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Markets Jolted By Iran Tensions · HPK Provident Advisors: The Weekly Bull

• 0:11
  SPEAKER_01: Welcome to Friday Live.
• 0:13
  SPEAKER_01: Every Friday, some of the partners at HPK Profiting get together and talk about what we're seeing going on in the markets, the economy, and then also tying in some pertinent financial planning topics.
• 0:22
  SPEAKER_01: So to start off, before we go to the market, this is the typical format of our blog posts throughout the week.
• 0:26
  SPEAKER_01: We have Market Monday, which I do my look-ahead post, just kind of a recap of the previous week, things I'm looking forward to in the upcoming week.
• 0:35
  SPEAKER_01: Um Brian's been doing a campaign tax Tuesday.
• 0:38
  SPEAKER_01: There's some very good information on that, and we'll go into those blog posts.
• 0:41
  SPEAKER_01: Wealth Building Wednesday and Think Ahead Thursday.
• 0:44
  SPEAKER_01: So uh the typical format is we cover the markets, the economy, what's going on, and then get into some of our blog posts.
• 0:51
  SPEAKER_01: So um every Friday by 12:30 Eastern time, we go live and discuss what we're seeing.
• 0:57
  SPEAKER_01: Usually it's it's me as well as uh either David or Brian on the call.
• 1:01
  SPEAKER_01: Um, but Brian's out with clients today, so it's just me, but I have plenty to talk about.
• 1:07
  SPEAKER_01: There has been a lot going on.
• 1:09
  SPEAKER_01: We got tons of economic data this week, escalations with Iran.
• 1:14
  SPEAKER_01: So um I'm gonna get into the markets first.
• 1:17
  SPEAKER_01: So let's see here.
• 1:19
  SPEAKER_01: Let me pull up my chart here.
• 1:22
  SPEAKER_01: Okay, gotta remove that first.
• 1:25
  SPEAKER_01: All right, so it should uh click over in a second.
• 1:32
  SPEAKER_01: There we go.
• 1:33
  SPEAKER_01: So we've seen a sell-off um with this situation going on with Iran that's really escalated.
• 1:40
  SPEAKER_01: Um typically with these kind of geopolitical shocks, uh, it can go one of two ways, especially in terms of fixed income.
• 1:50
  SPEAKER_01: Um, sometimes we see a flight to safety where bonds catch a bid and rates fall, but in this case, we're more worried about rising oil prices and energy prices and the effect that it may have on inflation.
• 2:02
  SPEAKER_01: So, as you can see here, I'll kind of zoom in a little bit.
• 2:05
  SPEAKER_01: We've broken down from this ascending triangle.
• 2:08
  SPEAKER_01: So um it does seem like a definitive breakout.
• 2:11
  SPEAKER_01: We haven't quite gone below on a sustainable basis behind below Wednesday's uh interday low.
• 2:17
  SPEAKER_01: So that's a good sign, but um, everything is pointing to getting to this level here around 6550, which corresponds with the 200-day moving average.
• 2:27
  SPEAKER_01: So that's kind of my target area I have in mind that the the major SP 500 index could fall to.
• 2:34
  SPEAKER_01: Now we were seeing a substantial outperformance in things like the equal weight.
• 2:39
  SPEAKER_01: Um, I'm looking at the Investgo uh ETF that tracks that, but it's really given up a lot of ground.
• 2:45
  SPEAKER_01: Um, this was trading at 6% or so positive on the year, and now it's gotten cut in half.
• 2:52
  SPEAKER_01: Uh, similar story with oh, international markets have really seen the brunt of the selling.
• 2:57
  SPEAKER_01: You think the SP decline is bad.
• 3:00
  SPEAKER_01: Uh, we're looking at I'd say eight and a half percent on the international developed, and now we're above 10% decline for emerging markets.
• 3:12
  SPEAKER_01: Um, so they're a little more exposed um to the geopolitical situation.
• 3:18
  SPEAKER_01: Um, the dollar has seen a rise, uh, which they tend to do better in weakening dollar environments, but crude, those prices have uh, I think we're surging to about close to 90 today.
• 3:32
  SPEAKER_01: So things aren't getting better in that in that dynamic.
• 3:35
  SPEAKER_01: Um, so we're just keeping an eye on it.
• 3:37
  SPEAKER_01: Um we picked up some, we picked up a few names this week.
• 3:42
  SPEAKER_01: We got out of one position and and picked up two new ones, um, more around the geopolitical situation.
• 3:50
  SPEAKER_01: So we picked up an oil refiner and uh we got into a steel manufacturer just in case infl, like I wasn't really concerned about inflation given the growth dynamics uh weakening, and and we'll get into the data in a minute, but uh overall the the labor market has been weakening.
• 4:10
  SPEAKER_01: So we've been a little more concerned about the growth side of things rather than inflation side.
• 4:14
  SPEAKER_01: But the longer this thing persists with Iran, it's the greater likelihood that we're gonna potentially get into a stagflationary environment where we could see both inflation rise and growth decelerate.
• 4:28
  SPEAKER_01: So hopefully that doesn't happen because that's the kind of the worst case scenario, um, especially in terms of what monetary policy will do.
• 4:36
  SPEAKER_01: They're kind of handcuffed in those situations.
• 4:38
  SPEAKER_01: Um their dual mandate is for stable prices and uh economic growth.
• 4:45
  SPEAKER_01: So when those go opposite of each other, it creates a difficult environment.
• 4:50
  SPEAKER_01: And I don't, I think the next meeting's March 17th.
• 4:54
  SPEAKER_01: It's always on a Wednesday where we get the announcement, but um unlikely to see a move there, and really probably unlikely to see a move until we get a new Fed chair in place.
• 5:05
  SPEAKER_01: Um, so getting into the economic data this week, uh, it was we started out the week.
• 5:10
  SPEAKER_01: I I was feeling more optimistic about the economy.
• 5:13
  SPEAKER_01: We got a strong ISM manufacturing number, it's been in uh expansionary territory for a couple months now.
• 5:20
  SPEAKER_01: Really a good uh reading, 52.4 above consensus in the prior month.
• 5:25
  SPEAKER_01: Um actually it, yeah, and it that's around the highest level since August of 2022.
• 5:31
  SPEAKER_01: New orders are strong.
• 5:33
  SPEAKER_01: Um employment situation was good, although the price index did tick up.
• 5:39
  SPEAKER_01: So not that great of a dynamic there.
• 5:42
  SPEAKER_01: Um, ISM services was also beat, remains an expansionary territory.
• 5:46
  SPEAKER_01: So things were looking good.
• 5:47
  SPEAKER_01: ADB came in above consensus.
• 5:50
  SPEAKER_01: Uh that's uh private payrolls, uh, 63,000.
• 5:53
  SPEAKER_01: So that was looking good.
• 5:54
  SPEAKER_01: The Challenger job losses were less than the previous month.
• 5:58
  SPEAKER_01: Um, they're essentially cut in half.
• 6:00
  SPEAKER_01: So everything was looking good.
• 6:02
  SPEAKER_01: Uh the beige book didn't have any big surprises, uh, relatively modest uh changes there.
• 6:08
  SPEAKER_01: Economic activity, seven districts reported, uh, economic growth as opposed to eight last month.
• 6:13
  SPEAKER_01: Employment was seen as relatively stable, and prices were seen modestly ticking up.
• 6:19
  SPEAKER_01: Um today was really the highlight of the week when it comes to economic data.
• 6:24
  SPEAKER_01: We got the non-farm payrolls, which you know, I've been saying January is always a funky month.
• 6:30
  SPEAKER_01: Uh, it was a 130,000 reading last in uh January.
• 6:35
  SPEAKER_01: This month, different story.
• 6:37
  SPEAKER_01: Um, that previous reading was revised lower by 4,000.
• 6:42
  SPEAKER_01: Um, I expect to see further revisions in that, but we also saw a downward revision for December.
• 6:46
  SPEAKER_01: But this month came in at negative 92,000.
• 6:50
  SPEAKER_01: So job losses.
• 6:52
  SPEAKER_01: So not a good thing for the economy.
• 6:54
  SPEAKER_01: Um, some positive aspect and I'll I'll take that also with a grain of salt.
• 7:00
  SPEAKER_01: I I am I tend to like February data better than January data, but there was some uh uh birth rate adjustments and there were some strikes going on, um, as well as some weather effects.
• 7:13
  SPEAKER_01: So, you know, I think uh I think we're gonna have to see another month to see where this thing goes.
• 7:18
  SPEAKER_01: But on the positive note, um average hour year earnings was good, came in at 410th, uh better than expectation, although that's not necessarily good for the inflation picture.
• 7:28
  SPEAKER_01: Um, outside of that, the unemployment rate did tick up from 4.32 to 4.44.
• 7:35
  SPEAKER_01: So uh not going in the right direction there.
• 7:38
  SPEAKER_01: And then retail sales, uh the headline number came in negative 0.2 on the month versus consensus of uh flat reading.
• 7:46
  SPEAKER_01: But you go and do the core component, which excludes uh energy prices and some uh transportation type things.
• 7:53
  SPEAKER_01: Uh it was actually a decent rating coming in at 0.33, I think.
• 7:58
  SPEAKER_01: So nothing alarming there, but it's really we need to keep an eye on the labor market and the inflation picture with this dynamic going on.
• 8:05
  SPEAKER_01: The longer it persists, the more risk to both those mandates.
• 8:09
  SPEAKER_01: So going into our blog post for the week, um, the first one was talking about risk of well, Tax Tuesday, Brian's post.
• 8:17
  SPEAKER_01: Oh, I skipped too far.
• 8:19
  SPEAKER_01: Um, this talks about when you get into retirement, there's a certain strategy where you should hit different buckets differently.
• 8:28
  SPEAKER_01: And it all depends on your unique circumstances.
• 8:30
  SPEAKER_01: So talk to your particular financial planner, and we're here to answer those questions.
• 8:35
  SPEAKER_01: But uh his post was talking about first you like to hit the taxable accounts, um, and then the IRA types, tax deferred, and then the very last bucket, tax-free, because they grow tax-free, and you can take out the distributions tax-free.
• 8:51
  SPEAKER_01: So there's even more benefit to leaving that in.
• 8:53
  SPEAKER_01: Um, and and Brian covers all that in his financial planning topics.
• 8:58
  SPEAKER_01: Uh, I did put a post celebrating we had our six-month goal.
• 9:02
  SPEAKER_01: We had uh thousand subscribers now on YouTube, so we're trying to keep that building.
• 9:07
  SPEAKER_01: Um, Wednesday's post was talking about uh it was a post that came out from uh Oxford Economics, and it was just kind of stating the concerns about AI's impact on the labor market and saying that 20% of US jobs over the next two decades could be at risk.
• 9:28
  SPEAKER_01: And the main areas here were manufacturing, uh particularly transportation was the biggest one.
• 9:35
  SPEAKER_01: Um, and then retail wholesale.
• 9:37
  SPEAKER_01: Going into Thursday's post, it's just, you know, springtime's coming up, it's a good time to take a look at your financial picture.
• 9:45
  SPEAKER_01: Um, plan for both short-term events and longer-term effects um events.
• 9:52
  SPEAKER_01: So short-term might be you're planning to buy a car um in the next year, possibly a house in the next couple years, and then those longer-term things like planning for retirement or your income needs in retirement.
• 10:04
  SPEAKER_01: So um short little read there, but yeah, all in line with our financial planning topics.
• 10:10
  SPEAKER_01: Uh, we'll keep this segment a little shorter this week since it's just me.
• 10:14
  SPEAKER_01: Uh Brian usually goes into more detail on the financial planning posts, but we're just going to continue to keep an eye on markets and the economy.
• 10:24
  SPEAKER_01: As you can see, we're down 1.2% today.
• 10:26
  SPEAKER_01: Uh, we've been having a trend lately that we finish higher uh well off the lows for the day.
• 10:33
  SPEAKER_01: So hopefully that trend continues, but there's just so much uncertainty out there given the the labor report we got this morning and and the unfortunate conflict that's going on in Iran.
• 10:45
  SPEAKER_01: Um so we're gonna keep an eye on that.
• 10:48
  SPEAKER_01: And next week we get some um pretty important economic data.
• 10:52
  SPEAKER_01: We'll get the CPI inflation data on Tuesday, I believe, and then uh the core PCE on Friday.
• 11:01
  SPEAKER_01: So um I I don't know if the higher energy prices are gonna seep into that report yet, but it certainly could in future readings, especially if this thing lasts uh longer than a couple weeks.
• 11:15
  SPEAKER_01: And originally the president was saying four to five weeks he sees it, but um it's not seen any signs of de-escalation yet.
• 11:24
  SPEAKER_01: And the the Strait of Hermouth uh delivers a lot of oil runs through that channel, and I think Iran has been planning uh to kind of use that as a uh a weapon for a decade now.
• 11:40
  SPEAKER_01: So it sounds like there's likely a lot of mines that could be activated in that region.
• 11:45
  SPEAKER_01: So um hopefully, hopefully things de-escalate there soon and we can get back to focusing on economic data and the stock market.
• 11:54
  SPEAKER_01: Um, before we go and keep an eye out for our blog posts this coming week, um, it'll follow that same format.
• 12:01
  SPEAKER_01: And then uh Friday live uh next Friday by 1230 Eastern time.
• 12:06
  SPEAKER_01: Uh we usually get it out sometime between 11 and 1230.
• 12:10
  SPEAKER_01: But you can do the replay on Facebook or or YouTube channel.
• 12:14
  SPEAKER_01: So keep an eye out for that.
• 12:15
  SPEAKER_01: And before I go, I'm gonna flip on our disclosures.
• 12:18
  SPEAKER_01: I hope everyone has a nice weekend, and we will see you next week.
• 12:22
  SPEAKER_00: Security is offered through LPL Financial LLC, member FINRA, and SIPC.org.
• 12:27
  SPEAKER_00: Advisory services are offered through LPL Financial LLC, a registered investment advisor.
• 12:33
  SPEAKER_00: Brian Peluso, Michael Kutch, and David Harper are registered representatives of LPL Financial LLC.
• 12:39
  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.
• 12:48
  SPEAKER_00: Any opinions expressed are those of the authors and do not necessarily reflect the views of LPL Financial or its affiliates.
• 12:55
  SPEAKER_00: All investments involve risk, including the possible loss of principal.
• 12:59
  SPEAKER_00: This communication may include links or references to third-party websites.
• 13:02
  SPEAKER_00: These links are provided as a convenience only.
• 13:05
  SPEAKER_00: LPL Financial and its representatives are not responsible for the accuracy or content of such sites.
• 13:10
  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.
• 13:20
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• 13:25
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• 13:29
  SPEAKER_00: You should consult with your financial advisor, tax professional, andor attorney regarding your specific situation before making any investment decisions.