Afternoon podcast 10-7-26

Patrick O'Hare (0:00)

Welcome to the afternoon Rob Black Show podcast, a guaranteed human podcast, which can also be heard on AM 1220 KDOW weekdays at 5 p.m. and on 860 AM The Answer weeknights at 11 p.m. The views and opinions expressed in the program are not necessarily those of this radio station or its sponsors and should not be construed as legal tax or investment advice.

SPEAKER_2 (0:22)

You should always consult the appropriate advisor before making any financial decision.

SPEAKER_3 (0:25)

All rights reserved.

SPEAKER_2 (0:31)

Now, new focus on wealth, new focus on wealth. Get a new focus on personal finance, wealth management, Wall Street, and the economy. Now, Rob Black.

Rob Black (0:43)

I know I say this too much, but it was an interesting day on the market. On today's show, I'm going to have Patrick O'Hara giving a market commentary as well as CFP Chad Burton talking about 401Ks. I'm going to hit the important text stories of the day.

But before we get there, let's take a look at what happened on the market. Honestly, one of the first headlines I saw today was the 10-year treasury continues to take higher. I was like, this is not going to be a good day. 5.36 percent. That's a pretty good level.

Let's say I have a million dollars sitting around, and I'm thinking, do I put it in the S&P 500 and aim for 10 percent, or do I put it in the money market fund and aim for 5.3 percent?

SPEAKER_3 (1:29)

Hey, what happened?

Rob Black (1:31)

And the risk of the stock market being overvalued, overconcentrated, three and a half year positive run, it gets in my head a little bit. I go, you know that safe money at 5.36 percent is actually a little bit better of an idea for me. Because I don't want to come now, a year from now and say, you know, I put a million dollars in too early, into the S&P 500, and then it corrected on me, and I didn't have any more money to put it into it. You get the idea, right? 5.36 percent on a million dollars, $53,600, I'll take it. That's good income. I expect inflation to be between 2 to 4 percent, so when I can get 5.36 percent, I'm like, oh, wait.

That's nothing to laugh about. So that was my initial thought this morning. The day went on and there was more bad thoughts in my head. Supertanker chartered from the Gulf Coast to China for $76 million, 10 times higher than pre-war levels. We no longer just have a supply shock in oil. We now have a shipping shock in oil. Let me repeat day, repeat day as my French teacher used to say.

Let me say it again. The Alexandros was chartered by the trading firm Trafigura and they're expected to load around November 19th. The normal rate for the route based on pre-war levels would have been 7 to 10 million dollars. It is now going for 76 million dollars. The cost of the journey is going to come to about 38 dollars per barrel. So not only is the barrel a hundred dollars a barrel, but then the shipping cost adds another 38 dollars onto it.

Ouch.

SPEAKER_3 (3:22)

We have a shipping problem.

Rob Black (3:27)

It sounds like I'm getting a little bit negative, aren't I? I know earning season could save us, but I'm starting to get to the point where like, is this a bend don't break? Is this a, oh no, this is going to hurt when it snaps back. Mega cap stocks rebounded today, lifting stocks from their worst levels as treasury yields retreat.

S&P 500 was down two tenths of one percent than NASDAQ down two tenths of one percent, finishing near their best levels of the day after recovering from much steeper morning losses. Dow Jones Industrial Average remained a notable number down seven tenths of a percent. Boy, we're having a good year. The Dow is up six and a half percent. The S&P mid cap 400 is up 10.1 percent. The Russell 2000 up 12 and a half percent. The S&P 500 up 14 percent. The NASDAQ up 18 and a half percent. Recovery today was concentrated largely amongst mega cap and tech stocks. It accelerated as treasury yields retreated from their morning highs. Ten-year treasury note yield climbed as high as 5.36 percent before a strong 39 billion ten-year note reopening helped spark a rebound across the treasury market.

There was a divergence that was evidence with the Russell 2000, which was down 1.3 percent. The S&P mid cap 400 down 1.6 percent. They remain near their session lows despite the recovery in the major averages. Their rate-sensitive pockets in the market also stayed under pressure. Caterpillar.