the market in the today's snapshot.

>> That's that's exactly my point. And in today, those estimates are rising. And so markets trade against forward. All markets always trade against forward earnings expectations. However, as investors, we also need to be aware that while the markets are very bullish today, there is a real risk that those earnings will not come to fruition. And anything that occurs in the economy that causes a reduction in those estimates at some point in the future. So, let's just say that we get into midsummer and the Iran crisis has not been resolved, and all of a sudden oil prices have spiked up. They've been staying at, you know, $120, $130 a barrel for, say, three, four months. Gas prices are up to $5. Iran carpet bombs all of its neighbors, energy and oil goes to $250 a barrel.

>> Exactly. What? Pick your case. You write your scenario.

>> Well, all of a sudden, all those estimates are going to come down sharply. Now, when that happens, the market's going to go, "Oh crap, I need to repric the market." And so, I was expecting earnings of $300 a share. They're now $250. And at 20 times valuation, the stock can't be at at at 7,200. It's got to be at 6,800. That's how you get that price correction.

>> Yeah.

>> That is a risk that you cannot take out of the books, even though right now everything seems to be okay. But stay focused on those earnings. The revisions to earnings are more important than the earnings themselves.

>> Yeah. Um, my point right now is if you are a valuation bear, the trend is not your friend.

>> That is correct.

>> Yeah. Um, doesn't mean that, you know, something some black swan might happen, but you're increasingly having to depend on the black swan as opposed to just deteriorating conditions.

>> Yep. Exactly right.

>> Okay. Um, let's see. Uh, where to go from here? Um, you may as well just make everybody angry. Um, so I I had I had a

>> Why why do that? Why we don't want to ruin everybody's weekend.

>> No, no. I'm making this as a segue to actually your most recent article that you just published today, Lance. Um, so, um, on I made a tweet on Twitter, to to go back to your terminology, instead of a post on X, um, recently that got a lot of lot of discussion. And and what it was was

>> Uh, can't remember the context in which this person said it, but they said, nobody trusts the US and the dollar anymore.

>> And they were kind of making the case that like, you know, the world is just giving up on, you know, American, you know, monetary and financial assets. No one's using the dollar, and no one's buying Treasuries. And I got into a big back and forth with this person um because I said, "Look, I'm totally sympathetic to the point you're making. You know, if if you want to talk about the fact that the US may be giving reason for other countries to buy less Treasuries than they were in the past, or, you know, uh, if you want to make the case that Treasuries as a percent of market value on central bank balance sheets um are are decreasing as a percentage of assets held um, or if you want to make the case that, uh, the US dollar is um devaluing versus other assets out there, man, I'll I'll I'll be singing that song sheet all day long. Um, but, uh, nobody, right? It's a completely hyperbolic claim. And I I went and and just pulled up a chart from Fred of um, you know, total US Treasury ownership by foreign entities. It's at an all-time high, right?

>> Price on price basis.

>> On a price basis. Yeah. And um, and, you know, lot lots of people pushing back and saying, well, hey, wait a minute. If you um, inflation adjusted, it's flat or, you know, whatever, whatever particular thing they wanted to look at. And my point was, yeah, you're right. And let's even take the inflation adjusted thing flat, right? That might mean that people are less interested in owning Treasuries than they were in the past, right? Or or less interested in owning more Treasuries than they were in the past. But it's trillions and trillions of dollars worth of Treasuries. It's not nobody. And so my point was just to say, look, you you've got to be really careful about letting your emotions cloud your conclusions. Right? So, as I said, there's you can make a case that hey, the world is a little less interested in owning Treasuries than it was, or whatever. But if you are saying nobody wants this, and therefore the dollar is going to zero, and nobody's going to own American debt, and America's going to have a massive debt crisis because it needs to raise all this debt, but no one's going to buy it. You're just wrong, given the current facts, right? And I just want to make sure that people are making eyes wide open decisions. Now, if you have a thesis that that's going to happen, that you can rationalize with data and position for it, fine. Um, but just be very cognizant that the fact that you're you don't like what the US is doing, you think that you think in the future people might want less of it, and whatever, fine. But until the data starts moving, you know, don't be committing to a thesis here that isn't borne out by the data. So again, I probably enraged everybody here who, you know, is betting their portfolio on the dollar, you know, totally getting debased from here, getting dumped by other countries. And look, folks, I own a lot of assets that are I own because I think they're going to appreciate versus the dollar in the future. Um,

>> But you should say as Lance thinks I should.

>> Um, but my point here is is again back to what we were saying earlier is, you know, I can understand the passion by which people have emotions around this, but don't let it cloud your investment decisions, especially if it flies in the face of the data that is out there to get if you just do the homework.

>> Well, I think that is is the most key point, which is, you know, when I say that you should own assets that will appreciate against the dollar, what we're talking about is a dollar that's stuffed in a jar, right? And and over time, inflation. If I've got $100,000 sitting in a bank account at JP Morgan paying zero interest, which is what JP Morgan pays on their savings accounts right now,

>> Then you're stupid because that is being debased or devalued relative to the rate of inflation over time. So those dollars should be invested in gold, stocks, bonds, something that generates a return over time to make sure those assets, the purchasing power of those assets are being uh being protected.

>> And a minimum maintained and hopefully maybe increasing.

>> Exactly. Right. So that's that's why we invest and that's the whole reason we invest. But the problem that to that you're addressing is is there's a lot of people with this thesis that, you know, government debt is is going to cause the dollar to collapse, or, you know, and to your like you said earlier, so, you know, governments are maybe maybe governments have less interest in owning US Treasuries. Well, the problem is is that's not even true because if you take a look at this is foreign holdings of US Treasuries. I want you to pay particular note to these two gold lines. Um, but you can see that every other central bank in the world is increasing their holdings of US Treasuries. They're not reducing them because they need to have dollar reserves to exchange. These two gold lines are important. This is the line. This gold line is the chart that everybody shows you. China's dumping all their US Treasuries. No, they're not. What they're doing is shifting custody from the US into Belgium and Luxembourg to avoid sanction risk. China watched us sanction Russian assets during the Ukraine invasion, and we basically took Russia's assets, and China said, "Yeah, we're not going to let that happen because we're not really an ally of the US. So, we're going to move custody of our assets, some of our assets, not all of them, but some of our assets from US custody into global custody so they can't be sanctioned and just basically frozen." And so they've been moving some assets on almost dollar for-dollar basis into Luxembourg and Belgium. And that's why if you take a look at China's holdings of US Treasuries, they've actually been rising a smidge, but they're about where they were in 2012. They haven't changed. It's just the location of where those have changed.

>> Okay. And let me just ask one one thing on here. Can you include in your answer? Um, I I know there going to be some people that are saying, "Oh, Belgium and Luxembourg, that's all US hedge funds that are owning Treasuries, you know, sort of outside of the system."

>> Right?

>> Well, no, it is. But you have to think about Belgium and Luxembourg as a country. They are not that large of a country. So there's no reason that you should see an almost dollar for-dollar change in the holdings of US of US Treasuries in those two facilities, which are basically Euroclear by China. So basically, there's been almost a dollar for-dollar exchange between China's reduction and the increases in Belgium and Luxembourg. And these are far larger than, you know, remember this is billions of them, billions of dollars. This is far larger than just hedge funds would own.

>> Okay.

>> And there's certainly some of that there. I'm not saying that all of the holdings in Belgium, Luxembourg are solely China's. I'm not saying that at all. I'm just saying that from a a dollar for-dollar transaction basis, they they almost tie together. So

>> Okay. And and who who put these charts together? This is data from from the tick data. This is coming out of, uh, the Treasury.

>> Okay. But is this your chart? Did you create this?

>> Yeah. Yeah, I built the chart. But this is

>> Okay. All right.

>> Um, so so now we talk about central bank net gold purchases. So when you talk about gold, and this is to your point, if you take a look at gold as a holding of Treasuries, gold, the the percentage of gold holdings has gone up sharply, but that's price. It's simply just a function of the price of gold rose very sharply. And so those holdings have val have more value, but it doesn't necessarily mean I'm buying a whole lot more. So back in 2022, we saw a lot of gold buying, but actually gold buying's been declining over the last couple of years, in particular. This is the end of this is towards the end of 2025. I don't have 2026 data just yet, but gold buying by central banks has actually declined. The price has risen, but they're not buying that much. Now, here, or they're not buying as much as they were. They they're always buying gold, right? Because gold is just another storage of the dollar reserve. I can I can store, if I if I need dollar reserves, I can store that in three manners. I can buy US stocks, I can buy US bonds, or I can buy gold because all those trade in dollars around the world. So when I if I need exposure to dollars, I can buy gold with it. And gold was doing well. And what was happening with in '22 and '23 and '24? What was happening with interest rates, Adam?

>> Well, they were skyrocketing.

>> They were going up. And what happens to bond prices when interest rates go up?

>> They go down.

>> They go down because bond yields go up to accommodate.

>> That's correct. So, if I'm a So, let's just think about this. Let's just say that that that you and I are the central bank of China, and we go, okay, well, we need to we need to have our dollar reserves to and, you know, to influence trade and all these type of things. If I buy US Treasuries, interest rates are going up right now. So when I buy those US Treasuries, my dollar reserves are going down in price, and I've got the currency exchange risk between the US dollar and and the Chinese Renminbi or the Yuan, whichever one I'm working at that point. Um, so I've got a net negative between those two. So I don't want to do that. But hey, look at this asset. Gold is going up in price. So let's take some of our reserves, put it in gold to do what? Protect our purchasing power. Right? This is this is what central banks do, just like everybody else. This isn't a dictate on whether or not I want to own the dollar. It's just a function of where I'm going to store my dollar reserves until I need them. And this is why we saw just recently that when the oil issue became a problem, what did we see Saudi Arabia and China and other people do? They sold gold to get access to dollars to buy oil, right? Because because gold is a very liquid asset. I can sell it very quickly. But gold pays no interest or dividends or has no income. It's just it's just gold. It's all a function of price. So we saw a lot of selling of the gold to get access to dollars, but they held their Treasuries.

>> Yeah.

>> Because Treasuries pay a yield.

>> Yeah.

>> Sir, let me ask you this just real quick on that. If the war ends tomorrow,

>> Yeah. Yeah. Right.

>> And the price of oil comes down as a result. Would you expect the gold price to to recover in a material way from this because that selling pressure is now released?

>> Um, some, but you also have now triggered a very big weekly sell signal on gold. Remember, you had a lot of just speculation. The move in gold wasn't just central banks. The move in gold was a lot of speculation in the markets, and you've now triggered a weekly sell signal, and you're getting very close to triggering a monthly sell signal on gold. So you I do if you if you ended the IRA crisis tomorrow, yes, I think you see a pretty substantial bounce in gold, but you but a lot of people have gotten trapped into that trade that were buying it right at the peak. And so we could see additional selling. I'm not saying this is the case at all. I'm just saying

>> You're saying the technicals right now don't look very good, but if the war were to end, that should be net gold positive.

>> It should be net gold positive, but again, I would pay attention to the technicals because there's a lot of trap longs in that in that position. Uh, so anyway, last chart here for you. Dollar denominated assets versus gold. So the gold line at the top, that is XUS central bank gold reserves at market price. Private foreign treasury holdings are 5.65 trillion, and official treasury holdings are 3.7, uh, 3.75. So so the point is is that foreigners still value Treasuries more than gold.

>> Okay, good point. And and again, um, to my central thesis here, and then we'll go to your your um article you just wrote about debt is, um, uh, even though you might be right on trends and things like that, or or what might happen in the future, um, just be very careful about, you know, having an ideological and and and being honest, you know, maybe a very emotionally driven stance that is influencing your decision-making. So, to Lance's point, out there, I know that a lot of people watch this channel aren't huge fans of the dollar for a whole bunch of reasons. You'd rather hold other assets. I I think in large part you should for all the reasons that Lance and I have talked about here. But if the thesis is because nobody wants this thing, as Lance just walked you through, that's not true. And until the data changes, don't put your don't don't make a a philosophical investment decision that is again lashed to the mast of something that isn't true today, right? It might be true tomorrow, and and if the data starts moving that way, great. But just just be prudent and eyes wide open. That's all I'm saying. I just don't want people to become victim of their own impassioned, uh, you know, emotional responses.

>> No, no, that's and that's the whole point. So that whole thing I just walked you through is it's just how money works, right? And and and again, you know, all the all these narratives are great, right? Everybody's got a narrative about this or that. And if I'm trying to get clicks and views, I can be really really bearish and those type of things. You know, but to to Adam's point, just understand that just look at the data instead of the narrative. And a lot of what we're talking about here is just how money works. Uh, you know, we we get tied up into these narratives that, well, nobody wants the dollar because the dollar is going down in price. Well, yeah, the dollar goes up in price and it goes down in price all the time. Uh, you know, did do you realize that the dollar is dramatically stronger than where it was in 2009 coming out of the financial crisis? It's been in a solid bullish uptrend since then. Does it go up every day? No. It goes up and down. And when the dollar, just like everything else, when the dollar gets overvalued relative to other currencies, people sell the dollar and they buy their currency because it's a value exchange. And so the dollar pulls back. And then if the dollar gets undervalued relative to those currencies, we see the dollar rally. What happened during the Iran crisis? Iran crisis, we've seen a very sharp rally in the dollar. Why? Because I need safety and liquidity. And the only the only currency in the world that gives me safety, liquidity, and depth is the US dollar. So when there's a crisis in one part of the world, I go into the dollar for a reason. And I go into that dollar because I have safety, liquidity, and shity of the value of that dollar and its ability to trade within global markets. So it this isn't this isn't an issue of too much debt or too much deficit and everybody hates us and we hate them. It has nothing to do with this. At the end of the day, remember the people driving economies, managing economies, managing central banks, they're just managing the economics and investments of those central banks. They have to make the best investment decisions for their countries to make sure that they can maintain inflation, that they keep economic growth solid, because they're responsible for that that economic growth profile of that country. So they're going to do things that are in the best advantage of themselves, regardless of what that is. They're going to do what's best for them. But they also do that in a manner to make sure they can not not bust the trade between say the US and China because China's very dependent. We're a very big buyer of all their products, goods, and services, which is supports their economic growth. So they want to maintain that peg relationship of currencies. So all these maturations of of buying dollars, selling dollars, buying gold, selling gold, whatever is at

The end of the day, just trying to keep those trade balances somewhat normalized. Somewhat normalized. And and let me, let me fully lose everybody that I haven't lost yet.

Um, so, you know, you can make the argument, Lance, that, um, oh my gosh, you know, America really just totally tanked its, um, its prospects in the world, uh, with this Iran war. Um, it was a war of choice that didn't need to happen. Um, America is losing it. Uh, the Iranian regime is going to persist. Uh, so what did we go over and do this for anyways, except just to show that we're impotent and we can't, you know, replace a regime that we don't like? And along the process, we didn't take any of our allies along with us, so they're all angry with us. And, um, you know, uh, we, we, we just made the world even more distrustful of America, building on we froze Russia's assets, and so everybody was freaked out about storing their wealth in dollars anyways. And and now we've just added kerosene to that fire and America's prospects are going to be vastly diminished from here, right? And and and we couldn't even protect our, our, um, allies in the Gulf. They all got hit with Iranian missiles. What good is America as a military ally, right?

Yeah. Sorry, but that, that's a story, right? That's a, that's a narrative and and there's an argu an argument that you can make that that could be the outcome.

Yeah. There's the other argument here, which is that, um, America has just demonstrated to the world that it has, by far, the most strong military. It brought, um, you know, a country with one of the largest militaries in the world to its knees, infrastructure-wise and militarily, within a matter of just a few weeks. Right? This, this could be the one, the most lopsided war ever in terms of, uh, how quickly it took to, to basically decimate an opponent. And, um, and America, uh, you know, has, uh, uh, showed it's got dominance of the sea lanes. It now, uh, you know, its economy is, is starting to fire on an increasing number of cylinders as a result of this. We just talked about all the, the, the increase in oil exports. Uh, America now has, uh, not only control of the oil that ex, it exports, which is now greater than Russia and Saudi Arabia combined, but it's now got a, a piece of the Venezuela action going on. Um, it now controls a number of key sort of choke points in the world with, uh, the, um, Panama Canal and now it's blockade that is effectively shutting in the Persian Gulf and then it's doing something similar in the Strait of Malacca. Um, and it, it has now just shown the world that, A, I don't ever want to have America mad at me because they're just incredible militarily and man, I want them on my side as an ally. If I got to pick sides in this world, I'm going to pick those guys, right? Um, and therefore, there could be a tremendous amount of, of benefit for the US system and the dollar and everything from those people not shunning America, but saying, "Man, if you're the world's strong man, at least you're my strong man and I'm going to be with you." Right?

So, folks, I don't know which way this is going to play out. But my point is is, it probably likely will be somewhere in the middle. And to Lance's point, every individual player is going to make a decision in their best interest, right? And you know, you can make an argument that the Gulf States would want nothing to do with America anymore because they started this war with Iran and they got, you know, they got became collateral damage. Or you might think, oh my god, America just took out this thorn in our side. It's been a destabilizer in our region forever. America showed it's the biggest, you know, uh, military power in the world, and they're going to help me defend even more so against Iran, and they're hopefully gonna, you know, demand the concessions we all want from Iran. So, we may come out of this with them being way bigger fans of America than they were before. We won't really know till the dust settles here, folks. But my point is, I hear from a lot from both sides that this is absolutely what's going to happen, right? It's going to be total devastation for America and its reputation, or it's going to be complete supremacy of America's dominance from here. And I'm just saying, be careful. These narratives, I understand how they can be very, uh, compelling given whatever your ideological position is. But the reality is, it's probably going to be neither. It's going to be somewhere in the middle. And to Lance's point, just watch what the markets and what the players are doing. Don't load your entire portfolio to it must be X, Y, or Z because I feel it so strongly in my bones. That's a really good way to be wrong in the long run.

Yeah, exactly right.

Yeah. Do a good job of being Lance there.

You, you did a great job. Yeah, absolutely.

So, but, but again, you know, this just goes back to, to the bottom line is like, invest in the markets you have today. You know, set the narratives aside, focus on what the markets are doing today because what's our job? Our job is very simple is that regardless of all these narratives, our job is to make money so that we can secure our own financial future. And that's what I do for our clients every day. You know, the reason I don't get tied up into a lot of these narratives is simply because I'm looking at what the markets are doing right now and I have a task every day. My job is to make money for our clients so that they can have their financial goals met, they can retire, they can have security. That's my job. That's what I'm paid to do. And that's why we focus so much on, you know, what the markets are doing right now, paying attention to technicals, doing those type of things because I need my money to work today, not, you know, betting on a narrative that might occur 10 years from now, five years from now, whenever it is, and then miss all that financial opportunity between now and when that event ever occurs. Because when that event occurs, and I'm not saying that any of these narratives are absolutely, you know, wrong. There's, you know, anything's possible. It can happen, right? But when it's going to happen, the market's going to give us lots of lead time to prepare it. We're not going to wake up one morning and the market's going to be down 50%. You're like, "Oh my gosh, I just lost all my money." Markets don't work that way. They're going to give us a long lead time. They're going to start struggling. They're going to start behaving poorly. You're going to get some declines in the markets. The the rallies that follow those declines don't get back to new highs. You then decline some more. You're going to have plenty of time to start making decisions to become much more negatively biased in your portfolio to protect your capital, which you should be doing at that point. And that's what we'll be doing as well.

Right? Or positively biased if you're, if you're right. And again, yeah, back to my point about, you know, America's decline versus America's supremacy here. Who knows which way it's going to go, folks. And that's why we do these weekly videos, you know, Lance and I is, as he says, the markets will give us signals along the way as to which path it's going to be taking, and we will just chronicle for you what the market is telling us along the way.

Um, all right, Lance. Um, I, I was trying to lead up for you to be able I think we've economically stressed them out for this week. I was going to say I've overlectured here, but, but let me, let me just give you 30 seconds to tell people about the the article that you just wrote about, uh, the debt. I don't want to say non-issue, but that the debt might not be as big of an existential issue as a lot of people fear and then tell them where they can go to read it.

Yeah. Yeah. So, um, so, you know, there, there's been a lot of headlines lately about, you know, the government look and and government debt at $39 trillion. You know, that's certainly worrisome, right? I mean, there's, you know, it's, it's a big number. And but the problem is is that we, we can't take these things out of context. And there's kind of two things we have to remember. One, debt creates economic growth and and the re and deficits as well because when the government.

The right kind of debt does, but yes.

Yeah. Yeah. Well, no, no, all debt does. And the and the reason is is that when the government issues debt, right, they issue debt to fund spending above what is collected in revenue. Well, where does that spending go? That spending goes to Social Security, Medicaid, Medicare. It's winding up in the, in the, in the balance sheets of households who then turn around and spend that money within the economy. Military spending, great. I spend money on the military. Companies like Raytheon, uh, General Dynamics, etc. They're building missiles and boats and planes and we're training the military and we're paying the military by the way with those government dollars which the military then turns around and spends in the economy.

Right. So, so debt equals short-term stimulus.

Well, well, no, there is a, there's what's called sectoral balances here. Let me show you a chart.

Okay. Ah, shoot. Sorry. I didn't want us to get stuck on this.

Well, you asked, you. Well, no, this, I'm gonna show you one chart and that's it. This one right here. So, this is sectoral balances. And so, two things to remember. Always look at debt as a percentage of GDP. And because you always have to put it in relation to something. The economy is growing because our debt is growing and that money winds up into the economy. Now, importantly, the more debt you have, the slower the rate of economic growth becomes because we have to service the debt.

Y. But you still get growth from it. But this is why sectoral balances are really important to understand is because the federal deficit is the private sector surplus. Because when the government spends in deficit, that money winds back up into the economy at, at, at multiple various levels, either at the corporate level where they're paying payroll to people, um, paying the military, which is their payroll, which they go spend in the economy, so forth and so on. But that's why there's this direct inverse correlation between the private sector surplus and the federal deficit.

Sure.

And that's the one thing that, that we need to understand very clearly because that's how the system operates.

Okay. So again, I'm not going to. Fight you on this. I should have said debt issuance equals short-term stimulus. Um, uh, but what's the punch line to your piece?

The punch line? Well, so, so the, the thesis is is that we're about to be the next Weimar or the next Rome, you know, the next Rome Republic and our, our civilization is going to end. So the punch line is is that we are vastly different than Rome and Weimar and there's no real similarity between us. So I go through all the facts and the data and, and, and are there consequences to having a lot of debt? Yes. But it's not catastrophic. Does it equal slower economic growth? Yes. Is, is prosperity going to be slowed down by more and more debt levels? Absolutely. But it's not the catastrophic end that a lot of the people are trying to make it out to be. So again, this is one of those narratives that really isn't supported by the facts. And remember again, a lot of that debt's winding up in liquidity in the system because that's what you know, I, I give, I give money to, you know, the government gives money to households through Social Security. What are Social Security people doing? They're investing in the stock market. So that's driving markets. So, you know, these things all work together. It's just important. Again, if you want to read the whole article, it's on the website realvestmentadvice.com. It's al also on Substack at Lance Roberts on Substack. Post every article there every day. But we just kind of walk through how and again, this has been a lot of our conversation today, just walking through how the system works and how money works and how debt works within the system itself.

Okay. All right. Um, trades. Sounds like it was an active week for you.

Yeah, it's, it's been a really kind of a big week. We traded about three or four times this week. So, um, the, the bottom line is is that we went in and we, so, back coming out of April, we bought a lot of stocks like Microsoft, Nvidia, Amazon, Google, and they've all had really big runs since those April lows. And so, we went in and trimmed those back back to target weights. Took some profits out of those. We did add a couple of new positions, uh, early this week. One was called Applied Technologies, APLD, and another was called Verdive, VRT. These are both directly used in the buildout of data centers. So, part of our portfolio, we're positioning for this continued construction of data centers. That construction thesis is going to last, that's infrastructure basically, that infrastructure thesis is going to last about two, two and a half years and then we're going to have to switch the model from infrastructure development to revenue generation by the data centers. So, this is, these aren't long, long-term holds, but these are are specific holds. So, like we bought Applied Dynamics, Applied Technologies early this week, it's already up like 30% from where we bought it. So, the goal was to try to buy these starter positions, buy them on a dip, and we didn't get the dip. So, um, you know, we're going to have to wait for the next pullback to add to those positions. Um, for you energy buffs, we added Exxon Mobil, uh, starter position, Exxon Mobil, uh, today, actually this morning. Uh, Exxon Mobil's had a nice pullback with this correction, oil prices. There's still be a lot of feed through to profitability to to Exxon Mobil. I am hoping that Exxon Mobil will give me a decent pullback. It's down about 2% today. I'm hoping it's going to, you know, give me another 5 to 7 to 10% pullback so I can buy some more of it. But long-term, you know, they're in the, they are the refiner for energy. We need some energy exposure long-term. But there is a, a significant risk of a decline in oil prices. If Iran crisis finishes tomorrow, next week, you know, in a month, there's a significant risk of lower oil prices. So, even though we like the company where it's trading currently, all that Iran crisis premium got sucked out of the stock over the last couple weeks, it's oversold. So, we're just making a trade on this, but I don't expect this to be a long-term hold. We might buy it, hold it through summer, and be done with that. So, and that's, that's part of the portfolio. We do look for opportunistic entry points and trade positions, but the core of our port, the corpus of the portfolio are much more longer-term holds. The Googles, the Nvidias, the Amazons, the Microsofts, the Eli Lillys, the Abbvies. We've owned those for years. We're going to continue to own them, but we're going to continue to to navigate those weights, right? So, when we get over target, we bring it back to target. Sometimes we underweight them and then bring them back to target. Um, and right now, we're pretty much, we've kind of rebalanced the whole equity portfolio.

And we're adding a little bit of value here because again, we've had this very strong run in growth. And so like in our ETF model, we sold MGK and we added VTV. Um, we, we kept part of MGK but not all of it. And we added an equal balance of VTV. So, we're making that rotation from value to growth also in inside the ETF model. And then we rebalanced our, um, uh, crypto model, our AI model, small and midcap growth model, and our growth focus portfolio. We rebalanced all of those this week because again, like I was saying earlier in the show, we had two stocks in the small and midcap portfolio that were up like 500% each. Bloom, uh, Bloom Energy and AHER Test Systems have had this, they became like 14% of the portfolio each. So, we trimmed back to their their portfolio weighting, but they've had just huge runs. Those portfolio, that that growth focused and, and, um, small and midcap portfolios have done very, very well since we launched those last August. So, we just rebalanced all those back to target.

Okay. Um, thank you. This is always such an appreciated part of these, uh, videos where you just be totally transparent with everybody. Two questions. One, Exxon Mobil, um, wasn't clear to me. So,

Knock on wood, Iran conflict ends soon. Um, presumably the energy space, even though some of that's already priced in, would get knocked a bit, we would expect from then.

What would you plan to do with Exxon Mobil then?

So, so like I said, we just bought a starter position in it today. Um, has a nice yield. So, part of our portfolio is also focused on yields. Um, for instance, we also bought, I forgot, we also bought a starter position in a, a BDC, a business development corporation. We talked a little bit about this last week that we were thinking about it.

And so, we actually bought one today, actually yesterday, um, into the portfolio has about a 12% yield. It's very, it trades at a deep discount.

Which one? It's an ETF, I take it.

Uh, no, it's BXSL, which is a Blackstone, um, a Blackstone private credit.

It's a Blackstone BDC.

Okay.

Um, but anyway, but it's trading at a fairly decent discount to its net asset value. It's about 10% below its NAV, as opposed to other BDCs which are all trading at premiums and it's got about 98% of its loans are collateralized. So, there's, there's a lot of security within that. The stock's been pretty beaten up because of the sell-off in the software space. Um, but if that just reverts back to its, its, uh, NAV, NAV, a very nice total return in that position.

Okay.

But here's Exxon Mobil. Uh, so we bought Exxon Mobil this morning, a little bit, and again, I'm kind of hoping it pulls back to 140, which is this kind of longer-term moving average and also gets it decently oversold, but the MACDs are getting pretty oversold here and if they start to turn up here and give us a little buy, I think there's a reason, a reasonable rally up to around 160 and then we'll probably take the profits out of it.

Okay. So, is that just all technical, meaning?

Yeah, technical trade.

Okay. So, so just to be clear, if it goes down because a peace deal is struck, as long as the technical point, the technical picture hasn't changed that much, you're not getting out of the trade because of a macro reason.

No, no, no. If, no, no. If a peace deal is struck and all of a sudden the supply comes back online, uh, you're probably looking at, and the, and the probably the 120ish, 118, 124 level on on Exxon Mobil will be out.

You'll be out 140.

Okay. So, so this, this trade is partially dependent upon what happens with the war.

Correct.

Okay. All right. That's what I wanted to clarify. All right. And then with your, um, your data center purchases, um, Applied Technologies and Verdive. Um, you said at some point you're going to shift from, um, companies that are basically building data centers to companies that are going to be managing them. And I've been, I've been having some conversations of late, sort of in this space, where just like in the oil industry, we have these midstream oil and gas, we have these midstream companies.

Um, do you expect there to be sort of this, this midstream ecosystem of companies that are servicing the fleet of data centers that are out there, you know, managing their either their energy sources or just whatever their needs are?

Yeah, there, there's going to be that level, but more of what I'm focused on is that once these data centers come online, that's going to be the revenue generation side for companies that, for the, for the hyperscalers, right? So, everybody that's that's operating the, the AI, so to speak, is the one that's going to capture all the revenue. So, we'll switch from the, the construction to the construction of the factories into the owners of the factories.

Okay. But, but let me just ask this question again. So, I don't believe.

Yes, there will be, there will be, there will be that maintenance level as well. Yeah. I, I don't believe Google and I could be wrong, but I don't know if Google is going to be managing all aspects of their data centers that they may have, you know, for, for example, these have to be powered by energy, right? Whether it's natural gas or whatever, nuclear microreactors, as I was talking about earlier in the week with another party.

Um, my understanding is is is.

There will be firms that are contracted to do that ongoing maintenance and management. Yes.

And so my question is, do you expect there to be kind of a burgeoning midstream.

Ecosystem around these things? That might be an interesting investment opportunity.

Yes, there will be. And.

It'll be backed by tremendous cash flows, presumably.

Exactly. And some of these companies probably haven't even been born yet. Um, but yes, to your point, this is why we own KMI as an example for the natural gas pipelines because a lot of these data centers have to be powered by natural gas for right now. Um, you know, GE Vernova, which has had just a spectacular run, um, we own that because of its power gen, you know, its place in the power generation cycle. Bloom Energy in the small cap portfolio is another good example why that's a good example, right? So, it's all that. But yeah, there's, there's, and again, this is one of the things too that we've talked about before is everybody's worried about this job destruction that's going to occur. Don't forget that we're also going to create a lot of new jobs because of this. Again, there, you know, there's going to be whole companies, companies that are created just to maintain data centers, you know, just to, you know, do whatever. So, there's going to be a lot of job creation that comes out of this as well. So, it's not all dark clouds on the horizon. And yes, there's going to be some fantastic opportunities, just going to be kind of picking some of those out.

Yeah. And that's an interesting thing that maybe we'll talk about one of the next times, Lance, is as, you know, I am long-term, um, concerned about the jobs displacement that AI I think will likely create. I do think there will be offsets in the next couple of years as we do the construction buildout for sure, and yeah, there will be maintenance and other jobs like that that get created, but I think that they will be very efficiency driven and I, I don't think they'll, they'll require, you know, um, office buildings worth of people the way that in terms of a lot of the jobs I think are going to get displaced. Um, I agree with you. So, it would be interesting. But, but what's interesting is right now, you know, and we're seeing some pretty substantial layoffs begin to happen, um, especially in the hyperscaler space where they're starting to, they were doing job hoarding. I think they're starting to kind of get rid of the excess labor that they really didn't need. Um, I think Microsoft just yesterday, um, announced like the largest, um, you know, early retirement buyout package that it's ever done in its history, right? Um, so it's starting. But, but at the same time, you know, we are, there were a lot of reasons to be concerned about the job market coming into this year.

As best we can tell from the numbers that are out there, it's still not bad. I mean, we're, we're, we're still seeing job growth, um, net job growth, um, higher than than I think most estimates have been. And initial jobless claims and things like that are still pretty historically low. And, and trust me, folks, I'm somebody who's looking,

For, you know, the dark cloud on the skyline there. Um, but, but we're, we're just not seeing it yet. And again, this is one of those things where it's like lots and lots of reasons to be concerned about where the job market could have headed. And I've had those concerns. Um, but I'm just not seeing it manifest in the data yet. And so you got to be real careful about actions you take today based upon those concerns.

Um, okay, so, um, we'll start to wrap it up here. Um, quick rant. So, Lance, I introduced you at the beginning as the portfolio manager with the green eyeshade because I had just, I so I paid my taxes, got that all taken care of. And then of course,

The the bill for all your tax preparation and everything. And so my little rant here is is, um, no matter how hard I do my calculations for my estimated, and I try to really stay, my goal is to not owe anything at the end of the year, right? I always end up owing more than I think. Um, and always having to write a check. And the tax preparation, and including the bookkeeping that that then enables the tax preparation, is always more expensive, uh, than than I think it's going to be. And usually that it's kind of guided. You know, I, I, I sit down when I have a, a provider, especially if I'm working with a new one, and saying, "Hey, give me your best estimates. I understand some things can change, but let's try to box in what we think this is going to be, right?" And it, it generally is never that, and it's always materially higher than than I was initially guided to. And the frustrating part of this is, I think you and I have ranted in the past, is despite all this cost and despite all the the work I do during the year to try to be as exact as possible, you know, the return comes to me, it's super thick. I look at it and I'm like, I don't know. I hope, I hope you did this right. You know, I'm not the expert. That's why I'm hiring you. And I'm now writing a substantially bigger check than I thought I would. And if the government has questions about it, I'm just hoping that you've got the answers here, but I don't know. Right.

Well, no, that's, you know, two things is is that see, I'm a firm believer that our tax system is completely backwards. I think the IRS should tell me what I owe them and then let me fight them from there, right? Instead of them coming to you and you saying, "All right, you tell me how much you owe us." And then they come back and say, "Well, you didn't include these documents that we have over here." They know how much you owe.

Yeah. I know. You, yeah. You go through all this. And then a month or two later, you get another bill from the IRS. Well, we think you did your taxes wrong. You owe us this. No explanation. It's just like, well, yeah. Why? I go through all that then for?

Exactly. Just tell me what I owe you. I'll write you the check. But.

Or better yet, you know, have the index card tax plan, which is you made this, this is the percentage. There's no monkey business. Just freaking pay. Let's get on with their lives.

Dude, I am, I am, I am so for just give everybody a 10% flat tax rate. They're going to raise more capital anyway.

But there's so many reasons for the flat tax. Yeah.

Well, no, it is. But look, you got a huge accounting industry and, and, and you got the IRS that they don't want to lose their job. You don't need the IRS with a flat tax, right? I mean, it's just, you know, it'd be so, there's a lot.

I think there's zero people watching that are going to cry tears over that. But.

Well, I understand that, but I'm just saying there's a lot of pressure not to do that from people that don't want to lose their job.

But anyway, you know, look, I, I evaluate, I've had one tax accountant now for 15 years and it took me a long time to find a really good tax accountant. And, you know, the way I, the way I measure a tax accountant is not by what they bill me. I, I measure it by what they bill me versus how much they save me, right?

And, and, and so finding.

Which they generally don't do a good job of saying, here's your bill, but here's what I saved you either. Like if they did that, I, it wouldn't matter. It's like, it's like the debt to, uh, GDP ratio. Like, hey, if you save me a ton, then I'm fine.

Yeah. Well, you know, but, but like, so for instance, I had to write a big fat check to the government for my 2026 estimated taxes and I emailed her. I emailed my accountant and I said, I said, I said, "Man, that's a big number this year." And, and she's like, "Don't worry about it." And then she sent me back, "Do you ever see the movie Saw, those those series?"

Yeah. You know, actually, I know, I know of them. I actually haven't watched them, but.

Okay. So, and there, there's a, the character, the, the evil character. He wears this mask. It's a clown mask with a circle on it. And so she sent me back this picture and, and she just put under it, she says, "Let the games begin." And the, the reason that's important to me is is because she's constantly out there looking for ways to mitigate my tax liability. And so when, when it comes time to pay taxes, you know, she's very aggressive about looking for, okay, what did you, what did you pay for last year? Where can we take some deductions? Where can we offset some of this income? You know, those type of things and then giving me good strategic ideas.

Your dog's a partner in the business, right? Okay. Well, look, let's get him the salary.

Absolutely. Absolutely. My kids are, my kids are on the payroll.

All right.

Um, you know.

So, when Lance isn't here, folks, because he's, he's in tax, you know, law prison, you'll know.

Adam, this is where you're failing, right? You need to, you need to set up your business as a family business. Have your wife and kids as part of the business and then have your annual board meeting on the financials of the business in Spain, Italy. Italy or Europe.

A speedo in Italy.

Exactly. Go have your family meeting and it's a tax-deductible, it's a tax-deductible trip because it was for your family board meeting. So, but, but the point is, is and this is why people get so upset about rich people and like, well, rich people don't pay their fair share. Well, they do. They pay about the top 10% of of, you know, people in the economy pay about 90% of the taxes. So, they, yes, they pay their fair share. But the difference between a rich person and a non-rich person is that the non-rich person just fills out the 1040 easy form and they turn their, they turn their paperwork in and they don't do any work. A rich person looks at their, their income and they say, okay, how can I minimize my tax risk? Um, you know, what? Instead of paying cash for, you know, a building that's going to be a rental property, I'm going to go borrow money against that property. I'm going to use leverage to my, to my advantage to go buy that piece of property, create income, and then that income generation off that building is going to have a lot of tax.

And then use, you know, the new bonus depreciation to, you know, basically.

All that doesn't, and this is like, you know, people, people get on Elon Musk because like, Elon Musk doesn't pay any taxes. Well, first of all, he wrote one of the biggest tax checks in history ever. Um, but a lot of people that own publicly traded stock, they just will borrow against their stock because that's tax-free income to them. So, there's. So, the point is, is that don't hate the tax code and don't be pissed off about the tax code. Learn how to make the tax code work for you. And the best way to do that is to really source out a good accountant that understands the tax code, can can work your position into help mitigate your tax liability, but not get you in trouble with the IRS, right? Nobody wants an audit, nobody wants to go to jail.

Um, so, but you, but that is worth its weight. You may pay whatever to that accountant, but it'll be worth, you'll make more money over time by keeping the money you earn.

So, so to totally agree. Um, and I think it obviously extends beyond taxes. I'm a huge fan of pulling experts into your orbit.

Absolutely.

Make you smarter because, yeah, they tell you about all the opportunities that you don't know because you're a non-expert, right? Uh, it's a, it's tried and true behavior pattern of successful people is to leverage the expertise, um, of domain specialists. Um, Lance, it's becoming more challenging in in the tax space. And look, I've, trust me, spent a lot of time looking for better accountants around here, right?

Um,

But one of the things that started my latest, or, or it's my latest, but, but reason why I'm now with the accountant I'm with her right now. And folks, I'm not necessarily beating up on my accountant here. Um, the point is, is, you know, the tax system is complex enough is it requires them to do a ton of work, um, that is has costs involved in it. And, uh, you know, as I said, it's just, it's sort of imperfect. Like it's squishy. It's just, you know, I, I, I just, I'm just hoping that it's all good, right? Um, but, so I had an accountant that I liked, um, was a Mormon accountant. And, you know, if, if my priority is, yes, I want to save as much on taxes as possible, but my top priority is, I do not want to go to jail, right?

I don't want to be fined. Um, so I had a really, you know, trustworthy Mormon accountant. I, I lost zero minutes of sleep thinking he might do anything untoward. Um, but he called me one day and said, hey, look, um, I am now shifting my practice to become really more of a financial advisory firm and if you want to continue getting your taxes done by me, you have to become a client of my financial advisory firm. And he did it because there's just not that much, like, like the, uh, you know, return on investment on energy and of of being a CPA has gotten worse over time, right? A lot of work, uh, and, you know, you're kind of capped on what you can make and, you know, it just, the trade-off was getting worse and worse. So, a lot of these CPAs are having to change their business model. And I was like, look, I think you're a great accountant, but I don't want to be your client in your first year of being a financial advisor. I want to work with somebody like Lance who's got 30 years, you know, of expertise beneath him, right? So, so, hey, best of luck and don't take it personally.

But, yeah, I'm, I'm going to go get my taxes done somewhere else, uh, by somebody who just wants to do my taxes and that's what they're fully focused on. And as I went through this process, I really began realizing that a lot of CPA, like, it's one of those industries where the older folks are retiring out and there's a lot less folks going in because it's just not as good as it was, right? So, it's actually pretty, it's much more challenging than it was to find what you're looking, you're advising. Well, find the person who just knows the tax code in and out and this is all they do and they live and they breathe it. It's kind of a dying breed at this point.

Yeah. And look, I, I was really, I had that concern a lot because the accountant I've been with, she's getting a lot older, right? This is her, this is her practice.

Yeah. You better retire when she does, buddy.

Right. Right. No. Well, no. But she brought her daughter in and her daughter is dynamite and she's teaching her everything about my business, how I run my business. So, her daughter is now becoming more and more of the relationship that I have. You know, my, my, my real, my personal accountant, you know, she kind of oversees everything and I do communicate with her, but the daughter is doing a lot more of the day-to-day work on on the accounting process. And look, here's the thing that, that people do misunderstand about paying taxes. The tax code has a lot of gray area to it and, you know, and so there's a lot of ways to work the tax code in your favor without going to jail, right? The, the big concern is like, "Oh my gosh, if I, if I, if I step right across that line, I'm going to go to jail. I'm gonna have a huge." That's not the way it works.

Yeah.

It's like working with a lawyer in business. It's like.

It's gray. And at some point, I'm going to make the decision to do it because I feel like we can defend it if anybody has a problem.

Exactly. And if, and, and look, you know, I've gotten letters from the IRS before and they said, you know, hey, I don't think you owed us enough money. And, you know, I think you owe us more money. And so then we ret, you know, we, you know, we send back our documentation, say, "Well, no, this is how we got here." And they say, "Well, no, we still think you owe us more." Fine. And then they tell us how much more we and we pay them. And, and that's it. Where you get in trouble, right, is when you don't pay your taxes, you try to avoid the IRS letters, you don't respond, you know, and those type of things, then yeah, they can get pretty nasty. But if you, they're like any other agency. Look, you get pulled over by a police officer, you've got two choices. You can be a complete dick and get beat up and thrown into jail, or you can comply, answer their questions, they're going to give you a ticket, and you go on with your day. It's the same thing with the IRS. It's just about money. And so, at the end of the day, you, it's, it's a negotiation game. You file your taxes, do it the right way, but, you know, set think about things that you can do. Talk to your accountant about what, what can I do? Can I go invest in some oil and gas drilling to get some, uh, you know, uh, indirect drilling credits, you know, for, you know, to reduce my taxes? Um, you know, I've got a, you know, I had this other investment over here that turned into a loss. You know, I'm going to deduct that off my taxes. All those type of thing. Itemizing your taxes, right? If you pay a good amount of taxes every year, start itemizing your deductions because you can start saving more money that way. But these are just things to work through with your accountant. And it is, it's just a game with the IRS at the end of the day. And at the end of the day, it all comes down to negotiations. And if you do get a letter, just respond to it and deal with it. It's no big deal.

Okay. All right. Well, you're, you're, I was hoping we were both just going to be angry men ranting here and you're trying to inject positivity into it, but that's totally fine. Um.

I, I, I believe that I should pay taxes on the income that I make. I just want to pay my fair share of those taxes off the work that I did. So.

Right. I do too. And my point is just, I wanted to be as simple as possible and as that I can trust. I've done it all right and the system is so not designed that way. But anyways, I'm sure we've got people watching who are feeling that pain. I'm going to end this section and then we'll wrap things up, folks. Um, by losing the last two people we haven't, I haven't lost already yet. Lance, I'm, I'm going to read a letter by, um, probably one of the least popular guys on the planet, Donald Rumsfeld. Did you ever read the letter that he, uh, he sent to the IRS?

Yes, I have. This is awesome.

Yeah, I'm gonna read it real quick, folks. Um, so he, he paid his taxes and sent this letter along with it to the IRS. Dear sir or madam, I've sent in our federal income tax and our gift tax returns for 2013. As in prior years, it is important for you to know that I have absolutely no idea whether our tax return and our tax payments are accurate. I say that despite the fact that I'm a college graduate and I try hard to make sure our tax returns are accurate. The tax code is so complex and the forms are so complicated that I know that I cannot have any confidence that I know what is being requested and therefore I cannot and do not know and I suspect a great many Americans cannot know whether or not their tax returns are accurate. As in past years, I've spent more money than I wanted to spend to hire an accounting firm to prepare our tax returns and I believe that they are well qualified. This note is to alert you folks that I know that I do not know whether or not my tax returns are accurate, which is a sad commentary on governance in our nation's capital. If you have questions, let me know and I will ask our accountants to be in touch with you to try to provide any additional information you may think you need. I do hope that at some point in my lifetime, and I am now in my 80s, so there are not many years left, the US government will simplify the US tax code so that those citizens who sincerely want to pay what they should are able to do it right and know that they have done it right. I should add that my wife of 59 years, also a college graduate, has signed her joint return, but she also knows that she does not have any idea whether or not our tax payments are accurate. I think I think I think every American should print that out and send that to the government next year on April 15th.

I totally agree. I totally, totally agree. And, and look, there's a lot to not like about Donald Rumsfeld, but I think he nailed it there. And the fact that he was, you know, our Secretary of Defense, he was in the cabinet, you know, in our, in our government, and he is just as flummoxed as us little people, um, speaks volumes about how crazy this current system is.

Yeah. Any, any day you want to go to a 10% flat tax rate, I'm all in, buddy.

All right. Well, I'll be right there with you, buddy. Okay. Um, well, look, folks, in wrapping up, um, if, uh, you think the, the second best thing in the world to a 10% flat tax, um, is continuing to watch Lance Roberts on this channel week in and week out, let him know that by hitting the like button and then clicking on the subscribe button below as well as that little bell icon right next to it. Um, if, in addition to, you know, finding a great provider to get your taxes done right, um, you are in the market to have, uh, a good financial advisor help advise you how to manage your wealth to maximize your potential for wealth building in the future. Um, consider talking to one of the financial advisors that Thoughtful Money endorses. These are the firms you see with me in this channel week in and week out. To do that, just fill out the very short form at thoughtfulmoney.com. Maybe you want to talk to Lance and the team there at RAIA, and the firms will be in touch with you right away. Um, lastly, if you, whether or not you did or not catch the video I just released earlier this week with Andy Sheckman about the latest of what's going on in the precious metal space. There's a big global mad dash for physical ounces these days that that Andy goes deep into. But he also, um, reiterated, it's probably not going to last for too much longer, the special offer that he's, um, extending to this Thoughtful Money audience to buy junk silver for $2 under spot, which Andy says is like an unprecedented price, uh, that he's never seen before in his industry. So if you want to take advantage of that, just go to thoughtfulmoney.com/bygold, fill out the very short form there, and Andy and his team will be in touch with you right away. All right, Lance, another great week. Um, we got you for a little bit longer before you, the skinny you heads off to Italy, right?

Exactly. Yeah. Yeah. It's not until June. It's June the, um, hold on a sec. I'll tell you exactly. We leave on June the 7th and we will be back on June 13th.

Okay. Well.

It's, it's June the 12th that we'll have to have, uh, somebody substitute in for us.

Okay.

Michael's also out that week.

All right. Well, we'll, we'll find somebody else from RA or I'll pull somebody in, folks. But, but we'll be happy to do it knowing that you're frightening the beach tourists, uh, with your.

I will, I will send, I will send you candids.

Please don't make them from the waist up then. That's all I.

All right. Uh, well, thanks so much, buddy. Um, great week and everybody else, we'll see you next week. Thanks so much for watching.

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Is This Rally A Bull Trap?? | Lance Roberts

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