Transcript:
Tom Vaughan:
Hello, everybody, welcome to Monday. It’s a red shirt day, unfortunately, today. I haven’t worn this in a long time. The S&P 500 was down 1.7%. Let’s just talk about some of the things that happened and what we might watch for. So first of all, one of the big catalysts seems to be, there’s a big company that does real estate in China, that is having trouble making a payment on its debt. And China itself seems to be moving more towards centralized government again. Through regulations it’s trying to essentially take over some of the cash flow of some of these bigger companies. So, the Chinese market, stock markets been struggling for quite some time. That’s why we don’t have an exposure there, as far as that goes.
The other thing that’s been happening is just the debt ceiling arguments that have been happening, this becomes of course a big political issue. And here’s the bottom line, here’s how it works, as far as I’m concerned: I bet you it gets worse before it gets better. Lots of saber rattling on both sides as to what needs to happen. And then ultimately, there’s a lot of political pressure that’s put on the people that are in Congress to get this done. Because there’s the donors and the big companies, and what have you that are out there want this to get done, and so it will get done. I think that it could bring the market down a little bit further, which again I think is opportunity. So for example, if there’s fear about the debt ceiling, bringing the market down, and then they resolve it, the market, at least for that portion could come back up pretty quickly.
We’ve seen adjustments to earnings that are happening, and that is because of the supply chain issues. And so, companies are having trouble making their products. The demand is there, which is great, and that’s super important. The consumer report that came out in August was up. And so… they want to spend the money, but then the companies can’t produce the product. Of course, that’s going to affect their bottom line.
Those are temporary issues, they work their way out. We saw lumber prices go up, skyrocket, and then all of a sudden, there’s all kinds of lumber, and the price has come down quite a bit as far as that goes. So, those aren’t going to happen all the way across all these different supply chains, and what have you; the demand is pretty decent. I do think that that works its way out. Although, that could take a while also. Just because it does take time, to kind of produce more pieces.
And so you kind of have all these different currents that are going on at one time right now. Quite a few of them are on the negative side. The overall stock market right now is just down, a little bit over 3% from its all time high. These are normal motions downward. You still have to assume that this is an upward market until proven otherwise. And so I think there’ll be some opportunity here, I don’t think it’s here yet. This is just a small downturn so far, but at some point in time, if it continues down, they’ll be some chances to maybe accumulate some really good companies at some good prices, because I think a lot of what’s happening right now is not systemic.
If you look back on the positive Friday video that I did last last week, and watch that again, you can see there’s an awful lot of really basic things that are super important to the stock market, that are still in place, that haven’t disappeared, and a lot of this just has to do with honestly, just we stretched the rubber band so far. It got ahead of earnings, and you’re bound to have some snap backs.
And those snap backs are critical. I mean, they let steam off of the market that has been really, really unbelievable, so far this year, for example. So there’s nothing wrong with what’s happening right now. Hang in there. The bond market is doing fantastic. A lot of you have a lot of pieces in the bond market. It did really well today, and really came up nicely to offset some of the losses that we had on the stock side.
Altogether, let’s just wait and see what’s gonna happen. Keep watching. Lots of buying came in at the end of the day today, so that could be a good sign. We’ll see what happens as far as that goe; we get a lot of bargain shoppers that come in as far as that goes. So anyway, look forward to seeing what’s gonna happen tomorrow. This is a very interesting timeframe to see how this plays out. Talk to you then thank you very much.