As we kick off the month of November, we are looking at the major US stock averages trading mixed with the S&P 500 and Nasdaq extending October's gains.
Now all of the major averages and November up double digit percentage points year to date.
And as we enter a new trading month, the US and China trade tensions have cooled with a one year trade truce agreed.
The Fed easing cycle has also resumed with two consecutive months of 25 point rate cuts.
Now Chair Powell says the central bank is navigating a tough environment with upside risks to inflation and downside risks to the job market.
He also says a December rate cut is far from a foregone conclusion.
Joining me this morning to weigh in is Patrick.
Mueller, president of Bella Advisors.
Patrick, good morning.
Thank you so much for joining us.
So first I do want to get your take on tariffs.
We know that these have brought the US hundreds of billions in revenue, and Peter Powell did say that the price of goods have moved up because of them.
But what are you watching for here and what do you make of tariffs?
I think the tariffs long term are going to be a good thing.
It's been really good for evening the playing field with other countries where we haven't been able to sell them to other countries, so long term, a lot of these trade deals are going to be amazing for manufacturing in the US and being able to import and to other countries, but short term we're going to feel some pain.
With the goods and services that are coming in from overseas, so we haven't really seen that too much reflected in the markets, and I think if we're going to see anything, any kind of pullback in the markets over the next 6 months, I think that's where we're going to see it.
We're going to start starting to see this tariff pricing starting to come in and starting to affect the pocketbooks, and I think we'll see a pullback in the markets adjusting to that long term.
I think the markets are going to be really good, but.
Well it's going to be interesting to see because this year's been ups and downs, right?
Trump Trump will say, hey, tariffs are on, and then the next day tariffs are off, just kidding.
And so I think we're going to see more of that moving forward, but he's done a good, a really good job, I think, of playing chess and putting the right pieces into place for the US.
Yeah, and Patrick, this week is a big week for earnings, and we'll be hearing from companies, so we'll get a better indication of how some companies have been affected in the latest quarter by tariffs.
But the top 10% of S&P 500 stocks do make up 37% of the index's market cap, which is higher than the dotcom era peaks.
So what do you make of market concentration, especially on the heels of last week's mega cap tech earnings?
It's really scary how overweighted the S&P is right now in the top 10 companies, you know, the most being the Mach 7.
So you've got a lot of companies that are just underperforming and just not keeping up.
And so I think people are getting really excited about that right now and putting in a ton of money into.
A lot of these different tech companies and it's so overweighted because it only takes one thing to happen, some type of catalyst or some type of black swan event to happen that is just going to clear out people's pocketbooks and so people need to be very cautious of being overweighted to it.
It's exciting, right?
And, and you definitely want to be riding that train, the AI train that's going on right now.
You're seeing all these incredible deals that are happening right now and the market's bumping up.
But I think people should be very cautious and make sure they don't have too many eggs in that tech and AI basket because they could, they could really get caught off guard, I think, uh, here in the near future.
Yeah, and while I have you here, let's take a look at the tenure.
So this morning we are looking at the 10 year yield right around the 4.11% level and the 10 year reclaimed level after the Fed meeting we had last week.
So what do you make of bonds as well as rates right now with a December rate cut, not a foregone conclusion?
And I would think that Jerome Powell is going to keep doing what he said that he's going to do even though he's saying that he's, he's been very consistent on what he said he was going to do since late last year, slow rolling the rate cuts and waiting till the end of this year, so I would bet that that that happens and it'll.
Start bringing the interest rates down and so that's going to be really good if you know, longer term if you were trying to get a new mortgage and trying to get into a home or reining you've got a lot of debt issues that are going on right now and people needing to refi it at decent rates.
And also credit card debt.
Those things need to come down, and it's not so great for for seniors.
Most of our clients are typically retired or close to it, and it's nice getting those rates on money market accounts and CDs and treasuries and getting those higher rates.
Now as those things start coming down, that's not great for seniors and savers.
So we'll see how that plays out long term.
We just have to look for other alternatives than bonds.
And finally, Patrick, before I let you go, the Oracle of Omaha, Warren Buffett's Berkshire Hathaway offloaded over $6 billion in stock with the major averages at records, what do you think investors should be paying attention to?
Well, I think you should pay a lot of attention because very rarely does the Oracle of Omaha get it wrong.
Warren Buffett long term has an insane track record, right?
Probably be better than any investor in history.
And it's good to have a lot sitting in cash.
It's over $380 billion they're sitting on the cash right now, so they're waiting for opportunities.
They're waiting for this catalyst in the markets.
They're waiting for this pullback to go in and swoop in and start buying up things at a discount.
So I think people should pay attention to that, and, and you need to have so much money that is set aside for emergencies and big purchases.
Things that can come up here in the in the near future and make sure you're taking some of those chips off the table.
People say this all the time when markets are down that it's only a paper loss, but nobody tells you that it's only a paper gain.
It's not a gain until you realize it either.
We're at an all time highs, so it's time to start taking some chips off of the table and repositioning that into stuff that that we can count on long term that's not going to be affected by the big swings in the markets.
Well, always easier said than done.
So thank you so much for joining us this morning, Patrick.
Thank you, Remy.
