Rally Or Trap?

DANO WEIR: We are live right now on the Markets. Sonoma Wealth Advisors, the Fermata Advisors family of brands. My name is Dano Weir. I'm the marketing director for the firm, joined shortly by our managing principals. S&P pushed to new highs this week. The big question, is it a rally or is it a trap? Was it a foundational move or a headline-driven band-aid?

DANO WEIR: We're also going to take a look at tariffs. One year later, what impact did they really have on prices? We've got the data. S&P, as I said, all-time highs this week. So why is Chris pulling out a chart looking at lost decades? And Daren takes a victory lap. We got to give it to him. Bitcoin successfully calling a bottom over two weeks ago. So let's get the show started right now.

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DANO WEIR: 401k and Fermata tax on the Markets starts now blonsky's Chris Sipes Daren Blonski Chris Sipes they are your managing principals for Sonoma Wealth Daren is my secret mic level checker making sure that my mic's not too loud so that i'm you can't hear my breathing And guys, we're sitting here back at all-time highs. How did it happen, Chris? Did you really expect it?

CHRIS SIPES CFP®: No. No, I didn't expect it. We were just talking about that before the show. Imagine two weeks ago and kind of the teeth of this and knowing that those straights are not going to be open and somebody tells you, hey, the S&P is going to snap back to all-time highs.

CHRIS SIPES CFP®: You probably think they're crazy. And that's why we're always kind of couching our comments of like, This could happen. That might happen. It's possible. Right. And, and you always have to speak in probabilities and vagaries because there are no certainties with the market. There's vagaries.

DAREN BLONSKI CFP®: Is that like a new verb, man?

CHRIS SIPES CFP®: Hey, I don't know. That's a word, isn't it?

DAREN BLONSKI CFP®: I don't think vagaries is a word, but I like it. Like, that's what we can call it. Like this show is vagaries on the market. We're just going to talk in vagaries because we can't tell you for sure anything. We know nothing. We just have vague ideas.

DANO WEIR: You know, look, if 10-year-old kids can make up words I've never heard in my life, I feel like we can, none of which I'll say, I feel like we can make one up in our 40s here.

DAREN BLONSKI CFP®: But I really want to get back to Scott Besson being the GOAT, the absolute GOAT, you guys. So before, for those on the show, we were just talking about how Scott Besson, who is the Treasury Secretary, is, I mean, that guy, his background is amazing. Did you guys know that he was like... Big time at the Soros fund.

DAREN BLONSKI CFP®: Like how does that narrative blow up? Right. Because everyone says, Oh, Soros is big left. He's big left. He's big left. Scott Besson, the Treasury secretary made his name with Soros.

DAREN BLONSKI CFP®: I had no idea.

CHRIS SIPES CFP®: You didn't know that till when?

DAREN BLONSKI CFP®: No. Like that's crazy.

CHRIS SIPES CFP®: Daren, this, this is rock solid proof that you don't listen to this show.

CHRIS SIPES CFP®: It doesn't mean I'm always listening to us, I guess. Because I, I, I mean, Dan, back me up here. I've mentioned that several times.

DAREN BLONSKI CFP®: Have I not?

DANO WEIR: Let's see. Which of my bosses do I want to please right now? It's okay.

DAREN BLONSKI CFP®: You can throw me under the bus, Dan. All right. Yeah. Back to the slideshow. We'll let that one, we'll let that one go. No, for real. Because I think it's part of, it's really important. And this is actually part of the geopolitical landscape right now. And that is that. Literally part of the negotiations with Iran, which now apparently the Strait Of Hormuz is completely open as of this morning.

DAREN BLONSKI CFP®: One of the things that we did is we basically, our Treasury department, went in and took 20 billion worth of Iranian assets in the financial system and held them hostage. And said, you either play our game or we're not giving this back. And so part, I guess, the deal is we're going to give them 20 billion of their money back.

DAREN BLONSKI CFP®: In exchange for them playing ball. But this is actually more important in a larger kind of geopolitical tapestry that plays into the Markets. And that is when Russia started invading Ukraine, we did the same thing and took their money.

DAREN BLONSKI CFP®: It's kind of interesting though, the fact that perhaps this whole idea that the world's going to push back against the US taking people's money unless they play our game. Like, I think the cards are breaking, guys. And I think that's important to point out. Like maybe it's not going to, they're not going to be able to push back like they thought because we're pretty powerful in the way we're using the Treasury now.

DAREN BLONSKI CFP®: To get other countries to behave. And that impacts the dollar and the importance of the dollar. And why is that important for this show? I don't mean to get political, but it's important for sustaining the dollar's value as the reserve currency of the world, which then gives us the ability to print as many of them as we want, which is important for the market.

DANO WEIR: I can take this on a rabbit hole if you want, because it's a really great analogy to what you just said.

DAREN BLONSKI CFP®: Go, go, go.

DANO WEIR: All right, and then, Chris, I promise we'll get to this meme. What you're basically describing... What you're basically describing is you're saying, hey, you have to keep your assets at our bank. Why? We'll bomb you if you don't. Okay. All right. We've got all your assets.

DANO WEIR: Now you have to do what I want or I'll keep all your assets. Okay. That's called a protection racket. And it's just in a geopolitical sense. So I am an American, so I don't know that I'm necessarily against what's happening here. But, you know, that's basically what that is, Daren.

DAREN BLONSKI CFP®: This is exactly what that is, right? You either play ball or we take your dollars.

CHRIS SIPES CFP®: And that's probably a big reason why we've seen this run in gold too, right? We've been looking at that since, you know, well, since 22 for sure, where you're, you got, you looking at gold, remember it was going up almost every day there for years going, gosh, what, what is happening? Why is gold?

CHRIS SIPES CFP®: And, and it was central banks moving more and more assets into gold and out of treasuries for that exact reason. So yeah, I think it, it can work. To a certain extent. And there's also, like everything, there's going to be trade-offs, right? But you guys good to go back to the slides or more?

DAREN BLONSKI CFP®: Should we do the show? All right. We offended your sensibilities here. We'll get back to, does it not mean the goat?

DANO WEIR: We're looking at a meme. We've got two dinosaurs, and one says, that looks really bad, and he's looking at an asteroid.

CHRIS SIPES CFP®: Hurtling towards the planet and the triceratops says relax it's already priced in yeah and and you know it's sort of tongue-in-cheek but it's also i think very important from a market's perspective to understand that most of the time it is priced in right i mean we got the news i guess it was today that the the straight was reopened but the market had been going up in response to that, most likely.

CHRIS SIPES CFP®: For several days now and really over the last couple of weeks. And so, that's why we're always saying like, look to the market because it's a forward looking mechanism. It's like the betting Markets. It's millions of people around the world betting their money on what is going to happen.

CHRIS SIPES CFP®: And whenever you're looking at those things and you're saying, gosh, this, this doesn't like, something's not adding up in my brain. You know, like we were talking about before the show, So if you listen to all of these...

CHRIS SIPES CFP®: These oil experts right now, I mean, it's pretty bleak, on these interviews, on these investment interviews and just talking about, Hey, even if we reopened it today, there's a lot of fallout from, from the energy Markets that is likely to come. And yet the market's responding really well to this whole situation. And so when you get these, you know, something's not making sense, right?

CHRIS SIPES CFP®: It's, it's, in my opinion you want to default to what's the market saying because usually it's right not all the time but usually and so that's what this whole meme is about like hey if that asteroid was really going to kill us the market would be down more by now right but relax it's priced in okay so interesting stat here from bespoke since 1928 and then that's when we really have good data back to for the stock market Since 1928, this is the first time the S&P 500 has made new all-time highs in 11 days or fewer after falling 5% to 10%.

CHRIS SIPES CFP®: So add another one to the belt, under the belt of this has never happened before. Here we are again. And they just keep racking up. And that's why you always want to be prepared for anything in today's Markets.

DAREN BLONSKI CFP®: You know, Chris, sometimes I feel like our relationship is built on it's never happened to us before. Because I feel like ever since we became business partners, it's just been a string of it's never happened before.

CHRIS SIPES CFP®: That's right.

DANO WEIR: We're going to start a new podcast for you guys. We're going to start a new podcast called Unprecedented Times with Daren and Chris.

CHRIS SIPES CFP®: Yeah. So we've got the sentiment indicator. And remember a couple weeks ago, beginning of April, that... Bearishness was pretty high. We peaked over 50 and at the time we said, hey, we're getting close to that area where sentiment gets pretty washed out. And this is one of the many indicators you want to look at.

CHRIS SIPES CFP®: As a possible contrarian indicator. Now, the CNN fear and greed index jumped all the way up to 69 greed, which is up from one week ago, 36. So look at that snapback. And that's, of course, related to price. The CNN fear and greed index is more based on how people are actually positioned.

CHRIS SIPES CFP®: There are seven different position indicators in that one. So that's less about how do you feel and more about how are people actually positioned. And then we've got Bitcoin at 21 extreme fear down from the doldrums of the single digits a few weeks ago. Last week, it was at 16 extreme fear. So it's still an extreme fear zone, but I believe we peaked 78,000 today.

CHRIS SIPES CFP®: And like you said, Daren, we got the kind of the first indications of bullishness out of Bitcoin, just like we got the first indications of bearishness. Remember when Bitcoin really sold off ahead of all this months ago. And so... Really look to Bitcoin as the tip of the risk spear.

DAREN BLONSKI CFP®: Again, we have to go back to shades of vagueness here because it's not always a correlation, but it's been very consistent. Bitcoin selling first and going up first and showing basing bottom as that's where the risk bottom is and it also where it tops off. So I'll be keeping my eye really closely glued to. Bitcoin to see how long this rally lasts.

DANO WEIR: Unprecedented vagaries with Daren and Chris.

DAREN BLONSKI CFP®: Unprecedented. That's good. That's got a ring to it.

CHRIS SIPES CFP®: Well, we mentioned this before last spring when we got the V-shaped recovery. And I think it's worth mentioning again that if you, and really this pullback was, if you felt like this was a pullback, this was really for historical, from a historical context, this was next. Next to nothing.

CHRIS SIPES CFP®: So it was a very, very mild, mild pullback. But if you felt yourself get that feeling that you feel when you're driving to soccer practice or something and you realize you left the stove on, if you felt like that when the war was announced and you're like, panic, oh no, I've got too much risk on.

CHRIS SIPES CFP®: You've been given a gift here, again, where you can go back to your portfolio and say, you know what? That was a little too much for me. Let's make some adjustments and maybe dial it down a little bit. If you felt that sense of panic, this is your gift to make changes now when things recover.

CHRIS SIPES CFP®: You don't want to be making tons of changes when you feel that panic because at that time, you're likely to make a wrong decision when you're being overcome with that emotion. You Ask yourself, did this really worry me? If so, it's probably a good time to make some changes. All right. So tax time. This is tax week. And I love this letter.

CHRIS SIPES CFP®: This is an oldie but goodie from Donald Rumsfeld, where essentially he sent this letter to the IRS with his tax return. He basically says, look, I'm a fairly educated person. I did everything I could to send in my taxes to the best of my ability, but he... But I still don't know if they're right or not.

CHRIS SIPES CFP®: And this letter gets me every year because I think Americans around the country feel this way at tax time.

DANO WEIR: Yeah, I've long wondered, especially, you know, when I was in my 20s, I did my taxes wrong. And then they'd come back and say, you did your taxes wrong. We made these adjustments. And I would wonder, like, hey, man, if I got a really simple situation.

DANO WEIR: If you're already going to double check me, just do it. You know what you're going to take from me. So, so why am I, why are you making me go through this charade charade? So I always wonder, I guess me and I was about the only thing Donald Rumsfeld and I have in common.

DAREN BLONSKI CFP®: You know what the trick to not hating April 15th is?

CHRIS SIPES CFP®: Tell us.

DAREN BLONSKI CFP®: You know what the trick is?

DANO WEIR: What?

DAREN BLONSKI CFP®: It's just file an extension so you don't have to think about it.

CHRIS SIPES CFP®: Take the can. Yeah.

DANO WEIR: You should be in government, Daren.

CHRIS SIPES CFP®: There you go.

DAREN BLONSKI CFP®: Just kick the can.

CHRIS SIPES CFP®: Now this, this from the heritage, foundation, it shows, or I guess the title of the, of the pages do the rich pay their fair share, which is kind of inflammatory probably to just get clicks. But if you're wondering, you know, when you look at the income groups and then the share of the income group. The share of all the income taxes paid, you can draw your own conclusions from this.

CHRIS SIPES CFP®: So the top 1%, according to this, And this is going back to 21. So it's a little bit outdated, but I think you get the gist. The top 1%, which is at that time was 700,000 or more in income. They make up 26% of all the income earned. So a quarter of the income earned in the US and they pay 46% of all the income taxes. So almost 50% of the actual taxes that are collected.

CHRIS SIPES CFP®: I don't know that that's fair or not. That's up to you to decide.

DAREN BLONSKI CFP®: You guys know how in California we have the proposition system, right? And I'm sure everybody who lives in California is experienced. You're going into the grocery store and there's the guy out front and he's like, sign my petition to blah, And usually what it is is it's a person being paid or she's trying to get signatures on these propositions because they have to get so many...

DAREN BLONSKI CFP®: Signatures to get on the ballot, right? Because genius is putting a proposition on the ballot and then making it completely difficult to understand what you're actually voting for and then asking the public to vote on something they don't understand. That's genius government for you. But nonetheless, that's what's happening, right? So you're signing up all this stuff.

DAREN BLONSKI CFP®: And so I was walking into a Target the other day and this guy goes, tax the rich, tax the rich, sign my petitions to tax the rich. And of course, that's going to be inflammatory to a lot of people. And people are like, oh, yeah, I'm going to have the, you know, I want to tax the rich. And then he's like, oh, and sign these five other propositions because I get paid the more signatures I get.

DAREN BLONSKI CFP®: And so I said to him, like, you realize that if you just tax the rich, they're going to move, right? Like, it's not going to work. And he just looked at me dumbfounded. Well, I mean, like. I mean, it's the same thing happening in New York right now. Like Mamdani is going around saying we're taxing the rich.

DAREN BLONSKI CFP®: Like I think he posted a video or something, on the 15th, but at the end of the day, like they're just going to move. And then I couldn't believe it when Kathy Hatchell, who's the governor of New York gets in a meeting with Mamdani and she sits there and she's like, we need all the rich people to move here so that we can tax them so we can set up all these crazy good things for the people. And you just scratch your head.

DAREN BLONSKI CFP®: Like you realize you're talking to humans, right? And humans are generally self-interested and there's not many people that are going to say, oh yes, let me move there. Even Soros, who tends to support all those things, he's not moving to New York to say tax my money. So like at some point, like, I mean, what are we doing, California? Cause we're out of the state.

DANO WEIR: And another thing to consider too, is that you say people flee California to. Nashville, right?

DAREN BLONSKI CFP®: Right.

DANO WEIR: Tennessee has no estate income tax now. That doesn't mean that they, you know, if they got enough money and they, you know, you got enough people together, all of a sudden they might have it. You know, I'm not saying I know that, but I mean, just, you know, it's all based on a current set of circumstances, which can change.

DAREN BLONSKI CFP®: Well, it's like the fat, the, the lady who runs in and out, right. In and out to family owned company in and out is like, you can't get more California than in and out, right?

DAREN BLONSKI CFP®: Like it is quintessential the brand of California well guess what nse and you're like well why and she's like well i wanted to raise my children what she wasn't saying is well i didn't want to pay all the taxes yeah your governor and government are about to throw at me can.

DANO WEIR: You get in and out burgers in Tennessee now yes they have them right now yeah they did open there but she says they're not going to the east coast but yeah wow okay okay.

DAREN BLONSKI CFP®: Yeah. So Chris, there's hope for Ohio. There's hope for Ohio.

CHRIS SIPES CFP®: That's right. I think they would crush it in Ohio. That's for sure. Well, I'll tell you what, the petition collectors, that is one of the very few times, guys, that it's nice to have a two-year-old in the middle of a meltdown.

CHRIS SIPES CFP®: That is when you're on the way into the grocery store and people are looking for signatures. They see your eyes and they see the kid melting down. They're like, not worth it. Not worth it. So they just keep going. Right, right. Smart. Okay.

DANO WEIR: Hey, Chris, it's been a year since tariffs, since the liberation day. What are we looking at here for our year of the tariff world?

CHRIS SIPES CFP®: Well, this is from Lizanne Saunders at Schwab, and there's been enough time now of the tariffs to see if that's what impact it's had. Now, So far, at least according to this, there has been an increase in prices. We talk a lot about inflation on here because inflation has an impact on interest rates and interest rates have an impact on the cost of money, has an effect on the economy and all kinds of things.

CHRIS SIPES CFP®: Are the tariffs do they increase the prices of things or not i mean it seems pretty simple math that yes it will i will say that the person i heard it from was mike green who argued that maybe in the short term they raise prices but ultimately they lower prices because of demand destruction essentially people say i would have bought that tv or whatever but but because visits.

CHRIS SIPES CFP®: You know, $1,000 instead of $500, I'm going to not, I'm not going to buy it. And so therefore it actually creates deflation. I think that is possible. I don't know.

CHRIS SIPES CFP®: But I also think because it's tax time, it's interesting to kind of look at this as an alternative revenue generator for the government, because just anecdotally looking at a lot of tax returns that are coming in for clients. After the tax cuts, I would, I would have to say that most people are paying less right now.

CHRIS SIPES CFP®: So maybe we're, we're, we're taxing less on the income side of things, investment side of things, but we are raising revenue elsewhere on the consumption side of things via tariffs. Now of course they're never going to sell it that way. People hate taxes, so they're not going to call it a tax on goods or a consumption tax. But, you know...

CHRIS SIPES CFP®: In my mind, I'm looking at it as like, hey, that's revenue that's going to the government and it's coming from goods. I don't know what else you would call it. But anyway, interesting nonetheless. But from an inflation standpoint where we're going with this from a portfolio construction standpoint, we may be coming out of a long-term, low-inflation environment and coming into a period of more sustained inflation.

CHRIS SIPES CFP®: If you consider deglobalization as inflationary, if you consider cutting down on immigration as inflationary, tariffs, war, etc., etc., it seems like there's a lot of things kind of lining up on the, hey, this is potentially inflationary, at least in the short run.

CHRIS SIPES CFP®: And you want to have assets in the portfolio that are, I don't want to say a hedge to inflation, but can perform well in inflation as well as can be expected. The traditional stocks and bonds move together kind of in best in a regime of higher growth and lower inflation.

CHRIS SIPES CFP®: And so you might want to consider things like hard assets, real estate, precious metals. We've seen precious metals doing really well. There's other things in the portfolio that can historically have done well with inflation that you may consider including in the portfolio. In case this inflation starts to trend higher.

CHRIS SIPES CFP®: All right, so what we're looking at here is the producer price index and the consumer price index. That little gray bar in 2020 was the recession, brief recession, I think it was a couple months. But the blue line is the producer prices. And so So that's, as it sounds, the people that are producing things.

CHRIS SIPES CFP®: That tends to lead the consumer price. Makes sense if somebody's making something and then selling it to the consumer. If it costs that person more to make something, it's likely going to cost that consumer more to buy it, right? And what we're seeing is an uptick. We got the updated producer price index this week on Wednesday, which ticked up to 4%.

CHRIS SIPES CFP®: Hard not to say that that's in an uptrend at the moment. When you stretch this out over... Longer term, a pattern that seems to show is that inflation doesn't usually spike up like we saw in 22 and then just go away. It tends to be in waves with inflation. And so it wouldn't be surprising to see inflation come back.

CHRIS SIPES CFP®: And at least at this moment, the probabilities seem to be in favor of a higher inflation moving forward, not only from a kind of macros perspective with everything that's going on in the world, but also from a, you know, backwards looking numbers perspective.

DAREN BLONSKI CFP®: Chris, that's some solid vagueness right there. Nice job.

CHRIS SIPES CFP®: Thank you. Thank you. Vagueries. Vagueries are dropping everywhere.

DANO WEIR: The solid offering of vagueries. Nice work.

CHRIS SIPES CFP®: I'm going to feel really bad if vagueries is not after this show. I'm going to look it up. But I'm looking up really bad.

DAREN BLONSKI CFP®: I'll bet you one of our clients who listens to this would probably be your dad or my mom will send you, hey Chris, it's an article word.

DANO WEIR: You ready? I got it. I got it right here. AI Gemini overview. Vagaries is an often cited, though technically incorrect, variant spelling. Oh, no, never mind. I just spelled it wrong. So I spelled it.

DANO WEIR: It's V-A-G-A-R-I-S, referring to unexpected, unpredictable, or erratic changes in situations or behavior. Vagary appears in some dictionaries to denote the state of being vague. We're good, guys. We are good. Okay. Aaron, we can tell Miss Robbins that we are doing well.

DAREN BLONSKI CFP®: We should. You know, we should change the name of this show just so it's extra compliant. It could be baggeries on the market.

DAREN BLONSKI CFP®: I mean.

CHRIS SIPES CFP®: Well, I got nervous there just as, you know, we have several clients with an English background. And I get nervous every time I have to email them, hoping that my sentence structure is correct, my spelling and everything. It's, it's. Anxiety producing for me. Okay. Now, government deficits going back to, hey, where could inflation come from?

CHRIS SIPES CFP®: Well, the budget, the government's budget has continued to run deficits, meaning that we're spending more than we're bringing in. And so that is just like in your personal life, when you spend more than you bring in month to month, that's adding to your debt over the long term. And you can see here over the long term, the deficits or surpluses. We've really been running a deficit since about 2002.

CHRIS SIPES CFP®: And the last time we had a surplus was in the mid 90s and into the 2000s. And we've been in a deficit ever since then with a couple big blowouts in that deficit. But historically, when governments get into a lot of debt, they, they only have a few ways out of it.

CHRIS SIPES CFP®: One is default, which they're, they don't want to do and they're not going to do. I hope, two is to, to grow out of it. I think that's, that's what they're hoping to do.

CHRIS SIPES CFP®: But the, the third and the one that, that happens, I think most often in history is that they inflate their way out of it. You know, the old printing money as they say. And so. The further we go down this road, the more likely it is that the US government prints their way out of it.

CHRIS SIPES CFP®: Wars are extremely expensive. They tend to be inflationary. There's a lot of capital controls and things like that that come in. So depending on where this goes longer term, there's at least a possibility of inflation. Now, the last one here, this is kind of interesting.

DANO WEIR: Chris, before you move on to that, I wanted to touch on this because I saw this this week. I don't have the slide to show it, but I'll just read it to you. We were talking and we have a group thread among our advisors talking about the impacts of various things in the economy. And one of them was the firing of those IRS employees because you were talking about lower incomes for the government.

DANO WEIR: This is from the Center For American Progress, their website, AmericanProgress. Org. They estimate that a loss of 50,000 IRS employees costs nearly $1 trillion over 10 years because without those IRS employees, they're not as diligent on people's taxes and therefore people are getting away with more.

DANO WEIR: And so as of the early part of the year, they had laid off 25,000 employees. So it's one of those things where it's, you know, theoretically pound foolish because you're saving those salaries by letting go of those employees. But the work they would have done likely would have made you more, at least according to that one. Just kind of interesting.

CHRIS SIPES CFP®: Yeah, that is interesting.

CHRIS SIPES CFP®: I mean, who knows where all these things come together, right? And as with everything, there's always multiple reasons for things and inflation coming back or not. Dalio talks about his five forces that impact the Markets, and one of them is acts of nature.

CHRIS SIPES CFP®: And it makes a lot of sense when you think about it historically, like, you know, things that have happened, natural disasters, pandemics, et cetera, they have an impact on financial Markets. And this one kind of slid under the radar. I follow this weather guy, Colin, gosh, now I'm going to forget his last name. Anyway, I'll try to find it here. But Colin, he just posts stuff about the weather.

CHRIS SIPES CFP®: It's not political, it's not financial, but there's something called the U. S. Palmer Drought Severity Index, and he says March 2026 was the third worst month for drought. In observed history for the United States, the only two worst months were July and August of 1934, which were during the infamous Dust Bowl. And how does that lead to inflation?

CHRIS SIPES CFP®: Well, if we have a harder time producing food, then less supply equals higher price. At least that's the way economics have worked in the past. Now, maybe there are some... Food expert would say, yeah, but we grow all of our food in buildings now and it doesn't matter. I don't know. But interesting to see that we're in such a severe drought and that could lead to food prices.

DANO WEIR: Colin McCarthy is a extreme weather tracker and a storm chaser for UC Davis.

CHRIS SIPES CFP®: Yes. Yeah. So if you'd like to... Follow snow in the Sierras and such like that. He's a, he's a good follow.

DAREN BLONSKI CFP®: I always thought that'd be like the best job. Like you just charge into like crazy things and talk about it.

CHRIS SIPES CFP®: I would love that too. Honestly. Yeah.

DANO WEIR: Spoken like a true firefighter, Darren.

DAREN BLONSKI CFP®: Seriously. It's the dopamine addict in me, right?

CHRIS SIPES CFP®: When, when we hang it up on the financial advisor side of things, Darren, let's, let's become storm chasers and weather reporters.

DAREN BLONSKI CFP®: We should do that. That'd be. Fun. Ai can't beat us to that, right? I mean, we'd be out there in our hard hats.

SPEAKER 5: The fire is raging.

CHRIS SIPES CFP®: Yeah, sounds fun. Okay. So what does this all mean for the portfolio? Well, the 60-40, the 60% stocks, 40% bonds, that is the traditional go-to portfolio for most people.

CHRIS SIPES CFP®: Just like the stock market, that... Particular portfolio has had many lost decades. And this is an illustration from JP Morgan going the various timeframes where we've gone through lost decades with the 60-40 traditional portfolio. Why worry about inflation?

CHRIS SIPES CFP®: Well, if you're able to include more diversification via some hard assets and things that can respond in different ways, your risk is that you don't you have tracking error to the 60 40 when times are good you know but the the payoff of that is that you likely see less when it comes to lost decades and so so the more diversification you can get the the lower probability of a lost decade happening higher probability of tracking error and a higher probability of not being in the hot thing but reducing your you risk of lost decades.

CHRIS SIPES CFP®: And so just food for thought there on the inflation front.

DANO WEIR: And look at that. I mean, I'm just looking at crises and you've obviously got the depression, but even like 08, now if you zoomed in on that, I'm sure it would look awful, but not too different there from the start of that decade. And that's sort of the point of that portfolio, isn't it?

CHRIS SIPES CFP®: Yeah. And what's interesting is if you look at right there, after World War II. So 1945, there was a seven-year period, another time where the U. S. Was dealing with a lot of inflation. During the 60s, the 60-40 had a rough go. And then, of course, during the 70s, when we had really high inflation, there was a lost decade.

CHRIS SIPES CFP®: The most recent one being the combined recessions from the tech bubble. And the great financial crisis. So that one was not really inflation related, but more credit problem related and market bubble related. But still, there can be different reasons for the lost decades.

DANO WEIR: We're going to get to this week's question, rally or trap? With all that's been happening in the market, including new all-time highs, Chris. Looking at our fundamentals and the economy and the second half of our show. Darren Blonsky, very much a fan of the technicals. Let's get into the charts themselves and find out if we can answer that question, Darren.

DAREN BLONSKI CFP®: You know, if you had listened to the fundamentals, you would have missed this entire rally. This is where the technicals come in. Because the valuations are stretched right now, right? So, Chris, do you know offhand what percentile the... The valuations are in, I think they're in the low single digits at this point.

DAREN BLONSKI CFP®: And yeah, it's come.

CHRIS SIPES CFP®: It's come in a bit, you know, or at least it did with the drop related to the, to the war. So it's not quite as extreme as it was prior to the war.

CHRIS SIPES CFP®: But I don't have the, I don't have the percentages offhand, but you're, you're right.

CHRIS SIPES CFP®: It was elevated.

DAREN BLONSKI CFP®: So we talked about earlier in the show and Dan did about Bitcoin and how Bitcoin was moving. So we've kind of started to build this thesis that, again, it's a thesis. I have to talk in a measured degree of vagueness, Chris. So it's a thesis, a possibility it could have perhaps, maybe, might be correlated to the front end of the risk curve.

DAREN BLONSKI CFP®: So Bitcoin tends to fall first and go up first. It tends to signal something's happening. It's tended that way as of recent. So nothing's one-to-one perfect, of course. But what we pointed out a few weeks ago was this. Double bottom that was forming here, which is a chart pattern that suggests that there's a basing effect happening, meaning there's enough buyers that keep stepping in in that area that they're supporting.

DAREN BLONSKI CFP®: Eventually, enough buyers step in at that price, and it pushes up price higher because there's no sellers there. They're willing to sell at that price, and price goes up. And so this is what we call a neckline of a double bottom, and you can see where that was resistance, and then we have our break above it.

DAREN BLONSKI CFP®: Today. So real nice break above it. I'd want to see a confirmation come back in. So we have the break. I want to see the test like this and resumption higher for me to say, hey, that's pretty locked in the bottom. But what that started indicating to us is that, you know, maybe the bottom's already starting. So if we look at right here, this was March 30th.

DAREN BLONSKI CFP®: Coincided with what turned out to be the bottom of the S&P 500. So look at that chart though, guys. I mean, that's crazy how fast it's moved. And this is why so often it's so difficult to time the market, right? If you got out the market right here in fear that the world was going to end because the Iranian War and we were bombing each other and World War III was upon us and find the bunker or whatever.

DAREN BLONSKI CFP®: You had a hard time getting back in because the market has just absolutely ripped, absolutely ripped higher. And that's the problem with trying to time the market getting in and out.

DAREN BLONSKI CFP®: We have a saying that nothing good happens below the 200-day moving average. So you can see the 200-day average was resistance on April 7th. And then you woke up that Wednesday and April 8th was kind of, I think, that first. Break that, hey, yeah, maybe this isn't World War III and that Iran's going to come to the table, we're going to figure this thing out.

DAREN BLONSKI CFP®: And then it certainly kept working higher with the surprise sort of announcement today that now the strait is open. Although I believe the strait is open for everyone except for Iran. Iran still has to sign the deal and finish the negotiation before I think it was what Trump said in his tweet today or his trousseau-phileg, I guess they call them troops. I don't know.

DAREN BLONSKI CFP®: But anyway I think that's interesting it does look like he was coming next from the whisperings I see in the OSINT channels that there's stuff heating up in Cuba but from what all the research I've looked at even if we go take on Cuba unless that turns into a long endurance fight it shouldn't impact the Markets too significantly but there is something kind of heating up there so keep an eye on that we should let them we should negotiate a deal with Cuba to open in and out burgers there we should let them experience the beauty of American capitalism in a way that they can't deny i think if they experience in and out that would be the death of communism it could be it could be an international relations you know in and out is my favorite restaurant by far.

DAREN BLONSKI CFP®: Mine too.

CHRIS SIPES CFP®: You're talking me into just storm chasing and eating in and out in between, Darren. This is starting to sound pretty attractive.

DAREN BLONSKI CFP®: Dude, that is the life. The life.

DANO WEIR: Can I quickly lay out the explanation? Because there's people who listen to us out of the area who don't get it. Whenever In-N-Out goes to a new city, there's always a huge line and people wait hours. And then when they get there, they're like, it's a burger, the fries, I don't know.

DANO WEIR: It's a letdown. If you're listening and you're out of California or out of the In-N-Out zone. All you need to know is that In-N-Out is like, In-N-Out in California is like bread in France, which is that it's really good, it's really solid, and it should be available and accessed frequently.

DANO WEIR: So like, it's not meant to be like the end of the world. Like this is the last burger I'll ever have. It's meant to be like very good value, very good taste. And you can eat it in large quantities.

DAREN BLONSKI CFP®: Exactly. Like you, you can eat it. Like you go to McDonald's. I probably can't say this, but maybe I can't. I don't know. You go to McDonald's and you always feel gross after.

DAREN BLONSKI CFP®: Right. You go to In-N-Out, you feel full, but you don't feel gross.

DANO WEIR: Yep.

DAREN BLONSKI CFP®: So it's like you can have a.

DANO WEIR: Burger it's like five guys burgers right same deal right like you can have a burger and you feel like you just have the backyard burger and there's just something about it it's amazing today's episode is brought to you by in and out burger available in 17 no anyway.

DAREN BLONSKI CFP®: It's i don't know how we got on that topic apparently i need to have an in-out burger tonight i'm gonna do just that I'm not even hungry. I'm not even hungry, but in Alberta, it does sound amazing.

DAREN BLONSKI CFP®: So one thing I want to show you on the S&P 500. So this is the SPY. And visually, what that kind of looks like is this, right? This is the heat map that we show on a regular basis. First thing I'll observe is notice all the green on the screen. Like the whole market's ripping, except for oil and Netflix. But that's because Netflix makes garbage shows and energy. Oh my God. I was getting in trouble today. Wow.

DANO WEIR: When you run the firm, you can drop the hot takes.

DAREN BLONSKI CFP®: So for real, I'm flying for spring break, right? And I'm in the airport. I'm like, oh, I got to download something to watch on the plane. So I'm going through Netflix. And I'm like, the only time I ever watch Netflix is like when I'm sick in bed and like I just need to zone out on something, right? Otherwise, I'm just not a TV guy, right? I like doing lots of things and going out and being doing, I'd rather trade cards.

DAREN BLONSKI CFP®: I guess that's TV all day. But anyway, I go to download videos and I'm like going through the videos. I'm like, there is nothing new on this thing. And I haven't been like sick in bed in months, but they haven't updated anything. So no wonder their stock's awful. But anyway, I don't, I don't know. I'm just going down rabbit holes today. So we're going to, so energy, not good.

DAREN BLONSKI CFP®: But obviously, because all of a sudden the Strait Of Hormuz is open, well, the price of energy is just falling through the floor like we're seeing right now. Oil just crumbling. You know, oil stocks are going to suffer, right? Because the other thing you have to think about is all these energy companies have been trying to figure out what the price of oil has been so volatile. Imagine trying to price that into your...

DAREN BLONSKI CFP®: The finance department over at Exxon is having a field day right now trying to price in everything as a Chevron. You Yeah, you're really seeing these Magnificent 7 just continue to rip and do well. But you're also seeing these other value stocks do well. And the way you can look at that comparison is we go back to our charts, look at the S&P 500 and look at what's called the RSP.

DAREN BLONSKI CFP®: What's interesting though today is the cap weighted and the RSP pretty much up about the same today.

DAREN BLONSKI CFP®: The RSP didn't break out to all-time highs yet, whereas the SPY did, pushed higher by those MAGs. And this is the MAGs, the Magnificent Seven. This is the ETF that tracks them, and you can see it just going high. So I guess it's not over yet, guys. I think we're just going to keep blowing this bubble. We're not there yet.

CHRIS SIPES CFP®: The MAGs are old news, Darren. Look year to date at Emerging Markets. Look at small caps.

DAREN BLONSKI CFP®: Oh, we're going to take the emerging market.

CHRIS SIPES CFP®: MAGs are old news.

DAREN BLONSKI CFP®: Old news. Let's take an EEM index. Let's go take a peek at EEM.

DANO WEIR: For those who don't know, Chris, emerging market is what?

CHRIS SIPES CFP®: So they kind of break the world up into three different, you know, overall investment pools, which would be U. S., developed. Markets, which is, you know, I think like Japan is probably the biggest part of that in Europe. And then are parts of Europe, I should say. And then you've got Emerging Markets, which the largest, country in that portion is China.

CHRIS SIPES CFP®: And, and I don't know exactly how they determine what is an emerging versus developed. There's a lot of controversy around that, like everything in investing, but that's, that's how it's broken up. And And they went through a long talk about lost decades. They've been there, but showing signs of life and at a time where you would not expect to see signs of life, given all the things that are going on in the world.

DAREN BLONSKI CFP®: Yeah, especially because of, you know, the heat between us and China, right? Because China is a big part of the merging, which is kind of stupid that we still have an index calling China emerging.

CHRIS SIPES CFP®: Yeah, that's what I mean. There is a lot of controversy around, like, who's in what index exactly.

DAREN BLONSKI CFP®: But, yeah, I mean, they're like the second most powerful country in the world, and we're going to lump them in the Emerging Markets. Okay. If that's not American-centric thinking, I don't know what it is, but whatever. We're in America, right?

DAREN BLONSKI CFP®: So, Chris, you must feel really good because you were feeling, I remember, I think I was like, I think we even gave Chris a clap back in February for this one, right? For Emerging Markets. Didn't we give him a clap, Dan?

DANO WEIR: I think we got that here.

DAREN BLONSKI CFP®: I think we did that. I mean, Chris, we got to go back. Emerging Markets doing really well. But we would got to give him another clap because Chris's favorite asset class bonds are making a resurgence. Oh, hey, double win.

CHRIS SIPES CFP®: Well, I think it's so I don't know about you guys, but I still have not had any clients ask about foreign stocks or, you know, anything like that. Right.

DAREN BLONSKI CFP®: Said no one. Can you get me tied into China and Russia?

CHRIS SIPES CFP®: Right. But if you look at, it's not just short term, cause I'm looking at least according to Koi Fin, the Emerging Markets index is neck and neck with the S and P over the last three years. I don't think many people would guess that.

CHRIS SIPES CFP®: So interesting, you know, and, and that's, that's how investing works. The trends start, nobody notices them. They take hold. Suddenly everybody notices them and then everybody piles money into them. They get overpriced and then, you know, on and on. But interesting.

DAREN BLONSKI CFP®: So there was allegedly right before the Strait Of Hormuz was announced open, allegedly somebody placed a $760 million thwart on oil.

DAREN BLONSKI CFP®: It seems like every time we have these big news announcements, there's somebody in the administration placing trades. There has to be because we see these massive trades come ripping through.

CHRIS SIPES CFP®: Yeah.

DAREN BLONSKI CFP®: Of course, they're not going to get in trouble for that.

DANO WEIR: I was told this show is not supposed to be political.

DAREN BLONSKI CFP®: It's not political, right? Political is being one-sided.

CHRIS SIPES CFP®: Let's change the subject before one of us just mysteriously disappears. Like one of the... Ha ha ha. Let's talk about something else.

DANO WEIR: Hang on a second, guys. My doorbell just rang.

DAREN BLONSKI CFP®: Disappears like one of the nuclear scientists have disappeared. Did you catch that the other day?

CHRIS SIPES CFP®: Back to bonds. Stop.

DAREN BLONSKI CFP®: Okay.

DANO WEIR: We're going to go to Target. Stay on Target.

DAREN BLONSKI CFP®: All right. So anyway, but it was a, it was in president Trump's press conference yesterday about the 10 nuclear scientists dying. I did text my buddy who's a nuclear scientist. I'm like, bro, watch your back. Something's going on anyway.

DAREN BLONSKI CFP®: So this is oil, right? So oil is just collapsing right now on the chart. And this is the whole Stratohormose fiasco. It looks to me like we probably printed a triple top. I'm not sure how to reconcile this with the pattern, but you've got kind of something like this going on.

DAREN BLONSKI CFP®: This kind of looks like more of a, and that could be lining up the triple top. So things actually look pretty positive for the direction of oil, which is great because I'd sure like to go into summer not paying $7 a gallon here in California. That would be fantastic.

DAREN BLONSKI CFP®: And hey, like Clinton always said, it was the economy stupid, right? So they got to get oil in line. They got to get interest rates down before we get into midterms or, Trump's going to, in his administration, are going to have a tough time in midterms. Looking at volatility, volatility is quiet. Guys, right?

DAREN BLONSKI CFP®: So, you know, we started off by saying, is this a rally? Is this a trap? What is it? I don't think you can step in the way of this Mack truck in the market right now. Things are moving fast and they're moving furious. I don't think the bubble's over yet. I don't think the party's ended. I think it looks like we got some legs for the party.

DAREN BLONSKI CFP®: That's my overall consensus. Looking at the charts from this week, let's take a look at gold real quick. Gold getting a bid. It found its bottom on its 200-day moving average, moving up and now finding resistance on that 50, which is that green. Sma right here. So we'll see if it breaks above that. And silver also catching a bid moving up.

DAREN BLONSKI CFP®: So maybe we're going to see a move higher now in silver and gold. Really importantly, when we look at interest rates, interest rates drive this economy. And what the 10-year is doing has a lot to do with where everything else is going to go. 10-year dropped off today. We're trading under that 20-period moving average.

DAREN BLONSKI CFP®: Coming back down to... Past this long-term down trend line. So if we break below, let's call it 4.2 on the 10-year, I'm thinking we go lower, which queues up real nice going into midterms. And with Kevin Welch getting to step in in the next few months, it's going to be really interesting with inflation starting to rear its ugly head to see if interest rates actually do come down.

DAREN BLONSKI CFP®: What I did notice over on the FedWatch or the FedWatch CME group where we watch the Fed rate. You can see we're starting to look like there's a slight possibility, a half of 1%, that on April 29th, they're going to raise interest rates.

DAREN BLONSKI CFP®: That tells you the market is saying, hey, inflation's in the system. It's live and well. So you got to pay attention to that. But with gas going up, I just don't see how you can't assume that there is more inflation. We want to look at SOX as the leading indicator, right? I talk about this. We haven't visited a lot lately, but look at the SOX indicator.

DAREN BLONSKI CFP®: This is a semiconductor, right? So they're the very front end of that risk curve, and boom, you can see it just ripping up. And IGV, which is also software. What's interesting, though, where I guess I could argue that this might not have lags, is one, it's moved so fast, so quick, and when it tends to go fast in one direction, it goes fast in the other direction.

DAREN BLONSKI CFP®: And IGV, the front end of the risk curve, we haven't completed this double bottom like we saw in the Bitcoin chart. We look at high yield bonds, those are going higher. High yield is a nice way of saying junk. So if junk bonds are getting a bid, then that can tell you that, well, in fact, people are willing to take more risk in the market.

DAREN BLONSKI CFP®: And we look at our Qs. I mean, Qs, whoa, just wow. I mean, when's the last time we saw a move like that? Like, we have to go back to like COVID era, 2020, to find where we just saw these just gaping rips up. I mean, that's an impressive move. Makes me a little bit suspect.

DAREN BLONSKI CFP®: But I think it all, at the end of the day, goes back to liquidity, right? I don't think the news hit this a lot, but there was some executive order that was put in. I haven't had a chance to look. More research on it, but I caught the headline, which is basically, we're infusing liquidity into the Markets. And there's more liquidity coming in.

DAREN BLONSKI CFP®: And when liquidity comes in, the market moves. Bottom line. So what I see right now is I see a government that's willing to put liquidity into the market to continue to push this market higher, whether it's for the best interest of the country and the longevity of the United States Of America is probably not, but guess what?

DAREN BLONSKI CFP®: Politicians don't care because they just want to get to the next election. And that's what you see. The heat goes on and it continues and they're injecting more liquidity. So long story short, is this a trap or a rally? I'm going with rally. Probabilities. Rally. Maybe rally. Could be rally. Probably not a trap. How's that for vagueness, Chris?

CHRIS SIPES CFP®: I nailed it. And Chris?

DANO WEIR: Your call?

CHRIS SIPES CFP®: Oof, it's a tough one. I try, you guys know me, I try not to get too excited when things are going up. I try not to get too depressed when things are going down.

DAREN BLONSKI CFP®: No highs, no lows, brother.

CHRIS SIPES CFP®: That's right. I'm in the camp of build it to be ready for, you know, for whatever's coming and stay the course. So short, I mean, it's undeniable. It seems. It seems undeniable, at least at the moment, that things are rallying. But hey, you know.

CHRIS SIPES CFP®: There will be more traps down the road sometime.

DANO WEIR: Well, maybe you both should run for office with that answer, Chris. You just danced right through that. Nice work, buddy. Nice work.

DANO WEIR: Darren, I think we're going to leave it there for the week. And thank you so much for checking out the show. This has been On the Markets from Sonoma Wealth Advisors, the private wealth arm of Fermata Advisors. You can learn more about our firm at sonomowealth.com. You can book your wealth analysis. You can meet all of us. You can learn.

DANO WEIR: Everything about the firm and how we help clients preserve wealth and persevere through rallies or traps. Also, wherever you found this show, make sure to subscribe, interact with it, and tell a friend if you enjoyed what you heard. We also have other podcasts, which you can find at SonomaWealth. Com. For Darren Blonsky, for Chris Sipes, my name is Dan O'Weir, and we will see you next week on The Markets.

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CHRIS SIPES CFP®: Fermata 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.

CHRIS SIPES CFP®: This content was produced by Fermata Advisors, LLC, DBA Sonoma Wealth Advisors, DBA Fermata 401K, DBA Fermata Tax, The opinions expressed by Fermata Advisors LLC on this show are their own. 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.

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.

CHRIS SIPES CFP®: 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 does not take into account your specific situation or objectives.

CHRIS SIPES CFP®: 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.