Begin the Begin

We'll be blending fundamentals, technicals, thematics, and our own boots on the ground research to tell you what you and your investors, what is happening in the market, and yes, what it all means. So who is behind this podcast, this cast of characters that will be bringing you these insights each and every week? Well, there are three of us, as I said, and let's start first with one, Lindsay Bell. Lindsa, give us the 411. On you.

Lindsey Bell  00:59

Yeah, sure. Hi everybody. I'm Lindsay Bell, so I have a broad background in the financial services industry. I've been working in the industry for 20 years now, studying markets. Most of that time. I started in investment banking. I worked on the sell side. I worked on the buy side with Jim Cramer and you guys, which is how we met, helping to manage the mid cap portfolio for small mid cap portfolio for Jim Cramer back in the day, but also interviewing you two and other experts on video there, including Jim Cramer and Stephanie link. And now I've been dabbling in my entrepreneurial interests, and I started a newsletter called the shift, where I dig into labor market dynamics. I also keep a close pulse on the market still. So that's me in a nutshell.

Chris Versace  01:51

Alright, well, Bob, let's wheel over to you. Bob Lang, over at explosive options, and longtime contributor to real money, Real Money Pro, now packaged as the Street Pro.

Bob Lang  02:03

Yeah, Chris, great to be with everybody, and also great to be with you and Lindsay. We you and I, of course, have done some podcasts in the past. Lindsay and I had some years back, did some webinars together, very, very successful and real popular. So this seems like old hat to me, but you know, I I tell you that, you know, being able to inform everybody about things market related, economics related, we really don't hold any restrictions on where we can go as it relates to markets and so forth. Getting your perspective, getting Lindsay's perspective in mind, maybe from a technical point of view, or an options point of view, is really going to be a fascinating dynamic here for for the audience. Now, a little bit about my background. I, as you said, I've been working with the street for the better part of about 15 years. Started with them about 2009 I have my own company called explosiveoptions.net, which I started in 2011 and I have a chat room and so forth. And through that, through that chat room, and through the services I've, I've done a lot of interviews with with some important people in markets, yourself and Lindsay as well, especially. And so it's going to be a great time to to help teach people and show them what we're thinking about markets, trying to get ahead and trying to explain, you know what? What's it all mean?

Chris Versace  03:38

I think that's a great perspective. Bob and I didn't really say who I was, but I'll bring up the rear, as it were, I'm Chris Versace. I run the Street Pro portfolio, formerly known as the action alerts plus portfolio, but I'm also the chief investment officer over at tomatica research, where we build thematic indices and models, some of which power ETFs over in Europe, but we've also got some RIA clients as well that are using these targeted exposure models. That's kind of a quick introduction to who we are, but I know you're going to be hearing a lot more from us each and every week, getting to know us a lot better and how we think. But as we get ready to launch on this endeavor, begin to begin, as it were, Bob, for somebody who's new to us, what would you say this podcast is going to be about?

Bob Lang  04:29

Well, I think this podcast is mostly going to be about our views. Lindsay's yourself and my view, and anybody else who comes on the podcast with us, to give a different perspective, a different flavor of what's happening in markets and in the economy and so forth. You know, I have a strong background in following the Federal Reserve Fed policy all the people on, on on the board over there, and you, you've asked my counsel on many a K. Conversations about, you know, what my my spin is on, on, on where policy is, is going. It there's such a an enormous link between markets and monetary policy. We heard chair Powell last week talking about monetary policy and the importance of being independent from the government and so forth, and the importance of laying out the right policy in terms of timing, for for the economy and eventually for markets. So that's my perspective, of course, with technical analysis and so forth. So I think to ask you answer your question, I think you know, we're gonna, we're gonna give everybody a very well rounded and complete view of things from our perspective,

Chris Versace  05:44

Lindsey as we turn from Bob the counselor Lang to you, anything, anything to add to that, and anything that we're hoping to accomplish as we share and impart our collective wisdom with the audience here who's got a combination of individual investors, RIAs and other professional investors?

Lindsey Bell  06:10

Well, I think that the unique thing that the three of us are going to bring to the table is our ability to drill down into the details, but then to, like, zoom out. And that's what this is all about, is to zoom out, right? What does it all mean? So to give that, I don't want to say 30,000 foot view, because I think we get a little closer than that. I like to say 15,000 foot view, the amount of time I spent as a chief investment strategist at ally and other places. To me, that's what it's all about, being able to kind of take a step back and really understand what the details are telling us and what to do with our money. From a broader perspective.

Chris Versace  06:44

I agree, and the only thing else that I would say is I know that from time to time, the market, to use your language, Lindsay really zooms in very close. It feels like we're thinking about the next couple days, maybe the next couple of weeks. But there are things that unfold over months. And some, sometimes it takes certain investments, you know, 1218, maybe even 24 months to really unfold. And sometimes you have to be patient, you know, and you have to really pay attention to the data. I was looking over the Street Pro portfolio the other day of Case in point, this one position that we have united rentals in there, and I mean, it's it's up significantly. But what I didn't realize is we started buying that in 2022, so just, just an example that sometimes you have to let the thesis play out. But again, these are some of the things that we'll be talking about in our conversations each and every week, mixing in from time to time, other thought leaders and other perspectives as well. So folks with that, as I like to say, the 411, introduction to the podcast, stick with us, because after this short break, we'll be right back digging into the big conversation of the week.

Chris Versace  08:09

All right, folks, we're back. That's right time to drill in and say, what does it mean with all this stuff that is happening this week? I'm going to turn right to the counselor himself, Bob Lang, because he did mention the Fed. Bob on Monday, Fed chair, Powell spoke, um, anything new? Because I heard what he said. And I gotta be honest with you, a lot of folks were saying, oh, Powell is saying he's not going to wait to get to 2% for inflation. But I hear it, and I'm like, he already said this. So what? So what am I? What might I be missing? Bob.

Bob Lang  08:42

So everyone, Chris and Lindsay chair Powell had an interview with David Rubenstein over at the Economic Club yesterday, about noon on on Monday, July 15. And as Chris said there, he didn't say a whole heck of a lot different than what he said on on the hill, and it's twice yearly testimony last week, nor did he say anything different than what we read in the minutes the prior week, nor did he say anything different from the statement and his Press Conference The following week, prior week. So yes, I don't really see that anything has changed in terms of policy. The only thing that I see structurally Chris and Lindsay that's really changed is the market is taking his words as being a little bit more aggressive towards rate cuts. And now, as we see today, on July 16, the Fed Funds Futures are looking at about three, almost exactly three rate cuts in 2024 Well, let's do the math here on when those rate cuts could could happen. We have four meetings left in 2024 we have the end of July, September, November and December. And of course, the. November meeting is the day the day after the presidential and congressional elections here in the United States. So I really don't know where, where chair Powell was trying to go yesterday, other than reiterating what's been said for the past few weeks, he did say, as you mentioned, Chris, that I think this is, this is one little point that that the market has forgotten about, is that the Fed is going to make changes in policy, cutting rates versus leaving rates where they are as we make a move towards 2% not at 2% so we're making that glide towards 2% it's taking a long time, and you and I talked about the core inflation, the personal consumption expenditures, it's taking its sweet old time trying to get down towards 2% but we're making that slow move towards that target, and when We do, we're going to see a little bit more discussion from the Fed members and chair Powell himself about rate cuts.

Chris Versace  11:08

So I agree with you, Bob, but you know, there was a little piece in what Powell had to say when he was talking about overall progress on inflation during the second quarter, because, you know, we've seen some good progress, but that seems a little more, I won't say wishy washy, but it's not as dovish. Where you know you would, you would hear that and you would say, oh, three Fed rate cuts. So so Lindsay, my question to you is, is the market potentially, once again, getting out over its skis with the number of rate cuts that we might be potentially getting in 2024.

Lindsey Bell  11:42

Yeah, I think the market's getting over its skis again. I mean three, three cuts this year, we still have mixed economic data. We are seeing a weakening, which is what's helping and disinflation occur. We need to, you need the economy to weaken for that to happen. But I think when you look at it is mixed data. You look at the retail sales that came out this week, right? They were stronger than expected. I mean, there's two sides to that coin. If you look at the real retail sales, that accounts for inflation, it's been negative for two years. But on the headline, the surface, it looks pretty good, especially if you look at the core, you know, the core group of retail sales. So I think there's enough mixed data the if you talk to certain economists, they'll tell you that that, you know, Powell says, hey, look, I want to see multiple months of progress, okay? And we've seen a couple months of progress, you know, the first quarter of the year, inflation was much hotter than we had expected, right? And then we've seen a couple months showing progress, but that that we need more than two data points, right? So I think that the Fed like, I think July, I think the retail sales data this week really, just like, took July off the table for the people that were out there kind of trying to throw that in the mix, that that five-

Chris Versace  12:57

Sorry Lindsay, that that five or 6% fringe group that thought we might get a rate cut in July.

Lindsey Bell  13:03

Yeah, so I think that's off the table. I think September is a possibility. But again, it's going to the Fed is going to be data dependent.

Chris Versace  13:13

I agree. I agree. And you know, I I wrote something last week where, if you take a look at the year over year core, ppi and Bob, you and I had this conversation, and you smooth it on a three month trailing basis. It's actually higher in June than May. May was higher than April and so forth for, you know, the last three, four months. And look, you know, the market can think what it wants, but I think we would agree that something like that is not going to go unnoticed by Powell in this team, and I think that's kind of why his comment was more like, yeah, we've seen some progress. And to your point, Lindsay, he wants to see more. We're going to see a lot more, Bob, if I had to put a gun to your head right now. How many rate cuts this year?

Bob Lang  13:59

Two rate cuts, one in September, one in December. But I would also say Chris, the reason for Powell and the committee being a little bit more on the conservative side. I think the flogging that Powell got a couple years ago when he introduced the word, remember transitory, but transferring. He was flogged all over the place, and I don't think he wants to go back into that, into that mode again. So I don't think he wants early. I don't want to think he he's worried about cutting too late. Look. I mean, it's been a year since the last rate move almost here at the end of July, 2023 was the last time they moved interest rates. It was at the end of July they raised rates to five and a quarter, five and a half percent. We haven't moved off of that yet. If you look at the economy, it would a huge fourth quarter of 2023 slowed down a little bit in the. A bit in the first quarter, and it looks like we probably slowed down a little bit in the second quarter, but still, you know, on an average basis of about 2% growth at five and a quarter interest rate on the Fed Funds, pretty extraordinary, if you ask me. So I don't think the Fed is erred on the side of being too aggressive. I think they've erred on the side being too too cautious. And I do think that the balance of risks that the Fed talks about, especially chair Powell, is on being too tight for too long. Right now. They've been very restrictive in policy for for the better part of 18 months. And I think as as we move forward, I think that the the the method of of bringing rates down is going to to probably be a little bit more aggressive, especially as we enter 2020, 2025,

Chris Versace  15:50

Okay, so, Bob, you said two rate cuts September and December. I believe. Lindsay, what do you think?

Lindsey Bell  15:56

I think we get one rate cut in September. And I'm, I don't even know that we actually need it. I think it'd be more of a commitment from the Fed to just show that we're trying to do the right thing. This is a very fine needle that we need to thread. I think things are going to slow down enough that the Fed's kind of going to give the market and investors what they want. But they may. They're probably, my guess is that they're going to have to take a pause as things re accelerate, probably into the end of the year, beginning of next year, okay?

Chris Versace  16:25

And when you say re accelerate, are you talking inflation or the economy,

Lindsey Bell  16:30

Okay, which may make inflation sticky. Okay.

Bob Lang  16:33

Were you, Chris? Were you Chris? Where are you at on the rate cut?

Chris Versace  16:36

Well, I had. I had been for the longest time, at one in December, and I will say that some of the more recent data has me softening that I haven't made a formal change yet, but I do think it's possible that we get two. But I agree with Lindsay that I think that, you know, what I saw in that PPI data tells me that, you know, the Fed's going to want to see, quote, more good data. So I you know, obviously July is off the table. To me, the question now is, you know, when we start getting July data, what does it show? And I think that's the difference potentially between September and November, or just one rate cut. So that's, that's kind of where, where my evolving thinking is. But Bob, I know you got a quick point to make, make it, and then I want to move on.

Bob Lang  17:19

So real quickly about about interest rates. You know, we have to pay attention with the bond market is telling us right now, and interest rates have been falling on the long end of the curve. And in fact, what, what we've seen on the yield curve is a more of a flattening effect, much like we saw earlier in the year. But when, when the two year yield fell close to 4.1% we're about 4.4 on the two year right now. And again, the market maybe is getting a little bit ahead of itself, as Lindsay said over at skis, a little bit more aggressive. But still, you have to pay attention what the what the bond market is telling us here, and I think they're trying to get themselves in sync or slightly ahead of where the Fed is right now, a little dangerous, I suspect, but still, you know, the bond market tends to predict a lot of things wrong. I think they predicted six of the last two recessions. So it's a paranoid market, if I've, you know, experienced it with working with bond players before. But, you know, I think this is really important to pay attention interest rates.

Chris Versace  18:24

All right, so Lindsey, if we think that the Fed, sorry, the market might be getting out over its skis with the number of rate cuts, and yet, the S, p5, 100 has been, you know, up until very recently, hitting new highs. You know, multiple, multiple days in the row. In a row. Are you? Are you a little nervous about this market, or do you think it's got some legs?

Lindsey Bell  18:45

I'm a little nervous, and I feel like I don't know if you two are, but I feel like I'm getting nervous and I'm typically, for history's sake, I'm pretty optimistic. Usually, when it comes to the market, I remain upbeat most times, but I'm getting a little bit nervous because of what I see in the labor market, which I equate to a stalling out of labor demand. And you know, inflation is cooling, which is good, but like I said earlier, inflation cold when the economy is weakening. You look at the City Economic surprise index, the surprises have been to the negative side, so numbers are coming in worse than expected, and just looking at we're at the very beginning of earning season right now, and I think we'll get into this a little later. But what I'm hearing from executives, and what I'm seeing in the numbers is that it's a great second quarter. So far, it's it's good. I think the numbers are going to come in great, but the outlook has been cautious. Now we've only heard from a couple consumer stable companies, the banks. You know, it's the early guys, and usually we things can can get off to a slow start. So we'll definitely keep our eye on it. But it, it is showing that the consumer is slowing, and that's been the one resilient part of the economy. You hear a lot of people talk about the different rolling recessions that. We've had over the last several years? Well, the consumer has been the one that has has remained resilient and strong throughout. And I think we're starting to see cracks in the consumer, which is two thirds of our economy. So that has me worried. But I don't see this as the beginning of the end. What I see it is, is a slowdown. I think corporations are getting a little bit cautious going into the election, because, I mean, just look at what happened over over the weekend was kind of a Black Swan, unexpected type of event, with the attempted assassination on former President Trump. And like, there's a lot of time between now November, and we don't know what happens actually in November. So I think corporations, you're starting to see a couple CEOs. You're starting to see executives. And you know, you look at the ISM services survey, they take commentary from some of the people that they interview. The election is coming up, and so it's weighing on people's minds. There's other surveys that show that political leadership has moved up significantly on the list of concerns, where inflation still remains at the top for corporations. So I think that the outlook and the spending that has been happening over the first part of this year could slow at least into the third quarter, potentially into the fourth quarter, before we get a rebound. We get past a lot of this uncertainty, especially related to the election, and also there's a and we could talk ad nauseam, about, you know, AI, and the impact that's having on the market. I think that's also causing a sense of cautiousness, or at least a slowdown in spending, with regards to other parts of the capex structure, not just in AI, right, but also in talent too. So I think all that leads to a slowdown on the economy near term. Again, I don't think we're falling off a clip, I just think we're taking a pause.

Chris Versace  21:55

Are there some bright spots that you are seeing though? Lindsay and I'm asking because, you know, we hear a lot of companies continuing to talk about AI. We obviously saw a trifecta of big, high profile cybersecurity attacks, Ticketmaster, at&t Disney, that that's kind of a reminder that cybersecurity, you know, remains a key, or should remain a key focal point of the C suite, in terms of IT spending, you know, some of the underlying non seasonally adjusted data, you know, housing starts has been actually favorable. We know we have the flow of infrastructure spending and related programs. So I understand that, you know, you got, you have some concerns. But for the optimistic Lindsay that's in there, is there? Is there anything that, you know, oh, you know, you're very encouraged by.

Lindsey Bell  22:44

Yeah, no, I think you mentioned a lot of that. I think AI is definitely going to be a tailwind for the market. The AI revolution is certainly underway, and I think in very early innings, I don't think that that's reflected in earnings estimates, even for the biggest players in the space. So I think that there's, there's going to be optimism there. I think the infrastructure spending is going to be a great tailwind for the economy over the longer term. I also think one positive out of the banks, I would say, is capital markets have been strong, and that's been a weak area for for for the banks. And so if you're a big, diversified financial institution at the reopening of markets. Lower interest rates actually helps deals get done. It helps, it helps the housing market, right? And so I think, I think there are pockets of of positivity too. I just worry about the consumer in the near term, but I think things are going to work themselves out.

Chris Versace  23:41

I mean, go ahead, Bob.

Bob Lang  23:43

So Chris, let me, let me, let me ask you pivot off of that for a moment. With all of, all of what you and Lindy just laid out there, we could have a completely flipped administration next year, in 2025 how does that change your thesis, Chris, in terms of growth in the economy and so forth, and, wow, you know, obviously, you know, maybe, maybe a new, a Republican administration might be favoring tax cuts and easier energy policy, that sort of thing.

Chris Versace  24:18

Less regulation, that sort of thing. Yeah, yeah. I mean, look, it's a valid, it's a valid question. I would just say that I think it's way too early, right? I know that there was a big wave of enthusiasm for the Republicans, you know, coming off of the event that Lindsay mentioned, you know, over this weekend that obviously surprised everybody. I was at a savannah bananas baseball game when I, when I heard about that, and I felt so bad, you know, for the teams playing, because the entire audience at National Stadium, just like froze. Everybody was looking at their phones. So, you know, obviously it was a big moment. I think, you know, the follow through, the immediate follow through on that is one thing. But I. Look, we've got a way to go until the election actually happens. You know, some and some things may change. I mean, Bob, we might even see some of the players change before we get there. So I would hesitate to kind of prognosticate this this early on, but it will be something that happens. But I do think Lindsay's point that that level of uncertainty is something that could influence how companies talk about the back half of the year.

Lindsey Bell  25:27

Yeah, and I think too with with elections, typically, this is a time of year going into into the November vote. Usually you see the market do extremely well and but I just think there's just a level of uncertainty, Chris, that you just said that you know, the Democratic candidate could possibly change. There's, yeah, there's so many things and so much time between now and then, and even right after the election, like how it's digested by markets, by by the country, by the world, I think too, is something that we're all going to have to watch.

Chris Versace  26:02

Yeah, three, three and a half months. I mean, it's more than a quarter, right? It's a long time.

Bob Lang  26:08

So, so I you know Lindsay mentioned that uncertainty here, we can see that in terms of of dollars in the markets. And what I mean by that is, if you look at the volatility, vix futures, term structure, there's a huge rise. Well, currently, right now, the VIX, the volatility index, the Fear Index, is trading at around 13, 13% there's a huge rise. Chris and Lindsay in October, November futures, about 45% higher than it is right now. And so what the what the market is anticipating or pricing in in three, four months from now is volatility marked volatility now. This happened about four years ago and eight years ago, the last two elections. And you know, people who who had bought volatility going into the election ended up paying for it because volatility collapsed right after the result happened. That's usually what happens, right? The volatility starts to rise as uncertainty is created. And we have a lot of uncertainty right now. Of course, you know who's going to win this election. Once that election result is, is is completed, we see volatility collapse. And when volatility collapses, we usually see a nice run up in the market. So I'm fascinated by this huge spike in volatility out in October, November, again, people are expecting a lot of huge moves in the markets three, four months from now.

Chris Versace  27:39

Well, let's talk about a recent big move in the marketplace. I think I read somewhere this morning that the Russell 2000 has had its best string of five days in I think almost forever. There's a lot of folks that are reading into this as the market rotation, potentially out of AI and big tech to other areas of the market. We are seeing some other areas of the market that haven't been working. They are working now, some of them are these more interest rate sensitive areas, but Bob, in terms of the Russell 2000 you know, when we were chatting about it, I think you said it's a moment to frame. What do you mean by that? Why did why is this important for listeners to pay attention to?

Bob Lang  28:21

Well, that seems a lot underwhelming. Now I'm going to say it's it's breathtaking. Do you honestly for this move that the Russell 2000 is made in the month of July over almost 10% in the past six sessions? Chris and Lindsay, it's amazing. How, how well this, these small caps, have done, and we can correlate that directly with the drop in interest rates. And the drop in interest rates happen when that better than expected. CPI number from June dropped on Thursday, July 11. And once that, once interest rates dropped on that, on that, on that morning, it was like, you know, ringing the bell all of a sudden. Okay, small caps are where we're going to go. You know, the NASDAQ and SP 500 had a great first half of 2024 up nearly 18 to 20% for each one of those indices. The Russell 2000 coming into the second half of 2024 flat for the year. So there was a lot of catching up to do. Either the large caps were going to come down or the small caps were going to come back up and and take the take the baton. And that's exactly what happened. It's been in a stunning run. But interestingly enough, Chris and Lindsay is that you know, the Russell 2000 after this strong move up here, still five and a half percent away from an all time high, the Russell the IWM, at 230 is the all time high. We're at 218 219 right now. So good 5% move up. Would get it up to the up to an all time high. Join the Dow Industrials, the S P and the Nasdaq, where they're at it all time high. So still a little bit more work to do with Russell 2000 but I tell you, the last four or five. Days have been breathtaking.

Chris Versace  30:01

All right. So, as Bob just said, Lindsay, breathtaking. But as we talked about a few minutes ago, even the counselor himself said he doesn't see three rate cuts this year. You know, we're concerned a little bit about the economy. My question to you is, Lindsay, do the fundamentals align with this move that we're seeing in the Russell 2000 or not?

Lindsey Bell  30:25

Yeah, see, that's where I get a little concerned. You kind of just heard my spiel on the Impend, the slowdown that we're going to be dealing with, and that that doesn't really bode well for for the small cap trade, right? That's not to say that the small cap trade can't keep going in the near term. But when I look at the fundamentals, I look at the s, p6, 100 earnings estimates, and what you see is, is that they're okay. They're improving, but they've been negative for for a while. Douglas Heikkinen, positive, but it's not like this massive catch up. They're slowly improving. And what? What do the small caps need to work in their favor? Primarily, the biggest thing that benefits them is lower interest rates. And I think that's a lot of what the market's getting excited about is that interest rates are going to come down, but we're still going to be in a higher for longer regime, right? And so even if we do get several cuts, and that is, that's the goal, to get a handful of cuts and then just, you know, resume, back to the neutral level, whatever you believe that is to be, I believe it's probably around closer to 3% on on interest rates, the neutral rate. So to bring you, want to bring interest rates down a little bit. But I think for small caps to do really well, you want to see a bigger, swifter, swifter move lower, but a swifter move lower, and interest rates mean the economy is weakening more significantly than we expect. So I think this is a trade that could take time to play out, but sometimes the the market thinks far ahead and gets super excited and moves faster than what is potentially rational, right?

Chris Versace  32:02

Oh, Bob, there's that word I like to use. Lindsay didn't say it, but she just gave the textbook definition of hopium.

Bob Lang  32:10

Hopium. That's right, right? Yeah.

Chris Versace  32:12

So, so if I parse kind of what we're saying here is, you know, it sounds like as impressive as this move in the small caps are it too? Could be a little overdone, depending on some of the data that we might get. But I would also throw in, you know, the earnings season is really going to matter, right? I think, you know, a week ago, when the s&p 500 was hitting those new highs, it was, you know, arguably oversold, based on the RSI Bob. I know you might have some other thoughts on that. From a technical perspective, the S, p5, 100 multiple is stretched over 23 times. We need to see earnings growth really accelerate above and beyond what the market expects, 11, 12% year over year in the second half, or the same range compared to the first half of the year. So I really do think that the next leg of the market is going to be more determined by what we see over the next three, maybe four weeks when some of these big cap companies call it Apple, call it meta, Amazon, Google and the like report, but then a whole array of other companies do the same. So I'm I think that certain sectors will continue to perform well, but we as investors know that we don't buy the market. That's not our job, right? Our job is to look for opportunities, whether it's, you know, call your flavor, ETFs, or just individual stocks, that are poised to outperform, in my experience, that means superior earnings growth so that that's kind of my area of focus, at least for now. Any any thoughts on that? You guys?

Lindsey Bell  33:58

Yeah, no, I would say, with regards to small caps. We did see another rally, and Bob probably is more lasered in on this than I am. But at the end of 2023 between the end of October and the end of December, small caps rallied 25% and before we started consolidating into this move that we're currently seeing, and earnings during that period, time period for small caps, weren't acting very impressively, so they were still pretty weak. So I think that the market can be irrational. Is it the Buffett saying the market can be a lot more rational for a lot longer than you can remain solvent. So I think that too, like you just said, Chris, it's really important you look for opportune opportunities within your time frame, right? So I might not think that small caps is a long term play, but doesn't mean it. They can't perform well over the next 810, weeks. You know?

Chris Versace  34:52

Yeah, and hang on one second, Bob, that's you just made a great point. Lindsay, it's not something we talked about, but as as folks try. To get a little more familiar with us on our different perspectives. You know, I think they need to know what are our time horizons, right? Because we each have different investing styles. I'll go first. I mean, I'm more a 12 to 812, to 18 month. 12 to 24, month type of investor. I like to really let things play out. Sometimes I'm early, but as long as the data supports what I'm, you know, the thesis that I'm building, that's, I'm fine with that. What about you? Lindsey,

Lindsey Bell  35:26

Yeah, I'm, I'm longer term, like that too. 12 to 18 months is usually what I'm looking at.

Chris Versace  35:31

Alright, counselor, are we calling you quick draw? Or what's the story.

Bob Lang  35:35

I'm looking at both, you know, short and long term, you know, I think, you know, fundamentally, fundamentals always went out in the long run. But you have to take a look at the technicals as well too. The technicals will support movements that are made in the short term. We're talking three to six months out there, because, you know, the technicals kind of give you an insight into the trader and investors mindset, the emotions that are that are playing out momentum in the markets and so forth, and how people react and respond quickly off the trigger to what's happening in the moment, right? So I think looking at it at both long term and short term is extremely important. And I'm looking at Lindsay had me triggered me to look at the longer term. Russell 2000 for instance. And you can see that after it bounced from the 2020 lows and from the covid lows, and it had a huge, humongous bounce to the all time highs in 2021 it's been basing for about two years in frustrating everybody who's been wanting waiting for a Russell 2000 breakout, because all the other indices did break out, except for the Russell, and now it's finally pushing out. And, you know, finally playing catch up. And who knows, this thing could have a long way to go. I want to say that Chris didn't you mention something that Tom Lee from mentioned a couple of days ago, that he saw a 50% gain in the Russell, 2000 in 2024 that's from the start of the year to where we're up 8% right now. So he can see, he sees huge upside in the Russell, 2000 by the end of the year. Is that right?

Chris Versace  37:14

No, I did not share that with you, so I'm fascinated by that. I'm wondering who this other Chris is. Maybe we should get him on the program.

Bob Lang  37:25

Yeah, so that I did happen to hear that last week, so I apologize maybe I didn't share that with you, but I did mention that to a colleague of mine, and it was stunning to believe that he thought that the Russell 2000 was going to far out, far exceed the NASDAQ, which has some of the bigger names that we've we've always discussed the mag seven and so forth, and the Dow Industrials, which has been outperforming all the other indices, even the Russell 2000 over the past two months. But to see that that that 44% from now, 50% gain in Russell 2000 is pretty stunning. If you ask me.

Chris Versace  38:03

I could not disagree. All right, let's get into some quick hits real because we were, you know, gotta, gotta get moving here between now and the next podcast right, which will be out next week, same day, Thursday. Bob, give me one thing that you'll be paying attention to, and only one.

Bob Lang  38:21

I'll be watching the earnings, earnings, Chris and I think you and you and Lindsay laid it out very nicely about how the mar the bar has been raised for a lot of our companies right now with earnings. And we got to see good, strong earnings, good, strong guidance going forward into the end of 2024 and you know, we're at the point right now where, if a company hasn't made it this year, they're probably going to throw in the towel on 2024 and start looking ahead to 2025 and again, you know, a lot of uncertainty out there, as you mentioned, Chris, we really don't know what who's going to win the election, or what policy is going To be like, fiscal policy and so forth. So I'm I'll be watching earnings, so over the next week, we can out.

Lindsey Bell  39:05

That is so not cool. Bob, you totally stole my answer.

Chris Versace  39:09

Yeah. Let me, let me, let me see if I can help you. Lindsey, as the pace of earnings heats up, is there any one particular earnings report that you'll be focused in on between now and when we talk next?

Lindsey Bell  39:23

Well, I you know what, instead of looking at one specific because I'm going to look at all the especially the big dogs, but I think what I really am going to keep a close eye on is operating margins to see if they can continue expanding across the board, not only in this quarter, but again, what does that outlook look like for margins. Because I think even as sales expectations come down, and I do expect them to come down because of inflation cooling, how's that flowing through to the operating margin line?

Chris Versace  39:53

That is a great that is a great point Lindsey, because everybody's because, you know, so focused in on that top line when it comes. Comes to inflation, we have to reconcile that costs for companies will also be coming down, you know, and if they can move those move those costs down the cost curve. God say, can't say that three times fast move the cost down the cost curve faster than the lingering benefit of price increases recedes. That is margin, right? But, but I also think, and you know, listeners, we talked about this, you know, a couple days ago, the three of us, you know, we were talking about PepsiCo, right, which is a great example, because, you know, Lindsay, I know you have some concerns about their top line, right? As some pricing has to normalize, but it's a reminder that you really have to look under the hood at these companies, because there's something very specific regarding PepsiCo and the rebound in its Quaker business that should allow it to continue to deliver growing margins, even if the top line might be just a little slower than what people were thinking for but that, but That's a great call out. I'm going to get very specific, though, unlike the two of you people, I'm going to say earnings, but guidance from Taiwan Semiconductor will be key. And I say this because it's too big and markets are high performance computing and smartphone these are the areas of focus going into the second half of the year, along with PC about AI, so their outlook for those three end markets will be key for the big dogs. I'm talking Nvidia, right? We're talking apple. We can lump Qualcomm in there. I would throw Marvell in there, you know. And I would say, you know, gun to my head. The second thing to watch over the next weeks will be spending Microsoft, meta, Amazon and the like. So with that, we will be right back and wrap up this first begin to begin podcast in just a moment.

Chris Versace  42:06

All right, folks, that was our first was it, does it mean podcast? You can see we're working out the kinks, but as you can also tell, there's a lot of brain power here, a lot of insights and a lot of smarts that you'll want to be paying attention to, and we'll be happy to be sharing that with you. But before we wrap up, I just got two questions to both Bob Lindsay, and, of course, I'll be putting myself under the mice microscope as well. Lindsay from our conversation, what was there? What was there? Any one thing that you kind of you're walking away with going, you know, I may not have known them well.

Lindsey Bell  42:40

First of all, Bob's pet name, Counselor, the counselor. So that will stick with me. Says a lot. But no, I think Bob, you laid some knowledge on me today that I liked about the small caps when you reviewed the consolidation that had been happening for over two years before the recent move. So we know it can be like a springboard. So I take that away when I when I think about the fundamentals of the small caps going forward.

Chris Versace  43:11

Bob, you.

Bob Lang  43:13

Well I throw it back at Lindsay, because Lindsay, you know, I appreciate her positiveness and generally, you know, I want to say bullishness in this markets, giving the benefit of the doubt to the buyers, but still having that reserve cautious viewpoint in letting letting the markets, letting the companies tell her how to proceed, as opposed to trying To tell them what to do and tell the markets what to do. So I think that, I think that that's a that's a great approach, and why, you know, she's should demonstrated so much success over the years and every place that she's been, and showing you know how to be patient and wait for the companies to deliver and tell her what to do.

Chris Versace  44:00

All right, Bob, Lindsay's gonna be here every week. No need to pilot high and deep so early out of the gate. Geez. Come on, we know she's smart. That's why she's here. Geez.

Bob Lang  44:09

So all the right moves, yeah, so

Chris Versace  44:14

I'll say that. You know, I can't believe I said that. Now I have to give some props to Lindsay as well. It's, of course, just her comment about watching margins throughout the upcoming earnings cycle, because I do think that's going to be a key point to focus, and it ties in a little bit to what I was saying about earnings expectations for the second half of the year. Okay, real quick, because we are running a little long out of the gate. We do like to chat, hopefully the folks like that, but between now and next week's episode of What does it mean? Lindsay, where can folks find you? If they're looking for you, and they should be,

Lindsey Bell  44:50

You can find me on Twitter at just L bell or LinkedIn. Lindsey Bell, at LinkedIn, you there. You'll. Find some of my my, my newsletter thoughts on the on the jobs market. And my newsletter is the shift, which can be found at WWW dot Lindsey bell.me, please go sign up. I send a newsletter every week on Friday mornings. So hopefully you enjoy. And

Chris Versace  45:18

I think Lindsay, the folks at advisorpedia are going to be showcasing some of that content from time to time.

Lindsey Bell  45:24

Yes, last week they shared one of my pieces, so you'll find it there as well. Excellent, excellent.

Chris Versace  45:30

So I guess that means you can also go to advisor pedia, type in Lindsay Bell, and you'll start to see some stuff from Lindsay, which is great, Bob. What about you?

Bob Lang  45:38

Well, I am I throw a lot of content out there. Explosiveoptions.net I have a market blast that comes out every morning. It's kind of a recap of of what happened the prior day, and kind of a setup for the following day. Comes out daily. I have a chart of the week every Wednesday. I have the daily bites, which I communicate out on social media about 830 in the morning. Mondays and Thursdays, talking about markets and what might have happened, what's going to happen, and webinars and so forth. Have a webinar coming up on Thursday. So I'm all over the place, and I think many talking with Douglas Heikkinen advisor. PD, to start carrying some of my content as well. I'm on Twitter at Aztecs 99 I'm also in stock twits, same as text 99 as well, too. So I'm, I'm flying everywhere, all over, splashed out everywhere. Chris, how about you?

Chris Versace  46:36

I'm still, I'm still recoiling from how you're all over the place. But as far as I go, the bread and butter stuff is for me, is usually two places. You can go to pro dot the street.com where you can find all the musings that I have for the Street Pro portfolio. You can also go to thematica.substack.com where you'll see some of the thematic models that we have, and some musings there from time to time as well. I tend to pop up in a variety of different places. And while I do have a Twitter account at Chris J Versace, I'm not the most avid Twitter person you can find. More, in my opinion, some more insightful posts over at LinkedIn. So I would say you might want to take a look for those. But with that, folks, that is the first episode The begin to begin one, as I like to say, for what does it mean? We hope you'll be back next week when we go, as I like to say, too, behind the scenes and in the know, sharing our thoughts with you. Thank you so much. We'll see you next week.