Latest / HPK Provident Advisors: The Weekly Bull / Jobs Data, Inflation Pressure, And What It Means For Your Portfolio

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Jobs Data, Inflation Pressure, And What It Means For Your Portfolio · HPK Provident Advisors: The Weekly Bull

• 0:04
  SPEAKER_01: Welcome to Friday Live.
• 0:06
  SPEAKER_01: Every Friday, the partners of HBK Provenant get together and discuss what we're seeing going on in the markets, the economy, and tying in some financial planning topics.
• 0:14
  SPEAKER_01: So with me today on June 5th is Mr.
• 0:16
  SPEAKER_01: David Harper.
• 0:17
  SPEAKER_01: David, how's the week been?
• 0:20
  SPEAKER_02: It is good to be with you all.
• 0:23
  SPEAKER_02: And uh last year, I mean last week, I was busy talking to some clients.
• 0:27
  SPEAKER_02: So uh Mike and Brian did a fabulous job.
• 0:32
  SPEAKER_02: Very fascinating about those Trump accounts.
• 0:34
  SPEAKER_02: Um I thought that was a uh very worthwhile thing to discuss, and you should discuss with it, should discuss about it more.
• 0:45
  SPEAKER_01: So Mike, we'll learn some more details on those as as things progress.
• 0:50
  SPEAKER_01: Um, it seems if your child is born in that threshold, it certainly makes sense for you to open up an account for them and get the hence free thousand dollars.
• 1:02
  SPEAKER_01: Someone's paying for those.
• 1:05
  SPEAKER_01: Yeah.
• 1:06
  SPEAKER_01: Um, but from a parent contribution, I mean, maybe talk to your tax accountant.
• 1:12
  SPEAKER_01: Um, it seems like they're essentially getting taxed twice on the I mean, you're not getting the deduction, so that's after tax money going into it, and then um the you get taxed on the way out, it seems like.
• 1:26
  SPEAKER_02: So I'm not fully, I don't fully understand them at this point, but um it will further investigation and see if it works for you.
• 1:37
  SPEAKER_02: Um, but the unhindered growth uh from when they're newborn, or if you have your children or grandchildren that are under 18, um, let it incubate and grow for until they turn 18.
• 1:55
  SPEAKER_02: Um, something be said for that.
• 1:57
  SPEAKER_02: And when it turns into an IRA, uh if they can't touch it till 80 60, holy cow.
• 2:05
  SPEAKER_02: Uh that's just some phenomenal growth uh potential.
• 2:09
  SPEAKER_02: So it's not the amount of money, Mr.
• 2:12
  SPEAKER_02: Mike, is it?
• 2:13
  SPEAKER_02: It's the timing that makes the difference.
• 2:16
  SPEAKER_01: Uh I'm a big fan of compounding interest, let me tell you.
• 2:20
  SPEAKER_02: I'm I'm good with that.
• 2:22
  SPEAKER_02: I'm good with that.
• 2:22
  SPEAKER_01: And then I mean, I guess it makes sense, like you know, someone working part-time um in their early years, they can convert that to the Roth and while they're still in a low tax bracket.
• 2:34
  SPEAKER_01: And then then you start to see the real tax benefits of it.
• 2:41
  SPEAKER_02: I'm I'm very happy with Senator Roth uh for setting up those Roth accounts uh back in the late mid-90s, late 90s.
• 2:52
  SPEAKER_02: That's that's been that's been a windfall for many, many people and does great for planning.
• 2:59
  SPEAKER_02: Um, and again, you and Brian had talked about it earlier uh on previous casts about maybe considering converting some of your taxable IRA into uh into Roth, pay the taxes now.
• 3:13
  SPEAKER_02: But uh we're getting ahead of ourselves, aren't we, Mike?
• 3:17
  SPEAKER_01: Well, we're just reviewing last week's blog post, so we're we're not really going too much off format.
• 3:22
  SPEAKER_01: Usually we don't kind of recap it, but David was so excited about the the the new account that we had to touch on it again.
• 3:32
  SPEAKER_02: Yeah, uh forgive me, guys.
• 3:33
  SPEAKER_02: I wish you best.
• 3:35
  SPEAKER_02: Um, but Mike's got Mike, we had some pretty good um, well, we had a number of uh economic reports this week.
• 3:42
  SPEAKER_01: Um yeah, happy non-farm payrolls day.
• 3:47
  SPEAKER_01: It's perhaps my favorite day of the month, the first Friday where we get those job numbers.
• 3:52
  SPEAKER_02: Mike, has anyone ever told you you're a nerd?
• 3:59
  SPEAKER_02: Uh yeah.
• 4:01
  SPEAKER_02: In a good sense, we we love your economic nerd.
• 4:05
  SPEAKER_01: Being a nerd makes money, then I'll take it.
• 4:09
  SPEAKER_01: Good.
• 4:10
  SPEAKER_01: So, anyways, we got 172,000 on the print for the month, and the the previous two months were also revised higher.
• 4:17
  SPEAKER_01: So we're not actually now tracking about 188,000 on a three-month average, which is pretty healthy.
• 4:23
  SPEAKER_01: Um, not as strong as we were a couple years ago, but um certainly a welcome relief after we got those essentially flat prints leading into the end of the year, and then it was just so volatile to begin the year, is it was really hard to see uh what the true picture was.
• 4:40
  SPEAKER_01: Um hospitality, leisure and hospitality was a big bump.
• 4:44
  SPEAKER_01: Um, education, um, some areas of weakness.
• 4:48
  SPEAKER_01: I mean, you would like to see financials and manufacturing have a little more job growth because they're a good signal for the economy.
• 4:57
  SPEAKER_01: But we've been pretty steady at the 4.3% unemployment rate.
• 5:01
  SPEAKER_01: I mean, that's off of the lows, but still historically um a pretty healthy number.
• 5:08
  SPEAKER_01: So an area of weakness though, um not uh the average our hourly payrolls number, we're sitting at about 3.4 percent.
• 5:17
  SPEAKER_01: So that's not really keeping up with what inflation's at right now.
• 5:21
  SPEAKER_01: Our last core PC number was 3.8 percent on the headline, and you know, gas prices are really leading into that number.
• 5:32
  SPEAKER_01: Um, but I mean the services are also the the amount we're spending on AI and the prices with that are very, very high.
• 5:40
  SPEAKER_01: So, I mean, it's not just an energy story, but um so the market's actually selling off today.
• 5:48
  SPEAKER_01: I guess the old saying I don't I don't think I've ever said the saying before.
• 5:53
  SPEAKER_01: What's what's good for the ganders and good for the geese is is is that the saying is that for the gander is good for the geese.
• 6:01
  SPEAKER_01: Oh, it okay, it's good for both of them.
• 6:03
  SPEAKER_02: Yeah.
• 6:04
  SPEAKER_01: Okay, well, I was trying to imply that good economic data is not always good for the stock market, and um, that's kind of what's causing this one over one percent pullback today on the SP 500.
• 6:16
  SPEAKER_01: Um, because now people are getting more on board with you know, the next move probably is a rate hike.
• 6:23
  SPEAKER_01: Um, now I think the market's pricing in a 98% chance, up from 60% chance.
• 6:29
  SPEAKER_01: Um, and I I obviously inflation's way too high, and the economic numbers seem to be, you know, overall pretty decent right now.
• 6:37
  SPEAKER_01: Um, not amazing, but they're starting to see some pickup of momentum.
• 6:42
  SPEAKER_01: We had uh another strong print on the ISM manufacturer numbers, remains an expansionary territory.
• 6:49
  SPEAKER_01: Um, services was also very strong, um, although prices paid component is up on that.
• 6:55
  SPEAKER_01: Um, besides that, ADP payroll numbers were good.
• 6:59
  SPEAKER_01: Um, weekly jobless claims ticked up a little bit, but still pretty low.
• 7:03
  SPEAKER_01: Uh, and then the only real negative print was the final read on the productivity number came in lower than expected.
• 7:10
  SPEAKER_01: Um, but overall, yeah, doing pretty well.
• 7:13
  SPEAKER_01: And I'll I'll pull up a chart of the S P 500.
• 7:17
  SPEAKER_01: Um, we had an eight-week run and we're working on the ninth one, which is really unprecedented, um, especially having the type of return.
• 7:29
  SPEAKER_01: I think it was about 19% on the SP 500 since the lows.
• 7:34
  SPEAKER_01: That kind of snapback only normally happens off bear market lows.
• 7:38
  SPEAKER_01: So we've had that kind of return in that time span four other times, and three of those were off of bear market lows.
• 7:45
  SPEAKER_01: The only outlier besides the current um market setup is 1997.
• 7:52
  SPEAKER_01: Um, so another parallel to the you know, run up into the dot-com bubble, which people are starting to talk about more and more.
• 8:00
  SPEAKER_01: But um, the good news is in in this circumstance, um, earnings and valuations have pretty much kept up with stock prices.
• 8:10
  SPEAKER_01: So it was a phenomenal earnings season, one of the best I've ever seen.
• 8:15
  SPEAKER_01: Um, but with that said, I I think it is healthy that we're getting a bit of a pullback.
• 8:20
  SPEAKER_01: Um, we do have support at the current level around the 7500, um, kind of where we pull back into in the in this area here.
• 8:30
  SPEAKER_01: Um, so that's a potential area where we could show some poor some show some support.
• 8:35
  SPEAKER_01: But I think it would be healthy if we went a little bit lower.
• 8:38
  SPEAKER_01: But I I think um I I don't I don't see anything deep here.
• 8:42
  SPEAKER_01: Um I think I'm gonna be pretty aggressive on any any downside we get in picking up new securities.
• 8:50
  SPEAKER_01: Um but yeah, we are seeing a pickup in in yields today, uh, especially on the two end is up 11 basis points at about 416 today.
• 9:01
  SPEAKER_01: So, I mean, uh Jeff Gunlock always talks about this is a great forward indicator of what monetary policy will do.
• 9:08
  SPEAKER_01: So, right now I think we're in the range of three and a half to 375.
• 9:12
  SPEAKER_01: So this is essentially telling us that we have uh potentially two rate hikes coming.
• 9:18
  SPEAKER_01: Um on the good news side, crude's been pretty uh stable, kind of closer to the low end.
• 9:26
  SPEAKER_01: We did tick up earlier, or I guess earlier in the week or late last week, and then uh we're sitting at about 91 a barrel.
• 9:34
  SPEAKER_01: So um that's at least not you know breaking out to the upside.
• 9:41
  SPEAKER_02: Yeah.
• 9:42
  SPEAKER_02: Uh there's this general sense uh of not knowing when the Iran conflict is going to be resolved, uh, and yet the market seems to be looking past that with the understanding that it will be resolved, but just don't know when.
• 10:02
  SPEAKER_02: Um there's such a seems like there's a lot of optimism out there, Mike, um, which is pushing the market to new highs.
• 10:11
  SPEAKER_02: Um is that do you see that?
• 10:14
  SPEAKER_01: Yeah, and I mean uh there's certainly some some things to um you know rationalize that exuberance with the AI trade and the earnings season.
• 10:26
  SPEAKER_01: But yeah, we we completely are looking past the war.
• 10:29
  SPEAKER_01: And and this week uh the president was talking about that we could see disruption through the strait in for another four months.
• 10:39
  SPEAKER_01: So I had to say we're we're certainly looking past a lot of potential inflation drivers there.
• 10:47
  SPEAKER_02: Yeah, and that will have the the price of oil continues to stay up, and that's gonna continue to put pressure on the inflation and warrant uh rising interest rates.
• 10:59
  SPEAKER_01: Um I found it particularly interesting that you know the VIX, the volatility index um is pretty pretty much on the low side at 16, but the underlying stock volatility has really picked up.
• 11:16
  SPEAKER_01: We're seeing very big interday swings.
• 11:18
  SPEAKER_01: Um a lot of it's the you know, one day semis are up huge and software is down huge, and then the next day it's opposite.
• 11:28
  SPEAKER_02: That's the we had uh uh the Dow went down uh 600 600 700 points on earlier this week, and then the next day was up 700.
• 11:42
  SPEAKER_01: I mean even look at today, the Dow's down uh third of a percent, NASDAQ's down two and a half percent, and SP's kind of in the middle.
• 11:52
  SPEAKER_01: So yeah, a lot of a lot of dispersion going on.
• 11:54
  SPEAKER_02: Um there's still four hours of trading, yeah.
• 11:57
  SPEAKER_02: So who knows what's gonna finish up at?
• 12:00
  SPEAKER_01: Yeah, I don't know.
• 12:01
  SPEAKER_01: I think uh I think this is probably one of those days where we you know grind lower to the downside throughout the day.
• 12:08
  SPEAKER_01: But you know, like you were saying before, just uh a headline could change that very quickly.
• 12:13
  SPEAKER_02: That's it is, which goes to what Brian usually likes to refer to is that you you we don't like to trade on a daily basis.
• 12:24
  SPEAKER_02: We want you to have a financial plan in place and put up those pieces that uh that weathers circumstances on on on all fronts.
• 12:36
  SPEAKER_01: So that's a good segue into our uh do our Wednesday blog post, which is about you know the mix of strategies within one's overall financial picture.
• 12:48
  SPEAKER_01: And it really does depend on what stage of life you are, uh what your liquidity needs are, um, you know, what kind of growth you're looking for, how much downside you're willing to accept.
• 13:00
  SPEAKER_01: Um, so you have all these different vehicles.
• 13:03
  SPEAKER_01: You have passive management, which we do utilize in the portfolios for um a portion of it, just because you know, it's it's hard for these active managers to beat the index um where it's concentrated in the Mag 7.
• 13:16
  SPEAKER_01: Um so to get exposure at a lower cost, I mean, ETFs can be a very good option, but we're also big believers of diversification.
• 13:25
  SPEAKER_01: Um, we always have some exposure to international markets as well as obviously US equities and add in some fixed income in different um income-producing vehicles.
• 13:36
  SPEAKER_01: And then on the active management side, we're picking up individual stocks trying to take advantage of different market pullbacks and what might work.
• 13:44
  SPEAKER_01: Um, some of our recent ones were more inflation plays, which have done pretty well in the recent pullback.
• 13:50
  SPEAKER_01: And then you have your tax-efficient investments that um would be in your portfolios outside of retirement vehicles that maybe um you incorporate municipals or government bonds where you're not paying the high corporate income tax on interest.
• 14:10
  SPEAKER_01: And then the tactical allocation, which we're big believers of.
• 14:14
  SPEAKER_01: Um markets don't go straight up to the top.
• 14:17
  SPEAKER_01: So we like to be opportunistic and take some risk off the table when things are getting a little elevated, uncertainty is rising, or like in this circumstance, we just had an incredible run.
• 14:28
  SPEAKER_01: Um sometimes it's good to take profits when you have them and be able to buy securities at lower prices when inevitably you do get those pullbacks, because pullbacks are normal in the market.
• 14:40
  SPEAKER_01: I mean, on average, you get a 14% pullback every year.
• 14:43
  SPEAKER_01: You get a bear market every three to five years, although these days it seems like a bear market every two years.
• 14:50
  SPEAKER_01: Um, but yeah, these things are common.
• 14:52
  SPEAKER_01: Five percent pullbacks happen throughout the year quite often.
• 14:56
  SPEAKER_01: Um, it's very rare that you don't get those in a in an up full market.
• 15:02
  SPEAKER_01: Um we were talking about this the other day, like I think 2017 was one of those years, 2023.
• 15:11
  SPEAKER_01: Yeah.
• 15:13
  SPEAKER_02: That it that the tree did go straight to the sky.
• 15:17
  SPEAKER_02: Um, there was no month that was down.
• 15:19
  SPEAKER_02: Uh those are nice years to have, but they're very rare.
• 15:23
  SPEAKER_02: So don't hold your breath waiting for that to happen.
• 15:26
  SPEAKER_01: Um yeah.
• 15:28
  SPEAKER_01: Um, and then Tuesday we had just a post on AMT alternative minimum tax.
• 15:33
  SPEAKER_01: This is if you uh have deductions that exceed a certain threshold.
• 15:39
  SPEAKER_01: Um, it used to be more common for people to pay AMT taxes uh because they weren't inflation adjusted up until 2013.
• 15:46
  SPEAKER_01: Um now it's a very low percentage of Americans that actually pay that extra tax.
• 15:52
  SPEAKER_01: And then we had uh blog posts talking about trying to give your child uh you know a little bit of an advantage.
• 16:00
  SPEAKER_01: Um I thought this was an excellent post, Michael.
• 16:04
  SPEAKER_02: Um artificial intelligence is in our world and uh uh either embrace it or get left behind.
• 16:17
  SPEAKER_02: Hard to believe uh how much it duplicates itself on a I mean because it's it's constantly uh progressing.
• 16:28
  SPEAKER_02: Uh so like if you're if you miss out on three months of artificial intelligence, it's just uh it has duplicated itself, it's it's probably gone on so much more.
• 16:40
  SPEAKER_02: So it's it's wise to uh um become involved and get to understand it and sharpen your skills.
• 16:48
  SPEAKER_02: And for uh for our children, uh our young adults, embrace it, uh get to know how artificial intelligence can uh can help you uh enjoy your work and it can give you some extra bonus uh when you're applying for jobs.
• 17:08
  SPEAKER_02: Um every employer is looking to add artificial intelligence if they haven't already uh to their to their bottom line.
• 17:18
  SPEAKER_02: And if you uh if you as a as a young college student or as a young college graduate, if you know some artificial intelligence, that's a bonus of to the to your potential bonus, to your potential employer, you know.
• 17:35
  SPEAKER_01: Um so yeah, and I mean I think some industries won't like you can be the you know trade school type, and those jobs are always going to be there, at least I think so.
• 17:51
  SPEAKER_01: Um, but if you're going into the traditional corporate world or getting normal jobs, if if you're not staying up in with AI, a lot of those jobs that used to go to the college grads are now being replaced by AI technology, doing those Excel formulas and um things that can be automated now.
• 18:10
  SPEAKER_01: So you really need to make sure you devote the time and give yourself an edge to be uh an employable candidate in the future.
• 18:21
  SPEAKER_02: I agree, I agree, Michael.
• 18:24
  SPEAKER_02: So the news isn't absolutely rosy.
• 18:31
  SPEAKER_02: Uh move moving on to uh sort of like a summary, uh Michael, is um the economic news isn't superb.
• 18:42
  SPEAKER_02: Uh it's there's a whole lot more optimism uh that we're thinking.
• 18:47
  SPEAKER_02: Okay, but uh if you think um markets a little bit tough, um uh take takes hold of us.
• 18:55
  SPEAKER_02: I remember the by I remember the bicentennial in 1776.
• 19:01
  SPEAKER_02: Uh and there was a lot of fun and excitement and and energy around that time, but uh now I'm gonna see the the 250th uh um uh anniversary of our country.
• 19:14
  SPEAKER_02: Uh it is hard to invest uh in the market if you don't have a positive view of your future.
• 19:24
  SPEAKER_02: And we certainly we've got 250 years behind us.
• 19:29
  SPEAKER_02: Um these little short uh hip cups uh that could have some big impact upon our uh on our lives, uh put them in perspective.
• 19:41
  SPEAKER_02: You know?
• 19:44
  SPEAKER_02: Uh when um um when uh when jp morgan was uh was running banks and bailing out the US government in the in the late 1900 in the late yeah late 1800s, um uh uh he was Mr.
• 20:02
  SPEAKER_02: Go To.
• 20:03
  SPEAKER_02: Uh so he helped bankroll uh the US to keep it on its feet.
• 20:07
  SPEAKER_02: Uh our country has a lot of resiliency and adopt that, celebrate that, uh, and enjoy uh our celebration of 250 years of of human innovation, uh of human enterprise, uh human uh stigtuitiveness.
• 20:30
  SPEAKER_02: Isn't that a great word?
• 20:32
  SPEAKER_02: Stick intuitiveness.
• 20:34
  SPEAKER_02: I I had to enunciate that well.
• 20:37
  SPEAKER_02: Um I I appreciate uh all of you uh taking the time out to listen to us.
• 20:44
  SPEAKER_02: Um sometimes we uh sometimes we're just uh awestruck with uh the of the giants that came before us uh and what they were able to uh unpack uh in their short lives that affects us 250 years later.
• 21:06
  SPEAKER_02: It's worth reading that history, learning from it, and applying it to our lives today.
• 21:15
  SPEAKER_02: Um I'm I'm all I'm all for uh USA, USA, USA.
• 21:23
  SPEAKER_01: And I'm proud to say that we now have over 2,000 subscribers on YouTube.
• 21:28
  SPEAKER_01: So we thank, like David was saying, everyone that's been watching and commenting and liking and sharing our page.
• 21:35
  SPEAKER_01: And we hope you continue to enjoy the channel.
• 21:38
  SPEAKER_01: And if you have anything specific you want us to talk about, feel free to leave a comment and we can get to it.
• 21:43
  SPEAKER_01: Um, every Friday we do this by 1230 Eastern time.
• 21:47
  SPEAKER_01: Next week, the highlights will be we'll talk, we'll talk about what's going on in the market, whether this one day or I guess now two-day drawdown um continues into something bigger, and then we'll we'll touch on all the inflation data that we'll get next week.
• 22:01
  SPEAKER_01: We'll have CPI data on Wednesday, and I think PPI data on Thursday.
• 22:05
  SPEAKER_01: CPI headline number, I think, is expected to come in at 4.3%.
• 22:09
  SPEAKER_01: So certainly not going in the right direction, but we will dive deep into that and um break down the underlying details of it and keep an eye out for our blog posts that come out throughout the week.
• 22:21
  unknown: Great.
• 22:23
  SPEAKER_02: Thank you very much, folks.
• 22:24
  SPEAKER_02: Okay, I'll leave you with this quote.
• 22:28
  SPEAKER_02: Uh, Mike, this is from uh Walter Elliott.
• 22:31
  SPEAKER_02: He was a priest uh during the late 1800s, early 1900s.
• 22:36
  SPEAKER_02: Uh graduated from Notre Dame and became a priest and a missionary.
• 22:41
  SPEAKER_02: Um, and he had a big significance.
• 22:43
  SPEAKER_02: His piece is quote, uh perseverance is not a long race, it is many short races, one right after the other.
• 22:54
  SPEAKER_02: Um I think that's Bing's volumes to our 250 years.
• 22:58
  SPEAKER_02: Um perseverance isn't a one and done.
• 23:02
  SPEAKER_02: You gotta you gotta stay in that human race.
• 23:06
  SPEAKER_01: Yeah, like like it's it's a grind.
• 23:11
  SPEAKER_02: Enjoy the grind.
• 23:12
  SPEAKER_01: All right.
• 23:13
  SPEAKER_01: Well, I hope everyone has a terrific weekend, and we will see you next Friday.
• 23:16
  SPEAKER_01: And before we go, I'll flip on the disclosures and um yeah, have a good weekend.
• 23:23
  SPEAKER_00: Bye-bye.
• 23:25
  SPEAKER_00: Security is offered through LPL Financial LLC, member FINRA and SIPC.org.
• 23:31
  SPEAKER_00: Advisory service is offered through LPL Financial LLC, a registered investment advisor.
• 23:36
  SPEAKER_00: Brian Peluso, Michael Kutch, and David Harper are registered representatives of LPL Financial LLC.
• 23:42
  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.
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  SPEAKER_00: Any opinions expressed are those of the authors and do not necessarily reflect the views of LPL Financial or its affiliates, all investments involve risk, including the possible loss of principal.
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