Episode 72 | Equity Strength, Energy Shifts, and Investment in “Trump Accounts”

In Episode 72 of “Market News with Rodney Lake,” Professor Lake, director of the GW Investment Institute, covers the equity markets, interest rates, energy trends, and market headlines. He reviews strong year-to-date performance in the S&P 500 and Nasdaq, noting the market’s stabilization following tariff-related volatility. Likewise, Lake examines how the current yield curve and anticipated Federal Reserve rate cuts may influence both valuations and mortgage costs. In market headlines, he spotlights Michael and Susan Dell’s historic $6.25 billion contribution to the Invest America initiative, which will fund investment accounts for 25 million children. Lake concludes by analyzing key energy and inflation dynamics—from lower oil prices to rising electricity costs and the accelerating global transition toward electric vehicles, particularly in the U.S. and China.

Chapters

• 0:00 Introduction
• 1:56 Market Overview, Year-to-Date, and Mortgage Rates
• 12:26 Dell Investment in Trump Accounts
• 14:59 Inflation and Energy Prices
• 19:03 Conclusion

Transcript

Thank you for joining Market News with Rodney Lake. This is a regular program for the GW Investment Institute where we talk about timely market topics. I'm Rodney Lake, the director of the GW Investment Institute. Let's get started.
Welcome back to Market News with Rodney Lake. I'm your host, Rodney Lake. On today's episode, we're going to be kicking off the episode with the news. This is the market news that we go over in class. Remember this is a GW Investment Institute podcast. This is educational and entertainment purposes only. And we're going to do on this episode what we generally do in class at the beginning of our class, which is we're going to go over a little bit of what's happening in the overall market.
So for the next 20, about 20 minutes, we're going to tackle what's happening right now. Today is December 4th, 2025. When we're recording this, obviously lots of things are changing. They're happening fast. So you got to keep up with what's going on now. We're long term investors, just to be super clear. But it's helpful to pay attention to what's happening in the news so you can build your own database of knowledge, compare that to other things you've seen.
And obviously, what we care about is what's happening today. And what do we think is going to happen in the future to the companies that we're invested in. And so let's go through some of those. Now, remember, we're coming to you from the George Washington University School of Business right here in the heart of Foggy Bottom, Duquès Hall, Duquès family studio.
Welcome back to the people who are back to the episode. Whether that's YouTube or Spotify or Apple. If you've listened to your review, by the way, and we both own Apple and Spotify for your 2025, you know, data like how many songs you listened to, who's your top artist? Love to hear your comments about that. What's the user experience?
Do you think it's good? Do you think it's slightly better on one or the other? By personal preference? I have both. I think Spotify actually does a better job on the user experience for your 2025 year in review hot take there on that. So, with that in mind, let's kick it off and let's talk about where the averages are just for the markets overall.
So, you know, well, again, we're heading into the end of the year here. So clearly there's going to be people thinking about, well, what's the what's the setup for the overall market? What have the market's been doing over the past year? Hopefully you've been paying close attention. And you know, obviously we're going to be thinking about what's happening for next year.
But but let's do the year to date number. We principally focus around the S&P 500, which is when people talk about the overall market. That's what most people are referring to. And then also the Nasdaq, we own a lot of tech companies in our portfolios. And so we we absolutely pay attention to what's happening also on the Nasdaq.
All right. So for the S&P 500, the year to date numbers here, 17.79%. This is through early December, December 4th 2025 and the Nasdaq 22%. So these are fantastic numbers, right? A lot of people had mentioned coming into the year. So if you're thinking about in the early parts of 2025, we've had these great years leading up to this and thinking like, well, there's no chance we can continue to repeat these type of returns.
And when you have Liberation Day in April, a lot of people thought, well, that's definitely going to be the case because the market really sold off at that point. People are worried, what's the impact of the tariffs now? Things have bounced back since then. A deal started being and now it's a little bit more certainty on how that was all going to play out.
There's still uncertainty in the market around the tariffs and lots of people have concerns about that. And I think rightfully so, depending on how it impacts you, if you're running a particular business and trying to figure out, you know, what are the give and gets, in those scenarios and try to make sure that you're prepared for those and you can plan for those.
And we'll talk a little bit about hiring, as well on the unemployment market as we talk about this. But the market in general tends to think like, well, things seem to be pretty good right now. And so the market overall has been digesting that data pretty well. And again, 17.79% year to date, December 4th, 2025 on the S&P 500.
And that is a fantastic number. And the Nasdaq 22.2%, two two two there, 22.2% for the Nasdaq. Another great year so far for them. And obviously, if you have this so-called Santa rally where we push into the, the end of the year, where lots of people have the FOMO and, you know, wasn't in their portfolio, they got to show it for their benchmarks.
They're going to be buyers into this. All right. So now that is the year to date. Let's take a look quick peek here at the 2, 3, 5, and 10 just to go over some of the numbers just to get some context of where we've been and where we've come from. So and again we're long term investors. So any even one year by the way of returns can be random.
You can have one good year, one bad year. That doesn't necessarily mean if you're a fundamental investor, as we are for most of our portfolio, and we have a quant portfolio, which we'll talk about a little bit, too, but for the most part, we're fundamental analysis. And even, by the way, some of the work that we do in the quant fund is really quantamental meaning it's a combination of using quantitative methods and fundamental analysis to discover ideas and companies, and investment opportunities for also the long term.
We're not these, the Flash Boys, Michael Lewis style, these quick day traders, we don't move in and out very quickly in these positions. And so we use these models to identify what we think are long term opportunities. They could be fundamental or sentiment driven, and or otherwise. Our students come up with those models, and they're doing a great job.
So, so what's the what's the two year back to the indexes here for a moment. So the two year annualized return now 22.93 on the S&P 500 and 27.92, on the Nasdaq. So really fantastic two year number. Now let's push it out to the three years and well okay now it's going to go to up the three year. But the three year number 20.55 for the S&P 500 annualized.
This is both annualized here and then 29.59 for the Nasdaq. So just killer numbers for really both and especially for the Nasdaq. Almost 30%. That is a fantastic return. And so really, really really good. No other way to say that when you're closing in on 30% compounding over three years, and even when you're talking about 20% compound compounding over three years.
These indexes, by the way, are tough to beat. Our students, by the way, have been keeping up and beating the indexes. So congrats to them. Stock pitch days upcoming where towards the end of the semester. So we're going to hear about all of their ideas. So let's now push it out to the five year. Well, five year not quite as good.
But still these are very good numbers. If you look at the S&P 500, the five year number through December 4th, 2025 14.74 annualized. And you look at the Nasdaq at 16.21 annualized, not the year but the number, 16.21, that is. These are terrific numbers right. Really terrific numbers. And and I think that's you know, something, you know to consider and think about.
You've had really good runs here for the last five years. Now last one we're going to look at here and we'll move on is the ten year. So what's the ten year number look like. Well for the S&P 500 14.93. This is terrific number, by the way our students have been beating this number. And for the Nasdaq 19.96.
These are terrific numbers for both indices. And so you can definitely say if you've been a long term investor in the stock market, in the U.S over the last five and ten years, you've done very well. If you've, you know, tried not to overly hedge yourself if you try not to get too cute on when you get in and when you get out, you know, you've done very well and you've been rewarded for being a long term investor.
The again, this is total return annualized. 14.93 for the S&P 500 and 19.96 for the Nasdaq. All right. So now let's check in on some other data here. So what else is happening? I think it's worth noting when we talk about what's the two year and what's the ten year. And what do these numbers really look like for us?
I think it's important to consider and think about, where is the two year, where is the ten year? So the two year, you know, right now. 353 in the ten year. 410 so the yield curve is a normal shape, you know, not backward dated, or, you know, inverted yield curve. And the joke is that the inverted yield curve has predicted, you know, 12 for the last ten recessions.
I think the yield curve was inverted. And it didn't actually, you know, lead to a recession, at least not yet. Maybe there's a recession coming at some point in the future. There probably will be one at some point. But that hasn't led. And so the, the short term, the shorter term rates, 3.53 and 4.10, it's been stubbornly high.
You know, something to to talk about. And we've, we've talked about in the past is the fed is going to meet again here in December. And right now the expectation is the vast majority of people are thinking that they're going to cut rates again. And that has waxed and waned and certainly, when we didn't have government, you know, the government was shut down, you didn't have reliable data coming out from the government.
You didn't have data coming out at all. That number went up and down and waxed and waned or ebbed and flowed. Whatever you would like to say about that. But now it's looking like that. Most people think that that rate cut is baked in and it's going to happen. And also, Trump seems to have an idea, it's not announced yet who the next chair of the Fed will be.
So we'll have to see how that all turns out. And very likely it's going to be someone who's, you know, looks like maybe more dovish. And so there's probably going to be more rate cuts next year, if that is in fact the case. So that ten year has been stubbornly high though. So when you talk about okay, well then where are the mortgage rates, for that.
And because, you know, when you think about, okay, the interest rates, that is the discount mechanism when you talk about the ten year in particular discount mechanism for stocks, and we'll move on to mortgages in a second. That's what you know you price for your future cash flows. And so what's what's the rate we use for when we discount the future.
Cash flows back to the present to solve for you know, what do we think this company is worth today. Well you using that ten year number, generally speaking to do that for that discount rate. So it's remained stubbornly high. And when it's higher, that means the present value is lower and vice versa. When that number comes down, present value goes up.
All right. So now that also helps you know or helps inform, set the market for what's the 30 year mortgage rate. So the 30 year mortgage rates have also remained elevated. But certainly not in a broad historical context. If you took a mortgage in the 80s, I didn't, but I do remember the 80s well, but I didn't have a mortgage in the 80s.
You're talking these numbers still sound good. So if you if you were in the 80s and you were getting a 15% mortgage or a 13% mortgage, 6 sounds pretty good. Right now it the average mortgage rates are in general, you're like 6.25, 6.30, you're in that neighborhood. So they definitely come off. They're definitely over 7 and they've come back.
And so generally that's a good thing. And that's going to be a huge driver on the housing market. People moving, people buying houses, people building houses, and then people refurbishing, or refurbishing rather, and then furnishing their houses. So this really drives a lot of spend associated with this part of the market, this part of the economy.
And so as those mark, as those come back, you know, we'll see probably increase activity. And I think you should think about that for 2026. Not a prediction. But if markets if they do in fact have the ten year come down, 30 year comes down, you're probably going to see an acceleration of building. You're going to see an acceleration of people moving, because, you know, a lot of people, they're locked into these really low rates and they're not going to move, unless they really have to for a job or some other reason, out of a 3% mortgage or 4% mortgage, into a 6.3% mortgage.
And unless there's really something compelling. So now but let's say it drifts a little bit lower, gets closer to that six dips into that. Have the five handle on it. Well probably going to have some people move I got a three and a half I got a four. But you know I really want to move to this house.
We need more space. Whatever it happens to be. I think that'll unlock some of that. The differential closes in a little bit. So I think people are much more likely, to move around. And so and then obviously you're going to get some refi’s coming there too. The PSA speeds, if you check out that those are the prepayment speeds, they're likely to pick up, because the people who have a 6 7 percent mortgage are likely to start to refi.
Some of those people have been doing that already, who've had higher rates or refined into some of these, lower rates now in some different products. Not just the 30 year fixed, but some arms as well. Also not mortgage advice here. Next up. What what is going on in the news? So a couple of things I think is worth noting.
That's related to the stock market, the Dell family, so Michael Dell, Susan Dell donated $6.25 billion. I had some news on that. Did a little quote. If you want to catch that, maybe we could look it up. This is really, Fantastic. And what what this is doing, it builds on these Trump accounts, for, you know, people who were born between 25 and 28, children, they're getting $1,000 into these so-called Trump accounts, Invest America initiative.
And Michael Dell and his wife, Susan, have added 6.25 billion to this to catch people who are ten and under in zip codes that are 100, makeing $150,000 or less. So this is really terrific. And so, 25 million kids getting 250, dollars each into their accounts and invested in index funds. I think this is really terrific.
You know, we talk about and teach about how compounding makes a big difference. You start early. Now, these accounts will be set up either when they're born for the for the obviously the people who who are starting right away. But for those people who are ten and under, you're still going to have, you know, eight years of compounding, if you're ten and certainly, that's going to make a big difference.
And one of the things that you get, the financial education, you have this account, you get it set up, you start investing. The idea is that it's in low cost index funds. So you own the S&P 500, for example. Some of those things we talked about and you've had really good returns, as a result. But even if you expect 10%, 8% returns, which is the long term average for this, you're going to do very well in these.
And I think it gives people this idea to be invested in America, to be invested in the economy and to have ownership, right. To have equity. You want to, you definitely want to own equity, to help yourself build wealth for yourself and your family. And certainly if you're managing money for clients, friends and everybody else, that ownership piece makes a big difference.
So tip of the cap to Michael Dell and his wife, Susan. I think this is a terrific, $6.25 billion gift. It may be the largest single gift ever. And certainly the mechanics of this, getting it into individual accounts for 25 million children is really terrific and innovative and new. And I'm sure there'll be some smart people working on that, to make that happen.
So I think, that's really good. And, and, again, building on that initiative out of the Big, Beautiful Bill, the BBB from the Trump accounts, the Invest America initiative. So all good stuff. Get more people invested in the stock market, get more people involved. And get them invested in these companies so that they can see the power of that compoundin, over time.
All right, so what else is happening? So let's, let's take a look. Also at energy prices. So that's another big thing is inflation. Right. And so, inflation has been stubbornly high. And that the last part of that, hasn't necessarily been coming out of the system quite as quickly as people like. So let's but let's use the oil price as a proxy, not for everything, but obviously it's a proxy for energy costs.
And now the mix of energy is changing. But on the transportation side, it's still a huge component because lots of people fill up the tank with refined gasoline, which comes from crude oil. So if you look a year ago, where was the oil price? About $59. Today, rather, it's at $59 a barrel. And a year ago, $68 a barrel, generally speaking, here.
So you're talking about, you know, approximately 13%, lower here. And so that that is, quite good, about $9 a barrel, depending on where you set the price points and what days you use. But in general, you know, things are better with respect to oil prices. It looks like OPEC and others are trying to manage the supply on the market.
But certainly, what's happening there is that there's, you know, ample supply at the moment. Prices have reflected that. And you're definitely seeing a transition. And the two largest economies, that that consume gasoline, that would be the US and China, a push, for electric and, and China that's moving much faster. So they have a lot more EVs on the road as a percentage of the total, than the US.
But both of these places, are moving forward. And we talked about the companies there. Obviously, Tesla is is a huge component in both of those markets, both in US and in China and in China. BYD is a big player, and they're working on exporting these cars around the world. And so I think as an analyst, as an investor, as a business person important to start paying attention to what's happening on the EV growth rates, in those two big economies and of the other ones as well. There's lots of noise and they just the released, from the white House that they're going to relax the cafe standards for the fuel efficiency.
But don't get lost in the mix here. What's, what's the overall trends that are happening? Certainly if you look at the oil price right now, I think that's a pretty good indicator of where things are likely to keep going over the past year, the economy is doing reasonably well, but you can see that oil prices and energy with respect to that is lower.
But if you look at electricity prices, they are actually higher. Well, the electricity prices are driven by different things, but certainly now EVs will be part of that. And the other part would be the big push for a I. But I think it's important to notice this shift when it's small, lots of people will dismiss this.
And they have over the past years. But again, as a business person, as an analyst, as an investor, I think it's worth and you should be paying attention to, okay, well, what are the growth rates? What's changing? And then when you look at something like the oil price, well, you don't need to replace 100% of the fleet. What you need to replace is that marginal demand.
And so when you start taking out a huge chunk of margin demand and supply then remains high. Well, what corrects in the short term, it's a commodity, is the price. And so pay close attention to that. I think it's going to surprise people. I think in five years I think the EV numbers are going to be much higher than people are expecting, and the difference in impact that they're going to make on overall energy prices related to refined gasoline, I think are going to be significant.
And so I think it's worth paying attention to that now, and setting yourself up for success there. Now, natural gas prices, are actually have been ticking up. But there's a lot of demand for electricity. Certainly EVs are a smaller part of that. A bigger part of that probably now in the short term is just the demand for AI and the expectation, for the data center and build out.
And so a lot of that marginal electricity is likely going to be coming from natural gas, at least in the short term, the quickest to get up and running. And over time, obviously from other sources like solar, for example. All right. So where is the overall market headed? We don't know. Right. So we don't we don't certainly don't make predictions of where things are going.
But what we can say is, look, the past year again, the indexes have been quite good. So the overall equity markets have been fabulous. And so if you look at again the the just refreshing the year to date numbers here. Where where are we now? December 4th 19.39 on the S&P 500. That's really a terrific number 24.33.
These are total returns for the Nasdaq. So these have been really these have been great years before. And this has been a great year so far. And we're hoping obviously, for our portfolios and everybody else, there's a Santa Claus rally. And if that's what you need, if you're trying to buy things, obviously you're you're hoping that the market goes down so you can get those things, but again, the market has been doing well.
If you've been an investor and you've been focused on the long term over the last five and ten years, you've done really well. Again, Non-investment advice, entertainment purposes only here and educational. But, you know, stay invested for the long term. It's not that's not what we do is the short term game. We're very focused. Our students are managing endowment funds for the university.
That's their clients are they're long term in nature. And that's where we try to train them and say, well, what are these opportunities, that we're going to have in the next one year, three years, five years? It's hard to think about ten years, but really thinking about, okay, well, what are the opportunities over that time series and where can we find those opportunities?
And again, mostly we're doing the fundamental analysis. We are doing some quantitative, as well. But our students are doing stock pitch day coming up here in a few days actually, for both of the sections that we have in our finance 4101 class, so we're excited to hear what new opportunities will be coming. We we're excited to hear their pitches.
The students will cast their votes and we'll see how the portfolios end up. We can report back a little bit if we have some exciting changes or something new that we didn't expect. So we'll let you know about that. And until then, we'll see you back on the next episode of Market News with Rodney Lake. Thank you.
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