4-23-26 Can Warsh Reshape the Fed?

And now for something completely different. Forget everything you've been told by others before. There is a niche. Niche? Niche? Niche? Niche. It's a niche. I don't know. It's a niche. It's a niche. It's a special area. There we go. Get ready for the real deal. Most important question, Lance. Yes. Pineapples on pizza or no? The full story. Me personally, I just, if I'm going to eat a pizza, it's going to be a pizza. I'm not going to order pineapples on a pizza, but I'm also not going to chastise somebody for doing it because I really don't care. Do what you want to do. The whole enchilada. So when you eat chili, beans or no beans? No beans. It's money news and information you can use to grow financially healthy, wealthy, and wise. Your Excel Word example. It's a great example, right? Because there's Google Sheets, which does Word. Okay. Okay. Okay. Boomer. Now, welcome in the real deal, The Real Investment Show with Lance Roberts. Presented by RIA Advisors. And welcome to the show, of course, today is Thursday, second best day of the week. Getting ready to wrap things up. Mike Lulitz joining me this morning. We're going to talk all about Kevin Warsh and, of course, his Senate confirmation hearing going on. Poly markets now expect him to be confirmed. About an 80% chance that he'll be confirmed as the new Fed chair by June the 30th. So we'll see if the betting markets are right. But we'll get into all that this morning. He said some very interesting things in his confirmation hearing that we'll discuss a little bit more in detail, particularly about kind of this reformation potentially of the Fed. And, of course, there's been a lot of, you know, interesting comments out on X that, you know, the Federal Reserve is buying back $15 billion of their own debt to try to save the dollar. Completely nonsense, but we'll get into all. It's called balance sheet management. And so we will get into all that this morning. But outside of that, earnings continue to roll in. About 85% right now of S&P 500 earnings are beating estimates. We still have, next week, of course, is going to be the really big week. We've got a lot of big mega cap earnings. We had Tesla report last night. Earnings report was okay. You know, deliveries are good. Outlook was, you know, kind of a little bit weak. Stock's trading down about 3% this morning. Nothing dramatic. So that is going to kind of pull, you know, on the markets here a bit this morning. Markets are trading a little bit negative. S&P is down about 28 points this morning. Again, you know, that's not surprising. We're kind of going through this choppy consolidation process. We had talked about last week that we were due for a correction in the markets. And, of course, we had a sell-off Monday and Tuesday. Had a nice rally yesterday. A little bit of a sell-off today is not surprising. So we're just kind of chopping back and forth, kind of working, trying to start working off some of that overbought condition. So not real surprising here. And we'll talk about that here a little bit more in just one second, kind of how to approach this market over the next couple of weeks. But outside of that, earnings are really continuing to drive the boat here more than anything else. Earnings, I just posted a chart this morning on X. So if you go to my X feed on X, I don't know how you say that. Anyway, just go to X and look up at Lance Roberts. I just posted a chart this morning of 2026 and 2027 earnings estimate projections. Those are ramping up sharply. The outlook for Wall Street right now is that earnings growth in the markets for the next two years, for the rest of this year and then into 2027, are going to be extremely strong, well, well above historical averages. And, you know, maybe this has a lot to do with expectations for data center buildouts, infrastructure development, all the things that are kind of related to AI and this whole kind of industrial revolution that we're going through in terms with AI, that's really starting to feed into the markets. And of course, yesterday, technology just broke out to an all-time high. First time it's been an all-time high in over six months. So we'd watched XLK here for a while, really struggle to kind of go somewhere. And a lot of people are kind of starting to write off the AI trade and AI is dead. It's all over with. But it's been a very, very sharp rally in technology here just over the course of the last really kind of three weeks. That's now broken out to an all-time high. Early this year, January, on January the 1st, we actually launched a value growth rotation model. So if you go to simplevisor.com, you can actually see the model. But it owns stocks within the S&P 500, but it kind of owns a split between value and growth. And what the model does is that it overweights value when value is outperforming. And then when growth outperforms, it switches from value back to growth. So back in really kind of late February, early March, that trigger occurred and it switched the model from value back to growth. That portfolio is up almost 9% year to date because it's been a growth push and that value sell-off has been really kind of holding the markets back here a bit. But the growth side of the market has been doing very, very well. So we're seeing that kind of reversion back to growth here. Now, those value growth rotations tend to last for a while. So it's very likely with growth outperforming value, at least for now, that that could last here for another couple of months at least, particularly as we continue to kind of go through the earnings cycle. So that's just kind of how markets are working right now. But let's talk a little bit of what you need to know before the bell this morning. So as I said, the markets are doing fine, and we've talked about this for the last couple of days. This overbought condition still exists. So, you know, again, if you're not, if you didn't get into this rally, right, so if you had had were kind of overly cautious, however, you know, whatever your position is, don't chase this rally right now. The market's doing very well. Estimates are doing fine. There are certainly some pressures out there on the markets. And we've got, you know, things coming up here with, you know, economic data. We've got issues with, you know, you know, obviously we've got this kind of switch coming with the Fed. We've got a Fed meeting coming up. So we've got inflation data coming very soon. So there's a lot of things here that can really kind of knock this market back here a bit. So be a little cautious chasing the market right now. Look for pullbacks. Again, this market is going through kind of some consolidation process. And whether this is a short-term top and then we kind of eventually come back down here a bit, I have no idea, nor does anybody else. We could just kind of flop around here sideways for a bit like a fish out of water and then take off again. But we've got to work off some of this overbought condition. It's unlikely that this market's going to make substantial gains from here. So in other words, what I'm saying is you're not going to miss anything by being a little bit more cautious right now. There's no reason to be concerned. And I wouldn't be selling a lot of positions out of your portfolio to raise a lot of cash expecting a big correction. That's not going to happen either. But again, upside is pretty limited right now until we either consolidate these gains here a bit for two, three, four weeks. In other words, we just kind of flop around here for a while or we get some type of pullback to this big cluster support. And pay attention to what's going on right now with the markets, too, because this 20-day moving average has now crossed back above the 200-day. It's about to cross above the 50. If we get to 20 back above all these moving averages so that we get kind of the reversion of those moving averages back to norms, that's going to give much more support to the markets, and particularly this rising 20-day moving average. The longer the market holds up here, the faster this 20-day moving average is going to rise. That's going to provide near-term support. So right now, if the market is going to pull back, you're looking at about 68.10 to get down to this cluster of support between the 50 and the 100-day. But right below that, that 20-day moving average is sharply rising. So we're definitely getting some momentum back into the markets. We're seeing money flows back into the markets as well. The markets are looking through this whole issue with the Strader Hormuz. Yesterday, we were doing live Q&A, and somebody made the comment in chat that we weren't paying attention to what was happening in Strader Hormuz. Yes, we are. And in fact, I've got an article coming out just for you on Monday talking about the straighter for moves and why the market's looking through that whole issue with what's happening in the straight right now. It all has to do with earnings growth. And again, you look past, you know, the markets are looking past that issue and looking at where earnings are growing for these companies and what companies are growing those earnings the fastest. So again, that's what you need to know before the bell this morning. We'll come back, pick up with Michael E. Witz. Don't go away. Get daily investment news you can use. Delivered at the speed of the internet at realinvestmentadvice.com. 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You're listening to The Real Investment Show. so in chat right now people are putting in you know what the temperature is where they currently live right so 55 here in god's country i thought the entire country was god's country but i guess just texas is correct um 40 42 in new york uh right now 32 somewhere uh blair says it's 32 where she is and i so i had to chime in with that i said 75 here in houston on our way to crematorium by august so yes anyway good morning michael how are you i'm doing well how's your allergies are killing me but i'm doing well well that's what you get for living up there gotta live somewhere we don have allergies here in texas i sure we have no pollen no mosquitoes it it great yeah exactly that it just might as they just might as well call it texifornia because you know we've got that california weather all year long everybody in chat's gonna go you're lying so anyway all right well mike we've got a good bit to kind of unpack here um with Kevin Warsh. This has kind of been coming here for a while. The nomination's kind of been grinding along. Originally, Polymarket expected it to be confirmed in April. Then they expected it in May. And now Polymarket's out to June. But at about 80% probability, he'll be confirmed as new Fed chair by June. But he made some interesting comments during his testimony that I kind of wanted to dig into. But first, before we get there, I thought it was interesting this morning, there was a comment on chat that the Federal Reserve bought back $18 billion worth of their own debt. A clear sign that the Federal Reserve is trying to bail out the dollar and trying to keep interest rates from rising. You mean the Treasury? No, this was the Fed. The statement was from the Fed. The Federal Reserve bought back their own debt. But this is my whole point about the misnomer. My point about this is to get to this misnomer of what's actually going on within markets. Because these things come out, and if you just look at the people underneath the comments on this particular tweet, which was completely erroneous, it's like, oh, yeah, this is clear evidence the world's ending. Nobody wants the dollar, despite the fact that foreign holdings of U.S. treasuries are at an all-time high. you know this is clear evidence of all this this is that kind of ongoing you know narrative that kind of you know surrounds the federal reserve in particular and the treasury uh the treasury is issuing debt obviously to you know raise funding for um you know spending beyond the revenue which is to fund our deficit um that's been you know that's has been going on for almost 50 years now so you know that's not a new thing either um but it is interesting you know these kind of narratives continue to swirl around there. There's not a lot of facts behind them. But go ahead. What were you going to say about the Treasury? Well, so I usually see those with the Treasury. The Treasury bought back $15 billion of this or that or $20 billion. And then you get the comments that, oh, they're printing money. They're just buying back their own debt, you know, like with money that came out of thin air. And what it really just shows is a complete lack of understanding. for what's going on in the system. The Treasury does not print money. The Fed does not print money. The Treasury is managing its expenses. And, you know, when it has to make payments, when it's getting tax revenue in, it's just like the way you would manage your books, your personal books, your checking account. So so what we like what I saw like a few days ago was the Treasury bought back $15 billion. What they really did was they were just shifting dates to align with tax revenue. So they issued $15 billion. They bought back $15 billion. They basically moved the maturity date on certain upcoming bonds to help better facilitate cash flows. And, you know, the bottom line is the Treasury does not print money. So if they're buying something, they're also issuing debt at the same time to buy something. They're just doing exactly what you and I do, moving money into the checking account, out of the checking account, pushing it from one place we have money to another place we have money. But they're not printing money. And it, you know, like I think it does you, Lance, it kind of drives me crazy when you see these people that start opining on this stuff, like they know what's going on and they make these accusations. And, And, you know, from the, you know, when you read the headline, it seems legitimate. The Fed bought $15 billion, but it's not. And it's not printing money. It's the way they've done business for, you know, our lifetimes at least. And I'm sure before that, because they have a job to do. They have to make payments. They receive revenue. So, put that one in the category. Well, and I think it's also important that, you know, this, you know, and this goes with the Federal Reserve as well, which is, oh, they're printing money. The Fed's printing money. The Treasury's printing money. Nobody's printing money because all money is lent into existence through debt. So how does the U.S. Treasury get money to fund the deficit? They issue debt. So they loan money to U.S. investors, foreign investors. Oh, sorry. They ask to borrow money from, yeah, they're not loaning money to anybody. But yeah, they're borrowing money from U.S. investors, U.S. pension funds, U.S. corporations. They're borrowing money from foreign investors, foreign governments. That's where they get their money from. So in order to create money, right, in order to increase the M2, the money supply, I have to loan money into existence. And that works the same way through the fractional banking system, you know, in the U.S. So the banks also create money by loaning money. They take in deposits. They then loan out based on a fractional reserve system. They make loans against those deposits. That creates additional money because they can loan out 10 times what they have in deposits, whatever the fractional reserve rate is. So they can create money by creating loans. And that's how we increase the money supply in the economy. And this is also kind of a misnomer we see a lot, Mike, which is people will show a chart of M2, and they just show this chart of M2 money supply going up at a 45-degree angle. Yeah, it should go up. If you don't increase the money supply, you can't grow your economy. If you're going to grow your economy, you need more money in the system in order to grow the economy. So there should be a direct correlation between the growth rate of the economy. By the way, there is. there's a very high correlation between the growth rate of the money supply and the growth rate of the economy if you didn't have the increase in the money supply your economy wouldn't grow and if you didn't have inflation you wouldn't have economic growth the economic growth is where inflation comes from now you don't want that money supply growth to grow faster than the economy like we saw in 2020 right that was not a good thing and that led to a big spike in inflation but now that that's all reverted, money supply relative to GDP, which is the only way to really look at it, has now declined back to its normal trend and is now back below economic growth rates. So, you know, it's always important to keep things in context with how they operate within the monetary system. So save that thought because this was irking me as well, driving me crazy, seeing those same exact comments. And I'm working on an article. It'll be, I guess, in two weeks. I'll put it out. But it's why the money supply on its own is not a gauge of inflation. Like you said, it's context, but there's other factors, too. So in a couple of weeks, we could go into much more detail and help people understand that the money supply on its own does not necessarily mean you're going to have inflation, disinflation or deflation. It's an important figure, but it's not the end all be all like, you know, we see on on social media or even on on mainstream media. Right. It seems like all the time. Right. You know, there are these constant themes. The dollar's gone away is another one that that just are very scary. And if you don't fully understand it, then, you know, I can I can certainly understand why you why they would raise concern and why it would impact the way that you manage your money. But it really takes a lot of time to dive into them and understand them and appreciate just how the world works, how the global economy and global financial markets work. And when you really understand them, I think like me and you do, these things can be really bothersome and tiresome because they keep coming out. Well, no, for me, it's, you know, it doesn't, look, you can, you know, for me, people on social media, et cetera, they can have their own opinions. I really don't care because it doesn't affect me. But what, where my concern comes in is that this misunderstanding of how, you know, monetary plumbing works, how the monetary system works, how economies function, that lack of understanding leads to bad investment decisions. So we see people making investment decisions. Oh, I read this article that the end of the world is coming because of A, B, or C, so I'm going to be all in cash or whatever. And then the market just kind of keeps going up, leaving them behind, and that impairs their ability to grow wealth over time. So what we want to do, and this is why I talked to you about this, and this is really more for the benefit of our chat and our listeners that are listening to our show, is just to try to bring some context into some of these discussions so at least you have something to kind of counterbalance those kind of those persistent purveyors of doom that are out there. Everything's always bad. It's always going to end. Everything's going to crash. So you make decisions based on – because, look, and let's be honest, right, those more bearish headlines, they sound really logical. There's always a lot of logic behind them. It seems like there's a lot of facts that support them. But once you start to break them down and see how the things actually function, then a different story kind of comes to light. And markets see through that, and the markets don't really pay attention to those kind of tell-risk claims that are made. They're operating on how the economy actually functions. And so what I want to make sure that our listeners are at least paying attention to are, yes, here's the narrative. This is what's going on. But this is what's actually happening underneath. And this is why markets are acting the way they're acting. So we need to be tracking markets. There will be a time, absolutely, that we need to be very, very bearish. It's just not today. And that's the thing I just kind of want to keep bringing to focus. And Lance, you made an interesting comment. Right after I spoke, you said something like, I don't really I forgot what you said, but I don't care about opinions that I see on social media. Right. The problem is some of these aren't opinions. It is fact. Like when we were talking about what the Treasury is doing, they are not printing money. That what people are putting out there That not opinion It just an outright untruth Right Right Will the dollar collapse in the year 2048 That an opinion that maybe it happen Maybe it won We don know Will who will win the NBA championship? We don't know that whoever you pick is your opinion. But some of these things we're talking about are just untruths and they're lies, essentially, or they're they just don't know any better. And I think that's a little bit of a difference. And I think that's what bothers me is what bothers you is that it's steering people in the wrong direction to invest their money in ways that may do well sometimes, but it's not usually in their best interest over longer periods of time. Yeah, absolutely. So let's let's shift gears here and talk a little bit about Kevin Warsh. So Kevin Warsh is the, if you've been sleeping under a rock lately, he is the new nominee for taking over as Fed chair to replace Jerome Powell, whose term is up in May. Right, Mike? Is it May? Yeah, I believe so. Yeah, May. so jerome powell will his well now hang on a second because if it may be june because if uh wars isn't nominated uh isn't confirmed till june then he can't replace powell so anyway may or june at some point in here the point is is that in the spring in the spring somewhere coming up here soon to a theater near you can't tell you what spring yeah exactly but But soon, Jerome Powell will step down as Fed chair, much to the relief of President Trump. And Kevin Warsh will step in. And it was very interesting. So he's going through his sentiment, his sentiment, his Senate confirmation hearing over the last few days and made some really interesting comments. And I just kind of want to get your initial takeaway. Then I want to show you a chart that around the comment that he made specifically about inflation. So what were your kind of some of your initial takeaways from his testimony? So so first of all, Lance, we have both probably written, I'm going to guess, 30,000 words each on the topic of QE over the past 10 plus years. Sure. And he said what he said. One of his quotes was so eloquent and so perfect that I don't know why we wasted that many words when we could have just said what he said. Right. QE is reverse Robin Hood. It's policy that steals from the poor to give to the rich. And I can't tell you how many times we have said that in various more complicated terms. Exactly. So. So the takeaway is that, you know, he wants to change the Fed. Not drastically, but I think a little bit on the margins. And he really addressed kind of three or four areas in which he's going to do that. one of the interesting ones was economic models. You know, we've kind of grown very used to what the Fed, we know the Fed has thousands of models, thousands of data, you know, more than that, probably the data formats that it's using. But they always talk about the same ones, you know, CPI and PCE, for instance, core PCE, are those main indicators that the Fed is using. um what wars talked about was that inflation gauges are bad and you know you can say some of this may be pandering to president trump because he wants to lower rates and justify that in that cpi is actually lower than where it's reported to be uh and we we look we've talked about that with trueflation right now trueflation is running about 1.7 percent that's almost a full percent below where CPI and PCE are. But he talked about using a trimmed model. You actually kind of jumped me here a little bit. Let me bring up this chart so everybody can see what you're talking about. This is actually a chart by Albert Edwards from SOCJ. He put this out yesterday. And what Mike's about to talk about is that he's talking about switching from the Fed has long used trimmed mean PCE as a kind of really their benchmark for inflation. And he's actually talking about switching from that to looking at like the Cleveland Fed median CPI, the Dallas Fed trim mean PCE, the Cleveland Fed, I'll get that spit out, Cleveland Fed trimmed mean CPI as well. But you can see that all those are trending and they're all below 3%, which is much lower than, well, not much lower, but a bit lower than where CPI is currently going. But go ahead, Mike. it. So bottom line, what they all do in some way or another is throw out the ends, the highest inflation figures and the lowest inflation figures. And we can debate all day whether that's the right thing to do. But it takes off like one off instances. So they look at, you know, every Fed member will tell you they care more about core CPI than regular CPI. Well, that's what core CPI does. It takes away food and energy. And yes, food and energy are a huge part of our daily lives and what we spend money on. But they're very volatile and they don't their prices swing in part due to what the Fed does, but in large part due to the weather, due to geopolitics, due to many other circumstances that are out of the Fed's control. So, you know, it gives them a better understanding of what inflation looks like for everything else. So so that was kind of his you know, that was how he was talking about the economic models just aren't working. The other interesting one was public communications. And back in the early 2000s, Greenspan introduced forward guidance. And what forward guidance basically was, was that the Fed, instead of flying, you know, instead of investors not really knowing what the Fed's up to, they're going to, just like corporations do, kind of give them an idea of what's going to play out over the next three or six months, what they're looking at. Are they likely to increase rates or decrease rates? Make the market more prepared so that the Fed doesn't shocked the market and after 20 plus years of the forward guidance experience experiment and we can debate whether it's good or bad and i have mixed feelings i'll lean towards i'll lean towards the bad yeah i mean i there are times i think it's good and times it's bad but but nonetheless he wants to reduce forward guidance um so i i think one you know i think when you're in periods like today where the Fed could actually cut or the Fed could raise rates, where CPI is kind of unknown because price of oil is whipping around, I think what that does is create some market volatility, both stock and bonds. Other times, I think it's good for the market. But anyway, that's a second thing. I thought it was interesting because he made some specific comments about that. He said that Worsh described the Fed as one that is lost. This is from Nick Timrose, by the way, Wall Street Journal. Worsh described the institution, the Fed, as one that has lost its way and wandered outside of its remit and that it is in the business of politics because of its own choices. He kind of mocked the Fed now. You know, we all look at GDP Fed now from the Atlanta Fed, real-time payments network. And of course, you know, from the central bank launch several years ago trying to move more towards this digital currency he's actually calling it fed yesterday um but it was it was interesting he to your point he talked about he says i prefer a messier meeting and people don't show up with rehearsed scripts which is that critique is squarely aimed at the current fomc meetings you you know almost with you know certainty that the fed meeting minutes are going to come out exactly the same way every month with minor just kind of minor tweaks it's like they all show up and they go oh let's just change this word from absolute to moderate or whatever right right so it's just these little small tweaks he's like you know that's not the way these meetings should be and he also opined on the fact that too many fed officials are now talking in advance of the meetings you know when they're not in blackout they're all out making public speeches saying what they think fed policy is supposed to be etc the problem i have with that is now and this has been clearly evident over the last you know five years, 10 years in particular, is that the markets just literally no longer pay attention to fundamentals. It's just paying attention to what the Fed's going to do. Is the Fed going to cut rates or hike rates, whatever it is? Oh, you know, you know, this Fed member says they're going to cut rates. So the market runs up expecting, you know, rate cuts, etc. And we particularly saw this in particular in 2022 during the decline in the market. We had these big rallies all through 2022 too, because it was all, well, you know, maybe at this next meeting, you know, there's some hints that the Fed may stop hiking rates in the next meeting. So we get this big rally in the market, the Fed would come out, Powell would say, nope, we're not, we're not going to stop hiking rates, market crashes again. And then we just kind of drift from one meeting to the next, rather than paying attention to fundamentals, economics, you know, those type of things. And this has become the market that we live in. So, you know, I would, the Fed prior to, you know, when was it, Mike, probably 1995, you didn't know who the Fed chairman was, right? I mean, they were in the background. They did their job of managing policy, but they were not front and center, and they were not front and center in the economy, and they were not basically the face of the stock market. And I think that change has done more to distort markets over the last 15 years in particular than probably just about any other point in history. Right, right. It's interesting. if you go way back, you know, in the way back machine. Yeah. Last century. Go back to last century. Don't strapping lads. We remember we used to wait for the Thursday night, Thursday, late afternoon money supply data. Yep. That was basically what we use to gauge what the Fed was doing or kind of think about the Fed. Now, no one no one has a clue when the money supply numbers come out or what they mean or, you know, anything. Right. Because it's all opinion of Fed members. And a lot of times they contradict each other. So it leads to a lot of confusion. You know what, Lance, one of the things that bothers me that Powell, I can't remember if if Yellen or Bernanke or Greenspan did this. But during a press conference, a lot of times, especially on kind if he's asked something about something that's important or a hot topic, he'll look down and he'll he'll basically read a pre-written script that I'm sure the whole Fed board has come up with. And that bothers me. Right. He's the Fed chair. He should this should be just say it as you think it is And it not to your point It a very scripted Fed And it wouldn surprise me if some of the people with opposite opinions kind of work on their scripts together as well so that they kind of lead the market where they want to lead it, the markets and the economy. So yeah, but again, I think we can debate all day. Yeah, I think the communications are important. I think the debate is in what form and how much information do they give? Do they need to be speaking three, four speakers a day every single day? Like those are the kinds of things that we should that they should really think about. Is it helpful or hurting the market? And I guess the question is really now is like, you know, we heard, you know, there's a lot of things that he said that were within theory, provide a very different Fed. right messier meetings less forward guidance less you know kind of less outreach from the fed to the markets those type of things you know the question is mike is is will he really have the ability to make any of those changes um or we will or will it be because remember when we when jerome powell was nominated and brought in everybody at that time was going oh he's so different than every other fed chairman he's gonna he's gonna do things so differently at the fed because of his background et cetera, so forth and so on. And he turned out to be the same Fed share that we had every other Fed share, right? So, you know, should we expect something different from Kevin Warsh or does he wind up being just another Fed share? If I had a guess, I'd say another Fed share. And you know what's kind of crippled a lot of the Fed shares is within their first year, maybe year and a half or two, they're hit with a crisis. And all those good things they said get blown apart because they have to react to the crisis and do what they think is necessary and there's incredible political pressure on them to do do those things and then at the end of the day all the credibility goes away um so i you know i don't know and by the way mike that's a that's a really good point that you bring up and and i actually just if i can find this really quickly um i posted a chart on this yesterday oh here it is uh if you can bring this up for me um uh brent here's a chart from yesterday so what what mike said was is that every time we get a new fed chair they're generally hit with a crisis of some sort and then whatever plan they had kind of goes out the window so what these shaded bars show you is new fed chairs and every time you get a fed chair um the s&p has basically a pretty strong drawdown at some point within the first two years of a new Fed share. Why it happens that way, I have no idea. But just to kind of show you what Mike's talking about is every time you get a new Fed share, they tend to have a crisis to deal with. So, you know, whatever plan they had, you know, they always say, you know, like Mike Tyson says, you know, you can have the best plan until you get the first punch in the nose. So that's what happens with the Fed shares is they start out with this great idea, and then they're back on their heels trying to fight some type of market drawdown, economic crisis, whatever it is. But it's a great point, Mike. And just for the record, that's two weeks in a row that we've used that Mike Tyson quote. That's true. So, Brent, that's the name of the next show. Exactly. Getting punched in the face, in the nose. But any other kind of, we'll wrap this up, and I'll just kind of switch to the markets real quick. But yeah, any any kind of last thoughts? No, it was just that that quote I kind of started with the reverse Robin Hood. He's very against QE, even though he was on the Fed when they introduced QE in massive amounts. So that'll be interesting if he wants to remove QE, do QT in a time where we know liquidity is just above OK. Right. The Fed started doing QE again. When was that? November? I can't remember. Right. Because liquidity was draining from the system. So the question is, there's certainly some level of excess liquidity. All the money markets are trading well, as they should. The question is, if he starts taking away liquidity, is that going to pose a problem for the economy, for the markets? And then, you know, maybe that kind of starts a mini crisis where the guy that says he doesn't like QE has to do QE and immediately go back on his word. So that's a, I don't know how he wants to navigate liquidity, the way the system is built without QE today. Well, it's going to be interesting, and especially the way the markets have functioned up to this point. You know, there's been a very direct correlation between QE and the rise in the markets because that money winds up through and leverage and all kinds of stuff and hedge funds, et cetera. So it'll be very interesting to see how market dynamics, if, again, and we're just assuming that there are these changes, and if he does follow through, it could have an impact to markets, which brings us to the markets, Mike. Just in the, you know, as we already kind of wrap up the show here, markets continue to do really well, as I was talking about during the kind of before the bell segment, you know, we've seen this rotation from value back to growth. You know, one of our questions earlier this year between you and I when we were having our kind of portfolio meetings and things is like, well, when the market rotates back, will it rotate back to value or will it rotate back to growth? And we kind of clearly now know that answer. You know, kind of what are you thinking? Well, so here's what's interesting. Some of our models are starting to point that value may be back versus growth. They're not there yet. But the question is this. So this rally we know has had no breath. The breath has been bad, right? it's the mag seven and a few other stocks, you know, like the good old days. So the question, I like the good old days. Yeah, they were easy. You know, so that's kind of the question in my mind is, OK, we got back to record highs. We're here. We've arrived. Now what? And I'm not sure that that question has been answered. I'm not sure that it's a continuation of growth or do we get back to value. And, you know, the problem that if growth is going to underperform value outperform is that, you know, a good third of the more than a third, there's five, six names that are driving the market. And if they're underperforming, it's hard for the market to stay up, you know, not to say it'll sink, but it just kind of flatlines or goes down a little. So again, I I don't pretend to know what's going on here because it seems to, you know, it's a very fluid market. But those are just some of the things that are worth paying attention. And, you know, fundamentally, the growth story makes a lot of sense versus the value story to me. Well, I was just going to ask you that because, you know, the value names really don't have a lot of value to them. And we've talked about that before, right? Right, right. That's a big problem. Yeah. But, you know, when we talk about value versus just just just for everybody listening, when we talk about value to growth rotations, there's what you know, there's kind of value in name only. And so people gravitate to stocks that are typically classified as value. They pay a dividend. They tend to be, you know, you know, kind of these good, you know, long term historical companies. as though Verizon and Philip Morrison, you know, AT&T and Walmart and Costco, those type of companies. We deem those to be value just because they're kind of in that class. And so when we do this rotation from growth to value, we're just rotating kind of factors. But to Mike's point, what Mike's brought up before is that the value trade really is not value. A lot of these stocks are trading at pretty hefty premiums. You know, we've talked about them before. you know walmart trades at a 40 p e with a peg ratio of three and nvidia trades at a 17 p e with a peg ratio of 0.5 0.4 actually so from a value perspective nvidia is a much better value stock than walmart is but we buy walmart when the when the value trade is on because that's considered to be the in the value factor if that makes sense it's just the way the markets kind of work and how money rotates. And this has become a much bigger issue because of the ETFs and this whole passive indexing kind of situation. We've had so many ETFs that are issued, so much money now going into ETFs that it has now distorted the value in the value sector because of money using that as an opportunity to switch from growth to value. It pushes those prices up and it distorts those underlying fundamentals. But that's just the market we have to deal with. But again, we pay attention to those rotations because those rotations can help you add alpha to your portfolio over time if you can catch them right. I'm sorry, go ahead, Mike. No, I was just going to say that stuff you were saying about passive investing is so true. And it's really creating a huge misallocation of capital within our financial markets. And ultimately, that leads to the economy. So it's really doing a disservice to future economic growth. From a portfolio manager point of view, the problem is that that is the steering wheel of the market, this quote unquote growth versus value, large cap versus small cap. There are other factor combinations. But those ETFs that people, you know, I'm going to switch from growth to value. I buy the Vanguard value ETF. that doesn't mean you're buying value. You're just buying something that has the word value in its name. So and I think because people aren't individually selecting stocks anymore and going through the fundamentals, that misallocation of capital both kind of drives the markets right now, but it also has negative impacts on the markets and the economy in the longer run. There you go. All right. That wraps up the show for the day. And, of course, we'll be back tomorrow for Financial Fitness Friday. On Monday, again, I'll have that article out for you on the Straight and Hormuz and why markets are looking past that right now. And, of course, we'll have the newsletter out this weekend talking a little bit more about the dollar in particular. We've kind of been getting a lot of narratives lately on the dollar, the death of the dollar, the dollar's going away. So I've got a whole piece this weekend going through how the dollar works, What is the dollar? All those type of things. So that'll be in this weekend's newsletter as well. So make sure you subscribe to the Bull Bear Report. Get all of our latest technical market updates as well in that report. Article on Monday coming out on the Strait of Hormuz. And then, of course, we'll be back on Monday with our next, you know, kind of conversation as well. So tomorrow, Financial Fitness Friday with Rich Rosso. Don't miss it. Be sure and like and subscribe to the channel. And y'all have a great day. .