Growing Risk Of Semiconductors Rolling Over & Dragging The Market Down With Them — Lance Roberts

[00:00:00] Lance Roberts: this has been what's really kind of driving the market as of late has been semiconductor stocks this is smh and you know it's kind of building a pretty defined head and shoulders pattern and again it hasn't broken down yet but i think this is the one thing to watch because if the market's really been driven a lot by the now 18 market cap weight of semiconductors if these things do reverse there is going to be a drag in the market and this is where all your momentum chase [00:00:24] Adam Taggart: is right now welcome to thoughtful money i'm thoughtful money founder and your host adam taggart welcoming you here at the end of the week for another weekly market recap this time featuring my good friend the semi-quincentennial portfolio manager lance roberts lance how you doing fine what happened to last week's title so last week i introduced you as the sesquicentennial and uh sharp-eared listeners uh caught the mistake uh semi uh quincentennial is for the 150th anniversary but for the 250th anniversary it is semi-quincentennial so well you know as old as i am both were correct exactly exactly uh both both apply to you you've hit both milestones in your very very very long life exactly me and george washington you and washington just like that yeah um as a matter of fact i think they were considering you for the job back then but they thought you were too old yeah that i was uh you [00:01:32] Lance Roberts: know they said you know we we need a bunch of 30 and 40 year olds to run the government and you know i was already in my 50s then so yeah i mean exactly yeah doubt already [00:01:43] Adam Taggart: well i'm glad you dragged your bones here uh for another week of this abuse with me um all right so lots to catch up on um and i do want to kind of dig a little bit more deeply this time with you into ai lance i've got uh some interesting um insights on both sides of the ai story and i know you just wrote a piece as well so we'll roll up our sleeves and get into that in a second folks just a couple of um a quick updates beforehand um i had an amazing 4th of july lance i hope you did too i'm going to talk about it in just a sec i just got back from uh the rule rick rules uh symposium and um i i for folks that were there and might be listening to this um i just want to say thank you um lance you got to come come to one of these things with me sometime um the there i mean it's a great symposium rick rick's uh conference there but uh just the amount of this really undeserved super positive feedback and goodwill that folks have uh for this program and and crazily to me uh for you and and this weekly market recap um but crazy crazy um but but folks i just want to say it is super meaningful and people uh said some incredibly nice things but the best thing lance um of all the feedback of all the very nice feedback is are the people that come up and say boy you really educated me about money and about investing and as a result i am in a much better place in life than i was two years ago three years ago before i started listening to you guys um the fact that people are using this information productively and constructively to improve their personal station in life i just can't think of any kind of better feedback to receive than that so i wanted to share it with you because you're a big part of that [00:03:29] Lance Roberts: appreciate it no i think that's awesome and yeah let me know sometime when you go to one of these things and let me see what my calendar looks like and we can try to do that okay uh i'll tell you it's [00:03:38] Adam Taggart: um this is such a high quality problem um but it it's it's it's oftentimes very hard to walk across the room in less than like two hours because people are coming up you know coming up and waiting their turn to talk to you and whatnot and you might take a step and then have another 15-minute conversation take another step of another 15-minute conversation um uh andy schekman was there who's the um ceo of miles franklin who's the precious metals um you know the officially endorsed precious metals provider for thoughtful money and um i we were going to go have dinner uh and so i called him and he said yeah come to my booth i kind of got near andy and i eventually was standing kind of back to back with him it was probably about two and a half hours before he and i could actually talk to each other because he was mobbed by so many people and i fortunately had so many people that wanted to talk to me um it was just amazing again just the energy and and the goodwill and the intent and all the really fascinating things that people had to share so yeah lance i think you'd have a really good time um all right real quick folks just to you know quick crib notes for the the rule symposium probably not a huge surprise but but a lot of love there for the critical minerals um so you know the government maintains a list of critical minerals and uh with uh the whole renewed focus on um you know national security and of course with the war war in iran and the other military uh engagements that are going on um there's just a huge amount of government funds going into these companies and so uh that was a big focus of the conference obviously people think a lot of those minerals have a real and their producers have a really good um outlook right now um a a strong sense that if you are a fan of ai and a believer that all these data centers and everything are going to get built out all this compute is going to get built out that's going to be done in the back of resources from the real world things that need to be mined uh and refined uh and then you know brought into to be used to build these these uh you know compute structures whether the data centers or the chips themselves um so just seeing a massive demand wave in the commodity sector from ai that they think has got a long uh life ahead of it um and just looking at the producers of many of these um commodities the general general sense is they're on sale right now um and you know lance will probably look at your your quadrant uh in a bit there in simplvisor but like you know you've seen the gold miners you know in the oversold quadrant now for you know a quarter or more at this point in time um so you know basically if you're a believer in the future outlook of a lot of these minerals this seems to be a pretty good time to get into these producing stocks so uh that that's the again the key crib note takeaway if you want to actually get the replay of the entire conference and rick recorded everything you can just go to thoughtfulmoney.com slash rule symposium and purchase the replay there um all right lance tell me real quick about your fourth of july and i'm going to tell you about mine [00:06:52] Lance Roberts: uh mine was boring uh actually um you know we didn't really have a lot of plans my kids all came into town so we did a little bit of cooking on the grill and just hung out and then let the firework [00:07:03] Adam Taggart: scare the crap out of the dogs and that was pretty much it okay good did you have real texas barbecue though oh of course absolutely so yeah then then the founders would be happy yeah that's why that's why they created this whole endeavor was that so texans could stuff their face with barbecue exactly [00:07:22] Lance Roberts: well no i mean you know hot dogs are for amateurs i mean you know that's hamburger that's amateur stuff if you want if you want a real fourth of july it's brisket it's and you gotta have the moist briskets you gotta have the jalapeno cheese sausage you've gotta have you know the corn the coleslaw and the and the potato salad that's that's fourth of july yeah i'm pretty sure the rest of the country that [00:07:44] Adam Taggart: you know has enjoys hot dogs simply what they're getting is just all the parts of the animal that the [00:07:49] Lance Roberts: texans didn't want to eat exactly yeah precisely right all right well look my my story and i'll keep [00:07:56] Adam Taggart: it quick um should also be uh somewhat of a segue into um the ai topic um but i was giving a little tease folks that i had really exciting plans for the fourth so one of the viewers of this channel is a very successful investor and um uh this investor spends time in the reno area in which i live and uh they they pinged me a little bit before the fourth and said hey uh we're going to this really cool party on the shore of lake tahoe um would you like to come along and uh you know i thought for about two nanoseconds and said yeah absolutely and um so lance this this this was a party at an amazing property right on the lake shore the property on one side is michael milken's property you know the junk bond king the property on the other side used to be owned by steve wynn um so this guy was right between the two um phenomenal property right there on the beach and uh had a massive party um and then rented a fireworks barge which was anchored right off the dock right so we all had our private fireworks show just sitting right there right under the fireworks show and it was amazing um not that he talked to me at all but sergey brin was there so i mean this was kind of you know that level of of silicon valley royalty so it was a very cool experience i'm not gonna lie um folks i don't normally get to hang out with with the elite of the elite like that um so you know understand this was a very rare opportunity for me but the the the quick story i want to tell is my host was very generous uh nobody knew who i was which is fun when you're at an event like this because everybody thinks oh my gosh that guy must be so important i haven't met him yet so i better be really nice to him right um so uh he introduced me to a lot of the people that were there and when they found out what i did the question that they were most interested in lance was what's your outlook for the nasdaq right and not a huge surprise because a lot of these people are you know tech founders folks that had sold one or many uh companies very successfully so you know they've got a lot of exposure to the tech industry um and as i started you know explaining to them that personally you know i've got concerns that as i as i mentioned in detail on this channel before so i won't go into it here uh but i've got concerns that the ai capex build out schedule it's probably going to happen but it's there's a lot of concerns i have that it may not happen on the trajectory that's currently in the excel models of the analysts sure i'd get about halfway through that story and they'd interrupt me and say this happened multiple times and they said god you know what i've got the same concern uh which is why i've totally sold out of tech you know one guy was like yeah i'm sitting on 60 you know 65 of my portfolio is t-bills right now and these are guys lance that made all their money in big tech you know they spend time with all these people sergey brin's right there at the party um and uh they are de-risking they're concerned and they're de-risking so i think a lot of people look at the ai boom and assume that the rich are like all in on this thing right the guys i talked to there and yes folks this is anecdotal but the guys i talked to there had a really healthy dose of concern and like i said they were telling me that they had de-risked in many cases pretty substantially in their personal portfolios i don't know if they still had professional exposure uh to this um but um i wanted to come relay that to folks here because it's a it's an interesting window inside you know the folks at the top of the tech pyramid so um any questions any reaction to that lance before we actually go officially into some of the questions yeah yeah go ahead okay um so let's see here so uh i just recorded an interview yesterday with jan benek uh it was his quarterly outlook uh that he does here on this channel and he did a really big deep dive into ai and he's pretty he's pretty positive still on the whole thing and what was interesting lance is he started with charts of like price to sales and a few other valuation metrics where he says yeah you look at this chart and it strikes fear in your heart right it's like i'm not gonna lie like this chart should give us all pause but then he went through with the earnings growth and um a number of other factors of these companies and said you know what like these valuations are actually pretty supported by the underlying fundamentals of these companies in terms of what how they're growing their profits right now um and you know he looked at a bunch of other factors and and i'll let folks watch it tomorrow and see the whole presentation but basically walked away from from you know his ai section of the presentation saying look i understand people's you know gut concern here and i understand looking at it from one perspective uh there's reason to worry but he said if you know if you look at it in totality like i just walked everybody through i don't think there's any reason to worry anytime soon in this trade and i i can't really make the argument after going through all this that it's that overvalued um so you know you haven't seen that lance i'll give you a chance to watch it and comment on that specifically but there are a lot of other concerns i just mentioned a few in my story about the the fourth of july party you just wrote an article today called ai capex risk cuts both ways in the american economy do you want to give folks a little bit of a walk through the key [00:13:46] Lance Roberts: takeaways from that well it's a pretty heady article but basically it's a revisit of i wrote an article um last year talking about how artificial intelligence and the capex spin that's coming out of that is going to lead to increased productivity and that increased productivity alleviates a lot of these debts and deficit concerns a lot of people are worried about the debt the deficit and uh there's a lot of projections about how you know the deficit is going to grow to you know x trillion dollars by 2030 2040 but none of those calculations by the cbo account for the actual input increases in productivity as well as the input into the economy through capex spending which kind of changes the [00:14:25] Adam Taggart: dynamic a whole lot and let me just give a quick analogy can you tell me if it's right or wrong but it's it's sort of like when we say yeah inflation matters but if wages are growing faster than the rate of inflation it's really not that big of a deal the average worker's coming out better ahead over time and it's sort of like yeah nobody likes debt and we have a lot of reasons to be concerned about our current debt overhang but if we grow our economy faster than we grow our debt we're actually starting to dig out of our our situation now that being said we've been growing our debt way faster than we've been growing the economy for the past couple of decades so we would need to make a change actually actually [00:15:00] Lance Roberts: that's not really the case i mean you got to look at the i mean yeah we're about 120 of debt to gdp but outside if you strip out all the debt issuance that we did during the pandemic which was the real outlier we've not really been growing debt that much faster than the economy so you know those those because remember every dollar of debt that's issued feeds directly into the economy right so if i issue a dollar of debt where does that dollar of debt go goes into the household balance sheet in some shape form or manner which creates economic growth so again you know we had this one outlier event that you know caused this massive expansion in debt but outside of that the growth rate of the debt is certainly a problem a problem right no doubt about that but the economy's been growing very very well [00:15:42] Adam Taggart: also at the same time okay but to my underlying point that the more you grow your economy then you grow your debt the actually relative better off you are right yeah yeah and so you know we take a look at [00:15:53] Lance Roberts: the multiplier effect that you get from debt um productive debt now again you got yeah you also have to quantify the type of debt we're talking about here which is productive debt versus non-productive debt but you know if you take a look at capex spending which is productive spending within the economy you get a multiplier effect uh the previous estimate would you get three to four dollars worth of multiplier from that which creates a a big push through in terms of economic activity a year later we can kind of look back and see that we're getting about you know two dollars worth two to 250 worth of capex spending you know multiplier in the economy so but again a lot of this is early stage spending and we haven't seen the productivity benefits just yet and those are still yet to come over the next year or so because we've got to build the data center first before we actually get the productivity boost [00:16:41] Adam Taggart: so can i restate that because i think it's a really important point um when you do this type of spending you're saying um not only do you get the immediate benefit like a new data center um but then you get the multiplier effect in the economy of all the jobs that are supported by the jobs that are there at the the data center you know not even just the the data center workers but the the restaurant nearby the gas day i mean just that money goes out in the economy as you were saying and you're saying right now we're we've only we've only really seen the first order effect of that so far um where we're building the data center whatever that multiplier effect is still to come in the future and we've spent a lot already and of course we're going to spend even more down the road so what you're sort of saying is is there's this multiplier effect boom that is lying in our future that's going to be nothing but kind of goodness for the economy again if it all comes to you know [00:17:35] Lance Roberts: there's there's lots of assumptions to all of this but you know again if you take a look at just kind of you know think about the internet boom um that we had you know the the increases in productivity since you know the building of the internet and before that we had all this build out for the space race and everything else and so really when you look at post world world post world war two to present um you know you see i'm trying to share a chart with you here very slowly i'm getting there um but this is this is really kind of the the cure so you know a lot of concern about the debt to gdp ratio i get it right you know um 120 debt to gdp it's not the alarm bell everybody thinks it is but it's certainly not a good thing right that we have 120 that jet debt to gdp i mean japan's the real problem 280 of debt to gdp currency's collapsing they got big problems um we're the reserve currency we're building all this infrastructure out in the country so the the real kind of tailwind is sitting behind the us not in front of it like japan has but you know look at at your increases in productivity since post world war ii you know it's a 2.4 versus the 1980s and just the tech generation you know it's one and a half percent housing era post great financial crisis you know 2020 so far so you know what we've got to do is is see this spin out that we're doing so far in this in this kind of ai generation start to translate and maintain that productivity because that's really what cures your debt to gdp because again the more you produce in the economy the more the revenue you create the less debt you have to issue and it's just it's just a self-solving equation after that [00:19:13] Adam Taggart: okay and i'm sorry lance what what what's the part below the line there a debt to gdp change okay yeah all right so productivity growth is above the line jet debt to gdp changes below the line okay all [00:19:28] Lance Roberts: right so but again um you know this is but this is kind of one factor that we often kind of just overlook as is you know we look at the spending and we go oh my gosh the spending the spending the spending hey i get it and again you know certainly very concerning but you have to look at where the spending winds up and this is very different spending that we're currently doing now versus what we've seen you know again if we're just spending debt to pay for social security paying for welfare right social security medicare medicaid you know kind of your government benefits that's non-productive it has a one-time hit hits the household the household spends it on groceries that's it's done right but you know if you're spending money to build a data center which puts you know construction workers to work electricians and architects and to your point earlier it has this whole demand drive for the underlying commodities to build that and then around that data center a whole town gets built because you have workers that are working on that data center and they need access to have a place to have lunch grab groceries they need a place to live so they build apartments you know all the all that type of activity creates a much bigger economic multiplier effect than sending a welfare check to a household [00:20:36] Adam Taggart: okay so um are you arguing sort of both sides in this article or is the article actually making a [00:20:42] Lance Roberts: point in a certain direction no it's an update like i said i wrote an article um it was let me give you the exact date on this um it's the it was called the deficit the deficit narrative may find it secure in artificial intelligence i wrote it in june of last year and so what this article does is basically just updates that article for what we now know as fact versus estimate that we had a year ago so it's just really kind of going through that same analysis and picking through that and looking at what the actual economic impact that we can actually visually see so far looking at what those actual impacts are and they're not bad the story the story is not as optimistic as it was a year ago um but it's still [00:21:25] Adam Taggart: very positive and sorry why is it not as optimistic because some of that some of the impact economic [00:21:31] Lance Roberts: growth that we kind of expected hasn't matured just yet so again when we start looking at you know where we were a year ago versus where we are now there's still a lot of this kind of pinup that's coming but the build out still occurring we haven't actually fostered off into the productivity side of that yet that's probably another year out so i'll probably update this in the next year or so okay we can get again then get the real-time evidence of what's actually occurring but the the premise is still very valid that's really the point of this article is that the prim despite all the headlines to the contrary are about you know you know ai is going to cost all the jobs and you know everything's going to hell on a handbasket that's you know maybe it's not as optimistic as it was looking a year ago just from the estimates we had a year ago but it's still very positive and things are still [00:22:17] Adam Taggart: trending in the right direction okay so so again just to be clear when when you wrote this a year ago and all the sources you pulled they had certain estimates for i guess productivity growth and economic growth and we haven't hit those estimates now that we're a year later but we did pretty well [00:22:34] Lance Roberts: yeah yeah i mean you know we're still growing at roughly two percent estimates last year we grew at two and a half percent so we're running a little bit below those estimates and that's kind of the update [00:22:44] Adam Taggart: okay so let me ask you this because this actually goes back to a topic at the the rule symposium um so don't only put words in your mouth but what i kind of got from you lance is the spending that's being done right so the government is still spending but two trillion deficit levels right now yep right so people can look at that and say you know this is just the government spending us into oblivion um you know they're never going to balance the budget this is going to devalue the dollar it's just going to make the debt burden worse whatever right and it could so i'm not trying to say that that's none of that's impossible but what i kind of get from you lances is yeah but the nature of the spending is if we're if we're going to deficit spend we seem to be deficit spending on things that are smarter and likely to produce a higher economic return than say you know you mentioned the anomaly of of the coveted era but where we spent a ton of money during the coveted era but on things that [00:23:46] Lance Roberts: weren't long-term investments right um so you know go back to the coveted era if in the coveted era what would have been much smarter is to issue five trillion in debt and go build a bunch of nuclear power plants right unless we did in world war ii right we you know back then we went and built the hoover dam we bit the built the tennessee river valley authority those were long-term productive investments that [00:24:07] Adam Taggart: all paid for themselves multiple that are still still producing a return now you know exactly 70 years [00:24:12] Lance Roberts: later yeah right and and you would have put you know instead of sending checks to households which was great you got the one-time benefit of by running out to either go gamble it or or drink it um for the most part you know you would have put a lot of people to work creating these nuclear power plants building i'm just using nuclear it could have been anything right right right but although i [00:24:30] Adam Taggart: think i think nuclear is a great example and i'm going to talk about nuclear later on in this conversation [00:24:34] Lance Roberts: but we could have spent five trillion saying you know hey we've got this covet shutdown going on but we're going to spend five trillion dollars and we're going to you know we're going to provide a real economic boost that lasts and then that economic productivity would have been there and then the investment would have paid for itself uh you know over time and so that trillion dollars would have been negligible because it would have been a self-repaying investment that we made into the country and you know it's kind of the caveat too with you know i always kind of chuckle when people complain about well the hyperscalers they're spending all this money on capex yeah that's great they're investing in their business rather than right on buybacks which they're exhausting their cash flows they have no more [00:25:15] Adam Taggart: free cash flow isn't that bad and it's like well no not if these the capex that they're spending it on gives them a multiple return on those cash flows down the road yeah and they're still generating [00:25:25] Lance Roberts: cash flow hand over fist but yeah but yeah you know it's just it's just you know it's always the case adam you know narratives are great for for click bait for headlines and those type of things but once you start really digging down into some of these narratives and starting to understand what the long-term ramifications are you know there's a lot of there's a lot of positive outcomes that are potentially going to come from this again there's no guarantee of anything but you know we do have to expect that the people running these companies aren't just stupid right you have to figure that they do have some business plan that they're operating on if they have some vision into what they do specifically whether you're nvidia or meta or google or microsoft that you've got some vision into where your business is headed and what your demand from your business is driving that they're not just making willy-nilly investments with no outcome so you know i think it's important to give a benefit of the doubt to the people that are running these companies and making the investments that they have some vision into what you know the future of that spending would be because otherwise look as an owner of my own business and you own your own business i don't think you'd go be spending all your incoming cash flow on [00:26:33] Adam Taggart: a thesis that you really didn't think was going to work right right by the way i think i think you're going to like the rant later today but i'll keep you in suspense for it um and you know it's interesting i'm going to say something a little controversial and by the way i'm still getting to a larger point which i'll get to in a minute um but to a certain extent uh the you know our elevated interest rates i mean historically they're pretty average but relative to what we're used to over the past 15 [00:27:01] Lance Roberts: years where we got spoiled it no it's not not even the last that's not even the last 15 years that's [00:27:06] Adam Taggart: the last five well i mean when qe started back in 2009 they were bringing it beginning to bring it [00:27:13] Lance Roberts: down pretty low um between 2009 and 2020 we averaged about four percent in the tenure did we i'm trying to do this from memory here okay i mean you you were a little bit below a little bit above it but mostly you were kind of around four percent you were back in 2007 you were at five and six percent going back to 2000 but no we all got used to thinking half a percent interest on the 10-year treasury was normal right right so now going back to normal is like oh my god the world's coming so i'm saying once you've [00:27:41] Adam Taggart: lived in zerp you know anything yeah but my point is today's non-zerp rates yes you know we would all love for them to be lower um and and relieve the burden that we feel that these excessively high yields are placing on us but they but they bring a discipline to commerce right in other words uh capital has a cost right so you just can't blow it right when capital is really cheap that's when you get malinvestment right because there's no downside to it oh i can just borrow more for nothing again right um and um so it's interesting to almost sort of welcome these quote unquote higher yields but but to your point lance i think they actually it acts as a governor on those ceos to say yeah i got to make sure i just don't waste this capital because it's actually costing me something to take on that's right yeah um okay so where i was going with this is uh uh you know the well so i was on a panel at at the symposium and uh i i told a little anecdote about how in business school at stanford um you know we were all budding young red-blooded capitalists and all super excited to go you know make a zillion dollars uh leveraging the free market and um you know you can you can you can select most of the courses you want to take there but they they have a kind of a core curriculum that they make you take and i forget the the actual name of the course but we all called it non-markets and it was basically of course we were we were made to take that just talked about all the things that could impact the system that weren't natural market forces so these would be things like legislation and regulation and stuff like that and at the time none of us wanted to take this court i think it was even less popular than cost accounting we were just like this is the most boring thing in the world when am i ever going to use this we all know that the free market is you know got the answers to everything and it turned out to be the most relevant course that we took at business school because of course for the next you know 25 years after that it's been central planner policy that's basically had the biggest impact on things right and it that comment generated discussion amongst the panels and adrian ash who was one of the panel members um kind of gave a bit of a diatribe against um what's going on right now with the government uh making direct investments in the companies direct equity investments in the companies and adrian was like look i am all for if you want to if you want to you know help an industry out right get rid of the regulation right do whatever you can to clear the playing field for that company to do what you want it to do but once you cross the line where you're taking a direct equity investment in a company then you're starting to pick winners and losers and also like you know the government's going to start having a say in what that company does and do you really expect the government to be the most efficient decision maker you know for a company that's supposed to operate in the free market um and it was you know it sort of ended with a not quite a standing ovation from the audience but but the biggest reaction you know that i saw at the conference um and i was chewing on this because i totally get where he's coming from and i get it and the question i asked him afterwards when we got off the stage was hey look i totally get that but let's say you're the government and you are trying to really accelerate um an industry especially for national security reasons right and you want to get something like let's say your point you want to get um you know new small nuclear reactors deployed in the next five years up to some some gigawatt level output or whatever right um yeah you could maybe you know take a direct equity investment some of these kind of companies i totally understand uh adrian's pushback on that but what if you gave him like a really favorable loan right like adrian would you would you would you feel as bad about that and he was like i'll have to think about is it probably not so where i'm going with this is is there a role lance for the government you know in certain areas when it's really in the nation's interest to put its thumb on the scale not so much in like a you know command and control i'm taking part of your company over the way you know we kind of have with some companies already um is it is it that is it appropriate for the government to do that at times and if so what's the most appropriate way for it to do it well uh you know i i don't know if [00:32:28] Lance Roberts: the term appropriate is the right word um there's because there's nothing wrong with it in terms of [00:32:34] Adam Taggart: i know it's not legal or illegal or anything like i think about world war ii i mean we basically made ford start making tanks and planes right yeah but you know look i've been an advocate of this for a [00:32:43] Lance Roberts: while is that you know we have we have a big power so look we got some some real problems in the infrastructure basis of the us right we've got an aging power grid you're bringing online a tremendous amount of power consumption through data centers etc which is all fine and dandy but if you don't have the power grid to deliver the power you're gonna have a problem down the road sorry to [00:33:04] Adam Taggart: interrupt but in addition to all that stuff which gets all the headlines like our highways and our bridges and our dams are like failing yeah yeah like we have to rebuild all that stuff too before you [00:33:14] Lance Roberts: interrupted me i was getting there okay but yes to your point all those things as well and you know but specifically to the power side is that you know it is a is a governmental use it is a function of national security so let's go back to what the what the constitution says basically the government has two jobs right infrastructure and national security that's their job outside of that all the other stuff they get themselves into they should not be getting themselves into that's not the authority of government all that should be controlled by the states but since power and power supply is part of both infrastructure and national security they should be involved in that so as an example there should be a private public partnership between utility companies and the government to build out all this infrastructure that's required to build and so yes maybe the government provides guaranteed loans at very very low rates or they actually provide direct capital investment into the building of the infrastructure and then the private companies actually execute the building of that structure um you know one of the problems we have with government contracts is there's not a lot of oversight in terms of how those government contracts work which is why budgets and you know run you know kind of balloon out of out of orbit on these things literally um you know so those those should be held to hey we're going to help you pay for this but this has to be done within this time frame it has to be done within this budget if you meet that budget and that time frame we're going to give you this money and that you know to fund that if you're over it every day you're over that budget time you start losing access to those funds so you know you have to create some some real viable structure around it but that private public partnership would lead to a much faster development and of the things that we need so yes roads bridges which are all part of infrastructure and needed i mean if you're going to build these data centers and all this other stuff we're going to have you're going to need all that stuff to go along with it and that's something that the government should be spending money on versus spending money on things like you know you know well you know programs that don't really benefit anything and there's you know the tremendous amount of money getting spent on projects for the government that don't lead to any real outcome we've seen a lot of money spent on on ventures that basically fail um instead of being put to to work in areas that actually would improve the overall [00:35:31] Adam Taggart: economy and society in general yeah this is a really interesting topic and if there's interest from folks watching and let me know in the comment section um i'm trying to bring on an expert to to really do a deep dive in this and i don't off the top of my head know who that expert would be but i i'll definitely do the legwork to do it if folks want to see this discussion um because again lance you and i are capitalists pretty much through and through um but there is a role as you say for the state to play in certain things and um i am curious as to you know i i always don't want to just be bitching about the problem you know i want to be i want to be advocating for a solution and you know i'd love to get more clarity on what what would be the right structure for for that and and quite frankly i'm all for accelerating a lot of these things that we're talking about i mean honestly i think the world is is has been rapidly proving to us that we probably sat on our laurels for too long we've taken too many things for granted we have under invested in a lot of things that are critical to our national interests and and i think probably almost every other country could say the same right and so you know what's the right vehicle for that acceleration where the government is playing an enabling hand but but not a not a controlling one not not crossing the line in the state control right um all right folks folks so if interested let me know in the comment section below there um you know i could say that's one area where i wouldn't mind seeing some more focus being placed um is in our our just national um uh transportation infrastructure um yeah i got back from this trip and it really wasn't even that bad of a trip folks but like as always you know my flight got my connecting flight got delayed uh coming back from this thing in florida and um i i put out a post on excellence i don't know if you saw it but i basically just said um i just hate traveling these days i used to really look for any excuse to travel when i was you know my young 20s um and now i just do everything in my power to avoid it um it's just it exhausts me there's just always complications along the way that just enrage me um the comfort of the whole process is is gone it just sucks largely you know somebody said what was it you get treated like cattle and a terrorist at the same time it's like it's actually pretty accurate so i asked on x i'm like does anybody else feel this way or am i just getting too old uh and and just overwhelming uh you know uh agreement from most people that the process really sucks and it really has deteriorated um over the years and and i don't i don't want to you know remember the old days too overly fondly but definitely travel really did change after 9 11 um both for the tsa constraint reasons but also you know the airlines just just went on this tear of you know what things can we take away from you while raising prices at the same time right so yeah look i you know when i [00:38:39] Lance Roberts: was you know in my younger years after i graduated college i was working overseas and doing all kinds of stuff i agree with you know it's it's all you know when you're young it's all exciting to live out of a suitcase but you know after a few years of doing that it's like i hate traveling period even for me i really don't even like traveling for vacation if i could just magically teleport and be there that's one thing but i abhor getting onto an airplane that is just you might as well just shoot me full of [00:39:06] Adam Taggart: needles so all right i figured as much yeah i'm i'm totally like on steam staycation now um but anyways um obviously folks chime in if you feel differently or the same um all right so let's see where else to go from here um just one last thing on this topic and i'll move on to uh let's say the fed minutes um or iran um one thing i don't get lance is why people are um so allergic to the concept of doge right like i i think those should be like a fourth or another pillar of government which is basically whatever government's doing let's make sure there's an organization there that's auditing them and making sure that they're doing it the way that they're supposed to be doing right i don't i don't know what the argument against waste fraud and abuses now i i understand at the beginning when it [00:40:05] Lance Roberts: came in people were super there's no argument against it it's all political bias it's all political or [00:40:11] Adam Taggart: people you know i think initially it was people either protecting their political interests and that certainly was the the reaction from the the government system itself trying to reject this new antibody and i think you can you know there are people who i think you know emotionally said look this is terrible we're firing lots of people this is their job um this stuff is never easy but look when a lot of waste has has accreted over time yeah you got to take a machete and start just lopping it off it's it's it's not going to be a fun process but um what's been amazing to me is is you know doge is still kind of chugging along and and what i'm sort of happy to see is that culture is starting to spread into you know sometimes to the state level to other parts of government um uh and what's been amazing is is you know i think we all know that the government is not a typical a very efficient spender um but it seems like for a ton of programs there was just zero oversight like basically people asked for the money and they got it and then nobody followed up with them to see like are you spending on what you were supposed to spend i mean it's just amazing these people who are like pocketing 20 40 50 million dollars uh that they're getting in grants and basically the grant checks just get written there's no due diligence there's no follow-up there's no audit trail um and and you know mind-boggling just to begin with but like to your point about the stuff that we should be doing this is all money that could be going to things that would generate really great long-term potential returns for us and it's just going down the toilet largely to bad play enriching bad players here and so at a minimum if we can just stop the bleeding of the bad spending um you know a we could probably balance the budget and i i mean i've said that many times but i've heard like scott best and other people say that like people that are really close to the actual national p l basically validating that so we could maybe just you know a not not take on more debt and and do what we're currently doing right now or at a minimum just redirect that spending to whatever else we think is really important if we're going to deficit spend let's deficit spend on things they're going to maybe pay for themselves over time no i mean you [00:42:31] Lance Roberts: know if you just logically think about it right i mean this this is what tells you that it's all political bias right if it hadn't been elon musk if it hadn't been donald trump if it had been you know some other person that wasn't so politically polarizing there probably would have been but big push back on bush because logically just thinking who would be against making sure that every dollar of debt that's being spent into the economy is being appropriately spent i mean it's you know there's a there's a great movie if you ever watch it's called dave and uh with kevin klein and he's this accountant that has to has to sub in for the president because he looks like him and there's a whole backstory it's a great [00:43:09] Adam Taggart: movie to watch if you like older movies yeah he's like the accountant by the way his friend charles [00:43:13] Lance Roberts: groden is the account yeah exactly so that that's great thank you uh but yeah but there he wants to find money for a government program they said hey there is no money for that program and he's and they go if you can find you can find it so he says he starts literally redlining the budget it's like yeah we spend that money on red line uh but you know that's the point is that who would be against that i mean if you know we've turned up you know tons of evidence of of money getting misappropriated misspent etc the the the military they report their budget and they're like yeah there's 800 you know [00:43:42] Adam Taggart: there's eight billion dollars we can't account for what yeah they they i think have have failed their audit uh like every year for the past 20 years yeah yeah it's it's it's incredible i mean but [00:43:52] Lance Roberts: what business would operate like that and if a business was operating like that who would be opposed to going and saying hey let's look at your books let's clean this up and let's make sure that every dollar of debt that we're spending is one right area and what cracks me up the most is the very people opposing doge are the same people complaining about the debt right they're the ones going oh the debt the deficit is going to lead to our demise and then they're against doge so you know it's it's just and that just goes to show you how it's just a political polarization of of who was trying to implement and why the idea is fantastic and we should that should be a normal process of government by the way that should be great that's what i'm saying it should be its own branch it should be the accountability branch no it shouldn't even we shouldn't even eat a branch this should just be the fact that we haven't had a budget do you realize the government has not had a budget since 2008 yeah ever since president obama took office in 2008 we've been doing continuing resolutions what's a continuing resolution a continuing resolution says all we're going to do is look at last year's spending at eight percent to it and that's this year's spending that's a continuing resolution and so rule of 72 how how fast are you doubling your spending at eight percent a year right right and now you wonder why you are at 30 trillion in debt because you're simply doing this this and then then of course you throw cove in there and we're going to really yank up some spending but you know that's the problem no we're not operating a budget if we had a budget adam and says okay here's the budget the military is going to get x dollars and you got to get rid of this kind of function where if you don't spend the money you lose it i mean that's a stupid thing to have inside of a budget anyway the goal of every department should be to spend what is needed but try to be frugal and try to save money where you can that should be the goal and then adjust your budget every year for what the needs are and we would not be growing our budget this pace but you can't you can't have a [00:45:47] Adam Taggart: budget analysis when you have no budget so you know the sound money advocates are going to say lance this is why we need sound money right is when you have a problem that's the worst idea ever [00:45:58] Lance Roberts: i knew you were going to go there but they're going to say that's the governor when you have [00:46:03] Adam Taggart: a fiat system where money can be created at will then your your your only limiter is the discipline [00:46:10] Lance Roberts: of the policy makers that sounds fantastic on on earth but if you want to live through the great depression all over again for the next 60 years go back to sound all right all right i don't want i don't want to rat hole on on lance's it's it's a terrible contract look but no no but just but just but just [00:46:27] Adam Taggart: acknowledge my point here right which is when you have a fiat system where it is limited only by humans ability to constrain themselves if they don't have any sort of mechanism that's holding them to [00:46:37] Lance Roberts: that then they're always going to punt okay and if it works that way then why did every civilization on earth that had sound money like the romans start depleting the sound money in order to meet their spending needs [00:46:48] Adam Taggart: yeah that's because there was no there was no governor on top exactly and it doesn't matter [00:46:53] Lance Roberts: that's why it never works it's it sounds great in theory but there's simply not enough precious metals in the world to support the spending you need to grow an economy the size of the us much less [00:47:03] Adam Taggart: the global gdp i i i get it i don't want to rat on this we can make this a discussion for a different day sure um where i was going with this is to your point of who could be against this right and i'm with you now that that said i i think initially a lot of people were against doge because it was elon right and this was right in the wake of the election and elon had thrown his hat in with donald trump and there was a lot of people that just didn't trust him and there was a sense of you're giving the keys the financial keys to the kingdom to this tech agopolis right and there were a lot of fears that he was going to you know i don't know you know create profiles on every american or whatever right okay so there was that that that that concern at the beginning there but something that elon says is you know you know you know who complains the most when you do when you put in controls like this it's the fraudsters it's the people it is basically it's like a paypal benefit from the fraud are the ones that complain yeah yeah i mean he basically said you know at paypal we would find that when we found an error and we'd fix it by far the way far and away the people that were complaining the loudest the most vociferously were the ones that were you know benefiting obviously oftentimes illegally from it right um so and and sadly i just think that's a lot of the current system the current system everybody's used to getting their share of the slush pie right so that's why you've had such vociferous and vigorous resistance to these measures but i do think over time uh let me put it this way i i am i am guardedly optimistic and i'm certainly rooting for this growing culture of you know what we just should be making sure that if we're spending money it should be spent on the things it was supposed to be spent on uh that that continues um so anyways um that and motherhood and apple pie and uh everything's good okay so um let me ask you this i i generally ask you variants of this question pretty often on this channel but um still tbd but things don't look very good for the ceasefire um with iran the president himself has said i think it's over you know he's calling these guys scum um back to that we we've we've hit iran for a couple nights they've retaliated by hitting a bunch of uh their neighbors largely targeting american bases in the region um sounds like you know there's efforts diplomatic efforts going into overdrive right now to try to contain the system but let's just assume lance it goes back to full bore war like full bore war where the u.s says you know what we're just going to finish the job it's going to be bridge and tunnel day um maybe we're going to take over karg island it's just the u.s bringing the full bore of its might down on iran um and some people will say hey that doesn't matter iran's still got the better hand here i'm not going to get into that debate but if it just goes back to full bore war what impact do you expect that to have uh on the system it's going to have some i know you think it's generally nothing burger but i mean oil prices [00:50:02] Lance Roberts: aren't gonna be able to stay low if that happens yeah well you think that but uh again we started shooting rockets at each other and oil prices went up for a day and then i agree i agree they're not [00:50:13] Adam Taggart: moving right now but we're not back at full bore yet well no i understand that i think the point [00:50:17] Lance Roberts: though is that you know and actually i've got an article i'm starting to write about this is you know this is the problem with all these forecasts is that you know oh if this happens if a happens then b is going to happen and back in you know march april you had a bunch of guests on that were talking about you know if we got you know this war with iran they're going to win it and it's going to be the finance the next financial crisis and and oil prices are going to 200 a barrel you better buckle up because it's been mass starvation because there's gonna be no food supply because of fertilizer and none of that happened and markets looked through it in about two weeks and said yeah it's good let's go and market started piling back into equities because the growth of the economy is still there and the oil supply dynamics have changed so dramatically since the 70s you know the suez the iran oil embargo etc those applications don't apply to today's economy so there's certainly impacts from higher oil prices in terms of demand destruction we've talked about that before uh we're going to see that kind of pull through a bit and and again if oil prices go back up the 80 90 bell range we're going to see some inflationary pressures just from the rise in oil prices but you know it's going to be something that the market looks through again most likely we may see some temporary disruption and again this is the setup we need you know you and i've been talking about that the real risk for the markets probably august september going into the midterm elections this is the exact setup you need for a sell-off in august and september of five to ten percent just to just to reset markets ahead of the midterm election you need a catalyst for that and that could very well this could very well be that case for that all right and when you say this are you [00:51:54] Adam Taggart: talking about oil prices more than the kinetics themselves yeah oil prices well the connect you [00:51:59] Lance Roberts: know the kinetics lead to the oil prices right well but let's let's say we go back to shooting but [00:52:03] Adam Taggart: the oil price stays low is that still enough of a potential trigger or no i don't know how you get one [00:52:12] Lance Roberts: without the other but if kinetics if we have kinetics but everything you know oil prices go to 50 or 60 don't i don't know how that would actually happen but no markets are going to look at the oil so that at the price of oil not the actual launching of missiles uh the finn stocks will do well right you know if we're launching missiles raytheon is going to do well but right yeah okay um all [00:52:36] Adam Taggart: right well look we'll keep our eyes on it closely folks and yeah i mean let's let's let's hope none of that happens and let's hope oil is successfully seeing through this um because to your point lance it [00:52:46] Lance Roberts: really hasn't moved all that much yet yeah and look and look and i think you know i think the only thing you watch right now is you pay attention to the price of oil because that's going to be the that's going to be your limiter um as to what happens with markets and again if something happens and again we haven't seen it yet but if something happens all of a sudden we wake up one morning and oil's up 30 40 bucks that's going to have an impact to markets and again the feed through from that is going to be high oil prices lead to a tick up in inflation expectations because of the feed through of oil right and that's going to lead to a increased risk of a fed rate hike which i don't think the fed's going to hike rates based on an oil price shock but you know it's still going to the market's going to look at it that way so you're gonna have a domino effect if oil prices spike so i think the only thing you need to pay attention to right now more than anything else if you're worried about [00:53:34] Adam Taggart: is pay attention to oil prices right right right that's kind of where i was going with all this which is it's interesting that that right now is the topic that i think i see the greatest amount of divergence on with the folks that interview um there are you know the jeff curry's of the world who think that higher oil prices are baked in for the next year um because of the damage that's already been done to global reserves yep um and then you have the oil market itself which is basically saying we're not worried um then of course you've got people saying well you know the oil contracts are the most shorter they've ever been or something like that at least you know super heavy short positions where they think that the price of oil is getting monkeyed down just to keep the world from worrying i kind of feel like lance that like that's that's a hard thing to do the oil market is a really big market i i i i'm curious if you feel differently but i don't think the president and his buddies and whatever countries you could get involved could suppress the price of oil for that long at the time uh to to kind of avoid any organic upward price pressure that would want to manifest over months [00:54:50] Lance Roberts: the the president and his friends and buddies have absolutely no control over the price of oil price of oil is set by commodity traders on the nymex that's it supply you know you have you have a portion so if you look at the breakdown of commodity trading right you have a very small component that's retail you have a a a relatively normal contingent of you know companies like exxon mobile going out to do forward hedging on delivery right so if oil prices are 100 a barrel i'm gonna go out and sell forward contracts so i can deliver oil i'm producing today that i won't have to market for three months i can still sell that at 100 a barrel right regardless of what oil prices do so you have you have the commercial hedgers you have your retail investors but by and large the largest chunk of what sets the price [00:55:36] Adam Taggart: of oil or speculators and president can't do anything about that yeah yeah that's that's my understanding too and also it's a global commodity i mean there are other parts of the world besides the nymex that that sell oil yeah and if those get too imbalanced you know just natural arbitrage will bring them back [00:55:54] Lance Roberts: into alignment absolutely absolutely and that's why you look at you know back in march and april in the middle of this crisis where everybody was predicting you know the end of the world if you look at the forward curve of oil they were all at sixty dollars a barrel right right it didn't really budge very much yeah in the later months you know and four months later we're 65 bucks a barrel we were then pick back up but we were in the 60s you know four months later which was about what the market was predicting so you know it's just interesting again you know if you just take a moment set aside all the narratives and the headlines again this is the whole point about investing is just set aside all the narratives and the headlines and go look at the data because the data will keep you out of trouble more [00:56:34] Adam Taggart: often than everything else yeah no totally agree and again i just underscoring here of the the many folks that i talked to this is the one where i probably see the cleanest split between kind of half of them on one side and half of them on the other and we're going to find out collectively which way it is but right now the ones who were saying oil prices are going to you know we're going to drop like a rock after the uh the um mou was signed um so far they're winning out again we'll find out what happens from here um all right so um i'll talk about the fed and then maybe we can you can bring up the um the ta for the s p for the weak lands um so we got the the fed minutes this week and it sounds like the not you know it was warsha's first appearance and you know we we talked about this last time you know he kind of did what he needed to do right which is really puff his chest up and say man i'm a i'm a massive monetary hawk and i'm going to do whatever it's going to take to tame inflation get it down to two not two point anything except other than 2.0 um and the market said okay that sounds pretty good um it sounds like the other folks around the fomc table felt pretty similar to him like in other words there was a lot of there was a there was a debate about whether rates should be hiked and there were people that were definitely on the hike side of this past fed release um so there are other hawks basically on that table along with warsh um and so you know you and i kind of stuck our necks out a little bit and said you know we think the market is wrong right now and it's it's um forecasting of a rate hike um as the next you know action that the fed takes um we don't think it's likely to hike we think probably the the next action we don't know when but it's probably more likely to be a cut than a hike um but a lot of that's predicated on what happens with oil uh and obviously uh you know missiles getting shot in the gulf doesn't help our case from an odds perspective here um so i guess my question to you is in light of that information are you thinking of changing your call at all there or or do you still think that uh odds are more towards a cut than a hike at some [00:58:51] Lance Roberts: point in the future no no i i think the odds are nothing right now and this has kind of been our case for a while is that i don't think the fed cuts i don't think they hike and because you really don't have the data on either side to support it right so you know the the only inflation push we've got going on right now has really come from oil prices and maybe and look this is entirely subject and entirely up to kevin warsh but i don't think he's going to hype rates based on an oil supply hit right uh an oil price move because he knows that's temporary and then with oil prices coming back down that's going to feed back through to inflation so i wouldn't hike here based on that input now if i'm starting to see real a real surge if i'm seeing wages go up which we're not uh if i'm seeing economic growth expanding really sharply if i'm seeing strong employment reports which we're not um then i would be more inclined to hike because that's a more of a or an organic supply demand push on inflation so that would that would be much more in line with why i would need to hike rates so that's not really there on the other side you know i don't have a lot of economic weakness the economy's doing okay uh the latest dina fed gdp now is about 1.2 percentage something like that uh employment's a little bit weak but it's not negative and inflationary pressures are stable they're not spiking off to the moon by any stretch of the imagination so there's not really a need to cut rates here either so i think he's stuck for the time being and just kind of maintaining rates where they are continuing to look kind of forward at the data and then of course today they just named all the different heads of their task department you know their five different task forces for reevaluating their data inputs by the year so that's another reason i think you know he's got an incentive not to do anything right now until these task forces come back and say okay here's the data we should be looking at and then start to align policy that you make a policy decision now and that date all comes back and says you know you shouldn't do this then you made a policy error so i think he's got a couple reasons to sit pat for just the next few months right he expects to have these task force wrapped up by year end this is july now christmas is next week so it'll be over before you know it and so a few months [01:01:00] Adam Taggart: i think he's just going to sit on his hands and wait okay and i actually agree that i'm i i share that um uh you know my question was more sort of placing our bets when they take action is it going to be more likely to be a hike or a cut but honestly at this point in time it's way too early so let's just let's just stick with stan pat until we have a more clarity um i just want to make one comment on something you said there um so in jan vanek's presentation tomorrow um he spends a little bit of time walking through the jobs um market and um you know he's like look it's it's it's looking pretty good there's there's really nothing in there that suggests that there should be really any worry um about the economy at least from a job side and i just want to note this one stat here i pulled this morning the number of americans filing for unemployment benefits for the first time so these were initial jobless claims fell to 215 000 last week remaining near multi-decade lows so you know we have what's sort of referred to right now as a slow hire no fire economy um and uh you know you and i talk about all the potential issues with bls and whatnot and yeah i wouldn't really hang my hat on any particular one data point that the bls puts out but to your point lance it's what the markets have to look at and i think it's more importantly just to look at it directionally right um not sure it's exactly accurate but just trend wise and trend wise is is you know what like in general unemployment rate is still pretty low um the companies yes there are layoffs going on but but on a net basis we're still growing and um and you know things that you would expect to see as signs of trouble like initial jobless claims or continuing even you know are muted so um you know we i'm totally um aware of and sensitive to people who are like what are you guys talking about right i'm looking around me and i'm seeing you know young college graduates can't get jobs and my buddy got laid off and i can't get a raise and whatnot um but uh you know the economy is based on averages and right now i think the averages are doing okay and and there's there's there is a lot of good stuff going on um that if you don't work in like construction or welding or you know data center build outs or big tech um that you're probably not seeing right and this goes back to a comment i keep making and i hate making it which is just sort of like if you're in the bottom leg of the the k-shaped economy which is 80 plus percent of us um right now it kind of doesn't matter how badly you're struggling because the top arm of the k is just continuing to still do great and keep the averages going well and and sadly that's all that [01:03:59] Lance Roberts: really matters to markets at the end of the day yeah it is but also too like we covered a couple weeks ago here you know the the k-shaped economy is pulling a whole lot of people from that bottom k into the upper part of the k and look and this is one of the big fallacies about the k-shaped economy [01:04:15] Adam Taggart: every economy in the world has poor people in it period yeah there will always be a wealth imbalance [01:04:22] Lance Roberts: the pareto principle it rules supreme and and not only that though i mean and if you want to choose socialism or communism as your form of of economic system that k gets a whole lot worse and that bottom leg of that k gets huge and the top leg of the k becomes very small because you have a small amount of wealth that you have a small amount of people at the top of all the wealth nobody else has the wealth so you know be careful what you wish for and be careful more importantly with what you vote for but you know we make a lot of noise about this k-shaped economy like oh it's so unfair that this is happening but again as we went through with the data with you last time or the time before last is that the number of people in those top of that top part of that k the upper 50 of the population is growing the bottom part of the k is actually shrinking because we're moving more and more those people up into the upper income strata upper wealth strata houses are going up in value more and more investors are getting involved in the stock market they're building wealth this channel right here is helping people move from the bottom of the k to the top of the k so you know it's important just to realize that and that's what's happening we make a lot of noise about this k-shaped economy because it makes us feel good and particularly if we're in that bottom leg of the k we can point the top leg of the k and blame them it's all their fault that i'm in this position but it's about a lot of this is about personal responsibility and what we do we all have the ability to move up in that k but there's always going to be the k there's there's always been a k there's never not been a k throughout the history of the united states it's always been a k because you're always going to have people at the bottom run of the ladder you have people at the top run of the ladder and that's why you have an average right you know not everybody can be in the top of the k because you can't have average right right um all [01:06:06] Adam Taggart: right green a lot what you said i am going to say lance um i would like to re-explore that data with you at some point in the future because i gotta be honest i'm still not completely sold with the the the point that uh what i what i think you were making which is yes the middle class is shrinking but it's shrinking upwards not downwards um and i'm not totally sold on that yet but i'm i'm right now [01:06:34] Lance Roberts: you can argue with the data all you want then well exactly maybe we can around there maybe we can look [01:06:39] Adam Taggart: at a couple different data sources but like i said i want to see it again i want to give you a chance to convince me and some others about that um okay so uh let's pull up the ta for the week the technical analysis for the week um uh if i if memory serves um well last week we were still kind of you know in a wedge uh formation and you were thinking we were going to break to the outside yep and [01:07:07] Lance Roberts: we did sorry break to the upside and we did so we actually broke out today above the upside of that channel so again that's you know again this this kind of bullish dynamic kind of continues to build we've got a nice rising set of bottoms that we had this declining set of tops we've broken out that declining trend line from the top we've triggered a macd buy signal we're not overbought on on different measures so you know this market's really in kind of good shape and and if you take a look at the money flows on the on the right hand side which are those bars that's buying and selling you got a lot of buying coming into the markets right now so you're seeing a lot of bifurcation between sectors of the markets as we've talked about before some inductors are doing great uh they've come under pressures of late and we saw the money rotate into other areas of the markets which goes along with that factor rotation change that we made about three weeks ago where we rotated out of value back into growth that's been working very very well since then because those stocks have done well but this is so go ahead i said congratulations yeah uh but you know that's that's all kind of dysfunction but july tends to be a stronger month anyway so really we're just kind of playing into the july strength right now we just finished the end of the quarter uh we did all the rebalancing we saw you know semiconductors get hit because of that rebalancing so a lot of that sell-off and semiconductors and we can look at that chart here in a second as well but you know we saw that that sell-off in semis we saw that money rotate back to other areas of the market that have been kind of beat up so that was just that rebalancing process now we're getting set up for earning season so today we had delta next week as all the major banks uh the last two weeks of the month are all of your mag 7 exception of nvidia right so we'll get microsoft apple google amazon those all report in the last two weeks of months so so and then right after that we also have all the corporate buybacks come back so as soon as we open that blackout window uh you know sorry open the buyback window which will be the first of august we'll have corporate buyback step back into the markets and those are still running at a record level right now so there's a lot of potential support for the markets here which really besides all the other data that's running around right now it really argues that investors should remain primarily invested into the markets momentarily as there's not there's not any real sign of you know exogenous risk showing up at the moment doesn't mean it can't and again if we're going to have an a a a correction before the midterm it's going to be in august or september most likely and that could be the iran crisis flaring back up it could be something completely unexpected could be just bad earnings maybe we get maybe all the semiconductor companies which have had massive increase in earnings estimates maybe they all come in short right and that causes the market to reevaluate forward earnings but you know if we take a look at forward earnings i posted this chart this morning um you know earnings expectations for the second quarter are just continuing to look i mean q3 q2 q3 q4 are just going near parabolic right now so you know it's just you know it's just the expectations for earnings growth are just getting more and more optimistic so if there's a risk to the market it's going to be disappointment in earnings because the earnings potentially maybe they're not but potentially the biggest risk is that earnings estimates are getting ahead of reality [01:10:25] Adam Taggart: yeah and i i'm so glad you brought this chart back up again um this is this is of this morning this is updated okay um so you know this is tied to what jan banek goes through in depth tomorrow um you know when the earnings are there you know then you can justify uh the higher stock prices and as earnings estimates velocity increase then yeah you know you should expect stock prices to zoom higher but i mean at some point you know earnings estimates can't keep growing it what's amazing is is is how much and jan had a great chart of this how much the earnings growth is for companies that are trillions of dollars in market i mean it a lot of large numbers right it's really hard to get a big number to grow and yet we have these these big companies growing like they're almost like startups yeah and that's [01:11:24] Lance Roberts: again that seems to be the outlying risk i don't know if it is or not but that's the one thing that we need to be paying attention to and again this is so i'm building a quick just a really quick chart of semiconductors because this has been what's really kind of driving the market as of late it's been semiconductor stocks this is smh and you know it's kind of building a pretty defined head and shoulders pattern and again hasn't broken down yet but i think this is the one thing to watch because if you know if you go back we kind of looked at silver um you know previously we had the same kind of parabolic spike in silver prices it was all based on the supply demand imbalance and then the markets came to realize that that speculation had gotten way ahead of the actual supply demanded balance that's what's happening with semis as well and the expectation the growth of these stocks is far outpaced you know we're pricing in 2029 earnings right now for a lot of these companies so the risk is any disappointment and again doesn't mean this pattern resolves itself to the downside this could just be a nice consolidation and the market takes off to the upside again and you know we just we're off to further races but again i would kind of watch this because if this since the market's really been driven a lot by the now 18 percent market cap weight of semiconductors if these things do reverse there is going to be a drag in the market and this is where all your momentum [01:12:39] Adam Taggart: chases right now all right um well folks will obviously keep a super close eye on this and um lance it seems like we shouldn't have too much longer to wait to find out if that right shoulder [01:12:50] Lance Roberts: is indeed developing right yeah yeah yeah because i mean we're going to get into earnings here pretty quick so that's going to be you know the risk of these companies and again it doesn't have to be a lot i mean if some if a company comes in and just says hey um you know we're not going to grow as fast as we thought or you know their supply coming to market or another company comes to market that's developing a new chip whatever you know it's it's always about supply and demand at the end of the day and right now the thesis is is there's not enough supply of these chips to meet the demand but that environment always breeds competition you know because again prices are high enough that i can afford to go develop stuff that maybe was not profitable before but now it's plenty profitable [01:13:33] Adam Taggart: so i'm going to start developing it right and from what i've heard it's going to be knock on the semiconductors here is that they haven't really changed anything about their product um except for the price that's right they've said hey okay you know um we're scarce okay you need us great we're we're hiking our prices up but it's not been a lot of like you know innovation or development or new product so that to the extent when supply starts increasing there's nothing to protect those higher prices they're just going to have to come down if exactly well and then what happens if companies [01:14:04] Lance Roberts: just say you know again you're right you know you're right there's not been a lot of there's not new semiconductors that are coming out that are all new you know so much better than it's not like [01:14:12] Adam Taggart: in video where it's like oh this is a you know they're always launching the next generation chip right [01:14:16] Lance Roberts: yeah so you know with semiconductors it's kind of this so what happens if companies just go you know what i'm going to recycle the processors we were losing using last year right and i'm not saying they can't but i'm just saying that or maybe we just continue to use last year's processors right and we've seen that actually happen before where they were installing you know older processors and new computers because there was a chip shortage previously and then all of a sudden the supply demand balance and changes and don't say and and look the initial response is oh they can't do that look companies can do what they need to do if the prices are high enough and i can sell an old chip [01:14:50] Adam Taggart: for the current price they're going to do it right it's reflexivity we're we've seen it in the oil market as we were talking about earlier right the world has figured out other places to go get oil besides the gulf to do the same thing there and to me this is one of the the i think the biggest risks that i don't think is being talked about enough to the kind of a i um the rate of the ai growth trajectory which is um again in jan's presentation he's got a chart there of uh the most popular ai models that are out there yeah and i think i think anthropic has the first two and then like the next several are all chinese right and um open source and you know because the chinese doesn't they don't have access to the the best chips out there because the u.s produces them and and doesn't want china to have them they have made a big investment in software and saying okay look um you know the west is taking a brute force approach to winning the compute race they're just going to build as many data centers as they can with as many chips as possible right and try to build compute that way we're going to have to just do more with less chips so we're going to have to write better code right the west is eventually going to say well look maybe we maybe the right thing is to do just brute force let's do brute force plus better code right and the point will be we'll just need less chips we'll need less processors as a result right and i don't i don't know why we wouldn't embrace that i can't think of the reason not to embrace that so i just think at some point there's there's a less demand for chips coming just because the software is getting more efficient component here to the story and i don't [01:16:34] Lance Roberts: hear really anybody talking about that no that's right and again look and this is the whole thing that you know be careful with investing right you know there's there's all these these kind of narratives that are out there whether and again those just like we talked about sound money before it's a great narrative but you have to go through what the the fallout of that is so and so when you start looking at ai in particular there's lots of great narratives out there about ai but you know again we have to go back to the basics of the business cycle the basics of business management the basics of how corporations run themselves it's a profit motive at the end of the day and they're going to solve these problems and again just because competent and look competition is a great thing when when china launches a new ai model that's not you know the media is like oh it's over right it's over china won they launched this new model and now claude and everybody else are completely out of business that's not the case that's not how it works at all it's actually a very good thing because when china does that then do you think the engineers over at claude are just throwing up their hands going well but you know whatever no they're going let's look at that what can we do to incorporate it let's figure this out etc so forth and so on competition breeds better outcomes and and so we should be welcoming that competition and understanding this is going to make anthropic better it's going to make uh uh chat gpt better open ai it's going to make all these models better and because everybody's learning all at the same time and the the big issue is is that we're investing massively more capital into this process than every other country even china we're out yet [01:18:16] Adam Taggart: we're out spending money on that when you look at china like with its nuclear you know they've got like 50 plus nuclear reactors under construction right now we've got zero when you look at their electrical production capacity it's like this and ours is like this exactly but when it comes to this our data centers we've got way more data centers than i i think to your point like almost everybody else combined um and that was kind of my brute voice brute force point um which is that may be what it takes to win this arms race and if it is i'm glad we're doing it but you know but brute force plus plus greater efficiency is way better than just brute force alone yeah and but look you brought up a great point [01:18:56] Lance Roberts: look i think the power is and again this is this is part of the thesis in our portfolio it's part of just part of my thesis in in particular but i think if there is a bottleneck anywhere it's not in semiconductor chips and it's not software it's in power it's in power yeah and this is where i think why we are not and why the government has it right now just like full-throated companies to go build nuclear reactors is kind of a little bit beyond me they have so long it takes long yeah well there's a lot [01:19:26] Adam Taggart: going on there in terms of um new technologies and you know these small modular reactors and these micro uh reactors um and actually i want to get to i've got one that's sort of a case study of of today's rant or it's a proof point of today's rant so we'll get to that in a second um i agree with you which is it's probably not enough um right now but given where we had been on nuclear for the past 50 years um it's like we've gone from a coma to you know a fast sprint so it's pretty impressive [01:20:00] Lance Roberts: it's just going to take a long time yeah right well no this is i think the thing is more like we went from a coma to where we're slightly awake right we're just we're just kind of coming out of the coma but we need to start sprinting pretty quickly yeah well so so again i'll talk about this in a little bit [01:20:15] Adam Taggart: more detail but like we we've had three new nuclear three new um brand new new types of nuclear reactors these are small or actually they might even all be micro i'm not sure um have gone have achieved criticality which means um they have actually fired up this this brand new reactor type and are now running a sustainable fission reaction to them the government had put a july 4th deadline on there one company um did it about a month ago one did it like two weeks ago and then the one i'm going to talk about did it exactly on july 4th um but like good news is none of them created a mushroom cloud none of them created a mushroom cloud um but but it's just we haven't had a new nuclear reactor built yeah uh a new type built in like i don't know like again like i think like 50 years or something like that so so we we are fast trying trying to change our ways um okay so before i get to the rant um two last quick things one you recently wrote a piece about um more margin debt wars that's a topic we've been touching on recently um anything quickly to note about what's going on with margin no no that [01:21:28] Lance Roberts: that article it's on the website it's also on our substack page at lance roberts but no it's it's a little bit of a different take on on margin it's not saying you know margin debt's going to blow everything up you know run run for the hills it's actually going through a lot of the the kind of the misdiagnosis of margin that we see a lot uh for instance you'll see a lot of people posting charts on you know margin debt to gdp margin debt to m2 margin debt to you know uh you know other things and those are very broad like margin debt to gdp tells you nothing margin debt to m2 tells you nothing um because you know those are very broad issuances and again you know gdp includes business investment and government spending and imports and exports which have nothing to do [01:22:16] Adam Taggart: with margin debt like i said they're not really correlated to time yeah yeah you know and again [01:22:20] Lance Roberts: you know it's kind of like the number of people that eat chicken versus the or the number of people that you know die choking on a chicken bone versus the number of people dying and tangled up in their bedsheets has a very high correlation but those aren't those aren't a cause of one another right just because you eat chicken doesn't mean you're going to wind up tangled up in your bed sheets and dying of [01:22:39] Adam Taggart: strength the causation is being pretty uncoordinated in both yeah yeah exactly so it's a so i'm not [01:22:44] Lance Roberts: saying you know again those those charts are very scary and you look at it it's like oh my gosh you know this is this is 2008 all over again um but what we go through is the actual ones that matter which are the rate of change in margin debt because margin debt is only about two percent of total market cap and it's been that way for the last 30 years so you know margin debt the market cap doesn't tell you a lot but the rate of change in margin debt how speculative are we getting in the markets um the the the amount of uh or the deviation of margin debt from its long-term mean those are the things that tell you a lot more they give you a lot more significance about the risk building in the markets because of margin debt which is now over a trillion dollars um you know it's growing very rapidly we've got a lot of people speculating in the markets and the difference this time and i think this is important is that previously when we would look at margin debt back in the 90s right or you know early 2000 or even prior 2008 you know these spikes in margin debt that was pretty much just people borrowing money to buy stocks on margin today it's people buying going on margin to buy [01:23:53] Adam Taggart: 2x and 3x leveraged etfs on march or as i always interject with this or call options on or call options [01:24:00] Lance Roberts: leveraged etfs yeah so you know we so really if you probably looked at the level of of leverage in the markets it's probably substantially much higher than even just what margin debt statistics tell you about so you know the risk is likely going to be bigger now what does all that mean that doesn't mean the market's going to crash tomorrow as we've talked about before margin debt is what provides the fuel for higher asset prices it just works in reverse very quickly because if the market starts to decline and and there's a very important thing that i wrote about earlier this week on margin as well we have to touch on when margin debt starts to decline you get margin calls which create forced liquidation which more margin calls which create more forced liquidation the sec and finra so this is the new this is not in the article it's in part of our daily commentary we wrote this past week i don't know if you're aware of this adam but the sec and finra just passed a rule in june that eliminated the personal day trading rule and it lowered the the account minimums from 25 000 to two thousand dollars so now i can go and so now if i have two thousand dollars i can go on margin in my account and you know this just is just going to increase the number of people that are trading on margin in their accounts and look there was a reason for that that that minimum because again if you can't come up with 25 000 to invest you probably shouldn't be on margin anyway because that's probably all the money you have and when a margin call comes they don't call you up and they say adam um you know your margin debt requirement you're not quite there so i need you to put some more money in the account they just sell it they just start selling stuff yeah they do give you a call they give you till the afternoon to get money in the account if you don't buy clothes they liquidate your account so but they've eliminated that that that that limit they've also changed the how margin how the broker dealer's extending margin that used to be calculated at the end of the day it's now calculated intraday so if you have a big sweep down in the markets like we had back in you know kind of 2020 where you're down five percent in a day we're very likely going to trigger margin calls much sooner than we would have previous previously the markets had to be down 15 20 percent before you started triggering margin calls because the brokers have to get worried that they're not going to get their margin debt covered right and so when they start worrying about the the the credibility of the margin debt that they've extended they start requiring margin debt coverage with this intraday calculation that could very well accelerate that process and bring those margin calls sooner than they would have happened previously again this whole rule change was to get more people on the margin because it's big for company and no and you're laughing but this was pushed by companies like robin hood but this is late stage this is this is [01:26:50] Adam Taggart: classic late stage we always bring down the safeguards yeah keep the party go whatever it takes [01:26:57] Lance Roberts: yeah yeah we've removed all the speed bumps it's a nice straight road go put the pedal to the metal leverage yourself up and hope for the best but but i do think you need to be paying attention to margin debt not from its level look for the reversal the rate of change reverses that's your key we got [01:27:13] Adam Taggart: issues okay so margin debt is going to crash the markets just not yet basically is the punchline of what lad said and the reversal yes let me ask you this do you act like like credit spreads give you some advance warning that that trouble is coming right will will the reversal and the rate of change here really give you any heads up or is it like it just goes 100 miles an hour until it hits the wall in other words the reversal starts when the margin costs start right it's like it's reversing but yeah i can see the markets crashing as we're talking here it's all going to be coincident you're going to see [01:27:53] Lance Roberts: see margin debt reverse you know markets are down you're going to get margin calls that's going to accelerate the decline in the market while all that's happening credit spreads are going to be spiking out because now we're worried about you know collateral in the markets so all that's going to be coincident together again if you watch credit spreads credit spreads will tell you when when the event is coming right start to they're going to start to broaden out before anything shows up in the markets [01:28:18] Adam Taggart: that's my whole point and i wish somebody i want to contrast that to your saying watch the reversal in in margin debt because my question is is i'm not sure that margin debt reversal happens until things [01:28:30] Lance Roberts: break no no no it is i mean like i said you'll be down 10 15 in the markets then the margin calls come yeah yeah and that just accelerates it so but but again if you start seeing that reversal in margin debt that rate of change it's at least a decent warning sign to pay attention to particularly from [01:28:46] Adam Taggart: current levels which are very elevated right now very elevated okay all right so it's like ai it's probably going to kill us in the end but not not today it's all all right um trades what trades if [01:28:58] Lance Roberts: any of you guys made this week none this week uh you know we made some rotation a couple of weeks ago that's been working out pretty well so far um we're very tempted to start lengthening out some duration on the bond side we haven't done anything yet but we're you know watching what's happening with yields we we you know what we need to see now because of what's happening with oil prices particularly at the moment but you know with kind of the way economic data is headed etc we want to start lengthening out a duration bit we're all crammed on kind of a short end of the curve right now [01:29:28] Adam Taggart: because you think separate from a new iran escalation raising the price of oil that disinflation is going to rule the day for the second half of the year well not necessarily the [01:29:38] Lance Roberts: second half of the year but next year and the year after right we're probably going to see slower economic trends particularly after we get through this build cycle um fed's going to need to cut rates at some point again that's a little bit further out so one thing we're just looking we've kind of been waiting for interest rates to pop back up and they did um we're kind of watching them right now because we're because now we've got this inflation push coming back in from oil prices at least for the moment until we resolve iran but probably somewhere in here we might again no guarantees but we might start shifting a little bit of money towards the longer end of the curve pick up a little bit higher yield but then kind of position ourselves for rate cuts in the next couple years okay you said [01:30:17] Adam Taggart: inflation push from this high rise back rising on i mean oil is at 70. that's the sweet spot right yeah but [01:30:25] Lance Roberts: again it's the rate of change right so yeah and again right now it's not right because oil prices are down as we're talking right now we're down about one percent in oil prices but again if this again we're not the reason we're kind of just watching oil prices yeah the move right so far hasn't been [01:30:42] Adam Taggart: enough to do anything but if it goes back to 90 or 100. absolutely my question was just i don't think oil going from 60 to 70 is enough to start pushing bond yields no no no not at all and remember it runs [01:30:54] Lance Roberts: on about a three-month lag anyway so yeah a lot of the in the economic data a lot of the oil price inflation hasn't even reflected through to things like pce and that's why i was saying disinflation [01:31:06] Adam Taggart: should rule the second half of the year unless unless it gets kicked back up from you know that's [01:31:11] Lance Roberts: going that's kind of that's kind of our thought too and that's kind of what's leading into this idea of maybe shifting a little bit of our duration again we're you know if you take a look at our bond portfolio you know out of 40 bonds about 35 of it is all short duration or cash um so we have about five percent and longer longer duration because we want that you know capture that yield right right [01:31:32] Adam Taggart: and so we start to increase that a little bit yeah yeah you know maybe take it to seven percent maybe [01:31:36] Lance Roberts: they get to nine percent at some point something like that uh just to lock in higher yields before [01:31:41] Adam Taggart: we lose that opportunity okay all right um well let's do the rant and then wrap things up here this rant shouldn't be too long i don't think um so i i just reconnected um with a guy that i used to work with at merrill lynch so as a reminder for folks um i went to college i was an archaeology and pre-med major um i did not expect uh to at that point in my life to end up where i am now and uh at the last minute decided not to apply to medical school and had to figure out what to do and then ended up um getting into an investment banking program in manhattan for merrill lynch and i've talked about that experience in the past so i won't go too much into it except just to say you know it was not the right cultural fit for me and it obviously taught me a lot about wall street and how end of the day wall street exists for its own interests not its clients um but anyway shocking shocking shocking um so i don't have a ton of nice things to say about you know most of the people that i interacted with down there but there was one guy there was an associate um so i was an analyst the next level up after you went to business school was associate there was an associate there who was a really great guy and um he was very smart super handsome um he just got all the women uh and rightly so he just was you know smart nice uh he was um spanish so he had the the great spanish uh accent uh he was a surfer he would somehow find time uh to get out of manhattan for a bit and go surfing um just a really super cool dude um and uh his his spanish name but his spanish all the spanish guys go by nicknames his nickname was pacho and um pacho was in great shape it was just built like a bull and um you know us analysts just worked all the time we were doughy and pasty and just you know whatever so i i got into a little bit of a fitness burst there and i was spent a lot of time on the treadmill at the the gym nearby um or trying to at least and uh it started feeling pretty good about my progress and so i was um you know telling some people around me about you know how much progress i'd made and how clearly good about myself i felt and uh i somehow was doing that with pacho and he was listening politely and all he did lance was he listened to me you know kind of brag about what i'd done and then he just took like two steps forward got right up next to me and he just reached his arm out and he pinched my midsection pinched my gut you know and he ended up getting a couple inches that he was able to pinch there and he didn't say anything he just looked at me right with this this look of like okay you're talking about how much progress you've made but i'm still pinching this flab here on your gut so clearly you haven't made enough progress yet right rough yeah and the rest of my life i've thought of this as the pacho test and um it's it's great because it just cuts through all the bs right all the narratives all the bias all the story we can tell whatever it's just a litmus test that says well do you have the results you want or not and in that case you didn't i didn't right um and so i've tried this to bring this into other areas of my life business and otherwise where um i try to i try to get out of my own mind and what i can tell myself or what i what i want to see right and just say all right look what's the metric i can look at that is going to tell me whether i'm getting the outcome i want or not and as brutal as it is that's going to be the truth right um and so um you know in business you talk about kpis or whatnot um and and you know i i don't have like a kpi for life but i'm just saying when you when you have goals when you have outcomes that you're looking for you know spend time trying to ask yourself you know what's the version of the pacho test to try to determine whether what you're doing is actually working or not um and a lot of people don't right i mean we'll just we'll tell ourselves stories we'll look in the mirror and say well it's not that bad or i'm close or whatever um or we'll start you know seeing more of what we want to see or we're listening to somebody tell us about how great whatever they're doing is if you've got a you know the right metric to just come in and say well all right you're making that claim let me just see if you're right or not uh just cuts through like i said all the bs it's a great superpower to have and i will say i'm still working on this in my life i'm not always uh perfect in um uh coming up with the right metric or even if i am i'm certainly not perfect in a lot of the things i do in passing the pacho test um but it's how i keep myself honest and how i get a sense for how close i am and for example you know i'm still doing this um this 12 week fitness transformation program that i've been doing last and i made a lot of progress um but i'll be honest i'm still failing the pacho test um i'm getting closer and closer to passing it but right now i'm just i'm not where i want to be because i i i yeah objectively fail that test um so that's a very tough test at our age it well whatever and i can come up with all sorts of excuses but my goal is [01:37:10] Lance Roberts: that's not really excuse part of that it's just just actual physical realities so true i know a 61 [01:37:19] Adam Taggart: year old who passed it when he just took his trip to italy right you sent me that photo lance you you definitely had passed it so you know um here's here's a good example um so you know a few months ago we had the ceo of aloe atomics here on the show and and this was the guy building his company's building one of these new micro reactors that they actually uh were the one that went critical on july 4th right um and what was great about that is that's like a great pacho test right you're building a nuclear reactor right fantastic it's going to do xyz phenomenal right okay it's all great can you actually get a fission reaction going in there right and and they did and what was cool about aloe is i think they actually passed a much more truer version of the pacho test than the two companies that did before them because the two ones that that went before them were using a lot of um kind of like prototype uh hardware so it's not what the actual end product is going to look like and they were using um fuel being provided by the department of energy in a lot of cases they were using department of energy employees to run a lot of the the processes there which in the once they're up and running sustainably they they won't they should be doing all that in-house aloe actually did everything the way that it's going to run they built their full reactor it wasn't just a test reactor they built the entire system out um using the fuel they're going to use they had the all of their employees do every step along the way so they basically did a full-scale version of what they plan to mass produce so for them to move forward from here all the get most of the guesswork is now out right they they've done a soup to nuts and and test of this so you know again for me from a pacho test these guys they passed it right that's very exciting news yeah so um so anyways i've got i've got one or two more things to mention on this but i will take a break for a second lance because you're you're you're very much kind of like a no-nonsense guy of like hey look you know yeah you can talk to me all day long about how great you are what you're going to do for me but are you getting done what i need to get done right now um i assume you guys probably have your own versions of pacho tests at ria oh yeah no i mean using your own [01:39:34] Lance Roberts: life yeah yeah absolutely and and you know everything is you know there's two things about whenever you endeavor into a project which is to have that to have a very set timeline you know where the pacho test for most projects is by this date you're supposed to have this done and if it's not done by that date then there's ramifications for that failure of some sort or another right but if you don't sit the the problem for most people why they never achieve success is because they never set timelines uh they do they they make two critical errors one is kind of like your fitness thing right 12 weeks i'm going to go into this program and i'm not going to put a time frame on it i'm just going to i'm going to this program and my goal is to be you know i want abs right yeah i want abs [01:40:24] Adam Taggart: right but if you don't put a timing on it you could be chasing them for 20 years right exactly well [01:40:28] Lance Roberts: that's the whole point right is that but it's also too big of a goal if you if you're 300 pounds and you say i want abs right that's that's too big of a hurdle you need to set up progression that you can goals that you can achieve that keeps you on track it keeps you moving forward you know i'm gonna get from 300 to 280 that's my first goal right 280 to 250 that's my second goal right instead but you have to set up these achievable goals this goes for finance as well right you you know people that are in debt they go well i'm gonna get out of debt it's too big of a goal right settle with paying off a credit card first then another credit card set achievable reasonable goals and then set achievable timelines and saying i'm going to pay off this credit card in three months and then go bust your ass and pay off that credit card in three months and then do the next one and do the one after that but you know this is this is the thing that frustrates me when and and this is why i do get frustrated when you talk about like the k-shaped economy a lot of these type of things because i get a lot of push on well lance you don't understand because you're a boomer right you don't understand that how it is today and i do i have kids that are growing up right and these are the same lessons i'm teaching them right is is let's look let's sit down let's go through what you're spending all your money on right and let's catch all the leakage that's going out the door let's start working on no credit card debt right let's get rid of all your credit cards you don't need a credit card to have a credit score it's a huge lie um you know those type of things but you know a lot of us just aren't willing you know to make two mistakes like i said one it's like i'm here and i can't get out of it right i don't even set a goal and i don't set a time frame to achieve anything so i mean you can you can achieve whatever you want you want to buy a house it's achievable right just set reasonable goals i'm going to start saving up for my down payment i'm going to save up one-third of my down payment this year one-third next year one-third the year after that whatever it is pick your goal but set a goal set some achievable marks and and get after it go hustle all right totally agree um [01:42:35] Adam Taggart: and you're reminding me of another um we'll talk about this more later on but one of the um uh kind of metrics i use maybe this is a version of the pacho test um so uh when when somebody works for me um first off i don't like people management and i don't think i'm very good at it so part of this is be aware of what your strengths are and what they aren't but when i have a business partner or you know a vendor or contractor um i try to i boil it down to a very simple directive that i give them where i say look i only need two things from you right i just need to if you do these two things well no matter what else you do you're going to do just fine it's communication and it's dependability and dependability is basically get done what you say you're going to get done by the time you say you're going to get it done by or because stuff happens and murphy's law exists just communicate tell me hey you know what this thing came up i'm going to need to make compromise x y or z right i'm going to have to do less or i'm going to have to push the timeline out or whatever right great as long as i know that's coming i can plan around that right and that's i got to tell you it is amazing how many people fail that test i know the communication [01:43:55] Lance Roberts: factor is the biggest problem and to your point as well that's the same way with me it's like i don't understand so like i i have a problem right now with a vendor that's working for me and he was supposed to deliver a product about two months ago and it's still not delivered and you know the the the sad part about this is is this was a very small negligible thing it means nothing to me right if he can if i never hear from him again it's fine right but if he would and and unfortunately for him is that i had a much bigger more lucrative project sitting right behind us i just ran a test with him and and the issue isn't that he hasn't delivered the issue is that in which i'm okay with that if there's reasons why shipping whatever it's all fine but i have to constantly run him down and calling texting emailing and i don't get responses and once that happens i'm never going to do business with you again so as soon as i finish up this contract with him whenever i get it done and maybe never at this point but once this is done i'm going to find a different contractor for my big project because i i can't rely on him he's not dependable and again to your point dependability is very key but communication is the most important part and i tell you what i am on my kids ass constantly about this because their generation does not want to talk to people right and i am constantly on them they're like oh you know hey have you taken care of this problem yet well i sent a text over or you know i went and i you know i sent them an email i was like no pick up the phone and call them right talk to them on the phone figure out what this is get this done and it's just it is you get so much more out of the process of doing this by communicating with people you'll be much more successful than relying on a text or an email which is very impersonal by the way once you start talking to people and explaining your situation whatever it is people then start getting empathy for you and they're willing to kind of go out of their way to help you they're not going to help you off of text right i mean there's there's no personal connection pick [01:46:08] Adam Taggart: up the damn phone i i think even a text is is uh i agree with everything you said there but like i mean i would love a text from some of these people that are horrible at communicating right just just text me it's not going to happen tomorrow for a reason x y or z and i can plan around that right um but um hey you're reminding me of like you know there's a reason why you know in in military communications right where you say roger right like you know it's like yes i heard what you said i'm confirming receipt of the message you just gave me right where it's like i sent a text out you know did you tell the guy why i sent him a text well did he get it did he have a response to it right like you need that roger confirmation and the problem is is or what frustrates me is like this part is the easy part right like you can't control the things that might get in front of your delivery schedule right the supplier was late with their delivery or the delivery truck broke down or whatever right but you can pick up a phone and give somebody that heads up right it's the easiest thing in the world to do i mean even a text right um but it is just amazing to me how many people fail this stuff and and a lot of it is cultural or generational or whatever they just don't think to think about it which boggles my mind or whatever but part of it too is like well i don't want to give them bad news it's like it's way the bad news is way worse when they come your boss comes to get the deliverable and it's not there and you're telling them for the first time and the boss is like wait a minute you knew about this for three days but you didn't give me a heads up right so anyways anybody's listening um i actually do think that's one of the most valuable things i can share with people just in terms of their their professional success but also same in relationships so there's two things communication and dependability it's kind of easiest thing in the world do what you say you're going to do by the time you're going to do it and if you can't just let people know in advance right yeah exactly okay um uh so uh back to the pacho test to a certain extent um so you know long time viewers here have noticed that i think two videos have run so far with um a sponsored read in them um for a fun product called uh plod um i'm not going to give the plug for it right now but um i mentioned that uh this channel is going to start doing selectively some sponsorships like that going forward and the main reason that we're doing it is to open up some distribution uh opportunities for thoughtful money contact uh thoughtful money content so basically um i've got the i've got the chance uh to go on a much bigger podcast platform and hopefully become a regular there kind of be their money guy going forward um i'm not going to mention who it is yet because um it hasn't happened yet um but i did and i was waiting for the call like the call from the minors to the majors right and lanty came in the other day so um next week i'm going to go on this program and shoot my shot so this is going to be like my pacho test there is is can i can i make the most of it and break into whatever it is they need they need me to do um and do well enough so that they say yeah you're a good fit and let's have you back on again and you know again get get thoughtful money's content and thoughtful money's uh insights out there to a much larger audience but but seemingly it's still a pretty like-minded one so folks will know if i pass that test uh in a week and if i do i'll let you know i'll let you know all the details either way but uh but hopefully i actually don't let you all down um also similarly um lance uh i'm beginning to get some other calls from some bigger media outlets um i just got a call from charles paine who i know you're on there all the time so for you it's like falling off a log um but i've only been on a show once and it was like three years ago and uh i i i i i kind of left that thinking like oh maybe my my shot didn't go very well um but i'm getting another chance at bat there and we'll see how that goes as well um and hopefully again folks you know this is all just to kind of get thoughtful money out into the the bigger larger world here cross your fingers let's hope as well adam yeah if you want to be [01:50:20] Lance Roberts: successful on charles paine it's a very simple formula be concise be bullish if you do that he'll [01:50:26] Adam Taggart: call you back okay great well we'll see how the i i can work on being concise uh the bullish one i mean there's a lot i can be bullish about so i think we'll be all right i'll just have to selectively pick the things i'm bullish about um but uh but um we'll see how it goes and hopefully that opens other doors as well we'll find out folks um all right well look um if um you think uh one of the best ways to take you know your real big shot in life is to continue watching lance roberts on this channel week in and week out let him know that by hitting the like button and then clicking on the subscribe button below as well as that little bell icon right next to it obviously if you would like to get some help in navigating your financial portfolio through what the future might hold especially if it unfolds uh in the way that lance thinks it might from here um i recommend you you know most people watching here uh get the guidance of a good professional financial advisor in doing that if you don't have one already advising you um i can you know urge you to consider talking to one of the ones that thoughtful money endorses these are the firms you see on this channel with me every week perhaps you'd like to talk to lance himself and the team there at ria to do that just fill out the very short form at thoughtfulmoney.com only takes you a couple seconds and once you fill out that form the firms will be in touch with you right away all right as usual lance i'll give you the last word [01:51:44] Lance Roberts: here yeah that's it um see you all next week have a great weekend and uh we'll see you then all right [01:51:49] Adam Taggart: everybody else thanks so much for watching [01:52:04] Speaker ?: Thank you.