Enlightenment - A Herold & Lantern Investments Podcast

What Were They Thinking When Everyone Bought The Same Seven Stocks

• Keith Lanton • Season 7 • Episode 41

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November 3, 2025 Season 7 | Episode 41

Markets don’t break on the loud day; they weaken quietly while everything still looks fine. We open with a clear view of the pressure points shaping returns right now: a grinding government shutdown, a Supreme Court showdown over tariff power, and a Fed that cut rates but refuses to pre-commit on December. Those crosscurrents jolted the curve, with front-end yields jumping as cut odds fell and the 10‑year backing up, resetting how investors should think about duration, equity risk, and liquidity.

From there, we zoom out to learn from real-world disasters. Historian Edward Tenner’s framework—pre‑peak complacency, post‑event overcorrection—maps eerily well to investing. The Hindenburg’s smoking lounge, the Titanic’s lifeboat fix causing the SS Eastland capsize, Tenerife’s time pressure rules, and post‑1993 elevator lockouts all show how safety drifts when conditions feel calm and how good intentions can magnify harm. We use that lens to interrogate the Magnificent Seven’s dominance. Yes, today’s megacaps trade at lower premiums than the Nifty Fifty did and are growing faster, but index mechanics matter: when passive inflows dwarf active, every dollar passively poured into the S&P 500 mechanically bids the same seven names. A true unwind likely needs two hits at once—slower megacap growth and shrinking equity flows.

We also tackle what’s changing under the surface: AI’s uneven impact on the labor market, strong aggregate earnings beats masking dispersion, and a surprising comeback for 60/40 portfolios as Treasuries finally pay investors to wait. On the single‑name front, Boeing’s path from crisis toward credibility highlights how leadership, culture, and execution can rebuild an investment case, with free cash flow and certification milestones as the right markers.

Finally, we lift the hood on the bond market’s quiet power. Treasury issuance choices can move long rates without a single Fed headline—tilting toward bills lowers term supply and can compress the 10‑year—while increasing rollover risk. And a new buyer cohort is here: stablecoin issuers now own a meaningful slice of T‑bills, potentially tightening the front end as crypto demand grows. Put together, this is a field guide to concentration risk, policy shocks, and portfolio resilience. If you value clear thinking over hot takes, hit play, subscribe, and tell us: where do you see the hidden weak link today?

** For informational and educational purposes only, not intended as investment advice. Views and opinions are subject to change without notice.

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Alan Eppers:

And now introducing Mr. Keith Lanton.

Keith Lanton:

Good morning. It's Keith. hope everyone had a good weekend as we roll here into November. Couple of months left here in 2025. So a lot continues to take place within the financial world and the larger world. That certainly impacts what goes on with our finances and how we construct our portfolios. So here we are at the beginning of November. We continue to have government shutdown. Government shutdown now is on to day 34. President Trump made some comments last night aboard Air Force One on his way back to Washington that it is up to the Democrats to open the government, that the Republicans are voting to open the government. So at the moment, despite some talk going on between some senators, we have the government remaining closed. We'll talk about some of the pressure that may be building in order to hopefully get that resolved. Last week, President Trump met with President Xi of China, and we'll talk about some of the agreements that they made with respect to trade. speaking of trade, this week the Supreme Court on Wednesday starts hearing a very important case. President Trump referring it to as one of the most important cases , in his opinion, before the Supreme Court in its history. And that's regarding the President's ability to impose tariffs, whether or not tariffs are in effect a tax, and whether or not that power is vested in the executive branch, and that will, of course, be a critically important decision, as obviously President Trump has unilaterally used the executive branch to impose tariffs and use it as a tool to extract concessions from other nations. And then last week we had the Federal Reserve come out with their decision on interest rates. What was not a surprise is we got a quarter of a percentage point decrease in the federal funds rate. Perhaps what was less anticipated was a commentary from Chairman Powell stating that the reduction in rates at the December meeting is far from a foregone conclusion. Markets were pricing in very high probability of a reduction in interest rates. We had two dissenting votes, one dissenter suggesting that they should not have cut rates at the last meeting last week, and another dissenter, Stephen Moran, who's been an act, very vocal person that we should have greater reduction in interest rates. Stephen Moran put on the Federal Reserve Board by President Trump and is taking hiatus from his other role within the Trump administration and advocating for that reduction in interest rates. So what we saw last week was a little bit of surprise in the markets. We saw interest rates reverse, their recent declines, especially on the shorter end, which was pricing in near certainty on the next interest rate cut. So , you know, treasury yields in the one-year, two-year category rising as those probabilities shift. But we also saw a shift higher in longer-term treasury rates as well with the 10-year, which hedge nudged below 4% down into the high 390s. At the end of last week, that was closer to 410. Now, talking about financial markets, one of the things that we're gonna talk about this morning, and this had to do with a Bloomberg article, and I'm gonna tie this Bloomberg article into another conversation with respect to the financial markets and valuations of the Mag 7 and some concerns on whether or not the Mag 7, which is the seven large capitalization stocks that have largely been driving equity performance for the past few years, whether or not what we're seeing in the Mag 7 is unprecedented, whether or not it is sustainable. Jim Kramer of CNBC talked about the Mag 7 and their high valuations and the drive in the Mag 7 to push up the averages and whether or not that is sustainable. So going to talk about a little bit of history and not specific to financial equities in a unique sense, but to give us a mindset about some of the things that have taken place in history and whether or not we could have foreseen some sort of problem or disaster coming, not necessarily in any way predicting that there is a disaster coming, but in order to give us insight into whether or not we can help think about what sort of the what is the lineup and what are the unintended consequences of things that may happen that that may affect valuations. And in that in that history, we'll talk about the Mag 7 and what I think is the closest collery to these seven large capitalization stocks here in the United States that may now make up a very big percentage of the S P 500. And to see anything that I think looks like these stocks, I think we've got to go back not to the dot-com era when we had lots of companies with initial public offerings, lots of companies that didn't have much in the way of sales, didn't have much in the way of earnings if they had earnings at all, but go back to a period which most market participants were not alive to experience, even if they were alive, and that is the nifty-fifty, and that was a market phenomena that took place sometime between 1967 and they peaked in 1972, and to compare those two time periods to give us any sense of if we are in a zone of greater risk or greater danger. So let's talk a little bit about history's great disasters. Again, whether or not a disaster is forthcoming, who knows, but what they are and what they have in common. And Bloomberg talked about one of those events, this is not a financial markets event, but an event that took place in Princeton, New Jersey in 1937, and that was the explosion of the Hindenburg. And back then the Hindenburg had flown and Zeppelin Zeppelin, Zeppelins had flown many many successful flights, twenty-one years of successful flights. Nevertheless, what we had was if you're looking at a at a Zeppelin or a Zeppelin and and you recognize that you have seven million cubic feet of highly flammable hydrogen gas just above passengers on that on that dirigible or vessel. And what you may or may not know is that the passengers who are right below those seven million cubic feet of hydrogen gas back then were permitted to smoke in that in that space. So what were they thinking? And this is not just a rhetorical question, and the person who who asked this question is Edward Tenner, and he is a historian of technology with a penchant for surprising unintended consequences, and he wrote an essay why the Hindenburg had a smoking lounge. And we can think about the Hindenburg, but more importantly, thinking about do we learn from our mistakes when we look back at some of these disasters? And those questions are what brought Professor Tenner back to teaching for his first time since 1990. Back then he taught the history of information. Now he is in his second year leading a Princeton freshman seminar called Understanding Disasters. And this is built on the premise to recognize disaster-prone organizations and situations, and his goal is that students can learn to be alert to the conditions that create these situations. So hopefully when they are in a position of leadership within their lifetimes, that they can recognize these warning signs and hopefully prevent these disasters from occurring. And what he's trying to do is help these students identify blind spots, assumptions, and unforeseen patterns behind the disasters, and he talks about some recent events such as COVID-19 and the Los Angeles wildfires, is material that he talks about in his class. One of the things that one of the students who used to work aboard a Navy nuclear submarine talked about is learning that safety and making sure continuously that you are adhering, whether it's in financial markets to building your portfolio with with some thought in mind, right? Diversification, different asset classes, making sure that you're not too concentrated, making sure that you're diversified. Those safety concerns often go out the window when things are good. Especially when things stay good for a long time. We get complacent, we think that we're impervious to financial disaster, we think things negative will not happen. It's been such a long time. And what this gentleman who was aboard that nuclear submarine said is he greatly appreciated how the military would enforce safety protocols above all else and how many safety checks there were, and there were no bending of the rules. So if you watch a lot of those movies, if you haven't served in the military and you see all those checks going on, well, you know what, they serve a purpose, and there's a reason that that they lead to successful outcomes or lack of outcomes. So Professor Tenner breaks down disasters into pre-peak and post-disaster phases. In the pre-phase, he says it's possible to see cultural factors that can compromise safety, like getting places on time, being in a rush. If we you know, if we do all these things, we'll never get to where we want to go. Another is things that we think are unlikely to happen, and therefore we can mitigate or cut back on some of these safety protocols. An example that comes to to mind in this article is the Titanic and the fact that they pared down the lifeboats, they made less lifeboats available because they were an eyesore, they were blocking the views from a lot of the premium cabins. What's the probability that this unsinkable ship will sink? Um and even if there is a problem, well, it'll probably be a limited problem. So we've got enough lifeboats so we can we can make it work. So in the post-disaster phase, some of these some of these fixes can have unintended consequences. And you can think about this, let's talk about we'll talk a little bit about this post-COVID. So lifeboats were made mandatory and after the disaster on the Titanic. But interesting, in 1915, tragically interesting, the weight of those lifeboats on a ship called the SS Eastland caused that ship to capsize. So they imposed all sorts of rules and regulations about lifeboats, but they didn't think about, well, what's the weight here on the different ships? So we've got to make sure that we avert another disaster like we just had. But unintended consequences, if you're not thinking and you're so focused on the last disaster, we had a capsized ship here, and actually more passengers died, not more people because so many crew died in the Titanic, but more passengers died in the SS Eastland disaster than in the Titanic disaster. Another interesting note in history one of the worst plane collisions or disasters happened in 1977. Two 747s on a runway in the Canary Islands in Tenerife. These two these two planes collided on the runway, tragically killing hundreds of folks on the ground there. And one of the reasons why this disaster occurred is because one of the pilots who was on a KLM Airlines airplane was subject to a strict Dutch law against pilots logging too many hours before they were able to take off again. And this pilot was in a rush to take off because there were criminal charges, actually, if if this pilot did not have enough rest between shifts. So he was in a big rush to get the plane off, to get the passengers to where they wanted to go. Of course, if you were a passenger on that plane and you knew that if you didn't take off in the next 15 minutes, you'd probably be grounded for several hours at best, , you'd probably be a big advocate for, hey, let's get this airplane up in the air. So, unintended consequence of this rule caused this pilot to be in a big rush and added to that issue. Similar problem occurred adding to the deaths on 9-11. So back in 1993 there was a bombing at the World Trade Center, and what engineers did at that time is they added a lockout and not enabling people who were stuck in elevators to get out of the elevators. And this was considered a safety measure because what they learned from the 1993 situation is you needed time for firefighters to get the people out. So if if we keep them in there instead of them trying to figure out how to get out a hundred stories above the ground and get to the next floor, they'll just wait for firefighters because that's what they learned in 1993. Not every horrible situation is identical, and that unintended consequence from the first disaster led to a worse unintended consequence in the second disaster, which brings us to America here in the 2020s. We had COVID strike not just the United States but the world. Going into COVID, America was considered the best prepared nation for a return of the 1918 flu, but yet we suffered the more deaths than any other developed country in the world. And now we are in the post-disaster phase. And where are we? What are we as a nation, what are we feeling? Well, we're feeling a loss in the confidence and rejection of vaccines that people had accepted for decades. Professor Tenner says this puts us at risk for a new disaster. So after the next disaster strikes, people will look back and say, what were they thinking? Professor Tenner says he believes many disasters would have been averted had the people in leadership been thinking more carefully. So again, while much of the education in this country focuses on preparing the future leaders for their first job, Professor Tenner hopes to impart some lessons that will last until they find themselves in a position of power so that they can have a real impact. So let's talk about the real world, real impact. Again, we're not forecasting disasters, but we hear lots of talk about market capitalization being confined to a handful of stocks. Some have suggested we will look back and say it was pretty obvious that 35-40% of the market capitalization was in seven stocks. What were we thinking? So let's do a little bit of a deeper dive into whether or not we should be worried or how worried we should be. Of course, nobody knows the answers here, but it's smart to ask the question. So I mentioned greatest similarity, perhaps, in my opinion, , to what we're experiencing today would be to go back and look at the nifty fifty stocks. And if you were to take a look at the nifty-50 stocks in 1972 by market capitalization, 1972 is when the nifty-50 stocks peaked, the largest stock by market capitalization would have been IBM, followed by Eastman Kodak, gone, followed by General Electric, certainly had their struggles, followed by Sears Roebuck, gone, followed by Xerox, stocks trading in single digits today, followed by 3M, Proctor and Gamble, Coca-Cola, Avon, and International Telephone and Telegraph. So taking a look at the Nifty 50 versus the Magnificent 7. The Nifty 50, made up of about 50 stocks. We talked about the 10 largest just there. The Mag 7, 7 stocks, as a reminder, what are those companies? Apple, Microsoft, Alphabet, also referred to as Google, Amazon, Meta, Nvidia, and Tesla. So the Nifty 50 stocks were considered blue chips. That's where that name kind of got built and derived from. And the mentality was that these were buy and hold growth stocks. And today the Mag 7 are technology and are considered high growth companies. The Nifty 50 was a diverse group of consumer goods, some early technology stocks, finance and pharmaceuticals. The Mag 7 heavily concentrated in technology. The Nifty 50 drove a bull market until the 1973-74 market sell-off. And now let's take a look and compare valuations between the NIFT-50 and the Mag 7. So the NIFT-50 traded at a PE of around 42 in 1972. The market was around 19 PE. The Mag 7 PE is lower at 35, and the Mag 7 is in a market that has about a 24 times market capitalization. So a lot less of a premium and a lower PE for the Mag 7 versus the Nifty 50. Earnings growth for the NIFT-50 were somewhere between 13 and 22 percent. Mag 7 recent growth rates more like 25 to 35 percent. So again, Mag 7 is is looking like, from a valuation standpoint, not quite as richly valued as was the Nifty 50 going back into the 1970s. And Jim Kramer talked about the Mag 7s in his weekly column over the weekend and talked about how these seven stocks make up 38% of the market, and he talked about the potential supposition, well, something's got to give. 38% of the stocks, what do we do? And what he suggested is what we do is we take a look at each of the individual stocks and evaluate them individually, don't look at them as a group, and see if their valuations make sense or not on an individual basis, and then you can and then you can make a more intelligent decision on whether or not you believe this is a a situation where the, as he called it, the Jenga blocks, you're about to pull the wrong one and they will come tumbling down. So talking about the summary here from Jim Kramer and another factor that he that he talked about that wasn't present in the 1970s, and this had to do with index funds and passive investments. So what has taken place with index funds and passive investments today is unique to this current time period, whereby the overwhelming majority of flows are going into passive investments, meaning they are going into indexes. In fact, for the 12 months end of June of 2025, about 900 billion went into passive inflows. Active funds had about a $230 billion outflow. Well, what happens every time money goes into a passive fund? Let's call it like the SP $500, one of the one of the largest, and not the largest, passive fund. Well, every single time you make an investment into the S P 500 through a through a passive investment, you are making a significant bet on the Mag 7. About 40% of your investment is going into those seven stocks. So as long as folks continue to put money into passive strategies like the SP 500, the odds are that they are going to continue to buy the Magnificent 7, whether they think they are good investments or not, because they make up a large percentage of the market capitalization, and SP 500 is a market capitalization weighted index. So in order for the Mag 7 to have a significant drawdown or drop, you probably need two factors. And they can cascade and feed on one another. One is that you start having a deceleration in the growth rates of the Mag 7 or a loss of confidence for various reasons. And then secondarily, you also need folks to have a loss of confidence in the overall financial markets and to start pulling money out of the markets because, in all probability, without folks pulling money out of the markets, because so much money is going into passive, they will they will need to take some of the money off the table in their passive index investments. So you need both factors to take place in order for there to be a real sell-off here. And if you're looking for disasters, that's what you need to happen in order to in order to have a situation where the current market, which is driven by these stocks, significantly drop or sell off. All right, well that was summary of what to look for, what to think about. And now we will look and think about what's taking place this morning in financial markets. I'm gonna take a look here, futures were earlier modestly to the downside on the Dow and a little bit up on the on the Nasdaq and the SP. And the NASDAQ future is now showing even more life up about 173 points, or it's three quarters, six two-thirds of one percent. SP is up three-tenths of one percent, and the Dow down slightly, at least in the future, is about thirty-six points as November trading is getting ready to get started. The backdrop here, U.S. government shutdown is painfully real for many Americans. Food aid has been disrupted, cuts to child care are kicking in, health insurance premiums are spiking, bright disruptions have emerged as a flashpoint with traffic controllers starting to not be as present as their paychecks are not flowing, and lots of worries about the Thanksgiving holiday and whether or not there will be lots of airplane delays. So solid gains is what we are seeing here in the Nasdaq and the SP. And this is as tech names once again provide leadership in the pre-market. Stocks are coming off a record-setting week. That capped a strong month for October, which is a month that many of us worry about. And AI investment momentum, trade optimism between the U.S. and China drove those markets to record highs. Well, what's going on this morning? Mentioned the Supreme Court hearing a case. , this was brought by a Chicago toymaker who argues that Donald Trump's tariffs should be struck down after his furry yoga ball business took a financial hit from fluctuating levies on his imports. wind could, of course, hamper the president's ability to use tariffs. Um he did say he's not going to be showing up at the hearing on Wednesday as he had alluded that he might earlier in the week. China will pause the plan to add more export controls on rare earth minerals and will not be as focused on investigations into U.S. companies in the semiconductor supply chain. United States is expected to support port fees, , China as well, starting next week. President Trump also saying that 10% of the 20% tariff on fentanyl will be removed, reducing China tariffs to 47%. Also 100% tariffs that President Trump had threatened will not be going into effect. That was scheduled for November 1st. President Trump said on a 60 minutes interview last night that China knows the consequences of an attack on Taiwan, but refrained from explicitly saying the U.S. would intervene militarily on behalf of the country. Other geopolitical news, he did say that the economy will be immeasurably hurt if the Supreme Court rules against his tariffs. He said that he doubts the U.S. will go to war with Venezuela, but he did say that Nicholas Maduro's days as president are numbered. He said Republicans should end the filibuster so they can reopen the government without Democratic votes. Senator Thune, the majority leader in the Senate, has expressed his reservations about that. President Trump said that he will work with Democrats on health care if they reopen the government. Treasury Secretary Besson said in an interview with CNN that sections of the U.S. economy could fall into recession if the Fed doesn't lower interest rates. On Fox Business News, Fed Governor Waller said in an interview he expects inflation to come down to target and he wants the Fed to cut rates in December. President Trump also said that he may pursue military action in Nigeria over the killing of Christians. Says the U.S. will, quote, immediately stop all aid and assistance to Nigeria, unquote. New York Times reporting that Canadian Prime Minister Kearney formally apologized to President Trump over anti-tariff advertisements in Ontario. Wall Street Journal saying the U.S. economy has defied negative predictions from economists on tariffs. Washington Post reporting that voters disapprove of President Trump's job performance but are divided on which party should control the House after midterm elections. Treasury Secretary Bessent said in an interview, this is also again on CNN, that the food aid benefits could flow by Wednesday following a judge's order. Washington Post talked about flight delays and fears of disruptions growing due to the government shutdown. China has ended a gold tax incentive , according to Bloomberg. And the New York Times is reporting that Zoran Mandami remains ahead in the New York City mayoral race. That election will be held tomorrow. Last week we did get a slate of some downsizing announcements from some major corporations here in the U.S., adding to some concerns about the labor market, announcing reductions in workforce, Starbucks, Target, Amazon, Paramount, and Molson Cores. Each announcement could be read as a one-off, but obviously when you put them together, it starts looking like a pattern. So this could be a warning sign for the labor market. It's been harder, of course, to get a grasp on the labor market with the government shutdown and several agencies not producing government reports. Adding to worker anxiety, the size and pace of layoffs suggest managers are more broadly losing their fear of firing, emboldened by AI and automation gains. At the moment, one of the biggest groups that is suffering as a result of AI appears to be the young men and women coming out of college, the unemployment rate in that group rising from 4.8% to 6.5%, , one of the biggest percentage increases. Over the weekend, Berkshire Hathaway came out with their operating earnings and they jumped 34%. Buffett bought back no stock and raised his cash hoard to $381 billion. Two companies specifically in the news, KenView, KVUE, up about 20% this morning. They are going to be acquired by Kimberly Clark, which is down about 17% this morning. It's a cash stock deal, and we we are seeing more merger and activity, merger and acquisition activity as as interest rates are heading lower, and the company is getting more comfortable with a more friendly, business friendly administration in the Trump administration. And NVIDIA this morning is up in the pre-market after Microsoft announced the U.S. will allow it to ship NVIDIA chips to the United Arab Emirates, according to CNBC. But President Trump did say in a 60-minute interview that NVIDIA will not be allowed to ship its most powerful Blackwell chips to China. This week, third quarter earnings continue to roll on. About two-thirds of S P 500 companies have already reported, 80% have beaten earnings per share estimates, 80% have exceeded sales expectations. This week we get another 132 companies reporting earnings. We do get a few pieces of economic data outside of the government. The Institute for Supply Management releases its manufacturing and services managers index for October, looking for the manufacturing PMI to come in at 49.4, slightly above September. Services is expected to be 50.9 up from 50 last month. Wednesday, since we don't get employment reports from the government, a lot of attention, extra attention will be focused on the ADP report on Wednesday when they released their national employment report for October. we're looking for a 30,000 increase in private sector employment after a decline of 32,000 last month. Couple of stories in Barron's. Barron's talking about portfolio allocation, how we should be thinking about our investments, and what they said that 6040 funds, that's 60% equity, 40% bonds, often referred to as balance funds, they're staging a comeback. They talked about the American balance fund, which is up 17.6% this year, which is even outperforming the typical large cap stock fund. Barron's saying the 60-40 strategy has historically returned 7.7% annually, with maximum losses of 19% compared to stocks 10.5% annual return, but with losses of around 43% in the biggest drawdown. One of the reasons the 60-40 is looking more attractive is because bonds are better positioned with treasuries yielding about 4%, up from about 1.5% at the start of 2022. That provides more income and gives more strength to the 40% portion of your 6040 portfolio. So Barron's suggesting 6040 funds maybe starting to win back investors who felt betrayed by the underperformance, especially in 2022, when the 6040 funds lost 14% as interest rates were rising from that period when 10 year treasuries were yielding one and a half percent, and that 14% loss, not quite as bad, but still painful. S P had lost 18% that year, so they didn't provide that that that protection to. The same extent as the participants had expected back in 2022, but Barron's suggesting that these 6040 portfolios are getting on track again with the help of higher interest rates, so suggesting that we should not see a situation where we had a year like 2022, which they're viewing as more of an anomaly. Boeing was the cover story of Barron, symbol BA, saying that Boeing stock is investable again. Boeing stock closed at the end of last week at around $201 a share. Here's an example of a company that went from a fairy tale to a tragedy really quickly. Now the story is shifting to redemption, and Barron saying it could pay off for the stock. Barron suggesting that a leader has emerged when hope seemed to have been lost, and that leader is Kelly Ortberg, hired in 2024. Ortberg is an engineer with decades of experience in the aerospace industry. He, they say, is making Boeing investable again. He has improved supplier relations, shaking up management ranks, reallocated resources, and perhaps most important is spending more time in Seattle where the 737 max is being is being filled article suggesting that some of the decisions in the past to move move management away from the production of planes that is being reversed, as well as the focus on financial engineering versus actual engineering as well. one of the other things that seems to mark Ortberg's tenure is a more humble management team that in the past days projected confidence when everything seemed to be working, but that came across as cocky when the company ran into trouble. The improvement that is taking place has been noted by customers and suppliers, with many now commenting they have more faith in Boeing delivering on their projections. Now, Boeing has many problems still to solve. It's got the worst current streak for a company in the S P 500 with seven consecutive years. Yes, that's right, seven consecutive years of losses. No company has lost more money since 2019 than Boeing. But if you're believing in management, the good news is that Boeing has more than 6,600 unfilled orders on their books, and the issue has been meeting customers' needs for more planes. Bank of America analyst Ron Epstein, who has a buy on the stock, saying it's actually a pretty simple story at this point. Can it deliver more airplanes? And if they can deliver more airplanes, they can deliver more cash. In terms of valuation, Epstein uses normalized free cash flow of $11 a share to reach his $270 target. That's up from about 35% from the current $200 target. These analysts suggest that other confidence can build confidence at Boeing as well. Boeing is working on certifying the 777X and 737 Max 7 and Max 10. The 10 is a longer version of the 7 for commercial service. Timing is uncertain, dependent on regulators, but all three planes could be ready for delivery to customers in 2026 and 2027. As the old problems recede, Boeing will be able to turn to the future, and that will mean designing a new plane, which is a risk but an opportunity. Back with old management, Boeing denied the need for a new plane. They were retrofitting old planes. , they are no longer denying that need, so while certainly has its risks, could be exciting if Boeing is able to deliver a next generation aircraft. Finally, I'll conclude talking about the bond market and what is coming out that used to be considered an esoteric area of the market that was largely looked at by by bond nerds, but that no longer the case, and that has to do with the Treasury coming out with their borrowing plans. Now, why is it important? Well, the Treasury Department, if they shift their borrowing to borrow more on the short end of the curve or more on the long end of the curve, that can have significant implications for interest rates because you are changing the supply of the amount of short-term bonds to long-term bonds. Now, if you increase the supply of long-term bonds, you create more certainty of what your interest rate obligations are. Think of it if you are financing your house and you do it by rolling over one-year loans, or you finance your house with a 30-year loan. Well, with a 30-year loan, you know your interest rate for 30 years. With a one-year loan that you've got to keep rolling over, you don't know what you got to pay, and you don't know how much people are gonna be willing and how how likely they are gonna be willing to lend to you each year. But what we do know is is that if the Treasury Department lowers the amount of long-term bonds that they are going to issue, well, that will reduce supply, and the market participants that want to buy those bonds will have less to choose from, and therefore interest rates could go down. Some suggesting you could see interest rates on the 10-year drop as much as a third of a percent if you were to cut that supply back in a meaningful way. And if you were to do that by issuing more treasury bills, well, in effect what you'd be doing is potentially lowering long-term rates, and some would suggest that the Treasury Department, not the Fed, would be in would be in effect lowering interest rates by how they issue this treasury debt. Now, what's also interesting is that is that the current Treasury Secretary, Scott Bessent, as well as the recent Fed Governor Moran, were previously very critical of the Biden administration for engaging in this kind of engineering through the issuance of treasuries. But now, while not formally stating their support, they seem to be tacitly suggesting that that this is a good idea, and this is another factor that that could increase risk in the treasury market in the sense that you have to keep refinancing these short-term obligations and thereby need to keep making sure you have demand for your securities. On the flip side, you're reducing that supply on the longer end and therefore driving down those longer-term interest rates. Another interesting participant in the treasury market, especially the T-bill market, that didn't exist just a few years ago, has to do with Tether, which is a stable coin issuer. And what Tether does in order to create that crypto stable coin is they take in lots of deposits and they say that these deposits are good for basically one tether coin is equal to one dollar. And how does tether back up or make sure that that dollar is behind that one tether coin is well when they take in funds from prospective tether buyers, they take those funds and they invest them in treasury bills. And tether now makes up about two percent of the total supply they own of T-bills. So if demand for Tether were to increase such that tether would go from a 2% holder of the total supply of treasury bills to let's say 3%, that also could potentially reduce interest rates, interestingly. So if demand for this crypto currency, this crypto stable coin were to increase, it could potentially potentially cause an increase in demand for treasury bills and possibly cause ironically lower treasury rates. That's everything I've got.

Alan Eppers:

Thank you for listening to Mr. Keith Lanton. This podcast is available on most platforms, including Apple Podcasts, Spotify. For more information, please visit our website at www.heroldlantern.com.

Sophie Cohen:

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