Capitalist Investor

Welcome back! The Capitalist Investor squad discusses all the news surrounding recent earnings reports, tax season coming up, behavioral changes in a recession, and Justin Bieber selling the rights to his songs for 200M. You need to tune in until the last minutes on this week’s episode because the squad erupts in all kinds of different conversations around aliens & the doomsday clock reaching 90 minutes until midnight. What does all of this craziness mean for the future and you!?

Welcome back! The Capitalist Investor squad discusses all the news surrounding the biggest minds on Wall Street & Politics at Davos 2023. What are CEO’s saying around the world? What is Labor Hoarding? Jeffrey Gundlach had a great interview on Fox Business last week. What’s the biggest takeaways from the bond king himself? Why are we debating gas stoves & electric stoves? All of this is discussed & more this week on The Capitalist Investor.

The Capitalist Investor crew discusses inflation & the Fed, the latest updates on the job market unemployment and tech layoffs, and a couple of canceled topics including taxes being possibly cancelled!

The conversation discuss the recent market changes and the expectation that the Federal Reserve will pivot soon. However, some believe that the market is overestimating the Fed's actions. There is data to suggest that this is the case, with many young investors thinking that there will be a pivot and older investors aren't expecting a pivot anytime soon. The Fed could overshoot and put us into a recession to try and gain back the credibility they lost by saying inflation was "transitory" two years ago. target inflation too aggressively.

Everyday seems to be a new company laying off part of it’s workforce. Or even companies that already announced layoffs that are either accelerating those layoffs or making those layoffs more extreme in headcount. At the end of the day, technology layoffs could be just the tip of the iceberg. As we enter into earnings season, the banks are the first to report. The interesting thing when analyzing bank earnings is the insight it can provide into the future. The American banking system helps build the economy through the debt they service & the investments they help make into companies & people. When loans are down & merger/acquisition activity is down, it can provide insight on what negative things might be in-store in the future. On the opposite side, when loans are up, and M&A activity are up, it can help shed a positive light into the future. That’s why these next couple of quarters of earnings are so important to shed light on the future of our economy & stock market.

Who likes taxes!? Most people do not, because the government isn’t very good at spending our money. With Republicans taking a house majority in Congress, there are already bills being levied to do away with income taxes & tax the consumption side of the equation. Even though it is almost impossible legislation like this could make it all the way through, it’s important to discuss the economical impact this could have on Americans & businesses. On top of that, sports betting just became legalized in Ohio. Right after midnight on January 1st, Bernie Kosar, a long-time Browns celebrity & radio celebrity lost his job after betting $19,000 on the Browns to beat the Steelers. Apparently, he didn’t know it went against his contract to bet on sports.

Timestamps

0:00:00

The Capitalist Investor: Inflation in the Fed, the latest updates

0:01:56

The Federal Reserve's Inflation Target: Is There a Pivot?

0:03:21

The Federal Reserve's Inflation Target: Is 2% Achievable?

0:08:26

Inflation: A Year-Long Topic of Conversation

0:09:51

The Impact of Tech Layoffs on the Overall Economy

0:11:14

Banking Earnings in the Age of Inflation

0:14:26

Canceled: Bernie Kosar Bets $19,000 on Browns to Beat Steelers

0:19:35

Canceled: Income Taxes

0:20:51

Making up the 15% in Taxes

0:24:41

The Impact of a Simplified Tax Code on Investments

The tax code changes that are going into effect in 2023 are going to have a big impact on the markets. Businesses are going to be affected the most, and it could not have come at a worse time. The team talks about how these changes are going to affect businesses and the market as a whole. The Inflation Reduction Act might actually work on businesses, but reducing demand through the middle-class isn't a good thing. Businesses may be worse off due to changes in capital expensing, R&D expensing, and interest expensing. The new tax code will disincentivize businesses from growing, and this will cost consumers jobs at a time when the Federal Reserve's interest rates are crushing demand. All of this will impact the economy, the markets, and you're wealth, which is why you need to pay attention to fiscal policy. The new tax plan essentially is making the government bigger through more tax revenue, which is causing the government to pick the winners & losers through the re-distribution of wealth.

Oil has recently been selling off, which might suggest a couple of different viewpoints. It could suggest that a recession is looming as demand decreases throughout the world. It could also suggest that the supply chain of oil has gotten better. But that doesn't mean there aren't risks in 2023 for oil. An escalation in Russia/Ukraine of China/Taiwan could send oil higher. Also, China re-opening the economy could increase demand in oil as well. Ultimately, lower oil costs is a good thing for the American consumer who is already struggling and is a good thing for inflationary pressures. But it's not a good thing for Electric Vehicles. One of the selling points for EV's is the cost of gasoline compared to electricity. As gas prices go lower, there is less incentive for people to buy Electric Vehicles. What does this mean for the investment world and stocks like Tesla?

Cancelled this week involves a conversation around McDonald's and their first restaurant to replace all of their workers by using machines & technologies to make the food for customers. What is the long-term impact technology has on the overall eceonomy and is it even sustainable in a capitalistic world? What ultimately might happen as time goes on and middle-class jobs are replaced by artificial intelligence and machines? It's something we need to pay attention too as technology continues to exponentially grow and businesses continue to use technology faster as the cost of hiring employees continues to rise.

TIMESTAMPS 

0:00:04   The Impact of the Secure Act on Businesses and the Market in 2023

0:02:15   The Impact of the Inflation Reduction Act on Businesses

0:03:58   The Impact of the Trump Tax Code on Businesses and the Economy

0:06:56   The Impact of Rising Interest Rates on Businesses

0:09:19   The Impact of the New Tax Laws on the Stock Market

0:11:44   The Impact of the Child Tax Credit on the Economy

0:14:00   The Impact of Redistribution of Wealth on the Economy

0:17:21   Oil Prices and the Electric Vehicle Market

0:19:10   The Impact of Cheap Gas on Electric Vehicles

0:21:33   The Impact of Electric Vehicles on the Automotive Industry

0:22:58   The Future of Electric Vehicles: A Conversation with Tesla Owners

0:25:46    Tesla is Still Overvalued

0:27:33   The Impact of Automation on the Fast Food Industry

0:29:43   The Impact of Technology on the Workforce

0:31:25   The Impact of Technology on Society

0:32:58   The Future of Work: A Discussion on the Impact of Technology

Welcome to the Holiday Special where the team discusses the bull and bear cases for 2023. They debate whether or not things will go well or not and also talk about the good and bad things that could happen in the new year. Will 2023 be just as crazy as 2022? Or will things finally calm down in 2023?

1. The Stock Market

2. The Bond Market

3. The Commodity Market

4. The Crypto Market

What are the possible outcomes for the S&P 500 in 2023. The bull case scenario is that the divided government is willing to work together, and that companies can invest without fear of significant tax code changes. The bear case scenario is that inflation will become a problem, and that the stock market will not be able to sustain its current level of projected earnings growth.

The Bond Market is down just as much as the stock market essentially in 2022. The bull case for the bond market is essentially the bear case for the stock market. What is meant by that? How do interest rates in 2023 impact the bond market and will the bond market act the same as the stock market in 2023 or will it finally disconnect from the stock market again?

Different commodities react differently to different situations. For example, gold can react differently to economic news than energy commodities like oil. But what is the overall bull and bear  case for commodities in 2023? Why is energy so important and how does Oil impact our every day life?

The crypto market has taken a dive this year, especially recently after the FTX blowup that caused investors to become distrusted in cryptocurrency. What is the bull case and what is the bear case for cryptocurrency in 2023? How does government spending & interest rates impact speculation within the economy that ultimately impacts the crypto market:

Timestamps

0:00:03

The Bull and Bear Case for 2023

0:02:56

The Bull Case for the S&P 500 in 2023

0:04:45

The Economy in 2023: A Look Ahead

0:08:26

The S&P 500 and the Market's Reaction to COVID-19

0:10:02

The Bear Case for the Stock Market

0:12:52

The Fed's Impact on the Stock Market

0:20:21

Bond Market Outlook for 2023

0:22:53

Bonds, Commodities, and ETFs: A Year in Review

0:25:10

The Impact of Interest Rates on Commodities

0:26:16

The Bull and Bear Cases for Gold and Energy in 2023

0:28:28

Oil Prices and the Global Market

0:30:15

The Impact of Oil on the Global Economy

0:31:55

Crypto Market Regulation: The Pendulum Swings from One Side to the Other

0:36:04

The Future of Cryptocurrency: Bearish in 2023

0:38:20

The Future of Crypto: A Roundtable Discussion

0:40:54

The opinions expressed in the podcast are for general informational purposes only and are not intended to provide specific advice or recommendations for any investment, legal, financial, or tax strategy.

The CPI read for 7.1% was a little below estimates, but the market still reacted positively. The Fed is expected to make a decision soon, and home sales will be a big topic for 2023. Sam Bankman-Fried was arrested before he was supposed to testify on Capital Hill. 

The team discusses the current state of the stock market and how it has been affected by various data points recently. They discuss how the market is pricing in a pause in the Fed's rate hikes, and how this could affect the market in the future.

The speakers discuss the recent actions of the Federal Reserve and how they may respond to a slowdown heading into the 2024 presidential election. They question whether or not the Fed will be able to lower interest rates enough to spur economic growth, and whether or not this will be used as political ammunition by the either party. They also speculate on whether or not Biden will be replaced as the Democratic candidate for president.

The team discusses the current state of the housing market and its expected future. They mention that home prices had been rising astronomically, but this is not sustainable. Home sales are expected to continue to decline into 2023 as a result. The cost of borrowing has also increased, which is not good for the long-term success of the housing market.


0:00:04

The heading should be in title case and no more than six words. CPI Read for the Week

0:02:21

The Impact of the Federal Reserve on the Stock Market

0:03:45

The Federal Reserve's Next Move

0:07:36

Home Sales in 2023: Will Prices Continue to Decline?

0:09:17

The Impact of Rising Home Prices and Mortgage Rates

0:12:36

The Real Estate Market in 2023: A Slow Burn Down

0:14:27

Tesla Stock Tumbles Amidst Controversy Surrounding Elon Musk

0:18:12

Tesla's Stock Price Drop and the Cancel Culture

0:19:59

Canceling Dr. Carson

The Producers Price index (PPI) is a measure of inflation for manufacturers. It is coming out this week and is expected to be high. How high (or low) it reads, could move the markets. The PPI is the best way to explain how much it costs manufacturers to make things. 

This could possibly mean that inflation is not increasing as rapidly as previously thought, which could be seen as a positive by investors. However, it is still unclear how Federal Reserve Chairman Powell will interpret this data.

The gang digs into real estate and the recent headlines surrounding some nontraded REIT's decision to limit withdrawals. For a variety of reasons, investors have begun to withdraw money from Blackstone Real Estate and Private Lending funds. We discuss the implications.

We also discuss the recent stock market sell-off and how it may be due to concerns about China's economy. We discuss oil prices, energy stocks and some contradictory data points, which create some uncertainty about a possible recession. 

The gang chats about China's recent decision to ease some restrictions and the causes: protests or the state of the Chinese economy? Tony, Derek, and Ryan discuss the different viewpoints on China, then get into the good stuff: the lack of diversity during Shark Week and the impending smash-hit blockbuster, Cocaine Bear.

Timestamps

0:00:07

The Capitalist Investor: PPI, Georgia Runoff Election, and Real Estate Funds

0:02:06

Inflation in the United States

0:03:39

Oil Prices and the Economy: A Conversation

0:06:20

The Impact of China's Economy on Global Markets

0:07:51

The Impact of the Georgia Runoff Elections on the Stock Market

0:09:42

Blackstone Private Placements and the Coronavirus

0:11:26

The Impact of Rising Interest Rates on Real Estate

0:14:56

Bereaved Properties and the Real Estate Market

0:16:49

The Impact of Legalized Gambling on the Casino Industry

0:18:15

The Discovery Channel's Shark Week is under fire for its lack of diversity and overrepresentation of men named Mike.

0:20:45

Cocaine Bear and Shark Week: A Conversation

Despite warning signs, Black Friday and Cyber Monday sales still break records.

The group discusses Black Friday shopping and whether it is bigger than Cyber Monday. They mention that while the sales were up when inflation is taken into account, there was no real progress made. The speakers discuss the market and Black Friday and mention that the rail strike and protests in China are having negative impacts on the economy.

The speakers discuss the possibility of an upcoming recession, citing several indicators that suggest it may be on the horizon. These include the recent inversion of the yield curve, the decreasing price of oil, and banks' unwillingness to loan money. They also note that the White House has started to take steps to prepare for a recession, such as replenishing the oil reserves.

Are Black Friday and Cyber Monday sales, and whether or not they are indicative of a strong economy? The group discusses how businesses and employees are impacted by a weak economy, and how the recent sales numbers may not be as strong as they seem.

0:01:51

The Market This Week: A Look at Black Friday and Earnings Season

0:03:31

The Impact of Economic Indicators on the Federal Reserve's Decision-making

0:05:28

The Impact of the Resilient Consumer on Businesses

0:07:29

The Impact of Black Friday and Cyber Monday on the Economy

0:10:20

The Impact of Economic Uncertainty on the Stock Market

0:12:34

The Impact of High Consumer Debt on the Economy

0:13:58

The Impact of the Railroad Strikes on the Stock Market

0:15:27

The Impact of a Potential Railroad Strike on the U.S. Economy

0:23:38

The Impact of China Lockdowns on the Stock Market

0:25:15

Apple and Twitter's Feud Could Impact the Stock Market

0:28:56

Apple and Tesla's Feud: Why Elon Musk is Picking a Fight

Welcome back to this week's episode of The Capitalist Investor! The group discusses Diamond Hands D's recent vacation, during which time the crypto market collapsed. On top of the crypto collapse, a recent statistic shows that personal savings in the US has decreased from $2 trillion to $600 billion in the last year. This could be due to increased spending, and that could lead to increased personal debt in the future. The Santa Claus rally may not be real or long-lasting, due to the high levels of credit card debt among Americans. There is currently 16.5 Trillion dollars in household debt and over 31 Trillion dollars in government debt. Has the Santa Claus rally already happened this year? Is the Santa Claus rally going to be able to hold? What’s going to happen over at Disney with Bob Iger coming back as CEO? All of this and more is discussed in this week’s “The Capitalist Investor”.

The Santa Claus rally, a stock market phenomenon that typically occurs in the seven days after Christmas. They note that this year, the rally may be occurring earlier than usual, and that it is generally driven by positive sentiment and increased consumer spending around the holidays. They also discuss the possibility that the rally may be extended into January, due to the recent strong performance of the stock market. One of the reasons the stock market does well during the holiday season is that retail investors are more optimistic during this time and there is less trading by institutional investors. But less trading means less volume, which usually doesn't support a strong move.

Bob Iger is back at Disney as CEO. Disney has become very "woke" over the past few years and Iger coming back to Disney raises questions on the direction of their "wokeness". Will Disney double down on being woke? Or will Iger come into Disney and walk back what they did over the past couple of years?

0:04:19

The Santa Claus Rally: What to Expect

0:09:18

The Impact of Cryptocurrency on the Stock Market

0:10:54

The Impact of Bitcoin Mining on the Crypto Market

0:17:38

The Walt Disney Company's Plans to Leave Florida?

0:22:53

The Impact of Wokeness on Disney's Business Model

0:25:26

The Future of Disney Under Bob Iger

0:28:14

The Scammy Business of Ticketmaster: A Conversation

0:29:54

Celebrities and Ticketmaster: A Scam?

0:33:09

The Impact of Live Nation's Monopoly on the Music Industry

What's going on with the recent crypto meltdown and specifically the FTX exchange? The traditional banking system works in a similar way, lending out assets to make money for themselves. What is to blame? The banks? The exchanges? Regulation? Or is this a culprit of low-interest rates and the changes in behavioral finance?

In the traditional banking system, banks will take customer deposits and use them to invest in other products or services. However, this can be risky if the bank does not have enough liquid assets to meet customer demands for withdrawals. This is what happened with the crypto exchange FTX. The company had leveraged it's customer assets to make other investments, but when the market crashed and customers tried to withdraw their money, FTX was unable to meet these demands. This caused the company to collapse, wiping out billions of dollars in assets.

The FTX crisis was caused by the company's use of client money for risky hedge fund leverage, which left the company unable to repay its debt obligations when clients began asking for their money back. But on top of that, it is absolutely possible that Fraud has occured, but we don't want to jump to conclusions until it is proven.

The person who hacked into FTX's system is now the 35th largest owner of Ethereum in the world. This hack is a reminder that the banking system is vulnerable to attack and that companies need to be careful about over-leveraging themselves.

The Crypto Meltdown: What Really Happened - 0:01:45

The FTX Cryptocurrency Exchange Scandal - 0:03:34

FTX Exchange Under Fire After Client Money Goes Missing - 0:07:17

The FTX hack and its implications for the cryptocurrency industry - 0:08:39

The Aftermath of the Largest Ponzi Scheme in History: The Bernard Madoff Scandal - 0:10:08

The Decentralized Finance Community's Relationship with Regulation - 0:13:32

Inflation: The Good, The Bad, and The Ugly - 0:19:13

The Impact of PPI on the Economy - 0:22:35

The Federal Reserve's Impact on Inflation and the Market - 0:25:19

Excesses Will Change in the Next Two Years - 0:31:00