Enlightenment - A Herold & Lantern Investments Podcast
Enlightenment - A Herold & Lantern Investments Podcast
Will the Fed’s Next Move Crash or Boost the Market?
September 9, 2024 | Season 6, Episode 33
What if we told you that the 23rd anniversary of September 11th holds profound insights not just into our collective memory but also into the dynamics of September's financial markets? Tune in as we navigate the turbulent waters of recent market movements, with Broadcom's earnings guidance and softer-than-expected jobs data taking center stage. We'll dissect how these factors are shaping retirement portfolios, re-examine Jim Cramer's weekend insights, and consider the potential impacts of imminent CPI and PPI reports. Don't miss the compelling discussion on the resurgence of nuclear energy and the rise of Celsius in the energy drink market.
Prepare to gain invaluable knowledge about this week's financial market landscape. We'll analyze recent earnings reports from Oracle, Signet Jewelers, Kroger, and Adobe, identifying key trends in data center spending, consumer behavior, and AI advancements. The bond market remains a hot topic, with analysts debating future Fed rate cuts, while major stock market moves—like Apple's product launch and Google's antitrust trial—are also scrutinized. Plus, we’ll cover broader economic issues like Bitcoin ETF outflows, China's economic slowdown, and its ripple effects on U.S. companies. Expect to hear updates about Merck, Boeing, Arm Holdings, US Steel, and Big Lots.
Finally, we'll delve into the resurgence of nuclear power in the U.S. and the dynamic role of tech leaders like Bill Gates and Sam Altman. Companies such as Constellation Energy and Vistra are experiencing significant stock gains amid increasing public support. The Biden administration's ambitious goals to triple nuclear capacity by 2050 will be examined, along with the challenges posed by lengthy construction timelines. Additionally, we'll explore the rise of Celsius Energy as a healthier alternative in the booming energy drink market. This episode is a rich tapestry of market updates, investment strategies, and cutting-edge energy innovations—essential listening for anyone keen to stay ahead.
** For informational and educational purposes only, not intended as investment advice. Views and opinions are subject to change without notice.
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And now introducing Mr Keith Lnton.
Keith Lanton:Good morning. Today is Monday, September 9th , as we make our way through fall just beginning Two days from today, September 11th 23 years since that tragic day. Kind of shocking here, especially in New York, that that's been 23 years ago, but all the folks in our thoughts and prayers still to this day. So we begin September, which has historically been a challenging month, and this year has gotten off to a challenging start as well. So what we're going to do is we're going to talk a little bit about what happened last week. Jim Cramer from CNBC did a nice recap over the weekend. I'll paraphrase from there. Then, what we'll do this morning is we'll talk about how to position our portfolios, especially for those of us who are retiring, thinking about retiring or perhaps thinking about retiring in a long time from now. I think we'll go through a scenario that was discussed in Barron's. That I think is a very useful way of thinking about how much money we each need for our retirement savings and be able to utilize this roadmap as a strategy to think about retirement and how much we need for retirement and how to structure our retirement savings. Think about retirement and how much we need for retirement and how to structure our retirement savings. We'll talk about what's going on in financial markets today, which are beginning the week on an up note, and we'll talk about what the Fed may or may not do, especially relative to the data we saw last week, and what's being priced into the financial markets. We'll talk a little bit about Barron's cover story, which talks about nuclear energy, which they are saying get ready for the new nuclear age. It could help solve America's electricity problems. Interestingly, this headline could have been on the front page of Barron's 50 years ago. So what's old is new again. And speaking of energy, we're going to talk about Celsius, which is an energy drink, barron speaking favorably about that company, and then Brad will hear about fixed income markets and his thoughts on markets in general. So let's back up to where we are here.
Keith Lanton:September 9th it's been eight days into the month and here's the ninth day, and it was a rough start to the historically week of September Economic growth concerns and investor worries about the presidential election and we have tomorrow the presidential debate and we also have some concerns and some thoughts regarding what the Federal Reserve is going to do when they have their policy meeting later this month. So last week the S&P gave back over 4% in its worst weekly performance in a year. Nasdaq down 5.5%, dow down roughly 3%. The sharp selling on Friday was partly attributed to Broadcom's 10% post-earnings stock decline. The chipmaker beat on the quarter but disappointed with guidance and as a result, the shares were hit hard. Now that wasn't the only event taking place on Friday.
Keith Lanton:Friday also saw the government releasing softer monthly jobs data. August non-farm payrolls grew by 142,000. That was short of expectations of 161,000. Perhaps even more concerning is we got some downward revisions to previous months. Unemployment rate unexpectedly did tick down to 4.2%. Wages ticked up slightly more than expected to 3.8% year over year. We'll talk about those metrics a little bit later.
Keith Lanton:The employment report sparked worries that the expected soft landing might be in jeopardy. Now, ironically, many of us in the financial markets are rooting for the Fed to cut rates, thinking that'll be good. But ironically, if you think about it, the only way for the Fed to justify cutting interest rates is to get weak numbers, like this employment report that we just got on Friday. So you can't have both. You can't have Fed rate cuts which you may or may not view as positively, and then have those rate cuts without some weakness and some concern and, humans being humans, that manic mindset seems to wreak havoc on us at times and we get overly worried and overly exuberant and we have to think rationally and try and figure out what the employment picture truly looks like, if we're guiding towards this soft landing or if it's going to be real bumpy, or perhaps we're going to miss the mark entirely.
Keith Lanton:At the moment, the market is expecting rates to come down significantly. I would argue that, given the data that's coming out so far, I would say the market might be ahead of itself. We'll talk a little bit more about that. Right now, the market sees about 125 basis points, that's 1.25% of rate cuts across the next three policy meetings, and that's according to the CME FedWatch tool meetings and that's according to the CME FedWatch tool. And what the markets are expecting is a 25% basis point reduction at the meeting on September 17th and 18th and then perhaps 250 basis point cuts on the meeting on November 1st and the other meeting on December 13th. That may be overly optimistic. If it's not overly optimistic, well, you may get those rate cuts, but you're not going to like the data to get you there In the week ahead. This week, investors, we're going to get two reads on inflation that could sway the Fed. We're also going to get a few earnings reports there's only a few left in the S&P 500. And we're all going to get a chance to see Democrat Kamala Harris and Republican Donald Trump debate tomorrow evening in the lead-up to November's presidential election.
Keith Lanton:Now let's talk about the numbers that perhaps will sway the markets the most significantly in the near term, and that is the CPI number that is coming out on Wednesday, and then important but not quite as market moving usually is the PPI, or producer price index, on Thursday. Now the CPI carries more weight because it measures the prices that consumers are paying at the point of sale, which is what the Fed is most concerned about when they're thinking about setting interest rate policy. Economists are looking for a 2.6% year-over-year increase in headline CPI and a 3.2% increase when you look at core, which takes out food and energy prices. In addition to the headline and core readings, economists will be keeping a close eye on the shelter component. This is the cost of housing, which is a big component of CPI. The cost of housing has stayed stubbornly high, causing some economists to expect CPI to come down more aggressively than it has, and many will be looking to see if the prolonged increase in interest rates, or the higher rates the longer that we've been experiencing, will finally cause some weakness in shelter costs, which could lead to more pressure on the CPI to the downside, which is obviously something that would be welcome from an inflation mindset. Economists on Thursday are looking for a year-over-year increase in PPI, headline PPI of 1.7%, core rate of 2.4%. Now PPI tracks the price producers pay. Also, you could think of them as the input costs. While the Fed is certainly very focused on consumer prices, the PPI is still a crucial report to monitor because input costs dictate selling prices, which ultimately do factor into CPI, perhaps with a lag. Well, you know, thinking of the companies that we invest in, they're certainly very concerned about their profit margins and if their input costs go up well, they may raise their prices to the consumer at the end of the day Earnings.
Keith Lanton:This week we get Oracle, which will provide another look into the state of data center spending and demand for AI infrastructure. Thursday we hear from Signet Jewelers, which is important to get an idea about the consumer discretionary category. Jewelry is certainly something that people splurge on when they're feeling better about their prospects. A consumer staple, kroger, which is in a battle with the government regarding their merger with Albertsons. But Kroger will report earnings on Thursday and give us some idea what's taking place with the consumer staples, and then also on Thursday, we get Adobe out with their results. Also give us some information in terms of what they're doing, especially with respect to AI and generative AI.
Keith Lanton:All right, let's take a look at what else we got going on this week. Let's talk about the bond market. Brad will talk some more about this. There is a divergence of opinion on whether or not the bond market is already pricing in A lot of the upside that is going to be delivered with some uh fed rate reductions. Uh TCW uh, one of their uh analysts, uh, jamie Patton, is convinced that even the swift easing that's now baked into financial markets doesn't go far enough, saying that short-dated treasuries have plenty of room to keep rallying. Meanwhile, jpmorgan Asset Management's Bob Mischel is betting the bond market has already run too far ahead of the Fed as the economy keeps chugging along. So we certainly have this back and forth in terms of the bond market and allocations in the bond market, where to allocate your funds and whether or not the bond market is sufficiently priced in the expected rate cuts.
Keith Lanton:This morning we're seeing futures moving higher. We are seeing the Dow futures up about 250 points this morning, a couple of percentage points above fair value. S&p is about 35 points above fair value and NASDAQ futures are about 130 above fair value. So we're looking up about seven-tenths of 1%. Treasury yields are higher this morning. 10-year note is up about four basis points to a 375. Two-year is up four basis points to 369. The price action in treasuries last week perhaps was somewhat of a reaction to the downward drift in equity prices and now that equities are attempting a rebound, perhaps that's one of the reasons we're seeing treasuries give back some of the gains that we're seeing this week.
Keith Lanton:Today, investors are racing for Apple's most important event of the year. It's rolling out its latest iPhones and setting the stage for a new artificial intelligence platform. That event kicks off from Apple's headquarters at 10 am local time. If you're here on the East Coast, that's 1 pm East Coast time. The most significant product announcement will be the iPhone 16, but the company is also preparing major updates to the watch and AirPods earbuds. Apple Intelligence a new suite of AI tools that includes an updated Siri digital assistant, which will also feature prominently.
Keith Lanton:Other tech companies in the news Google their antitrust trial starts today. Other tech companies in the news Google, their antitrust trial starts today. Palantir Technologies, pltr is replacing American Airlines in the S&P 500, effective with the opening of trading on Monday, september 23rd. Also on September 23rd, dell will replace Etsy ETSY in the S&P 500. That is starting to influence the prices of each of these individual stocks. For those who keep an eye on Bitcoin, the US Bitcoin exchange-traded funds have posted their longest run of daily net outflows since they listed earlier this year. Investors pulled close to $1.2 billion in total from the group of 12 ETFs over the last eight days, and that data is as of September 6th. As of Friday Reports in China that troubles continue to brew in China, as core inflation cooled to the weakest in more than three years, providing evidence that consumer demand is continuing to slow in the world's second biggest economy. This is having an influence on US companies like Starbucks and Nike and others that do business in China.
Keith Lanton:So something to keep in mind as you build out your portfolio. China exposure was viewed as a tailwind. Now it's perhaps a headwind. European shares climbed on the likelihood of an ECB rate cut on Thursday. On the Asian equity front, japan's Nikkei ended lower, weighed down by losses in technology stocks. China's shares dropped to seven-month lows on those reports that I just mentioned.
Keith Lanton:In commodities, oil futures are rising as a potential hurricane is approaching the US Gulf Coast and gold prices down modestly this morning. Other companies in the news Merck, down over 2% after rival Summit Therapeutics announced phase three trial results for a lung cancer drug and Summit saying that its product achieved a clinically meaningful benefit compared to Merck's Keytruda. Summit shares are up more than 30% at Summit Therapeutics. Boeing stocked this morning up about 4% after the aircraft maker reached a deal with a union that represents its factory workers, potentially avoiding a costly strike. Boeing is going to give workers a 25% wage increase over the next four years and also committing to build their next generation aircraft, largely in the Seattle area. Arm holdings this morning up nearly 3%, financial Times reporting that Apple will use Arm's artificial intelligence chip technology in the iPhone 16.
Keith Lanton:Us Steel shares moving higher. Us Steel, caught up in the crosshairs of the presidential election, concerns that US steel will be bought by Nippon Steel, the Japanese steel company. This morning, jp Morgan saying that US steel has fallen too much. Perhaps they will get interest from US steel manufacturers like Cleveland Cliffs, who started putting US steel into play. Jp Morgan upgrading the stock to overweight from neutral weight. This morning, big lots those of you who may see those stores around they announced that they are initiating bankruptcy proceedings proceedings and in other news, former President Trump says he will impose a 100% tariff on any country that moves away from the US dollar as its reserve currency. That's according to Bloomberg. Washington Post reporting that US officials say a ceasefire agreement between Israel and Hamas appear out of reach this year. Treasury Secretary Yellen says there are no red lights flashing in the financial system. Politico reporting that House Republicans unveiled a plan to fund the government through March 28th, but it includes some provisions that Democrats are against. And Bloomberg is reporting that donors to Kamala Harris's campaign want her to fire Federal Trade Commission chair Lena Kahn if she is reelected.
Keith Lanton:Let's talk about all this news that we're talking about and all this uncertainty in financial markets Always a challenge to try and figure out our asset allocation, always wreaking havoc with our minds feeling really optimistic and then, at times, feeling really pessimistic. And the crucial factor is how do we focus on the long term, how do we structure our investments so that we can think clearly? And Barron had a really good article, I thought, talking about retirement and how to structure portfolios structure portfolios and again, this is not for every single person, but perhaps a construct that many of us potentially could use, if not for ourselves, perhaps for our parents. One of the factors that you think about when you think about retirement is how much money can you take out of your account every year. One of the old rules of thumb was that you could have a 4% withdrawal rate. Barron's saying that now, a 5% withdrawal rate looking safer perhaps with interest rates being a little bit higher than they were two or three years ago. But one strategy that may make a lot of sense is to use buckets for cash, income and growth, and when we say buckets, these are proverbial or metaphorical buckets that we can think about allocating our funds into these buckets so that we are confident that we will be able to maintain ourselves and our loved ones in retirement.
Keith Lanton:Now, most folks don't really have a plan. Fifty-three percent of retirees say that they wing it, withdrawing money whenever they need it, and, of course, if you don't have a plan, it's hard to know if your spending is sustainable. So the idea here is to divide your portfolio into three buckets One holding cash for near-term expenses. A second in fixed income and high-yielding equities to handle intermediate expenses. And a third in growth stocks to help your portfolio beat inflation and possibly keep growing. And the way I would suggest thinking about this is to think about the bucket number one, the cash bucket, as holding two years worth of your anticipated retirement expenses. So let's just take round numbers. You expect that you're going to need and again this is just a hypothetical you're going to need $100,000 a year for your spending expenses, for everything that you're going to spend, including your health care.
Keith Lanton:If you're married, this is for you and your spouse, so you're going to be anticipating you're going to spend $100,000 per year in retirement, and we need to set up buckets. Well, if you're going to be spending $100,000 a year and this number is a moving target because of course, there's inflation, but we're just going to keep things simple at the moment and not address the inflation, we're going to suggest that you need to have $200,000 in your cash bucket. Now what does that $200,000 mean? It doesn't necessarily mean you need exactly $200,000. What it means is you need to have $200,000, including the cash flow that you have going into your portfolio. So what does that mean? That means perhaps that you are getting money from Social Security. Perhaps you have a pension, or your spouse has a pension, or perhaps you have other income that's very secure, perhaps from rental properties. So when you think about this cash bucket, you're going to need $200,000 because you're spending $100,000 a year. You're getting, let's assume, $40,000 a year from Social Security and other income-generating avenues generating avenues. That means that you need to put $60,000 in year one, $60,000 in year two or $120,000 into your cash bucket, and this bucket might hold vehicles like FDIC insured certificates of deposit, high yield savings accounts and money market mutual funds. You also need to factor in taxes into this calculation. So when we're talking about setting aside these funds, we are talking about after-tax amounts here.
Keith Lanton:Once your cash needs are set, you move on to the second bucket. This bucket should hold eight years worth of your required portfolio income. It should hold things like high quality bonds and stocks that pay relatively high yields, such as utilities, perhaps real estate, investment trusts and things like midstream energy companies, and you set aside in this example and we're talking about after tax income. But here you're gonna set aside Eight years of income, or $800,000 into this bucket. So the first bucket we're putting $60,000 because we're getting $40,000 for two years. So we're setting aside $120,000.
Keith Lanton:Again, this is a hypothetical scenario where you high quality bonds, stocks that pay relatively high yields, utilities, reits, midstream energy companies, and then that brings us to the third bucket, which is your growth bucket, and this should hold assets to keep your portfolio growing while you deplete the cash and income. It's also the riskiest bucket and should only include money you don't expect to need for at least eight years. So how does this all work? As you spend down the cash bucket, proceeds from the third bucket can help replenish it, alongside distributions from the second bucket. Now, a good time to top off the cash is during a strong market. When you have gains in your stock portfolio, you can sell appreciated stock and dump the proceeds into the cash bucket, and this avoids the scenario where you have individual stocks.
Keith Lanton:You may have underestimated how much you need because you didn't do this analysis. And suddenly you need $30,000 or $40,000 or $50,000 or $60,000, and the markets are down 10%, 15%, 20%, 30%, and if you haven't planned well, you're selling out of your long-term growth bucket at exactly the wrong time and the likelihood that you deplete your savings grows. So, setting aside these three buckets the cash bucket, the intermediate bucket, which holds those high-quality bonds, dividend-paying stocks like REITs and MLPs, income-holding investments like energy partnerships for assets, and then that third bucket, that growth bucket, and you can leave that bucket alone and you can strategically sell from that growth bucket when the timing is right, so you are not panicking and selling at the worst possible moment. All right, now let's keep moving here and move on to that headline story in Barron's which I said is talking about what's old is new again, and that is nuclear energy. And the reason that we are embracing nuclear energy again is because we are devouring enormous amounts of electricity. And speaking about what's old is new again. What's taken place in Harrisburg, pennsylvania, on the Susquehanna River, is perhaps extraordinary. The Three Mile Island nuclear plant, the scene of a historic radioactive meltdown in 1979, is quietly getting prepared for a second chance Within three to four years. The plant's one undamaged reactor may start up again, heralding a new era in American energy.
Keith Lanton:The stars are aligning for nuclear power revival in the US. The government is funneling billions of dollars into the industry. Tech luminaries like Bill Gates and OpenAI Sam Altman are backing new companies, and public support for nuclear energy is on the rise Now. Which companies could be beneficiaries Now? These stocks have already moved up significantly 50%, 60%, 70%, 80%. One of them is Constellation Energy, the nation's largest owner of nuclear power plants. Just a few years ago they were begging for help and now Constellation Energy is thriving. Its stock is up 70 percent in the last year and there's reason to believe. Barron says that shares of Constellation and peers, like Texas-based power producer Vistra, will keep rising as the government support increases for nuclear energy and utilities boost payments to nuclear plant owners.
Keith Lanton:America currently has 94 nuclear reactors generating 18.6% of US electricity.
Keith Lanton:Nuclear reactors are the largest single source of carbon-free energy in this country, which is kind of amazing when you hear all the talk about solar and wind and thermopower, but nuclear's share of total electricity generation here in the US has been declining. The percentage was 20% in the 1990s. A dozen reactors have shut down from 2012 to 2021. But the tide is turning. Six reactors that were slated to close have now been saved and will stay open. Three reactors that were closed and have been decommissioned may be restarted, like that plant at Three Mile Island. Bill Gates' nuclear company, terrapower, is preparing the site of a retired coal plant in Wyoming for a new reactor with more than $2 billion in government financing, and two Altman-backed companies are testing nuclear technologies. The Biden administration has announced a goal to triple the nation's nuclear capacity by 2050. The biggest reason for nuclear power's resurgence is that US electricity demand is growing. After more than a decade of flat power consumption. In some areas demand is exploding and utilities are scrambling to secure reliable power and they're willing to pay up for it.
Keith Lanton:So if you're thinking, where in this country is the puck going? The puck is going to the need for more energy and, specifically here, the need for more nuclear energy. But the Biden administration may be seeking to significantly increase the amount of reactors here in the United States, perhaps tripling those reactors. But when you get into the weeds, if you were to triple the number of reactors here in the United States and to triple the capacity of nuclear energy, you might have to build as many as 200 large-scale reactors in order to achieve what the Biden administration is hoping to accomplish by 2050. But not a single new nuclear reactor is under construction today in the United States, and even if one were to break ground today, it might be 10 years before we see another one. And the US is falling behind when it comes to nuclear energy. Around the world, 64 reactors are being constructed. China's building 30 of them, and they have been approving nuclear reactors at the rate of about 10 per year.
Keith Lanton:Now, public opinion with respect to nuclear energy has been seeing the pendulum swing back towards favoring it. 57% of Americans favor adding more nuclear plants. That's up 43% in 2020. And this is perhaps due to a generational shift. Those of us who grew up when nuclear energy was associated with nuclear weapons tend to have a negative view of nuclear power, whereas the later generation those coming to enter the workforce now over the last few years years see nuclear power as a much more viable resource and way of getting things done moving forward. So as we move forward with nuclear, we are seeing some unusual players in the space of nuclear power. Big tech companies have gotten particularly interested in nuclear power for data center and other applications, so perhaps these will be the folks who are advocating and helping to support the build-out here in this country. Microsoft has been hiring nuclear experts. Microsoft agreed to buy nuclear energy as soon as 2028 from an Altman-backed startup called Helion that's working on nuclear fusion. Amazon agreed to a deal with the power producer Talon Energy to connect its data centers directly to a Pennsylvania nuclear power plant, bypassing the grid, and companies like Alphabet, microsoft, amazon and steel company Nucor are partnering with North Carolina-based Duke Energy to explore new financing mechanisms designed to lower the long-term costs of nuclear energy. Duke last year in the Carolinas added more customers than ever, and its expectations for new electricity by demand by 2030 are eight times as high as they were just two years ago.
Keith Lanton:All right, one last article before I turn things over to Brad. We're going to stick with energy, but now we're going to talk about an energy drink real quickly, and this is Celsius Energy. Celsius's symbol is C-E-L-H. This stock has fallen about 66% from its high. It was trading around 100, and now it's down to about 32.5. That's pre-market. Before this article was written, barron's saying that the jitters are overblown.
Keith Lanton:Celsius positions itself as a healthier alternative to its rivals like Red Bull and Monster Beverage, which control 70% of the energy drink market. But Celsius has been really aggressively pursuing those two fast growers with their healthier mindset. At least, that's how they've been positioning their caffeinated drink product. Sales of Celsius have ballooned to $1.3 billion, that's up from $130 million in 2020. The stock did go from two right before the COVID pandemic to about 100 in March. What fueled that rise was partly a distribution agreement with Pepsi, which gave Celsius logistical support and also gave them ties to Pepsi's retailers and restaurants. Now energy drinks are packed with caffeine.
Keith Lanton:Celsius products are positioned as low-calorie, sugar-free, containing natural ingredients like ginger root and green tree extract that help the body boost metabolism and burn more fat, they say, and this has been appealing to a growing number of Americans pursuing healthier, more active lifestyles. They have been aggressively partnering with sports teams like Inter-Miami Auto Racing, scuderia, ferrari, professional boxer Jay Paul, f1 driver Charles Leclerc. They've been embracing the power of social media, partnering with fitness enthusiasts and health experts, and the numbers show that these strategies are working. Celsius sales at gyms and fitness clubs have increased 30%. Also, celsius is having success with online sales and, looking at sales on Amazon, they have about a 20 percent share in the sports drink category and that is a significant increase.
Keith Lanton:Barron's also saying that there's a large international opportunity for Celsius. Monster gets about 35% of their sales from overseas, celsius only 5%. They're aggressively looking to expand more into several overseas markets, but the story isn't all perfect, isn't all rosy. Celsius, like many consumer brands, under pressure as Americans cut back on expensive items, a 12-pack of Celsius costs about $21 on Amazon, versus about $7 if you're looking to buy some Coca-Cola and Red Bull and Monster aren't just waiting for Celsius to take market share. They are offering more promotions. Recently, celsius has said that Pepsi has reduced its ordering of its products as the distributor works to optimize its inventory. Also, celsius's explosive growth is slowing. Growth was 50% year over year. They're targeting sales growth of 10% year over year currently.
Keith Lanton:So many analysts have lowered their outlook but they still expect earnings to increase about 20% a year over the next three years. The stock not cheap by most traditional metrics, now trading at about 30 times expected earnings. Monsters at 26 times S&P, 21 times. Still, if you're looking at Celsius, that multiple of 30 is the lowest since the company turned profitable in 2039. So, barron says, while the stock is unlikely to reach its highs of 100 anytime soon, at a price of $32.50, again, that's before this article was written, barron's saying the stock looks oversold. If you're wondering about the analysts, about three out of four have a buy rating on the stock. Average price target just a little over $62 a share, if big. If that were to happen, relative to the price at least before the article was written, that would be north of a 90% gain if that were to occur and if the analysts were correct. So with that I'll turn it over to Brad to provide us with some more energy this morning. Good morning Brad,
Brad Harris:good morning Keith.
Brad Harris:I hope everyone had a great weekend. For those in the Northeast, yesterday was a dream day Perfect fall weather and football is back, regardless of how bad your team may be. Last week I ended my commentary by saying enjoy the extended summer and don't look to be a hero. That does not mean walk away completely, but make adjustments that will make you comfortable with this near-term volatility ahead of us. I always believe you should have some balance in your accounts, but now it really could continue to be helpful. We still face a ton of geopolitical turmoil one of the most contentious presidential elections, ever more and more issuance of government debt and, related to that and not really being discussed, another potential government shutdown. At month end the market will be on a news cycle roller coaster and the markets will be moving with that cycle.
Brad Harris:I live in New York City, which is certainly not representative of the country, but right now, especially after Labor Day, I see more traffic, more new construction, more busy restaurants than I've seen in a long time. If there's an economic softening, I certainly am not seeing it here Related to bonds. The 10 years of 3.74% and Fed funds are still trading 5.25% to 5.5%, so something is going to have to give. My opinion is that we will meet somewhere here in the middle, given that it doesn't seem as if everyone is suffering yet. So the Fed will definitely have to take this into account as they're making their decisions going forward about how much to cut.
Brad Harris:And last, speaking of Port Authority, the owner of the World Trade Center, as Keith mentioned at the beginning of the call, this Wednesday is the 23rd anniversary of 9-11. Please take a moment to remember what an awful day that was, even if you didn't lose a family member or a loved one. That event changed this country forever and hopefully we will never experience anything like that again. I hope everyone has a great week. Send it back to Keith. Thanks.
Keith Lanton:Thank you, brad. That's everything I've got.
Alan Eppers:Thank you for listening to Mr Keith Lanton. This podcast is available on most platforms, including Apple Podcasts, Spotify and Pandora. For more information, please visit our website at www. heraldlantern. com.
Sophie Cohen:Opinions expressed herein are subject to change and not necessarily the opinion of the firm. Past performance is no guarantee of future results. The information presented herein is for informational purposes only and is not intended to provide personal investment advice. It is important that you consider your tolerance for risk and investment goals when making investment decisions. Investing in securities does involve risk and the potential of losing money. The material does not constitute research, investment advice or trade recommendations.