Charles: We welcome Aquinas Wealth Advisors, their president, CEO Chris McMahon. And Chris, you know, many on the street are saying though, like as you point to CapEx as a positive, many are saying, and I just had this conversation with Savita, that it’s a negative.
At some point it’s going to end. They can’t keep it up. There’s no one paying attention to the return on investment. That is just wild, the wild Wild West.
Chris: I understand that. My grandma always said she, she said the market’s going to crash for 27 years in a row and it finally did.
She said, “see, I was right.” I said, Gram, we still have to invest sometimes, right?
This CapEx spending is crazy, but they’re spending cash, Charles.
And secondly, what we like very much is we think it’s going to be strong at least to the third and fourth quarter of next year.
So yes, it’s going to stop someday, but that doesn’t mean that we have to stop investing today.
Charles: Right. And it’s going to continue in your mind to, to power to for at least another year.
Chris: At least another year, that’s what we see, absolutely.
Charles: Another thing that I want to see and and you, you brought up that the market the rally beginning to broaden out.
So I’ve got your 200 day moving average which you got about 63% of the names there, a lot more last year.
And then the 50 day moving average which really bothers me a little bit because we’ve only got 55% that numbers come down precipitously.
So it’s still very narrow in terms of a real leadership, but does that also mean opportunity?
Chris: I think it means tremendous opportunity. If we look at the broad, you know the S&P what it’s 15 or 16.
If you take the mag 7 out, it’s it’s more like 16 today. Take the mag 7 out, it’s only like 7 and a half, eight.
That’s where the opportunity is. These companies think lower interest rates are coming. I think for sure. I think we need those two interest rate cuts to really drag that second-half of the economy with us, those consumers with us. But I think that’s going to happen and I think it’s coming together at the right time.
Optimism is high, a deal in China, there’s so much going on right now that I think it’s ultimately going to bring it together.
Charles: None of that you think it would be anticlimactic? You know the old buy the rumor, sell the news. You’re not concerned about that?
Chris: A little bit. I mean, I think I’m a little worried about the fact that we’ve been, we’ve been saying, “oh, don’t worry about
the tariffs.” People are discarding that now. We really want you to pay attention to the good news, which is a little unfair,
but I think we felt this day was coming. I think it’s going to benefit us. I think the interest rates are more important than anything.
And I think there’s really tremendous opportunity through the fourth quarter of next year.
Charles: So CPI has really sparked this. You know that we’ve been sideways for a couple of weeks, some more anxiety than normal.
We saw the retail AAII survey become bearish, extremely bearish. So there was some anxiety. You feel like that cooled off the inflation debate.
Earnings are strong, Fed cuts. This is your driver. This is a driver.
Chris: Those two cuts have to come and it’s right as you described, right from those two things.
Charles: Let’s talk about the wealth effect though, for a moment. So you write about this a lot. And here’s the thing.
We we’ve got 50%. That number in there is 0. That’s 50% of this country, right? So wealth is exploding. The top 1%.
Look at that big rich blue. That’s the top 1%. So I mean can the economy still be lifted even though 50% stuck almost at that 0 number?
Chris: We cannot be a robust country. We weren’t designed this way. We can’t have two separate economies. But I think these interest rates are gonna
have a huge impact. If somebody says we can’t cut the interest rates, we must. That is what’s going to bring this whole sector back.
Someone’s saving a $1000 – $1500 a month on their mortgage, on their credit cards or their Student Loans.
That money goes back into consumerism is the difference between success and failure for at least half our economy, and I think that is coming now.
Charles: OK, I hope so. Let’s talk about Amazon here for a moment. You like Amazon? It’s bouncing off its 200 day. Why has Amazon been spinning its wheels
anyway?
Chris: I think they don’t have as clear a path in AI and I think that’s it.
Charles: AWS is letting some folks down here.
Chris: It really is. But I think if you look at it, when you look at the what I think the index, the MAG 7 index is up about 24% year to date. Amazon’s up 3.5%-4%. That tells me that’s where the opportunity is. And I think the web services are going to pull us along and also the consumer in general, interest rates get cut.
I do think there’s consumers are going to spend and really drive this thing. It’s going to be the most, I think it’s going to be the strongest MAG 7 stock through the rest of this year and the next half of next year.
Charles: You know, one thing we’ve seen the laggards and Mag 7 at some point, get back up. Look at, you know Apple.
Chris: Absolutely, that’s a great example.
Charles: PLD Prologics. Just a huge spike. You still think though it’s worth the buy here?
Chris: I think so. When you look what they said right, they said what they have going forward was fantastic looking. Two weeks ago they said that look at where
we our revenue is going to go up and more starts than ever before. And guess what, we buy real estate when interest rates go down, we want to get on that bus.
Charles: Good stuff, Chris. As usual, I appreciate you.
Chris: Thanks so much
