Oil, Gold and Conflict

DANO WEIR: Welcome inside the studio. This is... Sonoma Wealth Advisors and On The Markets. My name is Dano Weir. I'm the marketing director for our firm. I'll be joined by our firm principals in a moment, Daren Blonski and Chris Sipes. This week, we are talking about what you're seeing here on the screen if you're watching our stream. Or if you saw in the title of the episode.

DANO WEIR: Unfortunately, this week has boiled down to oil. Gold and conflict. Uh... Tensions in the Middle East? We've We will look at how news of dual missile strikes in Iran and Israel hit the markets and the larger historical context of how those events. Impact the long-term trajectory of the market. Expectations for gas prices and oil prices in light of the events in the Middle East.

DANO WEIR: But also looking in the market specifically outside of those headlines, do companies do company earnings even matter anymore? Or are we all just playing games with a moving line and numbers? And finally, as the title... Indicates gold.

DANO WEIR: Gold is... Absolutely smoking every index as well. We'll say every, but many of the major indexes this year. Also, why Gold might be telling us the tensions could be calming sooner rather than later. Let's start the show now.

CHRIS SIPES CFP®: Thank you Mixed in.

CHRIS SIPES CFP®: Okay. You me Thanks for All right.

DANO WEIR: They are the managing principals of our firm, Sonoma Wealth Advisors, Chris Sipes, CFP, Daren Blonski, CFP. As I mentioned, I'm the marketing director. Here's some fast facts on who we are.

DANO WEIR: More about the fundamentals, more of a fundamental. Guy looking at the fundamentals of a company and looking at some of the history of the markets. And Daren, more of a technical analyst looking at the price action and the actual where is the line actually going on the chart and together.

DANO WEIR: That unique combination. Makes our show on the markets. Chris, birthday this week? And I know you. I know you made a cake. And you tried to get me to come to the party, and I was sadly busy for the Dow Jones' birthday. But Thank you Peace. Providing some historical context. Next. For perhaps current events.

DAREN BLONSKI CFP®: Dan, you just put me into sheer panic. Because I was like, wait. Did I miss a birthday?

DANO WEIR: Day?

CHRIS SIPES CFP®: What the heck?

CHRIS SIPES CFP®: Have a Yes. And Dan, I appreciate you referring to me, I think, as... As someone who looks at the fundamentals. Rather than a fundamentalist.

CHRIS SIPES CFP®: Yes. I do get that a lot.

DANO WEIR: Not the word to use this week.

CHRIS SIPES CFP®: Yes. Yeah, absolutely. So. It's But sometimes it can be helpful in times like this to revisit. What the market has done. Historically now. Course. That doesn't predict the future or infer the future. But If you look back at the history of the U. S.

CHRIS SIPES CFP®: Going back to 1900, and this is... From Ryan Dietrich. Acab Carson. Showing All these major events along the way. And some Some were... I'm sure it felt even worse than... Than what feels like is happening today. Yeah. As bad as it is. And so...

CHRIS SIPES CFP®: The market will tend to Surprise you. Thank Right. Sometimes it does. Well when Да. All the headlines are awful. Sometimes it... It does, uh... It does. Badly when all the And all the headlines are good. So you really can't invest that way.

CHRIS SIPES CFP®: You have to stay invested. Through the good and the bad. You're getting- paid to take risk. There's a reason why you know. The Taoist. As an example, has done better than just... Leaving your money in. In a bank account. Over that time period.

CHRIS SIPES CFP®: You get paid to take that risk. And without that risk, you wouldn't be getting paid extra. So we should be... Thank you I guess in some weird way. Hey. You know, appreciative of times where. Things don't feel so good.

DANO WEIR: And I just for some. Point of clarification for this episode, maybe it's the first time you're checking it out on the markets. Our approach is to incorporate what's happening nationally, globally. Because it does impact the market.

DANO WEIR: But our focus is the market. So, We. We're not here to necessarily comment on what is or isn't happening, but just kind of look at, okay, well, that's the event. Adheres. We're market focused and that's where we'll be today.

CHRIS SIPES CFP®: Absolutely. So. You know? Thank you way back on Wednesday. Which is I guess old market news at this point. We did get some good news on the consumer price index front. The year over year, CPI came in at 235. Which you can see on the longer term, this is a 10-year chart.

CHRIS SIPES CFP®: You know, kind of getting back to a more normal. Range and Now. Of course, this is... You have people that say, well, this isn't the real. You know, measurement of of inflation, et cetera. Thank you It is not. The absolute price value. So if you're like, well, If it's only 2%, then why are eggs, you know? Twice what they cost five years ago.

CHRIS SIPES CFP®: Well, it's because... This is a year over year. Percentage. Right, you see that? Big inflation pop that we had in 2022. And going into 23. Work We're starting to kind of get on the other end of that where we're More towards normal, but also it's interesting that the Fed is having trouble kind of fighting that last mile. You know.

CHRIS SIPES CFP®: To get us back. Down to I guess, under 2%, which is what... Day. Have said is their goal. What's so funny is that... Those that have been following the markets for a long time will probably remember. Pre-covid the the Fed was shooting for a 2% inflation rate on the...

CHRIS SIPES CFP®: Upside. They kept saying, we're going for 2%. Inflation that couldn't Get it. Couldn't get it, couldn't get it. And then... We got Thank COVID. And far exceeded that got into the nine. Nein. Handle on CPI.

CHRIS SIPES CFP®: And, uh... And now we're a. Above 2%, they're shooting for 2% on the downside. And and can't quite get there either. So. Uh... Interesting.

DANO WEIR: On the upside and the downside, you mean that they were... Below 2% inflation and they wanted. It to be higher?

CHRIS SIPES CFP®: Correct.

DANO WEIR: Why? Why?

CHRIS SIPES CFP®: Well, there's... There's sort of a quote. Goldilocks. Situation where You don't want to get... Deflation. Okay that's when prices are going down that's what happened during the great impression. You had a credit collapse. That's also what happened in 2008. Credit is the real money in the system.

CHRIS SIPES CFP®: You know, for every, you know. Dollar that's kind of... Moving around in our checking accounts and such, there's probably 10 to 15, maybe $20. Debt And so when you get in a... Debt collapse like we did great and in 2008. That the value of that debt goes to zero and those prices come down. Or at least gets...

CHRIS SIPES CFP®: That debt gets badly hampered. And so you have. Things like asset prices falling And that is a. Spiral that we do not want to get into either. You want to have a... You want to have a little bit of inflation, but not too much because people hate inflation as well. A lot of problems.

CHRIS SIPES CFP®: When when things are getting more expensive too rapidly and the value. Of your money is losing value quickly. But it... Also, Uh... Is almost equally as bad and It can be in a spiral in the other direction when you get. Deflation. So they're looking for that. Goldilocks. Scenario of around 2%.

DANO WEIR: So you're saying my in and out. Double-double value meal is never going back under $10. Thanks for That's what you're saying. That It's... Because I was hoping. I was hoping. The that All right, fine.

CHRIS SIPES CFP®: That ain't good ass.

DAREN BLONSKI CFP®: Get your $1.50 deal at Costco for your hot. Time.

DANO WEIR: Yes! Yes! We got one.

CHRIS SIPES CFP®: Right. That's right.

CHRIS SIPES CFP®: So with Crude oil. Popping WTI was up something like 7% today. I'm sure Daren's going to go through that in the candlesticks. So we'll... We'll actually see. Thank you you know, kind of more real time. But that That is kind of the big, you know, scary impact. Thanks of anytime something...

CHRIS SIPES CFP®: Starts to happen in the middle east is that it's going to affect the oil supply which therefore will... Pass along to basically everything in the economy that runs on. Energy and cheap oil And so I thought it'd be interesting to look at gas prices going back. To the early 90s.

CHRIS SIPES CFP®: And I was surprised. Surprised to see... Our gasp. Nationally is a about. The same place it was in 2007. That's one. Thing that was very, surprising to me looking at this chart. The second thing, was that you tend to notice gas prices going up. Fairly significantly into a recession.

CHRIS SIPES CFP®: Which makes sense, the input costs for... Things all across the economy goes up. It's going to be. Difficult to make money. It's going to squeeze margins. It's going to... Most likely create recessions.

CHRIS SIPES CFP®: And recessions are the gray bars. That you see here. Those energy prices drop a lot in recessions. Because there's just less demand. For that for that energy. And the third. Thing that I thought was interesting was that spike that you see in 2022. And I. I cannot get off the fact. Guys that I feel like 2022 was the recession that was never officially called.

CHRIS SIPES CFP®: When you look Thank Bye. All all of these leading economic indicators, when you look at the yield curve, when you look at gas prices you look at. Got. Many, many asset prices from 2022 that saw huge corrections.

CHRIS SIPES CFP®: All the inputs for a recession. Were there. And yet. It was a never. Officially called.

CHRIS SIPES CFP®: And I... I think you'll remember that We actually had two quarters of negative GDP growth, which they also said. Yeah, that's technically a recession, but we're not going to call it a recession. Right.

CHRIS SIPES CFP®: So just...

DAREN BLONSKI CFP®: Just the facts are just for everyone out there let me interrupt for a sec So.

DAREN BLONSKI CFP®: Let's talk about it for a sec. Thank you How are recessions actually called? Chris.

CHRIS SIPES CFP®: So there's... A bientôt. An organization called the MBER. And they... They look at the data, the inputs and everything, and they're the ones who actually. Call. A recession. A recession. They're the ones that say it's officially. A recession. Usually after the fact. Not. Proactively not. Even at the beginning of one but usually after the fact.

DAREN BLONSKI CFP®: Are you telling me that this group is politically influenced in any way, shape, or form.

CHRIS SIPES CFP®: Bye. I honestly have no idea. All I'm saying is that. It's been enough time now that I would have thought they would have called a recession. I mean, we saw corrections. Major corrections. And real estate. In the bond market. We saw the worst bond market since...

CHRIS SIPES CFP®: The Civil War, There's definitely been a correction in small caps, which we'll see. In a few slides. So we saw a huge market correction. Even the tech stocks, the mighty tech stocks were down. You know, significantly in 2022.

CHRIS SIPES CFP®: And you have so many charts like this. All the the fundamental charts, right, that said... Hey! Something's off here. Heh. Yeah. Something's off. And yet. There was never... There was never an official recession called. Call that whatever you would like.

DANO WEIR: Daren, I feel like you're trying to say something here. I don't know if it's... You know very thinly veiled or not. But duh.

DAREN BLONSKI CFP®: It's not thinly veiled at all. I just think it's important to point out.

DAREN BLONSKI CFP®: You know, quote-unquote a recession, there is a political layer to it. Right. Like. Is it completely political? I don't know. But is it? Thank you Is there a layer of... Politics involved when it comes to deciding if there's a true recession or not. Yeah, absolutely. And.

DAREN BLONSKI CFP®: It's very possible that... If it's not politically opportunistic. That we would look the other way on calling that recession. Thank you And I think to Kristen's point, like we saw this data suggesting that there was. Perhaps recession, and yet there was no... All of it.

DAREN BLONSKI CFP®: Maybe that's conspiratorial. I don't know. But... I think it's just important to note that... There's no like. This is the red line. And once it's crossed. We're quote unquote in a recession. It's a group of people in the room. Who all have different...

DAREN BLONSKI CFP®: Perspectives and different people influencing them that get together and say, yes, this is a recession by. Based upon their review of the data. So I think that's important for people to know that. Thank you It's not just like, oh, this indicator says we're in a recession now. And that makes part of the challenge of.

DAREN BLONSKI CFP®: For our business or for what we do. Helping people understand the markets. Thank you is is there's no clear Cut. Because this happened, there is a recession. There's some things that happened that Thank you often indicate there is a recession like the yield curve and slow down in jobs, but it has to be a whole Grouping of different economic.

DAREN BLONSKI CFP®: D-day Thank you it has to be fairly overwhelming for that. Decision to be made. And it's always made after the fact, right? So When people say we're in a recession, It's usually by the time the... The recession is. Quote unquote.

CHRIS SIPES CFP®: Last.

CHRIS SIPES CFP®: It's...

DAREN BLONSKI CFP®: When that happens then you actually... The market's already moved and it's already probably going up. Bye then. So it's super important not to pay attention to any of that garbage. It really doesn't matter when it.

CHRIS SIPES CFP®: Computer investment. Yeah, the market tends to start going up, or bottom, I should say. Right about halfway through the recession.

CHRIS SIPES CFP®: Which we definitely saw, right? I mean, it was...

CHRIS SIPES CFP®: You know, end of 22. If I remember correctly, fall of 22, you started to see recovery in the markets. And it took off again. I guess it doesn't really matter, Dan. You know, at the end of the day, like, We didn't need a market correction.

CHRIS SIPES CFP®: I forget what the old saying is, but something like, You know, if you still have your job. There's no recession. But If you lost your job, there's definitely... All right. Or your neighbor loses their job, no recession. You lose your job, it's a recession. So.

DANO WEIR: I don't want to go too long on this point, but I'll just say. I do think there's this old idea. And I don't know why we still have it. None of us were alive when this happened. But it feels like there's a guy. In like a 1930s radio voice who's just gonna come out of a stone building and go, it's determined, it's a recession, you know, and then like all of a sudden we're all in bread lines or something like that.

DANO WEIR: That's what's like. In our minds because of history books. But. What we do on this show, what we do at our firm, there's a lot of self-reliance and a lot of... Look at it yourself. Does it really matter what a headline says? We see this, this, this, and this. Therefore, we're going to do this, this, this, and this. So. Just kind of our approach.

CHRIS SIPES CFP®: Yeah. Absolutely. Now, this week we got the sentiment indicators and it looks like We are back. To normal. Okay. Course this sentiment survey comes out on. Thursday, so this is... Free you know, attacks in the Middle East. And so we are back to normal levels on. Foolishness, neutralness, and bearishness.

CHRIS SIPES CFP®: On that AAII survey. The CNN season. Fear and greed. Indexes basically unchanged at 61 greed this week. And then bit coin was at 61 greed, which was up from 45 fear. Last week So kind of back to more normal. Normal readings and all the sentiment indicators for this week.

CHRIS SIPES CFP®: Now. It's interesting, I think. I think you want to look at where... The consensus is that the government is not going is when you're trying to figure out Yeah. You know, where might the risk... Be concentrated. And this is interesting for Mo Hussain. Saying that The aggregate financial asset allocation across households, mutual funds, pension funds.

CHRIS SIPES CFP®: And foreign investors is at an all-time high in equity. Which is stock. Thanks for It is definitely, you know, for... From from my point of view. Anecdotally. People definitely feel Safe. In stocks And that is. You know, an interesting... An interesting thing given their historic volatility.

CHRIS SIPES CFP®: Thank you But You know, it's the, it's the. I think. Part of the market where you know The parts of the market that have done so well are household names. Companies that we all interact with. Daily and feel comfortable putting more money into them. And so it's been this market narrative that. Has really...

CHRIS SIPES CFP®: Okay. You know self-reinforced because More money goes into those names. They do better.

CHRIS SIPES CFP®: People continue to feel safer there. And so we're all time. Highs in the equity allocations. That makes me a little nervous. Now, cash is also near.

CHRIS SIPES CFP®: Lowe's And so is... Debt which would be bonds We Been lower in bonds. Previously so it's not you know, an extreme yet. But I think the fact that... Bonds did so... Absolutely horribly over the last three or four years. Again, the worst market since the Civil War.

CHRIS SIPES CFP®: You know People just really feel like, hey, You know, stocks are the only place to be. U. s. Stocks are... Are the only place to be. And I know these companies. I feel good about their future and I'm just dumping my money in.

DANO WEIR: I'm going to get a special bell. And I'm going to ring. And I'll only ring it. When Chris mentions The Civil War on on the markets And you would think that I would never ring that bell. Bell but in fact There are several episodes. Thanks for where we throw it way back. To the 18 whatevers.

DAREN BLONSKI CFP®: Yeah. Heh.

CHRIS SIPES CFP®: Yeah. That's right. That's right, Dan. The, This chart only goes back to 2006. Oh. Or Come on. But. What you can see here is the... Forward Price to earnings multiple. So based on...

CHRIS SIPES CFP®: You know, forward. Earnings Estimates for the S&P 500 pee We're at 22. Times, which you can see relative to history. If this chart did go back further, this would this would be very high. And so People are... Pricing stocks. For a very, very rosy outcome. ありがとう and You see... Back in 2009, we got down to nine times forward earnings. That's the... The trough in this chart. And Really, if you just threw...

CHRIS SIPES CFP®: Spaghetti against the wall with the S&P 500 or any... Almost any stock at that time. People hated them so much. After going through the 2008. Crash. That You could buy them dirt. Cheap and they've performed extremely well since then. Some pullbacks, obviously, here and there. But we've never really even got back. Down to that.

CHRIS SIPES CFP®: You know, 14 times. That we 14, 15 times, I guess we've. We've visited a couple times where we were. Prior to 2008 but Nonetheless, stocks are not cheap. They continue to price in a very, very... Good.

CHRIS SIPES CFP®: Outcome moving forward and really no downside priced in at the stocks Peace, love.

CHRIS SIPES CFP®: So This is from Goldman. Sorry, J. P. Morgan by way of... Of Mike Sicardi. Saying that JP Morgan says. U. s. Small caps already had a recession. So small caps would be... Small companies inside the United States. There's several charts here showing that... Now, they're not referring to 2022. They're referring to now, basically.

CHRIS SIPES CFP®: In this chart. But I would say, you know, 2022, that fall from the 21 high.

CHRIS SIPES CFP®: Seems to me to be to be a marker. Now, The bottom right chart shows that peak to trough move. In the S&P 600 versus the S&P 500. And a current Move. That we're seeing is at 36%. I know those numbers are pretty hard to read. Read, the average.

CHRIS SIPES CFP®: Has been 31. So we're a little bit above average in terms of how much the small companies. Underperformed D Big companies. On this chart, there's only a couple other times that happened. And that was in, uh...

CHRIS SIPES CFP®: The 80s. And from 83 to 90.

CHRIS SIPES CFP®: And then And, uh... 94 to 99, so there was a five-year span. There as well where we got as much as 50 percent. Uh... Between those two so Again, it really just matters location on. In terms of where where you're invested. And if those stocks have already... Experienced a recession. Or not.

CHRIS SIPES CFP®: And here we can see a chart of the Russell 2000.

CHRIS SIPES CFP®: Not investment advice, of course. But this is just one of the ETFs that tracks the Russell 2000 so that you can see.

CHRIS SIPES CFP®: We're still This is from 2021. This would be... June 13 to 21, so four years ago.

CHRIS SIPES CFP®: We're still down almost 10%. Off the highs from four years ago. So it's been a four-year...

CHRIS SIPES CFP®: Walk in the desert for for small caps. And who knows how long this will last. Hopefully not much longer. For those that are invested in this area, because historically... Small caps have done... Dann... Better than large caps, which would make sense given that you are... Taking on more risk.

CHRIS SIPES CFP®: It should be easier to grow a small company than a large company.

CHRIS SIPES CFP®: And There's for a lot of them, there's somewhat of an illiquidity premium. You know You can't. You can't dump as much money into them. So If you're like a huge institution. So small caps really continue to struggle. Showing all the signs of a recession that have already happened. In small caps.

DANO WEIR: I feel like I'm looking at... In international stocks. Chart Like Two years ago Chris where it looks hopeless and looks like it'll never get back and there's nothing that will ever turn this around.

CHRIS SIPES CFP®: Yeah, I mean, really, if you looked at almost any chart. Outside of the Mag 7, of course. It would look Pretty similar to this. Uh... The Mag 7 being really the only area of the market that was able to hold up. And recover and is pulled the rest of the S. P500. Higher.

DANO WEIR: Right, but what I'm saying is similar to International. It was International was this dog forever. And then now this year. Boom. You know. Completely turns around and you will look at these. These valleys and go, man, I should have been in. That's not investment advice, but I'm saying that's... When you look at things like that and you see how down it is.

DANO WEIR: That's a way to look at it as an opportunity.

CHRIS SIPES CFP®: Bye. I can say that a lot of clients are asking. Why do I even own these at this point? Point similar to what we were hearing.

CHRIS SIPES CFP®: Regarding foreign stocks. Right So you want to... You want to You can't know the future. And, usually when everybody's asking, why do I even own this? Usually the light is... You're getting close to the end of the tunnel, right? It's Hopefully not a train coming at you.

CHRIS SIPES CFP®: It's a lot harder to fall out. You know, get hurt falling out of a. A first story window. Then the 15th or 20th floor. Right And I think that's important. Is like What's what's the downside, right? These things have already been wiped out.

CHRIS SIPES CFP®: Nobody thinks they're going to do well. Sentiment is just awful.

CHRIS SIPES CFP®: And Thank Yes, I'm talking about small caps, but I could be talking about. Bonds too which is what we're looking at here.

CHRIS SIPES CFP®: And you've got interest rates and inflation from... Jp Morgan and the Blue line is nominal. What they call nominal yield. Not taking into account inflation. And then you've got the gray line. Which is Real Yields And so that's the.

CHRIS SIPES CFP®: Excess palm that you're receiving. On tips over Uh... Over the inflation rate. And so. You can see we're just kind of getting back to... Somewhat of a normal situation. But We were so low. The rates were at... You know.

CHRIS SIPES CFP®: Multi-decade lows coming into this. And so it was a pain. Painful ride going up. Because when rates go up, bond prices go down. Down. But now... We've got... Which got a pretty healthy real yield getting close to the The average from 1958.

CHRIS SIPES CFP®: At 192, we're at 163. At the end of May. And, End. We've got nominal yields also getting closer at 441 versus 573. On average. Out. That average is really deceptive because you look at the 70s and the rates were all over the place.

CHRIS SIPES CFP®: So that was a whole decade where... Rates were anything but normal. But I would say that... The the rates coming out of the 2009 recession were also... Similarly, anything but normal. And maybe some of the... Assets and asset classes that...

CHRIS SIPES CFP®: Did so well coming out of the great financial crisis. And then a super low. Interest rate and fire mint that environment seems to have changed. This point and maybe moving forward we're not going to see that same ultra low interest rate environment. Over the next 10 years.

CHRIS SIPES CFP®: So here we've got year-to-date bond. Bond yields. I think this is... Interesting given all the stress that we've seen in the market. This is a total return of the...

CHRIS SIPES CFP®: Seven to ten year treasury and And purple And then you've got the long-term treasuries represented by the popular ETF TLT. Again, this is not an invite. Advice. But just to to represent what's happening here. Thank you We've got... Returns that are positive, which is great. But... Not what you've seen. Prior super stressful uh...

CHRIS SIPES CFP®: Geopolitical times in this If there's anything you could say about the last six months, we've had a lot of... A lot of things going on around the world. For the first time, really, the dollar is not... Responding to that. In a positive way. People are not flooding money into the U. S. And therefore our rates are not going down. If anything, They've been kind of staying flat to. 2 elevating Which?

CHRIS SIPES CFP®: Maybe signaling some sort of regime. Regime change. Globally in the financial system of just... Fewer people rushing into the U. S.

CHRIS SIPES CFP®: Here we've got the... The... Spread between short-term treasuries and 10-year. Treasuries are common recession indicator, at least it had been until. This one. You know, we inverted way back in. I want to say I was 22. I remember it was April Fool's Day. I can't remember if it was 22 or 23.

CHRIS SIPES CFP®: We stayed inverted until...

CHRIS SIPES CFP®: Just towards the end of last year, we. Disinverted If that's a word, we've got of zero.

CHRIS SIPES CFP®: Which is more of a normalization of the yield curve. You should get... Paid more. To lend your money out for a longer period of time. Period of time. When you're not. That's not a normal situation. And we just went through. The most The longest. Abnormal situation in the bond market.

CHRIS SIPES CFP®: And in the rates market. At least according to this chart. Every time previously, we've got an inversion and then disinversion. We have seen a... Recession just around the corner. Right after the disinversion happens. It's yet to be seen if that's what's going to happen here.

CHRIS SIPES CFP®: But.

CHRIS SIPES CFP®: Nonetheless, it's interesting that the market really sees around. Corners and Like Darren always says. You never know what the actual event is going to be. But it only makes sense in hindsight. But a lot of times the market has seen these things. Grum. Water.

DANO WEIR: And Chris, I have to apologize because not only did I not make it to your Dow Jones birthday bash. But I... Also missed. Your disinversion disco party. That you tried to throw in January. I'm sure it was a great time. I've got kids and it was really difficult to get to. But I just want to let you know that when it reinverts and you throw yet another party, I will go to that one.

CHRIS SIPES CFP®: You're always invited, Dano.

DANO WEIR: Thank you.

CHRIS SIPES CFP®: Now, speaking of seeing around corners. Gold Here represented by GLD, the popular ETF. This is just... Year to Day. Haha. Which is unbelievable, right? We've got... Gold up. And this is as of yesterday, I believe. So we're probably north of 30. After today's close.

CHRIS SIPES CFP®: Closed at another all-time high. Gold And this is completely... Pairing it to the U. S. Stock. Market as represented. Presented by the S. P500. Which is going to be your larger companies. Your mid cap. Which is the green. And then the small caps, again, lagging. Struggling this year.

CHRIS SIPES CFP®: And you know Gold has just been. On a tear really for several years now. And you keep... Looking at it and going, gosh, what is gold seeing? What is gold seeing? Well, It could be inflation. It could be geopolitical issues. You know. There's things you want to have in your portfolio if you're concerned about inflation.

CHRIS SIPES CFP®: But You want to... You want to think about what causes that inflation. Like if it's a cyclical inflation. You know, tips. Are probably gonna do. Девушки pretty good job of taking care of you there if it's just a normal cyclical inflation.

CHRIS SIPES CFP®: If it's a inflation driven by growth you know we're were building a lot of things and and the economy is booming. Then commodities are typically going to do really well. Thank you But if it's an inflation driven by. Basement That's where gold really shines. And, uh... At least so far, the market seems to be saying. This This particular...

CHRIS SIPES CFP®: Moment for gold is driven Bye. To basement.

DANO WEIR: All right, great. Gold's up. So just go buy a bunch of gold. That's what you're saying.

CHRIS SIPES CFP®: Of course not, Dan.

CHRIS SIPES CFP®: Moderation, right? Everything in moderation.

DANO WEIR: For someone, that would be a natural thought when someone sees a chart like this. So for someone who would have that natural thought. As Darren often says to me, our brains are wired to do it wrong. Why is that? Perhaps not a good idea.

CHRIS SIPES CFP®: Well... First off, it's an asset class that kind of attracts a almost a religious level following to it. Right. So. People are into gold, they... They have the inclination to just put everything in. There. Right.

CHRIS SIPES CFP®: And I don't think that that's a good idea. About any asset. Class when he just talked about people piling into U. S. Stocks, large cap stocks, a handful of U. S. Large cap stocks. I don't think that's a good idea for the same reason. Which is You You can't know what will happen in the future. A lot of times when it feels the best to be jumping into something, it's the exact the opposite. Because we're heard. Were heard.

CHRIS SIPES CFP®: You know, you were wired to Heard. Thank you right? And, move with everybody else so that it feels like consensus but in and investing. By the time it's consensus, it's usually. Over. And so you want to really fight that urge to go where everybody else is. Going because you're probably paying a lot higher. Price. Which is again falling out of that 15 or 20 story window instead of the first floor. Ha ha Ha!

DANO WEIR: Thank you So, Again, not investment advice. Who knows the future? But if we're going by some. Basic investing. Principles. This chart would not be an opportunity.

DANO WEIR: And this chart might be an opportunity.

CHRIS SIPES CFP®: It. They could both be, right?

DANO WEIR: Yeah, you never know. You never know. Never know. This one looks... Absolutely horrific and you would never walk into this.

CHRIS SIPES CFP®: You're looking at the potential upside versus the potential downside.

DANO WEIR: Right.

CHRIS SIPES CFP®: And when something's already up a lot. And just you know I mean, the S&P, the... Gold Gold's done better than yes. Over 20-some years. Thank you you know, there's, there's maybe less potential upside than something that's... Just been left for dead.

DANO WEIR: Right. That's all I wanted to say.

DANO WEIR: We are moving to the second half of our show. So Chris, with the fundamentals, looking at some of the economic indicators. Darren the technicals. The technical analysts, and I have to even... Step aside and give him full power. To present, The whole show himself is where he takes over. We don't know what he's going to do. He's starting with a map. And, Darren Blonsky, what do you got?

DAREN BLONSKI CFP®: Dano, it's always a great mystery what I'm going to talk about. You know that.

DANO WEIR: Bitcoin End of sentence.

DAREN BLONSKI CFP®: Yeah. I'm actually not going to talk about Bitcoin. I can if you want to, but I always have something to say there. But Today, I'm going to talk about a map.

DAREN BLONSKI CFP®: And I thought we'd start by just kind of showing some. Geography, right? And why is geography important, especially in this moment in history?

DAREN BLONSKI CFP®: And the reason is because oil comes from this area of the world and to a large degree. Particularly in California, we are highly dependent on foreign oil sources. I don't know if you guys knew this. But California gets very little of its oil from the United States.

DAREN BLONSKI CFP®: So what does that mean? Like, why do we care? Walt. Us Californians are always complaining because our gas prices are so high. The dependence on foreign oil for Californians is pretty high, which means what's going on geopolitically right now will impact us in California.

DAREN BLONSKI CFP®: More than perhaps other parts of the country that are less resilient. Reliant. So let me orient you. Everyone for a minute. So this is Iraq. Thank you This is Iran.

DAREN BLONSKI CFP®: This little... Area here is Israel. Israel's a quiet... A bit smaller than Iran. And Uh... Who what happened like why so I guess Yesterday it was yesterday evening or the evening before. Israel went in and Thank you started Launching bombs and... What not on Iran with the claim that Iran was... Had obtained nuclear weapons and they were going to use them. And so Israel had to strike first.

DAREN BLONSKI CFP®: That has then since led to Iran. Retaliating and as of earlier today.

DAREN BLONSKI CFP®: Sent quite a few ballistic missiles into Israel. More are expected.

DANO WEIR: So. And just to give some scale here, I just looked this up. Distance between Israel and Tehran. This would be the equivalent to like San Francisco to Denver.

DAREN BLONSKI CFP®: Well, and therein lies in... Part of the issue, right? Because what's kept, I think, Israel and Iran from going head to head on things. For a while is the distance between them but what iran has done is it's created proxies Yemen, which has been in the news quite a bit because of this little area down here where a lot of...

DAREN BLONSKI CFP®: The world's goods and oil, etc. Come through this area and Yemen was lobbing bombs and hitting different ships going through this area will you Iran had created a proxy. Out of Yemen. A group down there. And They were making it. Pretty difficult.

DAREN BLONSKI CFP®: To move. Ships up through the Red Sea. Thank you In addition, Iran also controls the Strait of Hormuz. And this is really what I wanted to point out. So this little... Peace. Here of C, this is very, very important for... The world And for. The value of oil and what oil costs.

CHRIS SIPES CFP®: Per barrel.

DAREN BLONSKI CFP®: And there's a lot of...

DAREN BLONSKI CFP®: Thought that Iran is going to shut. This part or this area of Straight Home Roses. Down. Why? Can they shut it down? Because. Just the geographical. Make up of this area, anything going through there is fairly easy to target for them.

DAREN BLONSKI CFP®: Well, if they shut down that area and oil can't move out of the country, Persian Gulf, the Qatar, Bahrain. Quite Iraq. Can't ship all their oil out. That becomes very problematic for all of those economies. Night Emirates.

DAREN BLONSKI CFP®: I And then would create a lot of turmoil in the Middle East. Probably also make Saudi Arabia very unhappy. So they... Iran, why they would love to shut this area down if they start blocking all these areas from. Shipping oil out Not is that just problematic to the United States, but it's problematic to China.

DAREN BLONSKI CFP®: And China's a pretty important ally because it's one of the only allies Iran has left. So they don't want to alienate. Them too much. Thank you so And then we've got down here in Yemen, where the Yemen's are. Yemenis.

DAREN BLONSKI CFP®: Groups down here are targeting the Red Sea. Ship. So Really? Pretty quickly you could shut down a lot of Oil going on. And moving throughout. The world. Why? Then One might ask, well, why is oil? Oh. Since This battle begun. Well?

DAREN BLONSKI CFP®: Here we go. So you can see oil has moved up considerably when Israel started. Bombing. Iran. We were down at 60. We've been talking about oil. In the potentiality of a recession for quite a while. Now, here's what's interesting about. This.

DAREN BLONSKI CFP®: If Oil goes up exponentially and our gas goes up. And everything we buy that is produced with oil, that becomes problematic for the economy. I just find it interesting. And I told. Chris and Dan earlier this week, you know, sometimes I just feel like I'm living in the Truman Show.

DAREN BLONSKI CFP®: Because it would be. Particularly interesting. Did the yield curve just re-inverted? Which we're at the highest risk for a recession when that happens. And magically oil goes up.

DAREN BLONSKI CFP®: Because There's this. Fight! That breaks out. In the Middle East that's been building for a very long time. That then pushes up prices enough that. Decreases demand just enough. To tip us over. Defined ourselves in a recession. Thank you On top of that, we've already got really weak job numbers.

DAREN BLONSKI CFP®: On a Chris and Dan, you caught that this week. But all these job numbers have come out. From you know the government people who calculate these things. And they come out with these job numbers and then quietly. The kind of redo it. The next month. And. So.

DANO WEIR: Wasn't it down like 219,000? Oh, we were off by like... 200,000.

DAREN BLONSKI CFP®: Wasn't that it? Significantly. So the jobs numbers are very noisy. Right. So. The market kind of says, oh, the unemployment rate's this or that. But- Quite often those... Job numbers are... Not correct.

DAREN BLONSKI CFP®: And. The- So I always just find it interesting that the market moves off those numbers. But yet they're always recalculated the month later. And then usually. Lowered. Thank you And so what we found is that really we haven't added. Maçın. Any job. Thanks for watching this year.

DAREN BLONSKI CFP®: And that's obviously problematic. You know Chuck on the side of the recession world, right? So When we look at. Oil, now oil spiking, and you can see in the chart going up. Thank Thank you It's interesting that it's going up right now. Right Thank In a way, it could be that.

DAREN BLONSKI CFP®: You know, that needle that breaks. The camel's back. Or that you know, that final straw that pushed us into a recession. Which would be really. Would make sense given everything going on. Does that mean the stock market's going to go down? No, it doesn't mean the stock. Mark Skindow.

DAREN BLONSKI CFP®: So don't take that and start trading and whatever on that. It's just. The realities we might be facing. That. Now. Dan, you kind of teased. When we started off and said, why am I? Well, you said something that, you know, oil might be telling us that this might be over sooner than later. And here's why I'm sane. No. So.

DAREN BLONSKI CFP®: If you look at oil, So the market. Is in a way saying... We don't know that we believe that... This whole event going on in the middle. He's just... Going to be sustained. If we put a trend line on oil here, Thank you You can see oil traded up. That resistance point on a trend line today. And then quickly sold back off.

DAREN BLONSKI CFP®: And a lot of times when that happens, that's happening because That's the market trading. Price up. So at some point... Bear Oil went up to $77 a barrel. And then came back down and closed the day at $72. A barrel. And that's a pretty big spread, pretty big move. But the fact that it settled right back. Down I think is interesting. Right I don't. No, for sure.

DAREN BLONSKI CFP®: That In fact, the that it's going to settle down or anything like that. It's looking pretty shaky right now with Iran now taking direct... Hits on Tel Aviv. And literally flying ballistic missiles. Into apartment buildings, et cetera. What is also interesting when we look at chart patterns, so go into your point, Chris. All right.

DAREN BLONSKI CFP®: Dan earlier about technical patterns. This is a triple bottom. Right here. And so this triple bottom is usually a bottoming. Type formation. On a chart pattern What's interesting, though, and this is the other why I'm like, maybe it's getting close. It's really not going to get that. Crazy. And here's why. Because we have that triple bottom.

DAREN BLONSKI CFP®: And then. When you have a break of a triple bottom, it tends to move. Between what we call the neckline, which is ultimately right here. And then the extension off the neckline is a... Bow. The distance of that. Depth of that. What we would. Call the Well, inverse head and shoulders is another way to call it. And you can see that distance line up. 13%. And that's kind of about the range where we ended up. Today right in here.

DAREN BLONSKI CFP®: Which I find interesting from a chart perspective. Like, it just amazes me how often these charts kind of tell the story. We don't really know what it is that. Will be the catalyst to tell a story. But had you looked at this and said, okay, This is an inverse head and shoulders.

DAREN BLONSKI CFP®: And given we have a break of an inventory. Versus head and shoulders. We're likely to have an event somewhere around here. And is probably going to extend. You know, some degree about 13%. Up from that inverse. And you stack that puppy right there and lo and behold magically we have Completed. That chart pattern.

DAREN BLONSKI CFP®: Again, that's why I said to Chris and Dan, man, it feels like I'm in the Truman Show sometimes. Right on time. It's just interesting how the market works that way. So. Gas oil is going up. But it seems to be in line with trends.

DAREN BLONSKI CFP®: If we break above and hold above 76 next week, then I think we're in a different story. And I think this. Trend is now broken, this downtrend. I think we're on an uptrend. If it holds above 76, then I think we got bigger problems. I think that's going to lead to a recession.

DAREN BLONSKI CFP®: Then what will happen. Price in oil when it shoots up, then it tends to really collapse. Because then people just stop consuming.

DAREN BLONSKI CFP®: So let's go to the S&P 500. So for those who don't join us on a regular basis, this is the S&P 500 when you look at. It on a, From a heat map standpoint, I like the heat map. Because it just kind of gives me a visual. Of what happened in the market.

DAREN BLONSKI CFP®: So each one of these squares. Is the relative capitalization. To the other screen. Than the S&P 500, which is the largest. 500 US-based stocks. Met Microsoft, Nvidia, Apple, Amazon, Tesla. These stocks have really driven the market higher.

DAREN BLONSKI CFP®: And, but really a lot of red on the screen today. The only green is really the energy sector. Or why, because. Well. Stocks and energy are going up because there's perceive to be at least at this point that there's going to be a constraint in supply because the red sea Straight to her mo's. Those areas are going to be more.

DAREN BLONSKI CFP®: Difficult for ships to navigate and get oil out of there. I don't think it'll last very long. Do not think. That all the countries. That are sitting around the Persian Gulf. Are going to tolerate. Tolerate from Iran? Too much more of this because it really gets in the way of their ability to produce. I also don't think Iran's going to keep it going too much longer because China's going to get very impatient.

DAREN BLONSKI CFP®: If their oil stops moving. Into their economy, China is already in a struggling position. Thank you So I think Iran has a... It has to kind of... Threatify needle here. Now I... Do believe that Israel and Iran. Think that they're in a fight for survival, which could escalate. That's the scary part.

DAREN BLONSKI CFP®: Whether Iran actually has a nuke and we just don't know it. Or people who know it just haven't shared it. And perhaps. We know Israel has a nuke. And if... Too many more. Ballistic missiles land in Israel. And it gets too bad. I don't know why they wouldn't. Point nuke So. That becomes... Problematic too. Bye. And, You can understand why, though, because they...

DAREN BLONSKI CFP®: In Tud. Believe there. In a fight for survival. Right, wrong, or indifferent, that's what's believed. So now when we look at the S&P, though, which is interesting in... Yeah. I don't know if you... Dan or Chris remember this last week. But I talked about how... We were likely to get a breakout and a retest of this area.

DAREN BLONSKI CFP®: Because when it's... When the stocks break out, they tend to come back in and they resume higher.

DAREN BLONSKI CFP®: I think it's fascinating. Again, so this area is real, this, this.

DAREN BLONSKI CFP®: This which was support. Is now is now support, which was. Resistance when the market came back up. This area and this is just where buyers and Yeah. Sellers were sitting. Broke above that and it came back in it tested it and held And it actually closed the day holding. So I actually look at this. And look at the stock market. Thank you I'm actually constructive on the stock market. It. Shocker, right?

DAREN BLONSKI CFP®: I think all we really saw from a technical standpoint today was a test. Of call it 59. The only thing I don't like about this is I would have liked to He had clothes on the weekend. Liam Love, sick.

DAREN BLONSKI CFP®: That would have made me feel a little bit more. Come. Here. But you can see this is a week. Chart And. We're up. In this range, we're literally in the all-time high range right now. On the S&P 500. We're not far.

DAREN BLONSKI CFP®: It wouldn't take... Much to my break. Of that. And the fact that we... Did hold above that. Port line I'm... I'm actually fairly constructive on it. Even given all the war and garbage. Going on around the world right now.

DANO WEIR: Can I ask for a definition or some, I think I understand finally support and resistance because you're saying... Resistance became support. And so I think what you're saying here... Is that, was that top line 597? Is that what that is? That's support line now.

DAREN BLONSKI CFP®: Yeah, so that green line, give or take $597,000. Is I've put that in the chart, right? So I put that in the chart. So When you look at a chart, what you do is you say, okay, well, this look at this chart and use charts to figure out where all the buyers and sellers are. Are psychologically hanging out. Right? Because there's thousands of people around the world, millions of people looking at these charts.

DAREN BLONSKI CFP®: And so if you're looking at this chart and analyzing it. What you would do is you say, well, this is interesting. If last week the market was here and... Thank you say, wow, this area is really important. You can see it was... Portwright. There was some. Portwright. There was some. We're supporting you.

DAREN BLONSKI CFP®: Report here was resistance, right? There. I think that's a pretty important psychological. Point where buyers and sellers hang out. So what I'm going to do is I'm going to Just go ahead and I'm going to. Put in a sub court line you know, somewhere right around here, you know, and So we go like this and there's our support line. So we know something.

DAREN BLONSKI CFP®: Then in that range is a really important point where. Buyers actually are willing to say, no, I like it. Out. Price. I'm going to step. In that support. Thank you And then. Sellers or resistances. Where sellers say, well, right here. You can see today. That was resistance. That's where the sellers said, I don't like that price. I think it's getting overpriced. Spot. Thank you I'm going to sell today.

DAREN BLONSKI CFP®: And so that was. This week. Where the market moved in between these points. The fact that it. Broke above there. Held above held this support area that it broke above last week. That tells you like. There's support here. There's a lot of people willing to say. I'll take a bite of the apple right here. Because I think that it's going higher.

DANO WEIR: But psychologically, if we were to look at October 2024, $597 to a buyer in October 2024. Would have been like, man, that's way up. There. You know, ah, That's just like Can it even get there? There. But then flash forward to the next few months.

DANO WEIR: Not only does it get you to Ket there It's like, oh, yeah, no, this is the price now. No, we're just hopping around here now. Now, can we go even higher than this? We might dip a little bit, but we're always coming back to this. Psychologically and really simply, is that kind of what you're saying about support and resistance?

DAREN BLONSKI CFP®: Yeah, they become anchor points, right? They become psychological. Anchors, right? Where people are like, no, no, that makes sense, right? And you see that, just think about it from a basic economic... Principle right it's like The more someone buys a product, or sells a product at a certain price, that becomes a more like accepted price for that, right?

DAREN BLONSKI CFP®: You see it in like real estate, for example, right? Like. If you think that the average house is, I guess, I think it's like $450,000 is what the average. Single-family residences in the United States, somewhere in that ballpark. And You go back. To our parents' generation were...

DAREN BLONSKI CFP®: You know, in their first house, they paid. Bought the house for 20 grand or something like that. And. Like that. The idea that they'd even be buying a house for 400 grand would be just psychologically. Crushing to them. Whereas like now we're like, yeah, well, that's kind of reality. If you want a house, that's what you got to pay for it, right?

DAREN BLONSKI CFP®: And. So over time, our minds adjust and become more used to a certain. Price point. And that's why we say when we're looking at charts. What happens over time is the more often that a chart visits a... Superior area on the chart. The price actually hits that area. Weaker that area becomes.

DAREN BLONSKI CFP®: Thanks for watching And what that means is that more people are willing to take a bite of the apple along the way at that point. Price point. Thank you And the more people are willing to take a bite of the apple with that. Price point then eventually it moves higher The same is true, right? When we... You can see this better on the SPX.

DAREN BLONSKI CFP®: This is S&P 500, but it's traded a little differently in broader hours. So... This was the all time high. Back here in 2022. And then. The market moved down, it went back, it went up, and it never really revisited and tested that point. And then just recently when we have our tariff tantrum happen.

DAREN BLONSKI CFP®: We we had a test of that area right there.

DAREN BLONSKI CFP®: And. On that day when it I remember I was talking to a client and I was like, this is bottom, I think. It's more likely this is the probable. Bottom at this point. Because this psychological area was tested. Bye. But. Now, say, for example, and if you've been following us over the last few weeks. Had the market gone up? And then.

DAREN BLONSKI CFP®: R- And I think if you go back a couple weeks and look at it. But if it had gone up and then revisited this point. I would have been much more concerned about this point. If it revisits it multiple times, then. More likely to break through. The the probabilities of breakthrough become higher.

DAREN BLONSKI CFP®: So last week I said, hey, I think we're probably going to see all-time highs. And the reason I'm saying that is because you have this. Part of the chart visited once, that is twice, and now we're knocked. And on the ceiling of it again. And we revisited a couple times, so eventually people... Brain gets used to that price for the S&P. Breaks above.

DAREN BLONSKI CFP®: Same thing happening in gold, right? Thank you Here's the gold chart. And. Gold currently, if it were to close out... This month on it would would close out an all-time high. It never closed a month. Are we? We'll above actually Technically, we... Closed the week at the all-time high. For gold. Thank you It's never closed.

DAREN BLONSKI CFP®: It's gone higher, but it's never closed a week. Thank you And you can see this trend line, right? That was happening. We'll look at the daily. So. This trend line right here was happening. And you can see it visited, went down, visited, went down, and then it visited again, went down a little bit, and then... Boom, breakthrough.

DAREN BLONSKI CFP®: And then it breaks through. And then what do you see? You see that. Test. Now this line becomes. Port off to the races. So if you knew nothing about what was going on with Iran, in Israel. Nothing about any of that. You could literally just look at the price of this chart and say, oh, look at this. We had a A trend line down.

DAREN BLONSKI CFP®: It tapped it here was rejected. Tap It Here is rejected. Three times visit. It gets rejected. That may be, I don't know. But then all of a sudden you start seeing. Support, support, support people buying. Breakthrough. You see that and you say, OK, it broke through, but it might still be a false breakout.

DAREN BLONSKI CFP®: I'm going to wait to see if this trend line holds. We'll be before I buy. And then you see, okay, well, the trend line. It came in here. It held, meaning... A lot of buyers step. In right here. And then Boom. It goes up. We take all-time highs. On gold That's how traders think. Right? That's called swing trading.

DAREN BLONSKI CFP®: Not so much day trading, but swing trading. You're just trading chart. Pattern. Thanks for But there's a perfect setup. And that's what I'm saying. There's kind of that setup here in the S&P, right? We had our breakout. We had a retest. So... You You could argue the fact that we closed out a weekly chart right there. We're going to take on all-time new highs now.

DAREN BLONSKI CFP®: Which I know seems ludicrous. For me to be saying right now. Uh... Given everything going on the world But... We're... Literally staring down the pipe of a Thank Potential World War III. And I'm like, hey. All-time highs. And The market doesn't care. And that's what I try to tell people over and over.

DAREN BLONSKI CFP®: All this political BS. All this stuff going on. Yes, there are moments where it freaks out. But the market is on a mission. And if you learn to read what the mission the market is on. Thank you All the junk. In all that fundamental, no offense, Chris. Data just becomes noise.

DAREN BLONSKI CFP®: All right.

DAREN BLONSKI CFP®: I think I'm going to leave it there. For now, I don't think there's much else to say about the market this week.

DAREN BLONSKI CFP®: Are Thoughts and prayers are with all the people in Israel, in Iran.

DAREN BLONSKI CFP®: Awful situation. For both sides. And hope. Cooler heads prevail and that calms down before it gets worse. Worse.

DANO WEIR: All right. Thanks for checking out our show. Wow. We are Sonoma Wealth Advisors. You can find us at sonomowealth.com. Wherever you're listening or wherever you're watching, make sure you subscribe. Thank you And thanks so much for checking out. On the markets. We'll see you next week.

SPEAKER 6: Permata Advisors LLC is registered as an investment advisor with the SEC. And only transacts business in states where it is properly registered. Or is excluded or exempt from registration requirements. This content was produced by Fermata Advisors, LLC, DBA, Sonoma Wealth Advisors, DBA, Fermata 401k. Dba Promota Tax The opinions expressed by Fermata Advisors LLC on this show are their own.

SPEAKER 6: Information presented on this program is believed to be factual and up to date. But we do not guarantee its accuracy. And it should not be regarded as a complete analysis of the subjects discussed. Discussions and answers to questions do not involve the rendering of personal investment advice. But are limited to the dissemination of general information.

SPEAKER 6: A professional advisor should be consulted before implementing any of the options presented. Information presented is for educational purposes only and does not intend to make an offer or solicitation. For the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated are not guaranteed. Information expressed is not.

SPEAKER 6: Take into account your specific situation or object. Objectives. And is not intended as recommendations appropriate for any individual. Viewers and listeners are encouraged to seek advice from a qualified tax, legal, or investment advisor. To determine whether any information presented may be suitable for their specific situation. Past performance is not indicative. Of future performance.