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The Fed Talks Tough On Inflation While Markets Price The Next Move · HPK Provident Advisors: The Weekly Bull

• 0:04
  SPEAKER_02: Welcome to Friday Live.
• 0:06
  SPEAKER_02: Every Friday, the partners of HVK Provident.
• 0:08
  SPEAKER_02: Get together and discuss what we're seeing going on in the markets, the economy, and tying in some financial planning topics.
• 0:12
  SPEAKER_02: So with me today is David Harper.
• 0:15
  SPEAKER_02: I apologize for some reason my camera's not working.
• 0:18
  SPEAKER_02: Couldn't quite figure it out this morning.
• 0:20
  SPEAKER_02: So you'll just have to look at David and our charts today.
• 0:24
  SPEAKER_01: I'm I'm I fully apologize.
• 0:26
  SPEAKER_01: I'm sorry that uh I know Mike is the more handsome of the two of us, uh possibly the three of us, but uh sorry that you're stuck with me.
• 0:35
  SPEAKER_01: Okay.
• 0:36
  SPEAKER_01: And I'll do my best.
• 0:37
  SPEAKER_01: I'll I'll even bright out my eyes.
• 0:40
  SPEAKER_01: So some things are good seen, some things are good not seen.
• 0:46
  SPEAKER_01: I don't have a value on that proposition for Mike.
• 0:50
  SPEAKER_01: Okay.
• 0:51
  SPEAKER_01: Information is good.
• 0:52
  SPEAKER_01: That's all I can say.
• 0:54
  SPEAKER_02: So it's a pretty busy week in terms of economic data and earnings.
• 0:59
  SPEAKER_02: Um earnings, we had four of the meg mega cap seven tech stocks reporting.
• 1:05
  SPEAKER_02: Uh we had, let's see, Microsoft and Meta on Wednesday and Amazon, Amazon and Apple last night.
• 1:14
  SPEAKER_02: Um I think Yeah, we we've seen big moves all the way around.
• 1:20
  SPEAKER_02: Um basically, if you're gonna be spending a lot of money, the market's starting to say, show me, show me some results from it.
• 1:29
  SPEAKER_02: So that was the case in Microsoft and Amazon.
• 1:32
  SPEAKER_02: They had amazing cloud growth.
• 1:35
  SPEAKER_02: And um, although they were spending a lot, the investors were starting to see that AI spend um show positive results.
• 1:43
  SPEAKER_02: Whereas men, on the other hand, they're just spending a lot of money and um the market didn't give them the same positive reaction in the stock price.
• 1:53
  SPEAKER_02: Uh, so today um Amazon's looking like it's gonna have a good day, and Apple is selling off because of weak guidance.
• 2:01
  SPEAKER_02: Um I mean, we saw the same thing with Alphabet um let the other week.
• 2:06
  SPEAKER_02: They just didn't deliver what the market was looking for, and they're spending too much money.
• 2:11
  SPEAKER_02: So, I mean, that's kind of the theme.
• 2:13
  SPEAKER_02: Um, the bar is high going into earnings.
• 2:16
  SPEAKER_02: We're expecting another 20% earnings growth quarter.
• 2:19
  SPEAKER_02: Um, that'll be the second consecutive one.
• 2:21
  SPEAKER_02: So, overall, very good.
• 2:23
  SPEAKER_02: Um the economic data, really the highlight of the week was the Fed meeting.
• 2:29
  SPEAKER_02: Um again, like I'm I'm really not a fan of the new Fed chair so far.
• 2:36
  SPEAKER_02: Um he kind of puts a lot of uh negative emphasis on the the Fed and the previous Fed, um, specifically Powell saying, you know, inflation's been above target for five years now, and we're not gonna tolerate it.
• 2:56
  SPEAKER_02: Inflation's a choice, blah, blah, blah.
• 2:58
  SPEAKER_02: Um, but we're not gonna raise rates this quarter.
• 3:02
  SPEAKER_01: Like okay.
• 3:04
  SPEAKER_02: So I found a lot of it very contradictory.
• 3:08
  SPEAKER_02: And he just keeps referring to his committees and how they're gonna come up with all these great things, but it sounds like he doesn't really know whether you know raising rates is the correct mechanism or if it's more balance sheet adjustment.
• 3:24
  SPEAKER_01: So um I mean, I think he's feeling his way, he's feeling his way, Mike.
• 3:30
  SPEAKER_01: And uh usually uh I don't know.
• 3:35
  SPEAKER_02: Uh it was such a so the this Fed has only been intact for eight weeks now.
• 3:40
  SPEAKER_02: Well, yeah, you're you're the only new member here, and you've been on the board before, so I don't know.
• 3:48
  SPEAKER_02: We'll have to see.
• 3:49
  SPEAKER_02: But the the bond market, um, it was pricing in a 30% chance of a rate hike.
• 3:55
  SPEAKER_02: Um, I you know, I I I agree with not hiking this month.
• 4:00
  SPEAKER_02: I mean, it there's just too much uncertainty.
• 4:02
  SPEAKER_02: The swings we've seen in oil have been crazy the past two months.
• 4:07
  SPEAKER_02: So um I I'm in favor of just pausing for now.
• 4:11
  SPEAKER_02: Um, but I don't think you can be so strong that you're not gonna tolerate any inflation if you're not doing anything about it.
• 4:19
  SPEAKER_02: So yeah, going into the meeting, it was a 30% chance of a rate hike.
• 4:24
  SPEAKER_02: Um, now we're looking at I think about 60% chance in the September meeting.
• 4:29
  SPEAKER_02: Um, the bond market really um, you know, you saw the the longer end rise and the short end drop, meaning that, you know, I don't think they're gonna do a rate hike, and that's gonna result in higher inflation.
• 4:44
  SPEAKER_02: So we'll just have to see.
• 4:45
  SPEAKER_02: Um, outside of that, we had some other economic data.
• 4:48
  SPEAKER_02: We had uh uh durable good disorder was a slight miss.
• 4:52
  SPEAKER_02: Um, consumer confidence also came in a little a little bit lower than expected.
• 4:57
  SPEAKER_02: And then, I mean, overall the PC deflate or the Fed's preferred inflation measure was overall decent.
• 5:03
  SPEAKER_02: The core came in slightly below consensus on an annualized basis, in line with consensus at 3.3%.
• 5:11
  SPEAKER_02: Um, obviously well above the Fed's target.
• 5:14
  SPEAKER_02: Um, but it's nice.
• 5:16
  SPEAKER_02: I mean, 0.13 on the month isn't a bad reading.
• 5:19
  SPEAKER_02: I mean, that's kind of the area we want to see going forward.
• 5:22
  SPEAKER_02: And then the headline number was actually a decline of 0.11% for the month.
• 5:28
  SPEAKER_02: Uh, did come in a little higher on the year-over-year basis at 3.7, um, but that is lower than the previous month.
• 5:36
  SPEAKER_02: And then we saw some deceleration in personal consumption and personal income.
• 5:40
  SPEAKER_02: Um, and personal income is continuing to be outpaced by personal consumption.
• 5:46
  SPEAKER_02: So not a sustainable trend in the long term, but um GDB came in a little lower than expected, prices paid were much higher.
• 5:55
  SPEAKER_02: Um, so this is action that we've we've kind of dealt with this week.
• 6:00
  SPEAKER_02: A lot of volatility, especially in the semiconductor space, they've been big swings.
• 6:06
  SPEAKER_02: So the SP's just with um market opening today, we're just back up to the 50-day moving average.
• 6:12
  SPEAKER_02: We'll see if we can get above that today.
• 6:14
  SPEAKER_02: Um SP is up a quarter of a percent currently while recording this.
• 6:18
  SPEAKER_02: The NASDAQs felt more of a pain below the uh 100-day moving average and did get back above that, but it's a long way to go to the 50-day.
• 6:29
  SPEAKER_02: Um, as I referenced, um 10 years really at the highest level in over a year, um, at 4.72.
• 6:39
  SPEAKER_02: So inflation is a concern.
• 6:42
  SPEAKER_02: And I mean, the two years kind of on the higher end of that range, too.
• 6:47
  SPEAKER_02: I think uh I really think if the economic data comes in status quo um over the next couple months, I think it's really gonna come down to this metric, whether they're gonna raise rates or not.
• 6:59
  SPEAKER_02: And if I had to pick a number, I think the line in the sand is 85.
• 7:03
  SPEAKER_02: If you're above 85, I think it's we're likely to see a rate hike in the next meeting.
• 7:08
  SPEAKER_02: If we're below 85, I think it's more likely that it'll be a pause.
• 7:13
  SPEAKER_02: But we'll just have to see.
• 7:15
  SPEAKER_02: We have some time until the next meeting.
• 7:16
  SPEAKER_02: So it's really gonna depend on what's going on with the economy.
• 7:20
  SPEAKER_02: We'll get an another slew of data next week.
• 7:24
  SPEAKER_02: Um, we'll have the ISM manufacturing number, ISM services, ADP, uh job openings, and then non-farm payrolls, which I believe non-farm payrolls is expected to tick up a little bit to 87.5 from 57.
• 7:41
  SPEAKER_02: So, I mean, 87 is not an amazing number, it's not a bad number.
• 7:46
  SPEAKER_02: It's just kind of you know, mosing along.
• 7:51
  SPEAKER_02: But we will keep you updated on all that.
• 7:53
  SPEAKER_02: Um now going into our blog post for the week.
• 7:57
  SPEAKER_01: Well, Mike, let me uh uh make a reference.
• 8:00
  SPEAKER_01: Uh, if uh if the Fed raises rates in September, uh-huh.
• 8:05
  SPEAKER_01: Um I can't see them doing anything until after the election.
• 8:09
  SPEAKER_01: If they don't do it in September, um I don't see them making any action until after election day.
• 8:17
  SPEAKER_02: Yeah, I think that's accurate.
• 8:19
  SPEAKER_02: They want to prove that they're not being political and swayed by the president and that kind of thing.
• 8:26
  SPEAKER_02: And I really think uh the new Fed chair doesn't have his credibility established yet in terms of that.
• 8:35
  SPEAKER_01: So he um yeah, I think he's somewhat on a uh uh short leash.
• 8:43
  SPEAKER_01: Um don't don't mess with don't mess with uh uh don't mess with Trump.
• 8:49
  SPEAKER_02: So yeah, we we do a thematic blog post every week.
• 8:55
  SPEAKER_02: It's Market Monday, Tax Tuesday, Wealth Building Wednesday, and think ahead Thursday, and then as always, Friday live.
• 9:01
  SPEAKER_02: Um so this week on Monday, we did a post about you know, August can be a volatile month sometimes.
• 9:09
  SPEAKER_02: Um so we've had a lot of different one-off things in the economy, um, a lot of currency things, Russian default.
• 9:18
  SPEAKER_02: Um, so just be wary.
• 9:20
  SPEAKER_02: Um, typically August is a weaker month in general, and unfortunately, September is not better.
• 9:26
  SPEAKER_01: Um that's why we have you, Mike.
• 9:33
  SPEAKER_02: But I mean, even with I mean, even with the drawdown, I mean, now the SP is only down, I don't know, two and a quarter percent off its all-time highs, and the NASDAQ's probably about six or so.
• 9:44
  SPEAKER_02: Um, it's been a good year overall.
• 9:46
  SPEAKER_02: The diversified portfolios have been doing well, international is doing pretty decent.
• 9:51
  SPEAKER_02: Um equal weight's been holding up a lot better.
• 9:55
  SPEAKER_02: Um, but yesterday uh it was actually one of the worst breath days on record with the SP 500 being up over one and a half percent.
• 10:07
  SPEAKER_02: And it's also the only time that we've been above one and a half percent, and the equal weight has been negative on the day, so it's it's been a back and forth rotation.
• 10:19
  SPEAKER_01: It's a sparring match, and uh those those big seven um certainly outweigh uh their well, they're they're throwing their weight around.
• 10:31
  SPEAKER_02: Yeah, Microsoft was up 20 yesterday.
• 10:35
  SPEAKER_02: Wow, wow, it's pretty crazy when we're talking about a company of that size.
• 10:44
  SPEAKER_01: That's huge.
• 10:45
  SPEAKER_01: That's huge.
• 10:46
  SPEAKER_02: So then besides that, we just kind of had some things to consider as we're entering into the fall.
• 10:52
  SPEAKER_02: We mentioned the August thing.
• 10:54
  SPEAKER_02: Um, you know, before year end, you have some time.
• 10:58
  SPEAKER_02: Make sure if your RMD age, those are taken care of.
• 11:02
  SPEAKER_02: Um, if you have any losses, it's a great time to realize them.
• 11:07
  SPEAKER_02: Um by year end, offset some of those capital gains.
• 11:11
  SPEAKER_02: So just different things to think about.
• 11:13
  SPEAKER_02: Um, IRA contributions, you do have until um tax the tax deadline April 15th.
• 11:20
  SPEAKER_01: So you have some time on that.
• 11:22
  SPEAKER_02: Um some other things.
• 11:24
  SPEAKER_02: Um I think like HSA, you might have to have by year end.
• 11:29
  SPEAKER_01: Uh no, I think those are those are also taxed.
• 11:32
  SPEAKER_02: Oh, that's the same.
• 11:33
  SPEAKER_02: Okay.
• 11:33
  SPEAKER_01: That's just yes.
• 11:35
  SPEAKER_01: HSAs are are very beneficial and lowering your taxes.
• 11:40
  SPEAKER_02: Um so do you have any interesting client case studies this week?
• 11:46
  SPEAKER_02: I yeah.
• 11:47
  SPEAKER_01: Anything that stood out well, the thing that stood out and it it seems to underscore everything that we do.
• 11:55
  SPEAKER_01: Uh, you know, uh prepare for you know, plan for today, prepare for tomorrow, you know, our slogan.
• 12:02
  SPEAKER_01: It seems like everything that underscores that.
• 12:04
  SPEAKER_01: So I had a a really fun uh new client meeting, and I started off with that quote from Stephen Qu Stephen Covey that we uh highlighted last last week.
• 12:15
  SPEAKER_01: You know, I am not a product of my con of my circumstances, I am a product of my decisions.
• 12:23
  SPEAKER_01: And you know, those who and another collary to that is those who fail to plan, plan to fail.
• 12:32
  SPEAKER_01: So don't plan to fail.
• 12:34
  SPEAKER_01: Do your planning, do this.
• 12:35
  SPEAKER_01: Um, you know, I I know that this blind post was was sort of like for October, but it's it was a good time to remind uh take a snapshot of where you are now, do an assessment and uh do I need to make some changes?
• 12:51
  SPEAKER_01: Do am I am I happy and content where I'm at?
• 12:55
  SPEAKER_01: Uh what changes do I need to take?
• 12:57
  SPEAKER_01: And then Mike, you and I had a nice conversation and a Zoom call on Wednesday night.
• 13:03
  SPEAKER_01: Um and we did a financial plan, and here we were able to show um a young lady who would be able to retire at age 55.
• 13:13
  SPEAKER_01: Um that's she might that you know it's it's that's good and a lot of fun to be able to tell someone that the things that they've been working for um that that it can happen, it can happen for them.
• 13:31
  SPEAKER_01: And I I've always liked those conversations, Mike.
• 13:34
  SPEAKER_01: When you tell someone that yes, they they can retire and they have a high probability of success.
• 13:39
  SPEAKER_02: Yeah, that's uh that's good news to deliver.
• 13:42
  SPEAKER_01: Okay, but again, make wise decisions.
• 13:46
  SPEAKER_01: Um I I know that our country likes to be in a um a victimhood uh uh mentality, uh but the first way to correct the problem is to recognize and admit that there is a problem so that you can actually start to address it.
• 14:04
  SPEAKER_01: If you keep pushing it down the road, you're never going to address that problem.
• 14:09
  SPEAKER_01: And you're gonna end up being a victim, almost self-fulfilling prophecy.
• 14:14
  SPEAKER_01: Make wise decisions because even if you're not on the right path, you do that assessment and you say, What do I need to do to get me on the right path?
• 14:25
  SPEAKER_01: What do I need to do to to better my situation?
• 14:29
  SPEAKER_01: Um, and that comes with making decisions, and we can help you with those wise decisions.
• 14:42
  SPEAKER_01: And we have our annual client appreciation wild things baseball game on September 4th.
• 14:50
  SPEAKER_02: Is that um September 4th?
• 14:54
  SPEAKER_02: 4th?
• 14:55
  SPEAKER_02: Okay.
• 14:56
  SPEAKER_01: Yeah, that is a Friday before Labor Day.
• 14:59
  SPEAKER_01: Okay.
• 15:00
  SPEAKER_01: Uh that was the the thing about it is the wild things are gone from uh August 20th.
• 15:07
  SPEAKER_01: They're on the road and they come back that that first week of September.
• 15:12
  SPEAKER_01: Um, so um we didn't really want to do it as early as August 20th.
• 15:18
  SPEAKER_01: We wanted we wanted August to uh to be its volatility self.
• 15:25
  SPEAKER_02: Yeah, it's always a fun event though.
• 15:27
  SPEAKER_02: It's uh blast.
• 15:29
  SPEAKER_02: We get a good turnout and everyone seems to enjoy it.
• 15:34
  SPEAKER_02: Yeah, so any you're off to Disney this afternoon, right?
• 15:38
  SPEAKER_02: Do some due diligence on on Mickey Mouse.
• 15:42
  SPEAKER_01: Uh yes, yes, yeah.
• 15:45
  SPEAKER_01: Interesting uh vendor meeting on Monday at Epcot.
• 15:49
  SPEAKER_01: I'm looking forward to it.
• 15:50
  SPEAKER_01: Uh who knows?
• 15:51
  SPEAKER_01: I'll be able to report on that next week.
• 15:53
  SPEAKER_02: Well, their stock has not been doing a whole lot, so no, and sometimes they're uh some of their movies have not panned out very well.
• 16:05
  SPEAKER_02: So well, I hope you enjoy your bringing the grandkids.
• 16:11
  SPEAKER_01: Uh they may join us on Saturday.
• 16:14
  SPEAKER_02: Okay.
• 16:15
  SPEAKER_02: Okay.
• 16:15
  SPEAKER_02: But enjoy.
• 16:18
  SPEAKER_02: Um, before we go, I'm gonna flip on the disclosures, and we will see you next Friday to break down the latest economic data and earnings.
• 16:27
  SPEAKER_00: Super.
• 16:28
  SPEAKER_00: Have a great weekend, folks.
• 16:29
  SPEAKER_00: Lc, member FINRA and SIPC.org.
• 16:32
  SPEAKER_00: Advisory services offered through LPL Financial LLC, a registered investment advisor.
• 16:38
  SPEAKER_00: Brian Peluso, Michael Kutch, and David Harper are registered representatives of LPL Financial LLC.
• 16:44
  SPEAKER_00: Content discussed is for informational purposes only and not intended as an offer or solicitation to buy or sell any security or investment strategy.
• 16:53
  SPEAKER_00: Any opinions expressed are those of the authors and do not necessarily reflect the views of LPL Financial or its affiliates.
• 17:00
  SPEAKER_00: All investments involve risk, including the possible loss of principal.
• 17:04
  SPEAKER_00: This communication may include links or references to third-party websites.
• 17:08
  SPEAKER_00: These links are provided as a convenience only.
• 17:10
  SPEAKER_00: LPL Financial and its representatives are not responsible for the accuracy or content of such sites.
• 17:16
  SPEAKER_00: Brian, Mike, and David and HBK Provident Advisors may only transact business in states where they are properly registered or exempt from registration.
• 17:25
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• 17:30
  SPEAKER_00: Past performance is not indicative of future results.
• 17:34
  SPEAKER_00: You should consult with your financial advisor, tax professional, and or attorney regarding your specific situation before making any investment decision.