Joey Loss 0:01

Right, welcome back to another Market Chatter. I'm here with the Chief Investment Officer of Strivus, Adam Van Wie. I am Joey Loss. And Adam, what has been going on over the last few weeks?

Adam Van Wie 0:13

Well, nothing bad, that's for sure. It's. It's been a really nice run in the market. We didn't necessarily see the sort of Santa Claus rally that some people thought might happen, but it certainly wasn't a bad time in the market either. It was a little more flat. But at after the three year period that we've had and with the market already up 16 or so percent for the year, can you really complain about a lack of a strong rally going into the holiday season? Because I can't. It sure seemed like a great year, way better than anyone expected. And so that's kind of carried over into the new year with everything up a bit. Not a huge rally, but definitely things are looking good in 2026 as well. And some of the economic news has been pretty POS in the new year as well.

Joey Loss 1:04

Yeah, I mean it seems like, I don't know, it feels like nobody's talking about anything bad as much as we were. It felt like in November and into December we kept getting the question about the AI bubble and all these other things and now it seems like things have tamed down a little bit.

Adam Van Wie 1:19

Yeah. And it may be that some political things have taken over the headlines and people are more worried about that than an AI bubble. I don't know what the reason is, but I definitely think you're right. The that it doesn't seem to be on the forefront of everyone's minds as it was in November and early December.

Joey Loss 1:36

One headline I keep seeing this week I saw, I was just reading it last night in Barron's, is that tech is dragging a little bit, which I find. Can you tell us about what's going on there?

Adam Van Wie 1:48

I'm not exactly sure and it's only partially true. If you look at the semiconductor index, it's actually at 52 week all time highs. And so that part of the market is not dragging, but Nvidia is not what's driving that rally. Nvidia has been basically flat in a like 170 to 190 range for three months. And so maybe that's what they're pointing to is that it's not the names that were driving it in the first half of last year, but it hasn't been leading the market. It's definitely been more of a total market rally, which you know, I love as the chief investment officer of this company. I love it when things besides the Mag 7 are driving the market because that to me speaks of a really healthy market and not just a really healthy seven stocks.

Joey Loss 2:38

Yeah. And I mean it looks like Taiwan Semiconductor was doing good, doing having a good little period. And yeah, I mean it's scary. I agree with you. It's scary if Nvidia is lifting everybody up or Netflix is lifting everybody up. I mean it's just better as an investor to be like the sea seems to be rising for more than just the big stars.

Adam Van Wie 2:57

Yeah. You're seeing the small cap index get in on the action for the first time in years. The small cap index is kind of reminding me of internationals early last year where you're seeing outperformance in a sector that we haven't seen outperformance in, in a decade or more. And so I'm a big fan of that as well. It just makes, it's going to make those. When you're allocating to different sectors in a diversified portfolio, there's always going to be some lag laggards. But you hope that nothing is a laggard for more than a few years. Well, there's been a few of those that have been 10, 15, 20 years of just underperformance. And so international being one of those, small caps being the other, to see both of those having success and back to back years, very encouraging for overall performance.

Joey Loss 3:46

Did you catch the JP Morgan Chase earnings discussion and report recently?

Adam Van Wie 3:51

I read a brief summary of it. I did not catch the, the whole, I didn't list talk about their own earnings though.

Joey Loss 4:01

I thought that was very positive, like what I took away. I didn't listen to the whole call, but I read a couple things about it and I mean Jamie Dimon is a guy who calls things out a lot. The, the head of Chase and you know, Chase is the biggest, I believe, isn't it the biggest bank in North America?

Adam Van Wie 4:21

I believe that's correct. Yeah.

Joey Loss 4:24

So, you know, they hope what they say has some weight and they just pointed to a lot of indicators that suggest a few things. One, the consumer is healthy, which kind of goes against some of the narratives we've been hearing from various outlets. But sure, they seem to think that the consumer is healthy, that, that it looks good going into this year. And I don't think they're expecting a blockbuster year. But the entire tone and data points that he was pointing to suggested that there's really all the ingredients. It's kind of like what you've been saying to clients. I mean, all the ingredients of a successful year here. Will there be a global event that gets in the way? You know, who knows? But otherwise, positive outlook from Jamie Dimon, which means something to me.

Adam Van Wie 5:08

Yeah, just this morning I saw the headline was that weekly first time jobless claims dropped below 200,000 again. That is an incredible number. I mean you don't see numbers like that anywhere near a recession. It's that really the number to watch for is 250,000, but to go below 200,000, that is, that's like an economy that's on fire. And I know that that probably isn't the case today, but it could be leading to that. And so when you see numbers like that that you really just don't see very often that are pretty strong indicators of overall health of like the jobless or the job situation and the economy, that's pretty encouraging.

Joey Loss 5:51

Yeah, I agree. We've got a few earnings reports coming up here. It looks like

Joey Loss 5:58

mid January. We've got bank of the Ozarks,

Joey Loss 6:02

which I get. I mean they are a player. It's just funny to think that. And then Bank first national got a couple other tech giants.

Adam Van Wie 6:11

We got Meta, Wells Fargo and Bank of America also reported yesterday. Bank of America was very bullish. Wells, I think missed on their revenue slightly, but overall pretty, pretty strong start to the earnings season.

Joey Loss 6:25

Yeah. And one of the things that I've heard is that like when banks are really positive and they're doing well, that's a good mid cycle indicator. I know a lot of people think like we might be at the, the end of the bull cycle, but.

Adam Van Wie 6:39

Do.

Joey Loss 6:39

You have any comments on that? That that bank success is kind of what happens in the middle of a long bull run?

Adam Van Wie 6:46

Yeah, I don't, I don't think we're at the end of a bull run right now. At least it doesn't feel that way to me.

Adam Van Wie 6:57

I think that bank earnings, especially in the face of declining interest rates is probably a pretty good sign. I know that M and A activity has been much higher than it's been recently and they're probably benefiting from that. I know that the consumer banking side seems to be quite strong. Obviously the lending side probably needs some, could be better just based on where the housing market is. And so that's the one area I would, I would watch closely. But yeah, I feel like that is a pretty good mid cycle indicator that the overall economy is definitely better than it's being described on a lot of the news outlets recently. Yesterday I was perusing Through Market Watch and every other article was about inflation. And inflation's at like somewhere between 2 and 2.7%. The long term historic average is 3%. Suddenly everyone's concerned because it's not 2%. It just doesn't make any sense to me. Why are we harping on this when inflation was an issue two, three years ago when it was 9%, it is certainly not a problem at 2.7%. So I just feel like, I feel like the news is focused on all the wrong things. And if they were looking at the overall picture, it seems a lot better than what you would get by reading the headlines.

Joey Loss 8:23

Yeah. And that trend has been healthy. I mean, we've been watching this for what We've seen it bounce between probably 3 and then at one point, 1.4 over the last 12 months. I think those are probably the bounds. And I mean, for us to be bouncing in that range, I mean, we do the radio show every Saturday. I don't think we've gotten outside of that, have we?

Adam Van Wie 8:42

No. And that's where you want to be. You want to be in that one to three. I mean, that's, that's perfect. I don't understand why this is such a problem. And I mean, you could feel the price increases in 2022. They were everywhere. You would go to the grocery store and spend 20 bucks more than you did the week before, and it was just insane. And that is just not happening right now. You're not seeing crazy price hikes. I just don't understand why everything, everyone is so caught up in this, this inflation narrative. It's, it's not, it's not an issue today like it was three years ago.

Joey Loss 9:18

Yeah. Well, that's interesting. Let's segue into silver and gold, which just keeps coming up.

Adam Van Wie 9:24

There's some inflation for sure. Yeah.

Joey Loss 9:26

Well, it's funny because people always call it the hedge against inflation. And I cannot see 156% run up in silver counteracting a 2% inflation.

Adam Van Wie 9:36

No, I don't think this is being driven by

Adam Van Wie 9:40

hedging against inflation. I think it's being driven by. We saw central banks start buying the precious metals early last year, especially around the tariff, sort of introduction. And I think it was just a hedge against the madness that was that April. And so that made sense, but then it just continued. And I think it got to a point where it's a little bit of fomo, like everybody trying to buy silver and everybody's trying to buy gold. Silver was up over 150%. Last year. That's not sane. It just doesn't make sense to me. I, I can't imagine what is logic goal that would be driving all of that. And I feel like it's setting up to have a tremendous like down day at some point, like a hard and fast fall. We've been selling, we've been taking profits in silver and gold. I just, I just can't justify what's been going on in those metals. That's another one that for 20 years has underperformed and now all of a sudden is just going crazy. It's, it's a little bit, it's fun to watch, but it's also just makes you scratch your head and say, what is going on here?

Joey Loss 10:51

Yeah, those speculative assets are so difficult to advise on because, you know, the truth is we, you can't, you can't really come up with a formula to explain the price at any given moment. But we know historically how they perform as a little piece of a portfolio and that there's some utility. Some people may say there isn't. Our position is that for the right portfolio there is,

Joey Loss 11:15

but it's not a huge allocation. And when it goes wild, the tendency is for clients to come in and ask, hey, should we get heavier into this silver and gold thing? What do you think? How many times have you been asked that question?

Adam Van Wie 11:26

So many.

Adam Van Wie 11:28

Last year it was bitcoin in the beginning of the year.

Joey Loss 11:31

We haven't heard a peep in seven months on that.

Adam Van Wie 11:33

Not one. And so it's just, it's human, basic human nature though, to, to want to see something and then want to be part of that and capture those gains and. But by the time you see it, it's probably too late. And I feel like that's the case with silver and gold at this point.

Joey Loss 11:49

Yeah, the. So the challenge is like as an investor, if you're getting out of that position, and this is true for our clients too, as we talk to them about this is, you know, you have to just say, okay, I don't know what's going to happen. It could keep going up. It might be a 5% week next week for silver or 10 week for silver. But do I want to lock in the gains to make sure that that wealth was actually created for me and spread out the profits across other assets that are much more likely to go up long term? Or do I want to, you know, keep rolling the dice with my whole position and just stay where I'm at or add more, you know, And I think that's A hard decision to make because when we're comparing it to like Nvidia, we know Nvidia's one goal is to create an excellent product and keep growing profits. And when profits go up, the stock price goes up. There's something we can measure there. With silver, it's harder. Like it could outperform Nvidia as it has, you know, last year. But when is that going to stop? And that's really just a function of some, some event happens, some series of headlines comes out, people start selling and then it just doesn't stop. And you don't know when to get out.

Adam Van Wie 12:55

Absolutely. And with any commodity this is true, whether it's precious metals, oil, agricultural commodities, there's a cycle in place where the prices go up. People realize that and say, oh, I could make a lot of money doing by producing X commodity, whether that's oil or agricultural commodities. And so more people get into the business and grow those agricultural commodities, or more people get into drilling for oil and suddenly there's an oversupply situation and then the comes down. And that is just how commodities work. It's, it's, it's been universally true throughout the history of time. And so when you see things like this in a commodity in particular, I get very wary of throwing more money into a situation where the cycle has always led to lower prices after a big run up in prices.

Joey Loss 13:47

Yeah, agreed. Let's spend a minute on mortgage rates and the yield curve. It seems like we've got some improvement there. What are you seeing?

Adam Van Wie 13:59

Yeah, not as much as I would have expected at this point with the low demand for mortgages. But I have been reading that refis are up and these would be people that got 7 or 8% mortgages now refiing into a 6% mortgage. But I really thought we be a little bit lower at this point just because demand has been so low on, on new mortgages and home sales are pretty slow and so just surprising how sticky those mortgage rates have been. But they are coming down for sure as the Fed lowers rates.

Joey Loss 14:34

That's good. All of that should increase, I would think. Positive consumer behavior. Right. Like the more liquidity we have in the market, the easier access people have for cheaper money, the more spending we should see. Which generally shows up in housing and stock markets.

Adam Van Wie 14:50

Definitely. And retail sales were kind of through the roof in the last report. And so maybe we are seeing the beginning of that

Adam Van Wie 15:01

easier borrowing and lower cost borrowing causing consumers to go out and spend more. It's still too early to determine whether or not that's true, but that would be the general trend. When we see borrowing costs come down dramatically like they like interest rates have in the, in the recent times. And you're definitely seeing a flattening out of the yield curve too from we, we, we've been inverted for gosh, three years I think, I think and if you look recently, it's almost uninverted. So that's a good sign. That means that, that the, the bond market is saying that there's less likely to be a bad event happening in the near future. And so when, when it gets down where, where below long term interest rates, that means that risks in the market, the market has kind of determined that risks have been lowered. So I'm, I'm encouraged by that as well.

Joey Loss 15:59

Yeah, the inverted yield curve for listeners, it's, it's such a strange thing. It's basically like you would think for every additional year you agree to loan your money to somebody, which is what buying a bond really is, is basically you writing a loan for somebody, that you would get paid a little bit more interest because you've locked that money up for longer. When you have an inverted yield curve that becomes untrue. You know, the short end of the year yield curve pays you more, your high yield savings account pays you more money than a four year bond. That just doesn't really make any sense because in that high yield savings account you have full liquidity. I mean it's the best thing ever, right? If you have a high interest rate on your high yield savings account and your next option is to get a bond where you couldn't touch it or cd, you know, for four years or something, it just doesn't make sense. And that's what we were seeing.

Adam Van Wie 16:46

Yeah, it's. So interest rates are always an interesting topic because for everyone who benefits from a high interest rate, there are other people that, that are the opposite and they, they don't benefit because they, you're either a borrower or a lender. And lenders obviously love high interest rates. So people who are invested in, in things like CDs and, and even high yield savings accounts, they love those high interest rates. But if you're trying, high interest rates are your worst enemy. And so interest rates coming down really benefits one group. But people that we serve who are looking to make money on their money, they are not benefiting from that. And that's always the case. So there's a balance there where you have interest rates at the right level, where savers are happy and borrowers are happy. As well. And hopefully we're getting close to that equilibrium. I think it's probably somewhere around where we are right now, maybe slightly lower than here. Of course, if you're, again, if you're a saver, you want it as high as possible, but you also have to realize that at some point you might have to borrow money too. So, so hopefully we're near that equilibrium point for the, for the time being.

Joey Loss 18:02

Yeah. Last topic for today I think is just all the tax tailwinds that we have going into this year, which just further improve our feelings about the outlook. I was going to run through a few of them. One of them, you know, that you've brought up a lot in meetings is this bonus depreciation piece where companies are just, you know, they get 100% deduction for a large expenditure and it's hard to overstate how significant that is for spurring economic activity. We have one client who literally bought a personal jet last year and got to depreciate the entire thing. In other words, if let's say he made $10 million, he bought a $5 million jet, he gets taxed on $5 million. Normally you have to depreciate that plane purchase over 30 years or whatever it is for that particular item. It's far less beneficial to make a purchase in any given year with a full write off. I mean, there's all these people with money that are now spending. All of that trickles down into the people that have those jobs creating the planes. It's just such a positive thing. Huge tailwind, definitely.

Adam Van Wie 19:03

And that's, I mean, the private plane market is relatively tiny relative to gdp, but there are other pieces of capital equipment that make up huge portions of, of what America spends every year. America's corporations spend. And if you multiply that decision over every company that is looking to make a huge capital purchase, I mean, the dollars become enormous and the economic impact becomes enormous. And like you said, all of those jobs create other jobs. So every time someone orders a piece of capital equipment from Caterpillar, people have to make it, people have to design it, people have to do all the ordering. I mean, there's just so much activity, activity that comes from each one of those multi million dollar purchases. And that takes a while to sort of make its presence known in the economy because it, it is a long process from order to fulfillment on those big capital items. And so these are, these are benefits that we might see in 2026, 2027 and 2028.

Joey Loss 20:08

Yeah, and it comes at a good time you got a ton of, of domestic infrastructure build out taking place from these AI companies, even car manufacturers who are bringing some of the manufacturing back home. I'm not going to go as far as to say every dollar that they spend building in America is going to fall under bonus depreciation, but if even a portion of it does, you're helping offset some of the short term negative impact of having to spend all this money in the states to rebuild what you already had overseas.

Adam Van Wie 20:42

Yeah, it's a, it's a huge transfer of the means of production from foreign to domestic and that. And then once those plants are up and running, that's even more of an economic impact here in the states. So I really think this is more of a long game than it is, it seems like a bonus depreciation discussion would be talking about this year and to some degree it is, but I think the impacts will be felt for many years beyond this.

Joey Loss 21:10

Yeah, the other things that come up, we've got higher salt limits, salt deductions for people in high incomes or high income tax states. California, New York, a lot of the northeastern states have pretty high state income taxes. And you know, one of the downsides of the, the initial Trump tax law from 2017 going into 2018 was that it lowered the salt caps. So you got less of a benefit for the fact that you have to pay state income taxes. If you lived in a high income tax state, when it came to your federal taxes, there was less of a write off that you get for paying both of those taxes. Those limits have been increased significantly. And these are people who presumably will immediately have a desire and opportunity to spend that money in the economy, which then again helps with jobs, helps with stock profits, helps with all of these things. I think it's very positive.

Adam Van Wie 22:08

And what I like about the way they designed that portion of the new bill is that it really benefits the middle class. And it's funny to say this, but in these high cost, high tax states like New York and California, the middle class, and some of you may think this is crazy, but they probably make 200 to $400,000 a year, which sounds like upper class, but it's very expensive to live in Manhattan, it's very expensive to live in la. And so the people in that type of income situation are the ones that are really benefiting from this because they phased it out for the really high income earners. And so the people that are getting it are probably families, probably, you know, with two working spouses and a couple of kids. And so that, that's what I really like about that portion of the tax bill. Yeah.

Joey Loss 22:57

And, and for people who think that it's crazy to say 200,000 is middle class, San Francisco's mayor just threw out an idea. It's called the Family Opportunity Agenda, offering free child care for kids under 5 and families earning under $230,000 a year. So that's the lowest threshold that they consider deserving of free health care or, sorry, free child care for kids under five. And then you still get a 50% subsidy up to $310,000 a year. So that just kind of paints a picture of the reality of how expensive it is to exist in these cities.

Adam Van Wie 23:35

And yeah, it's, it's really true. And then you're also have to remember that some of these Cities have like 9 to 13% between state and city taxes. And so you're, whatever we pay in Florida, tack on another, another 12% of that and then that's your tax bill. So just a tremendous amount of your earned income is gone before you even get to spend it.

Joey Loss 24:01

Yeah, I saw an article that was talking about Puka Nakua, the Rams receiver who's just like hands down the best receiver in the league this year. He couldn't afford to buy and he makes like a million a year right now. You know, he's on his rookie contract, so he's not making the money he will make. I'm sure he'll get paid, but a million bucks wasn't enough for him to comfortably buy. And I was thinking about it and I was like, man, if he's paying, playing half his games in la, you know, he's paying probably after payroll tax and every, you know, he's probably paying well over 50% taxes.

Adam Van Wie 24:35

Plus they have agents they have to pay so that, that's more dollars out of their pocket. So they may, they may only take home 45% of their income in those high taxes states as a, as a highly compensated NFL player.

Joey Loss 24:48

Yeah. And you might say poor guy, but like assuming he's got his own personal training stuff and you know, people helping him, his take home could be a couple hundred thousand for being the best receiver in the NFL. You know, pretty amazing how a city like that works out tax wise.

Adam Van Wie 24:59

Yeah.

Joey Loss 25:06

But anyway, there's, there's these tailwinds are, are exciting and I'm, I'm excited to see what we see on the retail side this year from this consumer behavior. I don't know how much it would drive tech spending. If consumers are healthier, it might. But to me. The most obvious would be improvements in consumer discretionary spending. That'd be fun to watch.

Adam Van Wie 25:29

That definitely would be beneficial. So the consumer staples are your things, like your groceries, your toilet paper, just the things you have to buy no matter what. The discretionary items are really the things that you buy with your. Your extra free cash flow, the marginal dollar that you don't have a home for yet. This is where, you know, individuals and families make a decision about what do we do with this? And when they make that decision to go out and buy something with it, that means that their balance sheet is healthy, that their income statement is healthy, and they've made a decision, okay, we can spend this extra dollar on something we don't really need, like a vacation or a. Or a luxury good. And that is when you. That is a sign of a healthy consumer and healthy economy.

Joey Loss 26:19

Yeah.

Joey Loss 26:22

All right. Well, it sounds like we've got a positive 2026 to look forward to. At least the factors are there. You never know what's going to happen. But I guess we can call it there for now, and then let's just touch base in a couple of weeks and see what's changed.

Adam Van Wie 26:34

Yeah, that sounds good. I mean, things are changing quickly right now, so I'll be. I'm very excited to see what it looks like in two weeks, but I'm pretty optimistic at this point in the year, so I know it's early, but hopefully we're looking at a pretty good 2026.

Joey Loss 26:49

Awesome. Good deal. Thank you, Adam.

Adam Van Wie 26:50

Thank you.