Liquidity: Why the Market Might Not Care Who Wins

Daren:
[0:01] We made it through another week Chris it is Friday my favorite time of the week where we get to wrap up the markets and we did it all through Halloween we made it through with all the sugar crashes and rages over the last 24 hours we're

Chris:
[0:17] Almost there we're we're trying to limit the candy we're doing what we can.

Daren:
[0:23] Tonight the candy goes to the garbage can my friend i

Chris:
[0:28] Give him like 24.

Daren:
[0:29] Hours yep

Chris:
[0:31] That's smart i can honestly say this makes me very weird but i didn't like candy as a kid i had no problem i still.

Daren:
[0:38] Don't i

Chris:
[0:39] Still don't like it you know it's not a thing for me.

Daren:
[0:41] That is not shocking in the slightest about you chris true you're still the most disciplined eater i know this

Chris:
[0:52] Is true this is true yeah all right don't change all that much.

Daren:
[0:57] We're going to dive into it. Lots to talk about today. We're on the precipice of the U.S. presidential election. Obviously, that's creating some volatility in the markets. We're going to talk about why just perhaps the markets don't care about any of our politics and why there's much bigger things at play than who becomes our next president of the United States and how that could impact your portfolio and your investments.

Daren:
[1:23] So with all that said, we're going to dive on into it right after this.

Music:
[1:28] Music

Daren:
[2:05] Chris, I think it's kind of heresy, but I'm just going to say it now that our politics don't care about our portfolios, and they shouldn't. And I think there's a lot of nervous people out there about how this election is going to impact their portfolio. And it's the worst thing any of us could probably do is behave or act on our portfolio based upon who wins, whether we like the person who won or not. In fact, that both parties are what we would consider populist parties at this point are both candidates. And that means that they're going to play to certain groups. But what it means is both individuals are probably going to spend a lot of money and they're going to continue printing a lot of money and that's going to continue creating liquidity. Thus, we titled today's discussion about liquidity and why the markets might not care who wins the election, because either way, they're both going to spend money. Maybe they spend it on different things and that might create certain stress levels in individuals. But at the end of the day, generally, when the government prints and we have liquidity, the markets go up.

Chris:
[3:24] This is true. And I'll never forget this video that I watched in high school. Shout out to my philosophy teacher, Mr. Enzer, who had this video about scientific instruments. And I'll never forget it because it was talking about flying airplanes and how pilots have to rely on their instrumentation because your senses will lead you astray if you're flying an airplane, especially at night because you can't see. And so you have to rely on your instruments, even when your whole body's basically telling you that it's wrong. And there are so many parallels to that in investing. And politics is a big one where all of us are affected by our own views, and it can throw off our investing decision making based on our perceptions of how we see the world based on our politics. And so it's one of those areas where you have to recognize that and say, you know what, I'm going to look at my instruments because I can't trust what I'm feeling right now because it's probably wrong.

Daren:
[4:34] Yeah, fair enough. And I think I've said this for a long time, actually, but we can only hope that over the next week that we know very clearly who the winner is and who the winner is not, because there's been such a landslide win on either way or either direction, because what the markets don't like is not knowing, right? But once we settle all this out however we settle all this out and to what degree we settle this all out at the end of the day the markets will likely and i think the probabilities are that they will do well because we both we expect either candidate to spend money and spend big the sad thing is it's kind of like The best way to think about it is like a runaway train, right? The only way to save the runaway train is to slowly glide it to a halt. And I would say our spending as an economy and our debt in the U.S. is out of control. But if we just stop it, we're going to have a massive wreck. The only salvation for us will be a slowdown and a soft landing. I think what they've talked a lot about, which is hooey, hooey, because as we'll talk about in the data today,

Chris:
[6:01] A lot of, it's funny.

Daren:
[6:07] All the technical terms you develop as a father.

Chris:
[6:11] Yes.

Daren:
[6:12] That's hooey-hooey, which I might fill with a different word in different times, but not today, that you create these different words. But anyway, I digress. So it's likely, though, that the fiscal stimulus that we've seen, which is covering up all the sins of the economy. Chris and I have been talking for literally years on like, hey, these numbers don't look great. But the reason we keep going is when we look at it is because the government is spending so much money. And that's all that matters honestly at this point

Chris:
[6:42] I think i don't.

Daren:
[6:44] Think any of the technicals the fundamentals matter all that much um if the liquidity is in the system

Chris:
[6:49] Yeah it's a little like that movie from the 90s i think it was called speed remember that where they're on the bus and it couldn't go below 55 yeah yeah i think it was keanu reeves and like that was like.

Daren:
[7:02] One of his big

Chris:
[7:03] Break yeah yeah good it was a good movie but it's kind of like to your point where this there's no turning back now the spending is is to a point where it has to be unwound slowly you know yeah go under 55 uh immediately or you're gonna have problems a lot of problems the.

Daren:
[7:23] Thing is like if you look at back in the ross perot days right ross perot was like oh we're spending too much And it was like, I don't know, $5 trillion or something like that.

Chris:
[7:32] $5 trillion, yeah.

Daren:
[7:33] Yeah, he was freaked out about $5 trillion. Like, yo, we got $35 trillion now, bro.

Chris:
[7:38] Well, and I think that's a big reason why people don't really take it that seriously. Because it's like we have been hearing it for so long that it's not crazy to think, does it really matter? You know, um, it's really not crazy to think of because it's, it's been put out there for so long that it's, that's, uh, something to worry about. And it's just never, never created a problem, an immediate acute problem. I should say.

Daren:
[8:05] I've just come to accept that it does not matter until it matters. And that's the problem.

Chris:
[8:12] Yeah. Good point.

Daren:
[8:14] And you know, it's, it's one of those things. It's just going to be. It doesn't matter. And then one day it's going to matter and it's going to a little bit of time, then all at once. And then we're going to be in trouble. Um, and so until then you just have to ride the bus because if you jump off the bus, you're going to be in pain.

Chris:
[8:31] Yep. That's all very scary, but not as scary as our meme this week of the pumpkin with a tip, right? Everywhere you go, there's a tip. And when you stop and think about it as a financial person, you know, you're adding 15 to 25% to basically everything you purchase. I mean, it's crazy. So, you know, the tooth fairy, tooth fairy, at least when I was a kid was giving, giving out quarters and dollars, you know, and now I feel like, you know, $5 is pretty generous for a tooth my daughter came home this week and said her friend got 50 bucks from the tooth fairy 50 bucks there you gotta step up inflation's real i mean i and i asked my wife who's a dental person how many teeth do kids lose because i need to know you know they're getting 50 bucks a time now this is crazy uh.

Daren:
[9:32] Adding up for you buddy

Chris:
[9:34] Yeah yeah it's uh it's a little nuts so i think that's uh or she was just trying to trick me she's trying to throw out that anchoring of if she anchors anchors to 50 bucks then you know the tooth fairy's mind's already there so you know that guilt you've like.

Daren:
[9:52] You know you're you're at the grocery store and you're driving out of the parking lot and there's that individual sitting there and they're you know they're paying money and they have this sign mother of 10 and

Chris:
[10:05] Out of work and.

Daren:
[10:07] You're like oh i give them money do i not you know they're full well working it and i know that's controversial i have this debate with my daughter all the time but um you know and but you feel that guilt and you drive away. That's the same guilt we all get to feel anytime we buy anything because we have to walk away from tipping the person. I'm really not going to tip you for checking out my soda can.

Chris:
[10:31] Yeah. They give you the puppy dog eyes right when they turn the computer to you. It's the worst. It's socially awkward. Now this one, I laughed out loud when I saw this. This is so funny for me. So for those that can't see it, The meme is a guy, he says, inflation's bad. And then this lady's looking at him. She says, inflation is bad, or you ordered a private taxi for your burrito. He said, private taxi for my burrito. Yeah, my kids, thankfully, do not have access to DoorDash. They're too young for that. But my nephews, I understand, have access to it and regularly order themselves McDonald's, whatever they want. And it is insane how much that costs to have it shipped. So yeah, is it inflation or are we just getting super lazy with some of these convenience items we have available to us these days?

Daren:
[11:31] I must be a cheapskate because I recently had to decline a reimbursement for an employee that wanted to pass through a reimbursement of DoorDash. And I'm like, I'm not paying 60 bucks for your burger, man.

Chris:
[11:49] Yeah a private taxi for your burger yeah.

Daren:
[11:52] Yeah this was crazy did you actually watch the full video this i tried the glove open pulled the ball out it's

Chris:
[12:02] Crazy yeah yeah i saw the clip and i don't know anything about the fallout but i this one also made me laugh with the irs grabbing grabbing and your bonus the same way.

Daren:
[12:13] Can you imagine how mad the dodger i mean mookie betts like let's just let's just set set it level mookie betts was a red socks he should have always been a red socks and they sold him to the dodgers i'm still bitter about it i didn't even watch any of this series because i just refused to patriot it and you don't

Chris:
[12:34] Sound bitter at all.

Daren:
[12:35] And that's mookie betts's arm there that guy's worth hundreds of millions of dollars to the dodgers and some yahoo fans grab his hand bend it over this wall can you imagine how pissed off the owners of the dodgers must have been during that scene

Chris:
[12:51] Oh yeah yeah it's really crazy.

Daren:
[12:53] Absolutely angry yeah but yeah that's the

Chris:
[13:00] So, yeah, I felt like the meme, the meme game has been a little weak lately. So we had, we had some good ones this week.

Daren:
[13:07] But the problem is every other meme or I guess two thirds of the memes out there now are political, right? So we can't,

Chris:
[13:14] I'm hoping that by this time next week, it's a lot less, uh, we're, we're not talking politics as much, but you know, it's probably not likely. Uh, I'm one of those people that's just kind of exhausted with it at this point, but you But I think from a standpoint of like, hey, should I make big changes to my portfolio? Because a lot of people are asking that right now. This is from a dimensional or DFA, as they're otherwise known, showing the annualized returns going back to 29, which unfortunately for Herbert Hoover is included here, the Great Depression. That's that big red. I don't know what kind of candle you would call that, Daren, but the death candle from the depression for Herbert Hoover. But otherwise, you can see that whether it's red or blue, the market tends to do well because the market has done well in the past, regardless of who the party is in power. I also think it matters probably more whether or not it's one party rule or split government, which we've talked about that, how it looks like there's at least more of a possibility that we get one party rule, which in general is not great for the markets. Um, and probably not great from a debt deficit standpoint, if that ends up happening, but, uh, but we'll have to just wait and see.

Chris:
[14:43] But if you get that knee-jerk reaction of, oh, so-and-so won, I want to dump my portfolio and hide it under the mattress or go into something, make a major decision based on whoever won, that's generally been a pretty bad decision historically.

Chris:
[15:09] And uh here here's going back to the flying the plane with the instruments right um you can be influenced you probably are influenced there's you know there's religion there's politics and there's college football all these things will will distort our views in ways that we sometimes can understand and sometimes can't. And this great chart is from J.P. Morgan Guide to the Markets, which for anybody that's interested in the markets, look it up. They've got tons of slides. It's amazing, great research that's put out. But this one is great where it shows that after an election day, whichever side you are rooting for or think is best, Your views on the economy and the economic conditions completely change based on who wins the election. So just know that when you get that feeling that it's normal and that you should come up with some sort of shortcut to short circuit that situation because it's likely going to happen.

Chris:
[16:27] I'll say on the other side of that too, if your person wins and you say, great, pedal to the metal, let me throw even more risk on because so-and-so won and I know they're going to be great for the economy. Well, that doesn't work out very well either sometimes. So be careful, especially now, because people are pretty bullish. Things are pretty rosy from that standpoint. And so we've got the AAII numbers here, which you can see are pretty bullish. We've had a bit of a drop this week in the numbers, but still bullish overall. Now, if we look at the CNN fear and greed index, it dropped to neutral this week to 49 down from 60. So there was quite a drop. And then the fear and greed index on Bitcoin went up to 75 greed, which was up from 72 last week. And that's got to be a function of the fact that Bitcoin $72,000, $73,000 this week.

Chris:
[17:38] So as the price changes in Bitcoin, the mood changes very quickly there.

Chris:
[17:50] This is interesting from the conference board and Axios visuals where they're showing the share of Americans who think stock prices will increase in the year ahead. Now, this is probably a function of the fact that we're in something like the 15th year of a bull market in the stock market. So, you know, all of our recency bias is saying, yeah, stocks pretty much only go up, right? But, you know, there have been times recently, 2022 being one of them, where that was not the case. But we're one of the highest on records in terms of people thinking that the stocks are going to go up. Now, the last time it looks like was maybe 18 or 19. We were approaching this level. It's hard to tell by this chart. Um so uh people overall feel pretty rosy about the outlook in the in the stock market.

Daren:
[18:48] You know whoever wins chris has really got to thread a pretty careful needle right because you've had such a strong stock market you have an economy that on the surface is done pretty well but if you actually look under the hood it's driven by mostly government spending and not really true economic production, I guess, true independent economic production, but they've got a threat of Neil, right? You can't just come in and start changing everything without maybe making things very challenging. So I think as an investor, you have to assume that we're going to get more of the same, whoever wins, because they're both going to want to push the stock market and they're both going to want to keep the economy stimulated.

Chris:
[19:34] You got it. Now we got, we got a jobs report today, which was pretty awful. They're also, uh, making some revisions. Uh, this one was, uh, you know, significant revisions. And, um, I'll, I'll read now this is from, uh, I think it's Charles is a Charles Payne. Um, who's, I believe, uh, is he a political, uh, reporter? I feel like, or a business reporter maybe.

Chris:
[20:05] Yeah. Anyway, this rhetoric might be a little heated for some, but this is what he says. He says, Jobs report is a disaster and it's disingenuous to assume experts, he puts in quotes, that contributed to consensus didn't factor into their estimates hurricanes and strikes. Moreover, huge negative revisions continue to reveal how much weaker labor market than the media and economists portray. Now, I don't know if I fall in that camp where it's like everything is super duper manipulated. I think these numbers are harder to come up with than we think. But I do think it's true that under the surface, the labor market is less strong than what might be the initial number that you see. And like so many things with the economy and whether or not we got a recession, we've talked about the fact that there were some very big losses in the financial markets in 22. We've talked about the struggles in the real estate market.

Chris:
[21:08] The real estate market not seeming to have gone through much because of the prices on the houses have stayed high. And that's kind of covered up a lot of sins under the surface. And same thing in the stock market. There's been a handful of stocks that have done really well. You take out those handful until here recently, and the stock market didn't look like it was doing so great. So there's all these different areas, and I think you could add jobs to that where the headline number looks pretty good, but you look under the hood and it's kind of like, yeah, but there's a lot to that story, right? So maybe one of the reasons why we're not getting an official recession or we're going to see those official recession numbers is because it's really kind of buried under the initial numbers, jobs report being one of them that's been boosted by government hiring and kind of kept those numbers higher than would otherwise be.

Daren:
[22:01] Uh you've got those unique like kind of unique economic factors at play right now right and i think i know it's easy to say this time is different but i truly do believe it might be a little bit different this time i was thinking about this earlier today i mean you think about the amount of debt and that we're spending like you just can't

Daren:
[22:21] Dismiss that, right? You can't say that the economy has always been the economy. It's the same economy. It's the same stock market. And say that with an honest face when we're literally printing trillions of dollars every year to keep this puppy afloat, right? Like this is an economy that's propped up by the government from fiscal and monetary spending. And that's just a fact now, right so if that's a fact we have to say well perhaps it is somewhat different perhaps the idea of boom bust recession is maybe off the table for the time being until like we talked about earlier it all just comes off the table right it's like that runaway train speed or runaway bus and speed it has to keep going if it drops below a certain level then it blows up Um, I think that's really a great analogy for how the economy is. The second piece that I think we have to just factor in is you have the baby boomers and the group in the population of the baby boomers in the amount of money and wealth they control, uh, in the U S economy, which then influences the global economy significantly is very large and a huge portion of those, something to the tune of don't quote me on this number, but I believe it's like 46% of those individuals have their houses paid off.

Daren:
[23:49] That's unique, right? Their house is paid off, they're retired, they're living on pensions, large 401k balances, and they're influencing the economy. So the layoffs don't necessarily impact the overall economy as much because there's such a huge portion of people going in and in retirement at this point. I think those two major factors really are playing into how we read this fundamental data, how we understand this fundamental data, and how it influences the markets overall. There's nothing you can dismiss it anymore. It's just a reality. Like, there is this changed element that wasn't there before. All right. Very true. Suitbox.

Chris:
[24:30] Very true. So this is from Kathy Jones at Schwab. the next slide here showing the NFP report, they call it the non-farm payrolls. And she says non-farm payrolls fall to 12,000, way below the expectations of 100,000. However, it's likely distorted because of the hurricanes and will be revised next month. So again, back to the revisions, these numbers are not clear when they initially come out. However, if we go to the next slide, when we talk about interest rates and how the market digested that information this week, interest rates higher. And so, which is kind of a head scratcher because you're thinking, gosh, if jobs really are starting to struggle, you would think that the Fed is going to come in and start lowering rates. Hence, the market would expect lower interest rates. Well, so far that has not happened.

Chris:
[25:34] But Ed Yardini, Dr. Ed Yardini says in this chart, 28 days since the first rate cut and the 10-year yield is up nearly 60 basis points, so 0.60%. The 1995 soft landing rate cut cycle is almost a mirror image as it also started its descent a few days later, a potential post-election outcome. And that's by way of Seth Golden. So, you know, you can see where 24 falls. And if Dr. Yarden is right, and he's been right about a lot of things, and he was very bullish on the market before anybody else was, he's showing that we should expect interest rates to start dropping probably after the election. So maybe it is a pre-election phenomenon, but 24 so far has been kind of the highest reaction of any of the most recent rate cuts that we've seen going back to, it looks like 1989 is the one that goes back further. Yeah.

Chris:
[26:49] Now, it's going to be important for all types of things in the economy because interest rates and credit drive everything. And it's also driven with a lag somewhere between 12 and 18 months that the increased rates take to flow their way through the economy. And this is from Jeff Weniger at WisdomTree showing that via the small business survey, interest rate on short-term loans is extremely low at, or sorry, extremely high at 10% right now. And you can see the other times where it's been this high and it goes in cycles, like so many things were not great times, honestly, August of 2000 and December of 06. Now, 06, we still had another year or so before the markets peaked. August was really in that fall. But I also think it's important to remember, hey, not that long ago, we were in the pandemic, and there was free money raining down on businesses through PPP and all of these loans that were forgiven and money was just dirt cheap, basically.

Chris:
[28:00] Now it's super expensive. So is that going to delay things? Probably distort things for sure.

Chris:
[28:10] Right now, the market's still expecting a quarter percent rate cut at the November meeting, which is next week, a couple days after the election. Almost a 98 percent probability that we see a quarter percent cut from the Fed. And according to the markets, if we go to the next slide, that's the right move because we've got the purple line which is the two-year treasury rate, widely considered kind of the market's expectations of short-term rates versus where the Fed funds rate is. Now, we've seen this blip over October, a real jump in rates really across the border from the short end to the long end but And according to the market, the Fed's still too tight compared to where they should be. So if they get down to 4.75 here on the Fed funds, they're going to be getting closer to what the market considers neutral.

Daren:
[29:14] All right, let's dig into the stocks today and the markets. Let's just talk about the charts and what's going on out there. Uh, let's start, I'm going to start with gold today because I think that's the real story, which is tied to the interest rates, right? And gold just continues to go higher. We're seeing commodities, right? And we've been talking about that commodity boom for a while, Chris. It finally looks like it might be happening, which is interesting. But seeing gold just really continue to go up is certainly I think that will, being kind of a gold bug myself, I think over time will be balanced out because more gold is going to flow into the markets. But you're seeing a lot of central banks, they're the impetus behind Bitcoin. The gold move, I think, I suspect, because they're storing up a lot of gold because the question around the dollar and the viability of the dollar, which is closely tied to our debt and closely tied to the fact that we confiscated a lot of the Russian-owned dollars and started giving them to Ukraine, that has created a lot of dissent amongst the dollar-denominated world.

Daren:
[30:32] When we look at the SPY for the week. So the S&P 500, this is the largest 500 US-based stocks. From a chart pattern perspective, there's what we call an island reversal play. So this is like an island and then it reverses here. That's usually a bearish sign and a topping pattern. We're finding support right along here, right at that 570 and change mark. We did manage to stay inside that, more or that candlestick. But I would say that the fact that we traded up a little bit above yesterday's open and then sold back off is bearish on its face. So right now, I would say there's a bearish tone to the S&P 500 right now. What's interesting is the 20-week moving average, which is this red line right here has been support at least since

Daren:
[31:27] Uh, you know, last year around this time, you can see it was support right here, October or November of 2023. And then we checked in with it again in, um, April of 2024. We came here and found support around that area in August. It was support in September and now we're back looking at it. So if you're saying, well, how low does this go next week when we get all this volatility coming into the markets from the elections, which is likely the case, I'm sort of targeting as a first stop right here as major support at 560. But coming up right below it, by the time it gets there, this 20-week moving average should move right up below that. Right now, that's the first target for the correction, right? These corrections are good. You want to have corrections if you want the market to go higher.

Daren:
[32:21] So I think that's where we would keep an eye on. At this point, it looks like we're probably going to take a visit to that 20-week moving average. Once we get to the 20-week moving average, then we'll see where we go from there and whether or not it remains to be support on the S&P 500. If we go over to the primary bond market, Most portfolios are made up of partial stock, partial bonds for U.S. investors. The egg is traditionally looked at as the primary indicator or benchmark for the bond market. Had a nice move this year in 2024. We've gone up and now since rolled over, and that's really correlated with the increase in rates that we're seeing. We're going to need to see those rates turn around and start going back down if we want to see any improvement in the bond market. The fact, though, that we did close on this 100-week moving average, which is that gold line there, and we're finding support, albeit we didn't close below it, but we closed on it, I think is important. Perhaps we start seeing it move up. Although on its face, I'd say that looks bearish at the moment. I don't think we're due for a rate turnaround quite yet. I think there's just too much unknown from last week.

Daren:
[33:37] Again, I've said this many times on this. The markets don't care who wins. They care that we know who wins, right? They want to know what the plan is moving forward. And I think that's really, really important here. And we won't have that clarity. Hopefully we'll have that clarity early next week, but we won't know till then.

Daren:
[33:59] So next is take a look at oil we talked last week how oil had broken down here it's still finding support on this 69 level things seem to have kind of calmed down in the middle east israel last friday after the close chris and i recorded and then i i sent him a link shortly thereafter up look at here comes israel they're now bombing iran magical magical happens after the market closed.

Daren:
[34:28] So then what I was thinking about after I sent that to you, Chris, I was like, well, what are all these political individuals going to do now? Cause they now what, I mean, I don't know for sure, but it's, there's definitely a pattern here, folks. Whenever the markets close on a Friday, it seems to be a lot of geopolitical actions happen. And I don't know how many times on the show we've said, we've done the recording on a Friday market closes and like, yeah, we'll see if the war starts tonight. And sure enough, we've seen something. And then I heard some pundits say, oh yeah, the president of the United States asked Israel not to bomb during market hours or something like that. Um, but I was thinking if the market's now going to be opened all but two hours of the day, because that's the proposal right now is that the market's going to open up at one 30 AM, uh, And then trade all the way till 11 PM and then just be closed for those two, two and a half hours in the early morning. Like, just think, Chris, all the geopolitical strife in this world has to happen in a two hour window now.

Chris:
[35:32] I know. Practically going to have world peace. There's just no time.

Daren:
[35:37] That's how we get world peace. We just leave the market open at all times. So no politician wants to bomb somebody. But anyway, I thought that was kind of interesting. And I was also thinking a lot this week about that change and how that changes how we read the cues of the market, right? So if they do extend the trading hours, that will change how I communicate on this show because it will change how I read the charts. So we're all going to have to develop a whole new kind of approach to understanding and interpreting these charts here pretty quick.

Chris:
[36:13] Weekly candles won't mean as much, right?

Daren:
[36:15] Yeah, exactly. Like we're looking at the weekly candles right now where it closes and doesn't close. And I definitely won't be filming it, you know, 11 PM, given that both of us like to go to bed at eight o'clock. I wanted to point out lumber though. Lumber seems to be taking off per that commodity boom we're starting to see, which is going to make it really hard to control inflation, right? So whoever does win this election, they've got to come in, keep the market going, and they've got a cool inflation somehow. It's going to be an interesting kind of process, right? I think whoever the next president of the United States is in has about a year to take care of a few things, and then they've got to start moving the markets back up so they can get their buddies all reelected in Congress. virus.

Daren:
[37:11] So anyhow, that'll be interesting to see how that plays out. But yeah, we're seeing lumber move up and I was having PTSD moment from buying my lumber for my planter boxes right up, up around here.

Chris:
[37:27] The most expensive fence and planters ever made, right?

Daren:
[37:31] Yeah. So I used to live in that house and then I rent out that house. And then after I went back because I had to fix something for the tenant this week and I saw my planner boxes and I just felt a little pinch of bitterness that I bought those redwood lumber planners at the all time high. So even people look at the markets all day long, have to come up with ways not to buy at tops and sell at bottoms. So i think we should talk about a little bit about bitcoin um because i think that's definitely grabbing some of the headlines uh you know we started off talking about liquidity today i really look at bitcoin as liquidity driven i also look at it as um something that's becoming more viable as a solution for people who don't want to participate in a dollar denominated world we got a really strong move this week and bitcoin almost up and almost took out the 74 000

Daren:
[38:29] Mark, but then... Quickly, uh, and came back down. So we, we found resistance right up here at that 73, uh, level. Um, so I think that's noteworthy, but I would still say for those people doing the, the dance now saying, see, I told you all you Bitcoin people are full of it and it's going to go back down. Um, their market doesn't, the Bitcoin market doesn't close till five. So, um, we still have a few hours left yet to read it. But right now we're right on that upward trend line. It's just a correction, which I would expect when it moves that quick and accumulates. The thing you always have to remember with Bitcoin is when you want to buy more stocks, technically, if Chevron, for example, wants to sell more stocks, they can create more stocks. But when you want to buy a bit more Bitcoin, you got to go mine Bitcoin. There's only 21 million Bitcoin ever.

Chris:
[39:26] And so So ultimately.

Daren:
[39:29] As that continues to grind away and people buy more and more of that, price is always set on the margin, right? The actual coins are being exchanged or stocks are being exchanged, but less and less Bitcoin are actually going back into supply. And that's really clear. So they're becoming more and more scarce for people and more difficult to own. And so that pushes it up over time. But from a chart, that's still very constructive, even though we've had a correction. In that market better take a look at nvidia because nvidia is the stock that's certainly been the darling of this market hype or and what i will point out here is that trend line we closed right on it almost exactly interesting chris that looks almost exactly like the bitcoin close But you can see we closed right here. I would look to that line as the first primary support. And I would definitely look at 120 or 130 as the primary lateral support there. It's also sitting on support here at 135.

Daren:
[40:34] So I think things still look positive for NVIDIA, which would be helpful to continue to march this market forward. If we lose $129 next week and the volatility induced by the election, then I think we probably have something else to contend with. And that's going to make it more difficult for this market to continue to go up. Because we had stocks like Microsoft go out to the slaughterhouse yesterday. Well, I guess we won't call this the slaughterhouse, but certainly got sold off and we haven't seen dips like this in a while. But it's trending right along that trend line there and holding. So the you know the 400 we'll call it 405 area remains support why am i talking about nvidia why am i talking about microsoft why am i going to talk about apple because those particular stocks are such a large portion of the s&p 500 that how they do really determines how the index does and the index is what the news reports on it's how people feel about the markets and their portfolios because generally all portfolios on some level track the indexes. But yeah, we've seen a sell-off in Microsoft, Apple, and NVIDIA earlier on yesterday. Why? Why are we getting that sell-off? Well, I suspect, and I'm going to try to be as apolitical as I can on this for a minute, but the presidential election winner, this is the polymarkets now. The polymarkets are manipulated by big whales that can throw in a lot of money and change things.

Daren:
[42:02] For the good or bad. I think it's a whole new level of vote manipulation that could be at play here. And I think we'll see that after this election. I think a lot of people are going to write and talk about what the betting markets are doing to the auction cycle, because you can come in and bet a lot of money one way or the other and really move the market. However, the thing about the betting markets is unless people just want to waste their money, they're actually putting where their money, where their mouth is. I don't put it past any of the parties to find ways to funnel money into the betting markets to control how the odds are laid out. But the fact that we're seeing the odds of Trump winning versus Kamala winning, they're coming back to the center again, where for the last couple of weeks,

Daren:
[42:51] they really broke apart. And it was really clear that based upon the betting market's interpretation that Trump was going to win. Now that we're coming back to the center, that's creating more actors in the market to be less sure about the outcome of the election. Thus, the market is, I think, feeling jitters from that. We're also seeing a lot of reports about fraud both ways.

Daren:
[43:17] Both parties are crying foul at this point. I think that doesn't bode well for election integrity, doesn't bode well for election acceptance, and doesn't bode well that whichever side doesn't win, that they're going to peacefully step aside. And I think that's really important for that to happen in order for us to feel secure going into January and into the future. So let's hope for the sake of this country that we actually see a nice clean outcome from the election, but the odds of that are decreasing at the moment. And because of that, I think the market is feeling jitters from that. Um, when we go and we look at kind of the fundamental data report out this week, um, and we look at what came, um, again, I'm just going to show this. I'm going to say probably doesn't matter as much because I think the only thing that really matters is the fact that we have general liquidity in the markets. And when you got all that liquidity in the markets, it's, you know, the big gorilla, like there's just nothing, anything else. It doesn't matter, right? It doesn't matter if the job state is bad because guess what? The government just prints some more money. Um, doesn't matter really what employment is doing. And guess what? Because the government will just print some more money and that will continue to stimulate the economy. Thus, we see like in personal income is doing just fine.

Daren:
[44:34] Unemployment claims went down, but then non-farm employment change was off a bit and manufacturing was off. So we could say some of these things were showing weakness in the economy. I just don't believe it anymore until it happens because the fact that the government can just print money and change any of these things in any moment. And there seems to be an acceptance and okay with people out there just saying, yeah, we're fine if the government prints as much as they want. It just doesn't matter to us. That's just accepted the way it is these days and just keep this puppy going.

Daren:
[45:08] So that being said we just have to read price action in the market to see what's going on with the charts like we will do every week and as always we'll be back next friday to wrap up the markets we might do some kind of election thing i don't know we're thinking about it it's just delicate area to tread so but anyway we'll be back next week hope everyone has a wonderful weekend take care

Music:
[45:32] Music