What The Roaring 1920s Teach Us About Today’s AI Rush

June 1, 2026 | Season 8 | Episode 17

AI is moving faster than most of us can comfortably process, and markets are pricing that speed in real time. We take a sober look at the artificial intelligence boom, the surge in chip stocks, and what happens when portfolios quietly tilt too far toward one story. Along the way, we anchor the excitement to something investors can actually use: historical perspective, market structure, and practical asset allocation decisions.

We rewind a full century to the Roaring 1920s and the wave of disruption from cars, mass electrification, and radio. The lesson isn’t that change is painless, it’s that new technology tends to build entire ecosystems of jobs, businesses, and productivity, even while it wipes out older industries. That same push-pull is showing up today as AI tools rewrite workflows, data centers scale up, and regulators scramble to catch up.

Then we zoom back into the present: why market leadership rotates, how narrow market breadth can be a warning sign, and why IPO hype can distort fundamentals. We dig into bubble talk with SpaceX-style valuation math, track key headlines around NVIDIA’s push toward the AI PC, and highlight an “AI adjacent” opportunity in energy through SLB’s digital strategy and its partnership with NVIDIA. We close with a global reality check: the UK bond market and rising gilt yields as a reminder that debt, confidence, and politics can move interest rates fast.

If you want clearer thinking in noisy markets, listen now, then subscribe, 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

Welcome And Market Setup

Alan Eppers 0:00

And now introducing Mr. Keith Lanton.

Keith Lanton 0:03

Good morning. Today is Monday, June 1st. You heard right? June 1st. Almost halfway done with 2026. We begin the second the third month of the second quarter this morning, and as usual there is a lot going on this morning.

AI Revolution And Portfolio Positioning

Keith Lanton 0:26

This morning we are going to talk about the revolution that's taken place here in the world with respect to artificial intelligence, a theme that we've discussed many times before. Wall Street Journal had an article last week which we will embellish upon talking about artificial intelligence and the dramatic changes it is bringing and the investment opportunities. Since we want to put this all into perspective as we think about building out our portfolios, perhaps some of our portfolios have gotten allocated to a heavier extent than typical in technology and artificial intelligence. Some food for thought on what to do, especially given the run-up in technology and chip stocks and the upcoming IPOs of SpaceX, which is coming imminently, anthropic and OpenAI proving to be some of the largest IPOs to ever hit the financial markets and what the implications of that may be and what we may be able to glean from the fact that they're coming public at this moment in time. We'll take a deep dive, we'll take a look back in history like we like to do, and take a look at historically what the market leaders look like, what the leaders look like today, and try and create some perspective, and that hopefully we can create some perspective on how we should be allocating our assets, not only our equity portion of our assets, but our overall assets. How should our assets be allocated into equities, what percentage should be in equities that are growth, what percentage of equities should be in more dividend-paying stocks, international stocks, thinking about what the allocation should look like to commodities, which are getting a lot less attention than they were a little while ago. Just recently, we were talking about the significant run-up in gold and silver prices, of course, talking about the appreciation of oil, that's getting lots of less attention. Before that, we were talking about the run-up in cryptocurrencies. So commodities haven't gone away. Of course, fixed income bonds, what the appropriate percentage there is, the concerns continuing to be out there with respect to inflation, the independence of the Fed, the size of the U.S. federal deficit. And we'll talk about another country that is struggling with some of those similar issues, but without the heft and weight of the United States, although this country at one time was the reserve currency and was the United States of the world, and that was Great Britain. We'll talk about some of the problems that they're experiencing with their bond market, what they might be able to do to fix those problems, and then we will move on and talk about something that's getting a little bit more attention, and that is something that has not been brought up on this call in a while, and that is the word bubble. Are we at the early stages or in the midst of a bubble? What does that look like? Are we are we at dangerous point in terms of optimism, especially with SpaceX IPO coming, lots of attention being focused on individual investors investing in SpaceX? Is that a sign that the financial markets perhaps are getting overly exuberant, to borrow a phrase from Warren Buffett? And we'll talk about an opportunity in the oil services field, so a company that engages in technology but isn't itself specifically a technology stock. Against this backdrop this morning we are seeing futures off their best levels of the morning, but nevertheless, futures remaining to the upside, some of that having to do with some announcements from NVIDIA that we'll discuss, as well as continuing optimism for a deal in the Middle East between the U.S., Iran, Israel, Lebanon, part of the equation there. And June, I think, will be a big factor in terms of how financial markets react, is is how the Middle East will go. President Trump offering some continuing optimism, but of course, we're starting to hear the same things over and over again and haven't seen any decisive action yet in terms of a dis an agreement between the U.S. and Iran. Perhaps President Trump is biding for time. Israel is continuing their operations in Lebanon. Perhaps this is personal speculation, Prime Minister Netanyahu seeking to accomplish more in Lebanon before a agreement which Iran says needs to include Lebanon and Hezbollah. Perhaps President Trump seeking to give Prime Minister Netanyahu some some time to get more cleanup done on the northern border of Israel, and that's one of the reasons why President Trump hasn't made a decision. Not sure that's correct or not, but based on his actions and words, that could be a possibility and can only carry that for so long. So I expect to see some sort of decisions coming out of Washington with respect to the situation in the Middle East, certainly in the next thirty days or by the end of this month would seem would seem to be a timeline that really can't be kicked a whole lot further. So let's talk about the artificial intelligence that's taken place, the excitement around technology stocks. It feels like this is something that has happened to a lesser extent, arguably. the SoftBank CEO's son this morning talking about the dot-com bubble on CNBC in the 1990s and saying that this moment that we're experiencing is so much bigger with respect to artificial intelligence and all that the humankind can accomplish. Certainly, this must be the first time that we were all feeling this exuberant and had this much opportunity in front of us. And Wall Street Journal talking about the roaring 1920s and how the 1920s and the 2020s, so Roaring Twenties versus Roaring Twenties, have lots of parallels. So right now it seems like we're in the midst of a revolution here. We have we have artificial intelligence companies like Gemini, OpenAI with ChatGBT, Claude with Anthropic. They are rewriting our workflows, writing code for computer programs, many of us personally using it to help write emails, write the write the software code, and these are truly exciting times. At the same time, if you go to certain cities, certainly if you're in San Francisco or Austin, Texas, you will see robocars navigating our streets, and we see these hyperscalers, the companies that are building out data centers, tech giants moving faster than regulators can can act. So we see technology companies moving much faster than the regulation to catch them. So this feels largely unprecedented, right? Like humanity has never been jolted quite like what's going on before.

Roaring 1920s Parallels To AI

Keith Lanton 7:18

Well, rewind back one century, hundred years. Let's go back to the 1920s from the 2020s, and we can take a look back long before names like Elon Musk and Jensen Wong, and words like artificial intelligence, data centers, and Instagram, and we can go back to the 1920s when we had folks like Mr. Rockefeller, as well as we had folks like the CEO of company called Radio Corporation of America, RCA, all starting to become new words, new companies. American society being absolutely up-ended at the time by a whole series of disruptions. 1920s. Imagine suddenly we're going from being moving by horse-drawn vehicle to automobiles. Imagine how that must have felt, being able to go 50, 60, 70 miles in a single ride. Whereas before you had to do that on horse, the amount of time that was being saved, the feeling of liberation at the potential of what was being developed here with with automobiles and the mass appeal of automobiles at the same time. We were seeing electricity being rolled out nationwide, mass electrification. Again, picture not having lights in your home, not having things like dishwashers, vacuum cleaners, electric refrigerators, and suddenly having this available, the life-changing element of having electricity, something we take so for granted today. And then, of course, I mentioned Radio Corporation of America, radio bringing America together, folks listening to information being dispensed instantaneously, so it seemed until the internet, but instantaneous information becoming available for the first time to the mass population, truly revolutionary times. And back then, just like today, the old guard was extremely concerned. Sociologists embedded in the U.S. heartland, like in Indiana, were saying that fast cars were utterly destroying the social norms of the country. Young people were escaping being chaperoned, and they were experiencing unsupervised joy rides. A traditionalist screen that the American home was endangered, weekend car trips were replacing Sunday church services. Does this sound somewhat familiar, perhaps, to those who have serious concerns, and justifiably so with social media and the impacts and the effects that that's having the youth today? Back then, even the intellectuals like H. G. Wells trashed the newly invented radio, calling it inferior entertainment, only fit for the lonely and suffering. But just like today, the innovators won out and a fractured country was stitched together by a new a new national culture. So if you're losing sleep over AI killing your career, the nineteen twenties offer a massive, much needed dose of economic hope. Yes, the horse and buggy did completely collapse. There are no more buggy whip makers, but look at the effects and the knock-on opportunities that were derived as a consequence of the new technology. We had Henry Ford with his assembly lines. They didn't just create factory jobs, they sparked a massive, unprecedented economic ecosystem. Millions of people bought cars, the economy suddenly needed hundreds of thousands of things like tire manufacturers, mechanics, gasoline stations, needed folks to build out the highways, needed folks to publish and build and create maps. The same thing happened in entertainment. Suddenly you had this medium called radio where you had entertainers speaking on the radio and with voice inflection, and all of a sudden you had new technology of film, and it started out with silent film and silent film stars. And if you think about the opportunities from a business that didn't exist, suddenly we had a boom in entertainment. We had 20,000 movie theaters being built across the country in the 1920s that created all new opportunities and careers for folks like set designers, makeup artists, entertainment journalists. So history has shown us that disrupt technology does shift the landscape beneath our feet. It is very unsettling, but as opposed to being a job destroyer, historically, it has been a job creator. And it's not just about jobs, it's about daily life. Think about how we were were promised that artificial intelligence can potentially revolutionize health care, education, and household chores. All of this similar to what was being promised with electricity in the 1920s, and you know what? In the 1920s, it came true. We did revolutionize household chores, we did revolutionize the ability of people to engage in achieving more time to engage in leisure. And if we think back to the 1920s, we did build out the electrification of this country, we did expand people's abilities to achieve so much more in their daily lives. In 1920, 35% of American homes had power. By 1930, that number had skyrocketed to 70%. So again, the build-out happening super quickly, something like we're seeing today with artificial intelligence. Those labor-saving devices like refrigerators, toasters, vacuum cleaners, replacing grooming manual work, kerosene lamps. So if you're in the kerosene business, your business wasn't so good anymore. But as we talked about last week, the kerosene folks, a lot of them moved into the oil business, so they were able to pivot and be able to be able to be able to move from one opportunity to another. And back then, yes, there were safety risks. If you get into the parallels in the 1920s, cars were being rolled out, highways were being created faster than the regulators were able to regulate automobiles. Today we are used to speed limits, we're used to things like having rear view mirrors, and we're used to having things like brakes that work in cars. Well, all of that wasn't the case in the 1920s. There wasn't the regulation, and over time we had the government put in place what are viewed as today as reasonable and practical safety measures, but when we look back to the 1920s, there were lots of folks who are viewing this as an infringement upon their freedom. So it is very likely that what we will experience today with respect to artificial intelligence, that the technology is taking place faster than society and the government can react, and there's lots of folks who are s suggesting that there should not be put any regulation or breaks upon this technology. But history as a guide, it is very likely and possible that what we will see over the next five and ten years is we will see more rules, more guidelines being put on artificial intelligence as it gets incorporated into our daily lives in order to create a set of rules and regulations so that it can be rolled out even more efficiently and on a greater scale. So the opportunity is certainly there. just like in the 1920s and the roaring twenties, the question then became are we experiencing a a bubble or a run-up? And we will talk about that a little bit later in the in the discussion.

Who Leads Markets Over Time

Keith Lanton 15:02

But what we will discuss at this point in the discussion is the investment and the opportunity and the perspective. So if we go back to the 1920s and we take a look at what were the leading stocks at that point in time, well, the biggest companies in the 1920s were ATT, U.S. Steel, Standard Oil, which eventually became Exxon, General Electric, General Motors, Royal Dutch Shell, Consolidated Edison, which an up-and-coming company, a upstart, if you can believe it, right? A a new a new company, which is known as Con Ed, which is now viewed as an old and boring utility here in the tri-state area of New York. Um but what we can see is that these leading companies of the 1920s and the biggest company in 1920 being U.S. Steel didn't over the long, long run turn out to have the longevity and staying power to be the leaders forever. So something to think about when we think about the technology companies of today, whether or not these companies, which lots of investors view as lifetime investments, if that's something that they truly can achieve, time will tell. But we can again go back in history and just go back in recent history. You go back to the 1980s, take a look at the ten biggest stocks by market capitalization, six of the ten were oil companies. Go back to the nineteen nineties, take a look at the ten biggest stocks by market capitalization. You know what? Six of the ten were Japanese. The Japanese back in 1990 were considered the up-and-coming place to invest. In a sense, they were the AI, the chip, the the boom was was Japan and the manufacturing that Japan was achieving. And in the 1990s, in the top ten in market capitalization, you had the Industrial Bank of Japan, Fuji Bank, Sokora Bank, Sumitomo Bank, Daiichi Kangyo Bank, and Toyota, all in 1990 in the top 10 market capitalization companies in the world. And if you look at the performance of those companies in 1990 and you look at the forward 10-year average of those 10 companies, well, those 10 companies, which the following 10 years were up 4.3%. The rest of the world on average was up about 11.9%. And if you go back to 2000, the dot-com bubble era, even back then you had only a handful of technology companies like Microsoft, Cisco , and Intel and a European company, Nokia, this before the iPhone, making up the top 10 companies of the of the world back in 2000. And if you had bought the top ten companies in the world in 2000, ten years later, your returns would have been minus 7%, versus the rest of the world, which was looking at about 0% returns. And if you go to 2010, 2010 was seeing the emergence of another Asian power, and that was China. China beginning to dominate global trade. The number two company in the world in 2010 was PetroCina. Number six company in the world was a Chinese bank, ICBC, and number seven in the world was the China Construction Bank back in 2010. And it wasn't until 2020 when we started to see technology companies dominate the largest capitalization companies in the world. So in 2020, all ten companies that make up the ten largest companies by market capitalization were all technology companies. So just to give you an idea of that list, Apple, Microsoft, Amazon, Alphabet, Tencent, Tesla, Facebook, Alibaba, Samsung, and Taiwan Semi making up the top ten companies of the market capitalization of the world. And if you take a look at the list today, and today's interesting day, because today we had JP Morgan, which was number 10, and that's being pushed out from the top ten list this morning. But if you look at the top ten companies in the world today, nine out of ten for the first time pretty much in the last sixty, seventy, and perhaps even longer, data that that exceeds how far I'm looking back. All ten of the top ten companies, actually nine out of ten, Taiwan semis in the list, nine out of ten are United States companies.

Today’s Tape Nvidia Oil Data

Keith Lanton 19:39

All right, so let's take a look at at what's going on here this morning and taking place here in the financial market. We are seeing equity futures, as I mentioned, moving to the upside here, and perhaps on some commentary on what's taking place in the Middle East given back some of those gains. Dow futures are up about 125 points right now. NASDAQ futures up about 60, SP futures up about 15. Oil this morning on that geopolitical tension is up about $2.50. Taking a look at West Texas Intermediate, it's about $90 a barrel. And the 10-year treasury is relatively unchanged at 4.45%. This is as President Trump has a request to the Iranians. He said he's asking for stronger language around Iran's nuclear material. President Trump requests stated another round of negotiations could be necessary, which could last, he said, several more days. This coming reports that the United States attacked a Iranian radar and drone site on Keshem Island after the Iran shot down a U.S. drone. There are also reports this morning that Iran has targeted Kuwait and potentially American military installations that are in Kuwait. Some of the strength in the futures this morning being driven by news flow from Nvidia, which is up about five points this morning to about $216 per share. so artificial intelligence story dominating again the news flow this morning. Nvidia unveiling a new chip that puts AI capabilities directly into laptops and desktop computers, pitting NVIDIA against the likes of advanced micro devices Intel and Apple. Nvidia CEO Jensen Wang, who is in Taiwan for the Computex conference, said this new chip called the RTX Spark PC chip is part of NVIDIA's effort with Microsoft to reinvent the PC for the AI era, saying that this is the culmination of three years of collaboration between NVIDIA and Microsoft. The chip, they say, will Overhaul engagement with artificial intelligence. It is designed to run artificial intelligence agents locally rather than in the cloud. Jensen Wang saying that NVIDIA also developed this chip with the help from Taiwan's Media Tech. Also in the news with respect to NVIDIA today is a report that the U.S. Department of Commerce is moving close to a closing a potential loophole that may have led companies to export the world's most advanced chip, like NVIDIA's Blackwell Processor, two subsidiaries of Chinese companies located outside of China. Also, this morning reports that shipments of mobile phones, smartphones, dropping significantly, a record annual decline. Reports that the global smartphone shipments down about 13.9%. And you may be saying, why would that possibly be taking place given all the investment in technology? And that's because the cost of memory is going up. So these phones getting more expensive, so people choosing to hold on to their old existing mobile devices. Also this morning, Berkshire Hathaway out with a multi-billion dollar acquisition. They are buying a home builder, Taylor Morrison Homes. The symbol is Tango Mary Hotel Charles, TMHC, , for $72.50 per share. 20 plus percent premium for that company, expressing optimism that that we will see more homes getting built, and perhaps some optimism that interest rates will come down and perhaps make homes more reachable for younger buyers. this morning Softbank overtook Toyota as Japan's most valuable company. So again, another example of technology leading things forward. Speaking of technology, ARM stock moving higher because NVIDIA with that new chip, that chip combines an ARM central processing unit with an NVIDIA graphics processor to achieve that chip. So ARM stock rising ten percent. Some of the potential potential competitors to NVIDIA, those stocks are dropping. Qualcomm down about six percent, Intel and AMD both down about two and a half percent. And some of the other beneficiaries of this chip would be the companies installing these chips into their machines. So Dell rising after a strong week last week up 3%, Hewlett-Packard rising just about seven percent this morning, gold down significantly this morning, down about $54 a barrel. Interesting, silver diverging from gold is up about 20 cents a barrel this morning. What do we have going on? Well, later today we have the Institute for Supply Management releasing the manufacturing PMI. That's expected to come in half a point more than last month at 53.2. The services PMI will be released on Wednesday, roughly expected to be even with last month at 53.8. Earnings this week, the big names, Dollar General and Palo Alto Networks, the data security company releasing earnings on Tuesday, Broadcom and another data security company, CrowdStrike, releasing results on Wednesday. Also on Wednesday, the Fed releases its beige book for the fourth of eight times this year. And then the biggest economic report of the week comes Friday when the Bureau of Labor Statistics releases the jobs report for May. Economists are forecasting an increase of 90,000 non-farm payrolls following 150,000 gain in April. Unemployment rate expected to remain unchanged at 4.3%.

Bubble Talk And SpaceX IPO Math

Keith Lanton 25:58

So, talking about artificial intelligence, the AI revolution, mentioned that word which has been bandied about lots in the last year or two and has been at the very least premature, and that is the bubble word. Barons ran a story in their up and down Wall Street column. , if it walks like a bubble and quacks like a bubble, then it probably is a bubble. We'll talk about whether or not that is a thesis that you need to really focus on. What I will say this morning, if you want to talk about some grandiose talk, is that SoftBank's Masayoshi son was on CNBC this morning. He said that the AI revolution will outpace the dot-com boom in the 2000s. He said this is the biggest revolution of technology and realization that mankind has ever experienced. And he announced the 75 billion euro investment to build AI infrastructure in France. He did warn that back in 2000 that we did experience a painful bursting of the dot-com bubble, but he said that proved to be a small bump in a much bigger story. So while he is not suggesting that there will not be a pullback, he said that if there is the pullback, it would be a buying opportunity. He said, so there may be some correction, but that will be the best investment opportunity to me, is is what he was saying. Speaking of you know, parallels and bubbles this morning commentary from Michael Harnett at Bank of America pointing out that the S P 500 closed at a record on the last day of trading in May, but only a handful of stocks focused mostly in the AI area hit all-time highs. And he says this strange occurrence echoes what happened at the top of the dot-com bubble 26 years ago. On Friday, just 20 of the S P 500 members hit a record, even though the index itself hit a record. And of those 20, 13 were related to AI. So Mr. Harnett pointed out in a note to end last week that it was just 20 stocks that hit a new high at the very top of the internet bubble back in 2000. And the concern at this point is whether or not the bull market that we are experiencing, whether or not it will broaden out. Historically, when bull markets do broaden out and we start seeing new highs from more and more companies, that's a sign of health. If it stays narrow and deep, that's a sign of concern. So Barron's, when speaking of bubbles, is talking a lot about what's taken place in the initial public offering world. We talked last week about the SpaceX IPO and the valuation of SpaceX. And Barron's hitting on that theme again. The expected mid-range of market capitalization of SpaceX, the Elon Musk company that expected to go public perhaps this month, is going to be approximately $1.75 trillion. And if you take a look at the valuation relative to sales, and we did talk about this a little bit last week, you are looking at a price to sales ratio of 93.7. Put that into context, the S P 500, which is at a record high, is trading at 3.38 times sales. So the question then is, is SpaceX deserving of this significant valuation? Baron's mentioning that if you w want to ascertain that, well, you need to take a look at the prospectus for SpaceX. Baron's pointing out that the risk factors in the SpaceX prospectus are 38 pages long. The glossary is six and a half pages long, the overall prospectus is three hundred and eighty-nine pages. Now, if you want to go back to high price to sales ratios, Barron's brought back a interesting comment back from the dot-com era, and that was a commentary in 2002. For those old enough to remember, there was a super hot stock back in the dot-com era, and it was called Sun Microsystems. I mean, it was run by a super popular CEO who was one of the faces of the dot-com era, and that was Scott McNeely. And for those who don't remember, Sun Microsystem was swallowed up by Oracle in 2010. And Sun Microsystems was a very exciting stock, had gone on to make record high after record high, and in 2000 at the time, the stock had reached all-time high levels and it was trading at 10 times revenues or 10 times sales. And when looking back at that, Scott McNeely had some commentary, and keep in mind SpaceX is trading at 93 times sales. He said at 10 times revenues to give you a 10-year payback. He said, as CEO, I have to pay you out 100% of revenues for 10 straight years in dividends. That assumes I have zero cost of goods sold, which obviously is very hard. It assumes I have zero expenses, which he says is really hard. It assumes I pay no taxes, which is also really hard. And it assumes that you pay no taxes on your dividends, which he says is kind of illegal. And that also assumes that we're going to have zero investment in research and development over the next ten years, and that I can maintain the current revenue run rate with no investment in research and development in ten years. So he says to the investors ten years later, he says, Do you realize how ridiculous those basic assumptions were? What were you thinking? So the question is, what would Mr. McNeely be thinking today about SpaceX trading at 93 times revenues? And that is a question that only he can answer.

SLB Oil Services Meets AI

Keith Lanton 32:17

So let's move on, talk a little bit about another stock, and this one's in the oil services field, and it does have some aspects of technology and artificial intelligence because it's touching all aspects of life. And this company is SLB, formerly known as Slumberger, which is the world's largest oil field service provider. Stock is up 52% so far in 2026, so this is certainly a company that has already seen some significant performance, but Barons feels that this performance can continue. Slumberger, former name SLB, has an $87 billion market capitalization, operations in 120 countries, and it is benefiting from the rise in oil prices from $55 a barrel in the U.S. to around $90 a barrel for West Texas Intermediate. The bullish case for Slumberger looks ahead to the post-conflict scenario in which stability in the Middle East will lead the energy customers of the Middle East to rapidly rebuild their production and invest in next generation energy technology. So despite the fact that the stock is up over 50% year to date, Barron said that the stock, which is recently trading around 58%, could trade up to what they consider fair value of $80 a share over the next 12 months. At that point, it would have a PE ratio of around $30 per share. And Baron suggesting that the latest rally in the stock is because investors are beginning to recognize that Slumberger has some unique capabilities that their competitors don't have as deep of ability to accomplish. Slumberger's portfolio of products allows oil and gas producers to target technically complex, very deep water and offshore reserves as efficiently as possible. They also have advanced chemicals and specialty fluids in their portfolio in order to help the oil companies that they're providing services to to more efficiently extract oil from these difficult places to extract oil from. Perhaps the most underappreciated aspect of Slumberger's strategy is its digital strategy. They have decades of geological records, subsurface physics, and mechanical telemetry that are proving to be invaluable resources for them to find and discover energy throughout the world. They also have unique drilling capabilities utilizing their technology. In March, SLB announced an expansion of a multi-year partnership with NVIDIA to run its data and AI platform using Nvidia's computing infrastructure. The plan envisions an industrial-scale artificial intelligence factory for energy to power tailored, generative AI models and agentic AI tools for energy customers. SLB is building prefabricated modular data center blocks at manufacturing facilities that can be deployed to energy companies that need secure, on-premise AI supercomputers. So supercomputers that are being developed to be in the field, to be able to continue to operate under those types of conditions, and SLB is coming up with an out-of-the-box solution to deliver that to their customers. So if you're taking a look at the downside, there still are risks. Re-escalation of tensions in the Middle East would certainly undermine some of this bullish enthusiasm, as well as if there was a significant sell-off in the price of oil, and price was to drop significantly and precipitously quickly, that's something also that could weigh on the shares of SLB.

UK Bond Market Stress Test

Keith Lanton 36:25

One last discussion for wrapping things up, and that has to do with the debt market. And we're gonna talk about the bond market, not here in the United States, but in Britain. But it is important to think about the situation in Great Britain and the loss of confidence in the in the investor world in the British bond market and what that's doing to interest rates in Great Britain, and it's something that we here in the United States need to be aware of because the loss of confidence here could lead to a significant uptick in interest rates. So it's important to study what's happening elsewhere to see if we see that the seeds of what's occurring there could get planted here. So in Great Britain, one of the things that they have that's creating a lot of unease is that they are on their sixth prime minister in seven years, so a lot of uncertainty at the top. Carousel of leaders driving up borrowing costs, dragging down investments. Keir Starmer, who is the current prime minister, has put in place a finance minister, Rachel Reeves, and she has been playing nice with investors in a sense, so she's been sticking to the fiscal rules that the bond market would like the UK to adhere to, to balancing their budget so that the revenues stay elevated and that the debt to gross domestic product stays within a defined parameters so that the debt levels do not get out of hand. But this is something that is causing economic pain and is alienating voters, and this is one of the reasons that Keir Starmer is having trouble retaining power. So they are being fiscally responsible, but this is causing the fact that the administration that's in power that's being fiscally responsible, because they are being fiscally responsible, it's one of the reasons that perhaps they are getting pushed out potentially out of power. And as a result of that, concerns are that there will be a new government that is not as fiscally responsible. This is spooking the bond market. Ten-year treasury in Great Britain up to 5%, the 30-year is almost six percent in Great Britain, and the British bond market folks are worried that Keir Starmer will be replaced by a candidate who wants to rip up what they are calling the Reeves, who is the again the finance minister, Rachel Reeves, rip up her rules. The front runner to be the successor to Keir Starmer is Manchester Mayor Andy Burnham. Burnham said the government should be should not be in hockey. He said to the bond market, he is pledging to nationalize public utilities, and this is something that the bond market is concerned about. Bond market concerned that the UK may have another what is called a Liz Trust moment when she was looking to cut taxes, and we saw a surge in UK yields, the pound getting destroyed at that moment, and the British reversing course at that time. So the question is whether or not we can have a new prime minister come in here and revive growth without sparking a meltdown. Burnham, who will struggle to encourage investment, will seek to drive investors in the UK to take some of their savings. They have a high savings rate there as concerns about the economy weighing on the public. Also, their stock market has not been nearly as robust as the markets outside of the UK. UK since the last 10 years, UK stock market's up about 65% for some perspective, the rest of the world's up about 250%. That's actually the SP 500 in that time period. so the UK investor not as invested in equities and sitting on the sidelines as the folks there determining what the next direction of their country and their economy is as concerns weigh about the size of their deficit, and that's something that we may here in the United States have to contend with over the next decade or so, and we're seeing the ramifications in the UK, country that obviously doesn't get the privilege of reserve currency anymore, something that we currently still enjoy, but some parallels there with the concerns about the mounting debt.

Wrap Up And Where To Listen

Keith Lanton 40:47

That's everything I've got.

Alan Eppers 40:48

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 41:06

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