The AI Buildout Costs More Than Going To Mars

DANO WEIR: Happy Friday, November 14th, 2025. You are about to go On The Markets. My name is Dano Weir with Sonoma Wealth Advisors, Fremata Advisors family of brands. And this week we are looking at the market. Wait, we do that every week. What happened this week in the market and why the AI build out costs more than going to Mars? What am I talking about?

DANO WEIR: We're talking about the insane price tag that OpenAI thinks that it needs. And why the dude from the Big Short, who's made some news recently, isn't buying any of it and literally tapped out this week. Do you think the AI build out is big? How much debt will be invented when everyone's got a portable 50-year mortgage? That happened this week.

DANO WEIR: AI bubble stocks or not, we're going to take a little bit of a victory lap on staying invested through the April tariff crisis. We'll look at that across multiple asset classes. And finally, all that said, because we got to go out of both sides of our mouth. Why right now Daren thinks the way that the market closed just today, that the risk is to the downside. Let's get into it.

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DANO WEIR: Let's get them in here. They are your managing principals for Sonoma Wealth Advisors, for Fermata Advisors, family of brands, Daren Blonski, Chris Sipes. How are we doing this week, guys? Chris, how are you?

CHRIS SIPES CFP®: I'm doing very well, Dan. Thank you. It's another week down and another eventful week. Meme wise some weeks we get a little dry and there's not much to include sometimes we don't even include memes this week was not one of those there was just a fire hose of chaos coming at us and i feel like there's just an embarrassment of riches in the meme world this week so looking.

DANO WEIR: Forward to diving in yeah Daren there was a lot i felt like there was chess pieces moving on the board this week in a lot of different sectors.

DAREN BLONSKI CFP®: I think that's a fair statement. A lot going on out there, I think. Well, I guess that's kind of a broken record thing to say, though. So let's not say that.

DAREN BLONSKI CFP®: There's always a lot of pieces. But I think the most important, you know, if you're going to be one of the probably hundreds of people that listen and turn this off in about two seconds. The thing I would keep in mind is the front end of the risk curve, namely Bitcoin and some of these riskier tech stocks.

DAREN BLONSKI CFP®: They are not looking great. And so we tend to see those things go down before we do a dip. And we certainly seem to be in a correction or maybe looking at a correction phase in the market, which won't be shocking given how far we've run up.

DANO WEIR: We are going to get into the economy and a few of the developments there this week. But one of the storylines that I've been tracking, because I'm a movie guy, guys, so I come into this from kind of a media background. I did love the film, The Big Short, if you have seen that.

DANO WEIR: That helped explain the mortgage crisis back in 2008. The real guy who is part of that story, Michael Burry, has had a flurry of activity in the last two weeks. We talked last week about how he announced a short on Palantir and NVIDIA. Then this week, he straight up closed his hedge fund and indicated that he'll be announcing something on November 25th.

DANO WEIR: 5th. So I kind of I'm dug in a little bit deeper to try to see what is his gripe with AI and specifically, what is he seeing that he thinks is a bubble? Now, granted, guys, I don't have the CFP here, but I'm trying to understand Lehman's person's understanding of what he's saying.

DANO WEIR: What he's basically saying is that all of these AI companies, OpenAI, Anthropic, they are saying that that these massive chip investments that they're making, the chips are going to last for five to six years. But NVIDIA is saying they're only going to last about one year.

DANO WEIR: So they're actually going to need a lot more chips than they're actually saying that they're going to need. And then in addition to that, they're not only the chips that they're getting now are also being purchased on debt. And so he sees that as kind of a weak foundation for these companies.

DANO WEIR: So I'm sitting there and I'm trying to figure out, like, what's a way that I can put this into context that. Maybe the average person can understand. What's a different category, different story that we can tell? So I thought back to this book I read, guys, called The Case for Mars. And I read this about 10 years ago.

DANO WEIR: This book came out in 1996 by this author, Robert Zubrin. He's a space guy. Daren, you can see right there on the cover, Elon Musk even says it's, quote, worth reading. But he's a scientist who's basically arguing, you know, here's why we need to go to Mars. And in this book, which... Came out in 1996.

DANO WEIR: He basically says, hey, what you should do is you should build the rockets in orbit because a lot of fuel is wasted just escaping Earth's gravity. So if you build it in orbit, you'd be able to have enough fuel to actually make it to Mars. Here's a blueprint for how exactly you would do that. So his price tag to do that in 1996 was $40 billion.

DANO WEIR: Adjusted for inflation, that today is $80 billion.

DANO WEIR: The AI, let's just round up to 100 because it's probably more than that. The purported build out that Sam Altman says he needs for open AI is 15 times what this particular author suggested it would cost to put a human on Mars. And so I think that was kind of my takeaway this week that Burry is trying to say and other people are saying it too.

DANO WEIR: Other people have been sounding the alarm too. That, yeah, is it physically possible to build out some of this compute power that they need? Yeah, maybe. But man, trillion? Like, whoa, whoa. Like, at a certain point, the price tag is just too insane. That was my take on it. What do you guys think of that?

DAREN BLONSKI CFP®: I think it's complete wacko. Like, Sam Altman told me.

CHRIS SIPES CFP®: What, Dan's explanation or what's wacko?

DAREN BLONSKI CFP®: All of it. No, just kidding. The whole AI run-up thing. But I get it because you have like, you've got China that is all in on it, right? And if we're not all in the United States, then we're in trouble. And I think that's partially why Sam Altman even had an audience when he went to the government earlier this week and said, hey, we want you to backstop this basically.

DAREN BLONSKI CFP®: Which I guess enlists all kinds of questions about what role the US government should have in any of these companies. It does, man. It just feels like WWW all over again. I mean, I just can't help but feel like, remember a visceral feeling in college when the 2001 crisis happened and every other buddy had a WWW new tech internet startup going on. And that's the way this feels right now.

CHRIS SIPES CFP®: Yeah, I think that they're starting to be the new narrative that I'm hearing in the financial world because basically everything I listen to is financial based. And the narrative is starting to switch from these guys are making so much money, they're creating this innovative product that we're all going to be using to hold on a second. Now we got to build these data centers. Power.

CHRIS SIPES CFP®: So they're going to have to build their own power sources as well. And so it's going from a very light capital, not a very capital intensive business with huge margins to suddenly a very capital intensive business, which historically capital intensive businesses have not been very good businesses. And so the narrative is starting to change and they were financing all of this.

CHRIS SIPES CFP®: I think importantly, they were financing it all out of cash previously. And now you're starting to see borrowing in that space as well. So that leverage is going to add an additional layer on there too. So who knows? I mean, these narratives can go for a long time, but it does feel like they're starting to be the whispers of, wait, how much money are we talking here and you need to borrow how much, right?

CHRIS SIPES CFP®: So, and if you think about it, in addition to that, the U. S. Governments already got a massive debt load and they they are a huge borrower in the credit markets. So supply and demand is pushing up interest rates across the board. And so if you start to see even more borrowing in the AI space for this CapEx, you know, that can keep pressure on interest rates, you know, out into the future.

DAREN BLONSKI CFP®: I think there's another important story around Burry, right? And I think it's a perfect example going back to the previous slide. Michael Burry hanging up the hat. And what a great reminder, a reminder to us all that bubbles can stay alive much longer than you can stay solvent.

DAREN BLONSKI CFP®: So, you know, even though we're saying here in this conversation that like, this is, this just smells like a bubble. It looks like a bubble. It talks like a bubble. It walks like a bubble, but that still doesn't mean bet against it.

DAREN BLONSKI CFP®: Because as you can see, I think Michael Burry's, I don't, I'd have to go back to the research in this, but it feels on a regular occasion has come back onto X Or Twitter, whatever you call it and said, Hey, you know, I'm going to short this thing and then, nevermind and goes away. So, you know, just a reminder to all investors that like, it doesn't matter who you are.

CHRIS SIPES CFP®: Yeah. That's a great point. You're not Michael Burry. You're not Warren Buffett. And you know, they're on a different timeframe. We talked last week about all the calls that he had made that were not correct. We have this weird thing as humans where when somebody gets something right and they hit, they hit an amazing shot like he did with the Big Short.

CHRIS SIPES CFP®: That we just go ahead and assume like everything else that they're going to say and do in the future is going to be correct too. And we know that most traders are barely right more, more than half of the time in their bets.

CHRIS SIPES CFP®: And it's just being right more often than they're wrong. And when they're right, making more money than when they're wrong. And so that's, that's one. And two, they're on a different timeframe than most, you know, retirees or people that are investing for the long term.

CHRIS SIPES CFP®: This is a different trading style, a different approach than most people should have with their portfolios.

DANO WEIR: Agree. And just we've talked about him a couple of times the past couple episodes. And I think it might be the last time we talk about him because we don't, as a firm, we don't look to a lot of Nostradamus types. And I don't think as an investor, you should either. It's important to take it in as a data point. But ultimately, you're making the decisions for yourself.

DAREN BLONSKI CFP®: Let me make one other point to this because I think it's important. And When it comes to these people who pontificate about, here's what's going to happen in the market, here's how I imagine it.

DAREN BLONSKI CFP®: We're playing a game of musical chairs, and there's constantly all these people in the musical chair wandering around saying, oh, the market's going to end, the recession's coming, the bubble's happening. And imagine each one of these people playing in the game of musical chairs has an opinion about the market. They share their opinion.

DAREN BLONSKI CFP®: But eventually the chair gets pulled out from each and every one of them until there's one left standing. And I think that's more or less what happens when we hear these financial pontificators talk and say, oh, this is for sure going to happen. This is happening, blah, blah, blah, blah. It's like the game of musical chairs. They all get taken out one at a time and there's one left standing when it actually does happen.

DAREN BLONSKI CFP®: And then we all look to that one individual and say, oh, they're so smart. They know what they're talking about. Michael Burry is a perfect example of that, in my opinion, where he called this crash. And so then everyone thinks, oh, forevermore, he's smarter than everyone else. And he can call a crash. And it's just a matter of time before he's wrong. And he just got lucky once and the music just happened to stop.

DAREN BLONSKI CFP®: Because if you think about it, at any given time, there's hundreds of people calling for the demise of the market, demise of the world, demise of this. And when that actually happens, we all just look and say, oh, that guy called it and he's still standing. So he must've been really smart. But in reality, there were thousands of the people behind that. Those pontificators that were wrong.

DANO WEIR: You guys want to know something really funny is as I was, we use a platform called StreamYard to do our show. And as I log into StreamYard today, do the show with this kind of Mars theme that I had, this example I had, there's literally an animation that has never popped up and it's a rocket ship and it goes, StreamYard has made it to Mars and it's some multi aspect ratio streaming thing that they have.

DANO WEIR: So it's like. Wow. Maybe dead on with the Mars analogy this time. Kind of funny. So should we be doing a massive $1.4 trillion build out for a country that can barely keep its Federal Government open, Chris? That's the question.

CHRIS SIPES CFP®: Yeah, I figured we start off the show with a little good news. We finally ended the government shutdown. It's the longest one in history. Congratulations, guys. Another first. Time, you know, unprecedented situation to, to manage through. Here's another one that we just went through, that has not happened before.

CHRIS SIPES CFP®: And you can see that this one exceeded all the others dramatically, except for the one that we saw, the other one that we saw recently in 2018, not, not that much further from there. So, and the government wants to make up with us guys. So they are talking about.

CHRIS SIPES CFP®: Doing another stimulus to make up for the fact that we had everything shut down. President Trump announced on True Social, I think it was on Sunday, Saturday or Sunday last week, like a tariff dividend or something, the $2,000 for non-high income earners that they would be getting from supposedly from tariff revenue.

CHRIS SIPES CFP®: Of course, all the fact checkers said, yeah, but we're still have to borrow to do that if it goes out. But it's just funny. You know, I, I took it as they're trying to, trying to make up to us for having everything shut down for so long.

DAREN BLONSKI CFP®: You know, for months or probably years at this point, guys, I've been saying on this show, the government can't stop printing. Don't worry if your party wins or not, they're still all going to print. And, we saw that with the Doge and Elon Musk trying to cut out stuff. Like the government didn't have a choice, but to print, but look no further than the government saying, Hey, we shut down for a month.

DAREN BLONSKI CFP®: And so we're going to give you all stimulus check just to make the debt go up even more. Right. We're not talking about taking this tariff money and putting it back into the national debt and paying down our debt. No, we're just going to give it and hand it out more.

DAREN BLONSKI CFP®: And it just goes to show like the way our political system is built, like they cannot get off the train. The train is on runaway. And that's just a reality. And will it be 70 trillion, 80 trillion, 100 trillion? Before we have to do a debt jubilee to get off this path and change things. I don't know, but they can't stop. And I think another perfect example of that.

DANO WEIR: Yeah. And Chris is bringing the meme game this week. He Chris, Chris found a few.

CHRIS SIPES CFP®: Well, shout out to Russell, the Russell Van Sistine, one of our advisors. He found this one and nailed it. The other announcement was from Bill Pulte. The, the housing director saying, Hey, what about a 50 year mortgage instead of a 30 year?

CHRIS SIPES CFP®: Well, let's extend it out for 50 years, to, you know, essentially help, the, the people in the housing market that are struggling. I guess it's trying to do the same concept of like, well, if you can't afford the a hundred thousand dollar car, you know, in three years or five years, let's kick it up to like an 84 month.

CHRIS SIPES CFP®: Payments and maybe you can make the payments then who knows but this meme was pretty funny my first bike my first car my first job and then my first house and shows somebody with a walker going up to the house i laughed i don't know about you guys but i think yeah i i.

DANO WEIR: Did and i did some digging well we have another slide later but i did some digging on this not only are they talking about extending the term to 50 years.

DANO WEIR: Also, Secretary Pulte also talked about making them portable and assumable, meaning you could take your 50-year mortgage, and if you wanted to buy a new house, you just take it to your new property, I guess. Or it's assumable, so that if you were to go somewhere else, whoever buys your house next can just assume the mortgage that you already had.

CHRIS SIPES CFP®: Well, I think yes. And I think what they're talking about there again is taking the current mortgages. So if you're one of these people that's got a 2.5 or 2.2% mortgage and you're like, I'm never leaving this house cause I have this amazing mortgage. I think they're talking about making those assumable and or portable, which that would be interesting. I don't know how they, how they do that.

CHRIS SIPES CFP®: But, but that's, That's another interesting twist.

DAREN BLONSKI CFP®: Sounds like a political bacon move to me.

CHRIS SIPES CFP®: Yeah.

DANO WEIR: It sent all of the, because I follow all kinds of finance people now, and some of them are like the real estate double backflip guys who are borrow, borrow, borrow, lend, whatever. I've got my Airbnbs.

DANO WEIR: Oh, as soon as you said a portable and assumable, they're just like, well, based on the time value horizon of money, now they've got six different moves they can do. And it was just like probably sending poor Dave Ramsey into the morgue.

CHRIS SIPES CFP®: Yeah, this one, this one, literally, I did laugh out loud when I saw this from the Babylon Bee. It says it was a sudden shock. He wasn't able to handle Dave Ramsey in critical condition after learning of the 50 year mortgage.

CHRIS SIPES CFP®: So for those that don't know, Dave Ramsey has had a financial show on the radio for many years, and he is anti-debt. Which we think is a good thing. He also is an advocate for, you know, fixed mortgages and preferably if you can do a 15 year mortgage.

CHRIS SIPES CFP®: Now he's from Tennessee and, an area of the country where that's a little easier to do than say in California. But he's an advocate for going the opposite direction of the 50 year mortgage, which is, I guess why this financial humor cracked me up, but for the average person might've saw that and just said. What's so funny about that? I don't know.

DANO WEIR: Who?

DAREN BLONSKI CFP®: I think half the things that we find funny, the average person looks at us with a strange face. Don't worry.

CHRIS SIPES CFP®: I think half is generous, Darren. I think half is generous.

DAREN BLONSKI CFP®: Yeah, I agree.

CHRIS SIPES CFP®: It's comforting to have you guys on teams that I can send these things to, and I know you appreciate it.

CHRIS SIPES CFP®: So the savings on a 50-year mortgage, how much does it actually matter? Does it actually lower your payment very much? It turns out not really. This is from Mike Simonson, and he's showing a chart from Compass, and they show various interest rates, the 30-year fixed versus a 50-year fixed at these different interest rates. Now, you'll notice the 30-year is at 6.3.

CHRIS SIPES CFP®: And then they have a couple of hypotheticals on the 50-year at 6.8, 7, and 7.25. The reason there is hypothetically, if you're going to borrow for 50 years, that interest rate is likely to be higher than the current 30-year. Okay. And that makes sense because you're borrowing the money for a longer period of time. It's a higher risk to whomever is lending you that money.

CHRIS SIPES CFP®: So just like now, if you go to get a 15-year mortgage, chances are you're going to get a lower interest rate than a 30-year. And that's been more dramatic in years where the interest rate curve is more normalized.

CHRIS SIPES CFP®: Recently that that curve is basically flat so there hasn't been a ton of difference between a 15 year and a 30 year because interest rates you know, we had the inversion on the yield curve for many years, but, but you can see really by the time you factor in a little bit higher interest rate and such, it's not, it's not a huge difference in that, in that saving.

CHRIS SIPES CFP®: So, I'm also not a fan of, I think one of the big reasons why they, why the housing market is having so much trouble right now is because of all the government intervention in that market. Government is more involved there probably than almost any other market, maybe other than farming.

CHRIS SIPES CFP®: And the more that the government gets involved, the higher the prices end up being. And I think you see that in student loans. And you've definitely seen it in housing, whether you're talking about the regulations or the lending side. And when I say regulations, I mean where they can build homes.

CHRIS SIPES CFP®: And so if anything, this is probably going to maybe spur more demand, which our problem really is. Supply in the housing market. We don't have enough houses. And so I'm not sure spurring demand is the smart move here. I definitely don't love extending out the time period even longer.

DAREN BLONSKI CFP®: I think that's also tied though to the portable loan idea, right? Because I think part of the reason we don't have a lot of mobility in the housing market right now is the interest rates are so low in so many of the buyers. And that's... Is ultimately stopping a lot of people from moving around.

CHRIS SIPES CFP®: Yeah.

DANO WEIR: Yeah, true. Darren, did you have anything you wanted to say about the 50-year mortgage? Because you were kind of going off on team's messages this week.

DAREN BLONSKI CFP®: No, I think Chris wrapped it up pretty good. It's optics. It's a joke. Don't take the bait. That's my outlook on it.

DANO WEIR: Yeah.

DAREN BLONSKI CFP®: I mean, it might save you a hundred bucks, you know, in your monthly payment, but you'll... For that a hundred dollars per month you save, you'll end up with, you know, another half a million dollars in debt over the life of the mortgage.

CHRIS SIPES CFP®: Yep.

CHRIS SIPES CFP®: Remember a house is not necessarily an investment, right? There's a huge consumption piece of it. So be, be careful out there. Now, the median age of us home buyers as is at an all time high, we talked. Last week about first-time home buyers and, and all of that. But this is showing the median age of us home buyers in general, is reached almost 60 years old.

CHRIS SIPES CFP®: I mean, that's, as you can see on those long-term chart, this goes back to the eighties where back in 81, the median, the median age was around 30. So median's in the middle, right? And so, so you had people younger than 30 buying homes now My dad would be quick to remind me back in the early 80s, I borrowed money at 18% to build a building.

CHRIS SIPES CFP®: And the interest rates were crazy high back then. And so for people saying like interest rates have to be lower in order for the housing market to heal, I don't necessarily think that that's the route given that here in the early 80s, interest rates were.

CHRIS SIPES CFP®: Way higher double digits right and people were able to buy homes back then much younger ages so anyway if you are young where's a good place to look well these are some markets that the areas where young younger people can still afford a home so this is the percentage of adults under 30 with a mortgage in America's 50 largest metro areas i was very surprised to see Nashville at the top of this list given that it's a pretty you know hip and popular place you know Indianapolis Pittsburgh Cincinnati the there they always seem to be on the list but Nashville is one where i feel like it's kind of like it's kind of a buzz city.

CHRIS SIPES CFP®: So I was surprised to see Nashville at the top, but, and you see all the way at the bottom, San Jose, less than a fraction, there's a fraction of 1% of people, under 30 that can afford, afford a home there. And so, you probably want to avoid most those areas, which a lot of those are in, in California, unfortunately.

CHRIS SIPES CFP®: So, interesting. Nonetheless, now let's get to the vibes. It, I, if I had to, I feel like we talk about it every week, but this week, especially, you know, there's been a lot of talk about the vibes in the market. Bearishness jumped up to 49.1%. So a huge jump in bearishness. Although you can see we're still way off the, the high of bearishness in, in early April when we were at, 60, almost 62%.

CHRIS SIPES CFP®: So a big jump up in bearishness this week. The CNN fear and greed index got down to 22 extreme fear, which is down from 24 extreme fear last week. And then Bitcoin hitting 16. I'm trying to remember, guys, the last time we were in the teens on the Bitcoin fear and greed index, that's down from 24 fear last week. Now, all three of these indicators are kind of. Lining up with one another.

CHRIS SIPES CFP®: They're all showing a lot of fear.

CHRIS SIPES CFP®: I know we've talked about it many, many times, but a lot of times when you get in that extreme fear zone, hey, that as a contrarian perks up like, hey, maybe people are getting too pessimistic. Warren Buffett always talks about the market being a manic depressive. It gets way, way too excited and happy. And it gets way, way too depressed. And there's swings between the two occasionally.

CHRIS SIPES CFP®: And so, you know, who knows? Maybe we're heading towards one of those overly depressed sentiments. And I think if I had to guess where that's coming from this week, it is the chatter from a lot of the Fed governors this week. We did not get the CPI up. Update because apparently somehow that information was destroyed and gone forever.

CHRIS SIPES CFP®: So there's no CPI report. However, there's a lot of signs that inflation is being stickier than what the Fed likes to see. And the Fed governors have been out talking about it. And so now we've got a 50-50 chance of that 25 basis point cut in December. If you guys remember, just a few weeks ago was almost a lock in terms of the expectations of the market.

CHRIS SIPES CFP®: Double-check the betting markets. Also about a 50-50 chance in the betting markets. The futures market and the betting market is lining up here. A little bit of pessimism when it comes to the rate-cutting expectations for the rest of the year. Maybe no rate cuts for Christmas this year, guys. What? But I was promised 50.

CHRIS SIPES CFP®: Well, if you take a look at the short-term Treasury rate, the two-year Treasury, that's what we kind of look at as the market, the quote unquote markets pricing of short-term interest rates versus the Fed funds, which is the gray line here.

CHRIS SIPES CFP®: We've got the Treasury rate at 3.56 as of yesterday, and then 4% on the Fed funds. So not much of a spread there, 43, 44 basis points. And so you're getting tighter, you know, it's not like the Fed is way off. I, you know, occasionally it gets spreads of 75 basis points to 1%.

CHRIS SIPES CFP®: And, and then people really start crying for that, that, that cut from the Fed.

CHRIS SIPES CFP®: You know, I think you could still argue that if a cut is warranted. You know, based on these numbers.

CHRIS SIPES CFP®: But we're not way off, you know, we're not completely out of the ballpark when it comes to the market's expectation of these rates.

CHRIS SIPES CFP®: Sentiment though, we've got an update from the University Of Michigan Consumer Sentiment Index, and this is from Charlie Biello. He says, the University Of Michigan Consumer Sentiment Index has moved down to 50.3, the second lowest reading in the survey's history, which goes back to 1952. But at the same time, U. S. Retail sales grew 4.8% over the last year, outpacing inflation by 1.8%.

CHRIS SIPES CFP®: We've never seen a disconnect this wide between what the consumer is saying and what they're doing.

CHRIS SIPES CFP®: I think that is something to consider. I would love to know, and maybe Charlie knows this. I was going to ask him on X if he knew this, but how many times has the consumer sentiment been this low and the market has been at all-time highs, the stock market?

CHRIS SIPES CFP®: At our near all-time highs. Because you look at these other times where we've been this low on the sentiment indicator on those gray bars, we've been in recession and we've been towards the end of a recession. And if you look at, say, June of 22, markets were down dramatically at that point.

CHRIS SIPES CFP®: Obviously, 2008, 2009, the markets had been destroyed 2000 the markets were down a lot So when previously has sentiment been this low with the markets being this high? I don't know the answer to that, but I would love to know.

CHRIS SIPES CFP®: Go ahead, Dan.

DANO WEIR: Sure, I did. I think that last chart and what you're talking about is that K-shaped economy that we keep talking about, which is that a few people going up the escalator and a bunch of people going down the escalator. I saw a clip from Breathe. Don't let these names trigger you. But Scott Besson, who's the Treasury Secretary, he was on Tucker Carlson this week, and he quoted a stat that said.

DAREN BLONSKI CFP®: Scott Besson on Tucker Carlson. Like, wow, that triggered.

DANO WEIR: Yeah. Yeah. Some people just crashed out. But just try to breathe. I even shared it on my Instagram because I thought it was meaningful. He quoted a stat that said, Summer 2024, Chris, more Americans took European vacations than ever. Summer 2024, more Americans went to food banks than ever.

DANO WEIR: So it's that separation between, you know, the consumer sentiment is, you know, in the doldrums because you have a large percentage of the population who's struggling. And then you've got the escalator that's going up and they're buying like crazy because they're doing great. So I think this is this is that separation, that K shaped economy we've been talking about.

CHRIS SIPES CFP®: Yeah, I think that's probably the case. And with markets kind of driving the upside of that K-shaped economy, right? So it's been a virtuous cycle where the markets do better. That top 10% that owns most of the assets are using those assets to spend and do things, renovate homes, etc etc And how long does this flywheel keep turning?

CHRIS SIPES CFP®: Because when you look at valuations, kind of no matter what metric you look at, and I like this one because it shows a combination of trailing P, price to earnings, forward price to earnings, the cyclically adjusted price to earnings, price to book, price to sales, enterprise value to EBITDA, the Q ratio, market cap to GDP, blah, blah, blah.

CHRIS SIPES CFP®: Like basically whatever you want to look at. Where are we? Well, at or above the most expensive in history. So like I said, people's sentiment, very low. Markets, very high. There's a huge disconnect.

CHRIS SIPES CFP®: And I just don't know that there has been a time where it's been disconnected. Now, what's driving some of that sentiment? I would love to know this over the longer term as well, but there was a a Harris poll for Bloomberg this week that showed a little over half, 55% of Americans are concerned about losing their job right now.

CHRIS SIPES CFP®: That seems like a very high percentage to me, guys. One in two people are concerned about losing their job. Now, is that economic conditions? Is that AI? Is that all of the above That seems like a very high percentage of people concerned about the future of their position.

CHRIS SIPES CFP®: So that might be driving some of that sentiment. Then we've got the leading economic indicators. So we've talked about this many times where it's like, hey, a lot of these indicators just don't, you know, don't work anymore. Now, this is from Yardeni Research. He puts out some of the best research out there. And with some commentary from, oh, I'm blanking on his name now.

CHRIS SIPES CFP®: Give me a second. It'll come to me. Toby Carlisle. So Toby says this 60 year economic indicator just hit a level that's only happened before recessions. This chart displays the ratio of leading economic indicators to coincident indicators. Let me show you. That's this one here. And if we could take down the little tabs, you can see the punch line of this here on the market's logo.

CHRIS SIPES CFP®: I'll keep reading while there we go. So see that dislocation there. That's what he's talking about. Okay.

CHRIS SIPES CFP®: This chart displays the ratio of leading economic indicators to coincident economic indicators from 1960 to the present with gray bars marking the U. S. Recession periods. Leading indicators are economic metrics that tend to change before the overall economy shifts.

CHRIS SIPES CFP®: Stock prices, building permits, consumer expectations, yield curve, all of these things go into these LEIs. Coincident indicators move with the current state of the economy. These would be things like employment, industrial production, personal income, manufacturing sales.

CHRIS SIPES CFP®: When this ratio declines, the relationship to each other, it suggests that forward-looking indicators are weakening relative to it. Current economic conditions, essentially the economy's leading edge is deteriorating while current conditions haven't yet fully reflected that weakness.

CHRIS SIPES CFP®: So, so if I go back to this other chart where you kind of look at these, the ratios, and that's what he's talking about when that ratio kind of reaches this extreme and you see those shaded areas, usually when we get that downward you know slide shift we're in it we're we're in a recession We're actually towards the end of a recession in most of these cases.

CHRIS SIPES CFP®: And so we've talked about this theory before that, hey, maybe we've already been in a recession. They just never really called it one. And it was covered up by the fact that housing prices stayed high, stock market prices stay high, because we had kind of totally abnormal, whacked out conditions in both of those markets.

CHRIS SIPES CFP®: What could have driven that? Well, unbelievably huge government deficits. So this is what they bring in versus what they spend yearly. We can see that those deficits really blew out going into, even coming into COVID, they were starting to widen, but they just really blew out during COVID.

CHRIS SIPES CFP®: And we've kind of stayed at this level at this point where even with the markets at highs, with the economy doing great, you know. The tax revenues are just not covering what the government's spending. So there's a stimulus there, right? There's a borrowing in a stimulus.

CHRIS SIPES CFP®: And then we've got the money supply, M2 money supply. And this is on a log scale. So it doesn't look quite as dramatic if it wasn't on a log scale, but it's still significant. This is going back 10 years. We've got an 80% increase in the M2 money supply in the last 10 years.

CHRIS SIPES CFP®: That's a lot. And then when you look at government debt, this shows the increase in government debt over the last 10 years has been significant as well. So we've kind of been borrowing and spending and going about our merry way to the point where that's covered up a lot of sins.

CHRIS SIPES CFP®: The government has reacted in the way that you would expect them to like in a recession, essentially like the Keynesian economy, economists say, Hey, when, when everybody else pulls back on spending, then the government steps in and, and, and smooths out that business cycle.

CHRIS SIPES CFP®: Right. However, lately the government hasn't been stacking, stepping back when, when the economy's recovered, they've just kept the foot on the gas in terms of the stimulus.

CHRIS SIPES CFP®: Ending on something positive though where does that leave people well as as.

CHRIS SIPES CFP®: We always preach diversification. Don't try to guess what's going to happen. Remember back just as recently as April, we all thought the world was ending. And now we have the benefit of hindsight. And we know that staying the course worked again. Thankfully, we didn't have to wait that long.

CHRIS SIPES CFP®: You know, we got instant gratification in this case. But this shows year-to-date returns across different equity categories. Versus where they were in April. Now, us small and medium sized companies have really just, they've been in the doldrums for years. They have not benefited.

CHRIS SIPES CFP®: They were down a lot in April. They haven't bounced back as much, but on the flip side of that, how many people would have thought with all the tariffs, with all the changes in trade policy, et cetera, that you would see the highest returns from emerging markets from developed markets Right.

DAREN BLONSKI CFP®: And, like clap on or something for him.

DANO WEIR: Oh yeah. Where is that? I gotta have that better. Here we go. Chris, this is our victory lap for international.

CHRIS SIPES CFP®: Thank you. Well, I, I, and I count myself in this boat. Look, I didn't, I didn't think in the spring that, you know, the, the emerging markets and developed markets had the best chance, you know, coming out of a trade war coming out of a tariff war. And to be honest with you, I didn't really think us stocks were going to do that well and based on that, right.

CHRIS SIPES CFP®: But it shows you have to have a lot of humility when it comes to investing. Cause you just don't know, you don't know what's going to happen. You don't know when it's going to happen. So you have to invest in a way that, that you understand that you understand your limitations and, you diversify because of that.

DANO WEIR: Mr. Blonsky, you want to show us from a chart perspective how this week played out and why you said to me at the start of the episode that the risk you think is to the downside.

DAREN BLONSKI CFP®: I do. Let's start with the S&P 500. So the S&P 500, for those who don't know, is the largest U. S. -based stocks out there. So we use it as kind of a proxy for the quote-unquote market, when in reality... The market is much larger than the largest 500 us-based stocks. But anyway, nonetheless, that's kind of what the news reports. That's what people kind of think about.

DAREN BLONSKI CFP®: And when we look at this chart, so this is looking at the daily chart. So this is how the market moved on each respective day. So in this case of this week, we had two updates. We hit this downward resistance trend line and that became resistance. We got rejected and came back down in. Looks like we're finding support in the zone of, let's call it 660-ish and change in that area.

DAREN BLONSKI CFP®: Whenever you have a chart that is making lower highs, then you start to say, okay, are we on a downward change of trend? And however, I will say that on the bottom here, you can see how we're making higher. Lows. So what you have is this consolidation coming in here. And typically when we see markets consolidate like this, then you tend to get a pretty decent move one way or the other. Too hard to say which way it's going.

DAREN BLONSKI CFP®: But that's where we start and say, okay, well, can we find any other clues looking through other charts? So when we look at other charts, let's take a look at volatility. So VIX is a measurement of... How those who trade the S&P 500 futures feel, how complacent they are.

DAREN BLONSKI CFP®: The fact that we've had a little bit of a spike up in recent days tells you that there's a little expected volatility in there. It's not a particularly good predictor. But what you can see here is we're making lower highs in a VIX. And when the VIX goes up, volatility goes up. Usually that means a down. Market. So as this indicator goes up, market goes down, it's not perfect.

DAREN BLONSKI CFP®: It tends to be imperfect in many ways, but just kind of a, if we're going to add the whole holistic approach to all the markets and try and get some clues on where things might be headed, that might be something we look at. We definitely got to look at the mags. So this is an ETF that tracks the Magnificent 7, which have been responsible for driving most of this market.

DAREN BLONSKI CFP®: And when you look at this from a visual heat map standpoint, you can see that the stocks here in Microsoft, NVIDIA, Apple, Amazon, Google, Meta, Tesla, those are the big stocks that take up a huge portion of the S&P. I mean, NVIDIA is, I say this every week, I feel like, is exponentially larger than just the financial sector alone, let alone energy.

DAREN BLONSKI CFP®: It's like three times almost, it looks like, the energy. We're talking oil here, folks. A very significant part of the world economy. In media is substantially bigger. And this is the risk that Chris and I allude to each week where we say, look, it's looking a little funky here.

DAREN BLONSKI CFP®: When you've got this kind of bubble mentality happening, the first thing you could see is that we are in a downtrend in the MAG-7. So if the MAG-7, which are a large part of the market, are going down, it's going to take the whole rest of the market.

DANO WEIR: I think that's on your second screen. There you go.

DAREN BLONSKI CFP®: There you go. It's going to take the whole rest of the market to pick. Pick these MAG sevens up. Good news, bad news of the MAG sevens this week. You can see this actually just moved this to the weekly. You can see that we've had two red candles in a row now, but we didn't fall below this area. And we've briefly visited below that $64 this week, which would have been a lot more.

DAREN BLONSKI CFP®: I would have looked at that as much, much more negative. So I'd say the downtrend is in. But it's finding some underlying support at the moment.

DAREN BLONSKI CFP®: I think there's some particularly interesting patterns forming in the silver and gold markets. I'm going to put on the four-hour chart because I think it's really clear. But we have a chart pattern. Actually, let's do daily. We have a chart pattern called a double top, right? So when the market trades up, it trades up to a certain level.

DAREN BLONSKI CFP®: And then this right side of the top is lower than this top. And that double top can be a topping pattern. What we're going to want to watch is if silver gets down or close to this area, which is considered the neckline over the next couple of weeks, into $47 an ounce.

DAREN BLONSKI CFP®: That could be really bad news for those who like silver. So everybody piling into silver right now should feel very questionable whether or not they're going to have to hold that silver for a very long time to get their money back. As you can see, last time we were up this high was 2011.

DAREN BLONSKI CFP®: Imagine everyone went all the way here and had to wait all the way to here to get their money back. And again, that's the risk of chasing momentum price up. You don't know when it's coming back down. And the theory is, ah, it's just going to keep going forever until it doesn't. Until it doesn't. And then that's what creates that bubble mentality and it bursts.

DAREN BLONSKI CFP®: So gold looking a little, or excuse me, silver looking a little questionable, as is gold. And you can see the... The double top is even more pronounced with a downward trend in place. It looks like got to watch 39.30 an ounce. If we break through 39.30 an ounce in gold, it could be a rough go for a while.

DAREN BLONSKI CFP®: Now, some think, well, hey, the economy might get worse. Maybe gold is going to help us to, well, gold could be one of those assets that does really well if the economy goes down. Maybe. But it's so overbought right now. It feels like that. I kind of questioned that thesis. Then let's look at oil.

DAREN BLONSKI CFP®: So we've got gold, silver looking soft. We've got the stock market looking soft, but finding some support. And then let's take a look at oil next because oil, everything we have, you're sitting in your house, listening to this, the phone you're hearing this on, I mean, this is full of oil products.

DAREN BLONSKI CFP®: This is some interesting.

DAREN BLONSKI CFP®: Podcasts and such I was listening to this week that I don't know if you guys caught this but Ukraine has actually been throughout the whole war with Russia and Ukraine next to no ghost oil ships have been hit because they say that the U. S.

DAREN BLONSKI CFP®: Has been pretty clear you need to let the oil keep flowing because if you create all these recessions then that's in depressions whatnot through an election that's problematic so Ukraine's been in this kind of difficult spot of trying to fight this war for their existence, but also... Not doing too much damage to Russia, because if you do, then that impacts the rest of the world economy.

DAREN BLONSKI CFP®: And then all the neighbors will be not happy. It's kind of the slow burn approach. Well, when it comes to, because it seems that oil's low right now, and we have a glut of oil supply out there that they're allowed to start hitting some of these boats and attacking some of these oil, this oil infrastructure, which is kind of interesting and it's not impacting oil at all.

DAREN BLONSKI CFP®: I think part of that is because the relative common piece that we see in the Middle East, the oil's flowing in the Middle East. And so that's giving cover for the Russian oil to be somewhat attacked. Also, interestingly.

DAREN BLONSKI CFP®: Enough that secretary Hagseth announced this week that we're going to be participating in something to the tune of the southern spear is the title they gave this one but we're going to be going after the narco drug traffickers like it hate it i don't know it sounds like we're getting ourselves into another ugly war in the middle of a jungle somewhere but nonetheless we're going to start going after some of these narco terrorists down south of the border from us.

DAREN BLONSKI CFP®: But... When you look at Venezuela, Venezuela is sitting on massive oil supply. So this glut in oil, which is interesting, could be allowing the cover to deal with some of these other geopolitical issues that are happening out there at the moment. I think the timing is interesting.

DAREN BLONSKI CFP®: Nonetheless, whether or not it's completely connected, I don't know if that's a stretch, but certainly interesting timing when it comes to why they're politically doing what they're doing. So when we look at the front end of the tip.

DAREN BLONSKI CFP®: Of the spear speaking of spears with risk you have got bitcoin right and so bitcoin looking pretty shaky i guess Michael saylor's been getting a lot of heat lately because he's pretty leveraged on the bitcoin trade and the so you can see we revisited here this 95 000 we haven't been in this area since well let's call it may of this year we're back down i'm not Not particularly bearish yet.

DAREN BLONSKI CFP®: I'll be really interested to see how things go, though, when we hit close today. But definitely some pull down, pull back in the Bitcoin, which then you feed that into the stock market. And the lower highs are making the stock market, increased volatility in the VIX, MAG's going down.

DAREN BLONSKI CFP®: Gold looking questionable. Silver looking questionable. There's this general financial asset kind of pullback. It looks like it could be fomenting. Then there's like a bond market to say, okay, well, bonds are supposed to be negatively correlated to stocks, right?

DAREN BLONSKI CFP®: Well, wrong. They used to be at one point in history, I guess, but not anymore. Typically, when we see stock markets sell off, we see ag sell off too, which is the bond index. And that's not looking particularly weak, but...

DAREN BLONSKI CFP®: Questionable it's starting to trade in a sideways kind of slot could argue maybe the beginnings of a triple top there so you can see the head a shoulder the head and another shoulder right there with a neckline moving up there so could be some weakness for the bond market right now maybe we see that going down that would feed into certainly Chris's comments about inflation and inflation going up more than we thought.

DAREN BLONSKI CFP®: So let's take a look at the 10-year because that would be telegraphing some of that. The fact that the 10-year has not continued to stay high, or the fact that it stayed above this upwardly trend line and hasn't fallen through that trend line makes me think that, yeah, maybe there's some stickiness in inflation.

DAREN BLONSKI CFP®: Bonds have an opposite effect. So if interest rates are going up, then bond rates are going down. And so if the market's saying, hey, interest rates might be going back up, then we'd start to see bonds come back down.

DAREN BLONSKI CFP®: So anyway, something to watch. I don't think there's enough on that screen yet to be too excited about nothing. One of the big darlings of this bubble boom we are in right now is Palantir.

DAREN BLONSKI CFP®: Technologies which is a government AI play it's done exponentially well lots of connections to the current administration i mean just look at this run this year 25 just just crushing it this year so that's a stock i kind of watch to see maybe when the bubble comes out because this seems to be a favorite the fact that it's hanging in there on support around 170 at the moment, did trade below, but then closed up higher today.

DAREN BLONSKI CFP®: I think it's hanging on a lifeline there. So generally, I'd say the risk is the downside right now. Do I think we have some major recession headed? Do I think that everyone needs to button down the latches and protect themselves?

DAREN BLONSKI CFP®: I don't think I see that at the moment. I just think we've gone pretty hard, up pretty fast. Correction would be normal. And then maybe we... Ride out a few more soft weeks in November and ramp into the end of the year. That would be the general sense. Things tend to ramp into the end of the year.

DAREN BLONSKI CFP®: Although the last time we didn't, last time Trump had his first year in office, we did not ramp into the end of the year. So maybe we're following that Trump trend again. Anyway, let's leave it there. I hope everyone has a wonderful weekend. And AI build costs more than going to Mars.

DANO WEIR: Chris, did that analogy hit home or was I too far out into the orbit on that one?

CHRIS SIPES CFP®: I see what you did there, Dan, bringing it full circle. No, it's very difficult for us to get our head around these numbers. They're so huge, whether you're talking about government debt, the size of the economy. How much money is going into AI? Who owes whom what? It's all, it's difficult to understand. So you got to create analogies to help us, right?

DANO WEIR: Yeah, and I think the undercurrent of what we discussed with all of this, with the market, with the economy, is that there is this AI thing. And it's not a question of... Can it be done? It can be done. A lot of which they've shown in bursts already that it can do some phenomenal things. It's will we do it?

DANO WEIR: We literally could be on Mars right now. I have a human on Mars, but there's no will, political or financial otherwise, to have gotten it done since the moon landing. So I think it's a similar situation with AI right now. And we shall all see and experience in real time whether the AI bet is real or not. Thank you so much for checking out the show this week.

DANO WEIR: We really appreciate it, especially if you made it this far. Gosh, 13 viewers to the end of the episode. We appreciate that. See, Darren, we got 56 minutes in and we got 13 people watching. You said two seconds. So we're coming along in the world. If you're new to the show, my mom and Chris.

DANO WEIR: All oh the other 11 the other 11 are Chris's kits the show And the show, you can help the show by subscribing wherever you are following us. You won't miss future episodes, whether it's Spotify or Apple Podcasts or YouTube. If you subscribe, you will not miss future episodes. And you can learn more about us at SonomaWealth. Com. We thank you for checking out the show and we will see you next week.

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CHRIS SIPES CFP®: Discussions and answers to questions do not involve the rendering of personalized investment advice, but are limited to the dissemination of general information. A professional advisor should be consulted before implementing any of the options presented.

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