Positively Sloped
Positively Sloped is where markets, culture, and momentum collide — because the most interesting things in the world are the ones trending up and to the right. Jake and Scott break down what’s moving — in the markets, in the headlines, and in your group chat — with sharp insights, real opinions, and just enough irreverence to make finance actually fun. These are the conversations we’ve been having for years — debates, hot takes, and deep dives — just now with a mic in front of us.
Positively Sloped
21. Powell’s Farewell, Mag Seven Earnings, Micron's Explosive Run, & More
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In this episode of Positively Sloped, Jake and Neil tackle a massive market week featuring Jay Powell’s final Fed meeting and the "Mag Seven" earnings blitz. We analyze why Micron (MU) is up 560% and whether its 9x forward PE makes it the ultimate AI sleeper hit compared to Nvidia.
We also pull back the curtain on the OpenAI vs. Anthropic rivalry as "Claude" begins to eat into ChatGPT's market share, and we debate the "Sell in May and Go Away" theory. Is it a legitimate strategy or just "spurious correlation"? Plus, we discuss the potential United-American Airlines merger and why Intel's 130% rebound is more than just a jolt.
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Kingsview Wealth Management is an investment adviser registered with the SEC. Registration does not constitute an endorsement of the firm by the SEC nor does it indicate that Kingsview has attained a particular level of skill or ability. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. All opinions expressed by the Positively Sloped participants are solely their opinions and do not reflect the opinions of Kingsview Wealth Management, its parent company or any of its affiliates. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Positively Sloped participants deem reliable. Kingsview Wealth Management serves as portfolio manager to separately managed account strategies and investment adviser to exchange-traded funds. As of the date of this recording, those strategies and funds held positions in NVIDIA, AMD, META, Microsoft, and Amazon and did not hold positions in Google, Micron, Oracle, Intel, Samsung, United Airlines, American Airlines, or Western Digital.
On today's positively sloped, Neil and I discussed Chairman Powell's last meeting as the Fed chairman and what to expect over the next couple months as he transitions out of the position. We previewed the Mag 7 earnings season, which kicks off this week, and discuss Micron's rise in the stock market. Before we wrap up with the sell in May and go away theory, is it real or is it a bust? Okay, let's talk shop. Today is Tuesday, April 28th. Welcome to Positively Sloped. And Neil, we've got uh maybe one of the biggest market weeks of the quarter on tap for this week with uh the Fed meeting tomorrow. Uh we've got Jay Powell's last meeting as chairman, unless we don't get a new chairman by June uh 17th. We had a consumer confidence number come out this morning, PCE later in the week, and then uh four of the seven Mag 7 companies reporting earnings. So uh really diving into the uh the depths of the earnings season with the big some big tech names. Uh seems like Iran has taken somewhat of a backwards.
SPEAKER_04We were all prepared to talk about the uh Strait of Hormuz.
SPEAKER_01It's you know, it's nice to get a little break. We're at this point where we're negotiating or not negotiating. The the strait is effectively closed, there's not any ongoing bombings, and we're kind of just waiting to see what a peace deal may or may not look like. Are you headed out to Pakistan?
SPEAKER_04I you know, I was, but my trip was canceled. Then it was back on, but then it's off again. So I'm really just on standby at the moment. I would have chosen you. Yeah, I mean, I should be over there, but it's not happening.
SPEAKER_01Let's uh let's let's start with with probably the biggest uh event of the week, I think, uh, which would be the Fed meeting today and tomorrow. Um, you know, priced in at night over 99% chance of nothing happening in terms of in terms of rates that's been telegraphed for a few weeks as we stay in this kind of economic standoff between um a solid econom uh you know growth uh in the economic standpoint and and also uh persistent inflation, certainly with the Iranian war. So it looks like nothing's gonna happen.
SPEAKER_04I mean, look, in my opinion, nothing's happening unless you know Powell wants to give the middle finger to Trump and then there's a raise. But obviously there's a real chance of that happening.
SPEAKER_01So and that's that's the biggest uh that's the biggest part of this of this uh meeting coming up here is finally we have Chairman Powell's last meeting as as chairman of the Fed. Um we've been counting this down since Trump has retaken office, and he's been saying he's gonna fire Powell and he's stupid and and ignorant and arrogant and dumb and blah, blah, blah, blah, blah. Um, we still don't have Walsh confirmed yet. So we'll see actually when that happens when we do have a new chairman in place. But um, do you expect this to be Powell's last meeting, or do you think he's still gonna be around June 17th?
SPEAKER_04No, I think, well, uh for sure it'll be I I think it'll be his last meeting as chair. Um I I, you know, I would have said uh a couple weeks ago, I would have said he's sticking around. I still kind of think he will, and I hope he does. Because, you know, yeah, the DOJ dropped the case, but but that seemed a little abrupt. And if I'm if I'm him, I'm thinking, like, all right, what are they got up their sleeve? Where else, where else are they gonna come at me? And so uh I think while that that case has been dropped, um, I probably, if I'm him, I'm hanging around a little longer in my term just to make sure there's no nothing lurking on the sidelines, so to speak. It's I think it'd be great to have them stay on the on the board.
SPEAKER_01Yeah, I mean it's it's not unprecedented, it's not common. All right, it's not common of the last few chairmen. I mean, uh, you and I share a certain skepticism of a lot of administration uh doings, and and it seemed like the DOJ case getting dropped right as Walsh hearings like needed to pick up in order to be um in place on time was a little coincidental, if you will.
SPEAKER_04Yeah, and right after Trump says, you know, to keep the probe going. Right. So it's like it seems a little uh I think you know, reality is Warsh probably isn't confirmed if the if the case stays in place. So it was kind of a do or die if you want to.
SPEAKER_01Yeah, exactly. And this has been uh I'm sure all times, all all uh chairman uh terms are the most interesting, you know, uh set of years in given history. But Powell has certainly been through the ringer, been through a roller coaster ride of his two presidents over three terms. What do you think his legacy is?
SPEAKER_04So I mean, I think I think he actually he's been an effective Fed chair personally.
SPEAKER_01Um effective or ineffective.
SPEAKER_04I think he's been effective. Like I think he's been a good chair. Is he gonna, you know, look, everybody, I think you think about who are the best uh Greenspan. Yeah, I mean, Volker probably comes uh probably ranks at the top of the list, although he was his situation was a little unique, you know, stepping into double digit inflation. That guy didn't even have to think, they just had to tackle. But I think if you look at Paul, I mean he's had he's had it all. He's had uh, you know, maybe not a full-blown financial crisis like we saw in 08, but he had to deal with COVID. Yep. Um and you know, obviously we have uh COVID was not only what a shock, but then the aftermath of that and and just trying to deal with the tugs and pulls of uh of of inflation versus growth. Um, you know, I know critics will say that he's late. Obviously, Trump thinks rates should be lower, so that's why he's being labeled as ineffective from that perspective. But I think um I mean I think he did he let the data drive it. I think that's the way that I would want to see the Fed run. And I think, you know, rates are where they should be. Um, and I think is he gonna, you know, he's not gonna probably be the best, he's not gonna go down with his legacy as being the best Fed chair, but I would expect him to be near the top of the list.
SPEAKER_01Yeah, it's interesting you say uh, you know, too late, but he's let the data drive it, because that's kind of what the job is. I mean, if you're you're supposed like not supposed to be, but I mean, this is this is uh you know driving monetary policy, you kind of need to be reactive to data that comes in. Instead of going where the the puck is gonna be, you kind of have to be where the puck is. Right. Um, because you just don't know quarter over quarter what it's gonna look like. So you'd sort of have to be reactive to inflationary prints and to job growth and to unemployment.
SPEAKER_04And like the numbers, I mean, they're obviously what they target the inflation and and then full employment, but uh the numbers aren't bad. So it's not like it's not like we have 10% inflation that he's failed to address or that we have, you know, a a we're in some sort of recession where he's failed to cut rates. I mean, things are holding their own right now, and I think inaction is the right action, and he should get credit for that.
SPEAKER_01It's it's funny. We we there's like all these targets that you that uh that a Fed can can set. And the 2% inflation target was the the you know sticker brand um of coming out of COVID and the 9.1% inflation we had in 2024. We never got to two percent, but we got a soft-ish landing. I mean, we have a strong economic uh output right now, um, jobs look pretty full. Uh, in the face of lower labor force because of immigration, or I mean, um, you know, yeah, the immigration. And so, no, we didn't get to 2%, and we're at 2.5% before the Iranian war, we're up to 3.3%, but he's manufactured a pretty soft landing. I mean, you think of the things he had to go through, you like you said, COVID. Then in 2022, when we were coming out of that, you had Russia invading Ukraine, and that is now a four-year conflict. You've got Iran, there's multiple happenings in between 2023 and 2026. Like it's been shock after shock after shock. And and yes, it's always been uh he's too late. But again, I think he's been data dependent, they've been reactive, and and you don't see out-of-control inflation, and you don't see uh a bad employment picture.
SPEAKER_04Right. Yeah, and I think that continues. And what's gonna be interesting, let's if if Warsh gets confirmed, um, you know, I think I don't know that things are gonna actually be that different. Right. I think, yeah, he he's got Trump's ear, or Trump's got his ear, and he might push a certain agenda, but it's a committee by design. And so it's like he's not, it's not like he's the he steps in and suddenly rates go down. So I think um, I think a lot of this transition is probably being a little overhyped. And I think, you know, Warsh obviously has already has some experience on the Fed. Um, so you know, I surprisingly he's probably one of the more qualified people that we've seen this administration put forward. Um, and so I'm not too worried about it. I think I think the committee will prevail as always, and you know, things are gonna be steady as she goes.
SPEAKER_01Yeah, I think Elizabeth Warren called Masock puppet to his face in the confirmation hearings last week. That that'll be the interesting part. And I I want to, I you know, I think Powell will be remembered maybe by one word, transitory. Uh they're coining as inflation is transitory coming out of COVID.
SPEAKER_04Okay, that was probably one of his that was probably the miss. But I mean, look, it was stickier than transitory. It was. And and I mean, I it's a little bit of a joke now, but like you when you think about the circumstances and when you look at that, you know, that basically the supply shock we saw from COVID, like it, it uh it made sense to think it was transitory.
SPEAKER_01Yeah, it takes time to.
SPEAKER_04And then it's obviously taken a lot longer to abate, and then some some cases hasn't abated, you know, especially when you're sprinkling tariffs. There's a lot of things that that kind of mess up the situation, but um, but yeah, transitory is gonna be uh uh kind of a four-letter word for a while.
SPEAKER_01So so let's say we get Walsh in on time and it's May 15th or June uh in time for the June 17th Fed meeting, which is really what matters most, is people seeing the new chairman speaking and and kind of hearing uh his take on things. It'll be interesting because, like you said, it is a chair by committee or it is a uh you know a committee um uh on purpose. And so it's not like he's gonna come in with this agenda that, you know, my my appointee wants me or my appointer wants me in a lower rate, so we're gonna lower rates. It's not how it's gonna work, right? So do you think that the next move is up or down based on our inflation picture and based on who's coming in as the next chair?
SPEAKER_04Yeah, so I mean, I think the the pendulum swings closer to a rate cut. Um, because I mean he will have some influence, obviously is the chair. Yep. So uh he'll have his agenda and that will be the topic.
SPEAKER_01And you've got three other uh uh members of the chair that are Trump appointees as well.
SPEAKER_04So so I think that's where in and you know, we've got uh, I mean, we're we're a month and a half out yet, and there's a lot that can happen. Yeah, we can see, you know, war in Iran maybe gets wrapped up, get some of that inflation relief, and then you know, that now makes a cut look even more attractive. One of the things that worries about me a little bit about Wars is his comments about wanting to be less transparent and not necessarily, you know, telegraphing where the Fed's going. And and that um, I don't, you know, I I I think there's a a need for a level of transparency. Maybe we're too transparent now. I don't know, because now you you know you can't when every time you speak, it's like yeah, it's it it kind of pushes uh things in one direction or the other. But but but I think you have to have some level of transparency. And if he goes kind of quiet uh and doesn't give a lot of indications, uh that that that could be problematic and get a surprise cut. Maybe people aren't mad about that, but uh I I think just that mode of operation will be unhealthy.
SPEAKER_01Yeah, I we're in this day and age where everything is uh every word that's spoken, you can read it 10 minutes later. And so, you know, it's the same thing with earnings where we get an earnings print, uh, the market reacts, but what they really react to on a more long-term basis is the CFO earnings call or the CEO earnings call and the guidance that they provide. Same thing with the Fed meeting, right? We we could get no cut, as everybody's known for a month. What we're really going to care about is their take on the next meeting and their take on the rest of the year.
SPEAKER_04It's gonna be the well, what was the previous statement? What's the current statement? Let's do a word-by-word comparison.
SPEAKER_01Exactly. And and that could shake consumers. I mean, we had so we had a consumer confidence uh print this morning. Uh it was at 92.8 on the index, which was up from 92.2 in March, up from February, still at like the lows of COVID, though. And and people cited uh, you know, the worry for future state gas prices obviously eating into to household um expenses, and and just most of the worry and angst was tied to the Iranian war. I mean, we talked a couple weeks ago, and you said, you know, when the consumer really capitulates is when uh you like to get contrarian from a market perspective. So we're not there yet, you'd say. I don't think so. We'll still side with the consumer.
SPEAKER_04I would um, and again, this is a case where uh it's poor sentiment, but it can stay poor for a while. And I I don't uh I think it it's in line with what's happening in terms of price pressure and and and um and what the average consumer is going through. So I see that alignment. I still sit on the side of the table with them. The the uh things would have to get worse to to for me to feel like that capitulation is happening. Uh so right now, yeah, I think I think we're gonna continue to see bad prints. Um, you know, you might see some optimism creep in if we can resolve this thing with Iran. I think it that'll be probably not a huge move, though, because uh we wrap up Iran if we're lucky enough to do that, we'll see uh some immediate relief on oil prices, but it's gonna take some time. And we talked about this before, right? Like gas stations seem to be able to jack up the prices a lot faster and they lower them. Uh, and so it's gonna take some time. And and and until the consumer feels it in their pocket and in their bank account, uh, they're gonna stay, I think, a little bit pessimistic.
SPEAKER_01What's the uh idiom rise like a balloon, fall like a feather?
SPEAKER_04What's the rise like? It's not a balloon, but uh the rise is like a rocket.
SPEAKER_01Yeah, rise like a rocket, fall like a feather, I think is what it is. Um, what'll also be interesting is whatever the resolution in Iran means, I mean, they've proven to be more resilient than most people think. And so it should not be a surprise. It shouldn't be a surprise. This is why we get in trouble every time. 100%.
SPEAKER_04It should not be a surprise.
SPEAKER_01We'll see like what the fallout of whatever deal is. I mean, it looks like through negotiations, they're asking for some pretty substantial reparations that could make them almost pretty whole. I mean, we'll see in terms of nuclear capability, but from an economic standpoint and and from a payment standpoint, they're asking pretty substantial reparations. I mean, why they should.
SPEAKER_04Yeah, like and and I think um, you know, uh, I still don't really quite know if our what our objective with that whole theater is, if it was to really like take them uh take away some nuclear capability, which again we talked about this. Like I thought they didn't have it anymore after last June, but apparently still a threat. I think probably one one of the worst things that I would think could come out of this. I mean, it's a bad situation all the way around, but they can't control the straight of hormones. And if, and which is an ask, right? They that's they want it to be a toll road now. Yep. And I I think if that happens, if if there's any consolation to that, uh then then this whole thing has been a negative, a greater negative than I think it is right now.
SPEAKER_01Yeah, I I would agree with that. I would agree with that. We'll we'll see how it plays out.
SPEAKER_04We snuck in the straight of hormones and even though it wasn't on topic.
SPEAKER_01We'll uh we'll see how it plays out from a Fed standpoint. Um, expect it to be nothing tomorrow. We'll see if there's any farewell wishes for Powell. But I think you know, the investors are more focused this week on earnings. Um, you know, we get this, we've had unbelievable earnings growth quarter over quarter over quarter for much of the last four years coming out of like the COVID, you know, negative and then positive respike. Um, we've got Google, Microsoft, Amazon, and Meta uh all after hours on Wednesday and Thursday. So the the you know first half or a little over half of the Mag 7 NVIDIA obviously always wraps it up. Um SP 500, you we were talking about this last time, and you asked me to come with some more data. So SP 500 uh expectations for the quarter were 13 year over year growth. Um, as of Friday, we've had 28 of companies report. Obviously, in the SP 500, obviously, those are kind of on the smaller end or financials and not the big tech names. But uh we've got 81% surprise to the upside so far and a 15% year over year growth number. So without the biggest players so far, we're exceeding that expectation. And it looks like we've got nine of 11 sectors on tap to grow. I think the the big you know turning point will be energy and how the short-term uh spikes from from the Iran war affect those. But you know, I I think we're pacing above 13.
SPEAKER_04Yeah, I mean, obviously another strong quarter. I mean, I think you know, you quoted 81% uh surprise to the upside. I mean, you know, on like that's not a surprise. I've got a comment about that. Like on average, I think it's probably 75% anyway. And it's all, you know, it's all uh it's all guidance as you know, revisions and then and then you you meet to beat type of thing. So um that's not surprising. That's statistics not crazy. The 13% growth, that's that's solid. I think um uh, you know, we talked about this last time that uh the the tech push, AI push for sure is going to keep that number high when you when you aggregate everything. Um so I don't it's not obviously a flat 13% across the board, but yeah, strong quarter. And and uh you know, we'll we'll see where it leads, I guess. It's uh positive.
SPEAKER_01Yeah. Yeah, I mean, we we've got you've with the with the four coming up this week already. Um the Mag 7 itself is projected to grow 20% in this quarter for earnings. Um revenue growth projected to grow 22%. I think the big picture though, like I like I said earlier, it's not really earnings, it's guidance. And and you mentioned that as well. And there was a little a little uh loop thrown into the market last night with OpenAI releasing whatever segment of time their earnings were from. And you know, they missed on their own internal projections for revenue and users. Um, and given all the deals that they did last year to to get intertwined with the Mag 7 and Oracle and all these big software companies, that's dragged the market down today. I mean, the NASDAQ's down 1%. All these names are hit a little bit from uh Open AI's uh numbers last night. But it's the age-old question, uh, and it's especially true with AI right now, but but can the profits keep up with the spending? And open AI started to show some cracks last night.
SPEAKER_04I mean, not if you ask Sam Altman, but first of all, I mean, profits have to catch up to spending first and then see if they can keep pace. They're not there yet. And you know, look, if you take a step back, I think it's a pretty fair statement to say that right now the whole AI thing is still circular, it's just infrastructure build out. It's like, I'm gonna buy your GPUs, and you you know, we're gonna we're gonna have a uh a software contract. So uh we the user growth hasn't happened yet, and it takes time. So I think uh I'm still bullish on it. I I think we'll get there eventually, but uh until that happens, I don't see profits keeping up with the spend. And and so you're still kind of betting on on that outcome of at some point there's going to be a large-scale adoption of the technology. And I think you you see surveys, you know, like I think a lot of companies are still struggling to figure out how to use it in their business models. Like what processes are they going to uh try to replace? What are they gonna you know move to a more of an agenc model uh and and and try to reap some of the productivity um benefits that are being touted with this technology? So until that happens, we're going to see, I think, profits lag.
SPEAKER_01Yeah, I think the other interesting thing is the the la the kind of dynamic shift of the last few months uh between OpenAI and Anthropic, where Chat GPT was kind of all you heard from a chatbot perspective and LLMs, and then all of a sudden we hear that uh Claude was used in in Venezuela. And now there's this uh constraint for both Chat GPT and Claude on processing power and data, and there's some uh limitations on how many users they can take on. It sounds like you know, we were we're kicking around an enterprise relationship for the firm, and um sounds like you gotta get deep, deep, deep in line for Claude right now, and you gotta be uh in the six-figure spend. Um, so I think anthropic has certainly eaten into OpenAI's market share a ton.
SPEAKER_04And probably I mean, anecdotally, too. I don't know if you've I'm sure you've probably played around with both chat GPT and Claude. Yeah. And uh, I mean, like the the anecdotal feedback I get is people per prefer Claude.
SPEAKER_02Yeah.
SPEAKER_04Um, and I've done some side by sides where I've asked, you know, obviously done the same query in subject matters that you know I consider myself knowledgeable in. And you know, you definitely get very different responses. And and um, I'm oddly I'm a paying subscriber for chat GPT, but I yeah, using uh Claude for free because uh, you know, it just seems to be a little more uh useful responses.
SPEAKER_01Yeah, I'm in the same boat. I play I pay for I don't know which Chat GPT uh plus version of it, but uh I think what you get from a chatbot perspective is chat GPT wants to be your friend. Yeah, he wants to like you know kind of coat answers when you're in the wrong. It's it's very confirmation biasy. So a lot of the times when I'm prompting, I'll say, don't automatically agree with me. Right. Claude is pretty much to the point, like this is your answer. Um, and then I think from an LLM perspective and learning, and Claude seems to be superior from people I've talked to that are actually trying to train models. Yeah. Um so we'll we'll see what the advancement of that looks like. I mean, you know, Sam Altman is the personality more so than than Dario, I would say. And and OpenAI has been, you know, they linked every they linked to everybody in in the tech industry last year, kind of ahead of their time a little bit. And and you know, the deals with Oracle to to for cloud computing. Like we'll see if they can keep up. It seems like Altman's philosophy is kind of what you said that um you know more spending is gonna then derive more profits and then it's gonna like you know, snowball. It's kind of a chicken and egg situation, I think. Yeah, there's a lot of worry about uh from the CFO and from other C-suite members of OpenAI if their spend is worth it and if we're gonna see profits soon enough.
SPEAKER_04Right. Yeah, I think it is it's it's moving now from uh from that like hey, this is this cool technology. It's it's now the clock is ticking now. And then I think investors are gonna want to start to see some return on this on these massive CapEx spends. And uh and you know, they're gonna at some point the investor base will get will will get impatient. Um, and what typically happens is they get impatient probably prematurely because they don't, you know, every everybody wants that short-term uh regret uh satisfaction. And so um I I think there's going to be some headwinds eventually. We'll go through a uh a period of that and then on the other side of that maybe see what sticks.
SPEAKER_01Yeah. And I mean, we'll see if open AI as a private company, again, they less uh less transparency for sure. We'll see if that forebodes what comes with the rest of earnings season. But so far, you know, what mentioned strong earnings thus far uh through the first couple weeks. What's been interesting though is guidance. Guidance has been very mixed of firms that have offered their guidance for the following quarter. It's about 50 50 on positive and negative guidance. And that is, again, we talked about this. Last time a year ago, the the keyword was tariff. Now it is uh energy prices and Iran.
SPEAKER_04Look, every time they give guidance on the next quarter, it's a giant hedge. And so you're gonna see that now. And and and then, you know, the great thing is whatever they say today doesn't really matter because as we get closer to zero accountability and as we get closer to the next earnings season, they'll be revised based on you know additional information that's been gathered. So I don't, I mean, it's funny the market likes to react to that guidance, and and so that's where you pick up a lot of the short-term volatility around uh earnings season. But in reality, I I like it's noise to me, really, at this point.
SPEAKER_01Yeah, there's uh there's there's one company in specific I wanted to talk about, and it's not related to necessarily this earnings season because they reported in mid-March, but uh Micron. Uh Micron, yeah. Just on an incredible run, up 560 year over year, up 84% year to date. Um as we is that what's decent return, okay. As we uh transition into this, you know, memory uh data and memory being obviously at the forefront of what we need to store for for CPUs and GPUs.
SPEAKER_04Seems a little, I mean, doesn't it seem a little like like I mean, obviously, uh it's kind of when you talk about obviously Micron's business is memory chips, and uh there aren't a lot of chip providers in the memory space, maybe three, four.
SPEAKER_01I don't know pretty much duopoly between them and sandis.
SPEAKER_04Yeah, yeah. And uh, I mean Samsung has, I think, a little bit of play in there too. But uh, so it's like, why this seems like it came out of nowhere. It's like somebody woke up one morning and said, holy cow, we've got all these GPUs, but we need memory. Right. And so, so now you know you get that spike. But is it really one of uh, you know, memory is is historically a commodity, so it's like you're at the whims of whatever this the compute cycle might be. And so everybody, you know, you don't see like these big earnings spikes or or or rises in in stock price because people just assume it's gonna be cyclical. I think what's possibly happening here, and and and you know, I don't know if this is true, but um, if if they're now being viewed as an AI player because they're gonna be a major provider of the memory chips, which AI needs, then then you've got a little bit of a paradigm shift. Well, you have a paradigm shift. I don't know what a little paradigm shift is, but it you have a paradigm shift. Now they're gonna be viewed as an AI player. It's not they're gonna be revalued as not being cyclical, and we'll see. I mean, I wish I would have bought Micron stock a year ago.
SPEAKER_01It's really interesting because I think the market aligns with that thought process that you just laid out because you know it's it's up 560% year over year. That's great. It's still only trading nine times forward earnings.
SPEAKER_03Yeah.
SPEAKER_01Like, you know, we're we're at a uh stock price of about 550. Um, it looks like there's gonna be fiscal year earnings per share of$57. And so it seems like the market is still treating this as cyclical. The broader base market, yeah, there's unbelievable price action, but there's not this big flow of of money that's gonna drive the stock even up even further, uh, and and kind of regulate that that forward PE ratio towards the broader market of like 21 times, maybe because it the the market views it as cyclical and the market doesn't view this as a long-standing solution.
SPEAKER_04Or yeah, I mean, for sure, like uh, you know, I don't even know where it's sitting at forward PE right now, multiple uh probably nine, 10x micron, yeah. Nine nine X forward earnings. So uh yeah, so it's like, but I think it's early for that. So um, you know, I wouldn't be surprised if if that went higher. Uh but you know, it's gonna a lot of it like again, it goes back to this giant circular market right now in AI and and all the the capex and all all the the build-out, like uh if that like it hinges on that getting past that and seeing uh seeing the AI piece stick. And so I think uh it probably will linger in that you know 910X for a while, but I wouldn't be surprised if it it went up from there.
SPEAKER_01Yeah, and and back to something that you and I talked about at a client event in October up in up in Rhode Island, and and it was your uh kind of your floor. Uh, but you know, where would you want to be in the in the AI play right now? Do you want to be in the picks and shovels? Do you want to be in memory? Do you want to be in in data processing, infrastructure, software? Obviously, software has taken a huge hit over the last few months. Um, so would you rather be Micron or NVIDIA right now? Would you rather own Micron or NVIDIA?
SPEAKER_03Yeah, I mean, I would actually I would own them both. I think I like the It's not an option in this it's not an option right now.
SPEAKER_04Um then I'm probably sticking with NVIDIA uh because I think again, it's probably I don't know when I haven't studied like micron's inventory levels, but I know it's it's very easy to get into an oversupply in memory, probably more so than than GPUs. And so I think that if something's going to be cyclical, uh you have a greater chance on that memory side. So I would stick with NVIDIA. Um, but I'm again, uh I'll tell you NVIDIA, but then when I go back to my account and buy them both. Like it's because I think and that's the play right now. It there's too much, there's too much uncertainty, I think, still in what is that software play where in in some ways it's all a it all has to work. Like we have to get a business case for AI in order to support the that technology, and then make all that uh CapEx spends be worth something. So, you know, if if those things don't happen, the whole thing is a house cards and falls. But uh, but for now I'd still be playing on the hard.
SPEAKER_01I tend to I tend to agree with you. I think NVIDIA, um, like like I said, you know, uh from a micron perspective, there's two and a half player sure. I'll give you Samsung in in the memory space. I like the the comment, whether it was tongue in cheek or not, that this seems like it came out of nowhere because it's like a one-year rise in both these names. And if you weren't really tapped into the AI space, which I certainly cannot claim to have been multiple years ago, the micron's a new name for you. Sandisc is a relatively new name for you. Samsung's not because the phones, but um, NVIDIA has had players try to come up and eat into market share. You got Intel, you got AMD. We know Google's in the process of making their own chips. Meta's probably gonna get there as well. Like everybody's joining the space, but it seems like NVIDIA has such a competitive edge because they've been doing this for I don't know, 15 years at this point. I mean, NVIDIA uh GPUs have basically powered OpenAI's rise for the last 10 years, and that's why they got that$300 billion deal with OpenAI. I like NVIDIA's spot as a market leader um and and its ability to fend off competitors more than I think I like microns.
SPEAKER_04Yeah. So I mean, I think in the memory, like if you if you were just looking at who to own in the memory space, I mean micron's a great bet. Like I mean, it's actually for US investor, probably the it's certainly the easiest investment to make it uh and probably probably the best.
SPEAKER_01Yeah, I mean, there's probably some uh some investor anxiety around buying something that's six hundred dollars a share that's gone up 560.
SPEAKER_04Yeah, that's the weird part, right? Like we talk, I mean, that is that's the investor psychology coming in. And you know, but you would have been saying that when it was up 100%, no doubt, right? And now it's up 500. And so it's one of these things where you just can't, you gotta build the business case, you got to build the investment case for it, and then you know, and then follow that plan and stick it out.
SPEAKER_01And if you're a fundamental investor, you know, one of the core things you look at is it's trading 22 times today's PE, it's trading nine times forward PE. You would say that stocks gonna go up to match that you know forward PE. So you there's still appreciation left if you like the fundamentals. Now, if you like the technicals, um, we're approaching May 1st here. By the time this comes out, we'll be we'll be two days away. Um, do you buy into the sell in May and go away theory? Uh as a seasoned investor that likes to stay invested.
SPEAKER_04Well, you know, I'm a big fan for calling out spurious correlation. Yeah. And so I think not Steve Spurrier's correlation. Not Steve Spurrier's correlation, but spurious correlation. To me, that's what the look there, that's the that's the kind of May to September uh doldrums that we see occasionally. I think it's spurious. I think, you know, the I mean, the funny part is uh everybody will try to come up with a case for why it should be, you know, oh people go on vacation and markets are just less attentive, and you know, so got minds on other things, and then everybody comes out and goes to school and then things kick off again. That's that's not how it works. I mean, people are in the markets always. Yep. Um, you know, I think it's funny. It's like this the old uh, how's it go? Like if the NFC wins the Super Bowl and the stock market's up for the year. I'm betting here, if you looked at it, uh I'm gonna, you know, I don't know this, but I'm betting you look at NFC, sell and may and go away is a good thing, and then AFC wins the Super Bowl, then you don't. And now we're spurious correlation on top of spurious correlation. So I'm not a big believer in it. I think uh it's it's it's not something folks.
SPEAKER_01It's it's like uh a lot of technical trends, if you will, that if you if you want to find confirmation bias, you can find it. Yes, and if you want to say that style may go away works, you can find the data for it. I mean, over the last 25 years, uh May to October is like two to three percent uh return, and and uh November to April is then six to seven percent return. Um that would is the only interesting thing about that is July typically tends to be the best month of the year uh for the SP. And so it's it's odd that that would be in the middle of kind of the lower return and summer and and lower volumes. The the you know, the anti the anti uh thesis to that would be or the antithesis to that would be five of the last six years, May to October has been up in the market pretty substantially. Right. Um, and so again, I think it's something that if you look for uh if you want to find the yes or you want to find the no in a trend, you can find it. My question is what's your alternative? You're gonna go sit in cash? Like if you're getting two to three percent from May to October and you want to go to a money market that pays four percent annually and basically get two percent from May to October, are you gonna be in a better psychology if the market goes up and you and you trusted the trend and said, Well, I had to go to cash and you got outperformed, or if the market gets two percent and you get two percent? I'd rather ride the ride.
SPEAKER_04Yeah, for sure. I mean, I I think uh you you ride out your way. I think there's a weird, like uh in a lot of that again comes back to investor psychology as well. I think uh, you know, people, humans, that we value gains differently than we than we value losses. And so I think uh you're going to like you're gonna have regret if you're on the sidelines and there's a huge rally. Yep. Um, and for sure you'll feel bad if the market goes down and you're in it, but everybody's in it at that point. So we're in the misery loves company stage for sure of psychology. So I don't think it's smart, I think you just ride it out.
SPEAKER_01And I and and the way that you've built a couple of our portfolios at Kingsview is is staying invested. And the the philosophy behind missing the best days in the market, and we tend to see the best days come after some of the worst days. And if we drop 2%, there's a reasonable expectation that we might get back one and a half percent the next day. And if you capitulate on a bad down day, you're likely to miss the next good day. One of my favorite stats um is that if you miss just the the best five days, total five days of the last 25 years in the market, uh, your growth of$10,000 drops from 63,331 to 39,120. Basically, you're you're out, you know, 200% or so on that.
SPEAKER_04Yeah. I mean, obviously, uh like if we could strategically miss the best days, then we could strategically miss the worst days and we can flip the tables around and make that work in our favor. I think you're right. They're the the big days uh and the big up days, big down days tend to cluster. Yep. It's usually a reflection of the market environment we're in. We're in some high volatility environment that's being event-driven or some crisis events happening. Um, I think so, you know, and a lot of what you talk about, like when you look at just the math of returns and the fact that they're asymmetrical, uh, you can very easily build a case where missing losses uh can be a huge benefit to your portfolio. Um and and that's you know, that's credible math. Then the task becomes, can you miss the losses? And when you when you miss like if you flip that around and look like what would what that$10,000 investment look like if you missed the you know five worst days, um, it's gonna be a very nice surprising number to the upside. The problem is trying to get that timing down. We actually do have some tactical strategies that they don't look to try to to miss that um you know worst day, like they're not focused on such a short time frame. I think there is some logic behind looking at market cycles and knowing that, you know, if you're in a if you're if you're in a bear market that's forming uh that and that there's a a likelihood that that bear market's going to be sustained, you know, taking some risk off the table can work in your favor there. But trying to pinpoint days is impossible.
SPEAKER_01Yeah, I think especially for someone approaching retirement or in retirement, you know, that sequence of return risk and protecting that is probably, like you said, there's credible math behind missing bad days being almost as good for you, if not better, than than having you know slight upside days. I think back to to the tariff tantrum last year. You could have missed April 9th and missed the back-to-back down two and a half, three percent days. But if you weren't back in on Monday and getting that 3%, 3%, 2%, right, you were even if not behind already.
SPEAKER_04Right.
SPEAKER_01And so it it works so quick like that. Obviously, you know, that it's that feeds into a trend of ours that we like to talk about with speed of information. That again, I've said this many times on on the pod, but I remember the tariff tantrum day, we were sitting in the conference room having an investment committee meeting, and we were like, holy like the market's down three percent, and then 28 minutes later, we were like the market's up one and a half percent. Like, you know, we had a tweet that wasn't a tweet, that was a tweet, that wasn't a tweet. And like, yeah, we're in the day and age where that can happen right now, but certainly um I the the more I think what's important is you stay invested, you stay true to your philosophy. If you're in a tactical strategy, that's great. It's okay to let it do its thing. You know, let it do its thing, and and you trusted the philosophy and and the criteria behind why we're making moves and why you're coming back in or going out. And inevitably with those strategies, you're gonna miss down, you're gonna miss bad days, and you're gonna miss good days, and you're gonna be in for good days, you're gonna be in for bad days. Right. But you got to find something that works for you that that kind of eases the the psychology piece of it.
SPEAKER_04Yeah, I think the the biggest thing is like if you don't have a plan and you go into these crisis moments, the the decision making is so emotionally driven that it doesn't lead to anything positive. It's like you can't you can't be reactive to that to those kind of events when they're happening because that's when you will make you'll make the worst decisions. You'll you will capitulate on a down two percent day, and then and then as humans we're wired, and I've said this a million times, that and then you're gonna sit on the sidelines until it becomes obvious that you should have gotten back in, but then it's too late. Like you you've already should have been in. And so, and that's not our fault, that's just human psychology, human behavior. So, best thing to do is sit on your hands and and not not uh make any rash decisions and that he's in the moment.
SPEAKER_01Yeah, I I'm completely aligned with you there. Let's let's wrap up with our fades or trades for the week. I mean, we're we've kind of discussed a little bit of these, but we'll get some succinct uh takes on this. Speaking of sitting on on their hands uh and the Fed, would you fade or trade that Powell is out of the Fed on May 15th?
SPEAKER_04I'm going to fade that. I think he sticks around.
SPEAKER_01Yeah, I'm I'm I'm gonna fade it. I had it as a trick question because I think he will be, I think Warsh will be in as as chairman, but I do think Powell, even if he's not sticking around through 2028, I think he'll stick around for a short period of time.
SPEAKER_04With the with the DOJ drop in his case, that I he's gonna want to because I think part of the strategy is to stay on like if he's suddenly in the sidelines, he's forgotten about, yeah, and then it's much easier to do whatever if you're trying to uh you know implicate him on something. Uh whereas if he's visible, then you can let that a little defense. A little defense. That's my read, I would say. I like that what I'd be doing.
SPEAKER_01I like that. Second fader trade for the week. Uh SP 500 earnings growth tops 15% when it's all said and done at the end of the uh you sold me. I I will uh I'll trade that. Okay. I I'm gonna trade it as well. Right now, we've got nine of 11 sectors projecting earnings growth. Like I said, the wild card will be energy. Um, and we'll see what kind of short-term swings. I mean, that could if if you've got energy companies that are are reporting huge earnings because of February and March, um, because of the Iranian war, you're gonna see a big print, I think. If if those kind of fall through, it could it could be.
SPEAKER_04And the other part is like, yeah, we'll see how those impact obviously supply, like the price of oil's gone up. Yeah, but if if you're not selling it, yeah, you got you got a nice asset on your books, but you know, where's where the earnings selling?
SPEAKER_01That's fair. That's fair. Um, third fader trade for the week. And this is I said I had a a point on this earlier, but uh a United and American Airlines merger is a good idea. Do you fade or trade that?
SPEAKER_02I'm I'm I'm interested in your commentary. I'm fading. I don't I don't want uh American, I don't want American to be dragged down.
SPEAKER_01That's what it is, yeah. Okay. I'm gonna fade it as well. I think if they merged, United would get some good espresso machines. Yeah, club lounges, but they'd basically be be picking up a bailout. Um American is down to what 40%. I mean I think just 40% in the last five years.
SPEAKER_04No, it's that's just a stock price. The uh I think more seriously, just the pure antitrust, uh what that would mean from a from a competition or anti-competition standpoint, it would just seem like it would be hard to get through.
SPEAKER_01Yeah, and I think inevitably it would be negative for consumers. Like I would I would like as a Chicago hub guy, like that's what that's really why I fly United most, is because Chicago, Denver, and a couple other stops, Newark, um, if you connected American and I could get to the Southeast easily, or I could get uh to Phoenix easily, like that that route tree grows. But I I think inevitably this is American capitalism. And if you've got a company that owns 40% of the skies, they are gonna raise prices because they know they can and they're gonna go up, they're gonna squeeze every penny out of customers, whether that be on ticket prices, on on luggage fees, upgrades, whatever. I think um it would be great for like for loyalty programs. Uh, because I think I fly United as much as I can, but if I have to fly American, I will, and it goes off my books on United, which sucks. But I think inevitably it'd be a negative for consumers.
SPEAKER_02Yeah, I agree.
SPEAKER_01Uh last fader trade for the year, uh, kind of a random poll here, but uh Intel uh is up 130% this year, coming off of strong earnings. They've really rebounded the company um since last year, let's say. Do you fade or trade the Intel rise?
SPEAKER_04Man, um, so what's the bet? Like is the through the end of the year, is it gonna be higher lower from where it is right now? Yeah. Um I would, I would uh I would I would trade that. I mean, you know, I'm not talking about is it gonna go, is it gonna double from here? No, but will it will it finish higher from here? I think I think you know, marginally, yeah.
SPEAKER_01Do you do you trade their uh their role in the AI space?
SPEAKER_04So I I do, I mean, look, Intel's gone through a transformation, and uh, you know, the new CEO is doing a bang up job. I I I'm I'm bullish on them. I mean, it's hard to it's now, I mean we talk about the psychology element of investing, like it's hard to buy a stock when it just jumped 20% on earnings, but um, but I I think you know, I do think they're legit turnaround in general, and then um are a real AI player. So yeah, I think I'd I'd I'd trade that.
SPEAKER_01Yeah, I'll I'll trade them as well. I mean, they seem to be in a a better spot to be part of um, you know, part of this this grouping. And I think there's a jolt added to the company and uh to surrounding companies that are doing deals with Intel when the US uh government took a 10% stake last August. And um, you know, they they Intel saw some quick deals go through with other companies after that. And and so I think uh there's been a revival. Again, I I I like what you said that they've kind of had a transformation of what they are, and um, yeah, I would I would trade them as well and bullish on them as well in the short term and long term. Yep, agreed. I don't know. We didn't dis we didn't disagree on anything. I don't think we did disagree on anything, which kind of defeats the purpose of this.
SPEAKER_04So we may have to have to come up with some more controversial topics, I guess.
SPEAKER_01I mean, I'm fading the hell out of the pistons, dude. I think you might be oh my god, I think we might be aligned on that too.
SPEAKER_04I mean, like that's gonna be a tragic, you know, freaking best record to first round dropouts. I mean, look, there's still hope, but it's the it the light is dimming.
SPEAKER_01Uh it's a bad matchup. The magic are physical.
SPEAKER_04They are their defense is crushing distance right now. What they had like 20 turnovers in the last game or something. I the NBA for me is hard to watch. Michigan on a bad night. I mean, but Michigan still wins. Yeah, I know. So that's that's the piece that's missing in this puzzle.
SPEAKER_01The NBA, the NBA, tough product right now, just uh a lot of foul baiting. And uh I like I said to you, it looks a little better right now. You've got like 192 games instead of like 140 to 130, which I think is better. I don't want to see guys taking open shots and having open run at the rim. Um, but still, you watch a game and you get these like 20 second possessions that's just dribble, dribble, dribble, and then pump fake and then draw a foul. And it's like, what am I watching? I think it'll get better as it as uh the playoffs go on and we get down to the final four or final eight or so. I think we're on a Thunder Celtics collision course, but I don't watch a ton of it. Which is rare. If the pistons are out, I'm done. I probably won't watch anymore. Yeah, fair enough. Fair enough. Well, we're done for today. All right, perfect. So uh that that's today's show, and we'll be back uh next week.
SPEAKER_00Kingsview Wealth Management is an investment advisor registered with the SEC. Registration does not constitute an endorsement of the firm by the SEC, nor does it indicate that Kingsview has attained a particular level of skill or ability. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk, and unless otherwise stated, are not guaranteed. All opinions expressed by the positively sloped participants are solely their opinions and do not reflect the opinions of Kingsview Wealth Management, its parent company, or any of its affiliates. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the positively sloped participants deem reliable. Kingsview Wealth Management serves as portfolio. portfolio manager to separately managed account strategies and investment advisor to exchange traded funds. As of the date of this recording, those strategies and funds held positions in Nvidia, AMD, Meta, Microsoft, and Amazon, and did not hold positions in Google, Micron, Oracle, Intel, Samsung, United Airlines, American Airlines, or Western Digital.