Transcription
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Hello, and welcome to another episode of the Investing with IBD podcast. It's Justin Neelen here, your host, and we are coming to you live at 5:00 PM Eastern. Uh, uh, let's see, this is February 5th, 2025. We come every Wednesday for you, and uh, we've got a returning guest on the show for you today, Jeffrey Hirsch, who is, of course, the editor-in-chief at Stock Traders Almanac. Something that was started by his father, Yale. Gosh, how long ago was that? Uh, 58 years ago. 58 years ago. And uh, yeah, so he just came out with the 58th edition of the Stock Traders Almanac. Uh, I have my copy right here, uh, signed even. So that was really nice. Uh, thank you so much for that. Uh, but we've got a lot to cover, Jeff. I mean, you usually, we like to come on uh with you in the at the beginning of the year to kind of get an outlook for 2025. Um, and you know, we got the trifecta; we've got the election. I mean, there's there's some things that are a little bit different about this election cycle. Uh, uh, your data doesn't go back to Grover Cleveland, right, when there was a non-consecutive presidential term?
Some of it, yeah, it does. Some of it does. Some, some of it does. Okay. Well, maybe we can look at the, you know, what it was like for number 22 and 24. Uh, yeah, back before indoor plumbing. Yeah, when when the Mugwumps uh made made a difference for for everybody. Uh, so let's let's kind of start out, and again, for those that aren't familiar with what you do uh at the Stock Traders Almanac, I I just want to give, you know, have you give people a brief overview because so many people, so many traders find this uh, you know, this this information critical to decision-making and seasonality. Um, but kind of kind of talk about your process here.
Well, it is a source of pride that that there are so many people, top money managers, advisors, investors that have been using the book for as long as I've been alive and continue to have it on their desk. I have mine here as well. I got one at the home desk, you know. Um, but the process is kind of like um a take on My Philosophy is a little take, take on the Santiana philosophy that those who fail to remember the past are condemned to repeat it. I like to think that those who understand Market history are bound to profit from it. Um, so you know, we look at fundamentals, tactical-- I I love what's it, Market Gauge now, used to be MarketSmith. We use the charts there and and the analysis that that you guys put out at IBD. Um, I look at sentiment; I'm a big fan of Investors Intelligence um as a, you know, a long-running sentiment gauge, uh, monetary policy and and politics, geopolitics. But our foundation is cycles, seasonalities, patterns, and trends. Stock Traders Almanac, you know, and our newsletter service, can we drill down to on some level to half-thly, you know, trading patterns, intraday trading patterns, but a lot of it is month-over-month seasonal swing trades for sectors uh and the indexes. So it's a combination of, you know, looking at um investor behavior and how it has repeated over time and where the consistent patterns are, whether it's, you know, uh October bottoms or uh February week spots or the beginning of August being a weak period or trading the best six months of the year or natural gas coming in season in February, which is setting up well. We can get into that a little bit, but um we look at history in relation to where it is, um what's going on in in the present Market environment for any particular asset class, and we uh make trades and build portfolios accordingly.
Yeah, and again, there's a lot of, in addition to a lot of numbers in charts, what I really like is that you you kind of walk people through it a little bit, you know, some, you know, a little context, what does this mean? And and especially your introduction at the beginning really kind of does a nice overview of that. But um, you know, in the book, yeah, yeah, yeah. So just, you know, just for people that haven't really kind of seen it, um, you know, you you you can go by month, you can go by, you know, you can slice and dice the data kind of however you want, um, you know, or or what you want to look at because you've already done the work for folks. They don't have to go through uh decades and decades of-- than my father did it back in the 60s that we all get to stand on his uh his broad shoulders.
Yeah, absolutely. Um, so yeah, there's nothing nothing wrong with that. And you know, just for folks that might be, you know, thinking about the the the random walk ideas, um, you know, this is this is a little bit different, right? It's like, is not that this is not that that you know there's uh when when you kind of look at how some some of this stuff is correlated and just happens over and over, and what I mean, one of the great things about when you come on this show is you kind of share, okay, based on based on history, this is what the expectations are, and it doesn't always follow, but I got to say, you know, the last few times you've been on the show, you've been pretty spot-on uh with with some of the projections that you've used just based on the historical data.
Market's been cooperative with the cycles the last bunch of years, so maybe what we can do is we can start out with uh your your Trifecta indicator, and again, this is something that your father, Yale, uh had had done. A lot of people are familiar with the Santa Claus rally; it's it's really entered the traders' lexicon, but it's not always used the way that uh your father originally uh originally defined it. So maybe you can start with the the Santa Claus rally um as as element one of the trifecta.
For sure. Um, I mean, back in 1972, Yale Hirsch um created the Santa Claus rally and the January barometer in and published it in the 1973 Stock Traders Almanac. I have a picture of that table of contents, um, which is, you know, just a nice little Memory Lane trip there. But he discovered it, and the Santa Claus rally is not any rally at the end of the year, um December or whatever anyone wants to make up. It's the last five trading days of the year and the first two of the New Year, based upon the S&P 500, and it's not from the open on the fifth to last trading day; it's from the close on the sixth to last trading day to the close on the second trading day of the new year. And basically, you've seen a short, you know, sort of sweet little rally there. It's it's when the traders and and you know, people who are mining the shop or the rest of us are uh out celebrating or or picking up stocks after tax-loss selling is done and profit-taking is done, and you get this little rally. And when you don't get that rally, it's about one and a half percent on the S&P, nothing to write home about. Uh, when that doesn't happen, it's it's often a time when um the markets will, you know, be lower at some point in the year or even bear market to begin. So Yale's famous line, "If Santa Claus should fail to call, Bears may come to Broad and Wall." And for the young ones out there, Broad and Wall is the intersection of Broad Street and Wall Street, where the New York Stock Exchange still exists, even though now it's pretty much a TV studio, but it's still a a magnificent place to visit, and uh, you know, people have events there, and it's still there's still an aura there.
Oh, absolutely. Yeah. And then the January barometer, the full-month January barometer, also based on the S&P 500, Yale discovered that as January goes, so goes the year. I'll give you the big stat right off the blocks here: When January is up, uh, 40 out of 45 times since 1950, the year is up. That's an 88.9% b or an eight an 88, 889 batting average, um, and it's S&P average is 17% per year when January is up, only down five times um in the 45 uh instances since 1950. So then there's this old first five days on this tables here; it's FFD, Santa Claus rally, obviously SCR, JB, not James Bond, but January barometer, um, and FFD is the first five days; it's an early warning system. It's not the first week of the year; it's the first five trading days, which can overlap more than one week. You know, the calendar is a little tricky. Um, but uh what we did, what my partner Christopher Mist and I did back in 2013 uh when Yale was was still with us, we looking at this combination, and there's a page in the in the Almanac, I think it's page 18 or 20, um it's 20, um where you know, we we took, we stood on Yale's shoulders, we took all three of these indicators and put them together. When all three are up, when you hit the trifecta, that's where the the the name comes from, um the S&P is up 90.6% of the time, even a little bit more than than just the J barometer itself, uh only down um three times in uh 32 years um for an average gain of 17.7%. We didn't hit the trifecta this year, but um the situation that we had now is we had a a very small, you know, data set, that's why I kind of mentioned the full-month January barometer; 40 out of 45 is a pretty uh solid statistical um set, the data set there. But uh here we had, this is only the the fourth time um in um the history since 50 that we've had a um first five, a Santa Claus rally down, first five days up, and a January barometer up. Pretty solid history, um I know it's small, but it's really all about the January barometer to me, and it enabled uh me to reaffirm my annual forecast, which was initially wrote written about it back in June when we put out the Almanac that you have there in your copy, uh in my Outlook, um but uh we also put out our our newsletter forecast um, you know, to our subscribers um just before Christmas, us the Thursday before uh the holiday, and then we wait until we get trifecta results, which we just had at the end of January, and we're still looking at at an annual forecast of um 8 to 12%, which is our base-case scenario, and I think when you uh when you and I discussed the-- I'm just pulling up the chart on my my side-- when we discussed the the um post-election your seasonal pattern, you'll see where I get that 8 to 12 um, yeah, percent change.
Now, now a lot of folks might be saying, well, gosh, we've had two really strong years, you know, back to back on the S&P 500, you know, how often can it do it again? You know, I mean, you know, 8 to 12 is uh I mean it's not 20 plus, but it's it's no, it's no slouch; it's it's kind of an average, you know, market gain; it's it's in historical average, which I think speaks uh in of itself that it's pretty much a standard year. Um, we've also seen post-election years much better since World War II. I know there's an old uh saying going back to past Grover Cleveland and and and even the Andrew Jackson's time with some of the old cows industry stuff that we have data on where the post-election year used to be bad. Um, it it has been worse for Republicans because they tend to come in, like the current president is doing, to try to take care of things early. But overall, post-election years, like 2017, Trump's first post-election year, um a lot better, uh and the best of the four-year cycles since 85, um up 17.2%, uh, you know, yeah, you go go to the go to the the next chart there, and um since 85 it's been much better, uh eight eight up and two down. Um, the third year is still great, a little bit lower average, but up nine years out of the last last 10 post-election years. But this is um, you know, something that we got to keep an eye on here. Um, we've actually just updated this version uh for our our our members earlier today, um, but it's everyone knows that we've gone a little bit into February. We've been chopped into the little gold yellow line there is is 05, so the red line, you know, we're going to sort of put that in the background for now, but it's something we're we're tracking, and we got to keep an eye on that; that's the incumbent party lost trend. We're not tracking it out; we did a little bit out of the blocks when when there was some selling in January, but that's sort of what happens after we have a change in administration, change in party in the White House. The other lines, the other groupings are all post-election years since 1949, first full cycle after um uh World War II. Incumbent party wins in green; the pink year is the fifth year of a presidency. I know we had that Grover Cleveland situation again, but it's still the fifth year of a president; he doesn't he's not gonna have more more more years after this term. And then there's the um aggregate cycle, the composite, whatever you want to call it; it's it's all years since 1949, post-election years and fifth years of the decade all combined. And if you go over to the right side, you'll see the 8 to 12 kind of just right there. Um, and as long as we keep tracking, um I'm pretty comfortable with uh, you know, we also call for some first-quarter chop; it's one of the weak spots of the of the four-year cycle, as well as the the weak summer months, the August, September. You can see all of the different um groupings there have um some weakness in that, you know, worst six months, the people call it the "sell in May" period. Well, guess what? It's not sell in May; it's reposition in May. Um, we've got some rally, you know, we see we're seeing that mid-July peak a lot these days, uh which we had last year, but um basically, this is the the the foundation of of the forecast and Outlook. Um, we had confirmation from January, and uh we're tracking; we've come back. Um, the updated chart I have shows the uh we're kind of really coming right back in here to to where the pink and and and blue and the green lines are coming or uh joining there or conjoining there in February. We're so we're really, you know, sort of reverted to the mean here, and it's just uncanny how we're tracking um this pattern again.
Yeah, so you know what, I I can actually um I can actually I think show that uh I sent you that deck, did I not? Yeah, yeah. So I'll um uh let's see, that is, I'm just making sure I get the right one. Um, so slide four, yep. Okay, there we go. Let me uh but I've got to try and find my uh where where where you're at. So let me stop the share on this one and uh start the share on uh help. Huh? Here, right? Exactly. This is, oh, here we go. Here we go. Okay, watching us. Yeah. Um, see, yeah, there there's there's your uh your reversion of the mean that you were talking about, precisely.
Yeah. Um, I got there eventually. We're on track, you know. Yeah, that's that's that's the main point there. Um, and uh, you know, kind of going back to some of the stuff that you were talking about in terms of um the the the cycle again. Okay, so this is the the first year um, you know, post-election. So so you know, let's maybe talk about that a little bit, um, or yeah, yeah, let's let's talk about that a little bit since we're we're kind of talking on the presidential side. So here's here's your data going back, you know, again, 1949 to 2024, um, and where things stand in terms of the average um, you know, performance post-election, midterms, pre-election, and election years. So uh walk us through what what kind of usually happens.
Well, we've seen weakness in Q1, highlight in the pink there, and then we, you know, there's a little bit in in Q Q3 of post-election year, um, but not not as much, um, and we tend to move a little sideways until we get into the fourth quarter of the of the uh post-election year. We rally, rally towards the December. A lot of, I mean, another thing, um the annual highs are are very frequent in December, you know, unless it's a bear market, which are fewer and farther between. But then that, you know, after we sort of-- and this was is what had us when we spoke in 22, you know, I was bearish early on because of this four-year cycle, this midterm year, and the weak spot, the real weak spot of the four-year cycle is the Q2 Q3, the midterm year, which is something I'm getting already concerned about, you know, we're already starting to think about the 2026 Almanac year um and planning for that. And then there's that sweet spot, you know, which gets set up; you've got the the October midterm year. October is a great time to, October is a great time to buy stocks, tech stocks, small stocks, beat-down stocks, stock market in general, and the best October is the midterm October, especially after we had a correction and or bear market like we did in 22. And then you got that sweet spot where from Q4 midterm year to Q2 pre-election year, you get this, you know, about 20% down in S&P on average and about 30, I think it's 19, 20, and 29% for Nasdaq, um, and then you know, we got that's the best year of the four-year cycle. Um, what is it, only one loss since 39 when we had in 2015 for the Dow, two uh for S&P. Um, and then there's the election year, which, you know, again has gotten better. We have a page in the uh election-year edition of the Almanac, which was 24, which I know you have a copy of; it's called "How the Government Manipulates the Economy to Stay in Power." Um, you know, it's it's not uh there, no secret there. I mean, they want to get re--, and both sides do it, right? It's not like it's a Democrat or Republican thing; it's just, you know, um I mean, the current Administration is definitely trying to get a lot done now, more than than we've seen in in in my memory, uh, but you know, there is the midterm year uh which the incumbent, you know, party in the White House tends to lose seats, so they really only have two years to get things done before or the other side gets, you know, annoyed or people get disappointed that they didn't deliver on the stuff they didn't deliver on, and they tend to lose their, you know, whatever control or or margins or, you know, thin the margins that they have in in Congress, which is Congress is really what's important because they hold the purse strings.
Yeah. So the reason I I mentioned earlier why the post-election years has become so much better is because it's kind of like um a a a pre-midterm election year, so you've got them sort of prime the pump for the midterm year as well.
Yeah. Well, and then you know, post-midterms, I mean, how often do you kind of get that disconnect between uh the incumbent party or you know, the the party that's in control on the executive side versus the party that's in control on the legislative side when they're different? A lot of times that tends to be good for the market, right? Gridlock, it's not, it's not any combination; it's okay; it's not just, I mean, Republican president, Democratic Congress, not the greatest combination. Republican congresses are what I mean, I have a I have another slide that I that's on the ones I sent you. I mean, the best combination is a Democratic president and Republican Congress. Okay, when you've got, you know, a somewhat more potentially progressive, open-minded uh executive working with a conservative, fiscally conservative uh legislative, uh, but it's really all about Congress. Republican congresses, 15% average since 49 um on the S&P, uh Democratic congresses, 7.1. Combination of a um Republican president, a Democratic Congress, 4.9%; that's the worst combination, which, you know, you were you were sort of uh wondering about. 12.9 in the S&P for Republican Congress, Republican president.
Yeah. And and so here's here's some of the um Republican Congress and Republican uh president, you know, as you said, some some pretty solid Market history there. So the whole divided government is not necessarily um uh binary; it's not one-dimensional; it's a little more nuanced.
Yeah. No, that's and that's history; it could change. I mean, this is this is what's happened. Yeah. And look, each Administration is different, um, and and we do have a very unique situation here because it's not like this is Trump's first time to the rodeo, right? You know, you've got someone coming in, and it's also a different kind of second term; it's a different kind of of President. There's a whole populist wave, not just in the United States, but around the globe; we've seen in other places. Um, you know, if I could quote Fiddler on the Roof, "It's a new world, Golda," you know. I mean, it's it's it's different. Um, you know, we're coming off of COVID. Um, I know that feels like a long time ago, but there's still some, we're still dealing with some of the inflation that came off of the spending from that, and that's that goes into my Super Boom Outlook, the long-term forecast, which I know you want to get into a little bit later. We can we can save that, but
Well, you know what, um, since since you brought it up, uh uh maybe maybe we kind of give a a quick uh a quick teaser on that, you know. So this is another this is another this is a long cycle that Yale came up with back in 76. I was 10, um, but I remember because there were t-shirts, um there was um Dow 34,200 was his forecast he made in 1976 for by 1990, and it was based upon this long-term chart, which I know you've seen, just in of um the secular bull and bear markets were surrounded by World War I, World War II, and then Vietnam, and coming out of Vietnam with the um military uh government spending was really based upon the W-- you have inflation and peace and some functional government. Remember in 82 when we had um Reagan and uh Tip O'Neill uh actually doing things, compromising, right, again with with um Clinton and uh Gingrich, you know, warts and all, they they did come to some agreement on things. Um, but the Super Boom uh is these long booms where the the market or the Dow specifically in these forecasts, but the S&P also rises 500% or more following war and inflation, and then you know, I did a book on it, the Super Boom, uh came out in 2010. We had a forecast in May of 2010 on the newsletter for Dow 38,8120 by the year 2025. You all know now we've hit that already; we did it a year early. Um, we've upgraded that um to a little bit more. Again, I think we're in that, you know, something I also call as part of the Super Boom equation called the "culturally enabling paradigm-shifting technology," which I believe that's a mouthful. I don't know; I like it. I'm sure there's, you know, it's a tech innovation; could be the microprocessor, the personal computer, the internet, we got AI now, right? Back in the old days, it was things like indoor plumbing and you know, air travel and the interstate highway system and refrigeration, you know, all kinds of um technological innovation that change the world collectively as a whole and everyone's life individually, right? You know, and it's interesting because a lot of those things, it's not like it was just one industry; it was a trickle-down; it like, oh, it affected so many different things. And of course, productivity was one of the big things for for a lot of that. I mean, look at look at Palantir here and um, you know, those type of companies that are affecting productivity with AI across um, you know, multiple in like countless industries. I mean, what is it, Kathy Wood just said something the other day which I I'm already in a um uh, you know, a healthcare AI stock. She said healthcare is like the I guess the New Frontier for AI, and that's something I don't think Palantir really touched on. I'm talking, you know, all the data, all the stuff that you give the doctors that's out there; it's all analog; it's all like not digitized. They can call through that stuff and you know, put it through an AI, you know, co-pilot or bot or something and really figure out what treatment or therapy or drug or trial, you know, clinical trial you might be a candidate for if you've got some weird thing going on um or some you know, just uh nuance thing that that's not
Yeah, RX, RX; that's one of Cathy's uh Ark Holdings there. Yeah, they're not pure AI though; it's it's it's definitely um they're doing drug discovery using it.
Yeah. Well, even even uh Moderna, I mean, uh when they came out with the vaccine, a huge part of it wasn't just that RNA technology that they were using, but there was an AI component to it. Um, you know, um
Yeah, yeah. We we had we had some of the folks from Robo Global on and you know, before One Medical got bought by uh Amazon, even even the care, you know, using AI to kind of take some of the strain off of the doctors, yes. Um, so they could, you know, they've got to get the notes and data in there, digitized.
Yeah. And and um uniform across many platforms. I know my doctor, you know, they switch uh PR uh um, you know, whatever firm from, you know, Westchester this or whatever, Mona or whatever, and then they lose your your your records because it doesn't upload to the new system, right? That's a problem.
Yeah, yeah. So again, early stage, I put us at maybe equivalent of 1993 for this Super Boom, but AI Tech is that, you know, potential internet, Windows PC, uh um, you know, tech stack that launched us in in in the 90s. So people are thinking we're coming to the top already; it's the 19, it's 1999, you know.
I'm thinking more like 93. Yeah. And I guess I guess the trick there, um, to kind of, you know, I mean, since we opened the can of worms, we might as well uh, you know, get get get down this path. Hey, you you you said we could wait, but I just couldn't. Um, you know, there there was this uh, you know, this this kind of flat period here, um, but we really, I mean, it's not even looking at weekly charts or monthly charts; sometimes it's looking at yearly charts to see this this Super Boom cycle. Um, so you know, very hard to draw, what's that? It's very hard to plot because of the I mean, the the change from I mean, to to-- we have the whole cycle going back to 1914 in in in the book. I don't have it; I mean, it's on the I may have updated it on my uh my website. Uh, yeah, I didn't see it in your slides; it wasn't in there. We didn't talk about this today with the subscribers, but I I'll tell you if I think it was 24, April 11th, if memory serves, on my uh yeah, Super Boom update. Um, yeah, the big the big chart if you you want me to send you the link to it, I mean, I don't
Well, you know what, uh maybe maybe you can try and share uh, you know, there there's a little share. I'll share it. Yeah, let's see. Yeah, let's see. Let me put it over here on the other side. So this is the fun part of being live, you know. So hopefully you don't have anything uh that that you don't want people to see.
No, I I mean, I I close down stuff just for for for clarity, yeah, you know, for uh let's see, screen, which one, window? All right, that'll work. How's that?
Yeah, there you go. So this is a tricky log, so this is looking all the way back to 1913, and you have these are the sideways patterns, this the CPI. Uhuh. Um, and then you got your Super Boom. We got the, a lot of people talk about these cycles where it's an 18-year or 17 and a half-year or whatever year; it's it's based upon events. So we got Archduke Ferdinand getting assassinated, the the the Armistice, World War II, Germany invades Poland, Japan surrenders, Gulf of Tonkin, Saigon Falls, the war on terror, US attack, we have the combat uh ends in Afghanistan. This is a little bit trickier, and and I was trying to get to the the back here; it was government spending, military spending for these wars, the COVID spend, we had inflation lagging for a while, but the COVID spend was of military, you know, was you know, it was it was of that level. Yeah, that kicked in that inflation that we had in in um, you know, we gotta throw money out, it kind of thing, right? So here we have the sideways pattern; we came out with that forecast in 2010, and you know, we're up more than that now, and you can see the the the the boom from um, you know, Vietnam from 82 was up over 1500%; you can take it to 98; it's up even more. Um, uh so you know, that's why we sort of readjusted our Outlook in in-- it's even mentioned on page 11 in my in my Outlook in the Almanac of what that 60, 62, 430, I think that's what it says in here. Yeah, 62, 430. And and so again, you know, while while I think a lot of people are saying we're in early innings on the AI side, on the on the technical chart here, it seems like we're a little bit further along um in terms of how we came out of the you know, after the Great Financial Crisis. So um do you kind of think of COVID as offering a reset and kind of a a restart?
COVID as like the 81, 82 uh uh double inflation, and when Reagan came in and Volcker broke the back of inflation and all of that kind of changed things? It's never an exact correlation, you know, an an never an exact, you know, analogy, but you know, we got this 93 period, I'm talking about this 82 is probably like 2013. We had that um uh the 2015, 2016, August to February 2016, sort of little, you know, Ned Davis bear market that was kind of that, you know, mini bear that that signaled the breaking out to to new highs there, um, you know, above this range. So it's a little bit of art, you know, it's not pure science, um, but uh yeah, this is one of those, this is I should put I should put this on the wall, I think, right? And it's it's one of those things where again, because you're taking such a a big picture look, uh 40,000-foot view, you know, you're you're you're not going to be looking at the people on, you know, you're not going to be looking at the details; you're looking at that overall. So 40,000 Dow point view, right?
Exactly. Perfect. Well, you know what, if you want to if you want to go go ahead and stop uh your share real quick.
Sure. On that, and I'll go back to uh just one more thing that I kind of wanted to make sure that we we covered um, you know, before we got get a little bit more detail into the current market now that we've gotten that overview, uh and that is just kind of uh a little bit of a comparison to how 21, uh 2024, that four-year cycle, how how well it tracked um in terms of, you know, versus the historical from 1949 to 2020.
Little little scary for me, you know; it's like almost too too perfect. Yeah, you know, like I've said, like it's it's gonna it's gonna break at some point; it hasn't yet, and we're still tracking, as we showed earlier with the post-election year, you know, but it was uncanny uh what a a guide this was, especially, you know, I know we had a little extra dip here in in 22 from from-- I'm trying to point to it, but my mouse isn't working-- at the end of for Nasdaq and the in the thick blue line there that sort of broke broke away from it. So maybe there's a little uh, you know, the end of 22 when we had that sort of the the December low for Nasdaq, um, you know, that was a little bit sort of breaking from the cycle, which is, you know, when things aren't perfect, it it keeps it going, you know, like if if everyone was was believing it, it wouldn't work, you know. If everyone was was tracking it, it wouldn't it wouldn't be able to function because people would would know what's going to happen, and they would front-run it or anticipate it, right? But um uncanny how
Are all kind of aligning here for this seasonal gas trade, um, and that's kind of a textbook, uh, example of how to use these seasonal, um, patterns for a particular asset class, particular sector, uh, to make a trade or to, to, you know, make a this kind; it's a swing trade, you know, a seasonal trade here, but this is a pretty good setup, right?
And then, you know, also I guess, uh, no, no Market discussion would be complete necessarily without a little bit of a chat about the 10-year treasury, uh, because it's it's it's certainly been, uh, on on the minds of folks, uh, you know, as as the 10-year treasury yield has really, uh, come come up quite a bit. But you know, it it paused right around the same area, um, you know, kind of came up to five again and then started retreating, uh, in a in a in a big way. Yeah, you see the the blue line here is the S&P; you see, you know, we had 4.3% is this Line in the Sand, you know, for a while, uh, and then four and a half seemed to become a little bit more frightening because once we got through that back in in December or we headed towards it, you see the S&P started to come down, um, and then as we retreated, you know, it's almost a pretty pretty direct correlation with the the peak of the 10-year up at like near 5%, um, and then the bottom of the S&P in early mid early January, um, and, uh, now it's retreating a little bit. I think there's there's some other news that moves the the the S&P like that we've been talking about coming out of, uh, um, Washington DC and elsewhere, but um, you know, we're we're looking—was I think this is this is from yesterday's Club, so we were a little weaker today; I think we were down to 4.4, um, which is which is nice and and and the 10-year is kind of like the, you know, like they say copper is, you know, the economist or Dr. Copper; I think we got 10-years got a PhD in in economics and interest rates, you know, obviously, and it's kind of a combination, you know, roughly of, uh, economic growth, GDP, and inflation, say the PCE deflator, which was 2.3 GDP last, you know, last reading and 2.6 on the PCE, so you're looking at 4.9; 10-years telling us that, you know, rates are going to come down what about a quarter, um, probably June, uh, you know, the FED may have screwed up in '22 with transitory inflation stuff, but they seem to have, yeah, found religion, um, and and have been, you know, on top of things. I wasn't real happy with that 50-point; I think that was a bit wacky back in September, the 50-point cut; I think they paid for that a little bit; I think it should have been a quarter, um, and but maybe they were just, you know, trying to like reset, and what they did in December was reset expectations. Yeah, um, right, and that's what had the market going down, uh, as rates went up, just like we just described in this chart here.
So if the economy softens a little bit, or inflation pulls back—back it's been pretty steady—um, I run an inflation chart of, uh, off of the Fred database with the PCE, the PPI, and the CPI on there, uh, that's, you know, it's still inched up a little bit, um, but it looks like it's going sideways, and if that remains calm, maybe the the FED will give us a little more cut and, you know, surprise the market on on the upside, you know, with a a little upside, um, you know, boost a little little bit under the market there, you know, in that regard, um, you know, there it it seems for a while all of the, you know, there there was such a focus on every single CPI report, PCE report, jobs, you know, jobs report, jolts, everything, um, and and even the even the Fed, you know, meetings was, you know, a lot of volatility; then it kind of seemed like after September it turned into a little bit of a non-event, and then of course December happened, and it was like, oh, now now we're watching this again, you know, all the all the investors are kind of, uh, so do do you think that was just a temporary thing or is it back to every every CPI report is the most important one of your life, uh, thing?
I think it's gonna e and flow; yeah, they're going to be periods like the the softer CPI number in January was was kind of the low, um, I mean one of my themes from today was, you know, tune out the noise; there's just too much, uh, turn off the TV, um, you know, unless you're, you know, day trading and really hitting these things and you're good at it, then you really need to just, you know, stick to your guns. I mean, we've had a couple things get stopped out in the newsletter portfolio, and I personally haven't sold much of it because I'm just being a little patient, you know, and some of it's bounced up; all I know there's a lot of volatility right here; you know, you got to be a little calm and patient and, you know, check your emotions at the door here, uh, I think everyone's keying on way too much. I mean, one thing that's good about all the the the Tariff threats and, you know, negotiations and knee-jerk reactions and revisions and recisions and retractions is that it's taking people's, um, you know, Focus away from some of these nitpicky, uh, wonky, um, economic numbers that you're that you were talking about that we're talking about, so maybe that's a positive; maybe that's part of his art of the deal is to get people not focusing on that stuff and to look at me, look at me while I deal with everybody around around the world and don't worry so much about the up one percentage point uptick or basis point uptick and it's CPI or or Fed funds or or whatever.
Well, you know, and I also wanted to kind of cover, uh, you know, we we talked a little bit about AI and, you know, kind of the infrastructure picks and shovels that's been happening, and so before before this latest tariff volatility we had the Deep Seek news, and you know you and I were chatting about this is, um, you know, when when when these kind of things come out with this technology that is on the newer side, and you got to expect that there's going to be new technology and, um, upgrades and, you know, just efficiencies that happen, uh, how worried should we be about Deep Seek or the someone building a better mouse trap; is that is that necessarily a bad thing?
No, I think it's positive, um, I mean I joke and they call it it the Deep Seek deep fake, um, but you know a b a lot of what they, you know, claim is probably not, you know, fully true, um, there's part of that wonders about the hedge fund that's behind it; maybe there were short Nvidia or something, uh, but the the good news is is that hey we can get Innovation out of guess what, you know, bootstrapped low-budget innovators, uh, you know, in a new technology as opposed to the, you know, Mega cap behemoths that are trying to control everything. I mean, Dell Computing; he came out of his what dorm room? Yeah, Bill Gates and and Paul in a garage. I mean, there K Packard, same thing, started in a garage, right? This goes on; I mean, all these Innovations they don't come from the big players; there's a there's a a quote I have in the almanac from Cisco that I was about, um, you know, I got to look up; it's one of those Almanac quotes, but it's along the lines of the Innovations don't come out of the big boys, so this is sort of a reminder, a little Canary in coine or whatever, that it's not it's not all about having all this hardware and all this processing power; maybe it's about Innovation and people finding ways to write some code and some software, so it kind of is encouraging to me that we're going to be able to see some Innovation, you know, aside from the the the Chinese-backed company shenanigans that it really just sort of means that hey there's a real good opening, and we should encourage and and nurture the the small company, you know, budget-strapped, uh, uh, groups, uh, um, innovation in this in this industry, and it's it's only just begun. Yeah, and at the end of the day it's, you know, this is just one part of it, right? This is the, you know, how you're doing it, but there's kind of the way you monetize this and, you know, what you do with this technology, uh, that's still kind of the the unknown. You know, how many people knew that the internet and, um, all this processing power was going to be used for phones and, you know, and all the things that, you know, with that Wi-Fi brought, um, you know, when I mean heck we were we were starting with that Broadband, you know, you know, type thing; remember when we called it the worldwide wait?
Yes, exactly. You know, bust out your—you gotta get your newspaper while you're waiting for the thing to dial up and connect. Yeah, I couldn't even imagine how long it would take for a video like this to play and download; it would be like three days or something; it wouldn't play.
Yeah, absolutely; freeze. Yeah, yeah. So yeah, again, I I think I absolutely agree with you; there's there's a lot still, um, left to figure out here, and who those leaders are going to be. I mean, the leaders in the 90s, you know, there there's a whole host of companies that no one even remembers anymore, and those were the greatest things; it's not just about leaders; it's just about some companies that innovate and use it to make some money, and and there might not be the leader of the AI industry; there might be some trucking company that uses it or some healthcare company that uses it to, you know, get better treatments for people, and they make money that way by making it more efficient, making doctors more efficient.
Mhm. Well, Jeff, I I tell you every time you're on, I just have a great time; I love again the the way that you have this organized on the Stock Traders Almanac, um, it's, you know, a data a data junkies', um, dream, you know, what you put together there, um, and so for folks that, you know, again maybe haven't tried your newsletter and your subscription, um, you you basically send out an Almanac, you know, as as part of the subscription, and, uh, that's at stocktradersalmanac.com, um, you know, anything they should know, uh, about that? I mean, you you just did a, a presentation, um, yeah, you're doing presentations all the time, you know, for your subscribers.
Yeah, we do a monthly, um, Members Only, You Know, webinar; we recap everything and and give out and and and give our whole outlook and run through some of what you put up today was from that; it was a bit of a a tease on that, but there's more; there was a whole thing on Bitcoin seasonality, gold, C, you know, oil, all sorts, and we also spend a good, you know, half hour or more on Q&A, taking any question, and if I don't know, hey, we don't know; we'll look into it, uh, but we do have a nice back and forth, and people seem to appreciate it; we get some ideas from people as well, so, you know, if you you go to stocktradersalmanac.com, you could, you know, click on one of the the things that you might, uh, you know, be for be for subscribers only; you can take out a free trial; get sta—has a, um, savings code; everyone gets a free Almanac with the subscription, and if you want to see the webinar, you subscribe, and you know you'll be able to get this the slides and and and the the replay.
Yeah, and I should also mention that you share a lot of information on your your, uh, uh, Twitter feed or X feed, um, and that's AlmanacTrader, um, a great follow there, and, uh, you you you're doing videos with a lot of folks, uh, you're on CNBC; you're you're kind of everywhere, so
Yeah, we get around. Yeah, very good. Well, Jeff, I always appreciate chatting with you; thanks so much for taking the time and, uh, coming on the show again; always a pleasure.
Thanks. Okay, that's going to wrap it up for us this week, uh, please join us next week; we're going to have another returning guest; it's going to be Will Ryan from GraniteShares, uh, last time Will was on the show we talked a lot about the innovations that he was doing with some of the single-stock, uh, ETFs, ETN, ways to get leverage in single stocks, uh, in in a kind of a different way, um, so, uh, it's going to be great to talk to him a little bit because a lot has changed since he was introducing those things for GraniteShares, so it'll be great to talk to him; we hope you join us; thanks for watching this time around; see you next time. e e