By coinnews 
00:00 Speaker A
This is a market characterized, I think you called it um, disconnected resilience. What does that mean exactly? Walk me through it.
00:12 Speaker B
Well, it’s a little fancy and it’s a little bit more of an idea that it came with, came up with, uh, you know, earlier over the weekend. Obviously, a lot has changed today. But the idea is that six months ago we had a lot of ideas about what would send that market higher, you know, um, and with a new administration coming in, it could be, uh, you know, lower taxes, it could be less regulation, it could be, uh, you know, uh, just a better business environment, a better economic environment. Uh, a lot of those things didn’t really happen, yet, at least. And we’ve got some pretty, um, you know, pretty hard, uh, uh, sort of things to work through uh, in the economy with these higher tariffs, uh, with a lot of uncertainty, with a lot of unknowns. Uh, you’ve seen it from corporations as well. They’ve uh, out of the S&P 500 companies about 55% of them that give earnings guidance has lowered them this particular quarter. So the idea is this market is flat for the year when when you look at a total return basis after today. Yes, today’s news is is incredible and it pushed things higher, but that that resilience is a little bit disconnected with what’s changed since, you know, last November or so, when we were looking at the market in a different way.
03:02 Speaker A
That that’s to me another way of saying what’s happened doesn’t make sense.
03:12 Speaker B
In a way, yes. Absolutely.
03:23 Speaker A
And so, if you’re trying to invest in this market and anticipate what’s going to happen and it doesn’t always make sense, then what do you do?
03:54 Speaker B
Well, a lot of times the market doesn’t make sense. Uh, you know, I’ve been doing this long enough to know, yeah, and we see it continue to move higher when we’re in in the midst of very difficult situations. Um, this is one of the times in which um, I would to your point, we’re looking at a situation where you’re looking at 5% earning or revenue growth this year, 9% earnings growth, yet most um, I guess market analysts out there are calling for 15% upside in the S&P 500 this year. Well, in order for that to happen, we have to see um, you have to see uh, uh PEs go up. And are we going to see market multiples go up this year? That’s going to be difficult in an environment where you don’t really know how to plan for the future. You’re seeing companies that want to put CAPEX to use and they they want to maybe do something and start producing things here. And yet, all of a sudden, there’s a complete change um, and we might it might be more advantageous to continue to get goods from from outside United States.
06:06 Speaker A
Well, and just to put a fine point on this, the market is behaving today like obviously it’s not the worst case scenario, but that things are more clear. But what you’re saying is that things aren’t necessarily more clear or more certain.
06:51 Speaker B
They’re not. And one of the reasons is also we have to talk about what the Fed’s going to do. Um, and this idea that there’s always been a Fed put out there, um, it’s it does exist, we do see that, but um, are we going to see the kind of data, they’re very data dependent, data driven these days. And are we going to see that kind of weakness in the GDP or uh, you know, increases in unemployment or whatever they want to see or need to see in order to start really reducing rates? We’re only looking at two to three uh, potential rate cuts this year, and they don’t seem to be in too much of a hurry. So, you know, overall, I’d say that we are we’re constructive in the market. We’re we’re definitely, you know, it is a resilient marketplace, the US market right now. I still think there’s a whole lot of unknowns that are going to come out over the next three months to six months.
08:28 Speaker A
So you’re you’re constructive on the market, Ryan. Which sectors? Where do where do you see the opportunity?
08:46 Speaker B
Well, it may sound a little uh, redundant because their sectors have already done well this year, um, but, you know, utilities. We have a utility fund, for instance, which has done very well this year. Uh, those companies are actually seeing out of all the S&P 500s have seen some of the best um, uh, sort of out performance in earnings this first quarter. Um, their utilities, they’re not super exciting, uh, but they’re defensive in nature, of course. Uh, we also think, you know, staples and financials. We think there’s more to go with financials. If we continue to see the yield curve staying steeper like it is, that’s going to help the banks. Um, the economy feels a little better right now. Uh, tariffs coming down makes everybody a little bit more comfortable in that, and I think financials are going to do well for the rest of this year as well.
10:07 Speaker A
Um, what about the um, tax bill equation and how that feeds into all of this?
10:22 Speaker B
That’s a tough one because that’s depending on how it all shakes out, um, we’re not sure if it’s going to really help the consumer or not. Um, I think one of the things that it was, as I talked about, we talked about that six months ago, idea of corporate taxes. What about those? You know, if there’s really a potential out there where you see another corporate tax rate, that’s going to be completely to the bottom line for these companies and it’s going to be positive for the stock market. It’s not necessarily going to be positive immediately for the economy overall or for consumers, but I think that’s another thing that we’ll we’ll continue to look at going forward.
11:37 Speaker A
It’d probably be positive for the market.
11:42 Speaker B
It will. It will absolutely. Yeah. Um, so uh, so yeah, we we continue to just invest personally, you know, for the long term. Um, a lot of this stuff going on, it’s not noise, it’s very important, but our process really looks over many, many years anyways. Uh, and so, you know, some of our funds have been around for 20, even 29 years, and those continue to be run the same way, uh, you know, going forward as well.