In this insightful episode, Barry Kite sits in for Bill Gunderson to guide listeners through the latest market trends and global economic events. Starting with a positive stock market opening, we explore significant influences such as the ongoing U.S.-China summit, with discussions focusing on tariffs, trade negotiations, and the impact these have on global markets. Dive deeper into how recent developments, including key meetings with major Chinese officials, are swaying U.S. economic policies and strategies.
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 04 :
Good morning and welcome to the Thursday, May 14th edition of the Best Stocks Now show. I am Barry Kite, planner and analyst here at Gunderson Capital Management, sitting in for Bill today as he’s in the… Big city of New York doing a few meetings down there during the show today. So I’ll be here for the duration. Of course, it looks like we’re starting out with some green on the screen here. We’ve got the Dow actually leading the way for a change, up 0.6%, just under 50,000 at the moment, 49,987. And we’ve got the S&P 500. Up 31 points, up 0.42% at the moment. And the NASDAQ kind of up, but in the back end. Train here in this one today up 90 points here, up 0.34%. We’ve got oil, basically no movement here at the moment. That’s probably due to the U.S.-China summit over in Beijing. We’ve got crude oil up. Down $0.18, sitting right at $100, $100.84. Gold getting a little bit of a bump today, not much, up $1.50 to $4,688. And Bitcoin back under that $80,000 mark at $79,577. And again, it’s good morning and welcome to the Thursday, May 14th edition of the Best Stocks Now show. I am Barry Kite, pointer and analyst here at Gunderson Capital, sitting in for Bill today. Of course, all eyes have been looking across the Pacific in the direction of China as the meetings and kind of pageantry continue. President Trump and an army of cabinet members and who’s who and CEOs are, of course, meeting with Xi and other Chinese officials to hatch out a number of differences. Tariffs. We’ve got tariffs and trade on the docket. Obviously, the Iran conflict, how China can help put some pressure potentially on Iran. We’ve got chips, materials. We’ve got rare earth minerals, all kinds of things. Taiwan on the discussion points. So they’ve got a lot to cover in the two days that they’re going to be meeting over there. And the markets have acted favorable so far. We’ll continue to get more and more talking points and tidbits of news and potential agreements out of those discussions. And we’ll highlight some of the ones we’ve already gotten here a bit later in the show. But first, I guess let’s recap yesterday’s market moves. We had a hot PPI figure yesterday as soon as we Kind of started the show. But, of course, equity markets seem to weather it pretty well. The bond market, not so much. We’ll talk about that here in a bit as well. But the NASDAQ rebounded nicely after Tuesday’s short-lived AI sell-off. NASDAQ was up 1.2% yesterday. The S&P 500 was up 0.5%. And the Dow was slightly negative yesterday, but obviously a narrower index today. With the semiconductors, of course, leading the charge again yesterday. It was their turn to kind of take back over the leadership there. It was interesting. Bill highlighted this yesterday. But, you know, utility names are actually at the bottom, you know, worst performing sector yesterday. So it’s just kind of an. Odd dynamic at the moment where you’ve got AI names kind of leading the pack on one end, and then, of course, the utility names, the power source that you need for all these data centers, obviously kind of dragging a bit yesterday. interesting dynamic there uh we did have you did have the treasury uh treasury yields uh up right around four uh 4.47 percent just under four and a half yesterday uh the two year was right at four percent and the 30 year was at 5.04 percent and having that 30 year number up above five percent is just a kind of a psychological barrier to a certain extent. So as we’ve continued to mention, interest rates need to come down. The problem is we’ve got other factors that are leading the Fed’s inability to potentially cut. And we’ve got some Fed news that we’ll cover here later in the show as well. But We did get some Cisco earnings at the end of the close yesterday. The market seemed to like it. At one point, the stock was up over 20% after the release. That’s one of the bigger gainers here. Let’s see what Cisco is doing at the moment. Looks like… We’ve got Cisco up 13.5%. So if you held on to Cisco for this long since the last Cisco boom, then you’ve finally been rewarded. They came in with all-time, I think, all-time earnings or all-time revenues yesterday. So pretty amazing just kind of dichotomy between You know, the Cisco of yesteryear and then, of course, the Cisco of today and today’s AI-driven environment. So it’s pretty interesting. Other names like, you know, one name we own, Dell, you know, just continue to see that stock do very well and grow. kind of getting some of these names that we’ve seen and heard of for a long time over the years. Dell, like I said, being one of them. Micron, San… and woke up now, you’d think not a lot’s changed except maybe the values of the company underlying it. But after the close today, we’ll get a handful of earnings still trickling in. We’ve got one that we’ll be keeping an eye on, Applied Materials. We’ll certainly keep a close eye on that one. We own it in both our premier growth and relative value. strategies so we’ll have we’ll have a report we’ll talk about that one very likely on tomorrow’s show given that we’ll get the we’ll get that information it closes market expects a about a $2.68 earnings per share and a revenue of roughly 7.7 billion for the second quarter so we’ll see Those are the hurdle rates, and we’ll see where Applied Materials comes in in that report. Now, we kind of touched a little bit on the China-U.S. summit, and when we get back from the break, we’re actually going to dive a little bit deeper into Into the summit, like I said, we’ll see what news has come out, what some of the discussions are going to be revolving around, particularly whether it’s tariffs, chips, rare earth minerals, other geopolitical issues, Taiwan, Iran. and it seems, I saw a note today, it seems that, I guess, Xi wants the straight open as well, which obviously, you know, benefits them, any flow of energy, flow of oil and other goods from the Middle East, China, you know, China is relying on that as well, just like a good bit of the world is, so it’ll be interesting to see if they can apply any pressure to Iran. They’ve really been one of the friendlier countries to Iran. Obviously, that friendship works both ways where China’s getting some oil and other things from Iran. It sounds like Iran’s getting some other materials, whether it’s for rocket fuel or information in terms of satellite and coordinates of where our troops are, where our ships are. So there will be certainly some serious discussions around those matters. We’ve got, you know, going into this, we had kind of a little bit of mixed gains in Asia earlier this morning. We did see where the Korean aircraft, Equity indexes are, again, at all-time highs. That’s one of those ETFs that we use, EWY, which is an ETF there in South Korea. And their index is at all-time highs. I believe SK Hynix is getting close to being a $1 trillion company. That would be just the second company in South Korea to top the trillion-dollar mark. Of course, Samsung is. being the other one. And, of course, as everyone knows, what do they have in common? They’re both producing the memory chips. I am Barry Kite, planer and analyst here at Gundersen Capital Management, taking the wheel for Bill today. And, of course, it looks like we’ve got all green on the screen now. We’ve got the Dow up over a half a percent at 49,977. Up 0.54%, up 40 points today. And the NASDAQ taking the lead over the Dow here, up 0.64% as we get a little bit of bounce back continuing here in the chip names. And crude oil is now up 14 cents or above. And we’re at 101 on the crude oil. And gold up $2.31 at the moment. So we do got a little bit of green there. And Bitcoin back above $80,000. $80,153 up 1.1% today. So we’ve got some green on the screen. We’ll see how that continues throughout the remainder of the show. Of course, just before we started the show yesterday, we had Air Force One touchdown in China. Of course, President Trump, cabinet members, and who’s who of CEOs got off the plane. Of course, one of those being Jensen Wang of NVIDIA, who… Almost didn’t make the trip. Got picked up on the refueling stop in Alaska. So it’s pretty unique. Had to meet there to get picked up. So we’ll just go ahead and talk a little bit about the agenda there and what we’ve heard so far. Of course, we continue to get kind of tidbits coming out of these discussions, some of them being market moving at this point. So just the news of Jensen getting on the plane yesterday seemed to put a bit of a shot in the arm to the AI names, particularly after Tuesday’s short-lived sell-off. But, yeah, we’ve got, of course, essentially – Each side, the first place we’ll kind of start on, obviously, is going to be tariffs. They’re working on kind of creating an agreement that could essentially reduce, I guess, $30 billion worth of goods, remove tariffs on those. The point of these categories in these particular goods are ones that don’t cross any kind of national security issues. So they’ll be, you know, around agriculture, other particular products. It looks like the idea, and it’s something that they had talked about back in March when they met, but, you know, the goal was really to, you know, identify certain goods that aren’t going to be a national security issue at some point. And so some of these, beef being one of them. Example, the summit was kicking off. China actually halted beef licenses for U.S. beef exporters. That was kind of right at the beginning of the summit. Of course, we’ll see how long that lasts. They were on a hiatus for basically a year in terms of not having the licenses. Those licenses became valid here just recently. And then, you know, virtually almost hours after they were, you know, they were renewed, they ended up halting them again. So I don’t know if that’s going to be some discussion point. I know, obviously, for farmers, soybeans, you know, has been a big, big topic in terms of Chinese at least, you know, promising to buy soybeans from us, but not following through with that promise, particularly under the Biden administration. But in terms of beef, we’ve got essentially 400 plants were shut down or not allowed to export to China. And the interesting thing is even if the licenses do get renewed, there’s roughly a 77% tariff in China on U.S. beef. China claims to have not a beef problem. They apparently have plenty of beef in China, and they’re essentially trying to protect China. uh the chinese beef industry which you know they they’ve been a very protectionist uh country and that’s you know that’s that’s where a lot of these uh kind of the impetus for for you know trump’s tariffs initially or a lot of that frustration is from and so if you look uh you know we’ve got like i said 77 percent tariff on beef uh 12 percent of its uh the most favored nation tariff and 10 is on u.s imports and then they actually they have an extra 55% levy if they hit quota levels in terms of you export too much beef, then, of course, every additional pound is going to be at 55% tariff. So pretty rough numbers there. If we think U.S. beef is expensive here in the U.S., it sounds like it’s even more expensive for U.S. beef in China. Now, of course, beef isn’t the only thing on the menu at the U.S.-China summit. Of course, we’ve got rare earth minerals and semiconductors are certainly also an important topic of discussion. Those were very, very big in terms of discussions back in the March, kind of March meetings with some lower level delegation. The In terms of the semiconductor spot, well, we did get some information on the semiconductors and I guess some concessions from the U.S. on that front. The U.S. cleared NVIDIA H200 sales to around 10 Chinese firms. They’re going to allow them to essentially buy the second most powerful AI chip, NVIDIA’s second most powerful AI chip. That’s the H200 that you’ve heard a lot about. They’ve cleared them to buy them. Of course, no delivery has occurred yet at this point. Uh, of course, uh, you know, Jensen’s over there, you know, helping to, uh, you know, likely open up, open up that market. I know, uh, you know, in terms of, uh, in terms of Nvidia’s, you know, sales in the past, obviously they’re, they haven’t been allowed to, uh, do a lot of those exports at the moment, but, uh, you know, prior to, uh, to the, uh, to those, to, to those tariffs or demands not to sell them, uh, you know, they were, they were basically were 95% of China’s advanced chip market. So when they were allowed to buy those chips, they were pretty much the only chips that were being sold in China were NVIDIA-made chips. And, of course, that market accounted for about 13% of NVIDIA’s revenue. So if you think of future revenue source, and NVIDIA has specifically said they have not worked any of those Chinese numbers into their guidance. So in the event they are able to sell anything there, you would think that that’s going to lead directly to either a beat on earnings or revenue or also potentially future revenue guidance and beat and raises there from an estimate perspective. And so as we know, stocks follow earnings and earnings expectations and NVIDIA, It was up about 2.5% when I looked at it. Oh, yeah, up 3.2% today, really hitting all-time highs.
SPEAKER 03 :
This is Bill Gunderson. Thank you for tuning in to today’s Best Stocks Now, Best Inverse Funds Now show. I put several hours of research in during the wee hours of the morning each day to bring you the very best cutting-edge stories that I can. To get two free weeks of my newsletter, go to GundersonCapital.com. To talk to us about our fee-based-only money management services… Call us at 855-611-BEST. Now, back to the second half of the show.
SPEAKER 04 :
I am Barry Kite, planner and analyst here at Gunderson Capital Management, playing relief captain for Bill today. To stay up to date with our thoughts on the market and get Bill’s newsletter, of course, you can go to GundersonCapital.com, or if you’d like to have a discussion with us about your portfolio allocation, feel free to give us a ring, 855-611-BEST. That’s 855-611-2378. We’re always here to be a resource. And, of course, if you’re in the Minneapolis, Minnesota, St. Paul area, we’re going to be in Minnetonka, Minnesota next week, this time next week at the Marriott there. We’ll be there on Tuesday, Wednesday, and Thursday. That’s May 19th, 20th, and 21st. So feel free to come out, meet the folks. Looking forward to it. Seeing everyone, we’ll be available for one-hour appointments, and Bill will also be hosting a workshop on Tuesday evening. Always a good time to reach out to Edie, and she’ll do her best to get you on the schedule. It’s been a while since we’ve been up to Minnesota, so we’ve had a lot of folks interested in getting with us, and it’s always fun to get out, see the folks, and as we kind of tend to call it, boots on the ground, and get a gauge of what’s going on in the Minneapolis area, and we’ll kind of Kind of get a different feel from what we see on the news. We’ve got great people up there, and we always enjoy talking to the folks up in the Minneapolis area. And so it looks like we’ve still got plenty of green on the screen. Dow’s up 0.45%. S&P up a little over 0.5%. NASDAQ up 0.63%. Crude oil up 50 cents to $101.51 a barrel. Gold up about $4, not really doing too much. Gold’s been pretty much in a A bit of a slog lately. There’s a few reasons why. Primarily, the longer the Iran war goes on, the worse gold does. You would think it would be more of a fight to safety, but it’s really because of interest rates. As interest rates have gone up globally, that’s hurt the price of gold. And so that’s why gold’s kind of been stuck in a rut really since, you can look at the chart, really since the Iranian conflict began building. And then we’ve got Bitcoin up over that $80,000 mark. It’s been over it for a while now, but… I did see it peak down below right around 79,000 this morning. So, again, we’re kind of moving along here. Of course, finishing up the idea on the H200 chips of NVIDIA’s being allowed to be sold to some tech companies over in China. Some of the names approved are companies, some companies we’ve owned in the past. As Bill, as we mentioned yesterday, we haven’t owned… Owned a Chinese domiciled name in a while, but Alibaba, Tencent, ByteDance, and JD.com are a few of the Chinese companies that were named that we’ll be able to Purchased those chips. It looks like each customer essentially has been approved up to 75,000 chips under this particular licensing agreement. Other distributors that were named here, Lenovo and Foxconn. So interesting to see ByteDance on the list. I guess all you TikTok folks, they’ll have… We’ve got plenty of chips to tick-tock you into the future, I guess. We’ll see how that plays out. Of course, one topic that came up pretty quickly in discussions, actually in the initial remarks, was Xi’s remarks on Taiwan. He kind of brought up and questioned if the U.S. and China can avoid Taiwan you know, some type of conflict in the future regarding Taiwan. He referenced, he went Greek on us. He referenced the Thucydides Trap, which I’ll give you kind of a background if I don’t butcher the name again. That one came out of my mouth pretty well. Thucydides was essentially a writer, historian back in, Back in Greece, his writings still influence diplomacy 2,000 plus years later. It gives me a little bit of a feel of the Sun Tzu art of war. He wrote the history of the Peloponnesian War. which essentially chronicled the conflict between Athens and Sparta. And the, you know, kind of the, the analogy is that you’ve got when rising power, you know, basically a rising power in this sense, China creates a fear and an established power in this sense, the U S being the established power, you know, makes essentially makes conflict more likely. So, It was essentially the rise of Athens and the fear that that inspired in Sparta that eventually made war inevitable. And then, of course, I believe a Harvard professor kind of quoted this as the, uh thucydides trap and so um you know the fact that uh the fact that z referenced that during the you know basically his opening remarks yesterday was pretty you know pretty uh you know kind of kind of you know tells you what’s on his mind we’ve talked about you know a good bit at some point you know it’s in the chinese uh doctrine to essentially uh take over taiwan at some point in time so It was just kind of an interesting dynamic. Usually I think you would start out with the olive branch in this sense. He kind of started out with, you know, I hope we can get along on this. And didn’t want to. Doesn’t want the conflict, but almost says no. it would be inevitable if, uh, if, if, if, you know, the, in their mind, if the U S made any missteps, uh, in that particular relationship. So, uh, big, big, big, uh, things going on in China, you know, going to completely, you know, continue to get, uh, new news out of there. Uh, this, uh, you know, from, from today, I think it’s two meetings, two days. So it should be, I think it’d be a formal dinner here, uh, either tonight or today at their Chinese time. But, It’ll be interesting to see what else tidbits we get out of that. Of course, with all the U.S.-China news yesterday, you might have missed the fact that we’re closer to getting a new Federal Reserve chairman. Kevin Warsh was confirmed yesterday by the Senate. It was a close vote, actually. I think the vote 54-45. The vote is the closest for a Fed chair since the Senate confirmation requirement began in 1977. So it came down to the wire. It looks like all Republicans voted in favor. All Democrats voted against except for John Fetterman. And for our Pennsylvania listeners there, he’s crossed the cross the aisle and voted with the Republicans on on confirming Warsh. You know, just basically just made the deadline. Warsh will, uh, going to take the reins to the fed, uh, after, uh, Jerome Powell’s term ends and it ends tomorrow, May 15th. So, uh, just got him, just, just got him confirmed just in time there. There was some, some talk that it may take a little while and, uh, and then, uh, you know, Powell would have to kind of stick around as chairman even for a That piece of news kind of snuck under the radar a little bit yesterday. I think it’s worth noting, now that he is confirmed, who is Kevin Warsh? He’s a former Morgan Stanley executive. He was an economic advisor to George W. Bush. He actually got a big name in 2006 as he was the youngest person, I believe, ever appointed to the Fed Board of Governors at the time. So he served He’s actually served on the Fed from 2006 to 2011. So he’s used to the offices a little bit. I guess he’ll still recognize them after some of the construction that they’ve had there or lack thereof construction. We’ll see. But he also served as lieutenant under Chairman Bernanke and actually played a pretty pivotal role in the aftermath trying to put the House of Cards back together again after the 2008 financial crisis. So uh and and during that time he’s pretty pretty hawkish actually um he he i think he left his post because he didn’t uh he didn’t agree with some of the uh some of the extent of some of the bailouts uh for for the banks and just you know some of the uh you know policy easing that we had to do during that period so That’s the reason he stepped away from the Fed. Now he’s back and seems to be a little bit more of a dove. We’ll see how that plays out once he gets in power. As I said, we’re making it to the Minnesota area. We’ll be there next Tuesday, Wednesday, and Thursday. That’s the 19th, 20th, and 21st. Looking forward to seeing the folks out there. Of course, if you want to give Edie a call, see if we can get you on the Get you in and get you on the list. 855-611-BEST. That’s 855-611-2378. Of course, the market continues to cooperate a little bit. I think there’s some optimism in terms of what may come out of this U.S.-China summit. We’ve got the Dow up. Just about 0.6%. S&P up 0.7%. NASDAQ leading the way up about 0.9% at the moment. And so we want to get to some Cisco earnings here in just a minute. But a couple of notes. I did see something that seemed a little bit concerning when I looked at the news today. It says, I saw a headline, Cuba runs out of fuel. Of course, Cuba, essentially, their energy minister has said they ran out of diesel and fuel oil. The only thing that they’ve really got is gas from their wells, so I guess they can use some of that to fire some power, some utility plants, power plants. The city’s been having rolling blackouts in Havana. some as lengthy as 20 to 22 hour blackouts and you’ve got hundreds of Cubans in the streets in Havana protesting the blackouts and the government so It seems like that chip, that card may be the next one to drop here given that Cuba has run out of fuel. That was something that caught my eye. I wasn’t sure I was going to work that one into the show today, but I think it was worth mentioning and keeping an eye on in terms of the reshuffling of some of the world order here. Of course, Inflation continues to be a big talking point for economists. Yesterday’s hot PPI, producer price index reading, kind of continues to fuel those concerns. But what that’s translating in and why it’s important, It’s because it essentially affects interest rates negatively in the term of higher rates. We’ve seen global rates rising ever since the Iranian conflict began. Yesterday, it actually pushed the 30-year U.S. Treasury over 5%. We had a big Treasury auction yesterday. I think it was around $25 billion in new 30-year bonds that were awarded a rate of 5.046%. So it was the first 30-year Treasury bond auction that sold for… Higher than 5% since 2007. So it was kind of an interesting. Anytime you see those terms, anything around 2000, anything in that 2007, 8, 9 range, right, it kind of gives you a little chill. But in 2007, I guess on the eve of financial crisis is when that 30-year bond exceeded 5%. And there’s no 30-year bond that’s even exceeded 4.75% since. So it’s pretty remarkable. Obviously, it’s a pretty round number. at 5%, but it got as low as 1.25% in May of 2020, obviously following the pandemic. The interesting thing, those bonds nowadays that sold at 1.25%, I guess just… five, six years ago, are now worth 50 cents on the dollar. Of course, you’ve got to keep holding those things. If you hold them to maturity, that 50 cents on the dollar is going to start getting closer to 100 cents on the dollar, but still not a great investment. Just ask. Silicon Valley Bank buying what happens if you buy 30-year paper at 1.25% in May of 2020. It’s one of the reasons they’re not around anymore. Cisco, some earnings, kind of gotten a lot of the earnings have came in already. We’re getting some few pieces here and there over the next few weeks, essentially going to lead up to the NVIDIA earnings, which are always the big one now, and they usually come A little later in the period, but Cisco reported a little bit of a blast from the past again. They had a fantastic quarter, actually had a record revenue of $15.8 billion in Q3. That’s up 12% year over year. They continue, I guess, to take more and more orders in from hyperscalers, continuing to get into that data center space. And they’re actually restructuring. They’re going to get rid of, I believe, get rid of about 4,000 employees to restructure and kind of focus the business more and more on the hyperscaler or AI-adjacent side of the business. But Cisco… It was up over 20% yesterday in the pre-market. Let’s see what it’s doing now. I think it was up about 12% when I looked at it last. Yeah, up 14%. And looks to be, when I look at it here now, yeah, Cisco at an all-time high. Hit that today. It hit $119.35 intraday. So we’re hitting an all-time high at Cisco. It’s funny. We keep seeing some of these names that… That keep coming back from the past. Like I said, Dell, SanDisk, Micron. So I think the biggest difference between 2000s and now is earnings and revenue. So there’s a reason. I think there’s a reason why we’re seeing these large profits and large moves and these AI names that are much different than the dot-com craze of the early 2000s. Well, we’re getting close to wrapping up the show. Of course, if you want to stay up to date with our thoughts, with Bill’s thoughts on the market, get the newsletter. You can go to GundersenCapital.com. If you’ve got any questions, discussions, you want us to take a look at your allocation, feel free to give us a call at 855- 611-BEST, that’s 855-611-2378. And Edie will get you set up on our calendar, and we’ll look forward to meeting you and talking to you. Well, I hope, thank you for spending time with us today, and we’ll be back tomorrow for another edition of the Best Docs Now show. Have a great day, everyone.
SPEAKER 02 :
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 SIPC and FINRA.
