Fed Meeting Fallout and Market Perspectives with Barbara Doran of BD8 Capital Partners

[00:00:01] Spoiler alert! Somebody on this show was actually going to say that the Fed Over-Reserved has not finished hiking raids. Yet the Chairman came out today and actually gave his, I would say his least hawkish tone of the tightening cycle, really signaling that the Fed might be done.

[00:00:18] Welcome everyone to Buy Hold Sell! I am your trader Todd Schoenberger, and I am joined by my friend and co-host Tobin Smith on a sunny and hot Scottsdale, Arizona. He still has his sweater vest on, but I'm guessing that's because... I'm freezing out here! God, it's under 80 degrees.

[00:00:32] Wow, I tell you, New York is getting very cold these days, but we have a very special guest with us today, Barbara Doran. She is the CEO and CIO of BD8 Capital Partners,

[00:00:45] and she's going to join us today to help us get through all this mess that's taking place on Wall Street. Barbara, welcome to the program. Todd, thank you. Glad to be here. We're glad you're here as well.

[00:00:56] And I want to ask you, because maybe you could give the audience just a little bit of an introduction about BD8 Capital Partners. Yeah, Todd, thanks. BD8 Capital Partners is a wealth advisory firm, and we work with a lot of individuals, families, some foundations in planning their needs,

[00:01:12] but our real strength is in investment management. It's really about trying for the best performance possible, just not trying to not lose money. Not lose money and make you money. We also do separate managed accounts in the large cap growth session as well,

[00:01:27] so it's also an asset management firm. Well, you're being very successful with it obviously because you're on all of the news channels. I know that you're coming to us right after an appearance on CNBC, and I think that's fantastic,

[00:01:39] but they obviously are going to the All Stars because of the big news of the day, which is the Federal Reserve. This is our third straight day of market gains that we've seen, which is a complete reversal of the three month losses that we had in a row,

[00:01:52] but it's on the heels of the Federal Reserve saying, look, nothing's happening right now. Yeah, Powell gives a few clues here and there, but what do you think? What's your take on today's news? It was interesting because there was a lot of news today.

[00:02:05] First, there's been a real concern about funding of the federal debt, and you've never seen this kind of concern, but it is so expensive and so much, and so it's been really weighing on the market, and you've seen long rates back up,

[00:02:18] and that's really been effectively interest rate hikes for the Fed. It was funny because Powell today when asked about that refused to quantify, and there's some strategist saying, hey, with the backup and long rates, it's been the equivalent of three, maybe four, 25 basis point rate hikes.

[00:02:36] So that is yet to come and be felt in the economy. So today, Chairman Powell was, and as you said, it was probably the least talkish. I think Tobin and I were talking earlier that I think I've heard him,

[00:02:49] and in fact, someone say it was a victory lap where he said, last year we were concerned that we weren't going to act quickly enough, get rates high enough to really stem inflation because you don't want to get embedded, yet we did not want to kill the economy.

[00:03:03] And right now he basically said, I think right now the balance is good. So they're feeling pretty good about where things are. And of course, he's still saying, yeah, we're not ruling out a future rate hike, but it seems to me very unlikely at this point.

[00:03:17] You've got even though the economy is strong, and Powell said that you still, and he also said, wages are moderating, job growth is moderating. You saw the ISM number, manufacturing number today. Surprised everybody. It was negative. People thought it would go the other way,

[00:03:32] but so you still got a contraction there. I think there's been a lot of the news recently about credit card balances are climbing up, delinquencies are climbing up. You're seeing an auto loans. Now none of them, then of them are at dangerous levels,

[00:03:44] but the trend is going up. So the consumer though still I think flush with cash and of course jobs and wages and that is most of the ball game, you know, are starting to feel a little bit stressed. So savings are coming down.

[00:03:57] Todd, I sort of, you know, it was like she's having like an after party cigarette out there. You know, it's an accomplished. Yeah. I guarantee a couple of things, Barb. I guarantee you number one that he knew with that Atlanta GDP

[00:04:10] number was going to be that came out. Remember there was 5.1% growth GDP in the second quarter. And then, you know, the third quarter shockingly is 1.7%. So they knew that was coming. So we had that in his back pocket. He had certainly the fact that earnings are, you know,

[00:04:29] not robust, but they're not going south. And then, and then, you know, not only was the bond market doing the work for the Fed, but the stock market up until July, August was also doing the wealth effect. And as I constantly point out on this podcast,

[00:04:43] it's the top 25% tile of households in the United States that are responsible for the vast majority of discretionary spending, the best is the travel zone, so far. So it all makes sense where the trap door, I think has been is when, you know,

[00:04:59] when the inflation card was not coming down. And remember that shelter in all of its magnitudes is 42% of the freaking CPE, right? And we knew last October and November was the peak of when we had, you know, 8%, 9% year over year inflation from the year before, because, you know,

[00:05:19] people leave some place to live and nothing, nobody was selling anything and all the stuff we all know now. So we're getting the reduction that just the math says, and we got the three best days in the market for a while,

[00:05:31] because the narrative Todd, and that's the, you know, that's the driving force. I think most individual investors don't understand when you get all this stuff thrown at you all day long as I do, environment does, et cetera,

[00:05:42] you got to come up with a narrative that fits all those pieces together that you can invest in. And again, I'll give you a perfect example. We were very, very strong on the micro sectors of the economy. So liquefied petroleum gas, Barb,

[00:05:56] it's my favorite sector, six months, 12 months, 18 months, 24 months were up 400% on LPG tankers for crying out loud. But guess what? Now we have the Panama Canal blocked because a lot are so low they have to go another 2,000 nautical miles to deliver.

[00:06:14] And one of our LPG I've talked about on this show a lot just came out today raised rates, dividend stocks up 75%. There's just this year, there are pieces of the world that have inflections of growth that have nothing to do with Jerome Powell.

[00:06:28] And that's what we focused on and we're stock pickers and farm stock pickers. Well, hey real quick Toby, do you think the Fed has finished tightening? The Fed is absolutely finished tightening. And the reason is, is that it the only thing that

[00:06:41] counts to them is not the CPI but the CPE, the core equity, excuse me, inflation number. And it has peaked and the stock market did the work. And now the stock market is building a bottom. The interest rates that they are charging have nothing to do

[00:06:57] with the interest rates that are outside the world in the real bond market. And so when we didn't keep above 5%, when the bond vigilantes as our dear friend says, you know, didn't stop buying bonds, told me the narrative is enough is enough.

[00:07:15] The Fed is done and the Fed basically is doing the victory lap as Barb said, they said, you know, hey, we're going to get a soft landing. Whatever the hell that means, Barb. I mean, I've heard that. I know today, you know, it was funny because Jerome was

[00:07:33] asked, you know, do you think, do you see a recession? You've talked about it before and he didn't want to answer it, which was interesting. I think cause he's really trying to keep his options open, even though he's like a cat licking its whiskers,

[00:07:45] you know, we're in good shape. And basically he had to say, no, we don't see a recession. And I mean, I've heard pundits on the news talking about, oh, we're going to be in recession by year end, which is only two months away. And it's just not possible.

[00:07:59] You know, you don't have a recession with this kind of job growth and wages. So I think, you know, the economy is in great shape. And basically that's, but it is softening in ways that we need to, you know, and inflation is at the top of that.

[00:08:12] PCE number is key. And, you know, it's sort of stalled out a little bit, but if you look at the trend, it's just, it's coming down. So yeah, I will say that there's a very notable people who

[00:08:24] I won't note that have been so dead wrong about a recession that just changes every quarter. No, it's the recession is the second quarter. No, it's a third. Did I say third quarter? And, and, and, you know, as Todd wants to shake his head

[00:08:36] and kill himself when I'm about to say this, if you actually do the mathematics on what goes into an economy with a 76% service industry and 25% of the households providing almost 80% of discretionary funding and 96 million people who have some four-monthly income coming in from

[00:08:55] Social Security or pension, so on and so forth plus, plus, plus. And we had another note last week, which I looked from Ms. Iska was that, oh yeah, and in the 30 somethings in the 25 something, they all have side gigs.

[00:09:08] You know, they all, they all are doing side gigs for income. And I just saw a report that almost 20% of the income on a household from 25 to 35 year old is from some side gig. All that stuff never was around the 800 years ago

[00:09:22] that these people are calling for their recession or using data from and you know, we have different business models. We have business models subscription based. Yeah, we know what I think has confounded people is that, you know, you really, everybody on the street is like,

[00:09:39] well, you can't say it's different this time because it always works out the same way. Oh, shit, you can. It is and it has been different. We never had a shutdown where you suddenly just stopped everything dead. And I think, you know, initially as you remember the Fed

[00:09:52] was talking about, it was inflation was just temporarily tied. Transitory. Yeah, transitory was the word exactly. And it's really because they expected the supply demanding to get much back in balance much more quickly. And it's obviously not been, but you know, that was another

[00:10:07] thing pal said today that was very interesting. You know, he talked about, you know, we don't think wages are necessarily the main cause of inflation. And he was really talking about the supply issues and demand that are still all they're still being straightened out from the pandemic.

[00:10:22] So I was, yeah, I just it's just very convenient right now for him to just say, okay, we're fine, but we'll leave it out there in case we have to, I mean, you have three straight months of equity markets where you have 401ks

[00:10:39] that are down with 10% of the S&P 500 is down from its peak 10% going into this week. And you have also this job market. There's so many other variables right now. I am of the belief that they are not finished tightening

[00:10:53] and here's why it's a long road to go from three and a half to 2%. And he has said, we're going to hit that 2% mark. It might be a higher for longer, but then that's going to push us well into 2025 because I just don't see the economics

[00:11:08] to metrics that are going to prove to us that all of next year, yeah, we're going to continue to see the softening. You have job growth, which has just been phenomenal. And then you also have the retail sales number.

[00:11:20] People are still spending money because they have these jobs. So what do you guys think? You didn't live in Washington, DC for 25 years. I don't know if you know this, but there's a presidential election this year. I think I read that in New Yorker.

[00:11:37] Jay Powell or we just call him Jay knows better than anyone because there's never been a better brown noser than Jay Powell that you do the Fed does not fuck with the presidential cycle. That is a sacrosanct rule in Washington.

[00:11:54] And so they are done and they're not going to horizon that because A, he likes his job. B, he doesn't want to go down with the guy who got fired because he messed up the economy.

[00:12:04] And then the third part of it is GDP when you go into earnings and you're getting to take home pay, people are so crazy about this high default rate on auto loans. Well, holy mackerel, these were people who make $50,000

[00:12:19] a year going out to their Ford dealer to get a brand new $55,000 Ford 150. You can't hire enough repo men today in the United States, but you can't extrapolate that little tiny data point over the entire freaking economy. All right.

[00:12:37] And then the final point is I say it again all the time, but the top 80 counties in the United States account now for 81% of GDP. The other counties really don't count if you keep as we do the GDP of the top 80 counties, you will see that

[00:12:51] you're going to be stronger than the overall counties, but they count on an eight to one basis. So who cares about the other? Well, you know, Todd, what time were you going to say there? I was going to go right to you, but you.

[00:13:04] Oh, no, no, I was going to say about consumer spending. I mean, because, you know, Tobin made the point, you know, three quarters or two thirds, whatever it is in the economy is services, consumer is king. Right. But consumer spending when you look at it,

[00:13:15] you know, even though, I mean, I look at the, I don't know if you look at Bank of America Institute, they're doing a 28 million account, small businesses. And they do great work and you're looking at, they still see excess savings, you know, that are higher than pre-pandemic, right?

[00:13:28] They're coming down, but they're still there. And you look at the savings rate, which is coming down, that number was out today. Right. And you see consumer spending. We've obviously seen a pullback in door bowls. You're getting much more information about the lower income

[00:13:40] consumer is getting more stressed. And we know the lower income consumer spends most of their money on rent and food and transportation. You know, so the consumer is pulling their horns in a little at a time. In fact, we will know soon, you know,

[00:13:51] at the end of this month, we've got the big prime day or Thanksgiving shopping. So we'll have a little bit more, you know, understanding, but I think the consumer is definitely slowing down, but it's not dropping off a cliff. That right?

[00:14:03] The consumer is not an amalgam of all the consumers. Now you're right, when you're making- 85%, 81% of discretionary spending. I follow them. I don't follow the bottom three quintiles, right? Simply because from a mathematical standpoint, they really don't count at the margin as we learned,

[00:14:24] you know, back in economics 101, at the margin it's the discretionary spend. The other side of it is actual wages. Remember Wall Street, you know, was like, oh my God, all these tech guys hired all these, you know, what 350,000 people during the pandemic, et cetera.

[00:14:41] And you know what their average salary was? It's $256,000 a year plus plus. When you added those people in, what I was most worried about is now that they fired 100,000 of them, that that was gonna take over the overall, you know, earnings, but the top 25% income earners, wage earners,

[00:14:59] commission people, et cetera, they are the heart and soul of the discretionary spending. And I don't care whether F-150s are being repowed because the guy can't afford, do you remember to see the number recently where the average monthly payment was almost $1,400 for a freaking car or truck?

[00:15:18] In a household that is making $15,000, you know, for four tax. Yeah. And I see that credit card balances, I think it's some incredible number, like over 40% of people don't pay them off each month. That's 20, and they're now at 20%. 21%. Interest. So they're locked out. They're locked out of spending.

[00:15:37] But their spending doesn't count on a major basis of the whole thing. Yeah. Now, talk to some- I get these emails that I'm prejudice against low income people or whatever. No, I'm not. I just do the math to have to make a judgment

[00:15:51] for my work with my clients as to what's really going on and don't fall for this claptrap on either both sides of the aisle about how the world's gonna have problems. I think there is an impact on the margin. You know, I mean-

[00:16:05] On the margin but not absolutely. Yeah. And people as you said mentioned the wealth effect. So anyway, and one thing that wasn't asked a pal today or maybe I missed it, but was really, you know, everybody's talking a lot about the funding costs, you know, with our deficit,

[00:16:19] how much that's gonna cost us an interest payments. And that's clearly the higher the rates are. So that's not pal's mission. It's supposed to be about jobs and inflation. But that has to be somewhere in their conversations. You know, and I think that ties into Tobin's your point

[00:16:33] about it being a presidential election year. I mean, this, the deficit and all that's gotta somehow you gotta get those payments down. That's true. I just had two quick things in. Yeah. 48% of homes in the United States are owned for cash. So they don't pay a mortgage.

[00:16:47] The other 36% of the next houses are at rates below 4%. I mean, yeah, market's rates are high, but again, it only applies to a strad up here and you can't qualify for a freaking mortgage. You know, if you have a $50,000, $60,000 income. So we're insulated in many ways

[00:17:07] that I don't think the market is really. No, you're right. And Tobin, another thing that people don't talk about is because of those low mortgage rates and the fact that, you know, on that cash, I didn't know it was so high that people paid cash,

[00:17:19] but that frees up more disposable income, obviously. And so yep, and that's really a powerful, powerful thing. You've just got to spend on a monthly basis. I just let my B of A state, you know, for the joint account, my wife and I have,

[00:17:33] I look at the stuff that we spend money on. You know, wine is a health food, okay? The Reserve job, right? Traveling to Malibu last week. I was in the middle, that was a mental health day. You know, you know, I don't know.

[00:17:46] I live in this little cocoon of Scottsdale. I don't know where you live, but when you go through the upper 25% income households in America, things are really good. And yeah, their market's down a little bit, but oh my gosh, of 5% for no risk money.

[00:18:04] We just bought a bunch of, we think very high-rated, high yield bonds for 12 1 1 1 1 1 1 1 yield. And when rates finally come down, Todd, we haven't mentioned the fact that we've had two years of bear market for the bond market. I mean, if you want a leadership plan,

[00:18:19] you're pulling your hand out. Last year was a disaster. Everything was correlated last year, stocks and bonds. It was not a place to hide. And bond funds this year have lost money as well. Absolutely. So, you know, bonds people think, oh, it can be a substitute.

[00:18:31] I mean, I don't know what you think, but to me, bonds are complimentary. They, you know, are, yes, they're an adjunct to stocks. You're still trying to build long-term wealth at stocks. All right, well, we gotta go, Todd. While we come back though, I won't come back.

[00:18:43] You tease it out, Toby. I want to hear Barb talk about another, I believe issue that's important to investors right now is that we've had 40 years of declining interest rates, 40 years of up and then down declining inflation. That epic, that era is in my mind over.

[00:19:02] And if you're investing the way that you did during the Tina era and the no cost of money and then the zero cost of money than the negative cost of money. If you're investing that same way, then you're a bonehead because there are huge dividends now.

[00:19:17] Remember dividends always made up 30% of the return of the S&P 500. Now it's- Beautiful. Toby, I tell you, you're gonna have the audience on the edge of their seats because coming up after the break, we're gonna ask Barbara the same question.

[00:19:31] I'll probably just summarize it a little bit and get a little bit shorter. But we'll be right back. But we with us today, Barbara Durant, she is the CEO and CIO of BD8 Capital Partners and Lynn Guitaris for Durant-Duran by the way. I'm sorry. And I sing too.

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[00:22:22] You gotta listen to Todd and Toby on Buy Holds Set. Welcome back to Buy Holds So. Well, today is Fed Day, Fed Decision Day, but there was no decision out there, but stocks still rallied and this is our third straight day seeing the markets rallying and everything's up

[00:22:39] across the board, all major industries and we are obviously in the middle of tech season as well. With us today is Barbara Durant. She is the CEO and CIO of BD8 Capital Partners. You can go to our website at bdacap.com. We encourage the audience to go there

[00:22:56] and when we left off in the last break, Barbara, we were talking about all the different variables that are out there, some other opportunities for investors. What are some of the, because Toby brought up, he teased the going into this block,

[00:23:11] but what do you think I mean going into for the rest of the year? I mean, what should investors, because investors clearly wanna know what should we be doing going into 2014? Sector, stocks, stock versus bonds. What's the strategy here, Barbara? Yeah, well, I also think,

[00:23:26] you have to look at where we are in the market and Todd, as you pointed out earlier, it's been three months of a correction. Official correction is 10% we're there. And the question is do we go lower? I think after the Fed today

[00:23:37] and sort of this benign, non-threatening Powell, I think we're probably fine. We're setting up, November and December are seasonally strong in the stock market. October is not avoided to live up to it, so it's a stroke or reputation.

[00:23:50] And so if you look now where a lot of stocks and depends on the sector, but a lot of stocks are off their highs. You've got the tech sector, for instance, which I'll talk about in a second because that's an area that I really like.

[00:24:01] But if you look at sentiment, it's been very negative. Technically, the market looks very oversold. So I think you've got a lot of bad news baked into the market at this point. And I think the risk reward in terms of downside is probably limited.

[00:24:14] So it's probably a very good time to start picking some stocks or adding to put your portfolio. No, Barb, I go back to like early 80s. And I've been taking the Wall Street Journal. The 1880s. Every day. No, I'm not in my 80s. Yeah.

[00:24:30] I have kept the 52 week new highs and new lows. I've kept them in a drawer. Actually, my wife made up the ones from like the 80s and 90s. But whenever I had, I have this on a spreadsheet. Whenever we get to the point as we were last week

[00:24:48] where we had 110 new lows for every one new high, it has been a bottom in 88 and 92 and 2002. I mean, in 2009, 2010, it's just there are some mentality here. Everyone who had to sell has sold. Everyone who's cracked the bed has sold.

[00:25:11] And then you get into, when I ran mutual funds, October 31 is a year in. And so you want to, this you want to sell the crappy stuff, take those tax losses, take some profits. So you'll watch them. So your mutual fund shareholders don't get capital gains.

[00:25:26] All that happens in the washing machine, boom. And now we get to November 1st and the Fed calls off the dogs. The CPI and CPE is on the right slope. Powell's never, JPOW is never gonna say, oh, you know what?

[00:25:39] Because we have so much higher cost in the world today because of de-indexualizations and de-China and de-globalization and reshoring and all this stuff. We're gonna take the price inflation rates of 2.5% because that would be what would be actual, would be a normal rate given what we've done.

[00:25:55] No, they'll never do that. But we keep going down in rate, if we keep going that rate and tech stocks, you remember we had seven tests as tech stocks that were almost all the alpha, the outperformance without them we have zero market gain the entire year.

[00:26:11] So now it's time to be a stock picker and I want to hear what Farb's picking. No, well, Tobin you're right about it. I wanted to follow on the mutual fund selling which you know very well. And if you look at over half the S&P was down,

[00:26:24] there's names in there was down. And so there were so many tax loss candidates. And again, if you wanted to lock in some gains because things have run up, that was the time to do it. Mega-Captech has been talked to death endlessly. It's not exactly undiscovered.

[00:26:37] But the fact is they have incredible visibility of earnings growth. And depending on the name, there's the AI phenomena Israel does not a one or two quarter thing. You look at NVIDIA for instance, NVIDIA was up to date, we are closed

[00:26:51] but it was got to almost 500 after it reported those two incredible quarters of just doubling their sales and projections going forward. Like even the China that they may not be able to shift to China some types of their chips in the short term and then the medium term.

[00:27:06] So what they've got so much demand they can't meet it but that stock has come off from 500 to that almost of 400. And I'm sorry, their growth rate, or you look at the PE got down to like a 32 times when it was 50 times before they reported these blockbuster earnings.

[00:27:21] So those are the kind of things that you can just wait and even if you own it already, which I do it's core position on my portfolios you just wait out the volatility but if you don't own it, you can buy it now. Because now-

[00:27:32] Yeah, I would say for instance, so we have an AI 2025 portfolio we call which are the picks and shelves, right? So one of the ones that we just did ridiculously well on because we're ridiculously likely to own it was SMCI.

[00:27:47] SMCI is like the Peterbilt truck of the data centers, right? So they're the biggest buyer of NVIDIA chips. It was down at 160 bucks and when we started buying it and I think a lot of people I'm very hooked into the AI world.

[00:28:07] And when I saw the demonstration of chat GPTI in November it blew me away. And then you sort of like go down the scale and figure out, well who's got who wins? It was NVIDIA, it was SMCI, it was many other semiconductors but certainly- Yeah, yeah, oh, Broadcom.

[00:28:24] Broadcom. Broadcom and at risk of networks, ANET we just announced today that's our third largest position NVIDIA is our second. You can't, none of it, but you can't chase. And that's a thing you learn for Dode and I've learned as long as doing this

[00:28:38] is that when the FOMO thing hits and we get a mania like we got with the NVIDIA numbers then you just saw all these small, we tracked these small orders and the large orders. And starting about June 15th all the orders are more small orders

[00:28:51] than there were big orders. And that means the FOMO dude, dude, I gotta buy this, yeah, yeah. And we gotta crush them. I'm in a mood today Todd, but you gotta crush these people so that they'll understand so that now you can buy NVIDIA at 400 bucks.

[00:29:06] SMCI went to 450, we bought it at 150. I made all our subscribers and I told all of our investors we are selling this, you know why? Cause if you make 250 bucks on a stock in three months if you don't take that profit

[00:29:22] you are the stupidest human being on the planet and I'm not gonna allow you to do that but the froth has come down and now we're seeing these orders of magnitude improvements and it just at home, don't chase. And if something takes out that way

[00:29:37] the stock market has returned depending on how you do the math, seven or 9% a year, right? First it's 59. If you get 50 years of gains in one position in three months, you must sell. You have to take some profits. You absolutely do. Yeah, no question. Yeah, that's fine.

[00:29:55] Otherwise then you're a sad sack remorseful oh, come on dude, sell it. You know, it all came back. Well, you know what? If you're gonna be your do-it-yourself investor you gotta do it yourself brother. Well you are right. You are right about the, this quarter actually going back

[00:30:09] it's actually historically the best quarter in a pre-election year. If you're gonna be long, this is the time to do it. Barb what do you think? I mean should, I mean you brought up consumer spending I mean is the retail sector something to focus on?

[00:30:23] I mean oil and gas, I mean oil is done well. Is it tech girl? Times to do it. No, and consumer discretion. I'm growth. You know, I'm not big on cyclical because you really gotta get the timing right. I tell you when things are maybe so oversold.

[00:30:35] Like right now, if you look at where, you know utilities, utilities are crushed. They're a two year low. Right? Real estate, two year low. You know, it's things like that we can go okay well that's where, all right what's the risk reward? Maybe have to wait a while

[00:30:49] because those things obviously do only do well at certain points in the cycle. But in real estate obviously you have to do it by sector you know, off the buildings, we'll see. But no, consumer discretion. I love Costco, Walmart. Those are core holdings.

[00:31:05] You know, Walmart has really, it's stopped being a while ago a sleepy old retailer. It's number one in the world in terms of sales. And got the Omni Channel, you know they continue to have all these growth initiatives and they're just killing it.

[00:31:19] And that's one you just buy and hold. You know, so and the same with Costco. You know, and they have their little dips and ups and downs and they're not invulnerable to macro forces but they're pretty recession resistant.

[00:31:30] Yeah, well let me tell you I was in Costco on Sunday and I didn't see many broken down cars in that parking lot. Okay. And I saw older couples walking out with two carts full of stuff, you know like they're feeding a family of 100

[00:31:48] and no, I'm with you on that. That growth to me is a little slower than I like. I'll tell you one though, you know the GLP one inhibitors just all of a sudden crushed any of the technology companies that deal with insulin resistance or like, but DEXCOM.

[00:32:06] We just bought this yesterday, I guess Monday. That got killed recently because of the obesity drugs and I actually I was at disgusted with a friend who owns it and I thought it really the risk reward was amazing. What was the downside? And this is-

[00:32:21] Hebron again, hebron again. She's genius, she's brilliant. No, but I mean, look at DEXCOM again. I'm just a slave to freaking mathematics. They get reimbursed by Medicare, Medicaid by Medicare Advantage, et cetera. You go to your doctor, you have a high A1C, boom.

[00:32:40] They pay for it, they pay for everything. You know why? Because if you're on the DEXCOM and you get an alert on your phone saying, hey dude maybe you want to not eat the 25 pieces of candy you just did because your A1C is now enough

[00:32:51] to kill a freaking elephant. It changes their behavior and all their risk patterns go down. The thing pays for itself. So when it went down almost 35%, like in three days because everybody in the United States is going to be who's either type one or type two diabetes

[00:33:07] is going to be on vitamin O ozepic, come on man. Yeah. And I love bizarre anomalies that happen. No exactly. You just have to be waiting there like a vulture because you do get these dislocations. It's ultimately an efficient market but there's many inefficiencies along the way.

[00:33:25] I'm curious too. You should write that down. I'm wondering if you've looked at Starbucks which reports tomorrow morning, that to me is, I own it. It hasn't done well in the last six months or so but I think they are really doing a lot of good things

[00:33:40] in terms of product innovation making them ordering ahead of time. I don't know you but I do not like to wait 10 minutes to get a cup of coffee made and also their big China play. And China is an affordable luxury. Yeah, my fear in that was that remember

[00:33:57] they were trying to have 560 something stores and they were opening like four stores a week type thing to get there. And when I was in China recently, you could see there was so many vacant stores in these overbuilt shopping centers that nobody's going to et cetera, et cetera

[00:34:15] that if I just felt like the gross store was getting gutted by that. And the fact that remember in China, the way to wealth for the last 25 years because I'm not going to lose my point about the world has changed Todd. The way to wealth over the 25 years

[00:34:28] is you and your wife get together, you buy a condominium for cash, 78 or 79% of condominiums apartments in China are paid for in cash. Nobody has a mortgage. People have the mortgage as a developer, right? So the government gave you free money, et cetera

[00:34:46] everybody got these place things are great. And then all of a sudden, you know, the world changed and now I mean, I'm going to be in China like three weeks. It's going to, I just to look at the horrors show. So their economy was based totally

[00:35:00] on buying all this steel and cement and building these every apartment if you get lost and you're drunk coming home, come pie from a drinking night, you could luck fighting your apartment building among the other 25 that are exactly identical. So I'm not as big on Starbucks.

[00:35:14] I will say though at Costco, I just picked up the egg bites from Starbucks. The egg white bites. You could buy the Starbucks egg bites at Costco. Do you think they're good? I love them. And they're good at Starbucks. Have you ever had the egg bites at Starbucks?

[00:35:28] What are they? Is it egg whites, egg whites, egg whites? It's a big bite. Roasted red peppers in them, they actually are very good. Is it like a deviled egg? I love deviled eggs. No, it's like a egg that was mixed up

[00:35:41] and then you put it in a microwave and now it grows up and it's like this big Wow. Pepperoni and bacon. I don't know if I would go to Costco and buy a thousand of them though, but that's Toby, it's what he likes.

[00:35:54] No, that's not how I roll, but I'll just say that I have $126 of points at Starbucks, okay? Excellent. So I can make the entire year and I'm never gonna pay for a drink, of course it costs 1500 bucks to get that, but still. But here's my point, Bob.

[00:36:08] What I'm trying to get is I think because of the last 40 years, particularly the last 20 years, and let's not forget that maybe $7 trillion of cash money monetary stimulus went into the United States monetary system and it hasn't been taken out. I mean, that's the other big thing

[00:36:25] that I think people are missing. Is it, well, where the hell did it go? Dude, it went to the banks who then lent it out or lent it to businesses. Yeah, and they're still there. And it's 6.5 trillion sitting in money market funds and earning 5 plus percent,

[00:36:40] which is actually depending how things evolve, that's a lot of fuel to put into stocks when the moment comes. I mean, that is huge. But I guess I might do some quick points on how I'll end it though. But my theory is that if a person is investing

[00:36:53] the same way that worked, like clockwork for 40 years, 30 years in the last, certainly the last 12 years, then they're crazy because they're making the assumption that all of those stimulus factors, macroeconomic, China coming into the market, you know, 1.2 billion Indians coming, all that is happened already.

[00:37:14] And because of de-globalization, that your return on your portfolio is not going to be 95% no dividend stocks and 5% stock that pays the dividend, but you don't care. My feeling is that dividends are gonna come back and be that 30%, 35% return. And there's some incredible high paying dividends

[00:37:33] that we have again, like, you know, like shippers, like LPG shippers, some of these uranium royalty trusts they said that are paying getting 20, 25% dividends. The stocks are going up in value. They don't go down when they pay a dividend. I mean, I've never seen it before.

[00:37:50] Well, yeah, Tobin, I think, you know, if you've got a stock that also has capital appreciation, I had a client, you know, ask me, well, what about buying whatever and I looked at the growth rate in this company and looked where it was this year to date.

[00:38:01] I said, well, if you bought this January one, okay, you might have gotten 5% in dividends but you'd be overall down 20%. So you cannot just look at dividends and people just think, oh, I want income. But meanwhile, if your whole portfolio is losing value,

[00:38:14] so it's a good point, but you really, it's like the dividend aristocrats, you know, it's really where the companies that are have high dividends but are also growing. Because you don't wanna lose money by just buying the stock. So- Well, again, I mean, you know,

[00:38:25] the weirdest thing I've ever seen, you know, in the playbook right back in the old playbook, okay, let me see. Interest rates are being raised by the Fed. So, and we're looking towards a recession. So let's go to the safety trade. Let's buy utilities.

[00:38:37] I have never seen two years where you, I mean, freaking Florida light and power is down 48%. And that was the same money. And a financial advisor didn't tell them to get the F out of that because the world had changed and that person fire them.

[00:38:55] Because that is just, that's inconceivable. Okay. Two year lows in the utility sector right now. And people think of utility is so safe. So no, I agree. Although, you know, it'll be interesting to see. We don't want the inflation, I do believe will come down.

[00:39:09] I think it's gonna just continue to serve like air coming slowly out of a tire. It will come down. And when it does, because you look at, remember it was like over 10 years, the Fed could not reach a 2% target, you know? And there was, you know, the agreement-

[00:39:22] Well, in the world of disinflation. Well, it was disinflation was a lot of it was technology, you know, productivity. It was globalization, which by the way, I don't think globalization is over. I mean, we're on ensuring stuff and it's really on the margin, you know?

[00:39:34] There's still a lot of companies. I mean, you're still have to report good earnings to your shareholder. So it's just where they can, they're switching countries, but it's a process. Look at Apple. I mean, they are so invested in China, you know?

[00:39:45] And so I think that's, you know, globalization I think is still very much alive, but over time, you know, being more aware of the geopolitical risks and also what happened in COVID where you couldn't get supplies, you know, for certain things, some pharmaceuticals.

[00:39:57] So I think the S to have an overtime, but I think it's gonna take a long time. So I think once we've sorted out post pandemic, you know, there's no reason why, like particularly with AI, it should mean a lot more productivity and getting back to that.

[00:40:11] So, you know, we'll see, we could return to that environment, but for now we're not. And it looks like another year, maybe two years. Yeah, we own two Mexican logistics companies that are ridiculous, you know, 9% dividend, but because of the dollar, you know, they're there because Mexican dollars

[00:40:33] is the only thing that's going down in value faster than the United States dollars going up. And I totally with you, I mean, Mexico in the Macledores and the whole, I mean, you can go get out of the border one day and see if the thousand, 2000 trucks,

[00:40:49] I think it's 5,000 trucks a day that go through there, they are cutting the cost and you're gonna see more of that. And then logistics, I didn't realize that logistics, the United States is 9% of our GDP. In Europe it's almost 11% of GDP.

[00:41:03] In Mexico, logistics is like 18% of their GDP and it's mostly going out, not coming in. No, and it's an interesting point about, you know, using Mexico or more South American, Latin American countries, because it solves a lot of issues, you know, one, their friendlier countries,

[00:41:18] two, we help them, you know, and get more jobs so they stop coming, you know, here for a better life. I mean, you look at our immigration patterns over time. We had the Irish and the great potato famine. Sure, the Garner we did. Welcome to another.

[00:41:31] The Chinese coming, but they don't need to come anymore because their own countries, you know, are more or less thriving, you know, modern economies. All right, well, I didn't get out of what I wanted to hear from her, Todd. Wow, she said it all.

[00:41:44] I think he did back. We're living in a new era of investing, but listen, I've written three books on growth investing, so I'm pretty much a growth investor. Yeah. I will tell you that to get BW LPG, the Panama Canal, the water is low.

[00:41:59] It's low because it doesn't rain in Panama anymore. And, you know, shockingly, they don't use seawater. They use freshwater. So now they have to make a 2000 extra mile trip. The rates on LPG tankers have gone from 35,000 per day to $95,000 as of yesterday per day.

[00:42:14] And they're going 2,000 more miles. And in the old days, you know, Barbara, all the ship guys were old guys, and every time they got a little money jingling in their pocket, they went and bought more boats. You know, that was just because they went to the Greek ship

[00:42:28] owners' club and say, yo, look at me, I have 55 north volts, right? So they always screwed themselves. Now the sons and daughters are in charge of those companies, and they're saying dividends by, you know, opportunistically, but mostly, you know, so I'm telling you, man, LPG, LPG.

[00:42:47] Well, and you're seeing a lot in the oil and gas companies, you know, in the US who just, you know, they were always doing these projects. None of them were profitable. And finally the last few years, they said, look,

[00:42:55] we got to do a better job for our shareholders. And we turned it into a capital. Drill baby drill is now paid dividends and buy stock back, baby. There you go. That was awesome. Well, listen, I think we said it all today, guys.

[00:43:08] Only thing we didn't cover was the jobs report, but we'll get into that another time. We know that jobs report is going to be fine for kind of. $189,000 is the consensus. Likely will be. I think there was only one time in the last two years that we

[00:43:21] actually disappointed. So it should be especially after $336,000 last month. I don't foresee a big job. Two jobs for every one person wanting to work. Two jobs for everyone. What? It's going to go down? Come on, Tom. Yeah. All right. The balance is slowly coming in.

[00:43:37] It's slowly coming to balance. That's the thing. It's ideal. It's slowly. It's not going to be this sudden cliff. But we keep an eye on those initial jobless claims. And you know, we're looking for any signs of trouble

[00:43:46] there. And so far, no, no canary in the coal mine. Not the narrow. We will see that report tomorrow at 8.30 New York time, 8.30 AM. So you definitely want to check out your local news. It's 5.30 for me, Tom. So just send me a text, would you?

[00:44:02] You got it. I'll wake you up. You got it. You got it. So Barbara Durand, you are the CEO and CIO of BD8 Capital Partners. We invite the audience to go to bd8cap.com. We also have a link in the description of the show

[00:44:15] for you to go directly to it. Definitely, I want to see what Barbara has to say there. So Barbara, thank you so much for joining us today. I can't thank you enough. We would love to have you back on in some time in the near future.

[00:44:27] Tobin, thank you very much. It was a great pleasure. Great. Absolutely. Absolutely. So on behalf of Barbara Durand and Tobin Smith, I am Todd Schoenberger. Thank you once again for joining us today on Buy Hold Cell. We'll catch you next time. Take care.

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