It is a brand new week and Wall Street is opening deep in the red while oil prices are soaring and geopolitics and oil are overshadowing economic data as sector watch continues.
Now Palantir shined as a rare bright spot in a brutal week last week for the stock market, while the tech-heavy Nasdaq fell 1.2% on pressure from Apple.
Micron Palantir shares rallied a whopping 15%, and investors are piling into the firm as the US war in Iran drags on, betting heavily on a company that pulls 60% of its revenue from government contracts.
Now critically, Wall Street appears completely unfazed by the Defense Department's recent move to blacklist Palantir's AI partner Anthropic over disputes surrounding autonomous weapons.
And surveillance.
Well joining me as we kick off a new trading week is Luke Lloyd, CEO and founder of Lloyd Financial Group.
Luke, good morning.
Thank you so much for joining us.
So first and foremost, because you open and before, yeah, of course, and you also mentioned that stock futures as well as oil futures on Sunday evening.
So what do you make of the situation unfolding in the Middle East?
Yeah, so actually, I think the market tells you a lot.
You just have to sometimes sit there and listen to the market and really digest what it's telling you and the fact that, you know, I was down in Nashville last week hosting a show I do down there, and it's very interesting.
On Monday and Tuesday, the markets, obviously I was watching those very closely for some of the topics we're talking with guests about, and on Monday, the market opened down almost 3%.
We closed almost flat on Tuesday last week.
Market opened down 2%. closed almost flat today.
I mean, overnight, futures opened down 2.5%.
Small caps were down 4.5% overnight.
Now they're down 1.5%.
The market's down less than 1%.
So my point is the market is very resilient with the situation and sometimes there's a lot of noise and a lot of things to digest, but the thing that the market's telling you is it wants to remain optimistic and it wants to keep that liquidity.
It wants to keep on pumping that liquidity that's been very strong in the market back into the market.
So money's coming out of treasuries, going into buying the dip.
Oil obviously is something we have to pay close attention to.
I do find it very interesting overnight, we went from $120 a barrel back below $100 a barrel, but, but I don't think this is gonna be very long-lasting.
I think it's gonna end sooner rather than later.
Um, if you take a look at one of the charts I sent you, um, earlier, I don't know if you have that to pull up, but, you know, basically, the, the, the oil, um, mindset right now is all of that price appreciation pulled forward.
It's basically Pricing in that oil is going to go back to like $70 or $80 a barrel here in the next probably 3 to 6 months.
So they're not thinking that it's going to be a long term spike, which really shouldn't impact the Federal Reserve too much.
Obviously we might see some small inflationary prints over the next few months, but the long term gain for the market really hasn't changed.
We are still adding higher beta, higher growth names, specifically in the software sector with the IGV down like 10% below where it was in 2021 levels.
We didn't buying a new software stock every single week.
And I think it's also important to take a look at sectors because when we look at the S&P 500, we're looking at energy outperforming, not surprisingly by double digits this year while financials are leading the way lower and we're also looking at the IT sector down as well.
So what do you make of Pant here, especially given everything that's happening in the nation's capital.
Well, that's one of the ones we've added.
So we bought Palantir near 140 bucks a share, but a little too early.
It got down to the 120s after we bought it, but now I think we're ahead in our cost basis.
But look, Palantir is one of the stocks that, you know, fits almost every good theme right now in the market.
It fits the AI software theme.
It fits the defense theme with geopolitics and defense spending from the government side.
So not only does it matter from what the The government says it also matters what, you know, uh, you know, corporations say, and it looks like Palantir is obviously a play when it comes to defense and governments, but when it comes to like cloud and anthropic, you know, there's been some negative headlines on Anthropic.
I'm going to talk about the personal corporation side of that side.
You know, Mike's two brother-in-laws are software programmers.
They use Cloud every single day, and they said that they basically 8 times their productivity.
When it comes to coding.
So the first thing that's gonna be replaced when it comes to probably jobs in the economy from AI is probably gonna be the software programmers because you can basically tell plot and anthropic software to go ahead in there and, and code for you.
So it's kind of insane where we're at, where software is now coding its own software, and this is kind of that pivotal point I was kind of looking at a few years back when I said, you know, when AI can.
Code itself, that's when things get very interesting and we're basically at that point.
So this software is gonna increase the productivity for every corporation.
Every corporation is gonna be using these kind of products, um, and Palantir specifically obviously is more from the defense angle of that, but Cloud Anthropic is obviously more of the corporation side of that.
So we like to buy into this stuff for a very long term kind of game plan, uh, especially with a lot of these software names again.
Down 50%.
We bought a stock like ADP is a new edition we bought.
We bought Cellubrite, which is another software name that sells contracts to the governments in regards to defense.
So these are some names we're taking a look at to add to our portfolio as we increase the risk because liquidity and growth still remaining strong in the system, even though oil is a little higher, even though inflation pressure might be there a little bit.
It really does not change things too much.
Yes, and Luke, we can't ignore the broader software rebound last week despite the wider market sell-off and you gave us your take on some of these key names.
But while we're talking about productivity as well as artificial intelligence, what did you make of that negative non-farm payrolls?
Yeah, great question.
So that was one of the first numbers, the bad numbers we've seen for a while.
We did have a bad number back in October, but you remember back in October, October was also the time when the government shutdown was happening.
So that was one of the excuses for October's number.
This number was bad maybe because of the bad weather we saw the past few months.
I mean, a lot of bad weather.
I mean, I was supposed to go to New York City just two weeks ago.
I couldn't Get out there because of the winter snowstorm of 2 ft of snow.
So there's potentially some bad weather all across the United States in the past month that maybe caused some of that number to be weaker than expected.
When we take a look at numbers, especially those three things we track every single morning growth, liquidity, and inflation, one print doesn't really mean anything.
What we need to see is a pattern.
Once you see a print happen 2 or Three times it tells a story, then you have to start listening.
That's what I'm talking about with the market earlier.
When the market's ignoring these iron tensions and basically recovering intraday 3 times now, it's telling you something.
One off doesn't really tell you anything, but 3 prints, 3 numbers, 3 times happening.
That's a pattern in the making, so you have to listen and adjust accordingly. and Luke, finally, before I let you go, as you mentioned, there's a lot of volatility across all asset classes whether we're talking about oil bonds or equities.
So what should American consumers keep in mind as the Middle East conflict continues.
The biggest thing I think people need to watch right now is essentially earnings, profit margins, and GDP prints.
I mean, those are the three, the growth within the economy is something we need to You know, keep on paying attention to because profit margins are still at all-time highs, essentially at 14% from when it comes to corporations.
A share of GDP percentage of income for normal American salary and income, it's the lowest it's been since 1949.
So those two kind of things tell me that with profit margins at all-time highs and a percentage of GDP being the lowest since the 1940s of income, that tells me all the money is going to the top and the corporations are. making a lot of money and the top couple of percent are making a lot of the money as well.
So it's that K-shaped economy and that probably trend is going to continue.
So the only way to partake in that is to invest in the markets.
And, and honestly, like we didn't talk about Bitcoin.
Bitcoin is very interesting right now.
Bitcoin was selling off when liquidity was very strong.
Now Bitcoin's actually been very resilient with these Iran tensions.
So my point is, liquidity remains very strong.
The government keeps on printing money.
Um, these assets.
Classes, the only way to really make money is to, you know, invest into them, and, you know, cash is just as risky as, you know, not investing in stocks.
I had a good conversation with somebody earlier this week, kind of kid I've been mentoring.
I'm like, what's riskier, stocks or cash?
And he's like, stocks.
I'm like, no, cash, because, you know, you're losing to inflation, especially if we do have some inflationary pressure caused because of oil going higher.
The best hedge against that inflation typically is stocks.
Well, Luke, we will have to leave it there for today, but as always, great talking to you.
Thank you so much for joining us and thank you so much for sharing all of your insights.
