Join Bill Gunderson as he navigates the volatile market landscape driven by recent decisions from Federal Reserve Chairman Jerome Powell. Dive deep into the world’s economic currents with discussions on China’s rare earth deals, the fluctuating futures of tech giants Alphabet and Meta, and the enduring potential of Eli Lilly’s pharmaceutical innovations. In this episode, explore how these macroeconomic shifts reflect in the stock market’s ups and downs, offering insights into the critical factors at play for investors today.
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 :
And welcome to the roller coaster ride on this Thursday, October 30th. Is it a trick or a treat that’s hitting the market here today? A little bit of both, I guess you could say. This is Bill Gunderson. It’s the Best Stocks Now show, and I’m here with Barry Kite. Our chartered financial analyst, we opened up big to the downside on the NASDAQ. It was down over 300 points. It has gained back about half of that loss right now. It’s down 152 after hitting a new all-time high here this week. The Dow, on the other hand, is now up and in the green by 221 points. It was down a half a percent at the open period. We’re at 47,853 on the Dow. The S&P 500 is down a quarter of a point right now, 68.72 on its journey towards 7,000 possibly. The bad news is in the bond market. Good old Jerome, there’s nobody that can kill a rally like Jerome Powell can. And he did it again yesterday, turning the market, which was well in the positive at one time, to the negative. And the bond market getting clobbered today. The 10-year is up to 4.11 after dipping below 4 recently. So thanks, Jerome, for the trick, not the treat yesterday. Gold is flat right now at 4,002. Big story in Bitcoin, however, down 4,760 today to 107. So welcome to today’s Best Docs Now show with professional money manager Bill Gunderson, President of Gunderson Capital Management, a nationwide fee-based only registered investment advisory, financial planning, money management firm. We all do it here. We do it all here in one house, one place. Your one-stop shop, I guess you could say. Well, you know what? We’re drinking from a fire hose right now as far as the news flow goes. So it’s always fun to do a show when there’s lots of different.
SPEAKER 06 :
Plenty to talk about.
SPEAKER 07 :
From China to nuclear test resuming by our military. I mean, it just goes on and on and on. We’ll pick up where we left off yesterday. Jerome Powell delivered the quarter point rate cut. Very stingy is he. And really kind of, I think, said no to any more rate cuts this year. The Grinch, the old Grinch, who’s got about four months left on his contract, and I’m sure he’ll be packing his bags when his contract is up. Are you planning a party, Bill? Are we going to have a going-away party? A going-away party. Don’t let the door hit you on the way out, Jerome. But anyways, he threw water on the rally with his maybe no more rate cuts this year comment. But, you know, the damage really was done to the bond market there. We were down below four, and mortgage rates were starting to – get down closer to 6%, and nope, he pretty much threw water on the bond market yesterday too, and now all of a sudden we’re back up to 4.11%.
SPEAKER 06 :
By the way, now we only have a 70% chance of a rate cut here at the December meeting. Before yesterday, there was a very high probability that we were going to have you know, 50 basis points and cuts, meaning two more, one yesterday and one in December. So it is a repricing of the bond market.
SPEAKER 07 :
Absolutely. And he has a 100%. If you look at the probability markets, a 100% chance of not returning in May, I guess it is, when his contract is up. So anyways, that’s the way it goes. The Fed throws a lot of weight around in the market. And now we move to China. Oh, and speaking of drinking from a fire hose, the earnings yesterday was super Wednesday. Super Wednesday. So we’re just going to pick the highlights out here today. Trump cuts fentanyl tariffs on China. That’s good. He goes from 20% to 10%. They must have made some huge concessions. And they reached a rare earth deal with Beijing. The rare earths are up today. They get a one year reprieve on the restrictions. And lastly, Nvidia did not come up in his talks with Xi. So that Blackwell chip is still a big bargaining chip for us on our side. And on their side, it’s the rare earth. And in the meantime, we’ve got at least a year to really ramp up our production and our supplies and our sources. There’s the big problem, the sources for rare earth. Update on World War III real quickly. Trump directs Pentagon to resume nuke testing after a 33-year pause. So I don’t know if they’ll be blowing up some atoll out there in the Pacific Ocean or what, but I guess that peace through strength move by Trump, putting the rest of the world on notice. You know, North Korea did their own nuclear test, or missile, missile firing. just as Trump was arriving in Asia. So, you know, peace through strength. What can I say? No discussion with Xi on Blackwell chips, and NVIDIA is down a little bit today. How about a $1 trillion IPO? You know, you think NVIDIA crossing the $5 trillion mark. How about a private company out there that could be worth a trillion? When it IPOs, that would be the chat GPT maker, OpenAI. Let’s see where that puts Sam Altman as far as the world’s richest people on the world’s richest people list. But that’s the buzz. A trillion dollars is possible. When will it come public? Well, they better do it. No, no, late 2026 is what they’re saying on that one. okay earnings tonight coming from apple and amazon double a those are a couple big double a batteries there that could really uh uh you know move the markets one way or another and last night we got a huge trio of uh the the the seven the fabulous seven stocks reporting along with what I think is the best pharmaceutical stock in the market today, and along with a plethora of other smaller stocks down the line reporting. The government shutdown remains in force for now. Soaring premiums. ACA enrollees get first look at 2026. Insurance plans, and guess what, Barry? They’re going up. This is Obamacare. And, you know, really the shutdown, one of the biggest sticking points is… During COVID, the government agreed to subsidize Obamacare ACA enrollees because of the effects of COVID. And now those have run out, and the Democrats want to extend those cuts, even despite COVID basically not being much of a factor anymore, and the Republicans are against that. And that’s kind of, it seems to me, what it all comes down to. But the cost of the premiums, are going to just soar when those new rates come out. It seems to me like we’ve got kind of a program that’s falling apart that needs to be retooled. But that’s at the center, at the core of this current showdown, standoff with the government shutdown. Should the benefits be extended that were given? during the emergency of COVID. China has plans to significantly expand rare earth export patrols. So I think that’s going to put in a bottom on the rare earth stocks. that really have fallen since this rumor started and then became news that we would get a one-year pause. And you know what? I mean, there’s just no question about it. We’ve got a fine.
SPEAKER 06 :
You’re still going to have to secure your own supply going forward.
SPEAKER 07 :
And, you know, the government has made a big investment in MP materials, in critical minerals. In Lithium America, not for the lithium, but for the rare earths that are mingled in with the lithium. And those stocks were on a tear until this all hit. Then they really sold off hard. And now probably pretty good buys, a lot of them down here at this level. There’s probably about a dozen or so rare earth stocks, including some in Australia and some in China, obviously, and even a couple of rare earth stocks down in Brazil that I’ve been tracking. Okay, when we come back… What is going on with Bitcoin? And could the market be carving out a top here with this little bit of a sell-off today after hitting new records recently? There is a new sentiment indicator out that actually could be a bearish indicator. We’ll be right back. And welcome back here to the second quarter of today’s Best Docs Now show. Well, I wrote an article maybe three weeks ago in the newsletter about should Bitcoin investors be worried? And, of course, you know, I know a lot of people that are very, very bullish and have conviction that, in bitcoin’s future i’m a skeptic okay i’m a well-known skeptic i don’t make any bones about it i use uh the grayscale bitcoin trust gbtc as the chart that i look at because it’s been around the longest it was around way before these etfs came along so that chart for me carries a lot more weight to it Bitcoin is still above its 200-day moving average. And it still has a golden cross, the 50-day crossed above the 200-day. Now, we’re just looking at technical analysis here alone. Because what else can you look at on Bitcoin? You can’t look at earnings. You can’t look at book value. You can’t look at price to sales. We can look at a chart, okay? It is still above its 200-day moving average. But should it drop below that 200-day moving average, I would think that that would not be good. I mean, Bitcoin has not really been tested recently, Barry, as far as just how much conviction do investors have when push really starts to come to shove here, right?
SPEAKER 06 :
Yeah, I mean, the last true test for it really was when Bankman Freed got popped and and then they had to sell off a bunch of assets, and part of that being some Bitcoin assets too. to pay back their investors a bit. And that put a lot of selling pressure on Bitcoin. But that was back around $30,000, not $108,000. Yes.
SPEAKER 07 :
And just from a chart point of view, you’ve got a triple top now. It got up to this ceiling, we’ll call it, in early July. Bang, it hit it again in mid-August. It hit it again about a month ago, and it’s backing off pretty severely here. I mean, it’s down 14, about 15% now, which puts it in correction territory. Should it hit that 20% down from its recent high, that puts it into bear territory. And I think you would see a real test of just how much conviction investors really have in the cryptocurrency. So anyways, and there’s a few inverse Bitcoin ETFs out there. Biti is one, B-I-T-I. And the other one, Biti is one time inverse. And SBIT, S-B-I-T, if you don’t have any conviction and you think Bitcoin’s a house of cards ready to fail at some point in time, SBIT is twice, I believe it’s twice the inverse, yes, it is, of the Bitcoin index. So you can watch those both trading on the inverse side because that tells you a lot about the long side of the equation, too, when you look at the inverse side. So anyways, like I say, it’s still above its 200-day moving average, which is considered long-term support. It has a very solid line of resistance that it keeps bumping its head against and backing off and can’t puncture through it. And it’s also now in the midst of a 15% correction that could get worse. It could rebound from here. We’ll just have to watch it. And really, on Bitcoin, about all you have to go by is the chart of the underlying asset. Okay, earnings. Oh, I wanted to get to the American Association of Individual Investors. Bullish sentiment is way up. Why do I mention that? Because it’s usually a contrary indicator. You’ve got investor optimism, bullish sentiment among individual investors who are usually wrong. Now, I hate to take a shot at individual investors like that, but I would just say that most… As a consensus. Yes, there’s some good ones amongst the individuals, and there’s a lot of bad ones who sell at the bottom and buy at the top. And when we see bullish sentiment among individual investors rising to 44%, up from 36.9% the prior week, that’s a very bearish indicator, believe it or not, meaning that the individual investors are usually wrong. The reading marks the strongest bullish outlook in recent weeks as investors reacted to upbeat corporate earnings and moderating inflation expectations. Well, yeah, there’s no question. We don’t have an earnings problem, and I’ve said that many times, but we have an S&P 500 that’s now trading at 28.8 times earnings, which is going back to the year 2000 when we got just over 30. The forward PE ratio is 23.3, which is the highest it’s been since the sugar high sentiment on the market from COVID in 2021. Price to sales is 3.4. Price to book is 1.6. And price to cash flow is also extremely high on the S&P 500 right now. So we have a very bullish outlook. Sentiment is running very high. and that’s coupled now with some very very high valuation so you have to be careful here right now in this market okay now let’s take a look at some of these earnings let’s let’s let’s let’s begin with the good one of the day how about google that was a really good earnings report alphabet i know it’s hard to remember i i’m always going to call this stock google Google Alphabet, even the symbol is G-O-O-G-L, Google. It’s not A-B-C. It should be A-B-C, right? But Alphabet is up 5.3%. Guess what? It’s hitting a brand new all-time high. Alphabet is a large position at our firm because we own it in the premier growth portfolio. And we own it in the value slash relative value portfolio. And we still have a lot left over from the dividend and growth portfolio, which we discontinued, because it does pay a small dividend. I mean, I would take a stock like Google all day long in a dividend portfolio that only pays 30 basis points over Verizon, which pays 7% dividend because Google has earnings growth, and Google has racked up tremendous track record over the years of stock performance, while Verizon has been very, very mediocre. So Alphabet comes in with earnings up 10%. Sales up 16%, and that may not sound that robust, but it is for a company that’s closing in. It’s now $3.4 trillion. Will it be the next $4 trillion? Will it join the $4 trillion club? The stock breaking out to new all-time highs. It’s up 5.3%, which is a huge move for a $3.4, $3.5 trillion company. Now, when we come back, one of the other fabulous sevens has an ugly reaction to its reports today. We’ll be right back. Now, back to the second half of the show.
SPEAKER 03 :
Because there’s something in the air.
SPEAKER 07 :
And welcome back here to the second half of today’s Best Docs Now show. Well, I just want to go back to Google for a moment here. To me, the takeaway line or comments were made by Sundar Pichai, the CEO and director. He opened the call yesterday emphasizing this was a terrific quarter for Alphabet. driven by double-digit growth across every major part of our business. We are seeing AI now driving real business results across the company. We delivered our first ever $100 billion quarter He highlighted that Alphabet’s revenue has doubled in five years and noted, well, the rule of 72, that’s 14%, a little over 14% per year growth. The Gemini app, which is their AI tool, has now has over 650 million monthly users and queries increased three times from Q2. So it looks like all systems are go at… Google. Now let’s turn to Meta. And here’s the money line or the money losing line for Meta. Everything was going well. You know, I mean, he’s talking about another strong quarter, 3.5 billion people using at least one of our apps every day. That’s about half the world. zuckerberg highlighted instagram’s milestone of three billion monthly actives and threads surpassing 150 he talks in language like you know i guess that’s gen x what is he millennial language threads surpassing 150 million i hope he wasn’t wearing those goofy glasses during the uh you know the presentation barry i mean talk about The ultimate nerd, Zuckerberg. Now, he’s super intelligent, no question about that. And he went on and on about how they’re doing this and how they’re doing that. But then the bombshell was, and it came from Susan Lee. I’m not sure what her role was, but she’s pretty high up there on the chain. She said… We expect the set of investments we’re making within our ads and organic engagement initiatives next year will enable us to continue to deliver strong revenue growth in 2026. But warned, and here’s the bugaboo that has sent this stock south. CapEx, that’s capital expenditures, that’s infrastructures that they need to purchase and put into use. CapEx dollar growth will be notably larger in 2026 than 2025. We also anticipate total expenses… will grow at significantly faster at a significantly faster percentage rate than twenty twenty five in other words margins are going down with growth primarily driven by infrastructure cost what capex is usually depreciated i mean it’s not uh… an expense that is immediately recognized that’s why you treated differently it shows up in the cash flow price to cash flow uh… uh… but when the cash flow statement Whereas earnings will be hit by significantly higher expenses. Those are expensed immediately. And that has sent the shares down. There is some buying coming into it right now. This is either one of the greatest buying opportunities in a long, long time. Or there’s now a systemic problem in Meta. We’ll just have to wait and see where the numbers come in at for next year after the analysts make these adjustments. The stock is down 12.3%. It’s at $1.65 trillion. It’s not in the $4 trillion club, not even anywhere close to it. But look, their sales were up. 20% year over year, well, it’s decelerating. I mean, their last three quarters were 50%, 37%, 38%, and then it drops off to only 20%. And their earnings were up 26%, which is a very strong number for Meta. But, you know, like I say, the money line there that the stock is reacting to is the heavy CapEx spending that Meta has to do to keep up with the Joneses, I guess you could say. And that is hitting the stock because that’s going to hit their price to cash flow. And the market is adjusting meta stock right now.
SPEAKER 06 :
And it’s the most susceptible one. I mean, you know, the thing is with, you know, Microsoft and, you know, Google and even Amazon, right? I mean, you know, their hyperscaling is so then they can host, right? you know, some of these other players in terms of, you know, in terms of, and it becomes a revenue source pretty quickly. In this sense, for Meta, you know, they’re not necessarily doing the hyperscaling. They’re spending, you know, for themselves to make themselves more competitive players.
SPEAKER 07 :
And it takes time for that to drop to the bottom line of earnings. So, you know, look, I mean, these investors are sometimes very impatient. They can’t wait. You just hope they’re making good decisions and investing in areas that will someday give them a good return on investment. But right now there’s some question, and it caught the street by surprise, and hence the big sell-off in Meta. For me, the earnings report of the day – This is just sensational. Besides, you know, Google was very good. But how about Zepbound and Eli Lilly, a company that’s been around for 100 years in Indianapolis, Indiana? How about sales that were up 54% year over year? How about earnings that were up 495% year over year? I think Lilly deserves to be up a lot more than it is today. It is up $20 per share or 2.4%. And as you know, Lilly is also one of our largest holdings. We own it in the Premier Growth, the old Dividend and Growth, and the Relative Value Portfolio. That is just a stunning number and definitely gives credence to the potency and the effectiveness of Zepbound, the miracle weight loss drug that has upended the entire industry. Look at the dieting, fitness industry. I mean, it’s affecting the restaurant industry. It’s affecting shoppers at Wal-Mart. It’s making people healthier, in my book, in my opinion. The stock is up 2.4% today. That’s going to be a trillion-dollar company.
SPEAKER 06 :
It’s $790 million right now. I saw a report earlier this week, too, where they’re going crazy. going strong in terms of producing the pill i mean they’re they’re so right now they’re making a bunch of the pill in hopes right that it’s going to you know and they’re they’re essentially believe it will get approved but uh you know they i saw something where it said the amount of pills that they’re making is is unbelievable like they’re they’re ready to go wow i mean wow that’s something and i think you know i think that is a bit of a barrier
SPEAKER 07 :
A shot in the stomach, self-administered for some people, might make them squeamish. They’re also ramping up. They made a deal with Walmart to make the shots available right now. You can go, instead of having it shipped to your door, and that’s going to cut their expenses, I would think, a little bit.
SPEAKER 06 :
Yeah, one of them made it with Costco, too. I can’t remember if it was Lilly or if it was Novo Nordisk, but I saw where they’ve got a, you know, you’d be able to get your Costco, you know, get your ZipBound at Costco and get your protein. Well, there you go.
SPEAKER 07 :
So, you know, I mean, it’s a one-two punch there. And I still am a big, big believer in Lilly because I’ve seen results from too many people that are absolutely astonishing. Absolutely astonishing. Okay, Microsoft, you know, so-so. But for me, for a $4 trillion company, 18% growth in earnings. I mean, Kimberly-Clark would die to have 18% growth or in sales or Procter & Gamble or Johnson & Johnson or whoever else. They only had 18% growth. 23% growth in earnings, which is also sensational that they’ve been able to remain so relevant. despite being around for quite some time. This stock has gone from 97 back in 2019 to 529 today, Microsoft. We don’t have a large position in it, but we still have a position left over from our dividend and growth portfolio, so it’s a decent-sized position. Microsoft is down 2.2% today, as the expectations, I guess, were loftier than where they came in at. But I think that is pretty good. And, of course, Microsoft has got a big investment in OpenAI, which we talked about. which could be a trillion-dollar IPO, and Microsoft has the leader with ChatGPT in the AI space. So nothing to sneeze at there. We’ll be right back.
SPEAKER 1 :
You’ve got to go where you want to go.
SPEAKER 01 :
Do what you want to do with it, whoever.
SPEAKER 07 :
And welcome back here to the final segment of today’s Best Docs Now show where we’re drinking from a veritable fire hose of news flow here today. Everything from Trump and Xi’s face-to-face meeting yesterday wherein a one-year pause was put on the rare earth supplies. NVIDIA was not spoken about, and the fentanyl tariff was lowered from 20% to 10%. We still have Apple and Amazon coming tonight with their earnings, and we had an absolute gusher of earnings yesterday. Now, I want to tell you a little story. why it’s good to be vigilant, and how helpful CMT. Is that what that is? Chartered? What is it? What is it? Technical analysis? Chartered market technician. Okay.
SPEAKER 06 :
All right.
SPEAKER 07 :
I lack the designation, but I’ve got 25 years. Maybe 30 years of experience looking at it.
SPEAKER 06 :
At worst, you’ve got a ruler and some lines on the screen.
SPEAKER 07 :
Yes, and you know, that’s my last thing I look at. I mean, the fundamentals, the valuation, the momentum, the performances, everything. But that visual look is invaluable. A picture really tells a story. And we did pick up in the relative value portfolio several months ago some Chipotle shares. i’d just thought that you know this still is a strong franchise uh… it still has its uh… dedicated followers uh… and uh… on a on a relative basis the the ratios evaluation ratios were very very inexpensive and the story still had some legs right yes and then i’ve watched it really not do anything in fact defy my logic which can happen you know the market doesn’t always agree with you And I’ve been saying, you know, I just don’t know. And then it started to perk up. And I read some articles last week from analysts that said, oh, they’ve got it turned around. They’re going to come in with a very strong report, which they reported last night after the close. So anyways, about 3 o’clock yesterday, an hour before the close, this was after the Fed said, Made their disastrous talk. Jerome Powell does it again. And the market was reeling and rolling and rocking and, you know, quite a turnaround there in the last couple hours of the day. I said, I’m going to check my stocks one more time. My kids, you know, that I look at every day. And I looked at CMG’s chart and I said, you know what? I just do not like this chart at all. And with 30 minutes before the bell rang, I unloaded that in one block sale. Maybe two block sales I had to do because it was kind of funny the way it was positioned and stuff. But anyways, boom, gone. And you know, look, I very rarely do that. That is a very rare occurrence. Usually if you own a stock, you know, owning it during earnings season is part of owning the stock, okay? You can’t sell a stock every time earnings season comes along and then buy it back after earnings season. Sometimes you get your biggest moves during earnings season to the upside. And also, obviously, you can get some big down moves during earnings season. And after the close, I saw them report, and it was drifting lower. And then as he kept talking, Boatwright, I think is his name, the new CEO, I saw it just start peeling off as he announced, well, you know, we have a challenging macro environment, which is usually a good fallback. You know, you blame the U.S. economy if you’re not executing well. He said, our third quarter performance fell short of our expectations due to persistent macroeconomic pressures. Well, I got to believe they have an inflation problem over there at Chipotle. They use a lot of protein. Protein, one of the most inflationary products in the market today. And, of course, avocado prices, tomato prices, lettuce prices, et cetera.
SPEAKER 06 :
Yeah, and they’re getting squeezed from both ends because, you know, they have a value proposition problem with the customer, right, because, you know, this stuff is a little bit more expensive than other, you know, kind of quick service restaurant that you might go to. And then… On the other end, they’ve got the value issue, and of course that keeps them from being able to raise prices going forward, at least for a period of time. So they’re kind of caught between a rock and a hard place.
SPEAKER 07 :
Well, their only way out of it is not through organic growth, because organic growth is suffering there. It has to be through building new stores, which are expensive to do. But they have a lot of ambition to get Chipotle brand outside of America. I don’t know how it will do in Mexico. With all those good taco stands down there, which I so much miss from my Southern California days. I’ve eaten plenty of tacos in Baja during my career.
SPEAKER 06 :
I saw something. I didn’t watch the video, but I guess Chick-fil-A made it to the… I guess it’s in the UK now. Oh, good. Which I think it’s pretty interesting to see how… How that would fare, I would imagine it would probably fare pretty well over there.
SPEAKER 07 :
Yeah, I think China might be a good market for them, but I don’t know how Chipotle would play in China. So anyway, Chipotle’s stock right now is down 17.4%. So the chart, it came down to the chart for me. Their sales were up 8% year over year, and that’s coming mostly from new stores. Now, that’s the rub. I mean, you want organic growth at your existing stores. That’s a lot cheaper than going out and adding more stores. Their earnings were only up 7%. This has become a single-digit grower. then that’s not good when you’re trading it. Over the last five years, they’ve been growing by 40%. To go from 40% over the last five years now all of a sudden to single digits, that multiple comes into question big time, P.E. ratio of 34%. So there’s just an example about how being vigilant works. Now, some of the subscribers may not have sold. I sent that out with like 30 minutes left in the market. You had to be near a phone or something in order to execute your own trade, but that’s what I did yesterday, and that’s why I did it. And we’re out of time. I was going to get to Kimberly-Clark, my favorite stock to bash, along with Procter & Gamble, Johnson & Johnson, Verizon, et cetera.
SPEAKER 06 :
The cliffhanger for tomorrow.
SPEAKER 07 :
I do have an article that has been written this morning, early this morning, and we’ll be going to Seeking Alpha here later today, hopefully, and maybe published later today. Keep an eye out for that on Seeking Alpha. I have a lot of followers there. I have been active on X, formerly known as Twitter. I’m at Bill Gunderson on X. If you’d like to set up an appointment with us to discuss portfolio management and financial planning, 855-611-BEST, 855-611-BEST. If you’d like to get four free weeks of the live trades, the newsletter, and access to the app, GundersenCapital.com GundersenCapital.com Have a great day, everybody.
SPEAKER 04 :
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.
