Macro Outlook: Guest outlines a weakening labor backdrop and expects multiple Fed rate cuts as layoffs persist and employment data are revised lower.
Fed Policy: Anticipates four cuts this year and discusses the potential leadership change to Worsh, emphasizing a push for less forward guidance and cleaner communication.
Inflation Dynamics: Highlights disinflation risks alongside still-elevated price levels, noting that outright deflation would pressure paychecks and consumer health.
AI and Jobs: Warns that AI is removing entry-level white-collar roles, pushing graduates toward trades and reshaping career paths and wage dynamics.
Housing Market: Notes mortgage rates slipping near 6% but stresses frozen activity, high prices, and the need for further normalization led by rent disinflation.
Political and Policy Risks: Flags uncertainty around tariff authority and potential congressional pushback, adding policy noise to the economic outlook.
Consumer Strain: Points to budgets stretched by higher living costs since 2020, with rent relief the key near-term positive for households.
Market Implications: No specific stock picks offered; focus remains on macro positioning, risk awareness, and monitoring labor, housing, and Fed signals.
Transcript
This episode is sponsored by Interactive Brokers. And have you ever wondered if the year-over-year change in the US CPI would exceed 2.6% in February? At IBKR Forecast Trader, the yes, recently priced at 48% and the no at 50%. But markets move fast. Forecast contracts let you turn your views into trades on future events like the economy, climate change, and politics. With simple yes or no prediction style contracts, you can explore trending data, spot the trends, and if you get your prediction right, you'll earn $1 per contract at settlement. Plus, you'll earn 3.14% APY on your investment with an interest-like incentive coupon, and you'll get $3 for signing up with IBKR Forecast Trader, which you can use for any purpose or to start trading. Forecast contracts are not suitable for all investors. Go to ibkr.com/fors into IBKR forecast trader contracts today. Last trading day for this contract is March 11th. >> The Disciplined Investor is all about you, your money, and the markets. Sit back and get ready for this edition of the Disciplined Investor podcast. This episode of The Disciplined Investor is sponsored by Horowits & Company. If you're looking for a portfolio manager, look no further. Horowits & Company. From seed through harvest, cultivating financial success. The market's not thrilled with tech. Mortgage rates slip below 6% on the 30. February ends with a dud and looking at the Fed's next move with our guest Danielle D. Martino Booth, founder of Quill Research. All this and much more on episode number 962 of the Disciplined Investor podcast. Hey, it's Andrew Horowitz and welcome to another great episode of the Disciplined Investor podcast. Thanks for joining me and thank you for all your notes and things that you've written, said, commented, and uh I appreciate you. I just want you to know that. Now, before we jump into this week's AI earnings drama and what it means for your portfolio and some of the things that we'll talk about with our guest, I wanted to take a just a quick second to shout out something awesome from last week's show. And and if you caught our discussion on annuities, especially those variable annuity ones with their long lockup periods and steep surrender charges, that whole 1035 exchange game where agents will reset the clock for more commissions, that's the whole point of it all. You know, we didn't pull any punches during that discussion, right? We talked about how these products felt like to a degree financial like uh handcuffs and um you know with those really long penalty periods to get out and if life throws you a curveball you're stuck like a health issue or needing for some cash I don't know fix your roof or something like that and and and I warned and I talked about all these sales incentives that often really are put put ahead against your needs. It's really what's the needs-based selling that's going on here. It's the agents needs that are basing the selling of what's going on here. But what I wanted to tell you was that the response kind of blew me away. So many of you reached out and contacted us about, you know, what is going on. Let me know what's happening. you shared your details about what exactly you're holding in your portfolios and here's an eyeopener. A a a shocking number of the stuff that came through was exactly what we talked about last week. you know, these high variable annuity fees contracts with multi-year surrender schedules and these riders that sounded really just too good to be true, which they probably are, but eating into returns because it's so expensive and there's guarantees that come in with these really steep hidden costs. And it was kind of I I was at first when we started to think about if we wanted to really punch this in the face pretty hard. This whole idea of this annuity practice, we're like, well, you know, is that something we want to do? Because we don't really talk about that too much on this show. But I said, you know what, we even have a place in my book, The Disciplined Investor, essential strategies for success on annuities on guaranteed investment contracts or gicks, GIC's. And I said, you know, it's about time we talk about this. It's nothing that uh should be hidden or not talked about. It's something that needs to be discussed because so many people have these within their portfolio. And it was it was it was I was really happy to do it. It validated the reasoning and rationale as to why we were going to do it. But at the same time, I found it a little concerning to see how widespread these issues really are. And don't worry, you're not alone. You're definitely not alone here. I could tell you're not alone because of all the people that wrote us, right? You're not alone in this whole thing. And I say that because so many really smart and and and diligent investors got sold on this whole safety pitch. So, a lot of people asked a lot of things, you know, what should I do? Should I should I 1035 this? What's the, you know, what can I do? Could I lad? So, we're going to go circle back on on some of those specific issues maybe in an income. Well, we will eventually in um an upcoming segment, but maybe even maybe even dedicate an entire episode talking about this and maybe bring some experts in aside from just, you know, hearing it from me. But if you're sitting on one of these wondering if you still if it's still right for you, uh you know what, listen to last episode. So, thanks for trusting us with this and it's why we do the show, by the way. It's your feedback, your your uh participation in this is not a one-way conversation. This is definitely, if you haven't figured it out yet, it's a two-way conversation. Yes, I'm the only one with the microphone right now, but the bottom line of all this is that you are involved. You're you're listening because there's something you're getting out of all this. And I think a lot of that is making sure that you you are validated in what you're doing and making sure you're staying on the right path. So, we're going to cut through, of course, the noise from all that's going on in the markets and talk about what's happening. There's been a bit of a roller coaster ride courtesy of of Nvidia. We saw that Nvidia came out with the earnings the day before they came out with the earnings. We'll talk about that and then where happened. So, I guess we should just start with the headline, right? What we saw was on Wednesday of last week, we saw that there was uh earnings after the close that came out for Nvidia and everybody was really pent up and thinking about like what is it going to be? Is it going to meet all the the the excitement that we think it's going to be? And you know, when we talk about what's happening, well, Nvidia ended up down about 5% on the day after the earnings. They were up about two and a half 3% on the print because the numbers came out pretty strong, right? Um the day before on Wednesday, everybody was in high anticipation of this. The S&P climbed on Wednesday about almost 1%. NASDAQ jumped about 1.3%. That was pretty much given back after the Nvidia earnings. Um, tech was leading. Tech was fading. And Nvidia again was was really up ahead of its earnings because there was this big hype and buzz and valuation to be damned. Who cares? Let's just get in there. Thursday morning, we saw the uh the the the realization click in a little bit. Um revenue is 68.13 billion. Uh pretty big beat by the way on expectations that were up enormously on a year-over-year basis. Guidance looked really solid, but again 5% down the next day. Again, it was on the print with all the numbers that came out initially right before Jensen Wong really got to the stage talking about things in the morning that he did some interviews early early morning on Thursday. It was um NASDAQ was down about a percent and a half. The S&P dropped around 1% give or take throughout the day. Was down about 1.2% for for part of the day. It did come back a little bit. But what's really what what's what's what's eating Gilbert grape here? Like what's the problem? Um I think the fact of the matter is that even though this came back a little bit, um the truth of the matter is that this rotation about maybe there's a better place to be right now is uh something, right? So, so why was this big sell-off happening? You know, what happened here? I the only thing I can think of right now is it's it's this classic sell the news phenomenon. But I think deeper if you really think about what's going on here that I think investors really wanted this reassurance that the AI spending spree this massive hundreds and well trillions of dollars really but hundreds of billions of dollars by the hyperscalers like you know Microsoft Amazon and Google Meta Oracle hoping it's going to you know would deliver returns fast enough to justify the trillions in capex that's being spent right now. And I don't think this was really about one earnings report either. I think it's a microcosm of 2026 in totality, right? Big investing story so far has been that, hey, we're very worried about what's going on here. Can they really keep up? Are we going to see the returns? And that AI trade that dominated 2025 that carried into January, which pushed the S&P 500 above 7,000 miraculously for the first time ever. February was like, "Oh man." As a matter of fact, the NASDAQ is having the worst months in many, many months. I think it was a reality check. The check about lofty valuations, the questions about AI uh AI uh return on investment, ROI. And when we saw that the broadening out of investors thinking that maybe there's other places to invest like energy, uh like health care, like utilities, those areas got a lot. Remember, don't forget January, what happened there? We saw the S&P was up about one and a half%, the J was up 1.7. And that was all despite all the geopolitical noise, all the headlines that said anything other than buy, right? It was like no. But the markets were resilient. Energy surged 14%, materials, staples were up a lot, and again, tech and financial lagged. Now, what did that say? I think that was a hint that was a little bit of a tell that there was this rotation going on on away from this pure AI play that had been invogue for a while and going toward the cyclical sectors. Now that we saw Nvidia, it almost feels that that rotation was spoton. Now, this whole big AI infrastructure spending, the the the binge that has been going on with Alphabet just rose just raised uh what was the number like 30 plus billion dollars in bonds. And let's not forget, we'd be uh remiss if we didn't mention the hundred-year bond that they issued to fund their data centers. Oracle did what, a $25 billion bond earlier in the month. So combined the AI spenders are issuing like 120 billion dollars already last year with projections topping 500 billion potentially 2.5 trillion in total corporate issuance this year up nearly 12% and leading that is of course the AI trading. Now, right now, bond investors, usually the calm ones in the house, are ranking the AI bubbles, their top risk, for the first time in a Bank of America study that recently came out, up from 9% in December to 23% now. and software stocks that got hit hard early this month on fears of this you know disrupt disruption by uh Anthropic and any other name anyone any other AI that you want but Anthropic's been the one like what happened when they announced the cobalt enhancer that really whacked IBM the worst performance in any day down 13% this week or that one day actually on this hit and that was uh the worst since like 2008 eight. So crazy. At the same time, let's not count AI out. Let's not kind of throw the garbage pail and say that's it, that done. Fine, it's gone. Nvidia's results show an incredible demand for GPUs, right? Micron, which you may have been watching, memory chips for data centers up 50% in 2026 after like a 240% gain last year. You see what's going on in Korea? Korea up 53%. the the the market in Korea, the stock market in Korea up 53% this year, it's called Cosby. Cloud giants like Amazon, Microsoft, massive backlogs even though their stocks dipped. So, we're still looking for about a 12% increase in overall growth in 2026, well above the 8% long-term average. So, there's something to be said there. So, I think that's important. Now when we look at some other things right the the Fed holding rates steady in January with you know maybe two to three and we'll ask Danielle D Martino Booth about this but you know what's going to happen inflation's been cool cooling a bit jobs adding modestly but you know we say 4.3% rate so got policy wild cards Supreme Court ruling on tariffs which didn't really change anything just throwing a 10% and a be 15% on top of it. Um so what does this mean all of this when we take this and consolidate this compile this together and think about what is going to be in the future right now I do think that there is a lot of sagging uh optimism which means uh is it called deoptimism like disinflation disoptimism like dis disinflation we have disoptimism but AI isn't dead it's maturing right the easy money from the hype is probably over right now we're looking for execution, profitability. We have to see the revenue. You got to look at things like what's going to happen with a turnaround from like companies like Snowflake and Salesforce. But but I think we got to really consider diversity beyond mega caps, right? Energy, materials, staples, healthcare, pretty good valuation is going to matter. Again, that's the important thing here. The S&P is at premium levels right now. And if earnings growth accelerates as forecast, it's going to justify those prices. That doesn't I don't think that surprises anybody. But any slowdown in the AI adoption of Fed pauses, that's where you're going to have some problems. And I think that's what we're seeing the geopolitical uncertainty starting to kick in to all of this right now because it's not all just, you know, peaches and cream right now. Look, volatility is back. VIX at 20. And I think what this week's action reminds us is that markets are great at climbing walls of worry. Let's agree with something, right? AI, it's transformative, but not immune to scrutiny and questions. So, as we head into the rest of February, we got to stick on earning season Fed signals, whether the bull broadens out right now. I think that's a lot that's going on that we need to pay attention to. But, uh, as with every cycle, there's overhype and then pullback. Right now, we may be in the pullback area. It may not last a long time as we've seen. One, two, three days is probably all it can get. Any pullback has been a sign of any, you know, just let's buy, let's get in there, let's go for it. That could be what we're seeing right now. It may be a great opportunity right now, but the rotation where we're seeing small caps pick up international do amazing and just tech is the one that's really being questioned right now. Not the worst thing overall for people that are smart and looking for the right place to be. If you're just a passive index investor and that's all you do, well, you know what? That's what you're going to get. You got the opportunity on the upside. And if that caves and those 10 15 stocks don't do well and you stick it on the S&P 500 and the NASDAQ 100, well, what's going to happen there? We're going to get to our guest segment right now, but uh going to talk about IBKR for a second because I know you do your your your research, right? You research your investments, you analyze markets, you manage risk, but did you research your broker? In 2025, IBKR clients outperformed the S&P 500. Retail clients averaged 19.2% while hedge fund clients averaged 28.91% compared to the indexes 17.9%. IBKR's lower trading costs, competitive rates, efficient execution, and access to more than 170 global markets helped investors keep more of what they earn and put more capital to work over time. The broker you choose makes a difference. Interactive Brokers member SIPC. If you care about performance, find out why the best informed investors choose Interactive Brokers at ibkr.com205. Let me introduce Danielle D. Martino Booth, a crowd favorite. She's the founder of Quill Intelligence and what she wanted to do when she set that all up and founded it. She wanted to launch a research revolution and redefine how markets intelligence is conceived and delivered. So to build Quill intelligence, she brought together a core team of investing veterans to analyze the trends and provide critical analysis on what is driving markets both in the United States and globally. She's considered, and I agree with this, a global thought leader on monetary policy, economics, and finance. She's also the author of Fed Up, an insiders take on why the Federal Reserve is bad for America. has a column on Bloomberg View, is a business speaker, commentary fre commentator frequently on CNBC, Bloomberg, Fox News, what else? Fox Business News, u Yahoo Finance, and prior to Quill, she was spending her time at the Federal Reserve Bank in Dallas, where she served as advisor to President Richard W. Fiser throughout the financial crisis. So, let's uh bring her on and uh get it going. Hey, how are you? >> I'm great. I'm fantastic. How are you? >> I'm pretty good. Pretty good. Um, it's been a little bit cold down here in South sunny Florida in the 40s, but uh I guess compared to the rest of the country, it's pretty good. So, >> we're we're going up to 80 tomorrow here in Dallas. So, I'm I'm just as happy as you are. >> Yeah, exactly. Well, I want to talk about, you know, I like to um you've been on many times, of course, we talked about some things here, but I kind of got a few things I wanted to ask you about, like to find out more about you, and I kind of dug up a few things. Uh >> oh. >> Oh, yeah. So, we all know about your business side, your acumen, all the things you do. We're going to get into the discussion of the Fed and that what's going on, interest rates, your predictions, and all that, but what was going on in Mexico when you were 17? Oh wow. Um that's kind of a timely thing is given I spent most my time in Guadalajara which is in the news these days. >> I was supposed to be there by the way on March 9th. I was going to uh Hienda Patron. I was invited to do a tequila tasting and farm tour and dinners and they were putting me up but we canceled it. >> Yeah. It's um it's a really iffy time in in Mexico. you know, when I was there after I graduated from high school, that was my trip that I went on with my best friend in the world. Um, who's actually still my best friend in the world. She lives a block and a half away. We we met when we were 13. Um, but uh, you know, I had grown up in San Antonio, Texas, in a certain area where uh where Mexican nationals had second homes, took their children to send them to US schools. Uh, I I kind of grew up speaking Spanish and living the the culture. So I um So off I went to go visit Mexico for six weeks. >> There was a bit of a solo time there too, wasn't there? >> Um I mean I >> No, it it was just with her. No, no, I mean I I mean I I think the funniest takeaway from that trip is >> uh and it really doesn't have to do with tequila, but uh it you know I had read naively don't drink the water. >> Well, this was you know prior to bottled water being a huge thing. >> I didn't drink I almost lost a kidney because I I really didn't drink any water for like a very long time which by the way I don't recommend. >> Yeah. No good. And then you had a summer internship in Venezuela. >> I did. Uh I I think that um I think that all of the professional and academic experiences that I had that was in between my first and second years of business school getting my MBA in finance before I went off to Wall Street that I learned the most about economics over that summer in Caracus. Um the the country clubs were on the water uh which is the Caribbean. I mean, astonishingly beautiful, >> but you had to drive through poverty that was absolutely indescribable to get to these country clubs. >> And it was, you know, it was Venezuela's answer to The Great Gatsby. >> And I remember as I was leaving the country thinking to myself, uh, you know, this is not going to end well. And you know what? Shortly thereafter, Chavez rose to power. >> Yeah. It's like when I was in India, it's like in a way you have to walk over the dead people to get your cocktail, you know, it's like it's horrible, right? You know, it's like this you feel like the whole time. Then then of course, you know, you you you enter a compound or something and you forget about and it's meant to forget about everything else. But yeah, it's sad. And then I think, tell me if I'm wrong about this, you and I have something in common. We both have >> uh preeie twins. >> Oh gosh. Yes. >> Mhm. Mine are a little bit older than yours, I think. Uh we've never talked about this before, but my I have girls that are 35 and they were little bitty chicken nuggets in the incubators when they were born. >> So mine um mine just turned 18 and they're seniors in high school, boy, girl. And uh they they were uh 415 y >> and 51. >> Uh and the girl who was the smaller of the two dropped down into and she she had a three handle on her weight. >> Wow. before things kind of stabilized. It was in the middle of an ice storm in Dallas when they were born. And uh I actually did not meet her until she was 5 days old when they finally >> pushed me um in a wheelchair cuz I had >> maybe suffered a close to a heart attack the day the twins were born. So I was pretty sick myself right after they were born, but I didn't meet her until she was 5 days old. We're best friends now. So I um I love >> love having the one girl. Uh, the three boys keep me on my toes. They whatever they say about the frontal, you know, about their brains not developing until they're 25 is true. >> I'll attest to that. Maybe 25, >> maybe 50, you know. Yeah, give or take. >> So, let me tell me one more thing that people don't know about you just as a personal interest item. your favorite dessert, your binge food, weirdest thing that ever happened to the Fed, something just something that nobody knows. Maybe that a few people know. So, I mean, you know, if um if you've read my book, Fed Up, you may remember this, but to me at least, the most shocking moment when I was at the Fed, mind you, I had been on Wall Street, you know, my entire career, and I I I dressed what I felt to be appropriately to go to the office, and one of these kind of scruffy academic sorts that would wear the the the sweaters with leather patches. >> I can see this with the beard, a scruffy beard kind of thing, right? Yeah. >> Yeah. I mean, nothing you would bring home to mom necessarily, but he uh he said, "Well, you know, if nothing else, at least you do have a master's degree from Colombia and and you certainly dress better than anybody in the building." And I was like, "I don't think that's an appropriate thing to say." I didn't care. I was never about sensitivity training. Um, but it just it struck me as as so pompous >> and and I I look now I listen to to some of the things that these Fed officials say that sound like they're so far removed from the rest of the population of the United States. None of it surprises me. >> But the these >> they are far removed, >> right? But these guys also the heavy well, it doesn't mean them, but you know, the heavy academics, they're socially inept, right? They they have social and and and they're not they're not they they march to a much different drummer. You know, it's it's not like these are the guys and gals that you're going to go probably have weekend parties with and, you know, find them on a beach laying down. I mean, they're going to be head deep in some kind of really crazy book that's going to have the Dewey decimal system all over it or something. Well, I will say that they're not socially Well, I will say that there's a lot of social awkwardness. >> Yeah. Exactly. Yeah. Yeah. Yeah. Socially awkward. All right. Let's talk about this now. Um on talking about the economic outlook. Now, am I understanding that your latest writings and your base case is for four rate rate cuts in 2026? Do I have that right? >> You have that right. >> I have that right. So, and I think concentrated in somehow well the first half of the year, but we'll let we we'll let the timing go for a second. So I guess the question I have is what are you seeing from a perspective of key data points like I I guess the the the unemployment situation that although the rate went down we didn't count the million people some of the corporate layoffs with regard to like the the uh latest um who am I thinking the Christmas uh >> challenger grand Christmas >> challenger I love I love that name by the way um or what what is driving your view on this to be confident that all right four great cuts when kind of a lot of people are saying much different comments. >> Uh well so I I speak to the people at macro edge and they tend to have uh the jump on challenger data. They follow job cut announcements in real time. So looking forward they know that job cut announcements for the month of February are higher than what they were in January. in January's were high. So they I think there were about 112,000 um the warn notices from from individual states um they have not dissipated. Uh so the the the layoff train has not stopped and the reason um the the reason I'm as uh not sanguin as I am is because the revisions that you mention show that net job losses occurred in the second quarter of 2024. And one vet official who I do know goes to the beach. Um, I've been to the beach. I've been to the beach with Christopher Waller. We spoke at a at a we both spoke at a conference in the Bahamas a few years ago and I know that he went back this last year. Um, so um he is kind of an on the ground with it not so academic Fed official who who looks at alternative data sets, but in in his most recent comments he said it looked like there were job losses throughout 2025. So um and we happen to agree with that. So, we won't know for another year, but everything we know is that the average job creation in 2025 was 15,000. That's5 per month. >> Low. >> And that's >> much below the required amount. >> Much below the required amount. And that is easily going to get revised away when we do see the data. The reason I I drag you through all the these weeds is that if we know that we've been in a job losing environment for upwards of 18 months, that means that the onus is on companies to stop firing in 2026 in order to hope for a turnaround in the labor market. So whether it's the one big beautiful bill and the ability to pull forward um investment, something is going to have to turn the tide of layoffs to hires. >> And that's kind of where kind of where I sit. What what's interesting to me is it seems to me there has been a concerted effort and almost a you know he who protests too much of all these companies that are coming out talking about how AI is not going to be about job losses is going to be about productivity. I don't know about you, but let's say I have 25 people that work for me and I just goose my productivity in an area like dramatically, which means to me at least that wait a minute, I could do a lot more with a lot less. Therefore, I have two choices. Either try to keep on growing with the current employees to a next level or maybe cut somebody back and save some expenses. the idea that many of these companies that are talking about not having that AI will not, you know, you see it all the time. No, no, no, no. We're not going to fire anybody, you know, and um this is just going to, you know, increase productivity. But you add that to all the jobs loss that we saw and maybe that's intertwined or not. I there seems to be something ringing true about there is a uh potential jobs issue on the horizon. it. Look, there absolutely is. And if if you wanna if you want to find out what the truth is, you know, we were talking about my twins being 18. You know, I' I've got a 21-year-old who's graduating um from uh with with his degree in finance and visiting him over the weekend in Austin, talking to some of his friends, seeing the white hot panic of these kids who are not getting jobs. uh because AI has effectively in multiple industries just sawed off the first two three rungs of what we would consider to be a career ladder. They don't they don't need these entry- level positions. They can just plug it in. >> Yeah. >> And produce what these entry level workers once produced. So to me that is you really don't need to debate it. You just need to go get on the ground and listen to what is happening with kids who are have some serious buyer remorse >> when it comes to what did I just spend the last four years of my my life doing exactly if I can't get a gig. That's a that's the fascinating thing about this cycle that we could be seeing that where many people over the years have tried so hard to get into the right school to do the right thing and you know they want to make all this money on either Wall Street and as a as a lawyer as pick whatever you're doing. Uh whereas the blueco collar job actually where you work with your hands that can't be replaced. The plumber, the electrician, the contractor, the construction worker, those people are more potentially safer from the aspect of being replaced. Not because of a slowdown, but safer than some of the white collar. >> They absolutely are. I mean, in talking to my boys, I'm like, well, you know, you've got a degree in you're going to have a degree in finance. um maybe you should go to trade school and learn the HVAC trade and start an HVAC company and and run a tight ship. Um I'm I'm speaking partially tongue and cheek. >> Yeah. >> I'm also suggesting that the more kids understand where the opportunities lie, the more they can apply the skills that they have. And if it's at the intersection of trade and what we used to consider to be traditional business, then so be it. That's where they have to go. You have to ski to where the puck is. >> That's obviously the point. And it's funny though, you know, all these people that have been going in the private schools and schools and they hire all the coaches to get them into colleges. that whole track that has been a big thing and for a lot of people over the last however many years. You got to wonder if that track of of doing everything that that culminated by the way in fraud in California and all those people that were getting remember the whole the the people getting >> um it's kind of fascinating to me that that that may be we're almost going backwards into uh a time where trade schools were more important especially at what the uh the professional schools have pulled the crap they've pulled over the last number of years. It's all really coming down on them pretty hard. >> It it is and it's got to be unsettling not just for the kids but for their parents who don't necessarily want them to come back home. Um and and again that's why I say you know it's it's the intersection of trade and and and skill sets uh that will hopefully help a lot of these these kids find a new pathway because it does not look like it's going to be um kind of what they were expecting. >> Yeah. Now, >> I I just hope that they don't take this anxiety and this nihilism straight to the polls in 2028 and give us the next answer to socialism in the, you know, in the White House. I mean, >> that's what happens though when the pendulum swings too much one way, which is why I don't understand why they allow, if they're smart, the pendulum to swing so hard because that just brings out the opposite. every action politically seems to have a an equal and opposite reaction when it when it swings so far. And I would I would just look at Madani in New York. How do we get there? >> That's that's exactly my point. And you know, the irony is there's you you've got a mayor who's steps into one of the highest tax rates in in in the world and you know his his next solution is to raise property taxes. I'm like well that that'll be popular. >> Love that. So with all your research at Quill right you do a lot of work um and you you come up with your analysis you know potential for four rate cuts. Now, if the Fed doesn't cut in March or April, have some have suggested, do you think that there's going to be a C? Well, I'm going to I'm going to ask this question, but I'm going to ask you two questions, and I'm going to reverse them. Sorry. Um, do you think that Wars is going to kind of play catchup with maybe larger, more aggressive cuts to address some of this weakening? Um, and then the second question, which I'm going to now make the first question, sorry about that. Uh, is Wars, let's talk about him. Do you think that he is going to be uh fundamentally a dove considering his past being much more of a middle- of the road kind of guy? And what do you think of him? >> Well, we're going to find out um if War has to play a serious game of catchup um on day one and whether or not he can he can build a consensus on the committee. >> Yeah. uh you know he he was on the board before so he's he's a known known he understands the institution uh he kind of left and disgusted during the financial crisis because so much of the advice that he was giving was being was being ignored by Bernani he's like hey this QE business is not good in the long run let's not do this anymore and and got the Heisman uh and we will see if he sticks to his personal and well-known publicly voiced philosophies on the perils of zero interest rate policy on the inefficacy of quantitative easing. I mean these are some of the same uh these are some of the same philosophies that one Jerome Hayden Powell had when he first took office in 2018. And we forget that his first congressional testimony, he basically said, "I don't care about the stock market." Which the stock market then slapped him in the face and he had to back down and and abandon his his own roots in terms of what he felt was appropriate for monetary policy. And in fact, the pendulum is swung all the way to the other side. He he in 2012, he was pretty concerned about having a $4 trillion balance sheet. Hence the irony of him blowing it up to nine trillion on his own watch. So when you look at this and you look at inflation numbers right now and and I think we have to all always comment that this inflation that has come down from X number much higher 8 9%. Down to you know 2 and a half 3% where we are now and some of the alternative measures which maybe you could talk about like what what shows from trueflation etc and and others like shadow stats. um we're still paying a lot higher prices and wages may or may not be keeping up with all that because if you look at wage the price of things five years ago to compared to where we are now just stocks groceries if anybody wants to talk to me about eggs and egg price how they come down and how that's a political win I'm going to take them out I challenge you to a duel you know what I'm saying because eggs had nothing to do with actual inflation it was a it was it was it was a bird flu culling that cut down the chickens and the hens and the that was a whole but they used it politically nicely, didn't they? Um, but when we look at inflation measures, are you think we're out of the woods yet? I think we might be going in the wrong direction with inflation, especially if if you follow trueflation like I follow true inflation. And by the way, a lot more people follow true inflation now that it's on the Bloomberg terminal than before. Now you can track it daily and graph it and you know begin to appreciate the trends of what it looks like to track 35 million prices in real time on a daily on a daily basis. Um, and you know, before I say what I'm going to say, I will I will agree with you. The fact that we have much higher prices than we did in 2020. Much higher. It there's there's very little solace in me then saying, "But wait, we have to be careful about disinflation." And you know on my Twitter feed I always get you know a ton of push back but prices are much higher than they were in 2020. I agree. I I I I don't deny that at all. But if we have disinflation set in against the backdrop of of in of inflation that is latent but sitting there. In other words, if your paycheck starts to shrink and your cost of living is still higher than it was five years ago, things are going to get really ugly really fast. And that's why I tell people that actual deflation is not a good thing because ultimately it lands in your paycheck. >> Right. Right. But but we could use a few years. Disinflation I don't mind at all by the way. Uh deflation is a whole different discussion. But disinflation would be kind of nice for a little while. Of course. I I couldn't agree more. >> I mean, just to kind of cool just to cool things off a little bit. That's all I'm saying. >> Yeah. No, look, look, the country is still peppered with with real estate agents misguiding and misinforming sellers, which has caused this housing market to be absolutely frozen. >> Yeah. >> I will say this much though, there are now more individuals in the United States with 6% mortgages than there are with 3% mortgages. So that will free up some inventory to go onto the market. But you know at this moment disinflation in rents is about the best thing happening for US households because at least they have some hope of of the biggest line item in their budget not being so ownorous. >> Yeah. >> Going forward. And you know, home prices do tend to follow rents, maybe with a massive lag. And you know, the only silver lining of the Fed holding pat and not lowering interest rates more, interest rates are at three and a half year low right now. They just broke 6% down. >> Just broke, >> which is nice. >> Mortgage rates. >> Yeah. >> But it's still not it's still not creating some kind of explosive amount of home buying activity. And that tells you that prices must come down. And you're right, that would be a great development. >> I mean, come by, you should come by me. They sell for a thousand bucks a foot here. >> Literally houses. You have a you have a a three or not even it's more than that. I I 25. Yeah, it's like three and a half million for a 2,700 foot home on the water. >> Could be on the water, but if not on the water, I've seen things at like 800 a foot minimum. >> It's insanity. Mhm. >> It really is. >> Now you >> and and that's why you've got so many families who who've got multiple generations under one roof. >> Yeah. Yeah. >> They're looking at it through a practical lens of, hey, mom and dad, you've got a huge house that no longer has anybody in it, right? >> And rumor has it on the street that you want grandchildren. Well, I've got a solution for you. Move into your own basement. >> We're all going to be I mean, listen, there are a lot of countries that do that. That is part of the thing. Philippines, you do that. The retirement plan in the Philippines. Do you know how that works? By the way, >> it's >> I thought you were going to say Italy. >> Well, Italy, but well, it could be Italy, but in the Philippines truly and some other Asian countries, but in in the Philippines, I I was in the Philippines asking people, "Tell me about your retirement plans." And every single one of them said the same thing. It's all about having children because the children will go out and work and then support the parents. You move in with them, they support you. That is your retirement plan. So, not that we want that to happen. My parents live in Boon. That's good. plenty of space between them and us to see them when we want and not see them when we don't want. >> Um but but you talk about worsh and I think in past discussions and things that I read from you I think the words you use was cautiously hopeful. Is that right? Cautiously hopeful. Right. I am >> I I am cautiously hopeful that he can that he can hold the line um and stick to his guns even if he's facing a lawsuit from the president which has already been promised >> who wores. >> Well, I I I believe I believe our fine president has said that if he did not lower interest rates, he would sue him. >> Oh. >> Um yep. I to quote >> Oh, that's funny. I I hope that he's able to keep maintain independence at the Fed Fed his fellow officials on the on the Federal Market Committee. They'll know really quickly whether he is just a pushover or if he's going to stick to his guns >> and and maintain the Fed's independence. We'll know real fast. So, so kind of getting to the bottom of all this thing here. Do you know are you concerned that um you know he's going to face a lot? I mean, obviously he's facing a lot of pressure already and and nobody seems to care about cleaning up the uh you know, the outstanding debt that we have here. It doesn't you know, we're back to not quantitative easing, but they don't want to call it that, god forbid, which it is, by the way. But they're repurchasing the rolloffs, not allowing them to roll off. In other words, so do you think that one of the things that could happen, which it seems to me, so you tell me because I would I'd like your opinion that that there's going to be a lot of reforms that will be put in to the FOMC um and the Fed, the Fed primarily from Mors. Is he going to be a reform guy or is he going to be just a kind of get through it kind of guy? I I think he is going to try and and reform the Fed and I I mean I wrote a whole book about it. Good for him. Um you know, he's not so gung-ho on forward guidance and, you know, broadcasting to the world what what the Fed's going to do next. I hope he decreases communication. I mean, just as as as the two of us are speaking today, there have been like I don't know, eight different Fed appearances, only two of which were from voters. the others create what I call, and this is a technical term, noise. Um, but I I'd love to see him come in and and get rid of the dot plot. I mean, people don't know what policyy's going to be or what the unemployment rate's going to be or what inflation's going to be in three years from now. They don't. So why ask why ask the question if if if any answer could be rendered redundant by by by the passage of time. Powell didn't like the dot plot either, but he didn't get rid of it. I I hope that worsh comes in and cleans up some things that market participants and economists know are just a bunch of hoie. I I think that the communication strategy that I think was invented by Bernani um >> is is it was necessary at the time to create a sense that the Fed was on things and would not allow more to happen bad like just happened because it was so fresh uh all the mistakes they made. But I think coming out of it, the communication policy has turned into a circus. It's a sideshow that I can't stand. And you're not alone. And and worse gets it. >> That's good. >> So, you know, I I hope and I hope also that some of the reforms that he presents are respected because a lot of Fed insiders don't agree with all the noise that's created. So, I hope that he gets some support internally as well. looking at what the Fed does and looking at all the things that have happened and looking at the current administration that is going to be overseeing this for the next, you know, couple years. Uh, is this a job that you think I I mean there two there's two ways to look at this, but I I can't imagine taking that job, could you? >> Yeah. No. >> I mean, it'd be an honor, of course. Let's let's be honest. Let's be honest. It' be an unbelievable honor to do that and really cool probably. But man, that seems like already I have a lawsuit breathing down my throat already. Exactly. And and by the way, my predecessor had criminal charges brought against him. >> Oh, yeah. Remember that? That's gone out. Is that all gone now? Is that done? >> It's not gone. >> And that's why that's why the senator um Tom Tullis is saying until it's gone, there's no vote for Worsh. >> Oh, right. That's a good point. And can he hold it up, though? >> Yes, he can. He he's the he's he sits at the at the helm of the committee charged with pushing forward with a vote in the broader Senate. So yes, Tom, yes, he can certainly hold it up. >> So here we are in February. This has to be approved by when? Aprilish? Midappril, let's say. >> Uh yes, >> which is like, you know, uh not a long time for the Senate to do anything. And we have to then drop the charges. uh we have to get drop the charges on Powell in the criminal lawsuit against his overspending or whatever it is with redoing the Fed, which meanwhile uh it's okay if somebody knocks down part of the White House just to say that, you know, and just builds a ballroom in a >> I I hope that project's on budget. >> There is never such a thing. But the question still is we don't know if the Fed because that was a that was a big budget. That was that. Listen, I don't care whether it's worth it or not. That was a big budget to redo the Fed. >> Well, you tried dealing with Washington DC building code when you've got a 1937 structure that's probably full of of lead and asbestos. >> Yeah. Oh, I I get it. I get it. Listen, if nothing else, it's going to be once again good news for us because lots of good things to talk about in the future when it comes to what's going to go on because clearly it's a daily race to find the more interesting thing that is kind of like uh every 5 minutes we got to change. Well, let's let's let's finish up and talk about this then. Yes, last week we saw that there was a change in the tariff policy that went from, hey, you can't do this, it's illegal, to, hey, the good news is, according to the administration, it's better than ever now because we could do it a different way and collect even more money. Tariffs seemingly not getting into the way of inflation in a serious manner because many companies have absorbed a lot of it. FedEx is going to be suing is suing to get its tariffs back. if they win or something, there's going to be a whole crazy thing. I personally want my tariffs back. I pay tariffs on something. I must have increase the price somewhere along the way. What do you think about what's going to happen now moving forward and um the impact of tariffs in this cycle of tariffs on the economy? You know, it's it's hard to say because the speaker of the house, Mike Johnson, has come out and said that he doesn't know that that Congress will allow these tariffs to proceed given the Supreme Court saying that tariffs are the purview of Congress. This is it's the power of the purse. So I don't I don't know that there's necessarily an easy pathway to impose these tariffs as much as you want to talk big about them. >> Well, but but it would seem like if I was Congress, which is uh you know, there's a lot of people that come under that category, right? If I was the totality of Congress in a single vote, I would try to assert myself to make sure that I maintain some kind of ability to control what I'm supposed to be controlling because pretty much right now the whole country is being uh run by executive order. >> Exactly. And these politicians are starting to get very nervous about the midterms and they should be. And this is the first time that we've seen really any push back or even even a pulse out of this Congress which which has done nothing. I mean the only thing this Congress has done is sort of keep the government sort of open. >> Yeah. Mostly open. >> Well, I mean, you know, when you when you wake up over the weekend and you see that, you know, TSA and Global Entry are going away and then they're like, "No, no, we take it back." You know, TSA is still there. And then, >> ah, it's still amateur hour. Let's be honest. It's still amateur hour. It is. It is. It is. It is. And And I think that >> if if Congress is going to make a stand, they'd better do it quickly or they're going to find themselves out of office. >> Yeah, I would agree with that. Listen, everybody, go over to Quill Intelligence. Uh we'll put links on the website. Anywhere else you want people to check out and go. >> Uh come to dartaboot.substack.com. You can find the daily feather there. Um and I'd love to have you come on as a reader. We publish every trading day of the year. >> That's great. Good stuff. And it's it's great, insightful, brilliant, and wonderfully written, by the way. >> Thank you. >> Yep. Great stuff, Danielle. Always a pleasure. I'll talk to you soon. Thanks so much. >> Take care. >> Thanks. That wraps up this episode of the Discipline Investor podcast. Another great one. Next week coming up, you don't want to miss it. Ross Gerber is lined up. And after that, we have the founder of Interactive Brokers, Tom Perfe. So great guests going to join us, give us great information and teach us and the price is right. Right. All I ask you to do is uh go over to your favorite podcasting app and right now this second go give a review and if you have any questions on what we do, how we do it, why we do it, go over to the disciplinedinvestor.com and uh share your information with us. Go over to ask Andrew or any of the other areas to contact us and let me know what's going on. And we love you as a client. By the way, if you have money to manage, that's what we do. IAS, pensions, individual accounts, trusts, charities, all of that is what we specialize in. Thanks for joining me this week and every week, and I'll see you again real soon. This podcast is intended forformational purposes only and does not constitute personalized investment advice. Investing involves risk, including the possible loss of principle and past performance is not indicative of future results. The views and opinions expressed are those of the host and any guests and may not necessarily reflect those of Horowits & Company Inc., an investment adviser registered with the US Securities and Exchange Commission. Registration with the SEC does not imply a certain level of training or skill. Advisory services are only offered to a client or prospective clients where Horowitz company is properly registered or is excluded from registration requirements. Any mention of thirdparty companies, products or services is provided forformational purposes only and does not constitute an endorsement. Hypothetical scenarios or forward-looking statements are for illustrated purposes and should not be viewed as guarantees. Content is intended for US residents only and may not be applicable in other jurisdictions. Listeners should consult a qualified financial adviser before making any investment decisions. Please visit our website for additional information, disclosures, as well as a copy of our form CS. Advertisements are not related to the host or affiliates and are not considered recommendations by the host of the show or any affiliates department.
TDI Podcast: Reality Bites (#962)
Summary
Transcript
This episode is sponsored by Interactive Brokers. And have you ever wondered if the year-over-year change in the US CPI would exceed 2.6% in February? At IBKR Forecast Trader, the yes, recently priced at 48% and the no at 50%. But markets move fast. Forecast contracts let you turn your views into trades on future events like the economy, climate change, and politics. With simple yes or no prediction style contracts, you can explore trending data, spot the trends, and if you get your prediction right, you'll earn $1 per contract at settlement. Plus, you'll earn 3.14% APY on your investment with an interest-like incentive coupon, and you'll get $3 for signing up with IBKR Forecast Trader, which you can use for any purpose or to start trading. Forecast contracts are not suitable for all investors. Go to ibkr.com/fors into IBKR forecast trader contracts today. Last trading day for this contract is March 11th. >> The Disciplined Investor is all about you, your money, and the markets. Sit back and get ready for this edition of the Disciplined Investor podcast. This episode of The Disciplined Investor is sponsored by Horowits & Company. If you're looking for a portfolio manager, look no further. Horowits & Company. From seed through harvest, cultivating financial success. The market's not thrilled with tech. Mortgage rates slip below 6% on the 30. February ends with a dud and looking at the Fed's next move with our guest Danielle D. Martino Booth, founder of Quill Research. All this and much more on episode number 962 of the Disciplined Investor podcast. Hey, it's Andrew Horowitz and welcome to another great episode of the Disciplined Investor podcast. Thanks for joining me and thank you for all your notes and things that you've written, said, commented, and uh I appreciate you. I just want you to know that. Now, before we jump into this week's AI earnings drama and what it means for your portfolio and some of the things that we'll talk about with our guest, I wanted to take a just a quick second to shout out something awesome from last week's show. And and if you caught our discussion on annuities, especially those variable annuity ones with their long lockup periods and steep surrender charges, that whole 1035 exchange game where agents will reset the clock for more commissions, that's the whole point of it all. You know, we didn't pull any punches during that discussion, right? We talked about how these products felt like to a degree financial like uh handcuffs and um you know with those really long penalty periods to get out and if life throws you a curveball you're stuck like a health issue or needing for some cash I don't know fix your roof or something like that and and and I warned and I talked about all these sales incentives that often really are put put ahead against your needs. It's really what's the needs-based selling that's going on here. It's the agents needs that are basing the selling of what's going on here. But what I wanted to tell you was that the response kind of blew me away. So many of you reached out and contacted us about, you know, what is going on. Let me know what's happening. you shared your details about what exactly you're holding in your portfolios and here's an eyeopener. A a a shocking number of the stuff that came through was exactly what we talked about last week. you know, these high variable annuity fees contracts with multi-year surrender schedules and these riders that sounded really just too good to be true, which they probably are, but eating into returns because it's so expensive and there's guarantees that come in with these really steep hidden costs. And it was kind of I I was at first when we started to think about if we wanted to really punch this in the face pretty hard. This whole idea of this annuity practice, we're like, well, you know, is that something we want to do? Because we don't really talk about that too much on this show. But I said, you know what, we even have a place in my book, The Disciplined Investor, essential strategies for success on annuities on guaranteed investment contracts or gicks, GIC's. And I said, you know, it's about time we talk about this. It's nothing that uh should be hidden or not talked about. It's something that needs to be discussed because so many people have these within their portfolio. And it was it was it was I was really happy to do it. It validated the reasoning and rationale as to why we were going to do it. But at the same time, I found it a little concerning to see how widespread these issues really are. And don't worry, you're not alone. You're definitely not alone here. I could tell you're not alone because of all the people that wrote us, right? You're not alone in this whole thing. And I say that because so many really smart and and and diligent investors got sold on this whole safety pitch. So, a lot of people asked a lot of things, you know, what should I do? Should I should I 1035 this? What's the, you know, what can I do? Could I lad? So, we're going to go circle back on on some of those specific issues maybe in an income. Well, we will eventually in um an upcoming segment, but maybe even maybe even dedicate an entire episode talking about this and maybe bring some experts in aside from just, you know, hearing it from me. But if you're sitting on one of these wondering if you still if it's still right for you, uh you know what, listen to last episode. So, thanks for trusting us with this and it's why we do the show, by the way. It's your feedback, your your uh participation in this is not a one-way conversation. This is definitely, if you haven't figured it out yet, it's a two-way conversation. Yes, I'm the only one with the microphone right now, but the bottom line of all this is that you are involved. You're you're listening because there's something you're getting out of all this. And I think a lot of that is making sure that you you are validated in what you're doing and making sure you're staying on the right path. So, we're going to cut through, of course, the noise from all that's going on in the markets and talk about what's happening. There's been a bit of a roller coaster ride courtesy of of Nvidia. We saw that Nvidia came out with the earnings the day before they came out with the earnings. We'll talk about that and then where happened. So, I guess we should just start with the headline, right? What we saw was on Wednesday of last week, we saw that there was uh earnings after the close that came out for Nvidia and everybody was really pent up and thinking about like what is it going to be? Is it going to meet all the the the excitement that we think it's going to be? And you know, when we talk about what's happening, well, Nvidia ended up down about 5% on the day after the earnings. They were up about two and a half 3% on the print because the numbers came out pretty strong, right? Um the day before on Wednesday, everybody was in high anticipation of this. The S&P climbed on Wednesday about almost 1%. NASDAQ jumped about 1.3%. That was pretty much given back after the Nvidia earnings. Um, tech was leading. Tech was fading. And Nvidia again was was really up ahead of its earnings because there was this big hype and buzz and valuation to be damned. Who cares? Let's just get in there. Thursday morning, we saw the uh the the the realization click in a little bit. Um revenue is 68.13 billion. Uh pretty big beat by the way on expectations that were up enormously on a year-over-year basis. Guidance looked really solid, but again 5% down the next day. Again, it was on the print with all the numbers that came out initially right before Jensen Wong really got to the stage talking about things in the morning that he did some interviews early early morning on Thursday. It was um NASDAQ was down about a percent and a half. The S&P dropped around 1% give or take throughout the day. Was down about 1.2% for for part of the day. It did come back a little bit. But what's really what what's what's what's eating Gilbert grape here? Like what's the problem? Um I think the fact of the matter is that even though this came back a little bit, um the truth of the matter is that this rotation about maybe there's a better place to be right now is uh something, right? So, so why was this big sell-off happening? You know, what happened here? I the only thing I can think of right now is it's it's this classic sell the news phenomenon. But I think deeper if you really think about what's going on here that I think investors really wanted this reassurance that the AI spending spree this massive hundreds and well trillions of dollars really but hundreds of billions of dollars by the hyperscalers like you know Microsoft Amazon and Google Meta Oracle hoping it's going to you know would deliver returns fast enough to justify the trillions in capex that's being spent right now. And I don't think this was really about one earnings report either. I think it's a microcosm of 2026 in totality, right? Big investing story so far has been that, hey, we're very worried about what's going on here. Can they really keep up? Are we going to see the returns? And that AI trade that dominated 2025 that carried into January, which pushed the S&P 500 above 7,000 miraculously for the first time ever. February was like, "Oh man." As a matter of fact, the NASDAQ is having the worst months in many, many months. I think it was a reality check. The check about lofty valuations, the questions about AI uh AI uh return on investment, ROI. And when we saw that the broadening out of investors thinking that maybe there's other places to invest like energy, uh like health care, like utilities, those areas got a lot. Remember, don't forget January, what happened there? We saw the S&P was up about one and a half%, the J was up 1.7. And that was all despite all the geopolitical noise, all the headlines that said anything other than buy, right? It was like no. But the markets were resilient. Energy surged 14%, materials, staples were up a lot, and again, tech and financial lagged. Now, what did that say? I think that was a hint that was a little bit of a tell that there was this rotation going on on away from this pure AI play that had been invogue for a while and going toward the cyclical sectors. Now that we saw Nvidia, it almost feels that that rotation was spoton. Now, this whole big AI infrastructure spending, the the the binge that has been going on with Alphabet just rose just raised uh what was the number like 30 plus billion dollars in bonds. And let's not forget, we'd be uh remiss if we didn't mention the hundred-year bond that they issued to fund their data centers. Oracle did what, a $25 billion bond earlier in the month. So combined the AI spenders are issuing like 120 billion dollars already last year with projections topping 500 billion potentially 2.5 trillion in total corporate issuance this year up nearly 12% and leading that is of course the AI trading. Now, right now, bond investors, usually the calm ones in the house, are ranking the AI bubbles, their top risk, for the first time in a Bank of America study that recently came out, up from 9% in December to 23% now. and software stocks that got hit hard early this month on fears of this you know disrupt disruption by uh Anthropic and any other name anyone any other AI that you want but Anthropic's been the one like what happened when they announced the cobalt enhancer that really whacked IBM the worst performance in any day down 13% this week or that one day actually on this hit and that was uh the worst since like 2008 eight. So crazy. At the same time, let's not count AI out. Let's not kind of throw the garbage pail and say that's it, that done. Fine, it's gone. Nvidia's results show an incredible demand for GPUs, right? Micron, which you may have been watching, memory chips for data centers up 50% in 2026 after like a 240% gain last year. You see what's going on in Korea? Korea up 53%. the the the market in Korea, the stock market in Korea up 53% this year, it's called Cosby. Cloud giants like Amazon, Microsoft, massive backlogs even though their stocks dipped. So, we're still looking for about a 12% increase in overall growth in 2026, well above the 8% long-term average. So, there's something to be said there. So, I think that's important. Now when we look at some other things right the the Fed holding rates steady in January with you know maybe two to three and we'll ask Danielle D Martino Booth about this but you know what's going to happen inflation's been cool cooling a bit jobs adding modestly but you know we say 4.3% rate so got policy wild cards Supreme Court ruling on tariffs which didn't really change anything just throwing a 10% and a be 15% on top of it. Um so what does this mean all of this when we take this and consolidate this compile this together and think about what is going to be in the future right now I do think that there is a lot of sagging uh optimism which means uh is it called deoptimism like disinflation disoptimism like dis disinflation we have disoptimism but AI isn't dead it's maturing right the easy money from the hype is probably over right now we're looking for execution, profitability. We have to see the revenue. You got to look at things like what's going to happen with a turnaround from like companies like Snowflake and Salesforce. But but I think we got to really consider diversity beyond mega caps, right? Energy, materials, staples, healthcare, pretty good valuation is going to matter. Again, that's the important thing here. The S&P is at premium levels right now. And if earnings growth accelerates as forecast, it's going to justify those prices. That doesn't I don't think that surprises anybody. But any slowdown in the AI adoption of Fed pauses, that's where you're going to have some problems. And I think that's what we're seeing the geopolitical uncertainty starting to kick in to all of this right now because it's not all just, you know, peaches and cream right now. Look, volatility is back. VIX at 20. And I think what this week's action reminds us is that markets are great at climbing walls of worry. Let's agree with something, right? AI, it's transformative, but not immune to scrutiny and questions. So, as we head into the rest of February, we got to stick on earning season Fed signals, whether the bull broadens out right now. I think that's a lot that's going on that we need to pay attention to. But, uh, as with every cycle, there's overhype and then pullback. Right now, we may be in the pullback area. It may not last a long time as we've seen. One, two, three days is probably all it can get. Any pullback has been a sign of any, you know, just let's buy, let's get in there, let's go for it. That could be what we're seeing right now. It may be a great opportunity right now, but the rotation where we're seeing small caps pick up international do amazing and just tech is the one that's really being questioned right now. Not the worst thing overall for people that are smart and looking for the right place to be. If you're just a passive index investor and that's all you do, well, you know what? That's what you're going to get. You got the opportunity on the upside. And if that caves and those 10 15 stocks don't do well and you stick it on the S&P 500 and the NASDAQ 100, well, what's going to happen there? We're going to get to our guest segment right now, but uh going to talk about IBKR for a second because I know you do your your your research, right? You research your investments, you analyze markets, you manage risk, but did you research your broker? In 2025, IBKR clients outperformed the S&P 500. Retail clients averaged 19.2% while hedge fund clients averaged 28.91% compared to the indexes 17.9%. IBKR's lower trading costs, competitive rates, efficient execution, and access to more than 170 global markets helped investors keep more of what they earn and put more capital to work over time. The broker you choose makes a difference. Interactive Brokers member SIPC. If you care about performance, find out why the best informed investors choose Interactive Brokers at ibkr.com205. Let me introduce Danielle D. Martino Booth, a crowd favorite. She's the founder of Quill Intelligence and what she wanted to do when she set that all up and founded it. She wanted to launch a research revolution and redefine how markets intelligence is conceived and delivered. So to build Quill intelligence, she brought together a core team of investing veterans to analyze the trends and provide critical analysis on what is driving markets both in the United States and globally. She's considered, and I agree with this, a global thought leader on monetary policy, economics, and finance. She's also the author of Fed Up, an insiders take on why the Federal Reserve is bad for America. has a column on Bloomberg View, is a business speaker, commentary fre commentator frequently on CNBC, Bloomberg, Fox News, what else? Fox Business News, u Yahoo Finance, and prior to Quill, she was spending her time at the Federal Reserve Bank in Dallas, where she served as advisor to President Richard W. Fiser throughout the financial crisis. So, let's uh bring her on and uh get it going. Hey, how are you? >> I'm great. I'm fantastic. How are you? >> I'm pretty good. Pretty good. Um, it's been a little bit cold down here in South sunny Florida in the 40s, but uh I guess compared to the rest of the country, it's pretty good. So, >> we're we're going up to 80 tomorrow here in Dallas. So, I'm I'm just as happy as you are. >> Yeah, exactly. Well, I want to talk about, you know, I like to um you've been on many times, of course, we talked about some things here, but I kind of got a few things I wanted to ask you about, like to find out more about you, and I kind of dug up a few things. Uh >> oh. >> Oh, yeah. So, we all know about your business side, your acumen, all the things you do. We're going to get into the discussion of the Fed and that what's going on, interest rates, your predictions, and all that, but what was going on in Mexico when you were 17? Oh wow. Um that's kind of a timely thing is given I spent most my time in Guadalajara which is in the news these days. >> I was supposed to be there by the way on March 9th. I was going to uh Hienda Patron. I was invited to do a tequila tasting and farm tour and dinners and they were putting me up but we canceled it. >> Yeah. It's um it's a really iffy time in in Mexico. you know, when I was there after I graduated from high school, that was my trip that I went on with my best friend in the world. Um, who's actually still my best friend in the world. She lives a block and a half away. We we met when we were 13. Um, but uh, you know, I had grown up in San Antonio, Texas, in a certain area where uh where Mexican nationals had second homes, took their children to send them to US schools. Uh, I I kind of grew up speaking Spanish and living the the culture. So I um So off I went to go visit Mexico for six weeks. >> There was a bit of a solo time there too, wasn't there? >> Um I mean I >> No, it it was just with her. No, no, I mean I I mean I I think the funniest takeaway from that trip is >> uh and it really doesn't have to do with tequila, but uh it you know I had read naively don't drink the water. >> Well, this was you know prior to bottled water being a huge thing. >> I didn't drink I almost lost a kidney because I I really didn't drink any water for like a very long time which by the way I don't recommend. >> Yeah. No good. And then you had a summer internship in Venezuela. >> I did. Uh I I think that um I think that all of the professional and academic experiences that I had that was in between my first and second years of business school getting my MBA in finance before I went off to Wall Street that I learned the most about economics over that summer in Caracus. Um the the country clubs were on the water uh which is the Caribbean. I mean, astonishingly beautiful, >> but you had to drive through poverty that was absolutely indescribable to get to these country clubs. >> And it was, you know, it was Venezuela's answer to The Great Gatsby. >> And I remember as I was leaving the country thinking to myself, uh, you know, this is not going to end well. And you know what? Shortly thereafter, Chavez rose to power. >> Yeah. It's like when I was in India, it's like in a way you have to walk over the dead people to get your cocktail, you know, it's like it's horrible, right? You know, it's like this you feel like the whole time. Then then of course, you know, you you you enter a compound or something and you forget about and it's meant to forget about everything else. But yeah, it's sad. And then I think, tell me if I'm wrong about this, you and I have something in common. We both have >> uh preeie twins. >> Oh gosh. Yes. >> Mhm. Mine are a little bit older than yours, I think. Uh we've never talked about this before, but my I have girls that are 35 and they were little bitty chicken nuggets in the incubators when they were born. >> So mine um mine just turned 18 and they're seniors in high school, boy, girl. And uh they they were uh 415 y >> and 51. >> Uh and the girl who was the smaller of the two dropped down into and she she had a three handle on her weight. >> Wow. before things kind of stabilized. It was in the middle of an ice storm in Dallas when they were born. And uh I actually did not meet her until she was 5 days old when they finally >> pushed me um in a wheelchair cuz I had >> maybe suffered a close to a heart attack the day the twins were born. So I was pretty sick myself right after they were born, but I didn't meet her until she was 5 days old. We're best friends now. So I um I love >> love having the one girl. Uh, the three boys keep me on my toes. They whatever they say about the frontal, you know, about their brains not developing until they're 25 is true. >> I'll attest to that. Maybe 25, >> maybe 50, you know. Yeah, give or take. >> So, let me tell me one more thing that people don't know about you just as a personal interest item. your favorite dessert, your binge food, weirdest thing that ever happened to the Fed, something just something that nobody knows. Maybe that a few people know. So, I mean, you know, if um if you've read my book, Fed Up, you may remember this, but to me at least, the most shocking moment when I was at the Fed, mind you, I had been on Wall Street, you know, my entire career, and I I I dressed what I felt to be appropriately to go to the office, and one of these kind of scruffy academic sorts that would wear the the the sweaters with leather patches. >> I can see this with the beard, a scruffy beard kind of thing, right? Yeah. >> Yeah. I mean, nothing you would bring home to mom necessarily, but he uh he said, "Well, you know, if nothing else, at least you do have a master's degree from Colombia and and you certainly dress better than anybody in the building." And I was like, "I don't think that's an appropriate thing to say." I didn't care. I was never about sensitivity training. Um, but it just it struck me as as so pompous >> and and I I look now I listen to to some of the things that these Fed officials say that sound like they're so far removed from the rest of the population of the United States. None of it surprises me. >> But the these >> they are far removed, >> right? But these guys also the heavy well, it doesn't mean them, but you know, the heavy academics, they're socially inept, right? They they have social and and and they're not they're not they they march to a much different drummer. You know, it's it's not like these are the guys and gals that you're going to go probably have weekend parties with and, you know, find them on a beach laying down. I mean, they're going to be head deep in some kind of really crazy book that's going to have the Dewey decimal system all over it or something. Well, I will say that they're not socially Well, I will say that there's a lot of social awkwardness. >> Yeah. Exactly. Yeah. Yeah. Yeah. Socially awkward. All right. Let's talk about this now. Um on talking about the economic outlook. Now, am I understanding that your latest writings and your base case is for four rate rate cuts in 2026? Do I have that right? >> You have that right. >> I have that right. So, and I think concentrated in somehow well the first half of the year, but we'll let we we'll let the timing go for a second. So I guess the question I have is what are you seeing from a perspective of key data points like I I guess the the the unemployment situation that although the rate went down we didn't count the million people some of the corporate layoffs with regard to like the the uh latest um who am I thinking the Christmas uh >> challenger grand Christmas >> challenger I love I love that name by the way um or what what is driving your view on this to be confident that all right four great cuts when kind of a lot of people are saying much different comments. >> Uh well so I I speak to the people at macro edge and they tend to have uh the jump on challenger data. They follow job cut announcements in real time. So looking forward they know that job cut announcements for the month of February are higher than what they were in January. in January's were high. So they I think there were about 112,000 um the warn notices from from individual states um they have not dissipated. Uh so the the the layoff train has not stopped and the reason um the the reason I'm as uh not sanguin as I am is because the revisions that you mention show that net job losses occurred in the second quarter of 2024. And one vet official who I do know goes to the beach. Um, I've been to the beach. I've been to the beach with Christopher Waller. We spoke at a at a we both spoke at a conference in the Bahamas a few years ago and I know that he went back this last year. Um, so um he is kind of an on the ground with it not so academic Fed official who who looks at alternative data sets, but in in his most recent comments he said it looked like there were job losses throughout 2025. So um and we happen to agree with that. So, we won't know for another year, but everything we know is that the average job creation in 2025 was 15,000. That's5 per month. >> Low. >> And that's >> much below the required amount. >> Much below the required amount. And that is easily going to get revised away when we do see the data. The reason I I drag you through all the these weeds is that if we know that we've been in a job losing environment for upwards of 18 months, that means that the onus is on companies to stop firing in 2026 in order to hope for a turnaround in the labor market. So whether it's the one big beautiful bill and the ability to pull forward um investment, something is going to have to turn the tide of layoffs to hires. >> And that's kind of where kind of where I sit. What what's interesting to me is it seems to me there has been a concerted effort and almost a you know he who protests too much of all these companies that are coming out talking about how AI is not going to be about job losses is going to be about productivity. I don't know about you, but let's say I have 25 people that work for me and I just goose my productivity in an area like dramatically, which means to me at least that wait a minute, I could do a lot more with a lot less. Therefore, I have two choices. Either try to keep on growing with the current employees to a next level or maybe cut somebody back and save some expenses. the idea that many of these companies that are talking about not having that AI will not, you know, you see it all the time. No, no, no, no. We're not going to fire anybody, you know, and um this is just going to, you know, increase productivity. But you add that to all the jobs loss that we saw and maybe that's intertwined or not. I there seems to be something ringing true about there is a uh potential jobs issue on the horizon. it. Look, there absolutely is. And if if you wanna if you want to find out what the truth is, you know, we were talking about my twins being 18. You know, I' I've got a 21-year-old who's graduating um from uh with with his degree in finance and visiting him over the weekend in Austin, talking to some of his friends, seeing the white hot panic of these kids who are not getting jobs. uh because AI has effectively in multiple industries just sawed off the first two three rungs of what we would consider to be a career ladder. They don't they don't need these entry- level positions. They can just plug it in. >> Yeah. >> And produce what these entry level workers once produced. So to me that is you really don't need to debate it. You just need to go get on the ground and listen to what is happening with kids who are have some serious buyer remorse >> when it comes to what did I just spend the last four years of my my life doing exactly if I can't get a gig. That's a that's the fascinating thing about this cycle that we could be seeing that where many people over the years have tried so hard to get into the right school to do the right thing and you know they want to make all this money on either Wall Street and as a as a lawyer as pick whatever you're doing. Uh whereas the blueco collar job actually where you work with your hands that can't be replaced. The plumber, the electrician, the contractor, the construction worker, those people are more potentially safer from the aspect of being replaced. Not because of a slowdown, but safer than some of the white collar. >> They absolutely are. I mean, in talking to my boys, I'm like, well, you know, you've got a degree in you're going to have a degree in finance. um maybe you should go to trade school and learn the HVAC trade and start an HVAC company and and run a tight ship. Um I'm I'm speaking partially tongue and cheek. >> Yeah. >> I'm also suggesting that the more kids understand where the opportunities lie, the more they can apply the skills that they have. And if it's at the intersection of trade and what we used to consider to be traditional business, then so be it. That's where they have to go. You have to ski to where the puck is. >> That's obviously the point. And it's funny though, you know, all these people that have been going in the private schools and schools and they hire all the coaches to get them into colleges. that whole track that has been a big thing and for a lot of people over the last however many years. You got to wonder if that track of of doing everything that that culminated by the way in fraud in California and all those people that were getting remember the whole the the people getting >> um it's kind of fascinating to me that that that may be we're almost going backwards into uh a time where trade schools were more important especially at what the uh the professional schools have pulled the crap they've pulled over the last number of years. It's all really coming down on them pretty hard. >> It it is and it's got to be unsettling not just for the kids but for their parents who don't necessarily want them to come back home. Um and and again that's why I say you know it's it's the intersection of trade and and and skill sets uh that will hopefully help a lot of these these kids find a new pathway because it does not look like it's going to be um kind of what they were expecting. >> Yeah. Now, >> I I just hope that they don't take this anxiety and this nihilism straight to the polls in 2028 and give us the next answer to socialism in the, you know, in the White House. I mean, >> that's what happens though when the pendulum swings too much one way, which is why I don't understand why they allow, if they're smart, the pendulum to swing so hard because that just brings out the opposite. every action politically seems to have a an equal and opposite reaction when it when it swings so far. And I would I would just look at Madani in New York. How do we get there? >> That's that's exactly my point. And you know, the irony is there's you you've got a mayor who's steps into one of the highest tax rates in in in the world and you know his his next solution is to raise property taxes. I'm like well that that'll be popular. >> Love that. So with all your research at Quill right you do a lot of work um and you you come up with your analysis you know potential for four rate cuts. Now, if the Fed doesn't cut in March or April, have some have suggested, do you think that there's going to be a C? Well, I'm going to I'm going to ask this question, but I'm going to ask you two questions, and I'm going to reverse them. Sorry. Um, do you think that Wars is going to kind of play catchup with maybe larger, more aggressive cuts to address some of this weakening? Um, and then the second question, which I'm going to now make the first question, sorry about that. Uh, is Wars, let's talk about him. Do you think that he is going to be uh fundamentally a dove considering his past being much more of a middle- of the road kind of guy? And what do you think of him? >> Well, we're going to find out um if War has to play a serious game of catchup um on day one and whether or not he can he can build a consensus on the committee. >> Yeah. uh you know he he was on the board before so he's he's a known known he understands the institution uh he kind of left and disgusted during the financial crisis because so much of the advice that he was giving was being was being ignored by Bernani he's like hey this QE business is not good in the long run let's not do this anymore and and got the Heisman uh and we will see if he sticks to his personal and well-known publicly voiced philosophies on the perils of zero interest rate policy on the inefficacy of quantitative easing. I mean these are some of the same uh these are some of the same philosophies that one Jerome Hayden Powell had when he first took office in 2018. And we forget that his first congressional testimony, he basically said, "I don't care about the stock market." Which the stock market then slapped him in the face and he had to back down and and abandon his his own roots in terms of what he felt was appropriate for monetary policy. And in fact, the pendulum is swung all the way to the other side. He he in 2012, he was pretty concerned about having a $4 trillion balance sheet. Hence the irony of him blowing it up to nine trillion on his own watch. So when you look at this and you look at inflation numbers right now and and I think we have to all always comment that this inflation that has come down from X number much higher 8 9%. Down to you know 2 and a half 3% where we are now and some of the alternative measures which maybe you could talk about like what what shows from trueflation etc and and others like shadow stats. um we're still paying a lot higher prices and wages may or may not be keeping up with all that because if you look at wage the price of things five years ago to compared to where we are now just stocks groceries if anybody wants to talk to me about eggs and egg price how they come down and how that's a political win I'm going to take them out I challenge you to a duel you know what I'm saying because eggs had nothing to do with actual inflation it was a it was it was it was a bird flu culling that cut down the chickens and the hens and the that was a whole but they used it politically nicely, didn't they? Um, but when we look at inflation measures, are you think we're out of the woods yet? I think we might be going in the wrong direction with inflation, especially if if you follow trueflation like I follow true inflation. And by the way, a lot more people follow true inflation now that it's on the Bloomberg terminal than before. Now you can track it daily and graph it and you know begin to appreciate the trends of what it looks like to track 35 million prices in real time on a daily on a daily basis. Um, and you know, before I say what I'm going to say, I will I will agree with you. The fact that we have much higher prices than we did in 2020. Much higher. It there's there's very little solace in me then saying, "But wait, we have to be careful about disinflation." And you know on my Twitter feed I always get you know a ton of push back but prices are much higher than they were in 2020. I agree. I I I I don't deny that at all. But if we have disinflation set in against the backdrop of of in of inflation that is latent but sitting there. In other words, if your paycheck starts to shrink and your cost of living is still higher than it was five years ago, things are going to get really ugly really fast. And that's why I tell people that actual deflation is not a good thing because ultimately it lands in your paycheck. >> Right. Right. But but we could use a few years. Disinflation I don't mind at all by the way. Uh deflation is a whole different discussion. But disinflation would be kind of nice for a little while. Of course. I I couldn't agree more. >> I mean, just to kind of cool just to cool things off a little bit. That's all I'm saying. >> Yeah. No, look, look, the country is still peppered with with real estate agents misguiding and misinforming sellers, which has caused this housing market to be absolutely frozen. >> Yeah. >> I will say this much though, there are now more individuals in the United States with 6% mortgages than there are with 3% mortgages. So that will free up some inventory to go onto the market. But you know at this moment disinflation in rents is about the best thing happening for US households because at least they have some hope of of the biggest line item in their budget not being so ownorous. >> Yeah. >> Going forward. And you know, home prices do tend to follow rents, maybe with a massive lag. And you know, the only silver lining of the Fed holding pat and not lowering interest rates more, interest rates are at three and a half year low right now. They just broke 6% down. >> Just broke, >> which is nice. >> Mortgage rates. >> Yeah. >> But it's still not it's still not creating some kind of explosive amount of home buying activity. And that tells you that prices must come down. And you're right, that would be a great development. >> I mean, come by, you should come by me. They sell for a thousand bucks a foot here. >> Literally houses. You have a you have a a three or not even it's more than that. I I 25. Yeah, it's like three and a half million for a 2,700 foot home on the water. >> Could be on the water, but if not on the water, I've seen things at like 800 a foot minimum. >> It's insanity. Mhm. >> It really is. >> Now you >> and and that's why you've got so many families who who've got multiple generations under one roof. >> Yeah. Yeah. >> They're looking at it through a practical lens of, hey, mom and dad, you've got a huge house that no longer has anybody in it, right? >> And rumor has it on the street that you want grandchildren. Well, I've got a solution for you. Move into your own basement. >> We're all going to be I mean, listen, there are a lot of countries that do that. That is part of the thing. Philippines, you do that. The retirement plan in the Philippines. Do you know how that works? By the way, >> it's >> I thought you were going to say Italy. >> Well, Italy, but well, it could be Italy, but in the Philippines truly and some other Asian countries, but in in the Philippines, I I was in the Philippines asking people, "Tell me about your retirement plans." And every single one of them said the same thing. It's all about having children because the children will go out and work and then support the parents. You move in with them, they support you. That is your retirement plan. So, not that we want that to happen. My parents live in Boon. That's good. plenty of space between them and us to see them when we want and not see them when we don't want. >> Um but but you talk about worsh and I think in past discussions and things that I read from you I think the words you use was cautiously hopeful. Is that right? Cautiously hopeful. Right. I am >> I I am cautiously hopeful that he can that he can hold the line um and stick to his guns even if he's facing a lawsuit from the president which has already been promised >> who wores. >> Well, I I I believe I believe our fine president has said that if he did not lower interest rates, he would sue him. >> Oh. >> Um yep. I to quote >> Oh, that's funny. I I hope that he's able to keep maintain independence at the Fed Fed his fellow officials on the on the Federal Market Committee. They'll know really quickly whether he is just a pushover or if he's going to stick to his guns >> and and maintain the Fed's independence. We'll know real fast. So, so kind of getting to the bottom of all this thing here. Do you know are you concerned that um you know he's going to face a lot? I mean, obviously he's facing a lot of pressure already and and nobody seems to care about cleaning up the uh you know, the outstanding debt that we have here. It doesn't you know, we're back to not quantitative easing, but they don't want to call it that, god forbid, which it is, by the way. But they're repurchasing the rolloffs, not allowing them to roll off. In other words, so do you think that one of the things that could happen, which it seems to me, so you tell me because I would I'd like your opinion that that there's going to be a lot of reforms that will be put in to the FOMC um and the Fed, the Fed primarily from Mors. Is he going to be a reform guy or is he going to be just a kind of get through it kind of guy? I I think he is going to try and and reform the Fed and I I mean I wrote a whole book about it. Good for him. Um you know, he's not so gung-ho on forward guidance and, you know, broadcasting to the world what what the Fed's going to do next. I hope he decreases communication. I mean, just as as as the two of us are speaking today, there have been like I don't know, eight different Fed appearances, only two of which were from voters. the others create what I call, and this is a technical term, noise. Um, but I I'd love to see him come in and and get rid of the dot plot. I mean, people don't know what policyy's going to be or what the unemployment rate's going to be or what inflation's going to be in three years from now. They don't. So why ask why ask the question if if if any answer could be rendered redundant by by by the passage of time. Powell didn't like the dot plot either, but he didn't get rid of it. I I hope that worsh comes in and cleans up some things that market participants and economists know are just a bunch of hoie. I I think that the communication strategy that I think was invented by Bernani um >> is is it was necessary at the time to create a sense that the Fed was on things and would not allow more to happen bad like just happened because it was so fresh uh all the mistakes they made. But I think coming out of it, the communication policy has turned into a circus. It's a sideshow that I can't stand. And you're not alone. And and worse gets it. >> That's good. >> So, you know, I I hope and I hope also that some of the reforms that he presents are respected because a lot of Fed insiders don't agree with all the noise that's created. So, I hope that he gets some support internally as well. looking at what the Fed does and looking at all the things that have happened and looking at the current administration that is going to be overseeing this for the next, you know, couple years. Uh, is this a job that you think I I mean there two there's two ways to look at this, but I I can't imagine taking that job, could you? >> Yeah. No. >> I mean, it'd be an honor, of course. Let's let's be honest. Let's be honest. It' be an unbelievable honor to do that and really cool probably. But man, that seems like already I have a lawsuit breathing down my throat already. Exactly. And and by the way, my predecessor had criminal charges brought against him. >> Oh, yeah. Remember that? That's gone out. Is that all gone now? Is that done? >> It's not gone. >> And that's why that's why the senator um Tom Tullis is saying until it's gone, there's no vote for Worsh. >> Oh, right. That's a good point. And can he hold it up, though? >> Yes, he can. He he's the he's he sits at the at the helm of the committee charged with pushing forward with a vote in the broader Senate. So yes, Tom, yes, he can certainly hold it up. >> So here we are in February. This has to be approved by when? Aprilish? Midappril, let's say. >> Uh yes, >> which is like, you know, uh not a long time for the Senate to do anything. And we have to then drop the charges. uh we have to get drop the charges on Powell in the criminal lawsuit against his overspending or whatever it is with redoing the Fed, which meanwhile uh it's okay if somebody knocks down part of the White House just to say that, you know, and just builds a ballroom in a >> I I hope that project's on budget. >> There is never such a thing. But the question still is we don't know if the Fed because that was a that was a big budget. That was that. Listen, I don't care whether it's worth it or not. That was a big budget to redo the Fed. >> Well, you tried dealing with Washington DC building code when you've got a 1937 structure that's probably full of of lead and asbestos. >> Yeah. Oh, I I get it. I get it. Listen, if nothing else, it's going to be once again good news for us because lots of good things to talk about in the future when it comes to what's going to go on because clearly it's a daily race to find the more interesting thing that is kind of like uh every 5 minutes we got to change. Well, let's let's let's finish up and talk about this then. Yes, last week we saw that there was a change in the tariff policy that went from, hey, you can't do this, it's illegal, to, hey, the good news is, according to the administration, it's better than ever now because we could do it a different way and collect even more money. Tariffs seemingly not getting into the way of inflation in a serious manner because many companies have absorbed a lot of it. FedEx is going to be suing is suing to get its tariffs back. if they win or something, there's going to be a whole crazy thing. I personally want my tariffs back. I pay tariffs on something. I must have increase the price somewhere along the way. What do you think about what's going to happen now moving forward and um the impact of tariffs in this cycle of tariffs on the economy? You know, it's it's hard to say because the speaker of the house, Mike Johnson, has come out and said that he doesn't know that that Congress will allow these tariffs to proceed given the Supreme Court saying that tariffs are the purview of Congress. This is it's the power of the purse. So I don't I don't know that there's necessarily an easy pathway to impose these tariffs as much as you want to talk big about them. >> Well, but but it would seem like if I was Congress, which is uh you know, there's a lot of people that come under that category, right? If I was the totality of Congress in a single vote, I would try to assert myself to make sure that I maintain some kind of ability to control what I'm supposed to be controlling because pretty much right now the whole country is being uh run by executive order. >> Exactly. And these politicians are starting to get very nervous about the midterms and they should be. And this is the first time that we've seen really any push back or even even a pulse out of this Congress which which has done nothing. I mean the only thing this Congress has done is sort of keep the government sort of open. >> Yeah. Mostly open. >> Well, I mean, you know, when you when you wake up over the weekend and you see that, you know, TSA and Global Entry are going away and then they're like, "No, no, we take it back." You know, TSA is still there. And then, >> ah, it's still amateur hour. Let's be honest. It's still amateur hour. It is. It is. It is. It is. And And I think that >> if if Congress is going to make a stand, they'd better do it quickly or they're going to find themselves out of office. >> Yeah, I would agree with that. Listen, everybody, go over to Quill Intelligence. Uh we'll put links on the website. Anywhere else you want people to check out and go. >> Uh come to dartaboot.substack.com. You can find the daily feather there. Um and I'd love to have you come on as a reader. We publish every trading day of the year. >> That's great. Good stuff. And it's it's great, insightful, brilliant, and wonderfully written, by the way. >> Thank you. >> Yep. Great stuff, Danielle. Always a pleasure. I'll talk to you soon. Thanks so much. >> Take care. >> Thanks. That wraps up this episode of the Discipline Investor podcast. Another great one. Next week coming up, you don't want to miss it. Ross Gerber is lined up. And after that, we have the founder of Interactive Brokers, Tom Perfe. So great guests going to join us, give us great information and teach us and the price is right. Right. All I ask you to do is uh go over to your favorite podcasting app and right now this second go give a review and if you have any questions on what we do, how we do it, why we do it, go over to the disciplinedinvestor.com and uh share your information with us. Go over to ask Andrew or any of the other areas to contact us and let me know what's going on. And we love you as a client. By the way, if you have money to manage, that's what we do. IAS, pensions, individual accounts, trusts, charities, all of that is what we specialize in. Thanks for joining me this week and every week, and I'll see you again real soon. This podcast is intended forformational purposes only and does not constitute personalized investment advice. Investing involves risk, including the possible loss of principle and past performance is not indicative of future results. The views and opinions expressed are those of the host and any guests and may not necessarily reflect those of Horowits & Company Inc., an investment adviser registered with the US Securities and Exchange Commission. Registration with the SEC does not imply a certain level of training or skill. Advisory services are only offered to a client or prospective clients where Horowitz company is properly registered or is excluded from registration requirements. Any mention of thirdparty companies, products or services is provided forformational purposes only and does not constitute an endorsement. Hypothetical scenarios or forward-looking statements are for illustrated purposes and should not be viewed as guarantees. Content is intended for US residents only and may not be applicable in other jurisdictions. Listeners should consult a qualified financial adviser before making any investment decisions. Please visit our website for additional information, disclosures, as well as a copy of our form CS. Advertisements are not related to the host or affiliates and are not considered recommendations by the host of the show or any affiliates department.