Dion Pouncil, chairman and president of Hybrid Advisors, joins J.D. to discuss market volatility near record highs, defensive sector strength, precious metals trends, and where investors may find opportunity amid earnings season.
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J.D.: Dion Pouncil joins the show now once again. One of our favorite kickoff guests for the broadcast. He is the chairman and president of Hybrid Advisors. Thanks for being here. Nice to have you.
Dion: Yeah, thanks for having me again. Appreciate it.
J.D.: As you take a look up at the markets, not at all time highs, but all things considered for a very nervous tape today. We're still right about at all time highs. What do you look up and see in these markets?
Dion: Yeah. You see the volatility. Not a straight flight to safety. But I think the defensive markets and the consumer markets, as you mentioned Walmart just hit $1 trillion. I think that's going to be pretty exciting for this year.
J.D.: How big of a deal is that for Walmart? You talk about the exclusive $1 trillion market cap club. It's usually just these tech stocks. I remember when Apple was the first one down here back in like 2018. And now you had Walmart to the list. It's a big deal.
Dion: Well you think about that. Plus they're moving to selling robotics right. And so you have the opportunity for defense. You have the opportunity for consumers. And I think with the volatility of the market this year, I think it's going to be a charge up in the Walmart.
J.D.: What do you see when you look at precious metals with a wild story for gold and silver Friday after the announcement of Kevin Warsh to the Fed. We had all that heavy sell into. The downside continued into yesterday's session. A little bit of a bounce back for the metals today.
Dion: Yeah, a lot of news around metals. So one of my picks for over the next 12 to 24 months, I think silver is going to outperform gold. And if I'm looking at long only on gold or silver I would actually do relative value arbitrage. I would long silver and I would short gold and hold that over the next 12 to 24 months. The ratio of silver is going to be outperforming gold. And that's one of my predictions.
J.D.: Do you like silver on the technicals? Do you like it for its industrial use cases that gold doesn't apply to? What's kind of part of your thesis there?
Dion: The utility, right? Silver has everything from tech to defense, everything you need as far as operating technology and operating in the real world. Silver has way more utility than gold.
J.D.: Let me ask you what you're seeing in the defense aerospace names. Names like Palantir, Lockheed Martin, RTX, also known as Raytheon. Yeah, there's a lot going on in that sector of stocks, right.
Dion: I've been bullish on Palantir. You can bet against Peter Thiel. And I think cybersecurity actually is the number one threat to humanity over time. So you want to be in tune with every single thing that Palantir is doing, especially with the access to the data that they have.
J.D.: We are expected to see the SpaceX xAI merger be, in fact, not just a big one, the largest one of all time. Talk about the state of Elon Musk's empire right now. What are you following a story like that?
Dion: He's literally playing six dimensional chess, right? I mean, he's been seeing this and planning this all along, and now probably having the largest and most profitable IPO of all time. think when we're talking about orbital space and we're talking about orbital data centers, they're definitely going to lead the pack.
And then you combine that with the satellites and the technology for internet. They're changing the game. It's going to be a vertically integrated solution. And he's leading the pack
J.D.: We know the importance of corporate earnings season. We're really right in the thick of it right now. We've got a handful of the Mag 7. These mega-cap big splashy tech companies already reported. We've got a few others coming up over the course of the next few closes. And of course, Nvidia way later in the month of February. How do you evaluate what we've seen so far from earnings season, especially out of the most consolidated names in this S&P 500.
Dion: Well, I mean, you bring up the Nvidia I think the AI is actually leading the charge on keeping the market afloat. If we take out the FANG or we take out the Mag 7, the market is pretty stagnant, right? And so we need these earnings reports to keep the activity, keep the action up and keep the cash into the equity market. I think when we look at that, opposed to how the yields are going to do, the yields will be average 3 to 5% this year. But I think AI is going to help keep the equities up.
J.D.: Are there any other big catalysts or moments of note? Could be pieces of economic data, other earnings things on your radar do you think the average investor out there would benefit from paying a little bit more attention to right now, Dion?
Dion: Yeah, absolutely. I think the Fed announcement of who Trump's nominee is, and if that actual change will happen, will be a catalyst in the market. And I also think the private credit markets are going to be something to pay attention to as well over time.
J.D.: All right. Dion Pouncil, chairman and president of Hybrid Advisors. My man, you're always welcome back here on the show. It's nice to have you here again.