The End Is Near: Don’t Ignore Bad News | Ted Oakley
Summary
Market Outlook: The podcast discusses the current state of the market, highlighting an "everything rally" with the S&P 500, gold, silver, and Bitcoin at or near all-time highs, while bonds remain stagnant.
Historical Comparison: Ted Oakley draws parallels between the current market euphoria and the 1999 tech bubble, noting similar speculative behaviors, particularly with AI companies today.
Economic Signals: Despite negative economic indicators like bankruptcies in the auto sector and private credit issues, the market continues to rise, ignoring potential warning signs.
Federal Reserve Policy: The discussion critiques the Fed's recent rate cuts, suggesting that focusing on employment over inflation could lead to future economic challenges, reminiscent of the 1970s inflationary period.
Investment Strategy: Oakley advises maintaining short-term bond positions, cautioning against long-term bonds due to potential inflation risks, and emphasizes the importance of being selective in stock investments.
Gold and Commodities: The podcast explores gold's role in the current market, suggesting it may not be part of the "everything bubble" and highlighting its potential for long-term value, especially given geopolitical uncertainties.
Portfolio Management: The conversation touches on the evolving 60/40 portfolio model, with a shift towards commodities and liquidity, and stresses the need for active management in a changing economic landscape.
Transcript
The S&P 500 is at an all-time high. Gold broke out over 4,000. Silver is touching $49. Even Bitcoin is trading close to an all-time high. The dollar is trading strong. The only market that is not moving or the only asset class not moving are the bonds right now. The US 10-year pretty much moving sideways. What does that all mean? Are we in an everything bubble? Is that just the flood of liquidity that we've seen that was created over the last few years creating a final meltup? I've invited a fantastic guest to discuss. It's Ted Oakley. He's a managing partner over at Oxbow Advisors. And I'm really looking forward to getting his insights because I also want to touch with him on discussing whether the cookie is already crumbling. Meaning, we've seen some some bankruptcies on the auto loan side or on the auto industry side that could be an indicator. So, I'm really curious to see and hear what he has to say about that. Before I switch over to my guest, hit that like and subscribe button. It helps us out tremendously and we much much appreciate that. Thank you so much for doing that. Now Ted, it is great to welcome you back on the program. It's fantastic to see you again. >> Good to see you, Kai. >> Really looking forward to this, Ted. I really appreciate your insights. Um maybe we'll start off with the markets. We we have to make sense of what we're seeing right now. I I just called it the everything rally. Uh I can't shake that feeling. The question though is why is it happening? Like why are people throwing money into the markets across all asset classes? What are you seeing? Well, you know, Kai, our uh quarterly market letter is going to come out here in a day or two, and the title on it is party like it's 1999. Now, unlike a lot of people, I've been around a lot of these decades, and so seen different kinds, but it it really is a lot like 99. That's what the, you know, the we refer to in the letter. Uh because of this in 1999, no matter what you did, the market went up the next day. The news could be good, it could be bad, and everything went up with it. NASDAQ had a huge year that year up into all the way up into March of 2000. And it didn't make any difference. And what happens is when you get to these periods where you're going to probably have uh you know what I call sort of a blowoff market, but it's a period where things are going so well and nothing dents it that people just keep staying the course and then adding to it because there's nothing that makes you punch the go button more than making money. So if you made money today and somebody says you put more money in, we make more money tomorrow. It just keeps right on going until until >> something changes. And that could be, you know, three, six months into the future. I don't know. Could be tomorrow. But the point is is that is that when you're in these kinds of markets, they just go up and there's really not any rhyme or reason for it. There's not a lot of big changes between now and six months ago. Not really. So, um, that that's sort of how we see it. >> Yeah. It's interesting because you picked 1999 and the market ran for another two years and it was also a techdriven market at the time as well. like what what are some of the parallels that you're seeing besides of course the euphoria and people just it really went from if you take from January one of 99 it peaked the market peaked was March of 2000 the end of March you know into that quarter it fell off about 40% came back in the fall but never did you know never did make a new high and what happens is is that the similar you had certain companies then if you look back in the companies that that were, you know, real go- go companies. Uh they were talking about fiber buildout, everything you could think of. And they started with Cisco and go to Worldcom and and there were so many of that were in that group. And you could you could go public and put.com behind whatever the name was and it didn't make any difference. In my office, I have a list of 300 companies that between 1998 and 2000 went under and they all had.com between on the last part of the name. It's very similar now. You add AI to the name. It doesn't make any difference where you make any money or not. They're going to buy it and then everybody feels compelled to jump on that and you know a lot of people can't think for themselves. So they tell you that AI is going to do this or that or the other. Instead of thinking it out, they just jump on. And that's sort of where we are now. And the parallels really have to do with fiber buildout and AI buildout. All right? They're very, very similar. They overbuild like we'll overbuild the data centers. We'll overbuild all that stuff. And then you look back and you're not getting any return on capital. And so it doesn't work. The prices go down three years from now. I I I get it. Although I keep it trying to imagine pets.ai what that looks like quite honestly like what uh what an artificial animal looks like or artificial pet. But uh that's that's beside the point. Um but you've been touching on something that's quite important and it's the market is ignoring ignoring bad news. Um bad news and I I mentioned in the intro like either negative jobs numbers or uh bankruptcies like in the auto sector. We've seen first brands or tricolor sort of just just going chapter to toward to chapter 11 and the market seems to be shrugging it off. Um bit of a warning shot again was today Jeff announced that their funds are exposed to about 715 million in uh bad loans to to to those companies. What do you make of that? It's like I'm I'm looking for cracks of course. Is that one that I should be paying closer attention to? Well, the problem about private credit all along is they, you know, everybody, you know, lodgs private credit, but just think about if you're a C, I'm part of a bank. So, somebody comes to our bank and can borrow a prime at seven and a quarter and they're such a great company. Why would they go out and buy at, you know, borrow at 11 and a quarter or 12 when they're that great a company? So, you can tell me all day that the credits are really great, but obviously they're not. And there's a lot of leverage in that business. There's probably a lot more of that to come because you have all these different tanches. I mean, one of those groups you're talking about was, you know, they had it rated AAA up until, you know, a month ahead of time. And you, so we don't ever, you know, we wouldn't have gone that direction anyway. But if you look at private credit and private equity both, they've got them leveraged, uh, they're sort of a fake look in many, many ways. And you know, they've been able to to ride the wave right now, but you know, it's they they pushed too much money into those two areas. So, they bought a lot of marginal stuff. And when you buy a lot of marginal stuffs, you know, a lot of it's going to go bad. And now really coming on to roost. And I think that's where you are right now. >> Yeah. for for a while. My Instagram feed showed me reels about people buying cars with 120 month leases at 4% and $10,000 down. I had to laugh about that. But as you as you said, now the chickens are coming home to roost >> because it does remind me of what we've seen the housing crisis, >> but just more fragmented it feels like which is more difficult to track to track. Would you agree with that? Like how do we track that? >> Well, the auto market's like the rest of the economy. you know, the people that have a lot of money that have the stocks and all that, you know, they've got a lot of money right now. They're doing great. They walk in and pay cash for a car, uh, or they'll buy big names, that's not a problem. And for them, it's that it's that next tier down really, the next two or three tiers where they're having to pay a note, you know, pay it by the month. And a lot of them are underwater. And you know, most of the people on Wall Street have no idea uh what it takes to operate in the real world of of Main Street and people have to work for a living and go week to week. I mean, I grew up poor, so I got I got that down. But they don't, okay? Because they've been in these Ivy League towers all their life, and they think they got it down, but they don't realize that there's two pieces to that. And one piece is deteriorating quickly. The other piece doesn't make any difference because they've got money and they spend it. >> No. Fair enough. You know, it's a the supreme the supreme auto loans is is an interesting sector. I had a few guests on about six months ago that I'll need to bring back because it feels like that's where the cracks are starting to appear. Um I'm not sure if it's a trend yet, but it's definitely a signal. Would you agree? >> Oh, no question about it. But it but it had to be that way because when you leverage up like that and you're leveraging up uh things that are not, you know, that you don't have good quality, if you're going to leverage, you need to be able to leverage number one, don't leverage too much. And second, leverage things that have great sustainable, very good cash flow if you're going to use any kind of leverage, real estate, whatever. And they just they didn't have that. And that's the problem. >> No, fair enough. Like I'm just looking for for cracks in the system, maybe signals >> that that markets are ignoring, of course, right? And as you said, like the market doesn't really care about bad news right now until the chickens all come home to roost at the same time, >> right? And that'll be a challenge. Um, another signal really maybe, and maybe I'm interpreting too much on the negative side here, is the government shutdown in the US right now. We're at day six or seven. I lost track a little bit. I don't have an official tracker hanging behind me, but I think it is day six if I'm not mistaken. Um, what are the ramifications or implications of the government shutdown? What are you seeing? Um, again, the market is shrugging it off. Even the dollar is rallying, which I didn't really expect seeing that. Um, and rallying is a bit of a strong word, but it's it's doing okay given the environment we're in. Um, what do you make of the shutdown there, Ted? >> Well, I think people think they talk too much about it. I mean, I go way back. So, you I was in the business all during the Reagan years. Reagan had eight shutdowns. Okay. It never lasts because politically they don't have the wherewithal, the guts I should say to do it and they won't have and they never do because once they get the voters you putting pressure on I mean it never lasts and so that's not a problem. It's just it's going to close. You don't know which day or whatever and to me it's sort of a meaningless thing. There's a lot of talking goes on but in the end it'll be business as usual. I don't think there'll be a lot of changes. They'll come back together and maybe they they change one thing or two things and everybody claims to have a victory. It's all it's just typical DC politics. >> Yeah. Seems business as usual, although I'm not hearing a lot of um progress um to be honest. So, I'm not sure if that's even an opportunity. And I mentioned to you maybe secretly pushing through a Doge 2.0 agenda here. Is that something you would maybe assume or look at and maybe as a takeway? I'm trying to figure this out. Of course, >> I understand what you're saying. I'm sure there could be a little bit of that, but if you told me they had the guts right now to keep the the government closed for the next two months, I'd certainly take that bet and give odds. >> No, >> because I don't think it >> Yeah. No, that's it's very true. Like I'm curious how how this all ends cuz just just watching the news and being on X here, I don't see a lot of progress being made. Yeah. Um on either side of the aisle here. So I'm really curious um how this all plays out and how much longer it will be. Do you know top of your head, Ted, what the record is in terms of shutdown? Um was the longest time the government was shut down? >> I don't. >> Okay. >> I don't I mean you know there's a lot of them. I mean there's been so many shutdowns. >> Yeah. you know, in the last 50 years that it it's becomes a big yawn after a while because, you know, they act like it's a big deal, but they don't again, they don't have the fortitude to do something tough. So, you don't have to worry about that. >> No, you're you're right. And the market seems to be shrugging it off as well. Just non-event surprising. >> The market I think the market right now shrugs off everything. So you're at that stage, you know, when you get to these stages of the market, they just go up, you know, and you have to that's where you have to start keeping your head on straight. >> Bit of a bigger topic here, Ted, that we need to discuss as well is just the stands or the position of the Fed in all of this in general. Um they they've cut 25 basis points here in September. Right now, we're not getting a lot of data, but I think the trend is pretty clear that we'll at least see another 25 basis point cut based on uh the employment data that we've been seeing. ADP report, for example, absolutely horrible. Uh so I'm curious, what what's the Fed's position? What what do you think of the last rate cut? Was it too early? Was it too late? Was it the right time? And where do you see the Fed headed here? >> Well, one thing you know for sure, they don't know what they're doing. I've watched the Fed my entire career. So, you know, they're going to be late or not doing the right thing. And the problem with lowering rates right now is that we really shouldn't be lowering rates. I mean, you have 3% inflation. Um, and you can e you can say, well, I'm going to I'm going to forego inflation for unemployment. But what they don't realize is the most de detrimental thing you can do to an economy and the working class is to have inflation. So if you and they sound like they want to lower once or twice before year end. Let's say you do that. Okay, but you're going to be reinflating again by the end of the first quarter and second quarter. They're going to have to come back and say, gosh, all this money is insistency. Everybody keeps on speculating again. And we've got a Federal Reserve that's brain dead to what they should be doing. And right now they're folding politically. So, and it looks like they're going to fold politically because they're going to stack the deck and it'll be like the 70s under Arthur Burns where they keep trying to lower the rates to get things going, but it kicks the inflation rate back up. They got a comeback and finally gets so bad that somebody like Vulkar came in and said, "I'm going to fix it, but you're not going to like the way I do it." So what you're saying, Ted, maybe I'm hope I'm not taking this wrong, but you're saying at focusing on employment data is probably the wrong way to to look at this, inflation is the much bigger problem that might be roaring back here. >> I think it is because inflation is is a stealth tax. In other words, if you look at what affects the average family that just barely gets by, it's inflation. See, that's what they don't know in Wall Street. If my groceries are going up, my electricity is going up. All our data centers and you know, my car payments, everything's going up because we have to charge more for everything, then I can't make it to the next month because I'm not getting that kind of raise, you see. And they forget about that. And that's what puts pressure and that's what brings you into these periods where you throw your economy into a a tail spin. >> What should the Fed be doing in in in your opinion? We we all know they've been they've been wrong and maybe late even focusing on the wrong things here. Should what should they be doing if if you were Jerome Powell to today or tomorrow? Ted, what would you do? >> Well, I don't know. I don't know that I would be right either, but I what I would be doing right now is nothing. I don't I don't think there's any reason. And and the long 30-year bond's telling you that. You know, the 30-year bond hasn't changed much at all in six months. And it's basically saying it was a little bit but not much. And I think those buyers are saying, "Hey, you know what? You people got it all wrong. You can lower the short-term rates and try to juice the economy and that sort of thing, but you're going to give it up on the inflation side." And so if I were the Fed, I would do nothing. I just go just like we are. And you know, and you know, that's not going to happen politically because obviously you can see what's going to happen. They're going to stack the deck here with the people on the board. and they've already succumbed to it. So, I don't think they're going to change. >> No, it makes sense. Like, personally, I would have almost advocated for higher interest rates. I would >> you could have I mean I mean I may even be late for that, too, because you know, you got two things going on at the same time and >> I I don't I don't know. Uh I just think they'd have been better off not to raise them. Not to Laura. I mean, >> yeah. No, because it's also the signal that it sends. And to 25 basis points doesn't make a difference. Uh, not not really. >> Uh, >> well, don't tell me don't tell me you're independent when all of a sudden you get this pressure from the White House and you lower the rates. So, >> everybody knows I'm not a genius on that. Everybody knows. >> Yeah. Know, exactly. And their forecast employment wise is trending lower in two years. So why be worried about it if it's only temporary or was the nice term he said he he used transitory higher unemployment might only be transitory I don't know I'm just paraphrase right but if we were to use that term because that's what the the summary of the economic projections told us okay it's uh it's temporary it's transitory higher unemployment why why why be reacting to it just doesn't make a whole lot of sense if uh coming from that perspective would you agree >> yeah I agree Okay. >> So, let's talk about asset classes a little bit because I remember um and I hope I'm not wrong here. I don't know I hope I'm not remembering the wrong but you were advising at least looking at bonds for for a while um four and a half five years. Hope I'm not wrong there Ted. Um what what is your stance on bonds right now time? Yeah. What we when I say bonds we have short maturity so everything we have is less than 48 months. So, uh, now tell we have a few corporate bonds that are that are 60 months. They're not now, uh, because we haven't bought anything like that recently, but our average maturity of the corporate bonds is probably, and we don't own that much of them. Probably 12% of my portfolio, but, you know, that's probably now about three and a half, but on the treasuries, uh, you know, we're all we're two years and less. So, we don't have we're not in the long-term paper at all. >> Okay. Okay. So, no exposure on the long end there at all. You're still happy though with the yield that you're generating on the shorter term treasuries. >> Well, we are they're going they're going to go and they'll probably go lower and what I've told people is look, you're just going to have to grin and bear it here for about the next six months because if they keep on lowering rates, that rate's going to go down. However, however, we think within nine months from now that that inflation is going to be back running hard again and then they're going to have to come back and take you right back up. So, if you take the bait and go buy a 20 or 30-year bond or a bond fund, you're going to get caught again just like you did back in 2022. uh you know and they keep they keep sort of going back to the will but it it I I don't think in the next 10 years you should have anything in your portfolio that's more than 60 months max uh even if you have that because we're just not going to be in a period I think with inflation being a higher level and it's not the time to really make a bet on long-term interest rates because they're probably going to go up >> the the 6040 model port or portfol folio model is is under attack and it's changing. Morgan Stanley said, "Well, you should looking you should be looking at 60 2020." Even Redalio yesterday said uh on in a Bloomberg interview, 15% allocation to gold makes sense. But let's start with the bond side here. Does it make sense to reduce your bond exposure from 40 cent 40% to 20% and then allocate elsewhere? >> It depends on what you're doing. I mean, we have three portfolios and I'll give you an example. in the stock portfolio. If we can't find stocks that fit our criteria to buy, then we hold those in, you know, 90day and 180day treasuries. And so we've got about 40 40% of that portfolio in treasuries right now. Not trying to time the market, but it shows you how expensive the stocks are right now. So to get a really good value, you have to be real picky about what you buy. you can't you can't continue buying this unprofitable stuff and all this crazy stuff they do. So that's how we use the treasury. We don't think about it as allocation at all. If the prices were cheap tomorrow, even in our high income portfolio, which we have probably 50% treasuries only because we don't have again, we don't have the things we want to own. And by the way, they've all done really well, believe it or not, because we had the right we had the right allocation. Well, we had the right stocks and income miners we wanted to own. They've done well and you don't you can do well and have a fairly high allocation to treasuries, but if things got really really cheap, we wouldn't have any allocation to treasure. You know, we would be 5% and it all it all has to do with prices and what the valuations are. So that's what what it's saying is you have to be we don't have that thing where you say well you know we're 6040 or 60 whatever you say 60 2020 20 we buy them when they're cheap and that's that's how we allocate >> that should be the only way to do it to be honest but back in the past it was too easy just to allocate and just let it ride to to to simplify right um >> well I think that's where people would get in trouble though the next five years I think a lot of people in industry. A lot of people in our industry, uh, they've never been through any hard times. They've been used to just allocating. Buy me a, you know, 10, 12, 11, you know, exchange traded funds and I'll allocate amongst this, that, and the other, and then they just forget about it. Charge 1%. Go on down the road. But the problem is you're going to be in a changing atmosphere probably where commodities do better. You know, debt does not do well and you better be able to trade the markets to a degree because there's times when you're going to need to have a lot of liquidity much like the 70s and early 80s and other times you'll be fully invested. But the people we have in the industry today are not programmed that way. they they they've been uh raised up to just buy a certain few things and you'll be good 20 years later from now. And I think that that'll be the trap right there. >> Is always the long-term thinking like I remember people telling me just just buy the DAX or buy the Dow Jones or the NASDAQ >> just just dollar cost average. Is dollar cost averaging debt as well because it's too long-term focused? >> Well, I don't think you should dollar cost debt. No, not at all. Uh, I think you ought to keep your debt close in because you've got to be able to define debt is your safety valve. Well, if you've got 25 and 30-year paper and it goes down 25 or 30%, it's not a safety valve anymore. It's a cost, okay? And you're going to worry about that. You should have a bond portfolio, treasuries or whatever you want to use. We use treasuries that's short enough so that if anything goes wrong that is very very safe and you can use that to your advantage to either buy things that are really cheap, sleep well at night, you know, make sure you're okay. But you can't you can't just throw in a bunch of things and say I'm going to be better 20 years from now because the I could give you the statistics on it. go back to 1900 and the markets go through numerous 20 and 30-year periods where they make zero money, nothing. We've forgotten about it now in the in the last 20 years in this country, but I'm telling you, it happens. And you have to be in a position where you can you can weather any storm that comes your way, sleep at night, and know you're not going to lose everything. Uh, and you the problem about most people is they put in there, everything's fine, they make some money, and then they come along and they get a big setback and emotionally they're not ready for it. >> So, they sell out at the worst time. >> Always sell. People always sell at the bottom and never buy at the top, sell at the bottoms, right? >> They buy at the top. I will tell you that they're doing that right now. Yeah, that that I think we need to discuss that because there's one last asset class that I want to use the last five minutes on to to to discuss with you here as well, Ted. Is is is gold, of course, um where are we in gold? Is gold part of the everything bubble that I've mentioned or would you exclude that? Is that a separate asset class because it behaves differently? Um curious what your what your thoughts are here on gold, Ted? >> Well, Kai, it's a good question. I mean, we've you know, we've owned gold and the miners for a long time, so it's nothing new to us. Um, and we've got, you know, obviously big profits in it. We haven't we haven't taken really much of it off, but here's the big question, and you'll never know exactly answer this, but are you in a are you in a second leg of a market that's going to go a lot higher? I'm talking about gold. As you go back and look at 19 say 75 or 76 in gold all the way up for the peak in January of 1980. It was a big move. I mean it was a 786 78fold move and then it corrected big. Uh if you take our low of I don't know 15600 whatever it was at the low and you put on 4,000 that's not six times. Okay. And I'm not saying we're going to 9,000 either, but it's also it's hard to say whether that goes up. Now, you could get a correction. I think uh anytime of 15% or something and uh I know people would think it's over. I'm going to sell out. But probably more than likely, even if you got that later on over the next five, six, seven years, you go to higher highs and you'll be you you'll probably be so be sorry that you sold it. Um, but it wouldn't surprise me to get it. But either one wouldn't surprise me. It wouldn't surprise me to go on to go on up from here because obviously it turned real parabolic. And now you're starting to see the articles and the paper on CNBC and Bloomberg, you know, when they start talking about it. But I will tell you this though, it's way underowned. If you go look at, for example, the GDX, which is the large gold miners, they've actually had money flowed out of the system in this year. In other words, they go up, but people take the money out. And so, and as a percentage of assets, you look at the even today where the gold miners are, they're nothing as a percentage of the of the market compared to any other group. Um, so there's a lot of room to run there. I know they've had big moves, but I don't think you can always say, well, it's over now. I don't know if it's over or not. I I don't think it is, but even if we got some selling, it wouldn't make us clear out. we we would uh not saying we wouldn't take some profits maybe here or there but generally generally I think you have to look at gold over the next 3 to five years there will come a point when it's too I mean when gold corrects it really corrects so you have to you know when it's time is over then you have to think about it but you have to look at geopolitics today you know and and now it's going opposite direction most people would say when the dollar goes up interest rates tick up a little bit, then gold goes down. But see, that's they're now they're correlated. The dollar's going up and gold's going up. And so, uh, see, it's got them confused. But I think it has to do with central central governments and they're just saying, "Hey, you know what? We're not buying the dollar. We're we'll buy some of it, but we're we're not going to hold the bonds. We're just going to buy the gold." >> That's what the Swiss National Bank said just recently. We're buying euros. We're not buying the dollar. and the euro is now the most important reserve currency that the Swiss National Bank holds, not the US dollar anymore. So, it's just a you know, small cracks in the system that that we're seeing that are shifts happening. Absolutely. And uh maybe one more thing, Ted, as well like Q3 numbers are around the corner for the fin for the big miners or for the producers and we continue to see margin expansion. So, from the mining side, do you still see there's a lot of opportunity in the in the stock? You've been touching on it, but uh maybe just elaborate on that just a tad more. Well, you know, the industry has a group, so they know what the cost of production is. It's about $1,600 now, an ounce, and so if you look at that relative to price today, then you have to factor that in to these gold miners. And because they're they're super profitable. Now, if they sold at the same price to cash flow multiples today that they did in 2011, and I may be off on this some, but they're probably twice as high as they are right now >> because, you know, they haven't they've gotten a big push. I know they've gone up, but they have not gotten the buying from the institutional people that you think. And um if the price stays up here or goes higher, you know, they're just going to make more money. Even if it fell off, it's gold fell back from 4,000 to 3,000, they're still making $1,400 an ounce. >> It's not like it's not like it's not a good business. >> U so people have to keep that in mind. What's your cost of production and that's where we are right now >> and that's just analyst consensus as well. So like the analysts haven't even priced in spot gold. That's point. So >> absolutely Ted, what a wonderful conversation. I always love catching up with you. Uh, fantastic insights. A bit of a rhetorical question because our audience should know the the answer, but where can they find more of your work, Ted? >> Well, the best place is just come to the website. It's oxoadvisors.com. Is really, Kai, everything we do is there. We're very very transparent. We don't we don't have all the answers. We've got a lot of questions, but we don't have all the answers, but you'll see everything we do there. >> Fantastic, Ted. Really appreciate you joining us again. much appreciated. Thanks so much for your time. And everybody else, thank you so much for watching Sore Financially. As you can tell, I'm not in my original studio, but I do love that curtain behind me. It is sort of the Sore Financially colors here. Um I'm I'm traveling, so I do appreciate your patience with my lighting and everything else. Uh not not too pleased with it here. A bit too much orange today in my face, but I'm really curious. What do you think? Is is gold part of the everything asset bubble that we're seeing? Is it part of the overall global meltup that we're witnessing or is it a completely different asset class behaving and playing by its own rules? Really want to hear from you down below. Um, also maybe you can explain to me why is the GDX or sorry not the GDX the S&P 500 running from all-time high to all-time high completely shrugging everything off. Ted Ted gave us his opinion which I much much appreciate. It's back in Yeah, it feels like reporting like it's 1999. So um let's let's see how much longer that music keeps playing. So, thanks so much for tuning in. Don't forget to hit that like and subscribe button. We much much appreciate it. And uh we'll be back with lots more. Take care out there. [Music]
The End Is Near: Don’t Ignore Bad News | Ted Oakley
Summary
Transcript
The S&P 500 is at an all-time high. Gold broke out over 4,000. Silver is touching $49. Even Bitcoin is trading close to an all-time high. The dollar is trading strong. The only market that is not moving or the only asset class not moving are the bonds right now. The US 10-year pretty much moving sideways. What does that all mean? Are we in an everything bubble? Is that just the flood of liquidity that we've seen that was created over the last few years creating a final meltup? I've invited a fantastic guest to discuss. It's Ted Oakley. He's a managing partner over at Oxbow Advisors. And I'm really looking forward to getting his insights because I also want to touch with him on discussing whether the cookie is already crumbling. Meaning, we've seen some some bankruptcies on the auto loan side or on the auto industry side that could be an indicator. So, I'm really curious to see and hear what he has to say about that. Before I switch over to my guest, hit that like and subscribe button. It helps us out tremendously and we much much appreciate that. Thank you so much for doing that. Now Ted, it is great to welcome you back on the program. It's fantastic to see you again. >> Good to see you, Kai. >> Really looking forward to this, Ted. I really appreciate your insights. Um maybe we'll start off with the markets. We we have to make sense of what we're seeing right now. I I just called it the everything rally. Uh I can't shake that feeling. The question though is why is it happening? Like why are people throwing money into the markets across all asset classes? What are you seeing? Well, you know, Kai, our uh quarterly market letter is going to come out here in a day or two, and the title on it is party like it's 1999. Now, unlike a lot of people, I've been around a lot of these decades, and so seen different kinds, but it it really is a lot like 99. That's what the, you know, the we refer to in the letter. Uh because of this in 1999, no matter what you did, the market went up the next day. The news could be good, it could be bad, and everything went up with it. NASDAQ had a huge year that year up into all the way up into March of 2000. And it didn't make any difference. And what happens is when you get to these periods where you're going to probably have uh you know what I call sort of a blowoff market, but it's a period where things are going so well and nothing dents it that people just keep staying the course and then adding to it because there's nothing that makes you punch the go button more than making money. So if you made money today and somebody says you put more money in, we make more money tomorrow. It just keeps right on going until until >> something changes. And that could be, you know, three, six months into the future. I don't know. Could be tomorrow. But the point is is that is that when you're in these kinds of markets, they just go up and there's really not any rhyme or reason for it. There's not a lot of big changes between now and six months ago. Not really. So, um, that that's sort of how we see it. >> Yeah. It's interesting because you picked 1999 and the market ran for another two years and it was also a techdriven market at the time as well. like what what are some of the parallels that you're seeing besides of course the euphoria and people just it really went from if you take from January one of 99 it peaked the market peaked was March of 2000 the end of March you know into that quarter it fell off about 40% came back in the fall but never did you know never did make a new high and what happens is is that the similar you had certain companies then if you look back in the companies that that were, you know, real go- go companies. Uh they were talking about fiber buildout, everything you could think of. And they started with Cisco and go to Worldcom and and there were so many of that were in that group. And you could you could go public and put.com behind whatever the name was and it didn't make any difference. In my office, I have a list of 300 companies that between 1998 and 2000 went under and they all had.com between on the last part of the name. It's very similar now. You add AI to the name. It doesn't make any difference where you make any money or not. They're going to buy it and then everybody feels compelled to jump on that and you know a lot of people can't think for themselves. So they tell you that AI is going to do this or that or the other. Instead of thinking it out, they just jump on. And that's sort of where we are now. And the parallels really have to do with fiber buildout and AI buildout. All right? They're very, very similar. They overbuild like we'll overbuild the data centers. We'll overbuild all that stuff. And then you look back and you're not getting any return on capital. And so it doesn't work. The prices go down three years from now. I I I get it. Although I keep it trying to imagine pets.ai what that looks like quite honestly like what uh what an artificial animal looks like or artificial pet. But uh that's that's beside the point. Um but you've been touching on something that's quite important and it's the market is ignoring ignoring bad news. Um bad news and I I mentioned in the intro like either negative jobs numbers or uh bankruptcies like in the auto sector. We've seen first brands or tricolor sort of just just going chapter to toward to chapter 11 and the market seems to be shrugging it off. Um bit of a warning shot again was today Jeff announced that their funds are exposed to about 715 million in uh bad loans to to to those companies. What do you make of that? It's like I'm I'm looking for cracks of course. Is that one that I should be paying closer attention to? Well, the problem about private credit all along is they, you know, everybody, you know, lodgs private credit, but just think about if you're a C, I'm part of a bank. So, somebody comes to our bank and can borrow a prime at seven and a quarter and they're such a great company. Why would they go out and buy at, you know, borrow at 11 and a quarter or 12 when they're that great a company? So, you can tell me all day that the credits are really great, but obviously they're not. And there's a lot of leverage in that business. There's probably a lot more of that to come because you have all these different tanches. I mean, one of those groups you're talking about was, you know, they had it rated AAA up until, you know, a month ahead of time. And you, so we don't ever, you know, we wouldn't have gone that direction anyway. But if you look at private credit and private equity both, they've got them leveraged, uh, they're sort of a fake look in many, many ways. And you know, they've been able to to ride the wave right now, but you know, it's they they pushed too much money into those two areas. So, they bought a lot of marginal stuff. And when you buy a lot of marginal stuffs, you know, a lot of it's going to go bad. And now really coming on to roost. And I think that's where you are right now. >> Yeah. for for a while. My Instagram feed showed me reels about people buying cars with 120 month leases at 4% and $10,000 down. I had to laugh about that. But as you as you said, now the chickens are coming home to roost >> because it does remind me of what we've seen the housing crisis, >> but just more fragmented it feels like which is more difficult to track to track. Would you agree with that? Like how do we track that? >> Well, the auto market's like the rest of the economy. you know, the people that have a lot of money that have the stocks and all that, you know, they've got a lot of money right now. They're doing great. They walk in and pay cash for a car, uh, or they'll buy big names, that's not a problem. And for them, it's that it's that next tier down really, the next two or three tiers where they're having to pay a note, you know, pay it by the month. And a lot of them are underwater. And you know, most of the people on Wall Street have no idea uh what it takes to operate in the real world of of Main Street and people have to work for a living and go week to week. I mean, I grew up poor, so I got I got that down. But they don't, okay? Because they've been in these Ivy League towers all their life, and they think they got it down, but they don't realize that there's two pieces to that. And one piece is deteriorating quickly. The other piece doesn't make any difference because they've got money and they spend it. >> No. Fair enough. You know, it's a the supreme the supreme auto loans is is an interesting sector. I had a few guests on about six months ago that I'll need to bring back because it feels like that's where the cracks are starting to appear. Um I'm not sure if it's a trend yet, but it's definitely a signal. Would you agree? >> Oh, no question about it. But it but it had to be that way because when you leverage up like that and you're leveraging up uh things that are not, you know, that you don't have good quality, if you're going to leverage, you need to be able to leverage number one, don't leverage too much. And second, leverage things that have great sustainable, very good cash flow if you're going to use any kind of leverage, real estate, whatever. And they just they didn't have that. And that's the problem. >> No, fair enough. Like I'm just looking for for cracks in the system, maybe signals >> that that markets are ignoring, of course, right? And as you said, like the market doesn't really care about bad news right now until the chickens all come home to roost at the same time, >> right? And that'll be a challenge. Um, another signal really maybe, and maybe I'm interpreting too much on the negative side here, is the government shutdown in the US right now. We're at day six or seven. I lost track a little bit. I don't have an official tracker hanging behind me, but I think it is day six if I'm not mistaken. Um, what are the ramifications or implications of the government shutdown? What are you seeing? Um, again, the market is shrugging it off. Even the dollar is rallying, which I didn't really expect seeing that. Um, and rallying is a bit of a strong word, but it's it's doing okay given the environment we're in. Um, what do you make of the shutdown there, Ted? >> Well, I think people think they talk too much about it. I mean, I go way back. So, you I was in the business all during the Reagan years. Reagan had eight shutdowns. Okay. It never lasts because politically they don't have the wherewithal, the guts I should say to do it and they won't have and they never do because once they get the voters you putting pressure on I mean it never lasts and so that's not a problem. It's just it's going to close. You don't know which day or whatever and to me it's sort of a meaningless thing. There's a lot of talking goes on but in the end it'll be business as usual. I don't think there'll be a lot of changes. They'll come back together and maybe they they change one thing or two things and everybody claims to have a victory. It's all it's just typical DC politics. >> Yeah. Seems business as usual, although I'm not hearing a lot of um progress um to be honest. So, I'm not sure if that's even an opportunity. And I mentioned to you maybe secretly pushing through a Doge 2.0 agenda here. Is that something you would maybe assume or look at and maybe as a takeway? I'm trying to figure this out. Of course, >> I understand what you're saying. I'm sure there could be a little bit of that, but if you told me they had the guts right now to keep the the government closed for the next two months, I'd certainly take that bet and give odds. >> No, >> because I don't think it >> Yeah. No, that's it's very true. Like I'm curious how how this all ends cuz just just watching the news and being on X here, I don't see a lot of progress being made. Yeah. Um on either side of the aisle here. So I'm really curious um how this all plays out and how much longer it will be. Do you know top of your head, Ted, what the record is in terms of shutdown? Um was the longest time the government was shut down? >> I don't. >> Okay. >> I don't I mean you know there's a lot of them. I mean there's been so many shutdowns. >> Yeah. you know, in the last 50 years that it it's becomes a big yawn after a while because, you know, they act like it's a big deal, but they don't again, they don't have the fortitude to do something tough. So, you don't have to worry about that. >> No, you're you're right. And the market seems to be shrugging it off as well. Just non-event surprising. >> The market I think the market right now shrugs off everything. So you're at that stage, you know, when you get to these stages of the market, they just go up, you know, and you have to that's where you have to start keeping your head on straight. >> Bit of a bigger topic here, Ted, that we need to discuss as well is just the stands or the position of the Fed in all of this in general. Um they they've cut 25 basis points here in September. Right now, we're not getting a lot of data, but I think the trend is pretty clear that we'll at least see another 25 basis point cut based on uh the employment data that we've been seeing. ADP report, for example, absolutely horrible. Uh so I'm curious, what what's the Fed's position? What what do you think of the last rate cut? Was it too early? Was it too late? Was it the right time? And where do you see the Fed headed here? >> Well, one thing you know for sure, they don't know what they're doing. I've watched the Fed my entire career. So, you know, they're going to be late or not doing the right thing. And the problem with lowering rates right now is that we really shouldn't be lowering rates. I mean, you have 3% inflation. Um, and you can e you can say, well, I'm going to I'm going to forego inflation for unemployment. But what they don't realize is the most de detrimental thing you can do to an economy and the working class is to have inflation. So if you and they sound like they want to lower once or twice before year end. Let's say you do that. Okay, but you're going to be reinflating again by the end of the first quarter and second quarter. They're going to have to come back and say, gosh, all this money is insistency. Everybody keeps on speculating again. And we've got a Federal Reserve that's brain dead to what they should be doing. And right now they're folding politically. So, and it looks like they're going to fold politically because they're going to stack the deck and it'll be like the 70s under Arthur Burns where they keep trying to lower the rates to get things going, but it kicks the inflation rate back up. They got a comeback and finally gets so bad that somebody like Vulkar came in and said, "I'm going to fix it, but you're not going to like the way I do it." So what you're saying, Ted, maybe I'm hope I'm not taking this wrong, but you're saying at focusing on employment data is probably the wrong way to to look at this, inflation is the much bigger problem that might be roaring back here. >> I think it is because inflation is is a stealth tax. In other words, if you look at what affects the average family that just barely gets by, it's inflation. See, that's what they don't know in Wall Street. If my groceries are going up, my electricity is going up. All our data centers and you know, my car payments, everything's going up because we have to charge more for everything, then I can't make it to the next month because I'm not getting that kind of raise, you see. And they forget about that. And that's what puts pressure and that's what brings you into these periods where you throw your economy into a a tail spin. >> What should the Fed be doing in in in your opinion? We we all know they've been they've been wrong and maybe late even focusing on the wrong things here. Should what should they be doing if if you were Jerome Powell to today or tomorrow? Ted, what would you do? >> Well, I don't know. I don't know that I would be right either, but I what I would be doing right now is nothing. I don't I don't think there's any reason. And and the long 30-year bond's telling you that. You know, the 30-year bond hasn't changed much at all in six months. And it's basically saying it was a little bit but not much. And I think those buyers are saying, "Hey, you know what? You people got it all wrong. You can lower the short-term rates and try to juice the economy and that sort of thing, but you're going to give it up on the inflation side." And so if I were the Fed, I would do nothing. I just go just like we are. And you know, and you know, that's not going to happen politically because obviously you can see what's going to happen. They're going to stack the deck here with the people on the board. and they've already succumbed to it. So, I don't think they're going to change. >> No, it makes sense. Like, personally, I would have almost advocated for higher interest rates. I would >> you could have I mean I mean I may even be late for that, too, because you know, you got two things going on at the same time and >> I I don't I don't know. Uh I just think they'd have been better off not to raise them. Not to Laura. I mean, >> yeah. No, because it's also the signal that it sends. And to 25 basis points doesn't make a difference. Uh, not not really. >> Uh, >> well, don't tell me don't tell me you're independent when all of a sudden you get this pressure from the White House and you lower the rates. So, >> everybody knows I'm not a genius on that. Everybody knows. >> Yeah. Know, exactly. And their forecast employment wise is trending lower in two years. So why be worried about it if it's only temporary or was the nice term he said he he used transitory higher unemployment might only be transitory I don't know I'm just paraphrase right but if we were to use that term because that's what the the summary of the economic projections told us okay it's uh it's temporary it's transitory higher unemployment why why why be reacting to it just doesn't make a whole lot of sense if uh coming from that perspective would you agree >> yeah I agree Okay. >> So, let's talk about asset classes a little bit because I remember um and I hope I'm not wrong here. I don't know I hope I'm not remembering the wrong but you were advising at least looking at bonds for for a while um four and a half five years. Hope I'm not wrong there Ted. Um what what is your stance on bonds right now time? Yeah. What we when I say bonds we have short maturity so everything we have is less than 48 months. So, uh, now tell we have a few corporate bonds that are that are 60 months. They're not now, uh, because we haven't bought anything like that recently, but our average maturity of the corporate bonds is probably, and we don't own that much of them. Probably 12% of my portfolio, but, you know, that's probably now about three and a half, but on the treasuries, uh, you know, we're all we're two years and less. So, we don't have we're not in the long-term paper at all. >> Okay. Okay. So, no exposure on the long end there at all. You're still happy though with the yield that you're generating on the shorter term treasuries. >> Well, we are they're going they're going to go and they'll probably go lower and what I've told people is look, you're just going to have to grin and bear it here for about the next six months because if they keep on lowering rates, that rate's going to go down. However, however, we think within nine months from now that that inflation is going to be back running hard again and then they're going to have to come back and take you right back up. So, if you take the bait and go buy a 20 or 30-year bond or a bond fund, you're going to get caught again just like you did back in 2022. uh you know and they keep they keep sort of going back to the will but it it I I don't think in the next 10 years you should have anything in your portfolio that's more than 60 months max uh even if you have that because we're just not going to be in a period I think with inflation being a higher level and it's not the time to really make a bet on long-term interest rates because they're probably going to go up >> the the 6040 model port or portfol folio model is is under attack and it's changing. Morgan Stanley said, "Well, you should looking you should be looking at 60 2020." Even Redalio yesterday said uh on in a Bloomberg interview, 15% allocation to gold makes sense. But let's start with the bond side here. Does it make sense to reduce your bond exposure from 40 cent 40% to 20% and then allocate elsewhere? >> It depends on what you're doing. I mean, we have three portfolios and I'll give you an example. in the stock portfolio. If we can't find stocks that fit our criteria to buy, then we hold those in, you know, 90day and 180day treasuries. And so we've got about 40 40% of that portfolio in treasuries right now. Not trying to time the market, but it shows you how expensive the stocks are right now. So to get a really good value, you have to be real picky about what you buy. you can't you can't continue buying this unprofitable stuff and all this crazy stuff they do. So that's how we use the treasury. We don't think about it as allocation at all. If the prices were cheap tomorrow, even in our high income portfolio, which we have probably 50% treasuries only because we don't have again, we don't have the things we want to own. And by the way, they've all done really well, believe it or not, because we had the right we had the right allocation. Well, we had the right stocks and income miners we wanted to own. They've done well and you don't you can do well and have a fairly high allocation to treasuries, but if things got really really cheap, we wouldn't have any allocation to treasure. You know, we would be 5% and it all it all has to do with prices and what the valuations are. So that's what what it's saying is you have to be we don't have that thing where you say well you know we're 6040 or 60 whatever you say 60 2020 20 we buy them when they're cheap and that's that's how we allocate >> that should be the only way to do it to be honest but back in the past it was too easy just to allocate and just let it ride to to to simplify right um >> well I think that's where people would get in trouble though the next five years I think a lot of people in industry. A lot of people in our industry, uh, they've never been through any hard times. They've been used to just allocating. Buy me a, you know, 10, 12, 11, you know, exchange traded funds and I'll allocate amongst this, that, and the other, and then they just forget about it. Charge 1%. Go on down the road. But the problem is you're going to be in a changing atmosphere probably where commodities do better. You know, debt does not do well and you better be able to trade the markets to a degree because there's times when you're going to need to have a lot of liquidity much like the 70s and early 80s and other times you'll be fully invested. But the people we have in the industry today are not programmed that way. they they they've been uh raised up to just buy a certain few things and you'll be good 20 years later from now. And I think that that'll be the trap right there. >> Is always the long-term thinking like I remember people telling me just just buy the DAX or buy the Dow Jones or the NASDAQ >> just just dollar cost average. Is dollar cost averaging debt as well because it's too long-term focused? >> Well, I don't think you should dollar cost debt. No, not at all. Uh, I think you ought to keep your debt close in because you've got to be able to define debt is your safety valve. Well, if you've got 25 and 30-year paper and it goes down 25 or 30%, it's not a safety valve anymore. It's a cost, okay? And you're going to worry about that. You should have a bond portfolio, treasuries or whatever you want to use. We use treasuries that's short enough so that if anything goes wrong that is very very safe and you can use that to your advantage to either buy things that are really cheap, sleep well at night, you know, make sure you're okay. But you can't you can't just throw in a bunch of things and say I'm going to be better 20 years from now because the I could give you the statistics on it. go back to 1900 and the markets go through numerous 20 and 30-year periods where they make zero money, nothing. We've forgotten about it now in the in the last 20 years in this country, but I'm telling you, it happens. And you have to be in a position where you can you can weather any storm that comes your way, sleep at night, and know you're not going to lose everything. Uh, and you the problem about most people is they put in there, everything's fine, they make some money, and then they come along and they get a big setback and emotionally they're not ready for it. >> So, they sell out at the worst time. >> Always sell. People always sell at the bottom and never buy at the top, sell at the bottoms, right? >> They buy at the top. I will tell you that they're doing that right now. Yeah, that that I think we need to discuss that because there's one last asset class that I want to use the last five minutes on to to to discuss with you here as well, Ted. Is is is gold, of course, um where are we in gold? Is gold part of the everything bubble that I've mentioned or would you exclude that? Is that a separate asset class because it behaves differently? Um curious what your what your thoughts are here on gold, Ted? >> Well, Kai, it's a good question. I mean, we've you know, we've owned gold and the miners for a long time, so it's nothing new to us. Um, and we've got, you know, obviously big profits in it. We haven't we haven't taken really much of it off, but here's the big question, and you'll never know exactly answer this, but are you in a are you in a second leg of a market that's going to go a lot higher? I'm talking about gold. As you go back and look at 19 say 75 or 76 in gold all the way up for the peak in January of 1980. It was a big move. I mean it was a 786 78fold move and then it corrected big. Uh if you take our low of I don't know 15600 whatever it was at the low and you put on 4,000 that's not six times. Okay. And I'm not saying we're going to 9,000 either, but it's also it's hard to say whether that goes up. Now, you could get a correction. I think uh anytime of 15% or something and uh I know people would think it's over. I'm going to sell out. But probably more than likely, even if you got that later on over the next five, six, seven years, you go to higher highs and you'll be you you'll probably be so be sorry that you sold it. Um, but it wouldn't surprise me to get it. But either one wouldn't surprise me. It wouldn't surprise me to go on to go on up from here because obviously it turned real parabolic. And now you're starting to see the articles and the paper on CNBC and Bloomberg, you know, when they start talking about it. But I will tell you this though, it's way underowned. If you go look at, for example, the GDX, which is the large gold miners, they've actually had money flowed out of the system in this year. In other words, they go up, but people take the money out. And so, and as a percentage of assets, you look at the even today where the gold miners are, they're nothing as a percentage of the of the market compared to any other group. Um, so there's a lot of room to run there. I know they've had big moves, but I don't think you can always say, well, it's over now. I don't know if it's over or not. I I don't think it is, but even if we got some selling, it wouldn't make us clear out. we we would uh not saying we wouldn't take some profits maybe here or there but generally generally I think you have to look at gold over the next 3 to five years there will come a point when it's too I mean when gold corrects it really corrects so you have to you know when it's time is over then you have to think about it but you have to look at geopolitics today you know and and now it's going opposite direction most people would say when the dollar goes up interest rates tick up a little bit, then gold goes down. But see, that's they're now they're correlated. The dollar's going up and gold's going up. And so, uh, see, it's got them confused. But I think it has to do with central central governments and they're just saying, "Hey, you know what? We're not buying the dollar. We're we'll buy some of it, but we're we're not going to hold the bonds. We're just going to buy the gold." >> That's what the Swiss National Bank said just recently. We're buying euros. We're not buying the dollar. and the euro is now the most important reserve currency that the Swiss National Bank holds, not the US dollar anymore. So, it's just a you know, small cracks in the system that that we're seeing that are shifts happening. Absolutely. And uh maybe one more thing, Ted, as well like Q3 numbers are around the corner for the fin for the big miners or for the producers and we continue to see margin expansion. So, from the mining side, do you still see there's a lot of opportunity in the in the stock? You've been touching on it, but uh maybe just elaborate on that just a tad more. Well, you know, the industry has a group, so they know what the cost of production is. It's about $1,600 now, an ounce, and so if you look at that relative to price today, then you have to factor that in to these gold miners. And because they're they're super profitable. Now, if they sold at the same price to cash flow multiples today that they did in 2011, and I may be off on this some, but they're probably twice as high as they are right now >> because, you know, they haven't they've gotten a big push. I know they've gone up, but they have not gotten the buying from the institutional people that you think. And um if the price stays up here or goes higher, you know, they're just going to make more money. Even if it fell off, it's gold fell back from 4,000 to 3,000, they're still making $1,400 an ounce. >> It's not like it's not like it's not a good business. >> U so people have to keep that in mind. What's your cost of production and that's where we are right now >> and that's just analyst consensus as well. So like the analysts haven't even priced in spot gold. That's point. So >> absolutely Ted, what a wonderful conversation. I always love catching up with you. Uh, fantastic insights. A bit of a rhetorical question because our audience should know the the answer, but where can they find more of your work, Ted? >> Well, the best place is just come to the website. It's oxoadvisors.com. Is really, Kai, everything we do is there. We're very very transparent. We don't we don't have all the answers. We've got a lot of questions, but we don't have all the answers, but you'll see everything we do there. >> Fantastic, Ted. Really appreciate you joining us again. much appreciated. Thanks so much for your time. And everybody else, thank you so much for watching Sore Financially. As you can tell, I'm not in my original studio, but I do love that curtain behind me. It is sort of the Sore Financially colors here. Um I'm I'm traveling, so I do appreciate your patience with my lighting and everything else. Uh not not too pleased with it here. A bit too much orange today in my face, but I'm really curious. What do you think? Is is gold part of the everything asset bubble that we're seeing? Is it part of the overall global meltup that we're witnessing or is it a completely different asset class behaving and playing by its own rules? Really want to hear from you down below. Um, also maybe you can explain to me why is the GDX or sorry not the GDX the S&P 500 running from all-time high to all-time high completely shrugging everything off. Ted Ted gave us his opinion which I much much appreciate. It's back in Yeah, it feels like reporting like it's 1999. So um let's let's see how much longer that music keeps playing. So, thanks so much for tuning in. Don't forget to hit that like and subscribe button. We much much appreciate it. And uh we'll be back with lots more. Take care out there. [Music]