Episodes

Dan Ferris:               Hello and welcome to the Stansberry Investor Hour. I'm Dan Ferris. I'm the editor of Extreme Value and The Ferris Report, both published by Stansberry Research.

Corey McLaughlin:    And I'm Corey McLaughlin, editor of the Stansberry Daily Digest. Today we talk with Pete Carmasino, chief market strategist at Chaikin Analytics.

Dan Ferris:               Yes, Pete is the editor and guy in charge of making money for Marc Chaikin's PowerProfits and Chaikin PowerTactics. I highly recommend you get a pen and take some notes. This is going to be a good one. Let's do it right now. Let's talk with Pete Carmasino. Let's do it right now. Pete Carmasino, welcome back to the show, sir. It's good to see you again.

Pete Carmasino:       Thanks for having me. It's great to be here. It's been a while.

Dan Ferris:               Yeah, actually been a little while. It's been since February 26, 2024, was the last episode featuring yourself. And you know it's time to catch up.

Pete Carmasino:       It's amazing how much has happened in between that time.

Dan Ferris:              Yeah.

Pete Carmasino:       I think that's why it feels longer. [Laughter]

Dan Ferris:               Yeah, it is. It is. But just before we hit the record button on this, you did mention that last time we talked, we had discussed things like the unemployment rate and the potential for the Federal Reserve to cut rates, which they've signaled that they absolutely will do, and now it's just a matter by how much.

Pete Carmasino:       Yeah.

Dan Ferris:               And the meeting is just within days here of when this podcast goes out to the world. So I imagine that you have more thoughts about this now than you did in February, right? I mean... [laughter]

Pete Carmasino:       Yeah, it's something I've been tracking for a while. It's bond-related, it's obviously interest-rate-related, but it's also the fact that, I went back and just did – it was a simple study, or I just wanted to see when did the Fed cut rates last time, and then all the previous times, and what was really happening in those scenarios? And typically, the Fed doesn't cut rates because things are going great. They typically cut to stimulate, and it mostly, if not every time, correlated with an uptick in unemployment.

And we got that in August, and then the last one, just the most recent one, saw a downtick. But it was, it was sort of suspect, right? Because there's a lot of revisions to the downside. And even since we've met here on the podcast, the revisions for the previous year were even astronomical, 800,000 less jobs reported, or more jobs reported than should have. So, you've got to – it's hard to kind of nail that number.

But I do want to point one thing out. We saw 4.3 in August, but that's rounded up. It was 4.26. And this last report was 4.22, so it was a 4-basis-point move, not a 10-basis-point move. A lot of people go that's – you're splitting hairs. But that makes a big difference. And certainly, I think the Fed is going to be paying attention to it. They kind of got painted into a corner here. And to me, we already kind of know this, bonds have rallied. REITs have rallied. A lot of these sectors, we're going to talk about today, have rallied their interest-rate-sensitive sectors. And they're basically forecasting what the Fed was going to do.

It's the same thing that happened in at the end of '21 and beginning of '22 – bonds were falling out of bed, raising rates way before, way before the Fed even acted. So I think it's kind of a, it's just a reverse. And I believe bond managers – when I say bond managers, I don't mean the institutions, I mean more the financial advisors that are managing, trying to manage individual accounts, things of that nature, are still struggling with the bond timing here. But I mean bonds have really, kind of foretold, really, what the Fed is probably expected to do. Now, it's just a matter of how much.

Dan Ferris:               What do you think about, about the Sahm rule? Because, you talked about, like, a few bps change here and there in the actual unemployment rate. But that moving average has, it bottomed, and it's moved up by 0.5-plus, which is – that's when it gets the trigger. And the Sahm rule says, it doesn't say there's going to be a recession. It says we're in one now.

Pete Carmasino:       I – that's interesting. I love that. Actually, I kind of feel that. I mean, not personally, but looking at all of the charts I look at. And we're all in the same spot here. We look at hundreds of charts a day. I know I do, and I'm sure you guys do, too. It is, it's just amazing. How things are. You look back and you can say, all right, well, what would really be happening if there was a "slowdown." Well, things like lumber and copper might go down. Well, go look at a lumber and copper chart. They're down this year. So, things start to materialize.

And I made this saying up, if I didn't, somebody can fact check me and then @ me somewhere out in the universe. But dominoes have to fall in a row. They don't fall out of order. So they don't – one doesn't fall, then six dominoes later, the next one falls. It has to fall in a row. And that's why, I think, you start to see that business cycle that we talk about, whether it's early, mid, late or contraction/recession.

Where are we in that cycle? It seems like we're between. We're either at the end of mid or the beginning of a late cycle. And maybe it's accelerating, and that's part of that reason. But that Sahm rule is very interesting, and it obviously is tied to unemployment as well. And I don't think it's a coincidence indicator. I think it's a great indicator. And then what else happened? You had the, we had this inverted yield curve that just, is it disinverted or uninverted? I'm not exactly sure.

Dan Ferris:              Yeah.

Pete Carmasino:       So that would, that one positive as well. So guess what that typically, again, another domino that's falling based off the other ones that are already signaling things. Again, you had bonds move. You had the dollar come in, right, dollar's going down. So when that's happening, typically rates are going down, and they're very highly correlated. And then you can throw in what happened in Japan there for a couple of speed bumps along the way. And what do you – lo and behold, what do you get? Volatility.

And that's kind of what we're seeing. So we're seeing these massive up days, and we're seeing massive down days. To me, that's just uncomfortable. It's not, it doesn't seem, it's not a fun time right now. But if you're disciplined, and you've been rotating because of what price analysis has showed you, and things of that nature, you've kind of weathered the storm pretty well.

Corey McLaughlin:    Yeah, I've noticed oil prices trending down the last couple of months as well. And I wanted to get your thoughts on just a little bit more on employment – or unemployment too. I've found, I don't know if you've found something similar, the history of the Fed just underestimating how high the unemployment rate ultimately goes in a recession or a slowdown, or when they are at a point like this, where they're thinking about cutting rates. It generally, I found, at least gets worse, much worse than they are anticipating and have projecting.

Pete Carmasino:       Sure, absolutely, you're right. You're spot on. And it's that speed, right? I wrote an article that came out on our Power Feed September 10. And it's called "The Fed Might Break the Speed Limit." And in that regard, I was talking about how fast they might cut rates. And what you're saying is because they might have to catch up to a speeding unemployment rate as well.

So they're going to have to break the speed limit if they're seeing something that, for whatever reason, we don't have access to, which I don't think that's possible at this point in this – in 2024, I feel like information is flowing from every angle times 10. But at the same time, we do see periods of announcements, especially in the tech sector. Take Google, for instance. They laid off just hundreds of workers, but then Amazon comes in and joins the club for layoffs as well.

So did Dell, 6,000 layoffs earlier this year. Apple. And you start talking about the financial sector. So is Goldman, Citi and Deutsche Bank, they have all had job cuts. So you're talking about an estimated 60,000-plus job cuts across 254 just technology firms in 2024 so far. That's kind of dated already. Since then, it's probably increased since I've compiled those numbers, but at the same time, there's a reason for that. That's kind of sneaky, and it kind of – people are paying attention to it, but it's hundreds here, few thousands here. And then all of a sudden, it starts to add up very quickly.

Because a lot of these are headline news. You know, Google, Amazon, Dell. When that – those folks make some changes, we hear about it, but there's plenty of other names that we don't hear about. And I think that's where it gets again, it's very fast. And I think the Fed is, I guess, pressured in a way, but potentially, the Fed chair, Jerome Powell is very levelheaded. I think he's done a great job as far as communication. He's not been right all the time, but he has told everybody what he was going to do, and I think he's stuck by it. He's just very dovish.

So a lot of people were worried about a 50-basis-point cut. It would be possible, but I think he's at 25 and multiple 25 cuts to start, unless that unemployment rate gets out of control. So you're right. I think the unemployment rate could press the Fed to move faster. And I think there's a problem with that.

Dan Ferris:               Yeah, two things about that. One, they certainly broke the speed limit on hikes, right? And we're late to the party on hikes. So –

Pete Carmasino:       Oh yeah.

Dan Ferris:               – would it surprise us, on cuts for the exact same thing, late to the party, breaking the speed limit? Wouldn't – shouldn't surprise anyone. What I want to know, do you think if there's a 50-point cut baked in, will the market look at a 25-point cut sort of as hawkish?

Pete Carmasino:       A 25 point? Yeah.

Dan Ferris:              You know what I'm saying?

Pete Carmasino:       You know what, they could – yeah, it could be. Yeah, because that's just, I think that would be more from a perception standpoint. Right? In other words, it's like, yes, we cut rates, just not as much as you thought we needed to kind of a thing, because they might want to tweak that dial. I get that to a, to a degree. Anybody who's into music knows if you change your bass, or treble, or volume too quickly, you might blow a speaker, depending upon what's on the on that, on the radio, what's – what tune is playing.

But at the same time, 50 basis points is, I think, both mechanically and emotionally disruptive, meaning that mechanically, the markets need time to adjust to higher rates. But if he does 25, I don't think it's out of the question, it might be a little goofy because it's an election year, but it may not be out of the question to do an intermediary cut between meetings. Because I don't think there's a meeting in October. Is that right? So he might have that kind of ace in the hole, and says, "There's no meeting, but we can still cut in October."

So he might get 50 off the table before the election. And I think the – I think he's probably going to, he might test the market because of that. He might go a quarter, and then see how the market reacts. You're right. It could be hawkish, but I don't, I don't know if 50 basis points is the right one. Some people are talking about 75 is on the table. I know it's a low percentage. But we heard a famous professor from Wharton calling for an emergency rate cut, which we didn't need. That would be a terrifying event. But at the same time, I think, I think they're, they're kind of trying to thread the needle. And it's hard to do. I mean, I'll give, I'll give them that piece of credit.

Dan Ferris:              I don't know why – [crosstalk].

Pete Carmasino:       Me either. He attracts a lot of attention, I guess. [Laughter]

Corey McLaughlin:    Yeah, on a Monday morning emergency. It's an emergency.

Pete Carmasino:       We have to cut rates. [Laughter]

Corey McLaughlin:    We have to cut rates. Yeah, that's where my head's at. With this like it there's a lot of uncertainty whether – where the unemployment rate's going to go. I mean, where, what the Fed's going to do, 50, 25. It just seems to me like this period, the next couple months, through the end of the year, should expect volatile swings. I mean, we're seeing it almost daily, depending on if there's good news, bad news. I just, what are your thoughts on? Yeah, go ahead, Dan.

Dan Ferris:               I just, I just have another question. Like, if – in macro, as a recent guest, Bob Elliot pointed out, in macro, having the divergent viewpoint, right, of figuring out what everybody expects, and then finding a realistic way to assess that maybe something completely different is going to happen, and being right about it. That's where you really, really can make your macro chops shine. So nobody is talking about anything else, but how much is he going to cut 25 or 50, and Mr. Wharton, 75, whatever. And that's what the world is obsessed with at this moment. I wonder what's the divergent viewpoint there, 100 basis points? Zero? He says he's going to cut.

Pete Carmasino:       That would be reminiscent of the '90s, right? When you get an emergency fed rate cut. I mean, that would be markets in turmoil. It shows all over the place. It would be totally disruptive. I think the wild card is Japan. I really do. I think they're unwinding. Where they're – they've got to raise rates and protect their currency. Even though our currencies come in a little bit, their currency has risen in recent months.

And I don't call it a "safe haven," but it's been the better performer in the last 30-some odd days than most other currencies. Yet at the same time, that was kind of what jarred our markets there for a couple of days in the beginning of August, right after the Fed did nothing. Now, imagine if he had cut you there. Right? That would have been, I think it would have exacerbated the sell-off. But Japan sold off 12%. Like that was like one of the worst days since 1987 for Japan or something. And then rally back 10%.

And to your point, Corey, we're seeing these back-and-forth movements. You get these bookends, right? You've heard this myth, if you missed the 10 best days in the market, blah, blah, you'll underperform. People forget to tell you that the flipside of that equation is they're bookended by the, sometimes, the 10 worst days in the market.

Dan Ferris:              Yeah. They happen right next to each other. Yeah.

Pete Carmasino:       Literally right next to each other. It's insane. And so it's hard to kind of fair it out, all right, is that something that, is this a buying opportunity, or am I just seeing a bounce, and then I'm going to see lower lows. That's where I think technical analysis comes in. When you start to see a series of those lower highs and lower lows on any chart, whether it's an index, an ETF, or an individual stock, or a commodity, like copper, lumber, things of that nature, those trends persist. And I think that's really what we're starting to see.

Like, we could talk – we'll get into sectors, and things of that nature that we're seeing here at Chaikin, but I think at the same time, you've got to realize that, yes, rates are going to be, for me, it's always been, it's always been the three-legged stool. It's rates, bond prices and the dollar, right? This is what's driving – it's the cost of money. And how much you're willing to be either in debt at what rate, or how much you're willing to purchase debt at what rate.

And so I would think that if you saw what we did in from the Treasury standpoint, we issued a lot of short-term debt really fast. Why? Well, because that was an easier thing. We had buyers there, because they wanted, apparently, they wanted to be paid more for their risk. So again, that's a macro kind of view of the bond market. But at the same time, I think we have to be cognizant that rates are going to drive volatility and returns, and that's driving sector rotation right now.

You're starting to see tech, and semis, and things of that nature take a breather. No one else is – what's rallying? Utilities. Staples. REITs. I mean, it's not a secret. It's out there, right? We – everybody can see it if you just look at a performance chart.

Dan Ferris:               You mentioned semis. I mean, there are breathers and there are freaking breathers. [Laughter] I mean, that's a freaking breather, right?

Pete Carmasino:       That's a halftime. [Laughter]

Dan Ferris:               Yeah, that's a halftime show. It's like Janet Jackson for a half an hour.

Pete Carmasino:       Yeah, it's true. And you know true. I mean, and you're starting to see topping formations in, in the VanEck Semiconductors, SMH, you're starting to see the little topping formations. And again, they can surprise us, right? Obviously, they've done this. They've always surprised me when they rally to levels that are just unfathomable. But if you're not in them, you're not in the best part of the market sometimes. But sometimes they turn around, turn, turn, turn tail on you pretty quickly.

So that's the risk is, again, those 10 best days, worst days are surrounded, they bookend each other. Don't get caught looking at the waves. Look at this underneath the surface and see what's going on, because things are changing there, too. So again, I look out for lower highs, and lower lows and a period of breaking long-term trends. That's just the beginning, potentially, of a trend change or turning point in the best performing sector sometimes.

Corey McLaughlin:    Right. You mentioned all the things that I've been thinking about. Japan, the rotation into defensives, with staples, healthcare, bonds. I don't know what else to talk about right now. But it's, I guess – how do you, how do we know, or how does, how is a person to know if this rotation and the sell-off in semis, and some of those, the popular, the mega-cap tech that we've been seeing the last couple months, versus the more boring defensive sectors, how are we supposed to know if that's a, if that's just rotation within a bull market, or whether it's turning into something different?

Pete Carmasino:       So, sometimes I can be the most bullish bear you'll ever meet. And I find opportunities that are bullish inside of – whether it's corrections or pullbacks or whatever a bear market, determination is nowadays, right? We just had a massive 15% pullback in the QQ, right, the Nasdaq 100 rather quickly, right? But yet it turned around and came back to levels, except it did not make a higher high, neither did the S&P 500. So that right there is the first tell again. The dominoes have to fall in order. I think that's sort of the takeaway today.

So when you start to see those trends either break to the downside and fail to rally at a new high, while these defensive sectors are basically coming on the field, right, replacing the offense like, so to speak, it's football season, so you start to get that, that feeling and the understanding that, OK, things are getting a little toppier. So I always look at we have to remind ourselves, and I think I forget a lot of times, is that these indexes are cap-weighted, right? So the Qs, and they're being driven by the Mag Seven, whether it's on the way up or on the way down. And that's kind of what's happening here.

So when you start to see staples, right, XLP, will take that, the SPDR sector ETF, that's starting to outperform SPDR, and the Qs. And when you start to see that, to me, that's an area that could be defensive. Now we – things can change rapidly, especially in an election year. I don't remember, rewind four years ago, or more than that, let's just say eight years ago now, when Trump got first elected, I think that the futures market fell, who knows, 900 points, 1,000 points that night. And that was like the biggest –

Corey McLaughlin:    Yeah, Dan knows. That was one of Dan's favorite nights.

Dan Ferris:              Oh, god...

Pete Carmasino:       Yeah. And that was a famous investor, Carl Icahn, I think left, left the celebration party to go buy the futures. Because he was like this is wrong.

Dan Ferris:              Best crisis ever.

Pete Carmasino:       Yes, honestly. And so this is what I'm saying. So this, these things can have that capitulation moment unexpectedly. Remember, we also saw a few Christmas Eves ago, it was a slaughter at Christmas Eve. It was down 600 points on the Dow, things that nature, yet that turned out to be another buying opportunity. So I think that there's, there's always opportunities somewhere, to your point, Corey, how do you know whether we're in that turning point? I always think that that's really our job, as you know, sort of market participants, and market strategists like myself, is to kind of find, where are we going. Where's the wind blowing, and how do we adjust the sales to get to our destination, which is profit land? That's where we want to be.

So we have to be cognizant and understand that these stocks aren't our friends, and sometimes you bet against your best friends, whether it be tech, or semiconductors or software, whatever case may be, and you move into utilities. I want to make a point that utilities, staples, and especially REITs, are really bond proxies, if you think about it, for those institutions that are equity – mandated to own equities. That's in their charter. So they can't buy bonds. Well, guess what? They replace those with utilities, REITs, and staples. And even really high-dividend-paying stocks as well.

There's some household durables that are, that are part of that. And consumer discretion, not discretionary, but consumer staples spots, like your Proctor & Gambles, your Cloroxes, things of that nature. They're being bought because they do have a nice dividend, and they are a safe haven, and they've underperformed. So they've got a three, they check three or four boxes pretty quickly. I don't want to call them value traps, but at the same time, they might be great opportunities for the next three to six months before the new party starts.

Dan Ferris:               Yeah, I'm sitting here looking at an epic rally in XLU, the utilities SPDR sector fund, from about 60 to about 77, as we speak, which is, these are utilities. I mean, it's, that's a freaking, that's a rocket in utilities.

Corey McLaughlin:    Yeah, utilities is interesting, isn't it? Because it's typically defensive, and it is again, but then it also was riding this, like, AI wave before.

Pete Carmasino:       Oh, the data centers. Yeah, absolutely. Absolutely.

Corey McLaughlin:    Yeah, data centers, so I don't know how to think about it anymore. [Laughter]

Pete Carmasino:       Well, it has one other aspect that, again, I tend to forget when I do the research, I go, "Oh, that's right." And that's, they're just domestically based, right? There's no foreign currency issues there, right?

Dan Ferris:              Yep.

Pete Carmasino:       So that's another positive, especially for them, and reach for the most part, as well. So I think that there's a comfort level there, and there's a tailwind, especially into a scenario, where rates might continue down, back to what level, I don't know. Again, the unemployment rate will determine what level rates go to, right, so interest rates go to. So that's going to be a show worth watching.

Dan Ferris:               Utilities are a little tough for a value guy. I mean, XLU is like 23%, Next Era and Southern, and they're 3 times freaking book. I mean...

Pete Carmasino:       I know, look away. You'll turn into stone.

Dan Ferris:              Yeah, look away. It's just like, [laughter] it's tough.

Pete Carmasino:       Don't look them in the eyes. [Laughter]

Dan Ferris:               To be fair, it's been tough for me the whole way up. So I copped to that instantly. I don't pretend. But yeah, but I've got, I've been in staples and healthcare for a while, so I'm ready for them to start moving as they, as they have. But utilities, I could just never do it. I just couldn't do it.

Pete Carmasino:       Yep. Yeah, they're hard. I mean, honestly, they're hard. And then the ones that you do find that might be more value-oriented from that, price to sales, price to book, or whatever you might be looking at, or even P/E ratios, then you start to wonder, why are they down so much? What are they thinking of? What did they miss? Are they doing something wrong? I doubt it, but they might be in less populated areas. They may have exposure to data center – there's a myriad of things that could be happening in there.

But I love the data center thing. That's been something I kind of grabbed on to early this year, found some opportunities, and then that kind of changed rather quickly. Obviously, when, I guess it's, it was more political than anything, right? Because if we're going to go back to lower energy prices, let's say, if Trump is elected, obviously, he's going to drill, baby, drill. That's the mantra. And yet, at the same time, maybe that's why oil is pulling back. We were talking about that earlier.

We're seeing oil come into the buy zone, right? I started a chart. I don't know it was. It was a day, October 22, I think, or October 18 of 2022, is when the White House made the announcement, which is kind of a silly thing to do if you're going to be buying a massive commodity, they told the world, "We're going to buy between 67 and 72." Well, guess what? Oil has rarely got below 67, and when it's been above 72, it's not above there very long. But it is trading there at the bottom of that range right now.

And I believe I counted this correctly, it's the seventh time since they made that announcement that it's got back to 67. So I don't know if that's in any textbooks, as far as you know, seven bottoms. I don't know if there's an eighth bottom coming, or not, or a bounce up...

Corey McLaughlin:    There is somewhere probably.

Pete Carmasino:       There's got to be. Right? I mean, somebody's – if they're not hitting the buy button here, what are they actually saying by that [crosstalk] SPR.

Dan Ferris:              Yeah, it's this famous septuple bottom. It's a...

Pete Carmasino:       That's right. [Laughter]

Dan Ferris:              A very well-known chart formation.

Corey McLaughlin:    Oil puts bottoms.

Pete Carmasino:       That's right. [Laughter] Just discovered in the ex-Roman Empire.

Corey McLaughlin:    The White House put bottom.

Dan Ferris:              Yeah, that's right. That's right. [Laughter] Yeah.

Pete Carmasino:       That's right. But I'll send the chart over to you guys after this, but I think it's pretty interesting. And the trend, if you look at price action, and even moving averages, or whatever indicator – I know you guys are, I'm more technical most, most likely than you are, but at the same time that trend looks lower. But again, 67 has been sort of the backstop. And I guess markets are testing that level for that specific reason to see are there buyers there? We know from price discovery, being traders, been in this business for a long time, price discovery. They test levels to see if there's, are there any buyers here? If not, how about 66? Any buyer? How about 65?

Well, maybe there's a slew of buyers at 65, and that starts to push the price back up, but it comes into production, and OPEC, and there's obviously disruption over there from geopolitical problems. So you name all of those, and oil seems to be going, well, we're going to – it's been lower. So it seems to be shrugging off all those issues.

Dan Ferris:               Yeah, Pete, I need to go back and talk about something for our listeners' sake, just to clarify it. And you talked about the dominoes having to fall in in the right order. Can you be a little more specific about that? And just sort of tell us exactly [crosstalk] –

Pete Carmasino:       Sure. Well, it's, you're talking about unemployment, right? So, we started to talk about the that trickle effect. In other words, it starts off by hundreds, and then all of a sudden, the headlines go to thousands, right? Then you start to see, well, copper. They call it Dr. Copper, for a reason, right? It's got a Ph.D. in economics, apparently. And copper topped out in May, I think was May 21 this year, has been slowly moving lower, but persistently lower. Then you see the lumber prices lower.

So does that mean – is there demand destruction? I would imagine, at certain rate levels, yes. So the dominoes are falling. You started to see, again, this seems like it's not a falling domino, because I'm talking about something going higher, but utilities, staples, REITs, all moving higher. Right around that same time frame is when they really started. But I would say for most of the year, they've done extremely well. But for the last six months, they've been, I mean, they've outperformed most of the major indexes.

So now you're looking at those dominoes are all kind of falling in an order. And all of a sudden, here comes the unemployment rate ticking higher. And the Sahm rule. And then guess what? We're going to get rate cuts. And so all of these, and the dollar has come in a little bit. Then Japan is – so all of these things are being manipulated by one another. That's the cycle that we can't control, the business cycle is on as much as we like to think so from a monetary policy, things are happening out of our control. We have to react to them.

The mandate of the Fed is to price stability, and that doesn't mean stock prices, and unemployment, low unemployment. So they failed, it feels like, on price stability, because we're looking at prices 20% somewhat higher in just a few years, even though they're getting to their target inflation rate. But now unemployment is moving up. So once the scale – the scale only stays balanced for a few weeks, it seems like, because one's either moving higher or lower, and now you got unemployment racing higher to our point earlier. Where does it, where does it have to get to where it's one of those emergency rate cuts?

So those dominoes, I think, have been falling one by one, and sometimes they don't make it all the way through, right? We've seen fits and starts, the markets has ebbs and flows to it, and then something really positive comes out. Nvidia's new chip, it's going to change the world and cure cancer. And all of a sudden, Ozempic comes out and says everyone's going to, [laughter] everyone's going to lose weight, and we have an AI tool. I'm making that up.

My point is, is that all of these headlines are – people run and they see something shiny, they go after it. It pushes indexes up. It pushes up sectors. But under the surface, I always talk about that riptide of the market, things are moving into place, and it's like a, it's like a chessboard, right? Your pieces are where they need to be to win. And I think right now, the next move on the board is rate cuts. And potentially, we got CPI coming out again, we have that's going to be sort of a measurement that the Fed's going to have to pay attention to, too.

Dan Ferris:               Right. I mean, they claim to focus squarely on PCE, but we know they're focused on the headlines.

Pete Carmasino:       They love headlines. They love to talk, too.

Dan Ferris:              Right. And they love to look backwards at data.

Pete Carmasino:       Yes.

Dan Ferris:               Look at all that data back there. I guess we better do something.

Pete Carmasino:       Yeah. Yeah.

Dan Ferris:               Yeah. So it sounds like, just making it more concrete in terms of a trade, it sounds like you, you like staples, like, that's one of your trades right now.

Pete Carmasino:       Yeah, we've been migrating. And I always thought that it's a migration, right? For me, it's always like a, it's always a stair step. Not so much a fireman's bowl, right? You don't get down, you don't get – rotate that quickly. You stair stepped. You either – you're topping out on one sector, and potentially turning up on another one. And to get those two, that timing right perfectly, it's almost impossible.

But as the clock goes, 12:00 is the highest, 6:00 is the low. If I can get in at 7:00, or 7:30, or even 8:00, I'm happy. And if I can get out at 1:00 or 2:00, I'm happy there, too. So I don't have to get the top or the bottom. But yeah, we've been slowly migrating our subscribers and our readers into something that's a little bit more defensive, but not letting go of some of the more growth-oriented areas.

And you might see, software might start to perform better than hardware, right? So that's a little bit more sticky. It's more of an annuitized business. You saw, I think Oracle just came out with nice earnings. Adobe's kind of firming up. So those types of names they're feeling a little bit, I would think, I would think more opportunistic. But still, it's not an overweight situation. It's not, "Let's go in and grab every share we can." It's like, "Yeah, I'll take exposure, but I feel like I can get it lower as well."

So yes, staples, utilities and REITs have been flashing on my, I use a screener, and they've been coming up every time. Like, well, here we are again. Here's another REIT. Here's another REIT. And it's, and it's widespread. It's from office. It's retail REITs, specialty REITs, like data center REITs, and even health care REITs have done really well, but you're starting to see residential and even some office REITs, as I said, which was surprising to me. I think that's more of an interest-rate trade rather than a quality trade, but I think it's the tailwind is lifting.

And even some high dividend paying like the Dividend Aristocrat list of names, they have at least firmed up depending upon what industry they're in, some are better than others.

Dan Ferris:               Yeah, speaking of interest-rate trades, housing is sensitive to rates. And the homebuilders, of course, just before they really took off like a rocket recently, I sold them, of course, every single time, right?

Pete Carmasino:       Yeah. [Inaudible]

Dan Ferris:              Yeah, well, if I didn't sell them, they wouldn't have taken off.

Pete Carmasino:       It wouldn't have gone up.

Dan Ferris:              Right.

Pete Carmasino:       You did it for everyone else.

Dan Ferris:               Yeah, I took one for the team. Everybody else's team, not mine. My team's looking at me thinking I'm an idiot right now.

Pete Carmasino:       [Laughter]

Dan Ferris:               But so, the situation is still the same, like existing home sales are like nowhere. They're basically nonexistent. Existing homes are not existent in the market. And I wonder, I just wonder about, among other things, the potential for lower rates to kind of increase that supply of existing homes. Because the lower it goes when – if it's gets down around five, if the mortgage rate gets down around five, that's where that huge block of folks who feel trapped by their mortgages begins. It goes five down to three, and sub three, [laughter] some of us.

Pete Carmasino:       Mm-hmm. That's true.

Corey McLaughlin:    Oh yeah.

Dan Ferris:               And it's just, it – I wonder, I wonder what that supply/demand balance looks like. Because it's still super – the market is still very tight by any measurement.

Pete Carmasino:       I think, as real estate investors or owners, and look, there's a lot of people who own second homes. That's really, there's a lot of these homes that aren't even on the market because they're vacation homes, they're family homes, they're homes that have been passed on to generation to generation, but there's a lot of homes that were just purchased in the last four years because of rates, because of the work from home, work from anywhere, right? Because of potentially not being able to do something in one state when you could do it in another more freely, whether it's go on a boat, or go to a restaurant ,or whatever it was back then, because of the pandemic mandates and things of that nature. So that played a huge part in it. And obviously, rates went higher, so they're kind of locked into them.

But if you start to do the math, and I look at this from a standpoint of payments, people buy a payment. They don't really buy a price of a house. So if they can afford it, it could be that the house that's $580,000 today at one rate, it might be the same payment if it the price was 625, at a lower rate. They don't care about that price. They care about that payment. So that, to me, is the best of both worlds, because the buyer can still get the payment they want, and the seller can get a higher price.

I think that's what we're going to see because of rates coming down. So to me, that unlocks an opportunistic time frame, or period for both the buyer and seller, that's also threading the needle. But at the same time, it's not the right time of the year to be, to be a seller, right? It's typically spring, definitely somewhere through the month, months of summer, where folks are moving and trying to get their kids into school systems, things of that nature, first-time home buyers, whatever it might be.

But there's a seasonality to real estate, and I think the season probably might come a little early this year if we see rates – I mean, some people are saying we can see 100 basis points lower before the year's out. I would be amazing to me. I think that would prove beneficial for the January through May months of real estate in that sector.

So I think what's happening is prices might increase slightly, or not fall, where the payments might get better for folks to pay those current prices. But you can't, you can't deny the one thing. You are seeing a softening in real estate prices in the last six months or so, maybe even this past year. So, there's an equilibrium. Some people are coming off the cloud prices a little bit. You're seeing prices tick down, but rates have stayed firm. Now buyers are acting, but if rates come down further, they're going to act. I think you're going to see more houses for sale.

Dan Ferris:               Yeah, makes – I wouldn't ask anybody to make a big prediction. It's just sort of what's more likely, and I think that idea of threading the needle makes a lot of sense. Yeah, and certainly we know lower rates, we know lower rates, higher asset prices. Like, generally, right? Generally.

Pete Carmasino:       Typically. Yeah, you would think. You would think that money, when the cost of money goes down, asset prices are supposed to go higher. But again, if you get over supply, we know what happens there. So that's that threading the needle. We don't want to see a flush of new real estate for sale either, right? Because now, what is that? That's a buyer's market. And in a buyer's market, prices go down. So that's the that's that extra, what's the word, outlier that could, that could potentially disrupt the market a little bit. We don't want to see that.

But at the same time, we do have a housing shortage in this country, and builders have done extremely well, as you noted. And even some of the supply, the suppliers that he built, these builders have done well, but I'm seeing a rotation to the downside in some of those areas as well. Typically, and mainly, I should say, is machinery. That specific sector has come up on my radar just recently in the last several weeks, as showing me negative relative strength of the S&P, which means it's underperforming, the S&P. And that typically means a lot lower price for that, for those asset or those sectors.

Dan Ferris:              Right.

Corey McLaughlin:    Interesting. Yeah, I got to tell you, from, from one more thing on real estate and home builders, the fundamental case, I think, guys for homebuilders, like, is not going anywhere, anytime in my lifetime. I don't think I am, maybe fair to say. So there's, so I have friends, around here and in that in the housing market right now. And like, the only houses that are being bought, at least in our area, are, like, going, like, all cash deals right now. Like, it's still, still, still. And it's extremely tight. Even if you can afford, you're getting outbid by somebody who's got all the cash for it.

And so I still, if rates go down, to me, real estate's local, of course, but it's going to unlock, I think, more activity on balance than maybe lower housing prices.

Dan Ferris:              More demand and supply.

Corey McLaughlin:    Yeah. Yeah. Yeah.

Pete Carmasino:       Well, that, I don't disagree. I think there's something, and this might come out of left field a little bit, but there's something that I've been kind of thinking about and understand. And the question is, is being raised by what you just said. Where are these folks coming up with this cash? In other words, first-time homebuyers walking in and buying house for half a million dollars. That's typically not normal, right? Is that, is that what you're saying when you said their cash deals, or are they just kind of across [crosstalk] –

Corey McLaughlin:    Not necessarily first time, maybe second time, but they're getting help right from other family members, from their retired family members, who are – have a ton of assets built up over time and are helping out. And that's the only way you're able to get it.

Pete Carmasino:       That's what I'm, that's exactly what I'm getting at. And that's because the lifetime gift estate tax exemption is changing, so people are forwarding, paying forward, in other words, allowing folks to take the gift while those folks are still alive, before the limit is reduced in 2025. So it's currently – last year was 13.6, and I believe it's going to be projected down in 2026 down to be seven million, right? So almost half of what it is.

So I think that's part of why we're seeing more cash transactions, especially in hard assets, rather than specifically equities as well. So yeah, I think there's, there's, there's an accelerant. Now imagine if that changes, right? And imagine if there's a new party, well, let's say it's Trump, and he extends or even increases the lifetime gift exemption. You might lose those buyers. So I think that's that – there's another piece and of the puzzle there. It's very small, but it just does, it does affect certain markets, and real estate will be one of them.

Corey McLaughlin:    That's interesting.

Dan Ferris:              Right. So explain that to me again, like I'm five years old.

Pete Carmasino:       [Laughter] So, if you're as Corey said, there's folks who have obviously accumulated enormous wealth. And you get, you get to give away tax-exempt gifts to anyone, really. Typically, it's family members. So if you're Daddy Warbucks, and you sold your company for $60 million four years ago, and you happen to invest it, and now it's worth $100 million.

And you got three kids, well, you can give each one of them up to 13 – if you haven't given them anything, I'm sure they've given gifts along the way. And that's their, obviously, from a tax standpoint, and this is not tax advice, it's just a general, a general rule that you have a certain amount of money you can give to someone who receives it tax-exempt, and there's a lifetime limit on that. That limit, in 2024, was $13.61 million. So you can accelerate gifting while you're still alive, right? "Lifetime gift estate tax exemption" is what it's called, and that is obviously new money, and new money buys things with it.

Dan Ferris:              OK. I got you.

Pete Carmasino:       So whether it's houses, cars, vacations, you're seeing a lot of people take tremendous vacations, and maybe buying these second homes in places like Florida, where I'm at, and maybe even up and down the East Coast, North – the Carolinas, things of that nature, or even as far up as the New Jersey beachfront properties as well, which have done incredibly well over this past, these past four years. So there's a little bit of that happening.

And so if mom and dad have accumulated a lot of assets, and they want to see their kids use it and be proud of it, while they can watch them accumulate it and use it, and using it respectfully most of the time, I think that's what Corey was getting at. You're seeing people come in, boom, cash down, no negotiation, close in three weeks. You know what I mean? Remember, used to buy a house, it would take months to buy a house. People are buying houses in weeks. [Laughter]

Corey McLaughlin:    Nobody wants to do that.

Dan Ferris:               It just makes what kind of an economy would we have if the incentive was to accumulate, and invest productively, large amounts of capital, instead of chopping it up and giving it away before the government steals it. What would we be – and if we measured economic growth and economic health in terms of capital formation, and the investment of capital, rather than having that be one little part of spending, right? We measured by spending. Anyway, that's...

Pete Carmasino:       Absolutely. Yeah, you're right. That's right, consumer purchases. And what else are we seeing even today, to get into that, we're starting to see people really reach for their credit card way more often. So credit-card debt is at an all-time high. So those are the folks that aren't getting those lifetime exemptions. Or maybe they are, and they're just doubling it down on it, or using their credit card and not their cash. I don't know.

My point is, is that that seems to – people say, "Oh, don't bet against the consumer." I don't necessarily disagree with that, because lifestyle is a habit. You get into a habit of buying Starbucks every day. You get in the habit of buying the nicest clothes, or shoes, or having the nice cars, whatever. But at the same time, there's a limit to that. And where that limit ends, it seems to be keeping – it keeps extending, you know what I mean?

Dan Ferris:              Yeah.

Pete Carmasino:       The U.S. government's not giving good – setting a good example on that, either. But that's a different story.

Dan Ferris:              Right. Yep.

Corey McLaughlin:    Yeah, it's all part of the same story. I always come back to, it's all inflation is what I end up coming back to in the long run.

Pete Carmasino:       Yeah, and inflation is older than time, right? It's just, that's just part of the deal. And quite frankly, if you really think about it, isn't that why asset prices move higher? Yeah, I can tell you what my parents bought their first house for, right?

Dan Ferris:              Yeah. Me, too. [Laughter]

Pete Carmasino:       For $4,000 or something. It was ridiculous. And I think we sold that house, who knows, for close to $200,000 or whatever it was at the time, what they needed to sell it. But, but again, what an investment. But at the same time, first-time homebuyers, I've got family members buying first-time homes for $500,000, right? That's a, that's an adult number, real fast, but is it really – think about that $4,000 to $500,000. But who knows? My parents probably weren't making that much money, but they could afford that 4,000, so it was all relative, right? Our incomes today are out of control.

Dan Ferris:              Yeah, they are.

Pete Carmasino:       And that's, that's really what it comes down, that's what it comes down to, that payment, I think that payment we talked about earlier. I think people look at the payment. They go, "Well, we can do it. So we want to live in that neighborhood. We want our kids to go to that school. We're buying that house because we can afford it today." [Laughter]

Dan Ferris:              Yeah, my –

Pete Carmasino:       They [crosstalk] to afford it.

Dan Ferris:               – parents did the same thing. I don't know what year, I think my father got this big raise. He was making, like, $6,000 or $7,000 a year. And then he went to work for some government job, and they paid him like $14,000, and he had like, four or five kids already. He had no choice, right? And they bought a $15,000 house. They shot the works, you know? [Laughter]

Pete Carmasino:       Yeah. Yeah, right. Right. More than two bathrooms, oh my god.

Dan Ferris:               Yeah, that's right, more than two bathrooms. It's like, the wife, and the kid, and everybody can go to the bathroom all the same time. It's incredible.

Pete Carmasino:       [Laughter] And a garage, what a waste of a space.

Dan Ferris:               Yeah. Three bedrooms, three bedrooms upstairs. What the hell. Of course, they had so many kids they had to go down cut the garage in half, and build another bedroom.

Pete Carmasino:       Exactly. It's true. If you think about it, and that's – a lot of people, they talk about cars – don't even look at the car prices are. That, to me, is shocking. That's really more shocking than anything. That's shocking. So you're seeing pickup trucks going for $150,000. I mean, you better be able to make some money with that pickup truck, because if that's just for show. Wow.

Dan Ferris:               But it's interesting though, it's what we're doing is we're telling the story that's told all over social media every day, and in the press someplace. Like our parents were like, one-income household, plenty of kids. Some went to college. Most of us went to college, almost – five of the seven, and the parents helped out to some degree, on every single one of them. And now, it's like two incomes, and can't afford a house, can't get it done. Keeping the car – the car fleet in the United States, as you point out, is they're so expensive. It's older than it's ever been. I think it's like, I think it's hit 13 years or something. It's incredible.

Pete Carmasino:       Yeah, and some people prefer those old cars, right? There's less to break, there's less sensors. There's – some folks are kind of happy with that in a way. I'm in middle of the road there. I'm not exactly sure about that, but I – there are some old cars I wish I could buy right now, like '69 Camaro Z-28 or something, one of those old muscle cars, redone. That'd be great to have. But it's probably a $100,000 car. That was – we could have bought it new for probably five grand.

Dan Ferris:              That's right.

Corey McLaughlin:    And to your point about the housing. Like, not only can people not afford them, that's one thing, but just the availability, going back to the homebuilders, like, even, I think, I think, like, a younger generation would be open just buying, like, a normal house, [laughter] modest, like what you're saying, like it always was. They're just not there. There's not the population growth has well-outpaced the supply, and so it's just not even there. And so, yeah, part of that, I feel like it's just the millennial generation finally becoming adults, and things will change eventually. But...

Pete Carmasino:       Yeah, I think so, and I think that's what we're talking about. We're talking about, again, the dominoes falling in order, and those – that's where rates have to move first. There's got to be some relief there, right, in that area of asset. And if you think about it, I mean, we all know this, and it's been said a million times, but it is an incredible driver of the economy. Once you buy a house, you have to put stuff in it. And there's a lot of stuff to buy. There's – then you're going to fix it up. Then you're going to go to Home Depot. And you're going to get painted. And then you're going to hire a local guy to come do the roof.

And so, like all of these things, that is what keeps the economy going. But if you're a renter, you just pay the rent and call the person who owns the place when the sink leaks. But that person still has to spend the money, and so on and so forth. So at some point, owning real estate, obviously drives this economy. And so the more folks we can get in homes, obviously that's where that stimulation comes for.

And again, that's that full circle, and those – the dominoes falling in order, that can't happen until people can get into a home, be there for several years and obviously support themselves and the economy at the same time. But you have to do it with a lower cost of money right now. And that's what the – that's what we need, right? That's what folks are saying you need.

Dan Ferris:               All right. We have – it is time. Let me make sure I'm correct. Yes, it is time for our final question. It's the same question for every guest, no matter what the topic, even if it's nonfinancial, whatever the topic. And if you've already said your answer, by all means, feel free to repeat it. But the final question for every guest is, if you could leave our listeners with a single thought today, what would you what would you like to leave them with?

Pete Carmasino:       Yeah, I think it comes down to this. So I'll start here. I think it comes down to, we're listening – you're listening to us because we're talking about investing the markets. You know what's happening. We're trying to, not so much predict, but maybe anticipate what's happening out there in the markets. And you never want to have FOMO. And FOMO is the "fear of missing out." And to avoid having FOMO is to be invested. And to be invested takes discipline.

And I think if you're unsure about certain sectors, or markets in general, whether it be the bond market or the equity market, but you want to stay invested, find something that is easy to do. In other words, ratchet down where you're invested if you're uncomfortable. If you're having trouble sleeping at night, maybe go to an index fund, or stick to a high-paying dividend, money market, or something of that nature. My point is that don't ever feel like you're missing something. Stay invested, especially if you're young, because you've got so much time to get through this.

And if you go back and look at dollar cost averaging methods over the past even 15 or 20 years, you'd be really surprised at what a certain amount of money, every single month, no matter what, would have done in those time frames. I don't think that's going to go away. And so I speak to people all the time, especially young folks, and I try to ask, are you buying your company's stock? Are you investing? "I don't even know how to start." And I said in this day and age, you've got to, a) start, and b) got to stick with it. So the takeaway is, it's discipline, and don't ever – try to avoid the fear of missing out by already being there.

Dan Ferris:               Oh, that's a beautiful, beautiful summation right there. Avoid the FOMO by already being there. Thanks a lot for that, Pete. That was, that was a great answer. And it's always fun to talk to you. I'm glad you could come and talk with us.

Pete Carmasino:       This is fun. I love this. This is great. We can go for hours, but I appreciate, [crosstalk] I appreciate the opportunity. [Laughter] Thanks so much.

Dan Ferris:               You bet. I think we do a good job of getting fun folks to talk to, who also know what they're talking about. And Pete is certainly one of those, just a fun guy to talk to.

Corey McLaughlin:    Yeah, Pete's great. I love Pete, partially because I find myself, I think, looking at similar things that he does. And so when he brings up all things that I'm interested in, and think are important, I go, oh, yes, of course. I agree with this. And I would love to keep talking with you. And that was the case here. I do think all the, seriously, all of the different recession signals he brought up, and is it a coincidence? I don't know. I don't think so. And so I'll be keeping an eye on it. But at the same time, the longer-term trends are still up since 2022, and there's opportunities to own things, to buy things, in those defensive sectors in particular.

Dan Ferris:               Right. Yeah, I was glad to hear him talk about that. I feel similarly to the way you do, because I thought I've been in some of the defensive sectors for longer than they've been outperforming, let's just say. They've only just started to perform better. And it's good to talk to a guy, who's much more in tune with what is outperforming, and what has momentum, and what's attractive right now, which is not usually what I am.

I'm usually more about fundamentals. I look longer term. And I think, well, this will outperform or begin doing so within the next several months or a year. And you better own it now, because we don't know when that's going to start. So when I hear a guy like Pete say, "Oh yeah, staples are looking really great." I'm like, hey, finally. I was only there six months ago. So, it's nice to get a little confirmation from someone like him.

Corey McLaughlin:    Yeah, well, which was just the right time, because now they're making new 52-week highs, the staples are, so you're good.

Dan Ferris:               Yeah. Yeah, I did okay, I did okay with those. Totally missed utilities, though, which it's the weirdest thing, isn't it? Like, that's the one I figured, well, there are monopolies and stuff, and they're safer, but they're – legally, they have their returns capped, usually, at something like 12%. So I'm like, well, if the most they're going to make on the capital is 12% return, I'm like, over time, they're not going to scream. But of course, that was just right before they took off like rockets, [laughter] that I was thinking that. So, you just never know exactly how things are going to work out.

Corey McLaughlin:    And well, you still, you still might be right. And because, to the, to the point of these recession signals, yet people, the defensive sectors are kind of outperforming, definitely, like the mega cap, tech, and whatnot. You still think, OK, if the market is there now, then what comes next, like, three, six months after that, if the unemployment rate goes, keeps going.

I think maybe you brought, you brought up this question, like, OK, everybody expects the Fed to cut. What if they can't, or won't, or don't want to, or cut enough? Like, what if they can't – or what if they need to cut more than the market expects right now. And that's the bigger risk I think about, like at this point of the business cycle, where does it – people are fully – not fully. There's a lot of more people are expecting a slowdown now than before. But then, what does it look like? And then what all happens then?

Dan Ferris:               I'm going to say, I'm going to say, when lots of people are really expecting a slowdown, it looks different than S&P 500 within 3% or 4% off a new all-time high, just right off, just right off of my head. You know what I'm saying? [Laughter]

Corey McLaughlin:    Yeah, probably certain people. Yeah, you're right, yeah.

Dan Ferris:               And near its – most mega-bubble, cyclically adjusted earnings ratio and stuff. Probably when more people think it, it'll be time to buy, right? [Laughter]

Corey McLaughlin:    Yeah, okay. That's exactly what I'm saying.

Dan Ferris:               [Crosstalk] know it's more of the people we listen to, you know?

Corey McLaughlin:    Yeah, I always get caught – and that's the thing. I always get caught up in this, like, think, seeing all this stuff, and then being like, well, what, why is it still going to take six months to play out? Well, because it does. I guess that's, that's what happens, so...

Dan Ferris:               Right. Nobody knows the future. So, there's the discounting right now, and then there's the actual future that takes place. And it's, [laughter] it's often, it's frequently different than the discounting. Discounting, another word for a bunch of folks who think they know what's going to happen and are not always right. But anyway, great to talk to Pete and hear what he has to say, and how he's positioning himself and his readers. And, another fun conversation, that's another fun interview, and another episode of the Stansberry Investor Hour. I hope you enjoyed it as much as we did.

We do provide a transcript for every episode. Just go to www.investorhour.com. Click on the episode you want. Scroll all the way down, click on the word "transcript," and enjoy. If you like this episode, and know anybody else who might like it, tell them to check it out on their podcast app or @investorhour.com, please.

And also do me a favor, subscribe to the show on iTunes, Google Play, or wherever you listen to podcasts. And while you're there, help us grow with a rate and a review. Follow us on Facebook and Instagram. Our handle is @investorhour. At Twitter, our handle is @investor_hour. Have a guest you want us to interview? Drop us a note at [email protected], or call our listener feedback line, 800-381-2357. Tell us what's on your mind and hear your voice on the show. For my co-host, Corey McLaughlin, until next week, I'm Dan Ferris. Thanks for listening.

Announcer:              Thank you for listening to this episode of the Stansberry Investor Hour. To access today's notes and receive notice of upcoming episodes, go to InvestorHour.com and enter your e-mail. Have a question for Dan? Send him an e-mail, [email protected]. This broadcast is for entertainment purposes only and should not be considered personalized investment advice. Trading stocks and all other financial instruments involves risk. You should not make any investment decision based solely on what you hear.

Stansberry Investor Hour is produced by Stansberry Research. It is copyrighted by the Stansberry Radio Network. Opinions expressed on this program are solely those of the contributor and do not necessarily reflect the opinions of Stansberry Research, its parent company or affiliates. You should not treat any opinion expressed on this program as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion. Neither Stansberry Research, nor its parent company or affiliates, warrant the completeness or accuracy of the information expressed on this program, and it should not be relied upon as such.

Stansberry Research, its affiliates and subsidiaries, are not under any obligation to update or correct any information provided on the program. The statements and opinions expressed on this program are subject to change without notice. No part of the contributor's compensation from Stansberry Research is related to the specific opinions they express. That performance is not indicative of future results. Stansberry Research does not guarantee any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment discussed on this program.

Strategies or investments discussed may fluctuate in price or value. Investors may get back less than invested. Investments or strategies mentioned on this program may not be suitable for you. This material does not take into account your particular investment objectives, financial situation or needs, and is not intended as a recommendation that is appropriate for you. You must make an independent decision regarding investments or strategies mentioned on this program. Before acting on information on the program, you should consider whether it is suitable for your particular circumstances, and strongly consider seeking advice from your own financial or investment advisor.

[End of audio]