Honey Badger Don't Care: Market Edition

DANO WEIR: Welcome to On The Markets from Sonoma Wealth Advisors. It's Friday, May 16th, 2025. And my name is Dano Weir. I'm the Marketing director for our firm, Sonoma Wealth Advisors. Perhaps you're a client, perhaps you're considering being a client. This is our show where we look at the markets and not just the stock markets, but also alternatives, also the economy and things that impact your money.

DANO WEIR: I'm joined by Daren Blonski and Chris Sipes, both the co-founders of Sonoma Wealth Advisors. And this week, we're going to look at the S&P again, trending toward all-time highs, despite zero concrete news on tariffs. The S&P is a little bit like the honey badger. It just don't care.

DANO WEIR: There's also some data showing inflation expectations are spiking. What credit cards and auto loans are saying about a potential recession? Do college degrees actually pay our graduates actually getting hired this century. And this one might be a little bit shocking, but alchemy, turning lead into gold, may actually be real. We'll get to that all this week on On The Markets.

DANO WEIR: And as we say every single week, this is for educational purposes only. And if I have to educate you on the honey badger meme, the internet joke, well, I think we're about 15 years too late. I'll let you look that up yourself. But basically, we've got a new animal, Chris, inside the Wall Street Zoo. We've got bears. We've got kangaroos. We've got bulls. And now I think you invented this, the Honey Badger Market.

CHRIS SIPES CFP®: Yes. Well, I'm sure I didn't invent it, but I couldn't help when putting together the slides today, taking in the headlines, et cetera. That just popped into my head that the market just doesn't care. It just seems like no matter what. Bad news comes out.

CHRIS SIPES CFP®: The S&P just don't care. And as we've talked about many, many times before, when your personal opinions don't line up with like, oh, this looks like a clear skies for the market, of course it's going up. When you're looking at it and going, gosh, the market just ought to be going down at this point, right? But the market's going up.

CHRIS SIPES CFP®: Check your own. Perception because most likely you are wrong and the market is right and it will only make sense in hindsight, right?

CHRIS SIPES CFP®: And I think this little tariff spat that we've gone through over the last month is a perfect microcosm of that where you started to see recovery in the markets long before we got all the pauses that we've now seen in resolutions or partial resolutions to the tariff mess. That we've seen over the last six weeks, the market was going up way before that. Right.

CHRIS SIPES CFP®: And pricing that in, and even, even not just the stock market, but assets like Bitcoin that we talk about is like the, the tip of the spear when it comes to the risk, curve price this in way ahead of time, you know, so we all, by the time we all woke up on Monday to the news that there was a kind of sorta, maybe some sort of an agreement between the U S and China, to pause tariff and to also lower tariffs.

CHRIS SIPES CFP®: Yeah, of course, the market rallied on Monday, but most of the gains had already been built into the market at that point.

CHRIS SIPES CFP®: Hey, Chris. Yes.

DAREN BLONSKI CFP®: You know what I was thinking? I'm like, I wonder if we could take the honey badger concept and create ourselves a mascot with the honey badger. I feel like if there's any animal, that represents our time in this business, it's been the honey badger, right? And I feel like we've come back to the honey badger a couple of times in our calls and these things we put on once a week. We've been doing them for three and a half years.

DAREN BLONSKI CFP®: So Dan, we're going to charge you with that to create a honey badger mascot logo for us that we can use. I think that's pretty cool.

CHRIS SIPES CFP®: Yeah. Preferred.

DANO WEIR: Preferably one that nobody's going to sue us over Dan thank you okay great i got an art project i got a legal project this is great i love this yeah what happens when you show up on it's creative fridays Dan wonderful.

CHRIS SIPES CFP®: So every time I see a clip from this movie, Daren, I think of our very first company picture together. I know you always think of the movie Twins with Danny DeVito and Arnold Schwarzenegger, which I don't know how to take that as what I would assume I'm the Danny DeVito of the year. But this is the movie I always think of when I see that picture of us. So I'm not sure which one of us is Will Ferrell. But Anyway.

DANO WEIR: What first picture is this? I don't know this.

CHRIS SIPES CFP®: We'll have to catch you up. We're both wearing blue shirts. And you know in this movie when they get the family picture, and I can't remember if it's Will Ferrell, and I'm blanking on the name of the other actor in this. You will know, Dan. I know you will know. It's Will Ferrell.

DANO WEIR: John C. Reilly. John C.

CHRIS SIPES CFP®: Reilly. Yes, John C. Reilly. So they have the picture where it's like a family picture, and one of them's like got his. His hands on the shoulder of the other, and he's kind of like looking over his shoulder. Remember that picture?

CHRIS SIPES CFP®: Yeah, yeah, yeah. That's sort of what this first company picture reminds you of. Daren and I are both wearing blue shirts, although we're standing up. And I think Daren's reference to twins is that I'm about a foot and a half shorter than him.

CHRIS SIPES CFP®: Which is very apparent in that picture. So we'll catch you up. You'll get a laugh out of it.

DANO WEIR: You know, let me just give you a second, because I know we've got a company drop.

CHRIS SIPES CFP®: Well, anyway, this.

DANO WEIR: This might be it.

CHRIS SIPES CFP®: Yes, that is the picture. Wow. Wow. On the fly catch. That's, that's amazing. That's the picture. Okay. So back to the meme though. This is what we woke up to on Friday. Actually, it was kind of Sunday, but you know, I think we, we started celebrating the market started celebrating. Like we just won the trade war.

CHRIS SIPES CFP®: Right like Did we just win? Yep.

CHRIS SIPES CFP®: That's kind of how the market took it. But on the next slide, we'll see a summary. And this is from Mike Sicardi, where he talks about the kind of details of the agreement so far, which is that the tariffs are dropping from 145%, which is basically an embargo on China, down to 30%. The Chinese tariffs on the U. S.

CHRIS SIPES CFP®: Imports are cut from 125 down to 10. So significant de-escalation on the tariffs, plus the pause for 90 days to allow for further negotiations. Beyond that, there weren't really many things that I saw that were relevant to the market. However, the market rallied significantly on this news.

CHRIS SIPES CFP®: Like we've been talking about in the prior shows, even despite all the other tariffs on all the other countries, really the most significance is the one with China given our trade relationship with China. So it's really the main customer that matters or the main supplier that matters. And so what happens there is obviously hugely impactful On The Markets.

DANO WEIR: I was putting my son to bed last night and we were talking about toys and he had just gotten a Transformers toy. And somehow he's like, well, Target needs to make a different version because blah, blah, blah. And I went, you know what, buddy, I got something to tell you. Target doesn't make the toys. And he's like, what? I was like, he's like, well, where do they make them?

DANO WEIR: I go, I guarantee it's made in China. He's like, how do you know that? And I grabbed a random milk cup. It was a Mickey Mouse milk cup, like a sippy cup. I was like, I bet this is made in China. I flipped underneath it. Yep, there it was. So. The, there's such an influence on literally everything that we have in our house.

CHRIS SIPES CFP®: Yeah.

CHRIS SIPES CFP®: You know, I feel like we totally whiffed last week, guys on the, on the mother's day, you know, shout outs.

DAREN BLONSKI CFP®: That was a major fail.

CHRIS SIPES CFP®: Major whiff, right? Very insensitive to what was going on around us. And Dan, I personally blame you because you have the three of us should have. Been the most sensitive to that.

DANO WEIR: What should we have done?

CHRIS SIPES CFP®: I didn't forget. Well, we should have had a meme about Mother's Day, said happy Mother's Day. Like it should have been. Yeah. Luckily I didn't forget Mother's Day. Yeah. Thank goodness. But anyway, didn't want to miss the opportunity to recognize that this is graduation season. You know, a lot of kids getting ready to.

CHRIS SIPES CFP®: Get out of school here soon and some are going to be graduating and moving on to college or graduating from college and moving on to the work world. So congrats to those folks that are doing that, especially those that were able to get out without too much debt.

CHRIS SIPES CFP®: You know, it's really, I really feel for the, the, the new generation in terms of what they're dealing with when it comes to the cost of tuition. It's hugely more expensive than, than it was for me 20 years ago. I know that, of course I went to a state school. I was in state, luckily, you know, had, had a branch experience for a year. So it wasn't, super expensive, but still graduated with, with students.

CHRIS SIPES CFP®: Student loans. But now, I mean, people are talking $60,000, $70,000, $80,000 a year to go to school. And that just seems mind-blowing to me. And for parents, it can be a huge piece of the overall retirement picture too. And we tell people often, look, there's a lot of different ways that your kid might be able to pay for school.

CHRIS SIPES CFP®: There's only one way you can pay for retirement. You know, so don't let it blow up your retirement, to, to make sure that your, your kids and, and, you know, as a father of four, I'm not looking forward to this because if you've got multiple kids, you take those 60, $70,000 a year and multiply it.

DANO WEIR: I was just going to ask you, it's like, wow, wow.

CHRIS SIPES CFP®: You know, and, and all the other, all the other things that they're dealing with, the AI, you know, like, And my son's really into puzzles. He's four. He's really into puzzles. And I'm sitting there thinking to myself, does it really matter if he's going to be the smartest kid or not?

CHRIS SIPES CFP®: We used to worry about having to compete with kids in foreign countries that were working harder than us. And now the kids are going to have to worry about competing with AI that's got infinite knowledge. I feel for the next generation for sure.

DAREN BLONSKI CFP®: So I was listening to the gentleman who used to run Google, who's into AI, Eric Schmitt. And there's a YouTube, he did a TED Talk interview on YouTube. And I was listening to it last night. And the headline of the talk was, AI is underestimated. And when you listen to him and the stuff he's saying, I don't see how you can't listen to what he's saying and be just straight scared for our children.

DAREN BLONSKI CFP®: Because like, that's really the question. And the interviewer asked him, he said, well, what do you, like, what are people going to do? Like, literally, is he going to take every job and make it meaningless comparatively? And he made an interesting point. He just said, well, it's, you know, people are just going to, something to the tune of people are just going to have to engage at a more complex level.

DAREN BLONSKI CFP®: And they're not going to. Not going to be able to just do simplistic, like all the simple jobs in this world that are not either physical or like just a general admin role. Those types of things are all going to be done by AI in a very short order.

DAREN BLONSKI CFP®: And it's interesting, but so in talking with my kids all the time about like, Hey, what do you want to do when you grow up? What are you thinking about? What do you want to study? It's interesting being a father, trying to coach through that right now and trying to figure out, okay, like how do I help my kids position themselves?

DAREN BLONSKI CFP®: Like one of my kids is a great artist and he wants to draw he's like dad i want to make comic books and books i'm like you can do that but you have to also figure out a way to make a living doing that right now you can generate all that on AI immediately so how are you going to position yourself differently so that you can still make money doing that and.

DANO WEIR: I don't know i don't want to stick on this slide too long but i just my take on this a little bit with AI and a little but to what Chris is saying about the... Price. And we'll see this later when it comes to our college graduates actually getting hired.

DANO WEIR: You know, we grew up in a time where you just needed that degree and you just needed a degree going to fill in the blank business, put down fill in the blank degree from fill in the blank institution, get job. And so that really incentivized people to not really necessarily learn anything at college.

DANO WEIR: You just needed to get through it. Because you just needed that piece of paper. And so I think what this could, if I'm trying to have an optimistic lens, and if you watch me on social, I'm definitely not.

DANO WEIR: But if you, if you, if you trying to have an optimistic lens, maybe the takeaway from this is that the people who are actually paying all that money to go to college are actually like, wow, I should probably try to learn something through all this and not just cruise through it. Cause I'm just looking to get my paycheck in four to six years.

CHRIS SIPES CFP®: Yeah, absolutely. And, you know, from an investment perspective, just super quick, because I think it's very dangerous to say AI is going to change the world. Therefore, AI is a great investment. And just put my money into AI and I'll be fine.

CHRIS SIPES CFP®: I would warn you to go back through history and look at all the major technological advances and the market's responses to those technological advances initially. And the most recent one that comes to mind you can look at would be the dot-com bubble in the 2000s where people thought the internet was going to change our life, which it obviously did.

CHRIS SIPES CFP®: And continues to. However, from a market's perspective, there was a huge overreaction and a correction based on that. So it's not always A plus B equals C when it comes to AI. So back to the current state of the markets, I think this is one of the reasons why society feels so fragile right now as a participant in society is that From a young person's perspective, it's a lot shakier, the future.

CHRIS SIPES CFP®: Like you said, Dan, it's no longer like, hey, if I just get good grades and I go to college and I apply to a few places, I'm going to get a nice job and buy a house, have some kids, and life's going to be grand.

CHRIS SIPES CFP®: When you look at the, this is by way of Mike Zaccardi, but he's talking about the quote from J. P. Morgan where they say, For the last 30 years, the unemployment rate for recent graduates was below the overall unemployment rate, meaning that when you recently graduated, it was pretty easy to find a job, at least more so on average than the overall unemployment rate.

CHRIS SIPES CFP®: But that is now flipped with recent graduates having a higher rate of unemployment than the average unemployment rate. So you go through all these steps, you borrow all this money, et cetera, you get out and you can't find a job at a higher percentage than the average American. So you combine that with historically high costs of buying a home.

CHRIS SIPES CFP®: And I think a lot of the younger generation is just feeling like the future is a little more shaky for them, a lot more shaky for them. And When people don't feel invested in the future, that creates all kinds of societal fractures and fragility, which I think we're all going to have to deal with over time.

DANO WEIR: And yet there are still some people who can't figure out Microsoft Word. So sometimes some of these things take a while. You might have a little bit of an uptime. I still have trouble with Outlook too. So maybe the AI. Will only be adopted by some people.

CHRIS SIPES CFP®: That's right. So sentiment, finally, we're under 50 on the bearishness. And this just proves that sentiment follows price, right? And now that the prices have come back up, the sentiment is getting rosier. People are more bullish. So the market works differently than pretty much anything else that we buy with our money in that. When the market's down, people don't want to buy.

CHRIS SIPES CFP®: They get scared. When the market's up, they want to buy more. It's unlike really anything else. You wouldn't go to the grocery store and buy more stuff when it's more expensive. And so it's an interesting twist of human psychology when it comes to that. But we're kind of getting closer to the normal ranges, although the bullishness jumped up quite a bit. If you look at the- Trish.

DAREN BLONSKI CFP®: Real quick before we jump into that. I think what we went through in March is a really, really great opportunity for investors to reflect. And I was thinking about this the other night. And March happened so quick. We had to just pull down. The world was ending. Tariffs were going to shut everything down. We're all going to blah, blah, blah, fill in the blank. Everyone had their narrative.

DAREN BLONSKI CFP®: And now the markets are pretty much back above where they were at this point, depending on how you're investing, et cetera. You did a full trip. And It's such a great opportunity to reflect on the emotions of being down where we were and how you felt at that time and what those emotions were doing inside of you and making you think about doing your portfolio for good or bad.

DAREN BLONSKI CFP®: And I think one of the great opportunities investing is really getting really clear about how these different emotions we feel with markets going into volatility up and down impact. Our investing behavior. But March was a great opportunity just to reflect. And I was thinking back and I was thinking back to that moment when we were down at the bottom, when the bottom was on the 4th of March.

DAREN BLONSKI CFP®: Exactly how I was feeling that Friday and then the success of Monday after that and what that bottom felt like because there was an emotional affect of that moment in the market. And that turned out to be the bottom. And I think it was literally the Friday after the bottom is when we put out our bear market report. And that doesn't mean we're not out of this.

DAREN BLONSKI CFP®: That doesn't mean that we're going to all-time highs. It doesn't mean that we might not roll over because a lot of time markets roll over right around here. Or right around where it was last week. But I think it's just a great opportunity, an opportunity to learn and become a better investor for all of us because we can reflect on what that experience was like.

CHRIS SIPES CFP®: You had those moments. That's such a great point. Go ahead, go ahead, Chris. No, go ahead. That's such a great point. And we actually mentioned that. I can't remember if it was last week or the week before that like you've been given a gift. If you were freaking out when things happened in April, this is a gift because that... That time period were six weeks, right?

CHRIS SIPES CFP®: And granted in the honey badger markets, we've had these lightning strike down and then back up. So you haven't had to have the grit to make it through our true bear market in quite a while because it's just been corrected so quickly. And here we are, you're back to even because people are always saying like, well, once I get back to even, And then I'll think about doing some changes, right?

CHRIS SIPES CFP®: Well, Here's that gift where you can look and seriously ask yourself, was I over my skis? And I know a lot of us are going to look back and go, no, I wasn't scared. Me? Scared? No, I was fine. But if you look at that, now is your time where you can make adjustments to the portfolio when you're not under duress, when you're not making a hugely emotional decision.

CHRIS SIPES CFP®: And maybe turn that dial down a bit if you need to.

DAREN BLONSKI CFP®: Well, you're right on. And I think that's a super good point because clients often say, when is the right time to make adjustments to the portfolio? Will you get out if the market's going to go way down? Now is a perfect time. If you just went through March and you wanted to bail with everything in you when March happened and you didn't, good on you. But if you did...

DAREN BLONSKI CFP®: Well, I don't, we can talk more about that later, but the reality is it's a 21% down market is what happened from the top. Now that we've recovered most of that, that's when you make the change and you say, I don't want that volatility. I don't want that experience again. I'm not okay with that. And then you accept less risk and less returning for that less risk.

DAREN BLONSKI CFP®: So it's just a great, I mean, just a really great opportunity in a microcosm of what you should expect in the market and stock market. To have these moments where it comes down. And then now is the time to make adjustments.

CHRIS SIPES CFP®: Absolutely. So we didn't get to mention though, the CNN fear and greed index is up to 71, which is greed. So that's the positioning. And that's up from 62 greed last week. That's a scale from zero to a hundred. So, and then Bitcoin's pretty much flat at 71 greed again. So this is interesting.

CHRIS SIPES CFP®: We talked a little bit about the sentiment around gold, where we were starting to get some clients calling about gold. We saw the Barron's cover about gold. And now here from Bank Of America's global research, the fund manager survey that they do, Long Gold is the most crowded trade for the second month running. To be fair, long Magnificent Seven has been been the most crowded trade for several years.

CHRIS SIPES CFP®: So it's not because it's been on there for a couple of weeks that that necessarily means anything. But I think that the cat's out of the bag in terms of gold as the return engine. But notice number three, it's so funny to see long EU stocks on the top most crowded trades. It's got to be a long time since that's That's happened. No. That cracked me up.

DANO WEIR: Chris, these are terms I don't know. What is long and what is crowded?

CHRIS SIPES CFP®: Okay. So long means that you own it and you're expecting it and or you're expecting it to go up. Short means that you've sold it and or you're going to make money if it goes down. So like there's different ways you can do that. Either you know, in the futures market or just in the standard market, but, but long.

CHRIS SIPES CFP®: Basically means that you're hoping it's going to go up. You're going to make money if it goes up. And if you're short, you make money, it's going down. Crowded just means there's a lot of people in the trade.

CHRIS SIPES CFP®: And a lot of times it's kind of like a boat where you get too many people on one side of the boat and it'll flip over, right? So a crowded trade generally makes traders a little nervous because it's like, well, when do people start running for the exits? Usually all at the same exact time. And so that's, I guess, why they keep an eye on that.

CHRIS SIPES CFP®: So Honey Badger Market, we got inflation expectations today from the University Of Michigan.

CHRIS SIPES CFP®: And you can see it delineated by political party because that's how we delineate everything these days. And you can tell that Democrats and independents are really expecting a much higher inflation rate a year out.

CHRIS SIPES CFP®: While Republicans much lower, but still higher than they were expecting in January. Now, typically, the reason I say Honey Badger Market is because typically, inflation is not good for stocks, especially in the short run.

CHRIS SIPES CFP®: And therefore, inflation expectations being elevated, you would think would not be good news. However, the market went up today. Who knows, right?

CHRIS SIPES CFP®: And then we've got a lot of signs that would kind of back this up on this inflation front. This is from Nick Timoros at the Wall Street Journal. He says, Walmart said it plans to raise prices this month and early this summer as tariff-affected merchandise hits store shelves.

CHRIS SIPES CFP®: The magnitude, and this is a quote, the magnitude and speed at which these prices are coming to us is somewhat unprecedented in history, said CFO John David Rainey. So a lot of the earnings calls are coming out this week, and Walmart was one of them.

CHRIS SIPES CFP®: And this was the quote. So a lot of these companies are expecting higher prices moving forward and or are starting to adjust those prices higher. However, again, the Honey Badger Market don't care.

CHRIS SIPES CFP®: Credit card delinquencies. I like this chart because it goes back further than just like year to date. A lot of times you see these 90 days delinquent charts and they're too soon to really tell if there's anything going on. And 2005 isn't that long ago, but at least it's a 20 year time period. You kind of get an idea of the cycle. And you can see both on credit cards and on auto loans were pretty elevated.

CHRIS SIPES CFP®: And on auto loans, we're pretty close to the peak that we saw in the great financial crisis. It's just wild to me how many sentiment indicators, how many charts like this with delinquent auto loans are on par with the great financial crisis and or the depths of COVID. And the market, again, does not care.

DAREN BLONSKI CFP®: Hey, Chris, did you see that Moody's for the first time ever downgraded the U. S. Debt?

CHRIS SIPES CFP®: I did not. When did this happen? Was this today?

DAREN BLONSKI CFP®: Since you were speaking today.

DAREN BLONSKI CFP®: Interesting. First time ever they're saying, Moody's is saying that U. S. Government debt is not as safe as it once was.

CHRIS SIPES CFP®: I wonder if that's related to the budget as well, because, you know, it seems like the rates have been responding a lot to what's been proposed in the budget.

DAREN BLONSKI CFP®: Budgets and where we are with oh we'll see see what comes out but oh good another unprecedented can't wait Darren i feel like they were threatening to do that a few years ago they were i believe they were threatening and there were some capitulation on the threat and then i just saw a headline roll through the first time ever Moody's downgraded the u. s government it's no long we are no longer triple a boys must have been S&P that downgraded them.

CHRIS SIPES CFP®: A few years ago. Remember there was...

DAREN BLONSKI CFP®: I think, yeah.

CHRIS SIPES CFP®: Okay, maybe Moody's didn't. Yeah, okay.

CHRIS SIPES CFP®: Well, let's worry about that one after the weekend, I suppose. I'm not going to work on it, but yeah. So we've got two charts here. This is from Ryan Dietrich by way of the Yahoo Finance site showing just why the market...

CHRIS SIPES CFP®: Well, I guess the next one's going to show... Back a little bit further, but why the market's been concerned about tariffs, right? And even after these pauses and changes, our current effective rate is still pretty elevated.

CHRIS SIPES CFP®: You have to go back to prior to 1950 to see the tariff rates this high. And at that time, the tariffs were coming down when they were this high. The last time they got boosted to this high was in the 20s prior to the Great Depression. Now, of course, the U. S. Market is 100% different than it was 100 years ago. So I don't know that it's necessarily...

CHRIS SIPES CFP®: Constructive to look back that far and make any comparisons to today. However, the tariffs are significant. And maybe a possible explanation for the market not caring is that the market doesn't believe they are going to stay this high, just like it didn't believe they were going to stay as high as they were a week ago. So that seems to be... That seems to be what's baked into the prices we're seeing today.

CHRIS SIPES CFP®: Now, if you want to go back even further, this chart from Yale, they have a handle you can follow called the Budget Lab that calculates that through May 12th pre-substitution, so before consumers and businesses shift purchases. And that means like, hey, you were going to buy a steak, but now you're eating ground beef or something worse, cat food.

CHRIS SIPES CFP®: The US tariff rate is 17.8%. Post-substitution, after the shift, it's 16.4, both incredibly high relative to history. And when they say history, they're going back to the late 1700s on this chart. So Dan, you know I love charts that go back that far. This must have gone back to the founding of the Republic, basically. Oh, 1790. Sorry, I missed the obvious year at the top there.

CHRIS SIPES CFP®: But you see that back when the U. S. Was more of an emerging market and a developing country, that the tariffs were much higher, which I think is kind of normal. I mean, it's even normal today. Most developing countries have higher tariffs while the developed nations have.

CHRIS SIPES CFP®: Typically have lower tariffs and we've, we've had much lower tariffs. So these, these tariffs are not only elevated, but as with anything in the market, it's the relative speed of that change that makes a huge difference as well. And, this will definitely be a shock to the system if they stay in place.

CHRIS SIPES CFP®: That's all I have this week, boys.

DANO WEIR: Darren, what do you got, buddy?

DAREN BLONSKI CFP®: Well, let's talk about the markets.

DAREN BLONSKI CFP®: All right.

CHRIS SIPES CFP®: Let's see.

DAREN BLONSKI CFP®: We got to take that one down there.

CHRIS SIPES CFP®: Oh, I see. Yeah, Dan, you got to add it.

DAREN BLONSKI CFP®: There you go.

DANO WEIR: All right.

DAREN BLONSKI CFP®: Well, we're going to start with the S&P 500.

DAREN BLONSKI CFP®: The S&P 500 is the largest 500 US-based stocks. There are index funds. One of those index funds that I'm using as an example, one of the larger ones is SPY. So this is an index that just tracks the S&P 500. And you can't, in theory, trade the S&P 500 unless you buy an index fund that mimics the index. And so that's what's happening here.

DAREN BLONSKI CFP®: And this is one of the ETFs that I'm not saying. You should buy or not buy, just that it's one of them. And the SPY tracks those stocks. So when we look at the chart for the S&P 500 and what's happening out there, right back here, and this is February 19th, 2025 was the all-time high. Our most recent correction low was March 4th, 2025.

DAREN BLONSKI CFP®: And today at May 19th, Thanks. Or May 16th, excuse me, today is my dad's birthday. Happy birthday, Ken. So May 16th, there's where we've at. So we've now recovered over 75%, a significant amount of the drawdown we had from the all-time high. The all-time high, we are only, let's see, about 3% off of the all-time high.

DAREN BLONSKI CFP®: So going back to my point earlier, that in moments like we had back in March, where there was a lot of panic, go back to that emotion that you might have felt during that time. And what your brain was telling you to do as it relates to your portfolio, and then now look where we've come.

DAREN BLONSKI CFP®: And it's all of that junk, all of that news that was being pumped at us and propaganda about how the world was going to end. One of the worst things you can do as an investor is pay too much attention to the media. Because this is a perfect example of why we just stay the course when things get rough.

DAREN BLONSKI CFP®: Now, A few weeks ago, I mentioned that the 61.8% Fibonacci line was really important. And you can see how much buyers and sellers were trading right around that point. And that was either generally the point where we were going to roll over and the probabilities were to the downside. Or if we made above that, the probabilities were to the upside. So that was that 569, I think, boys.

DAREN BLONSKI CFP®: Do you remember that number? And there it was, 569.72. And we went into the weekend and then it gapped up. So this is called a gap up. Where you have a movement in the chart in this gap here where the market closed on 5-12, I guess that'd be closed on 5-9, and then that Monday, the following Monday, 5-10, it jumped up.

DAREN BLONSKI CFP®: I guess, no, 5-10, there'd be 9-10. So that was Monday we had that gap up. And when we see that on a chart, that means that there's a heck of a lot of buyers stepping in. And the odds of things going higher just raised substantially because we cleared that 61.8. Now, what typically happens when you have a gap like this in the chart, you try not to chase a move like this.

DAREN BLONSKI CFP®: Because if you chase a move like that, likely the chart's going to come back in and test that 569 as a really important support area On The Market. Right. So. I go back to that number I mentioned a few weeks ago. 569 was that make or break number for the market. And the fact that it jumped up this week and went above it in a big way, that tells you that, okay, the probabilities are on the upside.

DAREN BLONSKI CFP®: But I think before we get a full run at the all-time high, I think it would be more likely we get a test on the 569. So magically we'll have here something in the media about, I don't know, you make it up. Something will happen. Somebody bombs somebody and therefore the market needs to crack.

DAREN BLONSKI CFP®: A good example of what I'm talking about, if we go back to this area right here in the market, right back in 2024, August of 2024, you can see on the chart, we had a gap up. See that gap right there? That gap up, market goes up, and then it cracks and it closes that gap because the market it never traded around that area. That became the support level, was 540 at the time, and then the market resumed higher.

DAREN BLONSKI CFP®: Given that we had a gap like that, you wouldn't want to chase that gap. You would want it to come back in. And if I was a buyer, I'd be looking at 569 as a pretty important area or region. If it holds there, we're in good shape. I don't think we're out of the woods for all-time highs yet. I think there's still some more proving that the market has to do.

DAREN BLONSKI CFP®: But I think the odds are to the upside at this juncture. But I wouldn't be shocked if we saw some consolidation here. The market's moved pretty quick, pretty fast. Just like when it moved pretty quick, pretty fast down, when the market moves pretty quick, pretty fast up, you tend to get that resistance. So S&P looking great, right? And they sure as heck aren't telling you that in the news, are they?

DAREN BLONSKI CFP®: What's driving this? Well, it's been a pretty broad market rally.

DAREN BLONSKI CFP®: You can see green across the board today, but let's just look at the week. And you can see a lot of green on the screen for the week. Let me show you that. So this is a heat map. And what this looks at is the S&P 500 on a heat map. And this is showing you all of those various 500 stocks. And you can see this week is pretty green.

DAREN BLONSKI CFP®: And we've got Microsoft, Nvidia, Apple, Google, Amazon, Meta, all looking pretty strong at the moment, which is important because there are... Pretty big part of the market. So we call those the MAGs, the Magnificent Seven. So this is the MAGs ETF. So this ETF just tracks these particular stocks. So what am I watching on the MAGs? With the high that was made on Wednesday now, I would put a trend line right here.

DAREN BLONSKI CFP®: And if we get a break above that trend line, then I think we're onto the races for all-time highs. I think if Megs drives higher, it's going to pull the whole market into the all-time high. So I would put a little alarm on this one and we'll be watching it closely because if that breaks higher, I think that could be rather interesting for all-time highs.

DAREN BLONSKI CFP®: Now, I want to talk about... Gold because we talked about gold earlier. So it's just so interesting how this always works out this way. But this is a double top and a gold. Double top is a topping pattern. So that usually means that we're looking to the downside. This is the neckline in the double top right there.

DAREN BLONSKI CFP®: And we broke through that this week. So given the fact that we broke through that, I would expect that we're going to see, let's take that fragment there. I would expect we're going to see a sell in gold, and we're going to end up right in the region of about $3,000 an ounce.

DAREN BLONSKI CFP®: There's likely going to be some selling pressure. There'll be a lot of support there. There's some support right here at $3,200 an ounce. But given that this double top is breaking, I think we're likely to see gold trade down as an opportunity into $3,000. Now, this is what Dan Led talked about earlier. So there was some news that broke here.

DAREN BLONSKI CFP®: On the 13th of may that maybe a lot of people didn't realize or hear about but there's these things called a linear accelerator and so there used to be these people called alchemists that would take different minerals and try to find a way to turn things into gold and so there's actually some scientists in using the world's largest accelerator and so in these these colliders What they do is they basically take particles and smash them together and see what they make out of it.

DAREN BLONSKI CFP®: But researchers at Large Hadron Collider, the world's largest, highest energy particle accelerator, observed a real-life transmutation of lead into gold. But this transformation didn't come from direct collision, as was previously observed. Instead, it emerged through a new mechanism involving a near-miss interactions between atomic nuclei.

DAREN BLONSKI CFP®: So I hear all the time from the gold bugs out there and, hey, I like gold just like the rest of people. But it's possible now that we can actually make gold. So we saw this happen with diamonds when we were able to start making and manufacturing diamonds in the lab. It's completely crushed the price of diamonds.

DAREN BLONSKI CFP®: But I just think interesting if we go back and we look at the chart and we say, OK, the 13th. So this here. It's interesting that the neckline for a double top on the chart broke right when the news about our ability to create gold.

DAREN BLONSKI CFP®: With AI coming on board, it's very possible today we certainly aren't going to be producing ounces of gold in the linear accelerators because it's so expensive to make gold. But five years from now, 10 years from now, when we have some energy breakthroughs, who knows? And the moral of the story is this. If you've got investments and you're in love with your investments, you're probably making a mistake.

DAREN BLONSKI CFP®: The reality is that investments, they come and go. And that's, again, another story for diversification. Because if you take all your money and throw it in gold, and then all of a sudden scientists create a way to create gold like they just did, but now figure out how to do it in a large way, the price of gold literally collapses overnight.

DAREN BLONSKI CFP®: And if all your assets are in that one asset, you've got a problem. And that's true about gold, that's true about Bitcoin, that's true about the S&P. 500. That, again, is why we want a diversified portfolio. It's meaningful to be diversified at times, but in the long run, it generally pays off.

DAREN BLONSKI CFP®: All right. I bet you guys didn't think I was going to say diversify gold and Bitcoin, did you?

DAREN BLONSKI CFP®: Didn't see that coming.

DANO WEIR: Derek, that story you're sharing about gold actually happened with aluminum. I don't know a lot of the details, but in the 1800s, aluminum was one of the most valuable and expensive metals in the world because it was difficult to find in its natural state. And then they figured out a way to mass produce it.

DANO WEIR: And now we use it to wrap up leftover food. So I don't think they're going to do that with gold, but it's a perfect example of what you're saying, which is that don't fall in love with your investments, which, wait a minute, aren't you talking out both sides of your mouth? Because you said, don't make a bunch of changes.

DANO WEIR: It's a combination of the two. It's not necessarily being emotional in reaction to something like a huge dip in the market, but also not being so emotional that you're perhaps holding onto something because of an emotional attachment to it. It's, it's detaching the emotion one way or the other. Is it not?

DAREN BLONSKI CFP®: It is. It's don't fall in love with the investments, right? I'll never forget this lady I talked to years ago when I was first starting practice as a financial advisor. And she's like, you know, when my husband died, he owned Coca-Cola and he told me never sell Coca-Cola.

DAREN BLONSKI CFP®: I always thought about this and she pulled out the certificate of Coca-Cola. And I mean, good on her. I guess it's done okay over the years. But yeah, we don't want to fall in love with investments, right?

DAREN BLONSKI CFP®: The investments that got us here won't get us there. You want diversification. And if you're not actively involved in the investment process, then just picking something and forgetting about it doesn't always work. And another story of a lady who inherited a bunch of money and she brought me these stock certificates.

DAREN BLONSKI CFP®: And we did some research on it. And at the time of her inheritance, the stock certificates were worth $500,000. But by the time she brought them to us to do something about it, the company had gone bankrupt. So you just never know. And I also saw this headline just came through. Did you know that 246 large companies have filed for bankruptcy this year?

DAREN BLONSKI CFP®: Large, we're talking like big companies, which is kind of interesting. Like you were saying earlier, Chris, there's a lot of bankruptcies going on. There's a lot of credit card debt going on. People, the consumer's under pressure more than I think the, certainly the stock market thinks they are.

DAREN BLONSKI CFP®: Yep. Honey Badger Market don't care.

DAREN BLONSKI CFP®: Honey Badger Market don't care. That's right. So let's talk about the U. S. 10-year. Why do we care about the 10-year? Because all the rates are set off the 10-year and we continue to see rates go higher. And rates going higher is problematic for the market. It's problematic for real estate. The longer rates stay higher, the harder the economy has to lift to be successful.

DAREN BLONSKI CFP®: And President Trump would— really like to get the 10-year down as with Secretary Besant. That's been pretty difficult to achieve. And it actually doesn't help us the fact that Moody's just downgraded our debt. Because when you get debt downgraded, that means you have to offer more interest to interest the investors to buy the debt. So that's not great. Purchase rates going down further either.

DAREN BLONSKI CFP®: That doesn't help out people who like to buy bonds, who are diversified, because... Bonds have really struggled. Although I would say, Chris, if I'm looking at this from a technical standpoint, if we back up on a monthly chart and look at the bond market, the ag, so the ag represents the bond market. This is one mean bull flag.

DAREN BLONSKI CFP®: And a bull flag usually means it's going to go higher. So I'm willing to bet that the... The bond market's telling us it's about to go higher. I talked about a double top in gold a little bit ago, and you can see here's a perfect one. This was the topping pattern for the egg, and you can see that break there.

DAREN BLONSKI CFP®: And what typically happens is the distance from the neckline to the top of that double top is the distance that it will go down once the neckline breaks, and you can see that. Almost perfectly there. You can see that the bonds traded right into 95, which was the distance of the double top. So that's why I'm saying we'll likely see somewhere in the neighborhood of 3,000 on gold here in the near future.

DAREN BLONSKI CFP®: Well, wouldn't that just be the perfect market situation where the US debt gets downgraded, hence you would think interest rates go up, right? But instead, opposite and bonds rally, that would be just 100% expected, right? Like, oh, of course, of course. More bankruptcies, everybody's closer to bankruptcy. Of course, the interest rates go down.

DAREN BLONSKI CFP®: Yeah.

DAREN BLONSKI CFP®: I continue to believe that although the stock market's looking at all-time new highs, I think we have a fragile economy right now. You're seeing weak spots, but I also think it's possible that we're getting this rolling recession type thing where it hits different parts of the market. It's already hit the mortgage area and real estate area pretty substantially.

DAREN BLONSKI CFP®: Maybe it rolls into other parts of the economy as we go. When we look at oil, oil is a good barometer of economic health because everything we do has oil in it. You can see this 60 was really important and we just traded back above 60.

DAREN BLONSKI CFP®: I do think that the value of oil will get fairly stabilized for the moment, given everything that was going on in the Middle East with President Trump this week. It seems like Trump has the Middle East kind of in his house.

DAREN BLONSKI CFP®: Point and opec really controls the price of oil so i'm sure there's some collusion going on on some level as you're trying to stabilize the price of oil allegedly allegedly potentially possibly possibly maybe yeah thanks for that clarification there Dan so but this isn't a really strong bounce right back above 60 it kind of looks like a weak one and you can see you could easily put a resistance line right here somewhere.

DAREN BLONSKI CFP®: That range where it trades in. And if that gets confirmed resistance this month, and it breaks back below 60, I think we'll see lower prices.

DAREN BLONSKI CFP®: I tend to think that a slowdown in the economy is the more likely outcome right now. And even though the stock market could keep going, it doesn't mean the economy is going to stay strong, right? Because the stock market's more a function of these days of government stimulus than anything.

DAREN BLONSKI CFP®: All right. Any other charts, boys, that we should cover for the day?

DAREN BLONSKI CFP®: Can't think of any.

DAREN BLONSKI CFP®: I think that's probably pretty good for the moment.

DANO WEIR: You guys want something funny out the door? This just happened.

DAREN BLONSKI CFP®: All right. Breaking news. Dan, hit it.

DANO WEIR: So my role on the show is to be like just the guy, like the normal guy who's like, what are you guys talking about? Because I am not licensed and I am just still learning. And so one thing that Darren has taught me is to look where the puck is going to go. And another thing that Chris has taught me that he, a quote that he shared from Charlie Munger is show me the incentives, I'll show you the outcomes.

DANO WEIR: And so I've gotten better just in my life at just seeing, you know, A happen. I'm like, oh, well, then it's going to be B. And everyone's like, what are you talking about? What are you talking about? So, Darren, you're going to love this. The 49Ers have been dawdling on signing their quarterback Brock Purdy to a new deal.

DANO WEIR: The 49Ers also just, wait for it. The 49Ers also just sold a portion of their team to private equity. And so as soon as that happened, I told all my friends, I said, hey, oh, watch Brock magically get signed. Now that there's a bunch of cash around and like, what are you talking about? It has nothing to do with it. What has nothing to do with it? One day later, Brock Purdy just signed.

DANO WEIR: Well, so they, they did the private equity deal. They raised, I think it was, 500 million and Brock Purdy gets signed the very next day. So I had my own little Darren and Chris moment in my life where, I, I saw the tea leaves ahead of everyone. So I felt pretty smart.

DAREN BLONSKI CFP®: Now your buddies are going to ask for all the insight about the 49Ers. You can play that one up, man.

DAREN BLONSKI CFP®: You got to leverage that. All right.

DAREN BLONSKI CFP®: This show is not investment or gambling advice.

DANO WEIR: That's correct. That's correct. That's right. But I will find a way to make everything about football or money. So, hey, thank you so much for checking out the show this week. I'm going to leave this photo up because these guys love looking at themselves. We are Cinema Wealth Advisors. You can learn about us at SonomaWealth. Com. We have a free wealth analysis.

DANO WEIR: If you're not already a client, you can find out what it's like to be a client, to work with Darren, Chris, the rest of our great team. And we will see you next week here on On The Market. Subscribe wherever you are. If you're on YouTube or any of the podcast platforms, make sure you subscribe so you don't miss future episodes. Guys, we'll see you next week.

DAREN BLONSKI CFP®: All right. Take care, everybody.

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