Transcript:
Hello, everybody, welcome to Friday, I really want to thank everybody who came to Go Live With Tom today, I had a really good time, obviously, we’ll be doing that every week. So thank you for coming. And if you did miss it, we have recorded it. And I will include it, you know, in the emails that we send out, or you can subscribe to the channel by hitting the subscribe button and then hitting the little bell. And it’ll notify you when we post these other videos that aren’t, you know, this daily video. So, so today was very fascinating. Actually, let me show you the chart here just to show what happened here with the S&P 500. For example. This is a chart that shows kind of by the minute, you know, rates of return, we drag this down a little bit so we can see it last, you know, three days, so nice steady gains. But then look at this. And this has been happening on Fridays, for some reason, this giant kind of motion upward here right at the end, which is really fun.
So big, big move. And very fascinating today, just in the sense that this is happening in the middle of, you know, a report that came out today, from the Producers Price Index, the expectations was that we would see an increase of what the prices that they are getting for a half percent, and it came out at 1%. So this is showing some inflationary pressure that we’ve been talking about quite a bit. And again, it’s showing this upside surprise, where things are really jumping a lot more than, you know, the analysts are expecting. We saw with the jobs number we saw with the service industry number, we saw it with the manufacturing number over the last, you know, like 10 days.
And so I think, again, we’re gonna continue to see these upside surprises and all kinds of different places. So, you know, what does that mean, obviously, well, the market originally when that report came out, actually dropped, you know, not a lot, but some, because again, there’s some concern about the inflationary pressure that might come that could affect the stock market, you know, kind of in competitive nature. But then, you know, obviously, as you saw there, they’ve got over it, by the end of the day, I think the basics for the market, and the amount of cash flow that’s coming in the low interest rates and total are something else. I mean, one of the things to keep in mind, you know, just kind of put things in perspective, the Federal Reserve expects inflation to hit 2.4%. This year, I think we’re going to have an upside surprise there, I think it’s going to be higher than that. But if we go back, you know, to 1974, inflation was over 12% at that point in time. So, you know, even if this inflation hits three or 4% this year, it’s still really low in comparison, I do think the market will survive that it could get soft at periods of time, if it spiking really hard, but then it’ll resettle. And that’s kind of what’s happened. If you think about it, we went from roughly .6%, on the 10 year Treasury to about 1.7%, just since August, two now, and periods of time have got kind of soft, and now the market is kind of hitting new highs almost every single day.
So once it kind of settles in, I think that’s exactly the pattern, we’ll see when there’s a spike. And kind of in those interest rates, we’ll see softness in the market, we’ll see more softness in the growth stocks than the value stocks, just because that’s kind of how it works with these. And then we’ll see you know, it settle in maybe, and then the market can move off again. So because I think the fundamentals are so strong, that you know, higher inflation means higher earnings, ultimately. And so that drives the stock market. And that’s something I think the market really looking forward to.
So not a bad day, actually lots of green on the chart today, lots of the stock pieces, the bond pieces were down today are inverse pieces were up because the bonds were down today. And again, so the bond market responded more negatively to the possible inflation from this PPI report than the stock market did which you know, which is what you would expect actually, that is why the bond markets going to have some more challenges trying to get you know, through this time period and back. Now, please again, remember that even though the S&P the 10 year treasuries at 1.7-ish right now, you know, again, it was at 3-ish, before this whole pandemic started. So, you know, it wouldn’t surprise me if it doesn’t get back there at some point in time also. And I think we’ll survive that as far as that goes. So great day.
Thank you again for coming to Go Live With Tom, I look forward to seeing you on Monday for the daily updates and then again next Friday for our live stream. Thank you very much. Have a great weekend.