Capitalist Investor

Welcome Back To The Capitalist Investor Podcast! This week on the Capitalist Investor Podcast, the squad discusses the official “Bull Market” definition. The hosts highlight the potential risks and uncertainties that could drive the market down and emphasize the importance of paying attention to fundamentals and earnings. The podcast also covers the Fed's three moves, which could lead to a pause, hike, or cut, and the need for revolving credit to start getting paid off. The hosts question the US's $31 trillion deficit and compare it to China's $14 trillion debt, which is close to 50% of their GDP. The hosts caution that the US has nothing to show for its debt, while China has grown without taking on debt, becoming a dominant economy in the world. The hosts discuss the key differences between past and present exports and how they could impact businesses and the economy. China has grown exponentially in exports, becoming a major player in the semiconductor and technology world, without borrowing money to grow. The podcast ends with a discussion on current events and cancel culture, with the hosts expressing their opinions on the implications of cancel culture. The hosts maintain a defensive investment stance and remain cautious about the current market rally. Additionally, the podcast discusses the potential impact of China invading Taiwan and the resulting chain reaction on the supply chain, worse than COVID, as well as the potential for inflation to skyrocket. The speakers then briefly discuss the U.S. Open golf tournament and provide insights on the course and players. The opinions expressed in the podcasts are for general informational purposes only and are not intended to provide specific advice or recommendations for any investment, legal, financial or tax strategy. It is only intended to provide education about the financial industry. Please consult a qualified professional about your individual needs.
 
Timestamped Chapter Summary

• 00:00:00 - Introduction of hosts
• 00:00:11 - Discussion on fashion choices
• 00:00:21 - Cool Hand's motto: "look good, play good"
• 00:00:37 - Cool Hand's voice is gone
• 00:00:55 - Discussion on Mexico and healthcare
• 00:01:16 - Diamond Hands Day's birthday lunch
• 00:01:52 - Current market rally
• 00:02:20 - Discussion on exports
• 00:02:39 - Cancelled with current events: someone not allowed on TV
• 00:02:50 - US Open discussion
• 00:03:10 - Officially in a bull market
• 00:03:32 - Definition of a new bull market in the S&P 500
• 00:04:02 - Potential risks and opportunities in the current market
• 00:04:22 - Uncertainty about what could drive the market higher
• 00:05:07 - The potential risks of being too bullish
• 00:05:36 - The importance of a fiduciary mindset and being defensive
• 00:06:16 - The hype and high valuation of certain technology stocks
• 00:06:45 - Sector rotation and the potential for smaller stocks to outperform
• 00:07:27 - The impact of high interest rates on mid and small-cap stocks
• 00:07:52 - Everything has been multiple expansion, not earnings growth
• 00:08:00 - Earnings have been flat
• 00:08:27 - The S&P 500 multiple is around 20, historically around 16.7
• 00:09:07 - The average investor is becoming too bullish
• 00:09:26 - The importance of being defensive and not transitioning to high growth, small mid-cap names
• 00:10:03 - The Fed's potential moves and their impact on the market
• 00:10:19 - The need for revolving credit to be paid off for confidence in the economy
• 00:10:42 - Japan's debt is around 250% of GDP
• 00:11:12 - Technical bull market from the bottom, but not back to all-time highs
• 00:11:33 - China's debt is around 50% of GDP, $14 trillion in debt
• 00:11:36 - Discussion on Elon Musk's Twitter chart comparing US and China exports in&

In this week's episode of The Capitalist Investor, the hosts discuss various topics, including the recent announcement of Apple's new augmented reality headset, which lets users operate apps through hand gestures. While the hosts are skeptical about the product's high price point and clunky design, they acknowledge that this is just the first generation of the technology and that it will likely improve over time. They also discuss the potential implications of this technology, such as the possibility of replacing personal computers.
 
 The hosts briefly touch on other topics, such as text message scams, the recent scandal surrounding the app Liv, and the surge in spam text financial loss from scams. The hosts advise listeners to delete any messages from unknown senders or report them as junk.
 
 The hosts delve into the recent merger between the PGA Tour and Live Golf, which began with Phil Mickelson's criticism of the PGA Tour for not giving players their fair share of the earnings. The hosts discuss the potential benefits of the merger for the entertainment value of golf, but also express concerns about the Saudi investment fund's involvement in LIV Tour, with rumors of human rights violations and funding of 9/11. The hosts speculate on the fallout from the merger, including the possibility of hush money or the creation of a new league by disgruntled PGA Tour players.
 
 Overall, the hosts remain optimistic about the future of technology and its potential to revolutionize various industries, including golf. They advise listeners to stay tuned for updates on the PGA Tour and LIV Golf merger.

Chapters

| 0:00:02 | Introduction and overview of topics to be discussed: Apple Headset, text message scams, and live golf |
 | 0:02:29 | Discussion of the Apple Headset announcement, its features, and market reaction |
 | 0:04:23 | Speculation on the future of wearable technology, including contact lenses |
 | 0:05:37 | Battery life concerns for the Apple Headset |
 | 0:06:23 | Personal opinions on upgrading phones and the hassle it entails |
 | 0:08:48 | Americans experiencing surge in spam text financial loss from scams is higher than ever |
 | 0:09:38 | Tips on dealing with spam text messages and the potential dangers of AI-created scams |
 | 0:11:03 | Discussion of the merger between the PGA Tour and Live Golf |
 | 0:12:20 | Speculation on how the news of the merger was leaked and the announcement by the PGA Tour commissioner and the PIF representative |
 | 0:12:46 | Discussion of the Saudi crown prince's public investment fund and its involvement in Live Golf |
 | 0:13:19 | Contract and salary details for Live Golf players and the fallout from the merger |
 | 0:19:52 | Discussion on how the PGA Tour is taking a cash infusion from the PIF instead of giving it directly to the players. The original reason for the merger was to reshape the PGA for the betterment of the player. Fallout from the merger and the potential for a boycott. |
 | 0:25:37 | Recap and conclusion of the podcast. |

The dream team of Diamond Hands D, Tony the Tiger, & Cool Hand Luke discuss their Memorial Day weekend and topics of the day. AI and NVDA has been going nuts in the stock market.. at-least the hype has. What's next for NVDA and AI? We always talk about inflation, but we never really talk about deflation? Is that a possibility? What's going on over at Chick-Fil-A and the potential boycott? Find out all of the teams thoughts and more on this week's "The Capitalist Investor" podcast!

We’ve been talking a lot about Artificial Intelligence, but the real explosion didn’t really start in the stock market until NVDA reported earnings. But once you go past the curtains of the report, there could be something deeper going on. AI right now is an R&D expense to a lot of companies which means it’s an up-front investment. AI isn’t really adding dollars to the bottom line yet. The question is whether or not these stocks will grow into the current valuations or if these current valuations on AI stocks are over-done. The team discusses NVDA and their thoughts on what’s next for AI stocks and the technology in general.

All we have heard for two years straight is inflation, inflation, inflation. But what’s not really talked about is deflation. Prices have risen very quickly, and people seem to keep on spending their money, whether that’s on credit cards or not. But when recessions hit, typically consumers eventually cut back their spending. When people cut back their spending, it’s possible that you can enter a deflationary environment where prices actually go lower. This can impact many aspects of the economy & stock market. Is it possible that if the labor market takes a turn and unemployment rises we could have a deflationary environment? In that case, won’t the federal reserve just lower interest rates and pump liquidity into the economy? With how quickly rates have risen, a lot of people who locked in their 2.5%-3.5% mortgage rates are unlikely to leave their location for a job in another state and give up that mortgage. That could also have an impact on the labor market.

It looks like a lot of boycotts are getting attention and traction. Beer sales seem to be down for Bud Light & Anheuser-Busch and Target boycotts seem to be underway. This is also impacting both of their stock prices. But another one that is getting attention is Chick-Fil-A with the attention around the DEI (Diversity, Equity & Inclusion) VP. Is a Chick-Fil-A boycott underway?

This week on The Capitalist Investor, the team discussed everything from a fake picture impacting the financial markets all the way to the latest and greatest marriage & divorce tips on the news of Jeff Bezos getting engaged to Lauren Sanchez. What tricks, tips, and thoughts does The Capitalist Investor team have around these topics and more? Tune in!

A news article or picture rather has gone viral on social media that showed a fake picture of an explosion at the Pentagon. The picture spread quickly and impacted the markets as a result of algorithmic trading. There are long-term implications of the algorithms responding to the news without verifying the information, as well as the potential for deep fakes and other false information to cause a similar reaction. We have to be mindful of how information spreads on social media and the potential for algorithms to misinterpret it. There is a concept of efficiently inefficient markets, where everyone owns the same things and reacts to the same information, leading to a lack of value. We also have to pay attention to artificial intelligence and how it can distort reality, creating a lack of information in which it is difficult to distinguish truth from lies. All of this is happening as Elon Musk changed the algorithm on Twitter, leading to an echo chamber of information, which means the algorithms are too good at focusing on only what you care about. The markets are changing. Information is changing. People seem to be changing.

There’s news around Jeff Bezos & Lauren Sanchez getting engaged. Both marriage & divorce can have a huge financial impact. The team shares their thoughts around emerging trends and thoughts around getting a prenuptial agreement and more.

President Biden’s agenda came out today and it looks rather light. Is a light schedule something typical for the United States president? Most of our schedules look much busier and filled than our current President’s. Why is it important for the government to be ran like a business and how is the government different than a business in the ways of efficiency? The capitalist investor team discusses the latest and greatest around the oval office.

This week on The Capitalist Investor, the team discussed how the average car payment is up to $750/month and the average car on the road is over 13 years old. What does this say about the economy and America? Lately, one topic getting traction is the topic around parents charging their adult children rent after they turn 18 years old. What would you? Home Depot earnings came in light as did most retail economic data. Is this the crack in the system? Tune into this week’s "The Capitalist Investor Podcast" for the latest cancelled segment.

Throughout history, new trends start to emerge. One of those trends has been the trend of keeping your car for longer & longer until it completely breaks down. The average car on the road right now is 13 years old. Not only have cars gotten older, but also, the average monthly payments that people are spending on cars has risen significantly over time. The average car payment is $750/month, almost 20% of the average individual income. This can tell you a lot about what’s going on economically. As Capitalist Investors, there are always opportunities to take advantage of trends. The Capitalist Investor team discusses somewhere you can keep an eye on if this trend continues.

Maybe you have children, maybe you don’t. Maybe your children are grown, maybe they aren’t. If they are grown, are they still living with you? If they are still living with you, are you charging them rent? There has been a lot of discussion recently around charging your children rent. For the most part, the Capitalist Investor team seems to be in favor of instilling values & hardship into your child’s life to make them come out better in the end. That also means making them pay rent if they are an adult at “Could” be out on their own. Also, you don’t want an adult child living with you to hurt your future goals and retirement plans. Find out what the team has to say around that.

We’ve been talking for a while about how middle-class America seems to be hurting, but their spending kept on chugging along. Much of that spending was done on credit cards and revolving credit. The past couple of days, between Home Depot earnings & the retail economic data, we could finally be seeing cracks form that suggests middle-class America’s spending spree could be over. What should you be eyeing going forward?

This week on The Capitalist Investor, the team discussed credit card debt, electric cars, and inflation numbers. They discussed the topic of credit card debt and the momentum it has gained and then moved on to talk about electric cars and police forces, as well as a good cancellation they had. Finally, they wrapped up the conversation by discussing the inflation numbers that had come out that day.

The inflation rate was 4.9%, in line with expectations. They noted that the market had reacted positively, but was now flat. They then discussed how the middle class is getting screwed due to high credit card interests, mortgages, and inflation rates. They discussed how the billion dollars in credit card revolving debt will become a much bigger problem in the future, with $10,000 turning into $50,000 in five years due to high interest rates.

The conversation discussed the alarming levels of credit card debt in the US, currently reaching an all-time balance of $1 trillion with an average interest rate of 25%. The speakers discussed the double-edged sword of credit card debt, in that credit card companies make an exorbitant amount of profit off of it with a profit margin of almost 100%. This is because they charge 25% interest, and the average household credit card debt is around $7,000. They also discussed the ancillary impacts of COVID, such as people raising their standard of living and having difficulty lowering it again due to the free money being passed out. In conclusion, the speakers agreed that an issue with spending is the root cause of the high levels of credit card debt.

The guys discussed the staggering debt that a 29-year-old had managed to accumulate in the form of student loans, a mortgage, and credit card debt. They discussed how this system is designed to keep people in debt and how it needs to be revamped. They also discussed how young people are encouraged to take out student loans as a way to create success. They concluded that as long as the job market remains strong, credit card issues will continue to be a problem.

The guys discuss the current state of the US economy in this week's episode.  Janet Yellen has said may cause the US to default by June 1st. It is noted that the House has passed a measure to keep the government open and included $1 trillion in cuts, including rescinding 87,000 IRS agents, clawing back unspent COVID money, and ending the student loan forgiveness plan. It is suggested that the government is out of money and that the debt ceiling limit is at 31.4 trillion, with the amount of debt per person in Cleveland being displayed on a sign. 

The U.S. debt limit, which is the amount of money the government can borrow. Most Americans do not understand the debt limit and the implications of defaulting on it. The debt ceiling has been exceeded 45 times in the last 40 years, but the only time it had a cascading effect on the stock market was in 2011. The credit default swaps, which are bets on something bad happening, are currently at their highest since 2000. There is a high likelihood that the government will default on the debt limit.

What will happen to the  money stored in U.S. Treasuries if a default occurred?  In the worst-case scenario, Democrats would have to compromise and that there would be a cascade of problems.

Microsoft, Google, Facebook, and Amazon are all reporting earnings. Microsoft has reported good earnings and its cloud services are still in demand. Amazon is yet to report, but they offer cloud services and other products. Google is doing a $70 billion stock buyback. Most of these companies are beating earnings because they lowered the bar.

First Republic Bank, which is near collapse, and offering a package to some of the bigger banks to either bail them out or let them fail. They also discuss defensive stocks, such as Campbell's, Procter Gamble, Coca-Cola, and Pepsi, which are all doing well but have had year-over-year increases in their products. They conclude that while the banks seem to have done well, the outcome of First Republic Bank is still uncertain.

The guys are discussing the current market climate and how it has been affected by inflation, shrinking packages, and tech prices. Speaker 2 expresses their disbelief in the official inflation numbers and brings up the concept of shrinkflation to describe what is happening. They then discuss the risk and potential for a burst tech bubble, and how managing risk tolerances and using vehicles with downside protection can balance out the portfolio. The FAANG stocks make up a large portion of the market cap, but should not make up the same portion of a portfolio in order to avoid the tremendous losses that would occur if the tech bubble burst.

Welcome Back! This week on The Capitalist Investor, hosts Three Take D and Tony the Tiger along with Cool Hand Luke discussed the market, current earnings, the Biden administration, and behavioral changes to summer vacations. They noted that 90% of the market’s gains this year have come from the top ten companies, the “FANG’s”, and that 20% of the S&P market cap will be reporting earnings next week, including many of the top ten companies. They also discussed Tesla’s activities and the controversy surrounding it, and talked about the possibility of taking summer vacations and what’s changed over the years.

Earnings Expectations

In this conversation, the speakers discuss the importance of understanding how resilient cloud spending is for the tech industry, and if the market has priced in a good earnings season. They give an example of Netflix, which reported earnings, with the concern that people are sharing passwords, which could impact Netflix's growth projections. They also note that Netflix is planning to crack down on password sharing at the end of Q2. The speakers agree that any negativity when expectations are positive could be a huge drag on the market and that the expectations are a lot higher, meaning a higher hurdle to jump.

The stock market has essentially rebounded 20% from the bottom. However, they pointed out that a rebound of 20% does not mean that it is in a new bull market, even though a lot of people have been saying that it’s a brand new bull market. They discussed how tech stocks are being priced in with the price-to-earnings ratio and their expectations for future growth. They also discussed how some tech companies are cutting jobs to add dollars to the bottom line, but they may be giving up some productivity in the process.

When it comes to consumer spending, people are not spending as much money as they used to due to a pending recession. Who is buying the newest iPhone, just to upgrade one generation? The resilience of consumers and companies has been extremely strong, but how will companies & stocks be affected if there is a hiccup from any of the big companies.

Vacation Changes

Vacations have changed over the years. Things like Ubers & AirBnB’s are just two examples that can impact the cost of a vacation. But other things such as societal changes, like drinking $20 cocktails can add to the cost of a vacation. Will consumers keep on spending money on big vacations, or will they stay to smaller, shorter, vacations this year or next year? The squad has some tips on what they do to save money on vacations.

Connect With Mark Tepper

• Twitter: @MarkTepperSWP
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Connect with Derek Gabrielsen

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Connect With Luke Lloyd

• Twitter: @LloydBoyLuke
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Connect with Tony Zabiegala

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Welcome back! The Capitalist Investors discuss the Masters, earnings season, the US Dollar, and the former Twitter now known as X. The conversation focuses on the Consumer Price Index (CPI) and its improvement, the Fed's hawkish stance, and the difference between deflation and disinflation. The numbers released this morning showed that year-over-year inflation was 5% compared to the expected 5.1%, and month-over-month was 0.1% instead of 0.2%. The biggest increases in inflation came from transportation, electricity, and food away from home, while the biggest decreases were in gasoline, energy, commodities, fuel, and oil. The conversation discusses the potential for an increase in inflation due to energy prices rising again, the possibility of shifts from small regional banks to bigger banks, and the loan loss reserves of banks. They also speculate that banks will blame the Federal Reserve for raising rates and causing economic instability. In the end, what do you need to know?

Timestamps

0:00:00

Heading: "The Legend of Tiger Woods and John Daly: A Conversation"

0:02:20

Earnings Season, CPI Numbers, and the US Dollar: A Financial Discussion

0:04:09

Heading: Inflationary Trends and Disinflationary Forces in the US Economy

0:05:58

Heading: Analysis of Potential Inflationary Pressures Following Energy Spikes

0:08:36

Heading: Impact of Federal Reserve and Uncertainty on Business Owners and Middle Class

0:10:28

Heading: Earnings Growth Projections for 2020: Discretionary Sector Expected to Lead with 36% Growth

0:12:23

Conversation Summary: Comparing Prices of Disney Cruise and MSC Cruise

0:14:37

Heading: The Impact of the US Dollar on International Currencies

0:16:22

Discussion on the Possibility of Economic Warfare and the US Dollar's Role in the Global Economy

0:19:04

Conversation on the US Dollar, Twitter Name Change, and Elon Musk's Vision for X App

0:23:06

Conversation Recap: Masters Tournament and the Impact of the Live Tour on Golf

0:28:03

"Exploring the Unfairness of Professional Golf: A Discussion on the PGA Tour and Minor Leagues"