Did Tariffs Fix The Trade Deficit?

DANO WEIR: Maybe we're two crises too late. Tariffs. It has been a year and we're about to find out, did they actually do what they were intended to do? My name is Dano Weir. I'm the Marketing director for Sonoma Wealth Advisors, the private wealth arm of Fermata Advisors.

DANO WEIR: Today On The Markets, we're going to find out after a year of US trade deficit data, did tariffs really work? What have a year of tariffs done to the cost of... Producing products in America? A drastic decrease or increase? Could small cap funds finally be outperforming their outsized counterparts?

DANO WEIR: The market closed at an all-time high, so maybe tariffs did indirectly do their job? The market is the economy, is not the economy? Let's find out right now On The Markets.

SPEAKER 2: The stock market, the economy, your money. What's the latest and what could be next.

SPEAKER 2: Find out now with Fermata On The Markets. Straightforward financial market updates for the brands of Fermata Advisors, Sonoma Wealth Advisors, Fermata 401k and Fermata Tax. On The Markets starts now.

DANO WEIR: As we look at the globe this week, we're looking outward, we're looking inward and. The story, a headline in the market this week, headline in the world this week, are or are we not in a ceasefire? Chris Sipes, Daren Blonski, Managing Principles of Sonoma Wealth. Chris, I guess I'm feeling safe here looking at this graph because we've got the biggest bubble on the board.

CHRIS SIPES CFP®: That's right. If you guys didn't hear, I think we won the war again this week, according to the Markets, at least. Nice. Of course.

DAREN BLONSKI CFP®: Should we be proud about this here?

CHRIS SIPES CFP®: I believe so. Yes.

DANO WEIR: I'm not sure what we were fighting for or what we wanted.

CHRIS SIPES CFP®: We want it again. But hey, if you look at a lot of people and myself included, look at the Markets and you're like, what is happening? And you have to remember that conflict from a spending standpoint is it gets the money moving. And here's a perfect example. Look at these defense budgets globally and the U. S.

CHRIS SIPES CFP®: Almost a trillion dollars at 921, dwarfs every other country on this, on this, map by a, by a long shot. So what the U S is doing from a defense standpoint, budget standpoint, you know, it makes, it makes a difference, right? So we talk a lot about consumer sentiment being down and such and such, but Hey, you know, buying, buying one.

DANO WEIR: Airplane or missile or whatever makes up for a lot of people that don't feel like buying a tv this weekend you know and for our audio audience we're looking at a chart here it's got the world's largest defense budgets you've got germany at 107 billion russia at 186 billion China at 251 billion and they're represented by little appropriately sized orbs balls And then the largest on the board is the United States at $921 billion.

DANO WEIR: So it is always almost humorous to see those comparisons.

CHRIS SIPES CFP®: Yeah. And this was interesting showing, and we're not the first to uncover this, obviously. Everybody knows this. But one reason why you may not be seeing very much stress in the Chinese market is that they control. A lot of the rare earths that go into a lot of these manufacturing products.

CHRIS SIPES CFP®: And we talked, I can't remember if it was last week or the week before, Dan, about the strategic petroleum reserves of China, which was much higher than any other country in the world. So they're not stressing too much about the oil. But then when you look at all, they may not be spending the most on defense, but they have a lot of the...

CHRIS SIPES CFP®: Ingredients that go into building the defense weapons and such and so look at look at the control of some of these metals the production and then the refining which from what i understand is the refining piece of it can be almost as important as and maybe even more important than the actual production of those those tools so you This is something that they've been doing for years and years and years to get themselves in a position of strength on this.

CHRIS SIPES CFP®: And so maybe some of the reasons why you're not seeing the stress in the global Markets that you might have expected based on this conflict.

DANO WEIR: Yeah. And Daren, I know you saw the story. There's the United, there, there is always a narrative about China's rare earths and their control and dominance of them. And then here comes some story of, basically a Beverly hillbilly who, you know, strikes, find some rare earth cash.

DANO WEIR: That's enough for us for 70 years. And last week, Daren, last month, Daren, I'm sure you saw that story that in the Appalachians, they found a, a cache of lithium that's supposedly going to last, you know. For 800 years or something like that.

DANO WEIR: So it's always interesting to see some of the PR that happens when it's like, oh, China has complete control of cobalt. And it's like, well, so-and-so found in Kentucky that he actually has a cache of it. So, you know, I always find that interesting.

DAREN BLONSKI CFP®: Well, there were two headlines related to precious, or I guess rare earth materials I saw this week. One is there's three in Mountain Pass, California, for those Californians who've been up over the grapevine and driven through.

DAREN BLONSKI CFP®: The grapevine that's where Mountain Pass is apparently there's a pretty significant rare earth material or rares in that deposit there and they've i guess starting to explore operating but remember that greenland thing that like we were going to own it maybe i don't know was it six months ago or something yeah that was those four crises ago okay Four crises ago, yeah.

DANO WEIR: I can only keep up with the most recent two.

DAREN BLONSKI CFP®: So apparently a U. S. Company now has like all the rights to the rare earth materials on the southern end of that island now. So I can't help but wonder if in a very Trump-Esque way that was, you know, we're going to take your country over.

DAREN BLONSKI CFP®: And then that was all just about saber rattling so that they gave one of our companies a massive rare earth. Deal and exclusive rights to their rare earths, which is actually not a bad chess play, really, when you think of it. Not that I'm a fan of that, but very Trump-Esque in his way of getting things done.

DAREN BLONSKI CFP®: Because the truth is, and I've heard this from people inside the intelligence community that know this firsthand, China controls an insane amount of the rare earth materials, and they talk about that, and they've confirmed it. So I think it's interesting.

DANO WEIR: All too often part of the taco trade that we talk about on here is all about saber rattling to get something and that's the play Trump does over and over walks in a room throws a grenade blows something up to get what he really wants yeah and i'll put that in another context too it's it's as if Trump walks in a room and there's an entire thanksgiving dinner set on the table and Trump walks in and goes i'm taking this whole thanksgiving dinner there's nothing you could do about it And then the whole family starts, wow, We all fight about it.

DANO WEIR: And then at the very end, he goes, all right, fine. I'll just take the dessert. You know, he does that all the time.

CHRIS SIPES CFP®: So sentiment, we're back to, we're back to kind of even in normal sentiment. You wouldn't know anything's happening in the market at all, which, I, the, the longer we kind of watch these things, the more I re the more I believe that. Narrative follows price and not the opposite way. We kind of look at it as though price is going to follow the narrative.

CHRIS SIPES CFP®: And I think it's the opposite. Whatever the price does, you watch the technicals, et cetera, and then the narrative is going to follow that. So here we are. People are kind of back to neutral when it comes to their sentiment. The CNN fear and greed index is back up to 68, which is greed. About the same as it's been in the last couple of weeks. And then Bitcoin making a big jump up to 47 in neutral.

DAREN BLONSKI CFP®: Say it again, Chris. Say it again. Say it again.

CHRIS SIPES CFP®: Hey, it's back up to neutral. And to our credit. So you're saying there's a chance.

DAREN BLONSKI CFP®: So you're telling me I got a chance.

CHRIS SIPES CFP®: Look, how many times did we say it when it was, you know, that fear and greed was down in the five, six, you know. Those low single digits, we, we, we mentioned, Hey, this might be something worth looking at because historically when people feel this badly about an asset class, there might be some opportunities there.

CHRIS SIPES CFP®: Feel, feel like that was sort of prescient. So, you want to look at the extremes and you want to try to do the opposite of the extremes because typically, that, that tends to work, you know?

CHRIS SIPES CFP®: But Anyway, we're looking at where are the Markets one year out from the tariffs.

CHRIS SIPES CFP®: Whenever we do these kind of recap shows, it always surprises me at how fast a year goes by and how...

CHRIS SIPES CFP®: Things are totally different. Like, you know, remember this time last year, all anybody was thinking or talking about was tariffs. I haven't heard anybody talk about them lately. Have you guys had anybody mention them at all?

DANO WEIR: The only thing I've really heard is the, the, because they've been struck down in some fashion. And so the refunds and whether they will or won't be happening. And, a few, a few business owners I know have, have mentioned over the past couple of months about price changes as a result of them.

CHRIS SIPES CFP®: Yeah. And so it's kind of, like you said, it's old news. But if we look at where the major stock indices are since that time, we've got the emerging Markets, we've got the S&P 500, the IFA, which is the developed Markets index, Russell 2000, small caps, and then the Invesco QQQ Trust, which is the tech stocks.

CHRIS SIPES CFP®: Leading the way is the emerging Markets, kind of a head spinner, with tariffs being implemented and the largest ones being put on China, from my memory. Who would have thunk it that the emerging Markets would come out the clear winner? Who would have thunk it that the small caps would be right behind them, US small caps?

CHRIS SIPES CFP®: All the indices have just done really well since those tariffs were put on, taken off, struck down, the whole thing.

CHRIS SIPES CFP®: The market's resiliency is incredible at some point, honestly. It's just another testimony that you really can't predict these things ahead of time too hard.

CHRIS SIPES CFP®: Now, we look at what's the impact been on inflation. Look at the CPI up about 3% since last year in the early part of the year. And we've talked about the fact that many of the inflation sensitive assets have been responding pretty well in the Markets. And that if we are getting a return of inflation, whether it's from tariffs or the war or any other number of things.

CHRIS SIPES CFP®: Most investors don't have any exposure to those asset classes that might benefit to inflation in their, in their portfolios. So things like hard assets, commodities, even real estate to some extent can, can benefit from inflation. Stocks, you know, are kind of mixed.

CHRIS SIPES CFP®: But inflation protected, bonds, there's a lot of different options, right? That most people. Don't really have much exposure to. The average portfolio is some mix of stocks and nominal bonds, which is what people have adopted over the last, call it 40 years, really since the 80s.

CHRIS SIPES CFP®: We've been in a low inflation environment and we've been in an environment of interest rates falling over that time period. And people have just gotten very comfortable with those kind of two asset classes as really the standard. So if we get a return of inflation, it might be something to consider. And at least in the last year, it's continued to go up, on the good side of things.

CHRIS SIPES CFP®: If we look at the trade deficit, you know, one of the stated goals of the tariffs was to reduce the trade deficit. I can't say that you've seen really any change there. To me, that line, while it's gone up and down, it looks, it looks even overall.

CHRIS SIPES CFP®: And, so not really much impact on the trade deficit. I was just seeing an article today that a large part of the trade deficit has been driven by the, the build out in AI. You know, there's been such a huge, investment in, in the build out for AI.

CHRIS SIPES CFP®: And of course, many of those materials that we need are not produced here yet. And so we've got to buy them from other countries. And so it's, that's increasing the trade deficit, but. Overall, over the last year, there's really been no change. You wouldn't notice any difference in the trade deficit.

DANO WEIR: So then based on that idea, Chris, then if the tariffs, let's just say theoretically that the tariffs are the reason why the trade deficit, you do see it go down there in November.

DANO WEIR: Had no change happened to other products, then that need for the AI components would have sent the trade deficit much higher.

DANO WEIR: Could make an argument maybe then that the tariffs came at just the right moment to at least offset what would be needed for AI?

CHRIS SIPES CFP®: I suppose you could look at it that way. Yes, it's possible. Yeah. Yep. Now, if we look at manufacturing, some bright spots here, the PMI, the Purchasing Managers Index, is kind of like a gauge on manufacturing. And 50 is the line for expansion. So if it's above 50, it's expanding. The activity is expanding. If it's below 50, it's contracting. And we've gone from, call it 48, up to 52.

CHRIS SIPES CFP®: You know, but you see that change didn't really happen until January. And so that could be affected by the AI that could be affected by the war could be affected by both. I don't know. But either way, there is there is seems to be higher indication of manufacturing activity on that front over the last year.

CHRIS SIPES CFP®: Consumer sentiment is is down. And we talked about that, I think it was last week, where we've got record low consumer sentiment while we also have record high stock prices, which is not exactly normal. Usually people have these washouts and sentiment either during or after, most usually after an extended recession. People kind of feel the worst possible, and this one is not that.

DAREN BLONSKI CFP®: So, Chris, I got a theory on this, okay? So go back to the last slide that's forming here. So if you go back to the last slide, manufacturing up, go to the slide before that.

DAREN BLONSKI CFP®: And the trade deficit, right, doesn't seem to matter. The tariffs don't seem to matter. Keep going now. Go forward again. And you have sentiment down. I think there's already enough displacement starting to happen from AI that you're seeing.

DAREN BLONSKI CFP®: Increased manufacturing, you're actually seeing increased productivity happening in the economy, that actually AI is deflationary, and it's going to create all this deflationary push, and sentiment's in the toilet because there's enough people not working, and enough people getting laid off.

DAREN BLONSKI CFP®: So sentiment's staying depressed while the market's ripping higher because the AI, infrastructure, etc., all related to it's actually increasing worker productivity. But along the fringes, we're seeing a lot of layoffs, which then drags the sentiment number down.

DAREN BLONSKI CFP®: I think as AI continues to be adopted, and we're just in the early stages of it being adopted more and more, we're going to see sentiment continue to dive while the economy and productivity in the Markets continue to thrive. Mostly because there's going to be less and less people working and more and more people laid off.

DAREN BLONSKI CFP®: But there's actually this. Push economically. And then there'll be this like one point where it will all of a sudden just, you know, that old saying, a little bit of time and all at once.

DAREN BLONSKI CFP®: I think that's how this plays out here where enough people just get laid off and all of a sudden the economy just collapses because then we realize that it's not really humans working anymore. That's a little high out there, but I think that's why we keep seeing this sentiment in the toilet, but we're seeing manufacturing going up. We're seeing productivity go up.

DANO WEIR: Because i think there's just less and less people got one thing to add to that Darren too which is that AI is the cheaper route for a lot of things right now and as you said it's deflationary right people if you had the choice between a robot that could do the same job and a human that could do the same job the same level quality and the robot was a fraction of the cost obvious not obviously but many people will end up choosing the robot But I think it's important to remember that the robot, in a lot of cases, is being offered by a company which is not yet profitable.

DANO WEIR: I don't know if you guys ever remember YouTube TV when it launched, but it was only $35. And they built a massive subscriber base. And you know what it is now? It's $80. So there might be an interesting rug pull going on where AI is cheaper, And then they get everybody using the AI. And they go, okay, time for profitability. And now, you know. Something to think about.

DAREN BLONSKI CFP®: You know, what's interesting is that, so last weekend, I went down the rabbit hole, and I built my own agent on my own Mac Mini just to manage my kids' sports school calendars. Because I have three kids in different ball. Two kids are playing two different sports. One's playing one sport. Like, it's just madhouse.

DAREN BLONSKI CFP®: And they're all in travel ball and all that stuff. I promised myself I'd never let my kids do, but we're doing it nonetheless. And... I couldn't keep track of the schedule, so I built an agent that literally lives on Telegram. I can take a picture of the kid's schedule and will automatically sync it into all my Google calendars.

DAREN BLONSKI CFP®: And I get now a text message every morning at 6.30 that says, Darren, here's your kid's schedule. I have the bot scraping their middle school and their high school. Anything going on at the middle school and high school, it puts it into the calendar for me for each of the kids.

DAREN BLONSKI CFP®: So I know what's going on constantly with their sports, with their school. And that allows me then to manage my work schedule in addition to that. But think about the productivity enhancement. Like I don't spend any time scheduling anymore. I can literally take a picture of my kids, a hundred different baseball practices he has to be at.

DAREN BLONSKI CFP®: Or my other kids have some physical therapy going on from injuring his hip in basketball. And there's like... 10 different times and doctor appointments that he has to be at. I just take a picture of that and it's automatically uploaded into my calendar. That literally would have taken me hours and hours and hours of time to schedule all that and figure it all out in the past.

DAREN BLONSKI CFP®: That's why I'm talking about the productivity and it didn't cost anything, which is the interesting thing, right? Because that's not true. I had to buy a Mac Mini from Apple, but that's a one-time sunk and it may cost me. A few dollars in tokens on Anthropic to run that thing.

DAREN BLONSKI CFP®: But now my entire family schedule is all managed. And literally this bot, I can call it and just talk to it on my voice and tell it what to do and tell it to schedule this and Da-Da-Da-Da-Da. That's the type of productivity that's coming that isn't fully here yet, but that's the enhancement that I see.

DAREN BLONSKI CFP®: That has to impact the economy in a positive and deflationary way, which is, I think, the interesting world we're going to be in where it's like people are working less, but we're actually all more productive than doing it. And how does the economy and how does the market absorb that reality? That's the transition we're in.

DAREN BLONSKI CFP®: I'm not sure if that made sense, guys, but.

DANO WEIR: It did. Yeah.

DANO WEIR: Chris, you want to jump in now? Back Back to, sorry, sidebar. We get on our rabbit holes here on the show.

CHRIS SIPES CFP®: I think that kind of wraps up the recap on the tariffs. You know, it's a mixed bag, kind of depending on what you're looking at.

CHRIS SIPES CFP®: So depending on how you're looking at it too, you can probably feel really good about them or really bad about them.

CHRIS SIPES CFP®: Pick your data set. So on the positive side of things for inflation is rental inflation.

CHRIS SIPES CFP®: This is from Bank Of America. And coming out of the pandemic, rental inflation was around 9% three years ago. Now it's below 3%. And you can see it's kind of come back down into the trend line. And this is important for CPI calculations because this is about 30% of the overall. Consumer price index calculations.

CHRIS SIPES CFP®: And so housing being a major part of how inflation is measured. So getting that kind of under control. Now, remember kind of what went into this was a lot of overbuilding, especially in multifamily. And multifamily on the investment side of things has gone through a very, very difficult time. And that's...

CHRIS SIPES CFP®: The flip side of that is that these rents are coming down. There's been way more supply. We probably overbuilt some of those multifamily units, and that more supply brought those prices down on the rental side of things. But that's a good thing if you are spending money on housing, which most people are.

CHRIS SIPES CFP®: Okay, so now what matters today in terms of consumption? To Darren's point, it's... It's less so the consumer and more so AI. Look at, look at Q1, 2026.

CHRIS SIPES CFP®: When you look at the, the domestic demand, a lot of it is coming from the AI build out. It's kind of similar to Q1 of 25, I would say, but there's just not as much demand coming from just say like pure consumer. We're not quite as reliant as, as we once were. On just the consumer. So that consumer sentiment is having less of an impact on the overall economy.

CHRIS SIPES CFP®: Because going back to the military spending, hey, it just doesn't matter as much what you and I are spending on the weekends based on how we feel about our future when these companies are out spending.

CHRIS SIPES CFP®: Billions and billions and billions of dollars to build out their infrastructure. It's just going to dwarf, just like we talked about with the K-shaped economy, how the top 10% of income earners are doing over 50% of the spending.

CHRIS SIPES CFP®: Who is doing the spending matters more than really anything at this point in the cycle. And so this could be a continued source of strength in the... In the Markets, which is driving a lot of performance in the small caps. This was from Eric Balchunas at Bloomberg, and he's saying, wow, 100% of small cap growth funds are beating large cap growth funds over the past year.

CHRIS SIPES CFP®: This number is 10% for five years, which equals small caps having a legitimate moment right now so and But he ends it with, and yet no one cares. Flows are non-existent. It's like being Reggie Miller, cursed to play during the Jordan, parentheses, Mag-7 era.

CHRIS SIPES CFP®: So I think that's a great, great point. You guys remember Reggie Miller back in the days where Jordan was dominating and he got all the attention, of course. And that's kind of what we're seeing in the small caps.

CHRIS SIPES CFP®: These days is like they're they're doing very well i think you could say the same thing about emerging Markets and literally nobody cares no one notices no one cares kind of kind of where gold was three or four years ago no one was mentioning it yeah so under the radar i thought you guys would enjoy this one i'm sure you saw this i can't believe you put this in Chris this is triggering for you This cracked me up.

CHRIS SIPES CFP®: This was in the Financial Times. And I guess they were quoting some report where essentially either AI is going to lead us to unlimited abundance or tech singularity and human extinction.

CHRIS SIPES CFP®: Or we're going to continue on our path of about 0.2% productivity growth. So guys, one of...

DANO WEIR: One of those three outcomes is likely to happen who knows which 66 percent that's 66 67 percent that's great it's so uplifting thank you for sharing that Chris again you're saying there's a chance unlimited abundance or we're all gonna die one of the two so right before we get to the candles i saw this story this week you guys and speaking of the prevalence of AI and the hotness that it applies to any the heat that it applies to any ticker that its path shall cross.

DANO WEIR: Did you hear about the Japanese toilet maker who soared 18% because everyone found out they make AI chip components?

DANO WEIR: That's right. Toto is a 100-year-old Japanese toilet manufacturer company. Turns out they've been quietly making one of the parts every memory chip factory in the world depends on since 1988. The stock jumped 18% because the market finally caught up with the fact that Toto has been doing this for four decades.

DANO WEIR: So what they do is memory chips, the kind in your phone and inside every AI server, get built by stacking ridiculously thin layers of silicon on top of each other. The newest ones go 200 layers deep. To carve channels into those layers without ruining the chip, factories have to hold the silicon disc completely still. Microscopic shake equals dead chip. So they grip the disc using static electricity.

DANO WEIR: The same trick that makes your hair stand up against a balloon. The grippers are flat ceramic plates. Toto is the world's second largest maker of those plates. They started doing it in 1988, almost as a hobby for a company that already knew how to bake ceramic clay evenly, even. Even though it makes ceramic clay for Fancy toilet bowls. So there you go, guys, AI and toilets.

DAREN BLONSKI CFP®: Who knew Dan, who knew?

DAREN BLONSKI CFP®: Well, I just thought this one thing that the politicians will be buying Toto pretty soon.

DANO WEIR: Yeah. Right. Right. I just think that's interesting. Japan always fascinates me because there's, I'm not surprised that it came from Japan and I'm not surprised. It's always like a.

DANO WEIR: 80 year old, a hundred year old, 150 year old company from Japan doing like something unbelievably incredible, like at an extremely high level. And then they're all helping each other behind the scenes. It's very, I just got a laugh out of that this week.

DANO WEIR: All right, Darren, you want to take it candlesticks?

DAREN BLONSKI CFP®: Oh, we want to talk candlesticks, We can do that.

DAREN BLONSKI CFP®: You know, kind of an interesting week. I think everything right now is really just, to wrap it in a tight statement, everything's really playing off of what is going on with oil. And oil is everything at this moment.

DAREN BLONSKI CFP®: But let's take a look at the S&P 500. You can see we hit all-time highs here, 737. We got a closeout today. It's pretty impressive. Now, I remember this candlestick down here. I mean, like, oh, I think that might be it for the bottom.

DAREN BLONSKI CFP®: And it certainly turned out to be that way, so far anyway. But again, just a reminder to people that you cannot. I mean, this precipice here, we're going to war with Iran. It's going to be forever, blah, The whole Middle East is a...

DAREN BLONSKI CFP®: Missiles and bombs and nuclear war and world war three talk everywhere and now the market since that point at 630s ripped up 100 points and once we got back above that 200 day moving average it just ripped higher and higher so i don't think you can look at that as anything other than bullish you have at oil continuing to go sideways but also i would say Thank you.

DAREN BLONSKI CFP®: You know, it's making lower and lower highs. So it's on a downtrend there, but also could be just winding up for more volatility.

DAREN BLONSKI CFP®: So I think we're either going to see a big drop in oil coming up here pretty soon, or we're going to see a breakout again. Things will get worse. So there's something definitely building, but we look to be in a downtrend. But you could argue that this is a descending triangle pattern happening right now.

DAREN BLONSKI CFP®: So I think that's, you know, keep an eye on oil. I think that is the number one element to watch right now. As we get closer to the midterms, the politicians are going to want to get the cost of gasoline down, especially in California. It's pretty high. Have you guys been following any of those Spencer Pratt commercials that he's putting out for governor here in California?

DANO WEIR: Mayor in LA.

DAREN BLONSKI CFP®: Excuse me. That's right. Mayor. Yeah. Yeah.

DANO WEIR: I've been following him. Very interesting.

DAREN BLONSKI CFP®: Sign of the times. Sign of the times. But, you know, if you think about what's going on in California, it's the economy, stupid, right? Like if we all go to the pump and we're paying $7 a gallon, which we pretty much almost are here in the Bay Area, like that gets under people's skin pretty quick. It makes a lot of room for stuff like that.

DAREN BLONSKI CFP®: That he seems to be building momentum off of. All right, take a look at gold. Gold descending. We're right in this support level of 4,660 an ounce. It looks like it's hanging on, might be forming a double bottom. It would have to break above that, let's call it 4,900 an ounce to be a long-term double bottom. But we're looking towards the weaker end right now and perhaps seeing oil.

DAREN BLONSKI CFP®: I'm excusing gold go down closer. This long-term trend line, this 100-day moving average, 200-day moving average, you can see it came right into earlier and now it's going to have to deal with that here pretty quick. So either we're going to see gold spike up soon or we're going to see it drop below and we'll go into more of a deflationary cycle with gold.

DAREN BLONSKI CFP®: 10-year is just continuing to try.

DAREN BLONSKI CFP®: To trade sideways you can see double top though potentially building here which could tell you that the interest rates are potentially going to be going lower from right now it's interesting i was listening to a discussion yesterday that as soon as the 10-year spikes higher all of a sudden you find these like oh we're going to get along now we've got a treaty and you know It all has to do with interest rates.

DAREN BLONSKI CFP®: So just watch the interest rates. If interest rates really spike higher, then all of a sudden the politicians will find some way to agree with, okay, yeah, yeah, yeah, no, we're not going to bomb each other.

DAREN BLONSKI CFP®: We get along now. Because if they let these interest rates move too much higher too fast, it'll break the economy.

DAREN BLONSKI CFP®: So a good indicator of Markets settling down, of I guess geopolitics settling down is spiking interest rates.

DAREN BLONSKI CFP®: No one wants that. To Chris's point earlier on Bitcoin, you can see that we're still trading under that blue 200-day moving average. So until we break above that. This certainly could have been the bottom here, but until we break above that 200-day, game is not on.

DAREN BLONSKI CFP®: But we're starting to flirt with it. So it could start printing some GOD candles pretty quick. And what I mean by that is just these candles just rip higher. Just as much as it rips down, it rips higher. A lot of volatility in the Bitcoin.

DAREN BLONSKI CFP®: Space. RSP, so this year we've had a particularly good year with an equally weighted index. More value stocks have done pretty well, but when we look at the equally weighted index, we didn't make an all-time high. That's a divergence when we look at the cap-weighted index, which made an all-time high. So if you put equal amount of dollars on all the S&P 500 stocks in the S&P 500, this would be your performance.

DAREN BLONSKI CFP®: If you put it in a cap-weighted, which leans towards a it it leans towards a you can see this is a cap weighted index where you've got these seven big stocks as they rip up they pull the whole index up and you can see we hit an all time high today but there's a lot of red on everything else and it's just because these big you know chip manufacturing type companies are continuing to gobble up all of existence of the market.

DAREN BLONSKI CFP®: Which we've talked about for years now, Chris, which isn't particularly healthy, and at some point probably comes off the rails. Although I'm more and more getting comfortable with the thesis that, in fact, that AI soaks up so much productivity from the economy that it becomes just a permanent, bigger part of the economy. Although I feel like that's me. Raising the white flag with that.

CHRIS SIPES CFP®: The permanent, the higher plateau, right? Yeah, exactly. Higher plateau.

DAREN BLONSKI CFP®: Higher plateau, but then I feel like the minute that I say, well, maybe this is just the new reality, like that's when you're in trouble.

CHRIS SIPES CFP®: Yeah.

DAREN BLONSKI CFP®: I don't know. You got to be careful there. So all in all, I mean, what can you say? Market's ripping higher, right? Apple type stocks, NVIDIA just driving this puppy. And continue. Microsoft's still struggling. I can't help. What's interesting, this is interesting. I saw this thing earlier today.

DAREN BLONSKI CFP®: In every Microsoft product, there's Copilot, right? Nobody's using the Copilot. Everybody's plugging Cloud into Microsoft products because Cloud actually integrates better with Microsoft products than its own Copilot integrates with Microsoft products. And I think that's why.

DAREN BLONSKI CFP®: Microsoft isn't doing as well. It really kind of missed the boat. I don't think it's helped. Gates' extracurricular activities have helped Microsoft either. But I almost wonder if Microsoft's getting punished because it's like the death of software. Because we're certainly seeing that.

DANO WEIR: Nothing to see here with Mr. Gates. Here's aliens, and here's a war, and there's nothing to see.

DAREN BLONSKI CFP®: I wasn't going to bring it up, but the fact that the fact that he, the fact that we just released all this, these alien UFO stuff today is just like, why, why are you guys showing us all this right now? What do we avoid?

DANO WEIR: Look at this. Look at this. It's shiny. Do you like shiny stuff? Take that. No, don't look over at those files. Don't look at these files. Look at the shiny files.

CHRIS SIPES CFP®: Yeah. I don't know. Anyway, we won't turn this into a tinfoil hat.

DANO WEIR: Show but i do need to get the x-files theme though i should have that ready to go on a drop i should have that ready to go the anyway the i think overall things look strong they're healthy watch the oil Markets that's the key.

DAREN BLONSKI CFP®: Gold needs to do something here pretty quick or we're gonna get a breakdown in gold we've had a nice one with precious metals maybe that's over rates. I would also say watch oil and watch rates because if rates go too high, then all of a sudden you're going to see Trump and the administration like getting along with Iran.

DAREN BLONSKI CFP®: And what that tells you is like things still have aren't unhinged. If rates get out of control and that politicians lose the ability to control rates, that's when things really, that's when I think you see like a world war three type environment. I don't think we're there yet.

DAREN BLONSKI CFP®: All right, let's close it there.

DANO WEIR: Thank you so much for checking out the show. This is On The Markets from Fermata Advisors, Sonoma Wealth, our private wealth arm from Fermata. I'm Dan O'Weir. I'm the Marketing director. Chris Sipes and Darren Blonzy are managing principals. And you, our clients, thank you so much for making it this far. Subscribe wherever you want to be.

SPEAKER 5: You're finding us, whether it's on YouTube, Apple Podcasts, or Spotify. If you're new to our firm, do the same thing. You won't miss future episodes if you subscribe. And at SonomaWealth. Com is where you can learn more about us and book your wealth analysis if you'd like to see how we work with our clients and support a holistic approach to finance. SonomaWealth. Com. We'll see you next week On The Markets.

CHRIS SIPES CFP®: You're up to date with Fermata On The Markets. Learn about how the Fermata Advisors family of brands can help your family and business in finance. Sonoma Wealth Advisors, a comprehensive, holistic finance solution offering financial planning, asset management, and tax planning. Take our free wealth analysis now at SonomaWealth. Com.

CHRIS SIPES CFP®: Fermata 401k, business retirement solutions for small and large companies with a fiduciary commitment. Learn more at Fermata401K. Com. Fermata Tax, personalized tax services for yourself, your family, or your business with an emphasis on efficiency. Find out how at fermatatax.com.

CHRIS SIPES CFP®: If you haven't already, like and subscribe to Fermata On The Markets on YouTube, Spotify, and Apple Podcasts. Fermata On The Markets features human hosts, editors, and voiceover talent. Music by Dr. Delight on Soundstripe. Voiceover by Joan Alloway Nash. Thank you for listening to the very end. We appreciate diligent viewers and listeners.

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.