Join host Barry Kite as he sits in for Bill Gunderson on the January 16th edition of the Best Stocks Now show. Dive into a thorough market analysis as Barry unpacks the latest trends affecting major indices and the driving factors behind the recent market rally. Discover the significant role played by falling interest rates and robust bank earnings in boosting market confidence, alongside insightful discussions on the state of futures and traditional assets like crude oil and gold.
He’s been seen on CNBC, the Fox News Channel, and the Fox Business Channel. His articles can be found on MarketWatch, Seeking Alpha, TheStreet.com, and many other places. He’s the author of the weekly Best Stocks Now newsletter and the inventor of the Best Stocks Now app. He’s president of Gundersen Capital Management. Here is professional money manager Bill Gundersen.
SPEAKER 07 :
Good morning and welcome to the January 16th edition of the Best Stocks Now show. I am Barry Kite, planner and analyst here at Gundersen Capital Management, handling show duties for Bill today. Look at the markets. We started off futures, of course, were green basically all morning. Now it looks like we’ve got a good bit of red on the screen here. We’ve got the NASDAQ down 0.18%. That’s 34 points to 19,476. We’ve got the Dow down almost 100 points, down 0.22% here. And the S&P 500 down 12 basis points to 5,942 points. We also have crude oil back down below that $80 a barrel number at $79.59. Gold catching a bit of a bid today, back over $2,700. Right now we’re at $2,716. And Bitcoin down $1,200 today, down 1.25% at just under $98,000. But again, welcome to the January 16th edition of the Best Docs Now show. I’m your host, Barry Kite, Planner Analyst here at Gundersen Capital Management, sitting in for Bill. And I also have Jeff Webster, as usual, joining me on the show today. Jeff’s our Vice President and Advisor here at the firm. Good morning, Jeff. How are things going in your world? Going great.
SPEAKER 02 :
Happy to be here today.
SPEAKER 07 :
Yeah, certainly. Bill’s been talking about a lot of these support levels, whether he’s featuring that in the newsletter and the technical analysis part, or if it’s some of his live trading emails that go out and showing some support. various support levels for the markets, and it was nice to see the markets rally yesterday and kind of get a bit away from some of those support levels. So always nice to wake up with those charts looking a little better than the day previously. It really was a really nice rally in the market yesterday. I mean, you had the major markets. You know, all of the major U.S. averages were up. NASDAQ was up 2.5% yesterday, broke a five-day losing streak. It was also the market’s biggest day since Election Day. So it’s interesting. We’re not far from Inauguration Day on Monday. But also, the market had its best day since the day after the election. And so that piece was pretty interesting yesterday. S&P was also up 1.8%, a strong number there. And the Dow was up over 700 points yesterday. It’s a 1.7% really on the back of Goldman Sachs, and we’ll get into some of those banking earnings here later. But certainly a big driver for the market yesterday.
SPEAKER 02 :
It’s nice to see all three markets. do well on the same day it’s it seems like lately you know we’ll see uh the s&p and nasdaq you know in the green and the dow’s down but it was it was great uh to to see things good across the board yeah some other you know it’s nice to see another sector right of the market you know kind of uh
SPEAKER 07 :
kind of rallying out there versus just for the longest time it seemed, particularly from early 2023 on, it was really computer chips and chips and weight loss drugs for an extended period there. So certainly kind of a couple of reasons, certainly driving that broad-based recovery in the market yesterday, really driven by Two things, falling interest rates and then, of course, those strong bank earnings, which they’re the ones that kick off earnings season. So we don’t have a lot of financial exposure, but we welcome it in terms of driving the market forward. And that translates, as Bill always says, you know, we’ve got certainly, you know, interest rates were good news dropping yesterday by 12 or 14 basis points. We’re good for PE ratios and also with the bank earnings, we had good for earnings estimates. So both sides of that. equation both on the P.E. ratio side, meaning the multiple, how much we’re willing to pay for those earnings, and earnings estimates. Both went up yesterday, so that’s always a good driver in the market. And Bill’s been warning, as we know, warning about elevated P.E. ratios, particularly as we’ve seen rates rise towards getting close to hitting kind of that 4.8 number. Numbers we haven’t seen really in the last 10 years, only a couple of times. But yesterday, markets kind of repriced interest rates, particularly at the 10-year dropping. 14 basis points got to about 4.66% yesterday. I think last time I looked, I think we’re ticked up just a tiny bit. I think we’re maybe around 4.68, yeah, 4.67 at the moment today. But that was really driven by, we talked about early in the week what the movers were going to be. Jeff, in terms of what were the big reports, obviously we knew we had some bank earnings, but we had CPI report, we had the PPI report, PPI on Tuesday and CPI yesterday, which were fairly tame reports. And the CPI report yesterday actually had the market price an additional $25. basis point rate cut in 2025. So it’s interesting how just one piece of news can drive the markets in particular fashion. But yeah, I mean, those two reports this week, It literally had the market price in one more cut in 2025 than they initially had priced in. And you’ve got some firms out there that think maybe the Fed might raise towards the end of 2025. And that kind of tampered some of those expectations as well. So all of those, you know, all of that kind of led to that biggest cut. market move up since the Wednesday after the election. Of course, Asian markets, you know, the markets this morning, you know, Asian markets rose as well on the back of the U.S.’ ‘s, you know, U.S. equity markets rally yesterday. We’ll say the interesting story in terms of international finance, and Bill has talked about this a good bit before, is the Japanese yen, it’s strengthened, kind of reaching its highest level against the dollar in four weeks. There’s some word that at the next Bank of America, that they reported today too, but Bank of Japan’s meeting that they may actually raise rates at their next meeting, which could lead potentially, we’ll remember where we had some of the carry trade, uh that fell off uh once uh the bank of japan began raising rates uh kind of i guess it was i want to say it was earlier in 2024 eventually they kind of stopped raising they kind of took a pause and they may there may be kind of a surprise raise coming up which would potentially kind of put a little damper on the carry trade, which we’ve talked about it here before, is that carry trade. And Bill’s written articles on it, too. But that carry trade, you borrow a yen, buy dollars, and then those dollars find… risk assets, well, you know, when you unwind that, well, you’ve got to, you know, pay back those Japanese loans in yen. So you’ve obviously got to sell the risk asset you’re in in U.S. dollars, and then you turn that into yen and pay back the note. So in other words, the borrowing cost of that trade are going to go up, which could dampen the profits and the use of that. So Last time we saw that, we kind of had a pullback. I want to say it was, I’m just going to go back and look at this. I want to say it was back in July. Jeff, I know Bill put an article out around that time talking about the carry trade. But that’s something to be kind of a little wary of, even on the good news of what we had yesterday. Any thoughts on yesterday? I know the quantum names kind of pumped me and bounced back a bit.
SPEAKER 02 :
No, I’m thinking a lot about the banks. I know that Bill’s not particularly bullish on bank stocks, but they all seem to be doing well. We’re seeing great earnings results. A lot of them have attributed to their investment banking. We can talk about that when we come back, about what that means.
SPEAKER 07 :
I’ve got some of those earnings queued up, and we’ll get into those when we come back for the second segment of the Best Docs Now show. We’ll be right back. Stick with us. And welcome back here to the second quarter of the January 16th edition of the Best Docs Now show. I am Barry Kite, your host here today, sitting in for Bill, planner and analyst here at Gundersen Capital Management. We also have Jeff Webster on the line here, our vice president and also advisor here at the firm. Looks like in terms of the market, we’ve got still… Still some red on the screen, a little bit better than when we started. We’ve got the Dow down 0.2% at the moment. The S&P basically flat. We’ve got the NASDAQ down 0.09%, so only down 18 points. Crude oil is still under $80. Gold catching a bid today over $2,700. It’s at $2,715 at the moment. And Bitcoin down just a little bit less than 1%, so not a… Not a lot of volatility there, at least in Bitcoin at this point. So kind of a bit of a risk-off day, it seems like. Have you had a chance to peek at some of those quantum names today? That’s kind of my new gauge for appetite for risk there, Jeff. How are they looking?
SPEAKER 02 :
Well, it… Yeah, they’re actually a lot like Bitcoin as far as their volatility goes. And it seems like they take turns as far as who the big gainers are going to be. I mean, ARQQ is the big gainer today up… Right now, 43, almost 44%. QUBT and QBTS are both up 6% and 3% respectively. You know, my personal favorite, Rigetti, is up just over 100 basis points. IONQ is slightly down today, but it seems like they take turns trading off and on and You know, these companies, they’re exciting. Their investments with them, though, are still very, very highly speculative. You’re starting to hear that they’re striking deals with the government, the Air Force, with NASA, with all these different things. And please do not confuse striking a deal with revenue in many cases. Yeah. Those are deals. Those are things that will help project revenue over the next several years. But revenue has not been realized, let alone profitability. And so they’re still highly speculative. You know, I would encourage individuals to, you know, going out there on YouTube and using, you know, a variety of Internet resources, there’s a lot of great explanations as to what quantum computing is. But essentially, you know, a computer today, as we know it, Barry, they process information in basic units called bits, and they’re zeros and ones. And quantum computers process in qubits, which essentially allows you to process both a zero and a one simultaneously. It can be that same thing, and it’s called a superposition. And it essentially just significantly increases the processing and the ability to do things And, you know, a lot of times we associate quantum computing with AI, but AI is just one of the segments that quantum computing is going to benefit. I mean, I see big, big advantages to the pharmaceutical and medical industries as to how they research diseases and come up with cures in the financial institutions, you know, the ability to process financial information, any type of organization that does any type of modeling, these will be very, very strong applications. And, of course, we had Jensen Wang last week stating that quantum computing still could be 15 years. Zuckerberg also came out with a similar statement. a few days ago, but we’re starting to see some of the enterprise software companies, most notably Christian Klein from SAP, say, hey, you know what, I think we’re three years away from the utilization of these capabilities for business software applications.
SPEAKER 07 :
These companies have also made investments into that. A lot of times when you’re talking about these deals or partnerships, a lot of times it’s the company you know making an investment in the quantum name that you may have just popped up on your radar. Right. And they’re not just investing.
SPEAKER 02 :
They’re not just investing. They’re putting their money where their mouth is, and they’re buying billions of dollars of these chips and stuff like that. So they will be not only investing in these companies, but they will be buying those systems. They’re currently buying them to test them. I mean, not any type of a measurable investment, amount yet, but they’re looking for applications with these capabilities. So it’s an exciting space to begin to understand and follow. Well, it’s just, you know, as someone who spent a career in technology, it is so exciting. I mean, AI, quantum computing, I’m really thrilled to see what the next, you know, five years is going to do for us.
SPEAKER 07 :
Yeah, it’s amazing the things they’re doing there. I think certainly I’ve read some things and heard some folks talk about on the drug discovery side. you know, just in terms of, you know, the cost that it takes to research some of these drugs, to set up a trial, basically some of it, you know, some of these trials when they set them up, you know, CEOs admittingly are, you know, kind of shooting in the dark somewhat in terms of, you know, hoping that these particular, you know, pharmaceuticals or chemical combinations, right, are going to do what they hope it’s going to do. And a lot of times they fail and, you know, being able to run you know, simulations or scenarios, right, access to data, you know, certainly whether it’s through quantum computing or through AI or both, you know, being able to, you know, essentially almost run a trial and with the last step, right, testing it on folks through, you know, kind of, you know, so it almost can rewrite the, drug discovery process, which would be cheaper for the company to do the research, right, also cheaper for, you know, eventually for, you know, patients, right, to use the medicines and, you know, hopefully, you know, also comes up with better outcomes as well in terms of improving overall health, so, or at least treating overall health, I’d say. A lot of these drug companies really are just treating symptoms, but anything that can improve that, cut down those R&D costs is a big value to not just computing companies, but all types of companies across the industry.
SPEAKER 02 :
Well, there’s so many smart researchers and scientists out there, and just the technical capabilities that are becoming available to them to allow them to harness their intelligence and put into practice their ideas is going to be super exciting.
SPEAKER 07 :
Yeah, I mean, just making new discoveries every day. When we come back, we’re blazing through the first half of the Best Stocks Now show. When we get back, we’ll go through some of those bank earnings and also look at some of the inflation expectations that drove interest rates down yesterday.
SPEAKER 06 :
We’ll be right back.
SPEAKER 01 :
This is Bill Gunderson. Thank you for tuning in to today’s Best Stocks Now, Best Inverse Funds Now show. Now, back to the second half of the show.
SPEAKER 06 :
The instigator. Because there’s something in the air. We’ve got to get together soon.
SPEAKER 07 :
Good morning and welcome back to the second half of the Thursday, January 16th edition of the Best Docs Now show. I am Barry Kite, planer analyst here at Gunderson Capital, serving as relief captain for Bill this morning. And also, as usual, now joined by Jeff Webster on the show, vice president advisor here at the firm. Looks like still some red in the screen, not any huge moves there. happening. In terms of thoughts on the market, I know Bill’s been, I personally always kind of peak first at that technical analysis section. I’ll be interested to see what section you go to first usually, Jeff. But of course, if you want to stay up to date with Bill’s thoughts on the market, you can always get the newsletter on Also, live trading alert still for four weeks. You can always go to GundersenCapital.com and sign up there. You can also, if you want to have a discussion, take a look at your portfolio allocation, how we could be of use to you. Feel free to give us a call at 855-611-BEST. That’s 855-611-2378 and About 99% chance you’ll speak to Edie there. She’s there to be on the front lines and help you any way we can and schedule a meeting with us. We’d be happy to give you some thoughts on what you’re doing. In terms of… A big driver of the market yesterday is really earnings, and as a lot of you know, any earnings season bill will get given earnings grade as we go through earnings season. Of course, we’ve only had a few percentage-wise of the S&P, just a very small percentage report, but large financial institutions are always kind of the kickoff to earnings season, and Certainly has gone out of the gates well, Jeff. I guess we’d rather start with, if we’re playing basketball, we want a solid run at the beginning of the game rather than any other time, right? It’s like we’re starting out 6-0.
SPEAKER 02 :
That’s right. It’s important to get on the scoreboard in a positive manner early.
SPEAKER 07 :
Yeah, and it’s one of, of course, two things that we focus on. Valuation is PE ratios and earnings per share, particularly earnings per share growth, and certainly a hot start by the big banks and institutions there. Those results, I mean, in our opinion, certainly paint a fairly rosy or optimistic view of the economy going forward. It was interesting to see largely driven almost – Almost reflects when I read some of these notes from some of these earnings calls where, you know, a lot of times a lot of clients that we’ve spoken with, particularly since the election where, you know, I don’t know, it’s just folks seem a bit more optimistic or, you know, a cloud’s kind of been lifted off of, you know, off of folks or off the market in some form or fashion. And these CEOs from the banks kind of seem, you know, some of the comments kind of seemed I got kind of the same vibe where they’re almost driven by optimism around the incoming Trump 2.0 administration. Of course, I believe today, and maybe actually be questioned right now, but I think Scott Besant will be… Question of the day in his bid to become the Treasury Secretary, which I think in terms of resume is pretty hard to argue against in terms of what he’s done in different parts of the market.
SPEAKER 02 :
He’s our guy from Charleston, is he not?
SPEAKER 07 :
That’s right, yeah. So he’s resided, I don’t know how long he’s resided here, but he’s resided in South Carolina, resided in Charleston area for a period of time now. So it’s kind of exciting that he’s up for this post. Certainly when you look at it from a banking perspective, banks with this optimism, they seem to be on board. as well. And we’ll run through some of the bank earnings highlights here real quick. This morning we received Bank of America, Morgan Stanley, U.S. Bank Corp. All of those were solid reports and coming, of course, on the heels of yesterday’s good reports from J.P. Morgan. Wells Fargo kind of had a bit of a mixed report. Citi had a great one. Goldman had a fantastic one as well. Yesterday, of course, you know, Citi was up 4.8%. Wells Fargo was up 5.7%, even though I believe they missed on revenue. But who cares? Who cares, I guess. They’re up 5.7%. Goldman yesterday was up.
SPEAKER 02 :
What’s jumping at me right now, Barry, is U.S. Bank. U.S. Bank is down, down 7% right now. If you look at the banking industry, you have your retail banks. These are the banks that work with people like you and I and all of our listeners. We manage our money there. We pay our bills there. We might use them for mortgages, for credit cards, all those different types of things. You have your commercial banks that do the exact same things, but for businesses. And then you have the investment banks, which help companies uh, raise capital, you know, through equity and debt financing, through mergers and acquisitions, through underwriting securities, providing advisory services, and they provide, you know, nice fees. It seems like, uh, You know, maybe the firms that have, you know, good focus on that investment banking piece seem to be doing well. I mean, U.S. Bank does all that stuff, but frankly, their focus is is primarily, I think, on retail banking. Yeah, they’re more of a bank.
SPEAKER 07 :
Yeah, I always call them more of a traditional bank, right? And my guess is, and that report came out just a bit before the show, but if I had to guess, my guess is they were short on their net interest income. The double-edged sword, you know, Really, these banks benefit, especially these large ones, because they have, like Jeff was saying, they have both pieces, whether it’s doing traditional banking or also investment banking and or financial services or both. U.S. Bank is going to be more of a bank’s bank in terms of more focused on that interest income. But the two things that have really benefited banks, and you’ll hear them throughout these reports, were net interest income rising. And that’s kind of your tradition. Think of it as your traditional bank, right? And that’s just because the yield curve is steepened. Companies are able to borrow from the Fed at a particular rate, right? And then lend it out to us at a higher rate. So that piece of banking income has gone up. And also, Investment banking earnings expectations have risen, whether it’s through financial services or dealmaking, particularly forward guidance on the dealmaking side was very positive and optimistic. A lot of that comes from the Trump administration, kind of similar to his first go-around was going to reduce red tape, make investment easier. You know, make helping companies be able to combine easier, right, mergers and acquisitions. So all of those metrics, right, on a go-forward basis have helped particularly companies like, you know, J.P. Morgan that does both. You know, even Bank of America, you know, does both, particularly on the Merrill Lynch side. But the biggest benefit factor has really been Goldman’s report that they came out with. They just had some huge revenues, and they’re more of a quote-unquote deal-making bank over the years. So they’ve got some – they certainly are going to benefit the most from this tailwind in terms of as the deal-making environment becomes more more conducive to deals, then Goldman is certainly going to benefit there. Each one of these banks, Morgan Stanley, another one that benefits, they lean more on the end of investment banking slash retail investors. or just investment revenue. I mean, their revenue is up 25%, over 25% year over year at Morgan Stanley. So that, you know, that tells you, you know, that those pieces of those businesses are doing very well. And interest income, net interest income is one of those kind of slow and steady, you know, metrics. And they’re essentially, each one of these banks said that there’s, metrics are scheduled to rise over 2025. So, you know, bottom line is the banks seem pretty optimistic. That gives us, you know, our view from a market view, particularly in 2025 is, you know, that the trend should continue with some, you know, volatility in the first quarter of the year as the Trump administration gets things rolling. But we’re steadily through the third segment of the Best Stocks Now show. We’ll be back for the fourth and final one here in a moment and take a look underneath the market and see what’s going on. We’ll be right back. And welcome back to the January 16th edition of the Best Stocks Now show. I am Barry Kite, planner and analyst here at Gunderson Capital, sitting in for Bill today. And we also have Jeff Webster on the show, vice president and advisor at the firm. Well, you know, when we look at bank earnings, real quick just to finish this up, you know, painted a decent picture for the consumer as well. I know, I believe we’ve got retail sales today. I believe they came in today and not much to write home about there. It was pretty much a pretty benign report. But, you know, when you look at for a lot of these companies, whether it’s consumer credit or, They give you some insight on the credit or credit delinquency front. And the consumer continues. We’ve seen some reports. Target, I think, came out with one today in terms of how day sales were better than expected. So the one thing we can count on, Jeff, in terms of Americans, is spending, right? And while the consumer has continued to pile on debt, I do think it’s interesting. I mean, American Express… You know, some of those metrics, because the question is how long can the cycle last, right? That’s what you keep hearing in terms of the, you know, expansion cycle. How long can this, how long will this continue? And, you know, looking at from a credit card standpoint, I mean, we’ve got, you know, some of these numbers are even better than pre-COVID levels. I mean, you’ve got consumer card. This is from American Express. Delinquency rate was 1.4%. It was the fourth straight month. So it’s been steady. It’s been 1.4% for the fourth straight month in December. And also the level is under. the 1.6% level in December of 2019, which was before the pandemic. So pretty interesting that the consumer continues to move forward regardless of inflation or what’s out there. And we keep seeing it from a GDP growth standpoint.
SPEAKER 02 :
Barry, I can’t help but wonder how… the fires that we’re seeing in California are going to impact 2025, particularly the last two quarters of the year. You know, 12,000 homes have been lost. You know, while that may not have an impact per se on credit card, but mortgage defaults, insurance rates, those are all things that, you know, can impact inflation. I’d be curious to get your thoughts on that. you know, what that outlook could potentially look like.
SPEAKER 07 :
Yeah, well, I mean, you know, just living, right, home, shelter, right, that’s been one of the stickiest portions of the inflation picture. I believe, don’t quote me on this, but I think it makes up about 40% of the inflation number. And so, you know… I think it was Williams, one of the Fed governors, was mentioning, I believe in something yesterday, where they keep an eye on basically home, shelter, and they’ve been surprised how sticky it’s been in terms of being elevated. And a lot of that they can’t control, right? A lot of it has to do with home supply, right? And, you know, yeah, you lose, you know, however many thousands, you know, tens of thousands of dwellings and, you know, frankly, some expensive, you know, expensive pieces of real estate. So when you’re talking about, you know, just the red tape of building, right, rebuilding in California, you know, what those insurance rates look like going forward, building materials, where do those people live in the interim, which, you know, just creates, you know, less supply uh and so yeah overall it’s a you know it’ll be a you know much watched uh thing and california’s dealt with this before right they’ve had some uh you know some significant fire events in you know very affluent areas as well it’s just a you know it’s a it’s a problem that you know was already a problem and this only creates you know more issues you know in my opinion
SPEAKER 02 :
Well, I wonder if we’re going to see another mass exodus. We’re already seeing it to some extent from California. States like Arizona, Utah, Idaho, our own home state of South Carolina, which happens to be the number one state that people are migrating to. You have to wonder about the impacts on those states’ economies, their infrastructure, traffic, all that good kind of stuff.
SPEAKER 07 :
Yeah, and it’s not the only areas that deal with it, right? These are insurance companies, right, whether they’re writing a policy in California or writing a policy in some other state that potentially could be prone to these types of events. you know, they’re watching this and, you know, learning from it. Their models, right, their actuaries, right, are going to, you know, this is going to be priced into, you know, not just for Californians, right, it’s going to be priced in particularly on the insurance side and, you know, across the U.S., um and then building materials i mean you know you’ve got uh uh you know where these homes are and a lot of these materials right you know some of these some of these a lot of the stuff you don’t just go to lowes and pick up right um yeah that’s uh it’ll be you know it’s going to be an interesting dynamic for their their whole you know whether it’s from the real estate business side of it from the construction side of it i mean there’s already so much red tape to building uh in that uh in that area um certainly you would think you have to do something to um you know grease the wheels and you know and and allow those people to rebuild hopefully faster um you know sooner than later i guess
SPEAKER 02 :
Well, we talk about the proverbial picks and shovels around the companies that support AI and the various data center companies and things like that. But literally, as we talk about rebuilding and stuff like that, we are literally talking about picks and shovels and the companies that will go into rebuilding those areas. real estate, the lumber companies, all the fixtures inside the houses, the cabinets, the carpeting, the flooring, all those different types of things. It’ll just be very interesting to see how those things are impacted by it.
SPEAKER 07 :
Yeah, and those are, you know, it’s always kind of what we’re doing a lot of times as analysts and what Bill’s doing is really connecting the dots and, you know, thinking of how those different things and how everything’s intertwined there. But to stay up to date with our thoughts, give us a call, 855-611-BEST. That’s 855-611-2378. Or you can reach us at GundersenCapital.com. Have a great day, everyone.
SPEAKER 03 :
This show is not a solicitation to buy or sell any securities. Bill Gunderson or clients of Gunderson Capital Management may have long or short positions in stocks mentioned during the show. Past performance is not indicative of future performance. Gunderson Capital Management is a fee-based registered investment advisory firm. All accounts are held at Charles Schwab. Schwab is a member of SIBC and FINRA.
