The Rate Held, But The Fed Has Changed

DANO WEIR: Happy Friday, June 19th, 2026. You're about to go On The Markets with Fermata Advisors, our private wealth arm, Sonoma Wealth Advisors. My name is Dano Weir, joined shortly by our managing principals.

DANO WEIR: We had a Fed meeting this week and they held interest rates steady, but for the first time in years, the bigger story isn't the number, but it's the new person in charge. What are some key changes that Kevin Warsh, new Fed president, made in his first meeting? And what that could mean for the market. Also going to look at the index.

DANO WEIR: You might not know that's quietly outperforming the biggest seven stocks in the world that you probably do know. Markets still have human beings plugged in. So we're going to take a historical look at why the summer season we're heading into legitimately affects performance.

DANO WEIR: And who could have thought of a more out-of-touch product launch than the Metaverse? Somebody actually did something more out-of-touch than Mark Zuckerberg. Yes, it happened. We'll look at Snapchats.

DANO WEIR: New to our show, it is interactive. You have the ability now to ask comments live as we're doing this show. This is live. We're sitting here on a Friday afternoon with you with the market closed for the holiday today.

DANO WEIR: But as you have questions to the slides you're seeing wherever you're watching, whether it's on Facebook or LinkedIn or any of the social platforms we broadcast to, you can ask questions live and we will answer them as we can as they come in.

DANO WEIR: They are our co-hosts, my co-hosts, the managing principals of the firm, Daren Blonski and Chris Sipes. Chris loves a meme and a quote. And what do we have to start our show off today, Chris?

CHRIS SIPES CFP®: Yeah, well, a little financial history here on Juneteenth. We're on a federal holiday broadcasting today, and we've got the 4th of July coming up in a couple weeks here. And there's a new book coming out for those that are interested in financial history, specifically U. S. Financial history. It's called Investing In America.

CHRIS SIPES CFP®: It'll be out July 4th. And this quote is from Ralph Waldo Emerson. He says, America is the country of the future. It is a country of beginnings, of projects, of vast designs and expectations. And, you know, I told you guys my kids are kind of into the World Cup, into soccer. I'm an adopted soccer fan and been pleasantly enjoying all the things on.

CHRIS SIPES CFP®: On Twitter and X of the, you know, people come into the U S to watch soccer, but also enjoy the good things about the U S and the culture. And, and, that's been, that's been a fun thing to see, some of the celebrations going on there.

CHRIS SIPES CFP®: So, you know, having never lived anywhere else, I don't really know what the outlook is for, for the other countries, but America definitely is a place of the future. And, you know, projects, vast designs. I think we're all beneficiaries of, of that culture. And, you know, thank goodness that we get to, you know, work and build and, and help our clients in, in, in the economy that we get to do that in.

DANO WEIR: So, Chris, I'm so glad you brought that up because there's been nothing but in my feed this week, these past couple of weeks. And as we speak now, actually the United States is playing Australia.

DANO WEIR: And the World Cup, The world coming to North America, to America specifically, and the reaction videos have just been fascinating this week. The Japanese trying barbecue, Texas barbecue for the first time. That's pure joy, right? Yeah, I saw some British people were in a Texas barbecue joint, and the owner walks by and he's like, I got to stop you. I know where you're from. Put the knife and fork down. We use our hands here.

DANO WEIR: And there's even been like a legit love affair going on between Scotland and Boston. So much so that actually the mayors of Boston and Glasgow are in connection now and they're going to make each other sister cities.

DANO WEIR: So the general vibe is that people are surprised that we're not just running around with firearms and other American. Lifted trucks and things that, you know, other American stereotypes. We actually are people over here.

CHRIS SIPES CFP®: Yeah, it's great. It's great. So a couple of quotes here. This is from the book Market Wizards, which is also a great book. And, just want to focus on the second and third one, actually. So Nicholas Darvis says there is no such thing as cannot in the market. Any stock can do anything.

CHRIS SIPES CFP®: Boy, paste that to your head, right? There's, there's no such thing as cannot in the market. And then from George Leonard, he says the modern world, in fact, can be viewed as a prodigious conspiracy against mastery. We're continually bombarded with.

CHRIS SIPES CFP®: Promises of immediate gratification, instant success, and fast temporary relief, all of which lead in exactly the wrong direction. The real juice is to be found not nearly so much in the products of our efforts as in the process. And I'm not exactly sure when George said that. I should have looked that up before the show, but I think you could apply that to pretty much any time.

CHRIS SIPES CFP®: We are a creature that likes instant gratification and yet in almost every endeavor worth doing, that's the wrong direction to go, right? And those that can stick with it and be patient over the long run and really pay attention to the correct process tend to benefit from that.

DANO WEIR: Daren, you're someone who's followed the market, not just professionally, but in your life for a long time. That middle quote, there's no such thing as cannot in the market. Any stock can do anything. Can you just off, you know, anecdotally remember something that was an impossibility in the market that now is a reality, maybe Bitcoin or something along those lines?

DAREN BLONSKI CFP®: Well, I think we've talked about this a few times in recent months. But, you know, again, go back and both, you know, the answer to this question now, if I said what was the top performing stock ever? What is it?

DAREN BLONSKI CFP®: It's Monster Energy. Right. Like, there's a... No perfect example other than that. Like Monster Energy. That's just insanity when you really think about it. I mean, I guess it fuels the world in some ways, but when we talk about capitalism, capitalism is fundamentally about creating value and people consuming value that you create, and that's how you make money.

DAREN BLONSKI CFP®: And I guess Red Bull and Monster and all those bring a lot of value to the economy. They get a high market price. But I don't think anyone would have predicted that early on, right?

CHRIS SIPES CFP®: Yeah.

DANO WEIR: Monsters more valuable than oil? No.

DANO WEIR: Or seemingly.

CHRIS SIPES CFP®: Well, I think you could apply that quote to instead of just any stock, you could say any asset. I mean, we had oil go negative during the COVID crisis. The price of oil was negative. We've had negative interest rates, something that, you know.

CHRIS SIPES CFP®: Basically economists never even baked into any other models because they just thought it was impossible that's happened so you know there there is no such thing as cannot happen when it comes to investing all.

DANO WEIR: Right we had a Fed meeting this week and that is the title of our episode which is same rate new Fed guys interest rates staying the same no changes but There are some notable differences from Kevin Warsh's first meeting as Fed chairman. Pulled these from a CNBC article. There's a few others, but just we're going to highlight five. No rate changes, but the hawks are circling.

DANO WEIR: So there were nine Fed governors who indicated a potential increase on their dot plot, which is the we got into a couple of weeks ago, which is their chart of where they think rates might go. Speaking of, as we suspected, he did not completely remove the dot plot entirely, but Kevin himself did not submit a dot, therefore giving no forward guidance himself on what he thinks might change in rates.

DANO WEIR: He's launching some task forces to shake things up. He's charged with studying communication, the Fed's balance sheet. Data sources on which it relies, productivity and jobs, and the impact of AI on things. He's getting tough on inflations. He used the term price stability several times.

DANO WEIR: And this was an interesting one because, as we've said before, not just human beings, but actually algorithms look at Fed statements to the word and make trading decisions based on them. It was only a 130-word statement. From Kevin Warsh instead of a more lengthy 300-word statement, which it had been previously. So some interesting changes as people kind of watch the Fed with a critical eye.

CHRIS SIPES CFP®: Yeah, we'll see how it goes.

CHRIS SIPES CFP®: The market always... Test the new chairman or chairwoman you know and chairperson there you go the nature the nature of markets is that they are going to cycle there's going to be some crisis and so we'll see i think i think it's a lot like a political job these days where they're going to say one thing in order to get in but then how do they actually govern once they're once they're in right and So we'll see right now.

CHRIS SIPES CFP®: It's all just a talk in my opinion, and we'll see if they actually follow through on these, things, especially once they're hit with a crisis guys, my money is on more of the same. If you have to, if, if you ask me.

DAREN BLONSKI CFP®: What's that, that famous quote, everyone has a plan until you punch in the face. Yeah, exactly. So we're just waiting for me to punch in the face and then we'll see what they really think.

DANO WEIR: I think that's Mike Tyson. And meet the new boss, same as the old boss.

CHRIS SIPES CFP®: Yeah, exactly. All right, so we had the SpaceX IPO, and this was great from Ryan Dietrich because, you know, of course we got a pop in SpaceX the first day. And so from Ryan, he says, long-term IPO returns lag. The market IPO standing for initial public offering, which is what SpaceX just did.

CHRIS SIPES CFP®: And they say the first day pop makes offer price returns look much better than what aftermarket buyers experienced from the first close, meaning the people that got in on the IPO and they were allocated shares at the IPO price, which in SpaceX's case was $135, tended to do a little bit better than the people that bought.

CHRIS SIPES CFP®: At the first close, which is you're buying on the open market, so you're buying from somebody else that's selling. So out of 9,253 IPOs, that's a pretty good sample size. The average first day return was 18.9%. I think SpaceX was right in there in terms of the average. And then you see the three-year IPO return.

CHRIS SIPES CFP®: Now, these are not annualized numbers. These are total return numbers. And then you see in the last column, the market adjusted, meaning, you know, versus the market, how well did that IPO do? And, you know, those that buy it in the secondary market, it doesn't look great over the long term for the average buyer if you bought kind of on the first day or two.

CHRIS SIPES CFP®: So we'll see how it goes with SpaceX. It's now one of the largest companies in the world, despite, you know. 18 billion in revenue and nothing in profits. So, a lot to a lot of good news is baked into that price already. So, hopefully they can deliver on that.

CHRIS SIPES CFP®: Now, speaking of the, anything can happen, right?

DANO WEIR: I was just going to say, speaking of any stock can have any outcome. My gosh, the Knicks won a finals.

CHRIS SIPES CFP®: Yes. And that was the point because I think it's easier for people to relate to like sports. You know, we talk about horse racing sometimes because it's sort of similar, but like how many people really, you know, bet on horses or watch horses. But a lot of people watch sports. And if you if you watch sports, they have these, you know, win probabilities. Right.

CHRIS SIPES CFP®: And these are all four of the games of the Knicks versus the Spurs. And this from. Colin Rose, she says the Spurs had an 84% plus probability of winning the game in all four of their losses. So over eight out of 10 chance that they were going to win according to the market, quote unquote. So it just goes to show you, nobody knows anything. Anything can happen.

CHRIS SIPES CFP®: It always looks so clear in hindsight, like, of course, that's what happened, right? There's all these pathways of outcomes that are possibilities and you just never know. And so those that are looking at, say, single stocks today and you're like, well, of course it was obvious that Apple was going to be a winner. Was it really that obvious when Apple was down?

CHRIS SIPES CFP®: I forget exactly how much, but I know Amazon was down at 1.90%. I'm sure Apple was down pretty close to that at some point. Point when they lost Steve Jobs as the CEO. So there's all these what they call survivorship bias where we look at a stock or a person that held a stock and did really well. And we think, oh, we can do that. It's not that hard.

CHRIS SIPES CFP®: All you have to do is pick the right stock, concentrate in it, and then never sell it. But for every Apple, there's other, what was that computer company with the cows that was so popular?

DANO WEIR: Oh, Gateway.

CHRIS SIPES CFP®: Yes. I mean, whatever happened to them, right? And at the time, had you been betting between the two of them? I mean, it felt like gateways were everywhere. Maybe that was just in my little circle. But anyway.

DANO WEIR: There was a, Chris, there was a store. There was a gateway. It called it Gateway Country. It was a retail store and it was on Santa Rosa Avenue and other locations across the country. So absolutely. A gateway was a huge, huge deal.

CHRIS SIPES CFP®: Yeah. Well, this is, you know, the argument for diversification in investing because no matter how much you think you know. You know, you're 80, 80 plus percent certain that you're going to win with that one, you know, investment.

CHRIS SIPES CFP®: There's always the chance that the Knicks come back and beat you in the final minutes. There's, there's a possibility that Jalen Brunson's out there, running around somewhere. So, all right. So the bullishness sure popped with the, MOU, the memo of understanding, I guess is what you call it.

CHRIS SIPES CFP®: I don't know about you guys, but I'm going to try this next time I get in an argument with my wife. I'm going to see if I can submit a MOU and we can come to some memo, a ceasefire.

DANO WEIR: Yeah, I'm going to, I'll try that. I'll sit with my wife. I'll just say, did you get my memo?

DAREN BLONSKI CFP®: Let me send you an MOU, honey.

DANO WEIR: Yeah.

CHRIS SIPES CFP®: We can agree in principle on a ceasefire for at least 60 days, right?

CHRIS SIPES CFP®: Okay. So bullishness jumps back up.

DAREN BLONSKI CFP®: Chris, knowing Sandy, just for a SEC, your MOU is, you're right, honey.

CHRIS SIPES CFP®: Yeah. Yeah, exactly.

DAREN BLONSKI CFP®: Word of the wise.

CHRIS SIPES CFP®: Yeah. Let's be real. I'm never sending any MOUs over. Yeah.

DANO WEIR: There are no cease, there's no ceasefires. There's only surrenders. All right. What do you got here?

CHRIS SIPES CFP®: Absolutely. Absolutely. Okay.

DAREN BLONSKI CFP®: We're getting in trouble.

CHRIS SIPES CFP®: Yeah.

DANO WEIR: Getting in trouble just for talking about it.

CHRIS SIPES CFP®: Yeah. So I'm sure she's not listening. CNN fear and greed index. We're at 37, which is fear unchanged from last week, which is a little surprising. But that would be a little different in the positioning. Bitcoin still down in the doldrums, 14 extreme fear, pretty much unchanged from 12 extreme fear last week. A lot going on in that world So, talk about, you know, I don't know. Let's just.

DAREN BLONSKI CFP®: Let's move on. I don't want to get down on that, that track.

DANO WEIR: Well, I don't know, Darren, do you have extreme fear? You're, you're a supporter of Bitcoin. Do you have extreme fear right now?

DAREN BLONSKI CFP®: I don't have extreme fear. You know what I'm fearful about is not having a Trader Joe's, tote. Have you guys heard about this?

DANO WEIR: No, what?

DAREN BLONSKI CFP®: Like, I guess there's like. It's like the coolest like socialite thing is to have a Trader Joe's tote. And so there's lines across the country right now, according to the Wall Street Journal, to buy canvas bags for $2.99 from Trader Joe's. Some of them are listed online for $50,000 Overseas.

DAREN BLONSKI CFP®: So, and you know what's funny is I was in like Target the other day and I was like, Saw this lady with their Trader Joe's tote, and I was like, it's a thing. It's really a thing. Anyway, economics, of course.

DANO WEIR: Yeah, well, I was at a thrift store not too long ago, and I saw a whole shelf of Stanley Cups. So trends come and go.

CHRIS SIPES CFP®: Yeah, hopefully that lady had that thing insured, Darren.

DAREN BLONSKI CFP®: Yeah, for sure. Okay. I hope she didn't have her bag.

CHRIS SIPES CFP®: Yeah. So valuations, this was a great chart from Augur Infinity and just showing the current state of valuations on the U. S. Stock market relative to history across its few different valuation measures. We've got trailing P. E. Price to earnings ratio, the Shiller, better known as the CAPE, which is a 10 year smooth earnings, trend P. E., forward P. E., price to book and dividend yield.

CHRIS SIPES CFP®: All looking very elevated. Now, going back to the quote, look, anything can happen. Remember. That in Japan's bubble, the CAPE reached 65. CAPE ratio at 65. We're just north of 40 at this point, low 40s. And so remember that anything can happen, and nobody knows on this. But a couple of great podcasts this week, one was Jim Grant on with Meb Faber, and Jeremy Grantham was on Odd Lots. They both...

CHRIS SIPES CFP®: Had a really great historical perspective on where we're at currently. I mean, it's undeniable that with the build out in AI, we are living through maybe the biggest technological and infrastructure build out in history and in human history.

CHRIS SIPES CFP®: So, you know, that's a thing and it could go for a while and it's driving everything in the markets right now, as it should be. You know, Grantham said, Hey. I wouldn't compare this to the internet time period. I would compare this to the railroads in terms of the change that is upon us, in terms of the build-out that's taking place in infrastructure.

CHRIS SIPES CFP®: Forget the internet. This is more like the railroads. And he mentioned an anecdote of like, remember, people were showing up to the railroad station in a horse and buggy. So you're literally getting out of a horse and buggy and you get on a train that takes you, you know, 50, 60 miles an hour down the tracks to go travel somewhere.

CHRIS SIPES CFP®: And that's a lot of the way the AI feels right now in terms of the step function up in inability. Right. And then you've got in the real economy, the build out of the data centers and everything else that's happening across the planet and all kinds of wacky things are happening. The South Korean stock market is now worth more than the UK stock market.

CHRIS SIPES CFP®: Now imagine telling somebody going into World War II that in 2026, the South Korean stock market was going to be bigger than the UK in value. So anything can happen, guys. And this could be just the start of something even more, or we could look back and go, gosh, we were so dumb. Why didn't we... See what was happening in the markets, right?

CHRIS SIPES CFP®: It'll only be obvious in hindsight.

CHRIS SIPES CFP®: But something that is happening right now that I'm not hearing anywhere else is that the US small caps are on absolute fire at the moment in a good way, not a dumpster fire like they were previous to this, but good fire, like the kids say, ooh, that's fire. Now, this is the... Russell 2000 as represented by IWM.

DAREN BLONSKI CFP®: Chris, you also need to work in the slang word tea. I got some tea for you. I don't know this one.

CHRIS SIPES CFP®: I don't know what tea. You're going to have to enlighten me on this one, Darren.

DAREN BLONSKI CFP®: Tea is the word they use to like some gossip. I got gossip. I just spent a week in D. C. And New York with all middle schoolers, and it was hilarious. But yeah, when they got some gossip or some inside scoop, they'll be like, I got some tea. It's cock tea.

DANO WEIR: Are we doing this now? Are we doing Gen Z slang on God? On God, no cap? We doing this?

CHRIS SIPES CFP®: This is, it's like learning another language. Well, so what we're looking at here is over the last two years, you've got the dark blue line is the Russell 2000 small cap stocks. It's just a common benchmark for small cap stocks in the US versus... The ETF, the MAGS. And remember, guys, I feel like that came out. I'd have to see the exact date, but this was peak MAGS mania.

CHRIS SIPES CFP®: The Magnificent Seven ETF came out. And this is not investment advice, right? Do your own research. I don't know if these are right for you. But tell me somebody two years ago that was saying, hey, the US small caps is represented by IWM is going to... Is going to do just as well or better than the MAGS over the next two years.

DANO WEIR: In the midst of a massive AI build-out, by the way, which would benefit the MAGS.

CHRIS SIPES CFP®: Exactly where I was going with that. You've been given tomorrow's newspaper today, as they say, and you place your bets. Who's going to win here?

CHRIS SIPES CFP®: And if you look at a year to date, it's even more pronounced. Which, funny enough, I got to find this study because there was an actual study done where they worked with college kids. They gave them the newspaper. Of the following day and allowed them to invest the day before.

CHRIS SIPES CFP®: Like they did like a back test and they said, okay, here's the new newspapers headlines. You can place your investments on the day before knowing what the next day's newspaper headlines were going to be. And I don't have the exact stats, but basically they all blew up. Nobody did well. It was a horrible outcome.

CHRIS SIPES CFP®: And it was just amazing that, that like, you know, we think that knowing the news is going to help us and actually it might actually hurt us. But the U. S. Small caps are off to their best start since the year 2000. So since 26 years, this is from Mike Sicardi, IWM is having its best start to the year after Friday, which is 19.2% year to date.

CHRIS SIPES CFP®: And you can see that blue line is just peaking above. There, and that's, those are all the starts to the year in the U S small caps. So small caps playing catch up and we'll see if this is a trend that continues. But something I'm, I'm not hearing any, anything about nobody's calling about U S small caps. How do I get those in my portfolio?

CHRIS SIPES CFP®: I feel like by the time you are getting those calls, it's probably time to bail. But as for now That's, that's a powerful trend taking place under the surface.

CHRIS SIPES CFP®: Speaking of other trends, of course, everybody still hates bonds. And, this is from, Colin Roche.

DANO WEIR: Okay, buddy, you'll be okay.

CHRIS SIPES CFP®: Colin Roche here. And Colin says, you know, cause basically he was responding to somebody that, was basically saying like, there's no place for bonds in a portfolio anymore and why even have them, et cetera. And he says, look, this was a very valid narrative back in 2020 when the 10-year yielded 1% with a duration of eight years.

CHRIS SIPES CFP®: It's very different today when you can buy a T-bill at 4.2% with zero duration and a five-year note at 4.5% with 4.5% duration. This is best visualized in the concept I constructed called bond escape velocity, which measures the bond's modified duration, or better known as its interest rate risk, versus its starting yield.

CHRIS SIPES CFP®: He says the current escape velocity of government bonds is 4.6 years, its most attractive level since 2008, and vastly more attractive than the 2020 levels when this index bottomed. So we're sort of still fighting the last war when it comes to bonds.

CHRIS SIPES CFP®: And you might actually be getting some decent opportunities here at these current interest rate levels. Now, the rates have backed off a little bit since the war has simmered down. You know, the 10 years have come down a bit. But we got some pretty elevated rates here, you know, a few weeks ago. And that can be good if you're a bond investor.

CHRIS SIPES CFP®: Note. Going in at those higher rates. So we'll see moving forward. But going back to the MAGS narrative, so far year to date, the ag is outperforming the MAGS as well. Now we're only six months in, anything can happen, but with a lot less volatility, if you're agnostic to the asset class, where does my money go?

CHRIS SIPES CFP®: Hey, you at least so far, it would have been better off with the benefit of hindsight in bonds than in the MAGS during the biggest build out of AI in history. So who'd have thunk it? Another who would have thunk it, this is gold. And this is from Brent Johnson at the San Diego Funds.

CHRIS SIPES CFP®: And he's showing gold leading up to the war. And you can see it went pretty much vertical back there in January. Remember that? Kind of mania that it hits in January. Silver, I remember, was sky high at the time as well. Then the war starts and gold keeps going, right? Nope. Gold sold off.

CHRIS SIPES CFP®: And here we got a little bounce literally the day that it ends. So we'll see if that's going to turn gold back around. But with those interest rates coming up, people had alternatives. They're looking at it going, gosh, Do I go into gold with no yield? Or do I go into treasuries or something else with real yields rising?

CHRIS SIPES CFP®: What's a better trade-off for me? Another example of asset classes tend to lead the market and gold seemed to know that the war was coming before it even happened. And then once the news hits the hits the tape, you know, the asset completely starts acting differently, similar to the MAGS selling off once this build out is is a real deal.

DANO WEIR: So and that's counterintuitive, Chris, because if we were coming up with a really generic storyline. You would think that, okay, so we're drawing a correlation between the war and gold. People, again, generic, stereotypical.

DANO WEIR: The thought is that people flock to gold for safety because it's old and it feels tangible, even though, depending on how they're buying it, it's not. So the thought would be, during the war, gold would do well, right? But in fact, it ended up being the exact opposite?

CHRIS SIPES CFP®: Exactly. Exactly. So, a tough... Tough thing to understand. You can know the outcome and the asset class can respond completely opposite of what you might think.

DANO WEIR: All right. I got a couple of slides. I like to try to read the vibe of what's going on in the newsfeed every week. Did you guys happen to see Snapchat debut their new AR glasses this week?

DAREN BLONSKI CFP®: I have a hard time taking anything with Snapchat in a sentence seriously.

CHRIS SIPES CFP®: We missed that train, Dan. I know that that's pretty much the only way the kids communicate these days is what I understand, but I never had Snapchat, so I'm too old, I guess.

DANO WEIR: Snapchat's interesting because when we talk about social media, it just doesn't get lumped in there. Facebook tried to buy it about... 13 years ago for $3 billion cash. They turned it down. It's now worth $9 billion. And they spent $3 billion creating these augmented reality glasses, which they made beautiful.

DAREN BLONSKI CFP®: $3 billion? With a B? Oh, yeah.

DANO WEIR: Yes, that's their R&D on peripherals.

DAREN BLONSKI CFP®: Just the glasses.

DANO WEIR: Well, on peripherals. And this is the only one they've ever released. So you do the math. But... They showed off these glasses this week. They debuted them this week. They retail for $2,200. The stock took a dump the day of.

DANO WEIR: And in the last year, it's down 41%. And of course, here comes the memes, because it does not matter how cool the technology is, because the technology purports to be able to, you know. Look at a set of ingredients and then it's going to show you how to make a taco or whatever the recipe is, right? But here come the memes because the look of the glasses are just so absurd.

DANO WEIR: If you're listening, they're basically Coke bottle glasses, but even bigger. And many people have compared it to how disastrous the Metaverse announcement was, a project that Zuckerberg ended up spending $11 billion on. So I just find it interesting that You know, you can get so far down the line with some of these big tech investments that there's not one person who raises their hand and says, Brian, the glasses look dumb.

DANO WEIR: You know, I feel like those aren't going to sell for $2,200.

CHRIS SIPES CFP®: Yeah, probably. I forget the exact number, Dan.

DAREN BLONSKI CFP®: It's a corporate dictatorship.

CHRIS SIPES CFP®: Meta is still burning a ton of money on their AI lab. Thing that was working on the on the Metaverse i'm sure they're working on different projects now but meta meta is still you know profitable despite that crazy spending that they've they've put into that it's like billions and billions of dollars a quarter it's.

DANO WEIR: Wild Darren i have been waiting patiently for my candlesticks you line them up for me you light them And it's almost like a holiday. So can we see those and get a look at the market this week in light of the Fed meeting and other things?

DAREN BLONSKI CFP®: Yes, we could do something like that.

DAREN BLONSKI CFP®: Let's see here.

DAREN BLONSKI CFP®: Just looking at some Palantir earlier. Looking at these different war stocks to see if this MOU with Iran is actually a real thing. I think the easiest way. Like Chris said earlier, to know if any of the political BS is real is to look at the stocks behind it. I think that's often telling. Let's talk about rates first, though, because rates were kind of one of the main drivers here this week and what would happen to rates.

DAREN BLONSKI CFP®: Even amidst the talk of higher, and we're going to tell you less about what we're doing, we did see that move on Wednesday. And then kind of a bearish candle inside that bullish move for rates. In the rate world, if it's bullish, it's bad. And if it's bearish, it's good. Lower rates, slower lower rates is often a better sign for the markets. And we had that pop on Wednesday, but then on Thursday.

DAREN BLONSKI CFP®: Not a lot of moves. So although it seemed that the Fed was trying to communicate inflation higher for longer, the market, I don't know that it thinks that, but we shall see. We are holding support here, right at this level, looking right around 4.4. So right now that's kind of the basement and holding that. But it does look like we might be printing a double top there, which might be.

DAREN BLONSKI CFP®: A sign that rates are headed down lower. When I say double top, what I'm referring to is this movement up, movement down, movement back up, movement down. And in this area is what we call a neckline. And we're just hanging right onto that neckline. So if we lose that, then we probably go lower. My guess would be somewhere down to 4.2. You can see there's quite a bit of support there.

DAREN BLONSKI CFP®: Interesting that the Fed's signaling, hey, rates are going to be higher for longer markets. Maybe. We're not convinced necessarily. Let's take a look at the S&P 500. This is the largest 500 US-based stocks on the daily chart. Each one of these candlesticks represents a day in the market. First, we're going to look at weekly, though. You can see weekly. This is the weekly candle. Pretty nice.

DAREN BLONSKI CFP®: It was a red candle for the weekly, but actually a pretty decent close. In that we closed inside this all-time high weekly candle we had three weeks ago, and we hung out right there. It means there is bottom-line support. You can see this long-term trend line on the weekly going up. We're holding that. We didn't stay below it. We almost went below it last week, but we've stayed above it.

DAREN BLONSKI CFP®: Right now, I think this is only signaling that we've got strength in the markets. I'm not sure how you can look at that. With us making peace with Iran, And, you know, with a Federal Reserve, I guess in some ways, like not telegraphing or giving us forward guidance on the market could be a positive thing, right? Because you could argue that the Fed is kind of letting the leash out a little bit On The Markets by doing that.

DAREN BLONSKI CFP®: But those free market capitalists. Types really love the idea of the Fed not communicating everything about the markets and not telegraphing every move.

DAREN BLONSKI CFP®: So S&P looks strong this week. AGG, which is the ag, broke out above this downward trend line. So bonds looking better, even though we had a little bit of rate hikes. They're inversely moving with the rates. I look at this breakout and this hold of this breakout. As a sign that rates might actually be closer to going lower than higher.

DAREN BLONSKI CFP®: Because if the market felt like rates were headed higher, then we would probably be seeing it in the bond market, and we're not. So I think that's telling of what the market thinks. Anyhow, oil was the big move this week. You can see it drop, just total move down, and just sitting on this 200-week moving average.

DAREN BLONSKI CFP®: But this is a great example, right? So if these, we're looking at weekly candlesticks, and you can see this is last week, this is this week. Basically last week, the market had already telegraphed itself and said, hey, they're going to find a peace deal. I don't know how else you can look at that.

DAREN BLONSKI CFP®: But oil looks lower just in time to go into summer for all our gas guzzling needs for summertime fun. That's positive. So I think overall, like you have to say, okay, the outlook looks fairly bullish. I thought we'd talk a little bit about Microsoft this year.

DAREN BLONSKI CFP®: You know, we talk a lot about AI. Actually, let's go on the monthly. Microsoft this year, each one of these candlesticks is a month. It's basically had two months of up and the rest of it all down. And we just wiped that all out this month.

DAREN BLONSKI CFP®: Thank you. I think part of this is that AI is going to eat Microsoft's lunch from a software standpoint. You're seeing a lot of disruption in software. The way of the future isn't so much that there's these built-out software programs people are... Purchasing, but that we all have something called a data lake.

DAREN BLONSKI CFP®: The agents can program any type of software to communicate with that data and show it to us the way we want to. And so companies like Microsoft that have built their whole infrastructure on their software, not looking so good. And Microsoft kind of partnered up with OpenAI in some roundabout ways, and that's not looking good.

DAREN BLONSKI CFP®: And then they have the whole co-pilot. I'm wondering who's really driving the co-pilot. Like, they have their own LLM. I've never really looked into it. My read on it is when I use Copilot in Microsoft, I don't use Copilot in Microsoft. I use Claude because it's that bad.

DAREN BLONSKI CFP®: So interesting there that Microsoft continues. It looked like it was going to have some life to it the last two months, and then this month it's just getting pummeled 19 days in.

DANO WEIR: Yeah, there's some interesting, just some narratives you can throw in there, Darren. The zeal, the zeitgeist is off of OpenAI and has moved to Claude and others. And Microsoft obviously had a strong partnership there, so that hurts them. There may have been a scandal involving their founder, which is part of the narrative. And another one to consider that you might consider a Curveball, but 8% of Microsoft is Xbox and gaming.

DANO WEIR: And Xbox has been... Gushing cash Xbox is in free fall they have a new CEO and they had major major problems so that's kind of one of the risks of having a business like that which has so many things rolled into one ticker is that you know there's a lot of different things which shouldn't either benefit or hinder a price i think yeah.

DAREN BLONSKI CFP®: Interestingly enough i was in like i was saying i was in Washington, D. C. And New York City with a bunch of middle schoolers last week from my 14-year-old's trip to D. C., eighth grade going to ninth grade year. And we were in the Capitol when Gates, their founder, was testifying about Epstein.

DAREN BLONSKI CFP®: It was pretty crazy how much security was around and it was quite the hubbub going on in the Capitol building. You could definitely tell there's... They were in session. So I think, yeah, I mean, I think there's a lot of controversy underneath Microsoft, but their CEO, their current CEO, put out a big post.

DAREN BLONSKI CFP®: I don't know if either of you read that, all on like the future of AI and how software is basically going to get guzzled. That was kind of my brief take on it. And I think in a way, that was kind of like a concession by their CEO that like, uh-oh, we're in trouble. I don't think he said it that overtly, but that was my high-level read of it. Did either of you guys read that post?

CHRIS SIPES CFP®: I did remember him being on an interview, a podcast, and he was saying essentially that they were not going to be putting the same type of money into it as some of their competitors because he felt like it was wasted.

CHRIS SIPES CFP®: Wasted money and at the time that was like a very like left turn compared to the other ceos this is like a year ago but it feels like it was like three years ago is that what you're talking about no he had a post on x this week where okay no i didn't see that kind of like a very philosophical about where the market's headed and i felt like in some sort of way it was a concession that like Microsoft's in trouble but i don't I don't know, man.

CHRIS SIPES CFP®: Their stuff has been so bad for so long, and yet we all use it. You know what I mean? We're still using it every day, and so does everybody else. So, I mean, maybe. We'll see. They have such a strong network effect that there's a lot of room for error, it seems like.

DAREN BLONSKI CFP®: Yeah. Yeah, so I think overall, guys, I don't think you can read the market any other way than... Higher or longer at this point. It's holding above this long-term trend. If we lose this trend line, then I think we have to look at a different regime. But the last couple months, I mean, it's just been really cranking and doing quite well.

DAREN BLONSKI CFP®: You know, just goes to show, like, I remember a very short time ago, we started bombing Iran and, you know, everyone was pretty worried and pretty freaked out. And, you know, we've learned that over and over here in this world that you know, not to freak out when things happen. It tends to resolve itself.

DAREN BLONSKI CFP®: And sure enough, like getting too close to the midterms. And I don't know if you guys read much in the MOU, but a lot of people interpreting the MOU is. Pretty one-sided in the sense it was like, yeah, we'll give you whatever you need. Just let us open up the oil again and let's get through midterms. That's how I would read that.

DAREN BLONSKI CFP®: But, right now the prediction markets, don't have the Republicans faring too well. Come, you know, come, come time for the election. So you can look, speaking of predictions and we talked about predictions early on and Right now, there's a 57% chance Republicans keep the Senate.

DAREN BLONSKI CFP®: But look at this, 82% chance the Democrats take the House. And not to get too political, but I think you can't disconnect the realities of making decisions around Iran, making decisions around oil, making decisions around the economy, and making decisions around what's coming in the midterms.

DAREN BLONSKI CFP®: And right now, the betting markets are, you know, it's looking like... Democrats take the House, Republicans retain the Senate, you know, and that's going to create a very lame duck type of environment for President Trump.

DAREN BLONSKI CFP®: These thoughts have been showing so far.

DANO WEIR: Which, Darren, is what you said as soon as Trump got elected. You said he's really got 12 months to do whatever it is he wants to do because, you know, as soon as midterms come or as soon as there's infighting or whatever, you know, this, quote, four years. Can get pieced up very quickly.

DAREN BLONSKI CFP®: Yeah, I mean, that's the reality. And I don't tend to get too excited anymore when any one politician wins. I know a lot of people invest a lot of emotional energy in it. But the reality is, in the beauty of the democracy we have is that, you know, once one side wins, it starts to bifurcate out, right?

DAREN BLONSKI CFP®: And same is true with the Democrats, same is true with the Republicans, and that we get to midterms. And Trump, I think, tried to hit all his changes really quick with executive orders, etc. But, you know, the reality is, you know, you've basically got that first 12 months to do whatever you're going to do.

DAREN BLONSKI CFP®: And then you got to start warming up for midterms. And then you get another 12 months if you keep things in your favor. Right now, it's not looking that way. Right. And I would suspect that we start hearing all this impeachment stuff again.

DAREN BLONSKI CFP®: If this happens or good or bad i know that would make a lot of people really happy and then make some other people really unhappy i i think this is pretty interesting you know speaking of mous that we apparently signed this MOU yesterday or the day before i think it was yesterday and in the betting markets though the straight Straight Of Hormuz, traffic returns to normal by the end of June.

DAREN BLONSKI CFP®: And look at the percentage chance that that's even going to happen, 10%. So to me, that's the market, the prediction market, where people are actually betting about their opinions on stuff, saying, hey, we don't think this MOU lasts, which I think is kind of interesting.

DAREN BLONSKI CFP®: If we look by July 15th, normal traffic not even resuming by July 15th. And then we start seeing a little bit better probabilities by the end of July. So I think it's really important just to keep what's going on in context here.

DAREN BLONSKI CFP®: This is interesting. Right now, based upon what we heard, Fed rate hike in 2026 is a 66% chance. These betting markets are going to become even more important for FedWatch, I think, because one, we've found that a lot of insiders are trading on this stuff.

DAREN BLONSKI CFP®: Two, if the Fed's going to stop doing their dot plot, like they said they were this week, then we're going to have to look for ways to decipher what's going to happen next. And this might become a powerful tool for that. But right now, we're looking at a 66% chance of a rate hike.

DAREN BLONSKI CFP®: Although interest rates have either already priced that in or the interest rates feel differently. Hard to say. But wouldn't that be an interesting thing going into the midterms? They were actually hike rates.

DAREN BLONSKI CFP®: So anyway, this is just a way you can look at and kind of decipher what's going on. And they should call this the insider betting market, though, is what they really should call this.

DAREN BLONSKI CFP®: Just take a look at gold real quick. Gold continues to go down and just plummet. Looks like we'll find some support though. I'd say around 3,700 an ounce. We're certainly finding that. I'll bet you that's on an important moving average here. Let's see, we're below, we're trading below that 20 period. So it's down for gold.

DAREN BLONSKI CFP®: It's kind of funny, like I have different people that I'm friends with and community and whatnot that tend to be those people get more excited about things.

DAREN BLONSKI CFP®: Watching people go through the gold exuberance, I kind of have like, okay, next time this guy says anything about any asset class, I'm going to short it. Because there's this one guy that just was nonstop talking about gold and silver to me at basketball, my kids' basketball games.

DAREN BLONSKI CFP®: I'm like, oh, I can't wait for him to come up to me again and start talking to me about stuff because I'm going to short the heck out of whatever he's talking about.

DANO WEIR: Two assets, which by the way, you like. Like you're not opposed to them fundamentally you like the fundamentals of both a lot of different reasons yeah so it's funny it's funny though that someone could still annoy it's not like you were like oh great somebody like me you're like this guy no i think about that that concept a lot like you.

CHRIS SIPES CFP®: Know there's that book i think it's lawrence mcdonald that wrote it is called listen when the market speaks or how to know what the market's saying when it speaks some something like that i'm missing the exact but you guys get the point Like the market is telling you something.

CHRIS SIPES CFP®: And more and more, I'm starting to think like if you're at the gym, if you go to get your haircut and somebody asks you about a certain asset, that's the market telling you, this is not, this is not the way. These are not the droids you're looking for. Like you want to go, that is the market speaking to you in a way that you're got to kind of flip it on its head.

DAREN BLONSKI CFP®: I hate to admit it, but I kind of feel like we're getting there with AI, right? Like, as you guys know, like I've been on the AI interest wagon for quite a while. And at least since last March and really digging into it and using it and figuring it out.

DAREN BLONSKI CFP®: And when I used to talk about the things I talked about, say last summer, people, and I'm pretty sure people in our own company. Thought I was crazy when I first started talking about it. No comment. No comment. Exactly, right? Not me. People at our firm, when I started talking about where AI is headed and what it's doing, they just literally thought I had lost my marbles.

CHRIS SIPES CFP®: Well, in fairness, we didn't know what you were saying. Most of the words you were using were like a foreign language. So in fairness.

DAREN BLONSKI CFP®: That's fair. But the point is, is that there were people like, whoa, dude, like, what is going on? Like, what is happening?

DAREN BLONSKI CFP®: And I'm like great Scott you know straight out of back to the future and then when all that now is coming and happening and people are just like integrating in it and using it and it's not like that far of a stretch now that's starting to make me feel like we're getting close to that pop and then the fact that you have like SpaceX ipoing and all the hubbub around that I mean, and I've got some of our most conservative investors saying they want in.

DAREN BLONSKI CFP®: Like that's usually a sign that things are starting to get pretty frothy. And truly, we've only seen five days of trading for SpaceX. But look at this volatility for it, right? So this was the first day of trading last Friday, Monday, Tuesday, Wednesday, Thursday.

DAREN BLONSKI CFP®: So three up days, two down days. But look at the movement. In this from IPO. So this would be opening price right here at 149-ish. We went all the way up at some point, 50% up, right? And then from its peak now, we closed out the week yesterday. At 18% down from peak.

DAREN BLONSKI CFP®: So you're definitely seeing that froth that we talked about.

DAREN BLONSKI CFP®: What's interesting is the lockups. So what happens in an IPO is the people who own the stock before it goes to a public offering, they can't sell all their shares at once, but over a period of time, there's these unlocks. And then there's this flood of sales. And that will tend, they try to structure those in a way to support the price.

DAREN BLONSKI CFP®: Of space space hacks but over time that tends to plead it and that's why you tend to see this very kind of like We'll have to use a 10-minute chart to have anything interesting to look at in SpaceX. It really is only trade a few days. But you tend to see, and it's already playing out, and it makes me kind of wonder if it comes early, it comes late, and then it's this down, right?

DAREN BLONSKI CFP®: There's just all this excitement in here. And then the excitement's coming out of the stock. But from a very short-term 10-minute candlestick, it's bullish right now. It's too hard to read it any... You can maybe trade it on the 10-minute candle. There's enough on there right now. Other than that, it's hard to say. So tread lightly, tread carefully.

DAREN BLONSKI CFP®: I'm starting to feel like, I guess I got used to people looking at me like my hair was on fire, like I was the back-to-future mad scientist when I talked about AI. And now that people don't look at me that way anymore, it makes me feel like we're getting to that froth level.

DAREN BLONSKI CFP®: I think we're going to leave it there. Overall, positive. Marketing has moved forward. I don't think you can bet against this yet, but we're definitely starting to see some of the late signs of froth.

DANO WEIR: Thank you so much for checking out On The Markets with myself, Dan O'Weir, the marketing director and the managing principals of the firm, Darren Blonsky, CFP, Chris Sipes, CFP. Same rate, new Fed, changes at the Fed, and why under the hood. That may change the ability to predict certain things moving forward.

DANO WEIR: Wherever you found this show, whether it's on YouTube or Apple Podcasts or Spotify, make sure to subscribe. We appreciate our subscribers very much, and that will mean that you won't miss future episodes. If you're new to our firm, Sonoma Wealth, it's the private wealth arm of Fermata Advisors.

DANO WEIR: We help clients, individuals and families, both in Sonoma County, throughout Northern California, and wherever you may be. Sonomawelf.com is where you can book your wealth analysis to learn more about how we help people just like that, people just like you, perhaps. Thank you so much for checking out the show, and we'll see you next week.

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 fermatatex.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.