When Oil Hits $100 The Market Gets Moody

March 30, 2306 | Season 8 | Episode 9

Oil shocks don’t stay in the oil market. They leak into inflation, interest rates, earnings expectations, and then straight into your portfolio. We open with the late-quarter pullback that has stocks down meaningfully year to date, and we explain why the Middle East conflict and the Strait of Hormuz matter even for investors who never touch an energy stock. When crude hovers around $100, the question is not just “will prices rise,” it’s “what breaks if they do.”

We zoom out to the policy choices that shaped the modern energy map, including America’s mid-century dominance in oil and the Mandatory Oil Import Program that helped set the stage for OPEC. That history gives us a clearer lens on today’s push for energy independence, especially across Europe, India, China, and Japan, and why the scramble can accelerate renewables, LNG build-outs, and electric vehicles. We also talk through an uncomfortable but real geopolitical takeaway: nuclear deterrence incentives may be changing after the lessons of Ukraine, Iran, Libya, and North Korea, and that shift can influence long-run global stability and inflation expectations.

From there, we bring it back to markets and decision-making. We break down why higher energy prices can be both inflationary and growth-slowing, how that shows up in Treasury yields, and what we’re watching in S&P 500 levels and volatility. We also cover private credit risks and why markdowns can be painful without necessarily becoming a 2008-style systemic event, then pivot to opportunities and watchlists in tech as AI spending pressures short-term free cash flow while enabling new enterprise software winners. We wrap with a contrarian value look at UPS and what could make the turnaround real.

If this helped you think more clearly about oil, inflation, and the 2026 market outlook, subscribe on Apple Podcasts or Spotify, share the show with a friend, and leave a review so more investors can find it.

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

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Transcript

Market Pullback Sets The Stage

Alan Eppers 0:00

And now introducing Mr. Keith Lanton

Conflict Risks And Big Takeaways

Nuclear Deterrence And Global Lessons

Why Energy Independence Suddenly Matters

America’s Oil Power In 1950

The Import Quota That Sparked OPEC

From Peak Production To Embargo

Why High Oil Still Hits Home

Refineries, Canada, And Today’s Supply

Inflation Pressures And Interest Rates

Morning Tape And Trump Headlines

Correction Watch And Market Levels

Private Credit Risks Without A Crisis

The Week Ahead For Data

AI Spending And Tech Opportunities

UPS As A Beaten-Down Value Pick

Where To Follow And Closing

Keith Lanton 0:02

Good morning. Today is Monday, March 30th. Today, yes, it is March 30th. I couldn't believe it myself. Just one more day till the end of the first quarter. Certainly has been a very consequential start to 20 26. Equity market participants, bond market participants all feeling the pain of the financial markets. This is the first quarter since 2022 that equity market investors have experienced a downturn greater than 5%. So that is something that many of us do not remember all too well and something we don't want to remember all too well. But here we are in the midst of a pullback, obviously, as a result of events taking place in the Middle East, as well as concerns about inflation that were brewing before the events started in the Persian Gulf and with Israel, U.S., and Iran. So we're gonna talk about the developments this morning, , try and put things into historical context as we often do. We're gonna talk about the implications of the conflict and what the long-lasting effects may be. We're gonna talk about energy and oil and how we got to where we are today as a result of the historical actions that were taken in the past, and we can use that as a context to think about what's taken place today and what that may mean for the future. So if you are an investor, what you may think about doing going forward as a result of things that have taken place in the past, many times we forget what history has brought to the table to where we are today, and we forget that the events in the past are very much reflective of what we are experiencing today, and that can help us make better decisions going forward. Of course, things don't look exactly as they did, but humans are humans, and things tend to rhyme significantly. This morning we are seeing a little bit of a bounce in futures. We'll talk about why that's the case and why there may be some optimism at the outset this morning, and hopefully that will continue and that we will see peace in the near term. So some takeaways, perhaps some of the biggest lessons that may come out of this conflict going forward is number one is that countries are going to prioritize energy independence. Well, what does that mean? That means that countries that do not have extensive fossil fuels that they are going to focus even to a larger extent on solar, wind, electric vehicles, think Europe, think India, think China, think Japan. They are going to think long and hard about this dependence on this choke point in the Persian Gulf, about relying on others. And perhaps a dangerous lesson to take away is the lesson of that having nuclear weapons and the might of nuclear weapons is something that countries may seek to a much larger extent. Many countries were willing to defer to the nuclear powers with the understanding that the nuclear powers would not impose on them their might. And we've recently seen events in Ukraine. Now we see the events in Iran, which was trying to seek a nuclear weapon. If you remember going back to the 90s, Ukraine gave back their nuclear weapons to the Russians at the behest of the United States as the Soviet Empire was crumbling in the 1990s. The Ukrainians say that was done with an understanding that if they got into trouble, that the rest of the world would come to their aid. So the Ukrainians certainly have some regrets about giving back their nuclear weapons. The Iranians may think the events unfolding in the Middle East would have gone differently, perhaps if they had a nuclear weapon. And then we have the events that took place in Libya, where Momar Gaddafi gave up his nuclear ambitions and was attacked by the West about ten years later. And then we see North Korea, which certainly has been a thorn in many U.S. administrations' sides. President Trump in his first term made a point of having lots of comments about Kim Jong-un and his frustration with the North Koreans and that the North Koreans had to obey. But at the end of the day, the difference between what was experienced in North Korea and what was experienced in in Iran at the moment looks very different, and this may lead to lots of countries viewing nuclear weapons as something differently than they did before these recent conflicts in Ukraine and Iran. In fact, some of our allies in Europe are thinking about restarting some of their nuclear programs, and we may see the rest of the world start to engage in nuclear proliferation as opposed to non-proliferation. Keep in mind that while it is certainly challenging to develop nuclear weapons, that this is a technology that is eighty years old. An eighty-year-old technology typically is something that is something that can be harnessed, so some fear going forward for the rest of the world. So, with that said, let's take a look at some history. Let's talk about fossil fuels. We talked about energy independence and why countries are going to seek energy independence, and let's talk about fossil fuels and why countries may be seeking that independence as as we look backwards. And what we will see is one of the reasons that you seek energy independence is because it is something that you desperately need. You need energy to to run your country, to run your military. Many of us can relate that when we need something desperately, that we are willing to pay up significantly for it, and we are willing to try and find alternatives so that we don't feel that desperation going forward. We can think back to the pandemic and the fear that we felt if we didn't have masks, if we didn't have sanitizers, how much we were willing to pay for those items, how much we were willing to pay when we were running short on toilet paper. So these shortages do have ramifications and they do change our mentality and our psyche going forward. And when we think about energy independence and how how we got there, we can go back in history and we can take a look back to the 1950s when oil was certainly a meaningful input into the global industrial machine, but the demand for oil was nothing like it is today. And the king, the undisputed king of oil in 1950 was the United States. We produced 90% of everything we consumed. Imports in the 1950 were a choice, not a necessity, and often we were importing because it was cheaper to bring in oil from Venezuela than it was to transport it from Texas to the East Coast. This is before we had the extensive pipelines that we do now. Now, in 1951, the United States did discover shale oil for the first time in the Bakken field, but that technology to make it profitable would not exist for another 60 years, so we had this technology, but it was way too difficult and expensive. We didn't even know how to get that energy out of that shale field that we had then. So 1950 US undisputed king of oil. We were very energy sufficient, , but what we saw was that we were continuing to consume oil at a very rapid pace as suburbanization was growing, therefore, people moving further and further from cities, needing more and more energy to power their automobiles and to heat their growing homes. So by 1960, this suburban dream caused this supply and demand to start to get out of whack, and at the same time, energy and oil was being discovered at significant clips in the Middle East, and suddenly the United States was fearful that the United that Middle Eastern oil, which would soon be developed in mass, would become more ubiquitous, cheaper than U.S. oil, and we were concerned that we would start importing significant amounts of oil because it would be cheaper than the oil that we had in the United States, even though we were energy dependent in 1960 by and large. So what happened in 1960 is President Eisenhower established a program that got a lot of attention back then, but many of us probably never heard of it, called the Mandatory Oil Import Program. Why did he do this? Why did he create the mandatory oil import program? Well, he feared that cheap foreign oil, primarily from the Middle East, would flood the market, destroy the domestic drilling industry, and this was a move that kept U.S. prices higher than the rest of the world. So he set up this mandatory oil import program. May sound somewhat like what we're seeing today in terms of protectionist tariffs, and as a result, every action has a reaction. So as a result, ironically, those oil U.S. import quotas were one of the primary catalysts that formed this organization that some of you may have heard of called OPEC in the summer of 1960, as oil-producing nations banded together to protect their revenues. So this program, the mandatory oil import program, was something that fundamentally therefore reshaped the energy landscape, and it lasted for 14 years, and we'll talk about why it only lasted for 14 years. But this was a program that was at its core a national security measure that's designed to ensure that the U.S. didn't become overly reliant on Middle Eastern oil at the expense of its own domestic drilling industry. And as I said, the nude production was coming online in the Middle East, and Venezuela and President Eisenhower feared the U.S. oil companies would abandon their domestic drilling in favor of these cheap imports, and the U.S. would lose its ability at the time what was called surge capacity. So this means that we would lose the ability to be able to produce enough oil if we went to war and needed energy to fight overseas. Now, initially, President Eisenhower did try what he called a voluntary oil import program before the mandatory import program, but the oil companies ignored it and kept importing the oil from the Middle East and Venezuela, and therefore he put in place this program. Now, during this program, where we had the mandatory oil import program, again, many of us may not remember this, but U.S. oil at the time in the 1960s was dramatically more expensive than it was in most of the rest of the world. In fact, U.S. oil often costs 65% more than the rest of the world because we had these programs in place to limit oil coming in from overseas. In other words, we had, in effect, quotas limiting this oil. Now, one of the positives during the 60s was what it did do was it did incentivize drilling in high-cost areas like the Gulf of Mexico and Alaska, and therefore the energy prices, and because we were producing there and it was costing more, that led to the higher prices here in the United States. So, why did this program, I said it was 14 years, why did it end? Well, by 1970, U.S. production peaked and began to decline, but demand continued to skyrocket. So by 1973, a year that many of us will remember for its significance, domestic producers couldn't keep up. So we reached a point where we were limiting the import of foreign oil, but our own production was significantly behind what we needed. And this was causing gas lines even before the embargo that then took place that the Arab countries put in place against the United States in reaction to the war that took place then between Middle Eastern countries and Israel. And we as a country were producing a lot less than we were needing, and therefore the 1973 oil embargo had a dramatic effect here in the United States on our ability to meet our energy needs, long gas lines were the result. And in 1973, President Nixon formally suspended the mandatory quotas and ended the 14-year experiment in energy isolation here in the United States. Now, as we talk about the price of oil, perhaps again going into context and what effect the price of oil has on our economy, and one of the reasons why the stock market today is feeling less optimistic than it was a few months ago is because energy prices, in particular, oil prices are significantly higher, despite the fact that today we in the United States are largely, once again, energy independent, not reliant upon the rest of the world. But we are a participant in the world economy, and if you think about the companies that produce oil here, they have a choice. They can sell it in the domestic market, they can sell it in the international market. If the international market prices are dramatically higher, well, they'll say to their customers here in the United States, either you come close to those prices or we can sell them overseas. So even though we are producing our own oil, we are not immune to the effect of higher oil prices. Now, when we look at oil prices and we look back to those days of the 1950s and 1960s, we remember days when the United States was an economic powerhouse, goods and services were inexpensive, and energy prices were low. And that in fact is true. In 1950, the nominal price of barrel of oil was $2.77, and today's dollars that's about $26. 1960 prices weren't much higher. $2.91, today's dollars $23.90. Even heading into the 70s, in 1970, price of oil was $3.39. Not not a gallon of gas. We're talking a barrel of oil. And in today's dollars, it's $27.50. But come the Arab embargo, come the U.S., increased demand for energy, unable to meet our demand. And by 1980, oil prices had surged to $31 a barrel in nominal prices and $124 in today's prices. And today, today's prices, we are looking at roughly $100 oil. So by historical standards, in terms of $2026, we are looking at a very high price in a historical context for the price of oil. And this high price is something that historically has been something that has put pressure on the U.S. economy. Now, different type of pressure. It's not the type of pressure where at these prices we are worried here in the United States that we as Americans can't get what we need because we are producing lots of energy here in the United States. In fact, we are the world's largest producer of oil. United States produces over 13.5 million barrels of oil per day. That is the highest in the world. We have a 16% global share. The number two producer is Russia at about 10 million barrels a day, Saudi Arabia are at 9.5 million, and then the next three are pretty close between 4 and 5 million. Canada, Iraq, China, and then Iran at about 4 million barrels per day. Now, different than the 1970s, a big component to our energy use today, is not just oil, it's natural gas. And once again, the United States is a tremendous producer of natural gas. We have about a 24% global share of the gas market. Number two is Russia at 15%, and number three is Iran at seven percent. But Qatar, which has been in the news because their fields have been damaged, is rapidly increasing their liquefied natural gas production, provides a lot of natural gas to India and to Europe, and this is one of the reasons why these countries, as we said, second-order effect, are looking at alternatives to fossil fuels as as we look to move forward. So, as as we think about the United States and our energy, and we think about where we are getting our energy from, on top of the energy that we produce here, one big difference between 1973 and today is where our oil is coming from. United States, right now, even though we are energy sufficient, what we do is we export some oil and then we import some oil. Why do we do that? Because the refineries that we built here in the United States in the 1970s, by and large, were meant for much heavier crude, not sweet crude. That means it's more viscous, thicker oil. And this thicker oil came from Venezuela. One of the benefits of the of the situation that's occurred in Venezuela is that we have refineries that are built to process Venezuelan oil. We weren't getting any, but now we are as a result of the military actions that were taken. But because of the fact that we have refineries that that operate best on heavy oil, and we produce sweet oil, like the oil that's in the Middle East that you get from Saudi Arabia, sometimes we have to swap in order to meet our refineries that provide the type of oil that they they produce. We export sweet, we import this heavier crude. But who do we import it from? We import about six million barrels a day. Most of it comes from Canada. 80% of all the oil that we are bringing in is coming from Canada. So we have very low dependence upon the Middle East and that Middle Eastern oil that is at the moment in jeopardy. So we can see that we are in a very different place than we were in previous fossil fuel crises, but nevertheless, the effects of higher energy prices are having an impact on the financial markets because they are inflationary. So let's talk about inflation. Let's talk about financial markets, inflation in your portfolio. Why are the markets selling off? Well, the markets are selling off because they are concerned that higher energy prices are producing inflation. Inflation is certainly something that the markets are concerned about because it makes the value of goods and services in the future worth less, and therefore prices decline today. But higher commodity prices, higher prices also cause it the economy to slow down because the ability to borrow money and to engage in new projects declines as the cost of capital goes up. And heading into this war, we were already experiencing some of the concerns about inflation before energy prices took off. So heading into this conflict in the Middle East, the United States was contending with inflation measures like tariffs, which were arguably increasing costs. We were engaging in an immigration sweep where we were seeking to have less folks come into the country. It's not not a political statement, an economic statement. That means that the cost of labor potentially could move higher. And then also we were engaging in deglobalization, not just us, but the rest of the world. We didn't want to be as reliant upon the rest of the world for our goods and services, especially critical goods and services. But as you decouple from the rest of the world, you often see prices rise because it's sometimes more expensive to produce things domestically. So you had three factors all working to raise prices going into the Middle Eastern crisis, and now you add on top of that higher in energy prices, and you've got lots of factors working to push up interest rates. Now, what's working to push down interest rates? Well, arguably artificial intelligence, potentially creating greater productivity, and therefore we can have lower prices. That's a competition for labor, for workers, as we've heard, AI may may may lead to job losses. So that's the one factor that is is creating less inflation. But at the moment it seems like that factor is being overwhelmed by the other factors, which are tariffs, immigration, deglobalization, and higher energy and oil prices, all weighing on the concerns about inflation and, as we've seen, causing interest rates. The 10-year treasury this morning is about a 4.37%, which is actually down in yield prices a little bit weaker. And that's because the other factor that may cause lower interest rates is a slowdown in the economy. And this morning we had PIMCO and other financial firms suggesting that that that the bond market and interest rates may start to move a little bit lower or meaningfully lower because we're starting to see some weakness in the economy. So, not exactly the reason that you want to see lower interest rates, but a knock-on effect of all these other policies. Every action has a reaction, you create this situation where you're getting higher prices, causes the economy to slow down. What's the best remedy for higher prices? Well, it's higher prices. So we're seeing an effect there. All right, so let's take a look at what's going on this morning to give us some context here. , we'll take a look at futures which were up near their best levels in the morning, and we're continuing to see them rise. Dow futures are up. SP futures are up 51 points. NASDAQ futures are up 180 points. Oil is up $1 right now. This is for Brent at about $101 a barrel. And the bond market I mentioned yields are slightly lower at a $437 on the 10-year. And this rise in markets is a reaction to President Trump this morning giving some commentary that there are there is progress in talks between the U.S. and Iran. He said on Truth Central, the United States of America is in serious discussions with a new and more reasonable regime to end our military operations in Iran. However, the President added that great progress has been made, but he did say if a peace deal is not reached shortly and the Strait of Hormuz is not immediately reopened, the U.S. will conclude our lovely stay in Iran by blowing up and completely obliterating all of their electric generating plants, oil wells, and carg island, and possibly all desalinization plants, which we have purposefully not yet touched. He went on to say on Sunday that Tehran had accepted most of the U.S.'s 15-point plan to end the war, and that Iran has agreed to allow an additional 20 ships to cross the Strait of Hormuz. So news flow is consistent, and the financial markets will probably be bobbing and weaving as a result of commentary from President Trump, as well as commentary from Iran, as well as the military actions that take place, which often speak louder than the words. So last week we saw markets down significantly. We'll talk a little bit about that. Other commentary that we've we've got this morning. I mentioned about the slowdown risk of the economy, and it was Bloomberg reporting that it was JP Morgan and Pimco who were talking about the bond market starting to factor in slowdown risk. A couple of stocks in the news this morning. We are seeing Cisco. Now, this is not the computer company, this is the food distribution company. SYY is the symbol, it's down about 7%. They agreed to purchase a restaurant depot in a $29 billion deal there in that food services distribution business. Markets in Asia mostly lower, Japan was down 2.8%, Korea down 3%, the Hang Sing was down 1%, India down 2%, Korea down 3%, one bright spot, China Shanghai was up two-tenths of 1%. Most of European markets are trading in the green despite the fact that energy is still up slightly, and we're seeing European markets up anywhere between one half and 1% this morning. So let's let's move on to markets. Barons over the weekend with some cautious optimism that the market's bottom is closer than you think. Going into the weekend, , if you're looking at year-to-date movements on the financial markets, the NASDAQ down over 9% year-to-date. This is not from their highs, but year-to-date moves. Dow is down about 6.6% since January, so you know, since the start of the quarter, and the SP down about 7% year to date. Last week, Dow was down 1.7% on Friday, ended the week down just under 1%. Dow entered correction territory, meaning it was down over 10%. The NASDAQ was down 2% on Friday, 3.2% for the week. NASDAQ excuse me, the SP was down 1.7% on Friday and 2.1% for the week. Heading into the weekend, the VIX, the volatility index was up to 31, certainly showing signs of fear. Many suggest that the capitulation occurs at around 40, so we haven't gotten to those levels. Of course, we don't know if if in fact we will. Barron saying, though, that valuations becoming more attractive. S P 500 going into today was trading under 20 times 12-month forward earnings. That was down 12% from the end of last year. Mike Wilson, Morgan Stanley's chief U.S. strategist, notes that the decline is significant as and and as significant as the ones that occurred in 2015 and 2023, but he said he expects earnings growth for the next 12 months to be robust, and therefore he suggests that we could see a recovery in financial markets. Now that's not to say Barons goes on to say that markets won't fall further. If you're looking at this from a technical standpoint, the SP 500 closed Friday just under 6,400. That was down 8.5% from its all-time high, so year to date down a little over seven, eight and a half from record highs, and the possibility that the SP could reach correction territory, which is 10% or more, is certainly in its sights, especially with from a technical standpoint support on the SP 500, which going in today was around 6400, was it 6500, so that support is broken? And if you're looking for the next support level, that's around 6150, and after that you get to the next support level, which is the psychologically important 6,000 level. Another sign that Barron's is somewhat optimistic about the financial markets has to do with private credit, which has gotten lots of attention as a headwind to financial markets, and Barron's out with an article saying that private credit problems aren't a systematic threat to the financial system. They are serious but not systematic in their opinion. They say the current turmoil has been compared with the financial crisis of 2008 and 2009. That isn't surprising. We've talked about recency biases. This is something that is in the mindset of many market participants, especially those who experienced the the trauma, let's call it, of 2008 and 2009. Those participants also remember that during that crisis that there were lots of mortgage instruments created promising high returns with minimal risk, so there is some similarity to what we're experiencing today, and the fact that one common characteristic of every credit cycle which which we are experiencing here is that deals that started out getting done on good terms, once people get a little bit carried away, once they're successful for a while, they start getting carried out on much more tenuous terms, and that's something that Barons suggests is taking place, and that they do expect there to be a rise in defaults, but they do not expect these defaults to be a systematic risk that drags the economy down. One big difference between then and now, 2008 and today, is that the banking system isn't directly exposed to losses on its balance sheets from private credit, which is very similar to the financial crisis, and the banking system is significantly more capitalized now as a result of post-crisis reforms. So the difference is that the banks didn't make the loans directly to these companies. Banks may have lent money to the private credit companies who made those loans, but before the banks are on the hook for any of their loans, these private credit companies would first have to fail. So there's a lot of capital in between the banks and and the borrowers. It doesn't mean that some banks won't take losses, doesn't mean that some private credit companies may not be around at the end of the cycle, but there's a lot more cushion than there was in 2008 and 2009. Also, cause for optimism if you're looking at the credit spreads, something that would be somewhat similar to private credit. You would look at the junk or sub-investment grade bonds. We've seen some widening out in spreads, but nothing dramatic, which is somewhat indicative that we are not at the moment looking at massive defaults. There is going to be a what David Rosenberg called in Barron's a slow burning process where markdowns are taken in private credit, so you will see private credit companies mark down the value of their loans, mark down their net asset value, something that they've been reluctant to do. They've kept a lot of loans on their books at the cost that they put them on the books, in other words, at 100 cents on the dollar, which is one of the reasons why the NAVs have remained strong, and you will start to see perhaps those those those balance sheets get marked down. If you're a private creditor investor, you'll probably see those net asset values drop. And that's one of the reasons we're seeing redemptions. Investors say to themselves, I expect those private credit net asset values to drop. If I can get out at today's prices versus what I think these investments are worth, well, it makes a lot of sense to get out 20% or 10% or whatever the number is higher. One could argue that a better value in private credit at the moment, instead of putting money into private credit, put money into public credit. Perhaps take a look at deeply discounted business development companies, which are publicly traded credit, very similar. They're not always exactly the same to the private credit options that are available to investors, and many business development companies are trading at 10 to 20 percent, some cases perhaps justifiably even larger discounts to net asset value. So if you're thinking of deploying money in this space, well, the public markets at the moment look to be more attractive because they are pricing in the risk of markdowns where some of the private credit issuers are not taking those actions, at least not yet. All right, what do we have going on this week? This is a big week in terms of news. On Wednesday, we get reports on retail sales for February, looking for a four-tenths of one percent month-over-month increase, excluding cars. We're seeing retail sales rise three-tenths of one percent. That's compared with a flat rating last month. Also on Wednesday, we get the Manufacturers Purchasing Managers Index for March. The consensus is 52.3, roughly even with February. And then on Friday, and Friday's an interesting day, it is Good Friday, so I want to wish all who are celebrating Easter and Passover happy holidays. But Friday is good Friday. The stock market and most markets are closed. But because the employment report is coming out on Friday, the bond market will be open until 12. Probably be quiet, at least a little bit after the employment report comes out, there might be a flurry of activity. But nevertheless, the bond market is open until 12. The rest of the financial markets are closed. And on Friday, the Bureau of Labor Statistics is releasing the jobs report for March. Economists forecast a 55,000 increase in non-farm payrolls following a 92,000 job loss in February. Unemployment rate expected to stay unchanged at 4.4%, and markets certainly will be keeping an eye on that, especially with all the uncertainty taking place with artificial intelligence, with interest rates, and with the conflict in the Middle East. All right, moving on to Barron's. Barron's had a tech round table talking about the disruption taking place in software and some of the valuation shifts and where we may be able to find opportunity. And what Barron's is suggesting is to take a look at some of the stocks that have been beaten up. One that got a lot of attention was NVIDIA, which has become dead money lately, hasn't moved much. If you looked at it six months ago, looked at it today, the share price is roughly the same. And that's not because of bad earnings. In fact, earnings have been tremendous, but it's because it's become so large. The commentary here was that many funds literally aren't allowed to buy any more of NVIDIA. It's 7.5% of the SP 500. But the commentary here in general positive on NVIDIA despite its its size. Also, in this article, they talked about the big tech stocks like Microsoft, Google, and Amazon, and the fact that they're spending so much money to develop artificial intelligence, large language models, that's eating into free cash flow. And the concern they said with these companies is is not so much you know the the long term but the short term. So in the short term, because they're spending this cash flow, they're not able to pay dividends, they're not able to buy back stock because they are using up these this cash to engage in this in this large language model race with with each other, and therefore the short term looks cloudier. Short term earnings don't look as robust as the street was expecting because if you're not reducing that share count, you're still giving out options to employees, you're just you're diluting your earnings per share. Also, some positive commentary on Snowflake and Cloudflare and IBM. Yes, IBM. These companies seen as potential beneficiaries of the artificial intelligence build out these companies seen as the platform where corporate data lives. So Snowflake, Cloudflare, and IBM, think of them as the platform, you're a large Fortune 500 company, your data is sitting on this platform, and these companies are building systems that you can run multiple AI models through. So whether you're using Anthropic or Gemini or Llama from Meta or you're using OpenAI, you can you can pick and choose which of these AI models you want to use against your data so you're not going out and subjecting your data to the rest of the AI universe. And these companies have the software to facilitate that process, and these experts think that that is a significant area of future growth. They also talked about companies using AI for specific niches like ProCore for construction management and Celebrite for digital forensics, digital forensics celebrite, what digital forensics here means is police receive an iPhone from someone suspected of a crime, and Celebrite has the technology to be able to unlock what is on that phone and what has taken place within that phone so that they can kind of trace the digital bread crumbs. Finally, one value stock mentioned in Barron's. This is a company that has been a very poor performer, but Barron's thinks that United Parcel Service, which they say hasn't given investors much to celebrate anytime soon, down 40% over the last five years. That's even less than much to celebrate. But today they suggest the tide may be turning. they say that the UPS has been hit by a perfect storm, the post-pandemic shipping bust, then rising labor costs, and their decision to slash its low margin business with a margin, with with Amazon, toss that in with tariffs and the geopolitical tensions in Iran, and you've got the situation where stocks have been on a downward trajectory. However, Baron's saying that many analysts are suggesting the bottom is likely here. UPS is pivoting to a bigger, a better, not bigger strategy. That means leaner operations, 60,000 job cuts, shift towards high margin sectors like healthcare and cold chain shipping. Bottom line for investors is that UPS is currently trading, they say, at a valuation discount compared to FedEx, and they have a dividend yield at the moment of 7%, one of the highest in the S P 500. And they say that many analysts think think that the company can keep paying that dividend based on their cash flow. That is not a universal opinion, but nevertheless, some analysts suggesting that they will be able to persevere and pay that 7% dividend. Goldman Sachs issued a buy rating, $125 target, which represents about a 30% gain over the next year. So Barons goes on to say if you've been waiting to buy an American icon on a dip, , this may be your opportunity. That's everything I've got.

Alan Eppers 38:24

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Sophie Cohen 38:42

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