Exposing Market Secrets: Jay Hatfield's Exclusive S&P 500 Forecast & Shocking Bull Market Revelation

[00:00:00] Another record-high old Wall Street, ESOP 500 touches, a new milestone today, and it doesn't look

[00:00:12] like it's going to be any anytime soon. Our guest today is actually saying it's going

[00:00:17] to even go higher the good times you're here. He is predicting some major numbers, although

[00:00:22] there could be one thing that could derail this rally and we'll get into it. Welcome everyone

[00:00:28] to Buyhold Sell. I am your traitor, Todd Schoenberger and I'm joined by my friend and co-host

[00:00:33] OpenSmith out in sunny and hot Scottsdale, Arizona. It's raining and cold, you have a

[00:00:40] weather channel? You know what? I look at my Yahoo app and I look at it and I see it

[00:00:45] and I know what you're going through but I just have to throw it out there anyway because

[00:00:49] I know I'm going to get a good rebuttal. I got the vest on for crying out less than

[00:00:53] there you go. You look sharp, you look sharp with us today. Jay Hatfield, he is the CEO

[00:00:59] of Infrastructure, Capital Advisors and CIO of the Icap and Scap ETFs. So we're going

[00:01:05] to get into those later on. Jay, welcome to the program. Oh, and Tobin, it's great to

[00:01:10] me on. Thanks for having me. Yeah, I absolutely. I have interviewed Jay over the years, many

[00:01:16] many times and he's not opinionated at all. So I don't really know why we have him on

[00:01:21] the show, but ask him about the ECB. Would you talk about ECB? We're going to talk about AI.

[00:01:29] We're going to talk about all kinds of letters out there. But they got to start with the

[00:01:34] number right now, Jay. I looked at your pre-interview notes and I will say I think you have the highest

[00:01:41] forecast on Wall Street right now for the S&P 500. I'm not going to give away the number.

[00:01:46] I want to allow you to do that for the audience, but I need to ask how do we get there?

[00:01:51] Okay, so we just for a little bit of context last year, we had a 4,500 target and most of the year

[00:01:58] we acknowledge the risk we're to the upside partly because of AI. And the basis for that view

[00:02:04] was to try to simplify things. So we're monetary economists. So we do focus on the money

[00:02:10] is by don't ignore Keynesianism. But if you just follow the Fed, you will be a great investor.

[00:02:17] So our thesis was the Fed would pause and that would be huge catalyst for the market and we got to

[00:02:22] our target. So the reason I mentioned that this year is going to be exactly the same. And everybody,

[00:02:27] it's strategists aren't on top of it, but a lot of investors are. So maybe the Fed goes in July,

[00:02:33] maybe they go in later in the year, August I guess, but it's not going to matter. Once they start

[00:02:39] cutting and the ECB essentially is going to set their cutting in June.

[00:02:44] European Central Bank for those who do don't speak monetary.

[00:02:47] European Central Bank, and they are as important as the Fed, you know, the Eurozone's roughly the same

[00:02:52] size of the United States. And so that's the critical catalyst. Everybody's too well, most of Wall

[00:02:58] Streets too conservative and this AI boom is for real. So it's those two pillars. But there's one point

[00:03:04] and you can see this on our website. We have the global monetary base. If you just simply invest

[00:03:11] and get fully invested, when central banks are cutting rates, you're going to make money because

[00:03:16] what almost no one appreciates is that you can't just cut rates by fiat. Central banks need to inject

[00:03:24] liquidity into the banking system to lower these overnight lending rates. And that liquidity then

[00:03:30] flows into the capital markets. So it's sort of like you own the stock and Warren Buffett is buying

[00:03:36] it, but instead of being one stock, it's all stocks and all bonds. And if you look back and just

[00:03:42] follow that global monetary base and bond and sold based on it, you would be trading perfectly

[00:03:48] because you would have been long 2020, end of 2020, 2021. You would have been out of the market in

[00:03:54] 2022. You would have got long and 23 as it started to increase. And now that's going to accelerate.

[00:04:00] So that's our key indicator. You can access that on our website, www.infracapfunz.com. It's the

[00:04:08] global monetary base. And you can only find it on our website. Yeah. And hold on Toby real quick.

[00:04:14] And on there, one Infracapfunz.com, I looked and you actually posted the number. What is your target

[00:04:21] for the S&B 500? Oh, yeah. So 57. So we started out at 5500 in the beginning of the year.

[00:04:27] So it's not like we just had this epiphany and we were bearish before. But we just realized that

[00:04:32] this market doesn't want to go down to say I boom for real. The ECB is definitely going to cut because

[00:04:37] the data has been terrible since the beginning of the year for the eurozone. And so we raised it

[00:04:42] to 57.50, but we acknowledge the risk as to the upside. Yeah, I mean, 12% I guess from the current

[00:04:49] level. Yeah, I mean, sometimes it's, you know, simplest explanation when a central bank pushes

[00:04:56] cash into the marketplace, then it makes interest rates go down. When they take cash out of the

[00:05:02] system, it's supply and demand. And what our big boy here is saying is that there's a lot of ways

[00:05:10] they're pushing cash in even right now. And interest rates are right at this precipice

[00:05:16] and right at the margin is where the interest rates start to come down. And then, you know,

[00:05:20] you get the animal spirits and people, you know, you'll start to see, I mean, first of Bitcoin is

[00:05:26] already, you know, essentially suggested all of this. We're on the Ethereum. I just looked

[00:05:31] among Ethereum today. I mean, I might be able to buy another house tomorrow. I mean, isn't that partly

[00:05:37] because of the ETF? So well, Ethereum's not an ETF. They think they're going to have them. They

[00:05:42] probably will. No, it's that there's a significant amount of human beings that have sort of put

[00:05:50] something together and have a philosophy, which is if they're going to push a bunch of stuff

[00:05:56] of cash in, then I'm going to take risks. And where I'm going to take risks and sort of risky

[00:06:01] assets, that's a theory, but that's a big point. But the bigger point here is that what's the odds?

[00:06:07] Again, I can't remember how many times has the market gone up when the Fed got this, you know,

[00:06:14] stimulus? You said it was like five out of five times or 10 out of 10 times. Yeah, I mean,

[00:06:18] it's nearly 100%. I mean, you know, just at the like qualification is there haven't been that

[00:06:25] many periods. It used to be that the monetary base was stable. Yeah. Really since the financial

[00:06:30] crisis that they started treating it like we were a third world country. But just one little nuance

[00:06:35] to demonstrate our point, you might say, well, why do you care about the global monetary base?

[00:06:39] We were very surprised by the run up and rates to 5% during October, during really the summer and

[00:06:46] into the fall last year. So we started to do work and said, well, what the heck is happening here?

[00:06:50] And we discovered that the ECB to raise rates. Remember they were raising rates after our Fed.

[00:06:57] They needed to suck in one week 700 billion of excess liquidity out of their banking system.

[00:07:04] Because they had a lot of overnight repo facilities and they couldn't get the rate higher.

[00:07:08] So they sucked that all out at the end of June. And that marked the beginning of the global bond

[00:07:14] sell off. And so that's what we thought happened. We made a bullish call on rates October 31st when

[00:07:19] they were at 5%. Because everybody else was freaking out about the budget deficit

[00:07:24] and all these other on-shoring and other random theories. But they didn't nobody looks at the

[00:07:31] money supply. I don't fully understand it. I learned is undergrad 45 short years ago.

[00:07:37] So I've continued to study it, studied it at Wharton. So we're focused on it but believe me,

[00:07:44] very few people are. But if you watch that, you're going to get all these pre-indicators of these

[00:07:50] booms and buss. Yeah, yeah, nobody's talking about M2, that's for sure. Yeah, I can really understand.

[00:07:55] So Jay, you had one eye on the ECB. You're talking about the Fed, potential rate cuts in July.

[00:08:04] But what's the reason for cutting? I mean there really is no right now you have an economy,

[00:08:11] you have a 2% GDP target. Why would the Fed actually need the cut at this point?

[00:08:18] Well, there and that is a little bit of the bear case. But we do think the ECB

[00:08:23] conversely has no choice. Germany's already in a recession. They printed a negative 11%

[00:08:30] January factory orders number and that's down 6% year-over-year. They are in a flat-out recession

[00:08:37] and Europe has one and only one strategic advantage over the US. And that is they can properly

[00:08:43] calculate inflation. So we, because they're relatively new organization, they developed these

[00:08:48] methods over the last 20 years. We use methodology that's 50 years old. It was created really

[00:08:54] to make inflation look lower after the 70s. Yeah, byzantine methods, archaic, ridiculous

[00:09:03] methods that calculate shelter costs. We also have a similarly flawed way of calculating financial

[00:09:11] services inflation. So financial service inflation last month was 60% annualized. Why? Because my

[00:09:18] fees in Gov 60. Yeah, mine didn't either but the assets went up. Yeah, the assets went up so

[00:09:23] that's called inflation. So that's this flat-out ridiculous. But unfortunately we have a very flawed

[00:09:29] Fed that has a rigid policy framework that the PC regardless of how badly it's calculated needs

[00:09:37] to go towards 2%. But our data notwithstanding the terrible shelter numbers, the AUM thing is going

[00:09:44] to be tenuate. So we're forecasting a very slow roll down to 2.5 by the end of June, which would

[00:09:53] set us up for late July, you know, it's July 31st. But if that even that's not a certain

[00:09:59] yet, we do believe that next week will be a negative inflection for the market just like today,

[00:10:04] the ECB was a positive inflection for both the global bond market and stock markets, all bonds rallied.

[00:10:11] There was a widespread rally across the globe. But we think there will be some disappointment because

[00:10:17] the SEP or Doplock's going to come out and to your point, a lot of Fed governors like, oh, economy

[00:10:22] strong. And we're just going to stick this biopically to this 2% target so we're not in a rush.

[00:10:28] And for some reason, the market doesn't want to listen like BOSIC already said this, how

[00:10:34] implied it. So that could set us up for a mile disappointment, but I wouldn't like sell out of

[00:10:39] it because I'm sure in video will be up that day and the market will be flat or you know,

[00:10:44] or it'll go down that day and then a rally back just like it did yesterday after the last two days.

[00:10:50] Yeah, I think you know, your macro work has always been fantastic. After a micro level though,

[00:11:00] there's this little thing called politics going on and I was sort of shocked to see how many

[00:11:08] basically any of you know, we don't talk politics. I'm just talking about politics that affect my

[00:11:13] wallet is the tax raises, the corporate tax raises that you know, the quote unquote,

[00:11:19] I don't know what you call them anymore Democrats, but they don't sound democratic to me.

[00:11:24] The tax raises, corporate tax raises, you've got some data. I've got some data.

[00:11:28] When you raise corporate taxes, in every case, you slow the economy and you know,

[00:11:36] a first grader can know that you don't have to go to work to figure that out. So how do you read

[00:11:40] the teachings here? Well there's one other so everywhere but in the United States what you just said

[00:11:47] is accepted fact. It's not a political conversation. It's just the right math. So this is Scandinavia,

[00:11:55] has 20% average corporate tax rates. There's some lower, the only countries that are higher

[00:12:01] like the Congo or some horrible country in the 30s. Even in my native Ireland, we really have a 12

[00:12:07] to half percent rate. We're crushing those bastards. So this is not even controversial but there's

[00:12:14] one other nuance and the reason why this would be an unmitigated disaster for the stock market

[00:12:21] is that effects economic growth definitely, but it also affects corporate earnings growth

[00:12:28] which is the key driver of the multiple. And the reason for that is that most people don't appreciate

[00:12:34] this but we're probably going to talk about MLPs. They're a good example. If you don't retain earnings

[00:12:39] and reinvest in your business, it goes to heck in a rapid basis. So like a lot of strategists,

[00:12:48] most strategists are pretty bad I would argue. And they'll come on and say, well, I don't have a

[00:12:53] low target of this because I don't believe the 10% earnings growth but I have two points. But

[00:12:57] that first of all it's pretty much baked into the cake. If you retain 70% of your earnings and

[00:13:02] invested at a 15% after tax rate, you grow at 10. And so then if you raise corporate taxes to 30,

[00:13:08] then you don't grow, you don't get 15 to get 12. The growth rate of earnings is lower,

[00:13:15] the multiples lower and we're all losing 20% of our portfolios.

[00:13:19] Yeah, or if you're a consumer-facing company and your tax rate goes up, well guess what? You're

[00:13:28] going to raise your prices. But most people understand that dynamic and I would, if you take one

[00:13:36] thing away from this podcast, that is that earnings growth is more or less baked into good companies,

[00:13:46] the retained earnings, traded reasonable multiples. And that's why the odds are in your favor.

[00:13:53] It's like going to casino but you're the casino. And so if you hold stocks over long periods of time,

[00:13:58] then it will be profitable. But should avoid money-losing companies and you don't want to be in

[00:14:05] eye-tox jurisdictions because your earnings growth is going to be way lower. I can't remember

[00:14:10] tax-terestive. Yeah, well like why is it that? Why is it that 15 multi-billion dollar companies have

[00:14:17] moved out of California in the last 36 months and or in the retail side where the average hourly

[00:14:24] wage is $20 an hour which I can understand. I go to Southern California, you put up a Northern

[00:14:28] California, I mean it's not an expensive place to live. But now people can vote with their feet.

[00:14:35] Now companies can vote with their feet. And so I'm listening. Yeah, if you know Ireland's the

[00:14:40] best example of that, they have one of the highest GDP growth rates and the lowest corporate

[00:14:46] tax rate. And they are going to defend that corporate tax rate to the death because in Ireland,

[00:14:52] it's not even an issue, it's just obvious. They have all these international companies

[00:14:57] generating all this tax revenue, hiring people, I mean somewhat small because they're more like

[00:15:03] shell companies and they've made money off of it. So why would you ever consider raising the rate

[00:15:12] from what is basically the average of the OECD? Yeah, right. There's some questions. And you know,

[00:15:18] again politics do affect investing. I mean, we certainly know that when we had

[00:15:26] these big rate changes, when we had interest rates cut or when we spent $8 trillion and only

[00:15:34] brought in six and a half trillion dollars in revenue and had this more bonds, that also affects

[00:15:38] stocks because those are bond rates. So I'm with you Todd, sorry, I'll leave.

[00:15:45] No, no apologies necessary. This is great. I know the audience is getting a lot out of it as well.

[00:15:50] So this is fantastic. But we are going to leave it on that on this on this block, guys, because

[00:15:55] coming up after the break, we're going to talk to Jay about where to place some money right now.

[00:16:00] There's got to be some hot areas other than AI. I'm sure there's a few that he'd like to get

[00:16:05] into. So we're going to talk all about it. So with us today, we have Jay Hatfield. He is the CEO

[00:16:10] of Infrastructure Capital Advisors and CIO of the Icap. I'm sorry, it was an Icap and the Scap

[00:16:17] to the Ccap. We got all kinds of caps. We're going to talk about that after the break is closed.

[00:16:21] Thanks to cap. There we have this guy get into it. So please stick with us. We'll be right back.

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[00:17:32] financial future starts here. This is Barbara Durand from BD8 Capital Partners and you are

[00:17:39] listening to Todd and Toby on by hold cell.

[00:17:52] It's another broken record on Wall Street, the S&P 500. It's a new eye, a fresh eye. It seems

[00:17:58] there's an argument to be made Toby that since by hold cell hit the market two years ago,

[00:18:03] the stock market has been going up because of the show. It got to do because of us.

[00:18:10] I was just going to make that point. There's 100% correlated. Absolutely.

[00:18:18] I wanted to tell a quick story about Toby. What we do, MJ, have filled with us and he's from

[00:18:23] Infrastructure Capital. If I was a Toby, I know you have some history there with Jay.

[00:18:27] You've interviewed him a bunch of times on your own show. Tell the audience that you told me

[00:18:32] is this great story. I knew the audience would really like to hear it. Go with it.

[00:18:36] One of the things about Jay and I really admire is he's a realist. He doesn't live in some

[00:18:40] very, very hairy land. He actually looks at stuff. When we got into the pandemic thing,

[00:18:47] the research group that we have said that it was coming, I got calls from micron people in China.

[00:18:54] We went short to market. One thing we do, we do short energy and we all start to stuff.

[00:19:00] But one thing I never realized was in these master limited partnerships with Jay has this amazing

[00:19:06] ETF. They're mostly owned by retail investors. They can't end beyond by

[00:19:13] endalamus, because it has a K1. It can't own that literally. Anyway,

[00:19:21] Amzah went from $16 down to $6 in about an eyelash. Yet nothing had changed. The MLPs all get paid

[00:19:30] no matter what. I mean, I love the ones with the compressor MLPs. The USAC was another one we got

[00:19:36] where they never missed a bill, never been not paid in 25 years. All of a sudden it was horrible.

[00:19:42] So I admit a guy who works with Jay and we looked at it and we said, oh my gosh,

[00:19:49] anyway, we loaded up all our subscribers. It's like 2500 to 3000 subscribers and we bought Amzah

[00:19:54] including yours truly. I believe I just looked at my cost basis before the dividends and it's

[00:20:00] $6.25. What did it close at today Jay? I can't remember. I tried around discovering around $40

[00:20:07] share. Oh well, that's not only that but it also pays about a two dollar ten cents dividend per year.

[00:20:14] Am I exaggerating on that? Actually, we raised it and I should have this memorized but I can look

[00:20:20] at it from Bloomberg. It's $3.10. Yeah, so it's 26 cents a month. Yeah. So what's the name of this thing?

[00:20:29] So it's called Amzah and the official name is what? Amzah. The Infracap MLP ETF fund.

[00:20:37] Yeah, that's why we call it Amzah because it's a lot easier to do. Jay's really good at buying stocks.

[00:20:41] She's not that great at naming ETFs. Well, I actually had to look at my Bloomberg to remember it.

[00:20:47] Yeah, I know. Thank you. I was going to call makes a shit ton of money but yeah,

[00:20:52] that was already taken so. But the point is, so these are life changing events and when you're

[00:21:01] the most scared, particularly something that's at one time or once every 100 year event, man,

[00:21:07] you've got to be green and we just had a, again, we had this conference call with the subscribers.

[00:21:12] And a guy talked about how he bought 10,000 shares and he's now got all of his original capital

[00:21:19] back just on the dividend and more but he's put two kids through college and wonder that,

[00:21:24] you know, that Stanford place you went to pal and then a little more into a little Columbia

[00:21:31] and he still has 250,000 dollars of that. Well, the moral of that story is man, first off,

[00:21:38] know your stuff. Number two, when everybody's scared to death, particularly on a one time event,

[00:21:43] start looking at MLP's master limited partnerships are probably the most misunderstood entity out

[00:21:50] there unless you're in the energy business but all we really knew was I called the CFO and I still

[00:21:56] tell me what's going on, particularly USA, USA compressors. Tell me what's going on here as well.

[00:22:01] Have you ever had anybody to fault on your pipeline or on a compressor? I talked to the energy

[00:22:08] transfer people. I said we've never had anybody ever to fault us that we mean never, ever.

[00:22:13] I mean never, ever they have to pay their bill or their oil or their gas or their propane doesn't

[00:22:19] get to where it's going and so then they really have problems number one. And then number two,

[00:22:25] it's the first bill they'll pay. They'll defer a lot of other stuff but they're always going to

[00:22:29] pay that because if they get four clothes or taken out of the system, they won't get back. So

[00:22:35] he was very, very smart and he helped I just want you to know you helped a lot of people change

[00:22:39] their lives by being able to be cool, calm, collective when we started talking about

[00:22:45] AMS and USA compressors etc. at the time because you were an investor banker in that field.

[00:22:49] I mean you know the business. Yeah, I also founded a co-founded an MLP as well so I know.

[00:22:54] Well, let's talk. Let's go into that. I'm going to segue into this because you have this

[00:22:59] S cap ETF. Jay, I got to ask you what tell the audience about it because if you had that kind

[00:23:05] of success working with Toby, I can't imagine what the S cap ETF is going to be like.

[00:23:10] So we have five ETFs and they all pay monthly dividends that are substantial

[00:23:16] kind of six to nine percent and we're particularly excited about S cap

[00:23:21] because what normally happens in a cycle happened this cycle. Not dramatic is the pandemic but

[00:23:28] everybody knows over the last couple years and since the feds are tightening, everybody wants the

[00:23:33] mega cap stocks mostly text stocks but larger caps have done better way better than small caps

[00:23:39] and there's a valuation gap that's opened up of about eight multiple points so at least money making

[00:23:47] small caps are trading about 14 times and the you know the S&P is close or is over 20.

[00:23:55] So we think it's a little bit like AMSAA not as dramatic but one of those opportunities if

[00:24:01] you put money to work in a small SAC cap sector, you're going to make money but with just one caveat.

[00:24:08] If you look at the Russell 2000, about 20% of companies make no money and another 30 pay no

[00:24:14] dividends. So we curated using those criteria but also we don't like to overpay for growth

[00:24:23] so we look at for reasonable multiples relative to growth and that's super easy in small caps

[00:24:29] because they're so hammered down, so our average P's right around 15 and the growth rates are

[00:24:36] usually 10 close to 10 to 15 so like a one times growth versus two for the S&P but large caps.

[00:24:43] So and if you look at that fund we launched it last year so already beaten the small kept value

[00:24:49] index by a lot not necessary, we do a lot of work and we you know are good at accounting and

[00:24:56] projecting the company we're good analysts but it's not because we're geniuses we're just picking

[00:25:01] the best companies that are reasonable multiples paid dividends low leverage and they're beating

[00:25:07] earnings and they're going up and and they're it's a little bit like MLPs if they're down they're not out.

[00:25:14] If you buy a money leasing biotech don't develop the drug it goes to zero then that's just a loss.

[00:25:20] You buy a good stable company with low leverage reasonable multiple goes down then you just

[00:25:25] fold it longer and you're gonna get your money back so we could think small caps are good opportunity

[00:25:30] in this market if we're right about it being a bull market where rates come down because of global

[00:25:35] records. Yeah I would say we use SMHB a lot which again serves as your thing wasn't around that time

[00:25:44] they throw a little leverage into that that fund is I was just going over a client's fund yesterday

[00:25:52] which usually credit you know balance things out but but we put our heavy into it like you know

[00:25:59] when the world was going to hell the hand basket and it's now like 24% of our portfolio so I'm a

[00:26:05] bad person however the things that are 158% for a small cap fund I mean it's and all the dividends right

[00:26:13] so I'm totally grateful to you that when we you know when now can have the see the visions of actual

[00:26:21] interest rates coming down then I do want to you know own these companies that do better than I do

[00:26:26] want to buy these some of these companies that have been blown up I forget about office

[00:26:32] rates that's a sort of all different animal but even there's some office rates that that

[00:26:37] least it just triple eight companies that have been thrown baby in the bathroom right yeah and then

[00:26:42] preferred tell us about your preferred because I've always liked pffa when when interest rates

[00:26:46] starts coming down well yes so when actually pffa was a lot like Amsa we did get a lot of people

[00:26:51] into it during the pandemic the baby got thrown out with the bath water but the thing about

[00:26:57] preferred I mean it's a little bit complicated it's all good getting into all the nuances but thank

[00:27:03] God it's a similar situation very simple way to trade them and that is if they're well below

[00:27:11] par right now they're about 15% below par so pffa is our largest fund it's beating every other

[00:27:19] has a better truck return profile than any other preferred stock fund closed in open end and DTS

[00:27:28] and the reason for that is what we can do it and you do it so when preferred go above 25 if

[00:27:35] you own an individual one you sell it but also we are fund our average prices right around 21

[00:27:42] so if you buy it now chances are when everything normalizes which eventually does then it's going

[00:27:47] to go up to 25 now it's not going to be like MLP's where it goes up whatever that is like a thousand

[00:27:53] but um but you get equity like returns with fixed income risk we've never had a default

[00:28:01] default rates on preferred or very low like industrial grade bonds 0.3 so we do think that's also

[00:28:07] an opportunity not a discounted during the pandemic but discounted when rates are coming down those

[00:28:13] you're going to go back to par over the next couple years so good good degree told return

[00:28:20] opportunity yield yeah I just add a J is that you know if you're a self-directed investment

[00:28:27] and you're running your own show um 90 I mean I've been dealing with self-direct investors for 40 years

[00:28:33] and um the first they really don't know what a preferred stock is they really really don't understand

[00:28:41] the inverse correlation between a citrus rates go down bond prices go up and they certainly

[00:28:46] don't understand that every preferred is issued at $25 so if I can buy a $25 preferred the J

[00:28:52] Hatfield says this is a strong deal and I can buy it at 21 bucks you guys put a little leverage

[00:28:56] in there too don't you yeah we've we've very low leverage compared to to close infans

[00:29:02] yeah we run 20 to 25 right now net of calls we're running about 22 so very manageable level of

[00:29:10] leverage yeah but but but dude that's supercharges when industry starts coming down all of a sudden

[00:29:15] not only are you getting the you know your preferred stock to go up about 20 percent you're

[00:29:19] also getting the leverage so you're getting a much higher return but more importantly risk reward

[00:29:25] because you haven't had any default so I feel like I'm doing an ad here I want to see some care

[00:29:31] you have very few or no defaults you're buying these things at a discount and they by definition

[00:29:39] have two things going for the number one they almost always go back to the $25 level because if

[00:29:44] they stay below like $21 for a while the company's going to buy them back why would they not so

[00:29:52] you know it it it's a low risk high return and it allows you then to own you know a bunch of SMCI

[00:30:01] and Nvidia's and so forth that are you know we're gonna do that where this thing just goes

[00:30:06] the other point is the other I think I didn't mention is almost all about including main did

[00:30:11] automatic dividend reinvestment on Amazon so the shares that we started with crazy I mean and

[00:30:17] and I I stopped at about 20 or $22 but but the odd event if you're if I was you know 30 and I

[00:30:26] was saving for a house or kids college some so forth the you know power compound interest baby

[00:30:32] that reinvestment as long as you're you know moving sort of this way then you're actually hoping

[00:30:37] for a down day because when you know when you when it kicks in you want to get it lower but if

[00:30:41] the trend is going and that's the thing about bond rates when bond rates start coming down

[00:30:46] the trend of that of the underlying is going up it's not going up like that but it's

[00:30:51] stair-stipping its way up and now to get a 25% annualized return from accepting that the risk on

[00:30:58] risk reward is basically you know zip man you go a lot better at night and then when you have

[00:31:03] really good risk management on the low end then you can afford to freaking you know go a little

[00:31:07] long on videos and you go all right well I got to tell you Jay he's definitely going to be your

[00:31:12] spokesperson so but before we close out the show I want to pivot away from this guys and go back

[00:31:18] to what we're talking about in the first block because one thing that we never did figure out

[00:31:23] and went to hear from you Jay what can derail this rally because you said there's something coming

[00:31:28] up later on this spa that could just wipe everything out yeah so normally people tend to focus too

[00:31:34] much on these outlier events like they're sort of like you know yes an asterisk could destroy the earth

[00:31:39] but probably won't so who cares yeah so um so we're not a big you know we're not the type that's

[00:31:47] coming oh my god the Ukraine war and the Middle East normally does not affect the United States

[00:31:53] that much but there's one thing that could derail this rally and that is a Democrat and I am not

[00:32:02] more of a moderate I don't know comment a lot on politics but the implications of a democratic sweep

[00:32:09] would be horrendous because we already know what they're going to do so because we had all these

[00:32:13] house bills proposed last four years and we know corporate taxes are going up to 28 to 30 percent

[00:32:23] probably personal taxes for wealthier people least and tremendous increases in wealth

[00:32:30] in safety net spending so we know what the policy is but just focusing on corporate taxes

[00:32:37] that's going to hurt economic growth because corporations are the driver drive 80 90 percent of

[00:32:45] economic growth and even more importantly if we had a 33 percent increase in the corporate tax rate

[00:32:53] that's going to reduce the multiple on the market from 2021 probably 18 or 17 so we could take a 20

[00:33:01] percent hit but the reason that we're bullish have a 5750 target with more upside than down

[00:33:07] is if you look at the math in the senate it's extremely likely to to flip Republican

[00:33:13] mostly democratic senate seats up and and most of those states are states that trump carried

[00:33:21] so the chances of losing the senate are very low so we think the chances of a democratic sweep

[00:33:28] are low something like five or 10 percent so rope quesit real quick you said a Democrat controlled

[00:33:35] senate and house and a and a Democrat in the white house we're looking at a potential 20 percent

[00:33:42] so all in the market site here are you correctly yes just because most people don't appreciate

[00:33:47] that corporate taxes drive the multiple because they drive drive growth all of earnings growth comes

[00:33:54] from reinvestment and then the growth rate is driven by the after tax return on capital so if

[00:34:02] you lower the after tax return to capital which you obviously would have increased taxes 33 percent

[00:34:07] growth rate goes down and then I'm going to sign up and instantaneously but it's good people

[00:34:13] are gonna realize oh why aren't you growing so fast oh well actually you know we we have less

[00:34:19] money to invest because we had to pay you know 50 percent you know when you go from 20 to 30

[00:34:25] paying 50 percent more corporate taxes and nobody's give you know our former president

[00:34:31] credit for this you know they're gonna talk about all the corporate tax cuts went to buybacks

[00:34:39] it's just not true it increased the growth potential of the US economy these companies and

[00:34:46] increased the you know the fair value multiple on the stock market and so there now there was a

[00:34:55] windfall for stock owners but we also had higher economic growth and in fact I would even cite

[00:35:01] those low corporate taxes as one reason we've been able to power through this cycle fed raised rates

[00:35:09] 90 percent of the time we would have recession we don't even have recession it's partly because

[00:35:13] we have these powerful corporations with competitive corporate tax rates and that would be an

[00:35:18] unmitigated disaster if that gets reversed yeah and I think that you know when you go to the ballot box

[00:35:26] people sort of just associate the ballot box with their stock portfolio they're investment

[00:35:32] portfolio but in this case the JST talking about it is highly correlated we have data going back

[00:35:38] for 67 years that shows what happens when countries raise rates particularly with the the Dems are

[00:35:45] talking about and then of course we have this thing where we know we're gonna bring in seven

[00:35:49] and absolute income but we're gonna spend nine trillion so we gotta go then borrow some more money

[00:35:55] and when we borrow that more money shockingly our income the amount of interest we're going

[00:36:06] would be paying already we're doing it we're paying more now when we're spending on defense

[00:36:09] we're spending more on interest than we are in defense and many parts of the government just

[00:36:14] to pay the interest and when you you know when you raise the rates of basically inflation which is

[00:36:22] also with these as well because coming to get after raise their prices you know everything's

[00:36:26] getting raised at price because you know they're not the business of a thrown money away then

[00:36:31] oh my god now you have an inflation issue that keeps the fed at rate high you know it's a vicious

[00:36:37] circle it's a right and that's what I think I think you're really saying Jay is that you know this

[00:36:43] negative feedback economic feedback loop gets kicked off by the tax raises but it starts to feed

[00:36:51] into every other economic input and I'll just finally say you're still right on the archaic fed

[00:36:58] measurement my favorite one is I finally voted my entire life to get a phone call from a from whoever

[00:37:05] they hire to ask what you could rent your home for because remember that they this 42% of a shelter

[00:37:14] cost I finally got the phone call and I'm like you know myself should I should I lie

[00:37:24] yeah am I going to help with the cause here or am I going to hurt the cause

[00:37:28] um the 4200 phone calls tell us whether your shelter cost the equivalent rent of your home

[00:37:36] yeah give me a freaking break this is the thing called the internet we could get this you know

[00:37:41] simultaneously in real time you idiots yeah yeah then I see what you're saying all right

[00:37:48] go ahead if it's not the right one I just always point out too that so they only updated every six

[00:37:54] months so it's by definition six month flag on purpose yeah and then the second thing is you

[00:37:59] probably saw we had a high PC print well they changed their methodology so they included more single

[00:38:07] family homes in that survey maybe that's why I got to call that's what drove up the so there was no

[00:38:13] increase in market rates whatsoever but just of course houses rent from more than the departments

[00:38:19] that doesn't take it so they changed that base happened to be that month and that's why we printed

[00:38:26] this high inflation rate and unfortunately our fed they kind of they know this are not completely

[00:38:31] stupid but they just stick to their methodology bc's got to be core is going to be a two but that's

[00:38:38] why the we need bcb to bail us out and cut first and set the stage for the fed Todd that's

[00:38:43] the first time I've ever heard Jay in the five years I've known him say that the central

[00:38:49] bankers are not completely stupid I I'm some first time so I it's really a breakthrough for you Jay

[00:38:54] there you get on the TV and they don't they don't like that on on the broad media I can tell you

[00:39:01] but we love it here that's what you love it here we definitely do we love it and this is great

[00:39:07] especially now that the shows on biz talk today TV we're really loving it so you could say whatever

[00:39:12] you want Jay we love it but listen we're gonna leave it there because you said so much Jay how can

[00:39:18] everyone find you and your your ETFs so you go to www.infracapfunds.com and we have

[00:39:26] I and F-R-A-C-A-P-Empra cap.com yeah no more that's part of your media training you know sometimes

[00:39:33] print for a craft doesn't really know what that means so like so yeah I and F-R-A-C-A-P.com

[00:39:39] well I tell you what we'll also include this in all the descriptions as well as with hyperlinks too

[00:39:44] so we encourage the audience to actually read the descriptions and click on those links she'll

[00:39:48] be directed right to see what Jay Hatfield has to do with those ETFs and I'm sure there's also

[00:39:54] some wonderful commentary on there as well so listen we're gonna leave it there Jay thank you

[00:39:59] you said it all today you were wonderful for the audience we can't thank you enough we love to

[00:40:04] have you back again if I hold south thanks time to Evan with a lot of fun to share that's absolutely

[00:40:09] well one behalf of Jay Hatfield and Tobit Smith host of the new show Money Maverick which is coming

[00:40:15] out soon on BTT we'll get into that later on I am Todd show winner thank you once again for joining

[00:40:21] us tomorrow we have Timothy Pramer he is the CEO of C-Nick funds how to use him he's gonna be joining

[00:40:28] tomorrow so until then take care

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