Latest / The Jon Sanchez Show / Markets in Correction: Panic or Opportunity? What Investors Must Do Now
Transcript
- Jon G. Sanchez, CEO: Good Friday afternoon to you. Welcome to the Jon Sanchez Show on New Stock 780. KOH, pleasure to be with you, but more of a pleasure, but don't take it offensively, that it's Friday and this market is closed. You know, I'm gonna go back a little bit with you. Matter of fact, I think it was last Friday, if I remember correctly, and I did some calculations for you. And I said, all right folks, here's where we sit on a year-to-date basis. And then I said, all right, here's where we sit from a 52-week high. or the most recent high, which is the same thing. And when I did the calculations, we were roughly 5.7, 5.8 on average, down from the 52 week highs on all the major averages. And most of those occurred back in February of this year, except for the NASDAQ, which hit the 52 week high back towards the end of last year. And I said, OK, now what you have to be concerned with is the way the market looks at pullbacks. And I said, generally, 5%, 7%, right around there where we were a week ago, the markets don't really care that much about it. It's like, OK, this is the norm. And I went on to say that what a lot of people don't realize is a 10 % correction happens almost every single year at one point. And we can still end up very strong the time the year is over. But you usually get that one 10 % correction. Well, I hate to be the bearer of bad news on a Friday afternoon, because this is the last thing that I want to have to do with you, because I want some positive news. And that positive news did not happen today. The bearer of bad news that I need to be is we are now in correction territory, except for the Russell 2000. That's right, we're down over 10 % from our 52 week highs, our previous highs. That's how fast it happens. And so what I'm going to be focusing on this afternoon with you is I'm sensing from a lot of emails I get from you and so on and so forth there's a lot of fear. There's a lot of confusion. And guess what folks, this is the normal thing that happens. Right? You get to a point where you go, this isn't a little five or six or 7 % correction. This is something that could be more severe. And I'll tell you, ⁓ as said many times over these last few weeks, Last month, matter of fact, since this war began. that you're getting, me if I'm wrong, call me up and tell me or email me, text me, whatever you want to do, well, I can't take texts, but email me or call me if I'm wrong on this. That is, you're starting to feel headline exhaustion, Trump administration exhaustion, news exhaustion, and you don't know what direction to go at this point. Well, let me be your GPS today on this show because there are some things that you need to be doing, you need to be thinking about. ⁓ And some things that most importantly you don't do, but you need to understand why you're not doing something. You know on Wall Street sometimes the best advice, sounds so amateurish and I hate saying this, but it's true. And that is sometimes the best thing to do is nothing. As as that can be, sometimes you're better off to sit on your hands, turn off the computer, go live your life. and let this craziness unfold. But I don't know if this is the right time to do that. Because you see this market is trending and rallying and falling off of every headline that is out there. You're not moving the market. The institutions are. And they're moving the market on every move of oil, up or down, on every Trump social post, on every headline that comes out of a news service, out of news that comes out of Iran or Pakistan or anybody else that's as mediators. And everyone's just trying to sit back and go, what does this really mean? think one of the most frustrating things about this market time period that we find ourselves in, there's not a lot you can do, right? There's so much that is out of control. It's not like we're experiencing a big run up in interest rates or a massive fall in real estate prices or high unemployment or rapidly increase in inflation. None of the normal things. This is one of those, you've heard me say this term many, many times over the years. This is one of those black swan events no one could predict. I mean, sure, it's easy to sit back and armchair a quarterback and say, well, know, at some point, there was going to be a conflict in the Middle East. Well, we know that. It up happening inevitably. But this time, it feels a little bit different, doesn't it? Because we don't know what the end goal is. see, investors in Wall Street can put up with a lot of things. You've seen how resilient this market is. mean, count your lucky stars that this market is only down 10%. Think about it, for everything that has happened over the last four weeks, missiles flying, 20 % of oil can't get to its destination, meaning the closure of the Strait of Hormuz. mean, threats by Iran against us. mean, the list goes on and on. I consider the entire show. You talk about what we've gone through these last four weeks. ⁓ to really only say we're down roughly ain't all that bad considering. But it's still painful. I understand that. It's painful to everybody. Big investors, small investors, it hurts everybody. But what we have to do is we gotta clear our head, we gotta take a deep breath, we gotta pause for a second, and we gotta sit back and say, what really is going on? As I always like to say on Friday, my job for you on every Friday is this, analyzing and deciphering and answering what is the market telling us right So is this a panic time or is this an opportunity time? Those are the main questions I'm gonna help you understand today. But if you can tell by kind of my sanguine and attitude, it's an exhausting time period for everybody. I've said so many times over these last couple of weeks, said it just to the boys yesterday on the real estate show, I said, look it, this is one of the frustrating things when you're managing money. What you think should drive the markets higher, the market many times during this conflict has gone lower and vice versa. Well, today we kind of had a perfect storm come together. And to be honest with you, the markets reacted the way that they should react. We had a big uptick in oil prices. and we had a big downturn in the stock market. That's pretty obvious. But we've had a lot of days a positive note that that hasn't happened. And that's where you've heard me say, you know, I've scratched my head today. It didn't make any sense. Oil went up, stock market went up, didn't make any sense. I think now, folks, we are at that turning point. And that's why I'm glad we're together this Friday afternoon, because we're at an inflection point of the market right now. As been cautioning you, my biggest fear is if we hit $100 oil Not that we just hit it, but that we close above it. And I was telling you that in the 80s, meaning the high $80 oil prices, I was telling you that in the low 90s. And I'm telling you that today, on Friday, March the 27th, where oil closed at $99.51 a barrel. $5.08 gain in one day. Now did anything happen today? Well, as your typical, as I covered on my first stock update this morning at 523, it was the typical things. Iran fired some missiles at UA and Q8 and Israel did some more bombing and Iran did some bombing into Israel and this is kind of the normal, what we've been seeing. But all of a sudden this market said, I'm tired. I'm headline exhausted and I'm going to sell off. And that's exactly what happened today. And that gets to be a dangerous point because if you have been paying close attention to your portfolios and to me each and every day, what's been the positive of this? We've been having, as I've kind of used term somewhat of a torture test, right? We have it where we're a couple hundred points one day, then we're up a couple hundred the next day, and then down a hundred, and then down another 200, and then up a hundred. Just this ⁓ real like, dangling the carrot out there. It's like don't give up everybody on me, meaning the market. Don't give up on me. Everything's gonna be fine. And of course the president, he's controlling the stock market right now. I don't care what anybody says. He could turn this market around tomorrow and he tried doing that this week, but it didn't work by the time the week was over. Right? How did it start off? Let's go back to last Saturday. and reflect on what happened Saturday and then what happened this week. I'll start there when I come back. Let's turn it over to Kristen Snow. She is in the Right Now Traffic Center. Hey, wait a minute here, it's Friday and it sounds like you're having way too easy of a day, my dear. Back to the Jon Sanchez showing his talk 780 kid which happy Friday to all of you. I'm gonna give this Friday I think about 10 exclamation points when I say TGIF right, let's get down to business here And then go back and rebuild from what happened from a week ago to where we are today All right. So the damage of the day again so many factors came into today seven hundred and ninety three point decline on the Dow down one point seven three percent closing levels forty five thousand one six The NASDAQ lost 460 points, 2.15%. Closed there was 20,948 and the S &P down 109 points, or excuse me, 108 points, 1.67 % to close at a level of 6,368. Russell 2000, a one and three quarter percent pullback down 43 points with the Russell closing at 2,449. Well, as I said in the first segment, this was kind of a day of a perfect storm. Oil prices surging. Didn't happen all at once. It was a slow, steady increase throughout the day. And again, just an inverse chart pattern of the market going down, oil prices going up. $5.08 rise on oil, $99.51, as I said. Gold rallying $113.90, $4,492.80. Now, here is the bright spot. The bond market, it's kind of starting to get back to normal. I mentioned that a few times this week, where days where the market's getting a little bit nervous. You're seeing the money coming into the bond market, yields coming down. We didn't have that in the first few weeks of the conflict, as I've mentioned many times, simply because traders did not want to hold on to bonds for fear of inflation. Why of sudden they are now? That tells again, back to my exhaustion theme. People are just for a safe haven right now. Forget about inflation for a moment. They just want to protect their money. And I'm talking on the institutional side. So what do we on the bond market? Two basis point increase on the 10-year. Treasury yield 4.44%. Now, wasn't bad. It was only up five basis points for the week. And remember, there's 100 basis points and 1%. So that wasn't much of a move whatsoever compared to the last couple of weeks that we've experienced. So ⁓ a little bit of a bright side there that, again, we're not seeing much panic going on over the bond market side of things. So now I want to go back. I want you to keep thinking as I go through. rebuilding what we went through this week and then trying to outline again some and strategies for you as you go into the weekend. Let's go back and let's keep this theme in mind, investor exhaustion, headline exhaustion. Everybody is as flat out tired, right? We're trading off of headlines, which is not the way anybody wants to do it. ⁓ reach a point, which I'm gonna explain here in a moment, where the headlines fail to generate any type of a market gain. We saw it this week a couple times with the president and some of his strategies, I guess you could call it. ⁓ rallied on the news. And then we don't have any news. And what happens? The market goes down like today. I hear anything from the president today. Nothing. And here's a prime example of what happened in the market. So let's back to a week ago. So we go back last Saturday. Last Saturday, we. ⁓ were contemplating firing into Iran, hitting, obviously purposely targeting the infrastructure, the power plants, the desalinization plants, you name it, anything infrastructureized. It got called off on Saturday because, you know, the president that I've seen has not admitted this, but many people around him are saying this. He was getting a lot of pressure from around the world. He was also getting pressure from his own advisors who said, look at Mr. President, this could go down as a war crime, right? There's some written rules that countries are supposed to follow. I know it sounds crazy when it comes to war. Obviously, torturing people is one of those and many, many others. But when it comes to infrastructure, those are supposed to be off limits, right? Offenses are supposed to do whatever they can to avoid hitting refineries, to avoid hitting power plants and over there desalinization plants and things that keep a human being alive, essentially. So many told the president, you know, towards the end of last week, now look at, you frankly, some of your military leaders, you could be going down for war crimes. Now again, Trump never said anything about that, I don't think he ever would, but that was I think one of the factors that he had to deal with when he decided to give Iran another five days. So, those five days of course should have been up today. However, this week was the week of what he's calling negotiations. Iran is saying, No, these aren't negotiations. So we go back a couple days ago. This is when the market rallied. What did Trump do? He sent out a 15-point plan to Pakistan, who was to deliver it to Iran, and say, are the things that we want. Pakistan said, we'll take a look at it, but we're in no hurry. I'm sorry, Iran said, we'll take a look at it, not in any hurry. The next day, meaning yesterday, Iran comes back with their five And as I read them on the show that day, I think it was Wednesday, yeah, was Wednesday, excuse me, not yesterday. When read them on the show, it was almost ⁓ laughable. you get a chance over the weekend, I don't have a chance to go through them today, but if you get a chance this weekend, just Google. Google that, know, Iran's five, you know, I guess you can call it. You again, they get you know, permanently control the, the Strait of is one that I remember. Another one that I remember ⁓ is we have pay for all the repairs that we have caused for this war. They would recognized as this and that. And I know one that stood out my mind also was we never could go to war with them again. We never could attack them. Well, you never heard the Trump administration come back and say, that's ridiculous. Why? Because that's part of negotiations. So the thought on the street today, or this week, was, all right, like everything in negotiations, you ask for the world, and you know you're not going to get it. But you're going to reach somewhere in between. And I think that's what kept the market alive a bit this week, except for today. Because again, we haven't heard anything in the last 24 to 48 hours on any negotiations. Like I said, these market participants are exhausted. They need something to look forward to. And they didn't get it today. So we asked for 15 items. Iran essentially said, no. And we're not really that big of a hurry to negotiate. They came back with five. haven't said any comments, at least that I've seen. But I'm sure ⁓ a non-military person like myself and you can ⁓ at them and go, these non-starter. These aren't even things that could get you to the negotiation table. then to say what's gonna happen there? So had that carrot dangled this week on the hopes that that was gonna happen. Some type of negotiations fell apart. Now we find ourselves going into the weekend. Once again, everybody nervous on the weekend. At this time last week, you read, I shared with you, 2,580 second airborne Army Rangers heading that way, heading towards there. They were on an amphibious ship. Well, then we learned earlier in the week that number bumped up to 5,000 yesterday and Essentially the military, the Pentagon, the Trump administration, no one's confirming this, but all the news sources are saying 10,000 troops are headed that direction. So the thought process is now, again, another item that is weighing on the market is, okay. White House has said, yep, President Trump leaves his options open. Doesn't mean we're going to utilize 10,000 troops on the ground, but his options are open. Wall Street looks at it and goes, well, now wait a minute here. Here we are four weeks into this conflict. We don't have the Strait of Hormuz open. A few ships are getting through here and there. They did turn back to China oil tankers today though. They around and said, nope, you're not coming through the Strait of Hormuz, which is kind of bizarre. No one can figure that one out. So essentially there's just no traffic still. And then you say, okay, so what could 10,000 troops be used for? Well, the first thought process is Island. So when I come back, we'll talk about that and talk about its implication to the oil markets and therefore to your portfolio. Let turn it over to Mr. Jim Poston. He's got news, and weather. Jim. Welcome back to the Jon Sanchez Show on Newstalk 780K which happy Friday to all of you. Tough day on the street today with a loss that we don't like to say with any decline of over, you know, with a seven starting with it, 793 point decline on the Dow, 1.73%. Nasdaq down 460 points, the S &P lower by 108. Again, trying to give you some direction here as to what's going on, what happened. so much under the surface that many of you, ⁓ so hard at work and taking care of kids and doing everything, ⁓ want to share with you because obviously I'm glued behind these computers 14 hours a day, seven days a week, ⁓ to keep this ⁓ figured out for our clients and ⁓ on and so forth. Now. We're going be talking about this in a little bit more detail during this segment. know, as the market now that it's in correction territory, right, with the S &P 500 or the Dow, the NASDAQ in correction territory, S &P's close to that. We're down, I don't know if you realize this or not, this is a real interesting point. ⁓ We're down for five consecutive weeks. Do you realize that? Five consecutive weeks the S &P 500 has declined. That's the longest losing streak going back to 2022. Now with the surge in oil prices today, again, up $5.08, 99.51 a barrel. Did a little stat check on that one too. That's the highest level that we have been at since July of 2022. We remember what a year 2022 was, right? Many of us that are in the market, we wanna forget that year. So, like I said, we've got the correction, again, which is defined as a 10 % pullback from the recent highs. So correction in the... Dow correction in the NASDAQ, &P getting pretty close to it. We got oil touching that $100 mark, which is where we do not wanna be. ⁓ that line in the sand as I keep saying. Now, I wanna go real quickly back to the negotiations, because I was able to dig up the that I was half-hazardly joking a couple of segments ago, because this was this week was about, right? It was about negotiations, right? That's why the street was ⁓ pretty optimistic going the week. Back to I never finished my thought. missiles were supposed to fly against the infrastructure on Saturday. Trump postponed it. ⁓ Said going to give you another five days because negotiations are going really well, is what he said. So then we fast forward a couple days into the week. We send a 15 point plan to Iran. Iran laughs at it. They come back with their five point plan. So let me there, then I'll finish out the rest of the week. So here is what the five demands to end the war are. Number one. Halt to aggression and assassinations, a complete cessation of all military actions and targeted killings by the US and Israel. Okay, well, we know that's not gonna happen. Number two, against future conflicts, establishment concrete binding mechanisms ⁓ to the war is not reimposed or repeated. So in other words, we never could attack them again. Not gonna happen. Number three, of war damages. A demand for reparations and financial compensation from the U.S. and Israel for damages incurred during the conflict. about them. Did you see the US? you see the political that would get himself into if someone turned around and said, yep, we're going to write a check for, I mean, it's got to be in the billions, right, to Iran? So we know that one's not going to happen. Number four, end hostilities across all fronts, a comprehensive termination of the war across the region, including actions against all regional resistance groups. Now that's the one I forgot to mention when I was trying to just remember these five points. you you got all their buddies, the Houthis and all the different ⁓ and things around the world. So we can't target them either. Okay. Don't think that's going to happen. And lastly, sovereignty the Strait of Hormuz. Formal recognition of Iran's control and sovereign rights ⁓ over strategic waterways. Because you remember folks, Iran thinks they own the Strait of Hormuz. No one owns this Strait of Hormuz. Look it up. No one owns it. But they think they do because they control it. And that goes back to what I was saying in the first segment, which is the boots on the ground, right? This is the other thing that's weighing on your portfolio right now. 10,000 troops supposedly heading that direction. So as I was starting to describe, many of you are saying, wait a minute, what are they gonna do? I watched a fascinating video on Iran. a couple nights ago because I was laying there trying to go to sleep and one of the biggest benefits that Iran has, I didn't realize this, is basically the whole country is surrounded by mountains. So it makes it very, very difficult for military troops, of course, to just go right in there. I mean, you literally would have to, I don't know how, I mean, if you got into Tehran or any of the major cities, I don't know how they do it. Obviously they'd have to come in through another country or something, but it's a very, very tough terrain. So back to the 10,000 troops. Karg Island, okay, this is what we have to watch. There was not much talk this week about Karg Island, but this is what many analysts on Wall Street are concerned about. So you got this island that sits, what, 21, 22 miles off of Iran. 90 % of Iran's oil. is shipped off of Karg Island. It's not a big island by any means. But this is where all the big tanker ships come into, load up, and then head out. So % of the oil exports of Iran leave Karg Island. So remember, what's it been now? Two weeks? Maybe close to three weeks? We targeted a number of things on Island. But supposedly, I mean, who knows? We were told that we purposely did not hit any oil manufacturing, refining, storage, anything along those lines. But now many strategists are saying, okay, this could change that these 10,000 troops, Airborne, so on and so forth. Well, I'll just tell you what, I hate to scare anybody because no one likes to hear this, but we gotta talk about it. What many are saying is you're look up in the sky and you're gonna see ⁓ 82nd troops parachuting, because that's how they ⁓ go, into Karg Island any day now. Now, is why investors get very nervous going into the weekend because we've this many times with various administrations. They don't like to do big military operations during the week when the stock market's open. They like to do it on the weekend. So what they're saying is you could see the 82nd Airborne parachute into Karg Island and do they can to take Karg Island over. Then at that point, we now control again, 90 % of the oil that's going out of Iran. Think about that from a negotiation standpoint. Now who's gonna control the Strait of Hormuz? Who cares about the Strait of Hormuz if 90 % of the oil is under our control? And so we find that to be a very probable situation. That's where many of the troops would go. Another vast majority, another theory is you would start to position the troops along the coastline of the Strait of Hormuz where the bottleneck is. I'm sure many of you have seen the map, right? So you can picture, kind of you go from bottom left to open ocean, you come up through the Strait, and then you gotta make a big left turn, and that's where all the missile firing usually occurs, because it's only like 21 miles long. I'm sorry, wide. So you can fire a .22 rifle and probably hit something out there, much less a drone or of course, any type of a missile. So are we could be sending our troops in if they go to go along the beach, essentially, in that area the strait is so narrow and then try to take out Iran and the Houthis and all these others that are sitting there firing missiles ships. Then of course you still have something you don't hear much about anymore. You still have the mines that are there. So we've seen mine sweeping operations going on, ⁓ that's been pretty quiet. I don't know where that one sits at this particular time. But the concern right now. So ⁓ I've I think almost every day this week, I'm gonna wrap up this week by saying this too, the two things you gotta watch closely, sustainable oil above a barrel and ground troops. That could take another leg down. Back to the 10 % correction. Remember, as I said, this is a critical inflection point. Because when the market hits a 10 % correction, either one of two things are going to happen. Either it's going to stop. That'll be the support. And the market will rebound. good likelihood that you could go into a 20 % correction. There's really no in between. Rarely does it stay 10%, 11%, 12%. Usually, once you hit 10, it's going to go to 20. And that's a bear market. Which we haven't had one those in a long time, as I keep reminding people. Or. Again, some positive news comes out, some type of promise, something from our side, their side or something, and we begin to rebound and we say, all right, this was just another year that we had a 10 % correction, but big deal, look where we are now. those are the critical things. Final points when I come back. ⁓ wrap it up with Chris and Snow right now, Traffic Center. Welcome back to the Jon Sanchez Show on News Talk 780K, which I want to take this moment, by the way, to thank Mr. Jim Poston for filling in for Jack this week. Jim, you did a great job. I know that's tough coming in when you haven't done it in a while, but man, I love hearing your voice and your news and everything else. I just want to personally thank you on the airs for filling in. You've done a great job, my friend. Absolutely. Okay, now we gotta get down to the point where we bring everything together, but before I do, there's one other quick thing I wanna mention to you. Who was very quiet this week? The Fed. Right? We didn't hear much out of the Fed this week. But what's Wall Street's takeaway of the Fed right now? The odds now favor of an interest rate increase than a decrease. And this is another factor that's weighing on your portfolio. I just wanted to throw that out there. Once again, ⁓ of this can change if oil prices come down and this conflict can come to an end. We hope and pray that that's gonna happen soon, obviously most importantly for the sake of our servicemen women, but also for, of course, your portfolio. And wanna leave you with something a little positive on this Friday. I know it's been a tough day, tough week. Think about this. A little Buffett saying to go into the weekend. Be greedy when others are fearful. This is where wealth is built, not at market highs. God bless, have a great weekend.