Ep. 317 Want In On The Stock Market’s Latest Rally? Here’s What To Watch For.
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Hello and welcome to another episode of the Investing with IBD podcast. It's Justin Nielsen, your host, and we are coming to you live at 5 p.m. Eastern as we do every Wednesday. And today is April 23rd, 2025. So welcome to the show. And I'm happy to have back on the show a good friend, colleague for a number of years now. I think we're up to 27 or no. What are we up to? Yeah, it's...

28th year? Yeah, this will be the 28th year. 28 years and a couple months for you, I think, yeah. Yeah, so for me it's September and you're a few months ahead of me in terms of our time. We both started in 1997 at Investors Business Daily. So Ed Carson, our news editor, and also nicknamed Econ Ed. And I mean, look, with all the stuff that we've had going on with the economy, global economy, Fed, tariffs,

Who better to have kind of walk us through a lot of this stuff than Ed? So thanks for coming on the show. Hey, thank you very much for having me, Justin. Absolutely. So let's get right into it. I mean, what do people need to know about tariffs? Or is this one of those cases where the more knowledge you have, the worse off you might be?

This might be. So you might want to just not listen to any of this. Like, oh, no, actually, no. But that happens at times. Oh, great, Ed. You come onto the show and say, hey, don't listen to the podcast. Well, I say that sometimes about my columns, my writing, is that the issues – yeah, it is important. You want to know the news a little bit, but obviously the market is your final guide. So when you can hear these things and you can take –

Take these opinions. The news might be bad and the market may take off. The news may look good to you or even other people will say it and the stock market will sell off. So ultimately the market pays attention. But yes, I think people don't need to understand is that what's going on with these tariffs is really radical. Even some of the minimum levels that Trump is talking about, we're putting tariffs up at the highest levels in about 100 years.

I mean, and, you know, so some of them, they may be coming down, but even if they do, there still would be much, much higher than they've been in generations and much higher than most of our trading partners do. You know, I know that President Trump will often say that other countries are stealing from us, but he generally views that if other countries have a trade surplus with us, they're stealing.

they're stealing even if they're not. So that just makes it difficult. So it is a major dislocation of the global economy. So in the very short run, at the very least, there's going to be big dislocations, even if a lot of these tariffs come down quite a bit. So there's still a lot of risks. There's a lot of uncertainty as well because we don't know how the tariffs will play out. We don't know what they're going to be like hour to hour,

And so that raises the difficulty for the economy for investors. If you don't know as a company what your tariffs are going to be like –

how are you going to what are your decisions on spending in short term, let alone big investments? So it's just not it's not just oh, it's a little thing always doing this and that it is a really big change. It's it's effectively the biggest tax hike that we've had since World War Two as a percentage of GDP. So it's it's a big deal. And so we'll see how it all plays out. But it's

it's really a big deal. Yeah. And I think everyone can agree on that part. You know, everyone knows that this is a very radical change where the, you know,

where the, I guess, confusion for a lot of people is, is whether it's a good thing or a bad thing. But as you said, a lot of times it becomes a little bit more obvious months or years down the road, like, oh, well, of course that's what was going to happen. And again, that's whether these are good or bad. There's going to be an element of, oh, of course that's, you know, what would happen. But I guess with something like the tariff issue, again, because the

It's either, you know, when you listen to some very well-respected economists and, you know, political pundits and everything like that, it's either a disaster or the best thing ever, you know. And I guess how do you approach it? You know, you're the news editor at IBD and, you know, we're really kind of trying to figure out what is happening.

the best information for investors without kind of a political spin to it. So how do you, how do you kind of go about that? You know, what, what is your source of information to kind of make sense of this? I mean, I do try to follow the market. I'm trying to stay more in the now in terms of like, this is what's happening now. And, and it is negative right now. There's going to be dislocation. It's not, the tariffs aren't going to be positive anymore.

in the short run for the economy. I think most people would agree with that, that there would be some pain because it's hard to know. And because again, we don't know what the tariffs will look like. So it's hard to really make prognostications about how this will all play out when you really don't know what the tariffs will be like. So I have personal views. I've generally believe in free trade for a lot of reasons. I'm concerned that I personally believe

think that there's that the aims will not be achieved through that but I just started thinking in the short run this is what's happening this is how the economy react this is what you know we're seeing here and

And going from there and discussing what the goals are from the Trump administration. They're somewhat conflicting because you can't say that we're simultaneously going to raise a ton of money but also reshore everything. Because if you get tons of tax money from imports, that implies there's going to be tons of imports. But if you think you're going to reshore everything, then those imports are no longer going to be there. Now, there's a mix of those things, but you can't have both of those things. Right.

Another goal is, well, maybe we're going to isolate China. Well, if you're going to do that, then you might want to be targeting China as opposed to going after everybody. It's sort of like hitting everybody and hitting all your friends and then saying, let's go after that other guy. Your friends may not like that so much. And so there are some different games. There's different things. And generally...

Generally, I would also just sort of like, not only is it 100-year tariffs, nobody has tariffs like this except for very poorly run countries that have no capacity to raise taxes in any normal way. And so they use tariffs because that's about the only way they can collect revenue. So it's very unusual what we're doing. But yeah, so I just try to keep it local. I'm just trying to see what's going on and look at the data. And I try to be honest. We haven't seen the negative repercussions in the economy yet.

There's some hints at it that this is happening, this is happening. But if you look at the economic reports, and this is something Fed Chief Jerome Powell has said,

It's not really there yet. I mean, he expects it to slow the economy, expects prices to go up, but we haven't seen it yet. Yeah. And all of that takes time, right? So, again, whether or not this is a good thing overall, that part will take time. As you said, I think a lot of people can agree that there will be short-term pain. The question mark is whether there's going to be long-term pain, too, or long-term if this is something that gets, you know—

gets kind of resolved. And I guess to kind of, you know, wrap a little bow on that, at the end of the day, you know, you're very good at kind of deciphering what's happening with the economy and knowing all of these different levers that go into it. It's tough, though, because there are so many different variables that go into it and things that can change things. So what do you kind of

You know, I think back to Bill O'Neill, the founder of Investors Business Daily, when he's analyzing a stock, he looks at, you know, the fundamentals and the technicals, leaning more heavily on the fundamentals, using the technicals for timing. But when it comes to like the economy, how much do you lean on kind of your macro economic thesis versus what the stock market is doing right now?

Yeah, it's a weird mix. I'm looking at – yeah, I have my ideas and I try to see what's happening out there. But yeah, it's because I don't think – the stock market is having some reaction to it, but the stock market is trying to be forward-looking. But it's – I mean, let's face it. Even the market, I think, is a little bit in the dark on how things are going to play out, positively or negatively, because the news changes so quickly. I think that –

You have to try to be humble on this and just sort of take a look at what is the market doing? What is the economic data showing? I mean, it's one thing that might lean into what you believe or it leans against it, but you have to take all that data into account and just try to be honest with yourself and with the audience out there. I mean, I take it seriously that

You know, I have all my sorts of opinions, but I really do want – I want to make sure that readers and viewers are getting accurate information and aren't, you know, swayed negatively by, you know, wrongly – not negatively, but wrongly about major issues. And, again –

You may think about the economy may be terrible, but the market may still take off. The economy was terrible in 2020. The Q2 2020 was like the biggest contraction in like, I don't know, maybe since the depression. And the stock market was rip-roaring. So you just have to take that into account. You have to separate also the economy from the investing. Yeah. Yeah.

And that was another case where, again, I think it became obvious after the fact. Well, of course, with the amount of liquidity that was being pumped in, you know, all of the things that were happening in 2020 as a result of the covid, you know.

shutdowns and everything and that recovery, what that looked like. Oh, of course that's what happened. But when you're in the thick of things, it's not always that clear. And to your point, when you're saying that some of this is the market isn't sure either, I mean, that's why we've been seeing lately these very big swings because, again,

one headline comes out. Uh, and I mean, heck, there was that one day where a headline came out, it was dispelled, you know, and you had a big move up, big move down. Uh, and then a couple of days later it was, Oh, the 90 day pause is back on right back up. And, uh, you know, 12%, uh, you know, as, as was noted a number of times, I think it was the second largest percentage gain, uh, in history, the largest point gain in history. Um, and,

And so, of course, this is where people say, well, this is why you need to be invested, because if you're not invested, you're going to miss those 12 percent days. But it was surrounded by some really bad days.

Yeah, I'll be honest. And just to talk about, I've kept my 401k just sort of going. I probably should have stepped it out, but I generally just let that run. I just let that run, you know, the dollar cost averaging and all that. But personally, I stepped aside. But yeah, it just makes it very difficult to get any kind of edge in that market. We can talk about it later. But yeah, it's just a different situation. So even if the market felt like, okay, right now,

the market collectively feels comfortable with where things are, like where things are priced. But yeah, as you say, things can just change so dramatically in a way that is just not usual because Trump can do things unilaterally on trade. I mean, he can do massive things on essentially reordering the global system with his own whim in a way that nobody can. I mean, right.

Nobody can. I mean, I suppose if Jerome Powell wanted to say even he couldn't like unilaterally do it, but let's say he wanted to raise interest rates to 40 percent or minus 20 percent. I suppose you could do something radical like that. But other than that, there's really nobody who can have with an instant that transformative effect.

Again, it's hard to step back. Looking back, we'll go, wow, the changes that are going on. And maybe everybody will go, wow, this was just what we needed. But boy, are these some wild times. And it's just hard for without that precedent for even the market to keep it all and keep it all track. Mm-hmm.

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So shifting gears a little bit, when you're kind of looking at

a lot of uncertainty. I mean, there's certainly... when you're trying to decide what stocks to get into, I mean, there's some that you could say, oh, these would be the winners or losers if the tariffs do X. But since we kind of don't know a lot of those...

What do you kind of do in terms of your stock selection? You know, how do you kind of say, OK, I can build a thesis off of known information, but there's all these unknowns. So what do you do there for your stock selection? Yeah, I mean, I tend to look more in the defensive growth area and because defensive stocks may do well, but I always get nervous about, oh, everything turns up and then those stocks immediately tank.

And so I'm looking more. I tend to do defensive growth and often medicals because they tend to be insulated to a certain extent. I'm trying to look for things that are more insulated for things. So there's some maybe traditional growth names like a Netflix or a Spotify that may be somewhat insulated from tariffs that you may feel can handle turbulent economic times. But I'm looking for things that

you know, probably have somewhat recession-resistant but might do well in a good market too. You know, that's sort of my general bias. But I'm looking for other things. I'm still looking at some growth names. I'm still looking at a few more defensive names. But that's sort of my bias in sort of up and down times because I feel like those are kind of stocks that –

You know, we'll tend to hold up and maybe set up in the markets going down, but be ready to go. But it might still do well when we get into more of a risk on market. Right. And I guess to that point, I'm just going to pull up a chart real quick here, because certainly one of the things that was being talked about is.

Well, gosh, you know, gold, and I'm just going to pull up the monthly chart here. This is something that had this big, long cup with handle, what Jim Ropel's been calling the Mona Lisa of monthly cup with handles. It still kind of took a while. I mean, and when I say a while, years for this little handle, I guess. But man, this has been really kind of on a tear. But then you go to the daily chart and...

As the market started to recover a little bit this week, it was kind of what was working, what was the safe haven, it kind of just seemed like the money comes very quickly out of that. Now, this was extended and kind of going at a different angle, I guess you could say. But

Again, when things change that quickly, do you kind of change your time frame in terms of maybe a little bit shorter with your trades? Or how do you approach that? Often what I'll do is I'll just not trade as much. I'll be honest because I don't really enjoy swing trading. I just don't because I feel like it just seems like a lot of effort to stressing myself out. And I'll do it sometimes partly because...

maybe out of happenstance. I think things are going well, and then I go, oh my goodness, this market's turning over here. I sold. Look at me. I'm a swing trader. But that wasn't necessarily my goal. So that's often what I do. But sometimes I'll take some partial profits, try to lock some in. But again, I just try to stay to the side. I feel like that's more my edge. Just on gold, I tended to stay away from things because of that knee-jerk situation. And I think there was something interesting. What happened in early April when

the so-called reciprocal tariffs were first announced, you saw even gold sell off. And you saw a lot of defensive things really sell off. And that can also happen when things get really bad. Again, there can be a sell everything. Like, yeah, there's other... You have margin calls and other things. I better sell the stuff that I've got gains on. So, I mean, I don't know, but everything is selling off. Yeah, to that point, you know, Berkshire Hathaway, which, again, you think, oh, well...

You know, this is the value play. And same time period, you know, there you go. It was a big whoosh down, not what you typically see from Berkshire Hathaway. So the defensive names will do badly if things get better, and they won't do that well if things get really bad, especially –

especially if there's massive selling. It's one thing if it's bad, bad. When a boring bad, they can do fine. I like gold especially. But yeah, there's that issue. It just makes it really tough. And I just think it's that if you can do well in these markets, boy, you can do great in good markets. So it just generally, that's usually what I try to do. I usually find that whenever I play these markets, I

I usually end up getting nicked up more than anything else. I usually don't make much headway, and that's if things are going well. I'm usually just losing ground when I should just be preserving my capital financially and emotionally. Yeah, and that's a big thing. We often talk about that mental capital preservation in terms of –

sometimes trading in markets that are moving 12% in a day and then down 6% the next day, that's draining. Especially, not everyone knows this, but you're kind of a busy guy. You're doing multiple things at one time and to have a market that tosses you to and fro that you have to constantly like, oh, I've got to get completely out because this headline is just tanking things or I've got to get

you know, really invested because this market is taking off without me, that can be mentally taxing. It can be. It can be. And I will say that the worst kind of market, and it's possible we're in that now. It's hard to say because it's like, depends on how you want to look at the timeframe, but choppy markets are the worst because it draws you in, but it draws you down. But if you think of charts, it's like if you buy on strength,

You're sort of buying at the top, and then you'll bit roll over, and then you get shaken out, or the market sells off, and then you've got a big loss. And so, choppy markets have just enough power to lure you in and out. Of course, you sometimes need to play that because you don't know if things are starting to go on an upswing. Maybe that's the real one. Maybe this is when we really go higher. So, you can't ignore that strength, but you need to be really tentative about it.

in that kind of environment in my view because sometimes I'm not as fast. Another reason why I'm not a swing trader is I'm not

I'm not as good at cutting losses as I should be. I do cut them, but it's like I could be better. And so that means I need to – I say it and I tell it. I'm really saying it to myself. If you're going to jump in in a dicey market or go in heavy, you have to be ready to jump out just as fast. And I tell that to the audience, but I'm really telling that to myself. Right.

You know, I want to spend a little bit of time just talking about the 10-year treasury yield. And I've got to say, you know, when I first got introduced to your work, I think it was in the late 90s, I started reading, you know, what was it called? Was it called FedSpeak, where you basically translated what Alan Greenspan was saying? You know, he would come on and he would say such and such. And then, you know, this is what that meant. You know, the change of this one word

And you would write two paragraphs on that one word change. Was it called? Oh, it was called Greenspeak. I think it was called Greenspeak. Greenspeak, yes. It was a weird environment because 15 years earlier than that, the Fed wouldn't say anything. Sometimes it wouldn't tell people that they'd even cut rates. And now they talk and talk and talk, and they're pretty clear about what they're trying to say. But yeah, it's...

But on the 10-year Treasury yield, it seems to have calmed down. But you can see that spike from a couple of weeks ago, or at least on this chart. That was not good. That was unnerving. And I think that was one of the things...

One of the first things that when Trump was first at that 90-day pause, I think that was one reason why, is because the U.S. market was starting to act like an emerging market. Normally when bad things happen, even if the bad thing is the U.S. economy, people rush into U.S. treasuries because it's safe. They rush in there. But we were seeing, even when the stock market was tanking, we were seeing treasury yields skyrocket.

And that was like, that was not good. It's fine if treasury yields are rising because the economy is strong and yada, yada. Okay, you may not like it, but that's normal. But the treasury yields surging and the dollar tumbling while stocks were falling was not good.

That was unnerving. You don't necessarily need to know all those things, but I can tell you that was definitely something that I think that caught the eye of a lot of people on Wall Street and in the White House. I think President Trump himself specifically was citing basically the Treasury market, talking about it getting yippy. So that was a little disturbing. It calmed down a little bit, and so that's fine. But yeah, so that's something out there. And obviously it doesn't –

And just even setting aside the weirdness of it, rising yields. I mean, part of the argument is that, hey, maybe the Trump administration will be able to refinance a lot of debt at lower rates. This hurts that. And companies that are probably freezing all investment opportunities right now because they just don't know what to do, these higher yields just make that all the more like, I'm not touching anything. Why would I want to borrow at these rates? Not that they're sky high, but just at the margin, we don't need to do anything to discourage investment right now.

Mm-hmm. And, you know, in terms of, I know that we've sometimes been looking at rates and kind of saying, okay, well,

again, based on what the 10-year treasury yield is doing, these are the areas that we expect to do well, whether it's, you know, real estate when those rates are going down because you're expecting, you know, the mortgage, you know, mortgage rates to also come down or, you know, small caps, again, because they rely more on borrowing. And so when their borrowing costs are less, lower rates are better. So when things are kind of whippy like this, is there, again, a kind of a

Where do you turn? And especially like what we saw, I often was quoting you because a lot of times you were saying sometimes the 10-year treasury yield, it didn't matter until it did. We would see it really go up a lot and it didn't seem like that was affecting the real estate REITs or building home builders, what have you, but then all of a sudden it did and then you had those things kind of crashing. So I guess with

as much whippiness as we've seen in the 10-year treasury yield lately, does that kind of give you a game plan for where you look at all or...

No, that just makes me nervous about the whole market. Yeah, because you don't know which way it's going. But it just, again, if your safe haven isn't safe, that really is scary. I mean, it's one thing. It's like, you know, it's like, oh, things aren't going well. But if I go here, things will be okay. All right. You know, there's a place that will protect me. But if nothing, but if you feel, and it may be completely erroneous, but if you feel, if the market feels that there is no safe place, that just,

creates the fear. So the treasury yields whipping around like this, especially when they were whipping higher, wasn't just reflecting market fear, but it was heightening it to a great extent. Because again, there's no safe place other than cash, but a lot of people have to be invested. But if everybody sold stocks, that would probably not be good. It's good for a lot of individual investors, but if literally every mutual fund went to cash, I think the stock market would have a little trouble. So...

Yeah. So that I think is more about just raising concerns about, wait a second, there's just doesn't seem to be. What can I count on? If I can't count on this, what can I count on? And again, it calmed down. So, I mean, I think that's a big reason why the market is doing better, obviously, with the headlines. But those headlines also calmed down the treasury market. And I think that definitely matters.

Yeah. Now, again, it doesn't mean we're out of the woods because, I mean, there were some people that were kind of declaring victory and kind of saying, oh, okay, well, there's nothing to worry about now. But there's a lot of this that's still undecided and quite opaque. I mean, even the deals themselves, there's a lot of talk of deals that are in the works, but we just – we don't know yet. Yeah, and just to speak – and I know this is more –

going to stuff we were talking about in the first segment, but because, again, Trump has... He doesn't like surpluses, but it would be hard to get a lot of these countries to get rid of those surpluses. And I would like to do that. So they wanted...

So there's not a lot for them to give. Their tariffs are pretty low. Yes, there's non-tariff barriers, but everybody has non-tariff barriers like we do, like our EV credit, $7,500. That's Buy American. There's a lot of Buy American provisions in government procurement. And I'm sure there's other countries have Buy Japan, Buy France or whatever, but those are non-tariff barriers. They're not technically tariff barriers, but they're there. And so you could see some of that, but the U.S. has that and the U.S. tariffs. I'm not sure why.

what kind of deal is really on offer? Because, you know, the other countries might be able to give a little bit here and there, and that'd be great if we could do that. But they would point the U.S. tariffs to come down a lot, and I'm not sure how much they really will come down. So, again, that's just something. I guess that's just a point, is that it's not clear what deals will be made. I mean, given the dynamic of what Trump wants and what other countries might be willing to accept. Right. And...

While we're kind of on that topic, again, everyone kind of has their – each country has their own agenda, right? I mean they want their country to do well. And so to that end –

If we take a look at the international market, and look, I'm looking at the Vanguard Total International Stock Index minus the U.S. So this is basically everything else. And sure, China is a large part of this, but this is everything except for the U.S. And

I mean, you look at this chart, relative strength versus the S&P 500, it's just been in a long-term downtrend. I mean, decades where international just hasn't been doing anything. And everyone kind of says, oh, well, it's time for international to shine. It's due, but it just hasn't. So given the tariff situation, could this be something where...

It would be interesting to look at more international stocks. And I'm going to just go to the weekly to get a little bit more granular here. And then the daily, you know, a strong move off the bottom, just as the U.S. has done.

U.S. market, but whereas we're still below our 200-day, our 50-day moving average line on the NASDAQ composite, the S&P 500 and whatnot, international minus the U.S. is looking a little bit stronger.

It's hard to say because these other countries are going to face issues, too, from tariffs or just the reduced trade. Their economies might struggle, too. And look at the relative strength. It's really back to where it was like several months ago. I mean, while we rallied a lot in November and December, internationally, it didn't do that much. You know, like you could see how there was that drop. So we're sort of going sideways. I don't know. I

I mean, there's an argument. I mean, this is part of the thing. It's like the U.S. has had stronger economic growth. It's had stronger productivity growth generally than a lot of the other countries out there. I mean, certainly the rich nations like Europe and Canada, Japan. So there could be something down the road. But I think that may be more like when things are settled, because I think there's a concern that a protected U.S. economy, especially because the economy is so big.

companies wouldn't even bother trying to compete internationally. There's enough here. There's enough here to do it. And so you could see innovation slow down here. I also think something totally separate from innovation

One thing that might be better for international is the fact that simultaneously with these tariffs, it seems like there was concerns about AI hardware spending. And that really isn't related to Trump. But it's like, you know, we saw with NVIDIA, we saw this deep seek that maybe we don't need to spend as much money on AI hardware. Again, the jury's still out and all that thing. And I don't know. But we've seen with some of those names, a lot of those AI hardware plays and not just chips, but, you know, but even things like

Vistra energy and all these things that were going to provide the energy for the data centers, for the AI, you know, like, so yeah,

If you think that AI isn't... And that's been a huge reason why the U.S. has outperformed in recent years. And that just isn't something you saw as much in Europe or Japan. So maybe if AI is less of an issue and tech is less of a tech time, that other countries might do better just because we don't have that special edge, even setting aside the tariffs. But I don't know. I mean, it's hard to bet against the United States. I...

I think that, but I do think that there could be concerns about that longer term. But I think you'd want to see how the dust settles. I don't, International has done something nice here, but it, you know, I'm not really convinced that it's really outperformed even that much in the last few months. You know, it could last five or six months, let alone longer term. So, you know, you want to wait until the dust settles to really feel comfortable about that.

Well, and kind of on that AI theme, I mean, you know, we were certainly seeing, you know, the...

Gosh, for a few years here, it was really kind of all about the Magnificent Seven. You know, those were really kind of leading the U.S.-based indexes to such great heights. It was really these heavyweights that were doing the heavy lifting, if you will. So, I mean, you were around in the 90s. You remember the whole Internet boom and how that played out where, yes, you had all these companies and, you know,

You didn't know who the winners were going to be. And even, you know, Cisco was established as a big winner, but then, you know, 2000 rolls around and Cisco still hasn't made highs, even though a lot of people still use their stuff. It just, it's, it's, it never got back to its old glory. So I guess, do you have kind of a, a thought of how a lot of people are using the internet analog with AI? Well,

What is this current, I guess, uncertainty or little AI correction due for that overall analog to the internet in terms of where we're at in that? Obviously, people still use the internet. It's not a fad. But the problem is that all these stocks, a lot of them busted. And it could be that what if – I mean it would be –

great for the use of AI. What if AI was much, much cheaper to do? Right now, it's very expensive to run these models. I mean, it's just very expensive. So that helps NVIDIA and the hardware companies, but even helps the company spending on it because nobody could compete with Microsoft or Google or others because you have to spend so much money. But what if it gets a lot cheaper? All of a sudden, the uses for it, just like the internet, it's like, hey, once it gets cheaper, like, oh, once PCs really get out there, so there could be a productivity boom. It could be great for the economy, but

But it could be terrible for a lot of the stocks that have been really high market cap stocks. So I just think that you have to think about that. I don't know. Again, the stocks look terrible right now, so that's easy enough for me to say I'm going to stay away from them. If they set up again, I'll look at them even if I have this thesis that I don't know. I mean, you just have to play that kind of thing. But I think that is the concern is that

There may be a lot of other companies that benefit, but those are probably diffused in the economy. They don't even trade in the U.S. or they are not even on public markets or they're very small cap or they're $10 billion companies, not $3 trillion companies kind of thing. So that's just a different thing. So the stock market could suffer even if there's some real positive underlying economic problems.

But we'll see how that plays out. Yeah. Yeah. Well, and, you know, let's go ahead and shift over to a little bit more about the current market. And I'm just going to start with the NASDAQ because that typically gets the bulk of our focus. You know, we kind of looked at the international, but...

Look, the NASDAQ has had a strong move, you know, a lot of whippiness. Here's that big 12% day on April 9th when the pause was announced, but it came right back down. And we really, at least on the NASDAQ and S&P 500, we haven't gotten outside of this trading range of this big day yet. It's just been kind of going back and forth in there. So...

So, yeah, I think it's maybe a little bit early to declare victory. And certainly we have had this. The green line here is the 21-day moving average line. That has been acting as an area where we've bounced our head. And, I mean, even today we got a nice gap up above there but didn't close above it by the end of the day. So, yeah.

We talk a lot about incremental moves, you know, kind of going slow. How quickly are you doing this? How much can you trust it right now? I don't think you can trust it too well. I mean, I think you need to...

You need to want to participate in it. I just bought the Q's on – we had a follow-through day on Tuesday just to sort of participate. But I think there are risks. There's the 21-day line. But even if we get above that and even if we get outside of that range that day, there's the 50-day line. There's the 200-day line. There's a lot of things potentially because often you'll see stocks run up for a while, whether it's like a 2018 or 2022 situation. You'll run up to some levels.

or for a short term and then fall back over. Again, it depends. There's so many headlines. And that's the other thing. The trend could still be positive, but we could see a negative headline tomorrow that quickly gets retracted. But in the meantime, the market falls 7%. And then what do you do? You don't know that the market's going to come right back. When the market was tanking like it was, you didn't know it was coming back.

I mean, you know, there were some things that were sad, but it's like it could easily go back. We could whip higher. What if a headline doesn't come and save you? Yeah, what if the headline doesn't save you? Or again, so that's the thing. I think you need to be incremental. If it keeps on working, and look, anybody, and this is also what I'd be incremental, even if things are still trending higher, like on this particular day, if you bought at the very top,

With a couple of stock exceptions, you could easily be down 3%, 4%, 5% on a lot of stocks. And those stocks may look pretty good, but you're down a fair amount, and it wouldn't take you much to get shaken out. But if you just bought one position, and it's a small position, and you're down 2%, it's like...

you know, that's not too bad. You know, that's how, so you don't get hurt too much. If it comes back down, you may need to back out of it, but it's okay. If the market continues to improve, then fine, you can hold it and you can start adding on. So that's really, I think, in this kind of market, you want to be incremental and, you know, you may even want to take partial profits along the way because of the risk that things could change. I mean,

We're in the middle of earnings season coming in. We're going to be – we'll see a lot of things. Do we need constant positive headlines? Or, you know, if we don't hear good news, even if there's nothing bad, if we don't hear any good news, will the market fade off again? I don't know. Will it keep on rising without any good news? I don't know. I mean, so it just seems like there's a lot of unknowns. And there always are. It's always in hindsight it looks easy. So don't get me wrong. It just feels like this time –

There's so much because it literally could change. I mean, we talk about in a way we could literally change, not just overnight. It could change in a minute. While we're doing this podcast, for all I know, something has been said in the futures market, and we're down 3%, and I have no idea. And that just wouldn't happen in almost any other scenario. So that just is going to keep people, I think, a little bit –

It's going to keep me a little more tentative. You should be incremental anyway, but even as we get above, I'm probably going to be less invested than I might otherwise, given the potential for just a huge riptide and that kind of thing where you're just not expecting it. And again, it may not come. And I'll fully acknowledge that. I'll be willing to take a smaller gain in that regard to protect myself from a bigger loss.

Yeah, yeah, exactly. And again, that's, this is where a lot of people who, you know, when you see the destruction and like, oh, well, why wouldn't you, why wouldn't you buy, you know, Warren Buffett buys when there's blood in the streets, you know, and, you know, this has got to be the bottom, but.

I mean, you and I have been around long enough. We've seen things get worse when a lot of people are saying this has got to be the bottom. And that certainly could have been the case and still could be with what we're dealing with. You mentioned earnings season. And so I want to kind of address that. You know, one of the things and I think

I think a lot of people probably hear you rail against Tesla or Elon Musk and stuff, but you also, I think a lot of people don't realize that you are very honest about when Tesla, the stock looks good, you know, despite your feelings of, or misgivings on, on the company itself. Um, so maybe we can talk a little bit about, um, you know, this earning season and, and start with Tesla, you know, just had earnings, um,

Not great. So kind of maybe walk through. This is such a heavily followed company. And what does that mean? Look, it's just not – I mean, if you covered up the name of this, you'd just be walking away from it. The earnings have been falling. They actually revised Q4 down. I mean, I think it was related to Bitcoin, so it wasn't like –

but it turned to negative. So I think earnings have fallen six of the last seven quarters. It was a big miss from lowered views. They've already, even with that, 2025 is already looking to be another low. Three months ago, and I mean this, three months ago, the estimate was like 331 for 2025. I mean, it's gone down basically 33%. Nobody really seems to care. Look, clearly the vast, vast,

The vast majority of the valuation of this stock is in things like self-driving. And Elon Musk said we're still going to have self-driving in June, so we'll see. I mean, maybe I'll just be stunned and we'll see an amazing transformation here. It'll probably be a mix of this and that. There'll probably be something for everybody on that where you'll see, you know, people, bulls will be thrilled and bears will be convinced that once again, you know, this and that.

But I don't think anybody would – I think Mike Webster, who is a big fan of Tesla, not to speak for him, but it's not looking good right now. I mean there were times clearly it broke out around earnings with the election. There was another time it moved out. Those were times to buy it. There's times to buy it. But you can also just see even if you're the biggest bull in the world, you could see that it's gone down basically 50%. It's below basically all its moving averages. It needs to do a lot of work. And I think you probably –

Unless you're doing a real swing trade, like even if it got above the 200-day line or above those things, trend line, you'd still want to be careful because of that June deadline. I think that for the end of June, when they're supposed to have self-driving, I mean, that could be something that lifts the stock up 30%, 40%. You could knock it 30%, 40% because so much is riding on it because EV business, to me, absent-mindedness.

Self-driving just almost seems to be heading for real, real, real decline. I don't think the 2026 estimates are going to reflect that yet, but yeah, it's not looking good. Maybe someday it will. Any valuation estimate does rely a lot on the full self-driving. There's no way. Just to put it in perspective, look at GM. It's not a thing, but if you were to say if you're going to treat this as an automaker,

And mind you, an automaker that has declining profit, that has essentially no EV pipeline, except for a cyber cab that requires self-driving and a manufacturing process they don't have yet, this has a forward P-E-G-E-G-M of four. Tesla's over 100%.

If you were to treat this strictly as an EV maker, and I know they have some other stuff, but if you were doing just an EV business, you'd probably be looking at this as a 2 or a 3 instead of 111. So when we talk about the vast majority, I mean the vast majority because it's not really an EV maker anymore in many ways. Certainly not the stock.

And then I know you often will point out, you know, as kind of a big competitor, BYD company out of China. Why do you follow this one so closely? Well, because it was a competitor. It is now bigger than Tesla in terms of EV sales, even all electric sales. It's doing a lot of interesting stuff. I mean, it's growing. It's the only EV maker that's profitable and growing.

right now that I can think of, like earnings are growing. And it's been on a real tear for that. So it's going to come out with Q1 earnings probably in a couple of days. It's a little unclear. They already pre-announced, and I don't think the estimates reflect it because I think there's one analyst that follows it on FactSet and hasn't updated in a few weeks, but they pre-announced net income

that essentially is going to double versus a year earlier. So that's probably going to coincide with another quarter of accelerating growth. And that net income is almost certainly going to be higher than Tesla's for the first time. That's another milestone that BYD will have. I mean, it's already in sales, already in EV sales, but now on some profitability metrics. Yeah. But it's China.

There's so many things. There's so many risks. I think it's really – I'm interested in it as just an industry. And I also am interested because I just think that this – it's doing a lot of things internationally and overseas. But I think you ought to be very careful about something like this. So I'm sorry about that. I just – that's me –

looking at fun watching this is this almost as not even as a writer, more like just, it's sort of interesting following the EV market, but this is even, this is, it's extremely high risk, uh, despite its strong performance. Yeah. And we talk about ATR sometimes about, you know, the average true range. Um, we use a 21 day, uh,

average true range calculation, which basically says, okay, how much does it move on a daily basis? Tesla, it's up there. 8.76 is the average that it moves on a daily basis. And BYDDF is, I think, what, 5.7, something like that? It certainly looks like it, yeah. It has gap ups because it trades in Hong Kong. This is over the counter. That's another thing. So that's another factor to it. But yeah, it

And in whipsaw markets, you're going to see these high ATRs that are probably going to have even more. Now, obviously, these are average over the last 21 days, so maybe in a more normal market, they'd be less, but...

Yeah, you can see huge, huge moves on any day for a stock like Tesla or BYD. Well, and to that end, we can also take a look at Palantir, which is challenging the 100 level. I do have a position in this myself. It's a pretty small percentage of my portfolio. I'm not going with full position sizes yet on individual stocks. I've gotten a little bit more on the index side. So kind

Kind of walk us through here. The ATR on this, 8.4%. So, again, up there with Tesla. It does, you know, even when you look at some of these quote-unquote tight days, you know, I mean, this is a pretty tight day here. I mean, that's 1% move on that day. This day here, still in this range, I mean, this was down...

Oh, can't get it. Okay, there we go. Now down 3%. And it just looks like not even an average day, which it isn't, since the average day is 8%. So what do you do with something like this that it's got a decent setup, but just moves so much? Yeah, I actually had bought it a little bit when it got up toward 98%. But I got out, and as I said, I probably got a 1% gain. But it went from 98% to 66% in just a couple of weeks.

So, look, if the market sells off, Palantir is going to sell off. I mean, I don't mean anything. And there's been some good news in the last week or two that's helped Palantir. This was one of the strongest stocks in this particular day where a lot of other stocks gave up gains. Palantir held on to it, held above Palantir.

What I think the 9817 buy point or there's other things in there. So, yeah, it acted well. So definitely one of the stronger ones. You know, it's one thing to have. I definitely wouldn't want to have a portfolio of high ATR names like Palantir, just Palantir. But this is really among the highest quality names. But, yeah, high risk with this one in this market.

Now, if we wanted to kind of go to a little bit of a lower ATR, we could look at something like Walmart. And look, this got back above its 50-day moving average line, kind of dipped below there. But I mean, this is a pattern right here. And it looks very different from a lot of the, again, the indexes or your average stock with it being above the 200-day moving average line, above the 50-day moving average line, above the 21-day moving average line, a discernible pattern here. So

But, you know, relative strength looks great. But then do you think of, gosh, you know, if goods are getting tariffs, what does that do to the Walmart business? What do you how do you kind of reconcile that that risk there?

Even though the chart looks pretty good right now. Yeah, I mean, there's a lot of nice things about the chart, certainly in the last few months. But yeah, that's a risk. It's like, so if you have a defensive name, but it could be hit by tariffs. Now, again, you might say, well, Waterman will weather the storm better than most and this and that. But you don't know. And obviously, the sell-off it faced was...

was in part because of the tariffs. I mean, that clearly was, I'm sure, that concern. And part of the rally has been on hopes that the tariffs won't be as intense as feared. And so this one's moving on tariffs. So that's, on the one hand, I guess, if things get better, if people feel more, aren't as worried about tariffs, then Walmart might still do well, unlike a lot of defensive names. On the flip side, if people do get worried about

Again, this is not going to provide you necessarily a ton of protection. It probably won't plunge the way a Palantir would, but it could still sell off. So, yeah, I'm not super enthralled with that. I'm paying attention to it, but it's a strange thing where it's not as defensive as you might normally think.

Normally, it's recession defensive but not tariff defensive. Yeah. And then we also have Sprouts. And I know you've talked about the fact that you shop at Sprouts regularly and you're

This just seems kind of crazy for groceries, you know, for a grocery store to go up this much. I mean, I get it. You know, organic is a trend. But gosh, have you ever seen a grocery store go up like this? It's pretty... Yeah, it is pretty amazing. It's pretty rich valuation for a grocery store because margins tend to be pretty low. But look, the profits have been really impressive. I mean, that's the thing is that it's not...

not acting like that situation. So yeah, the growth will probably slow just because comparisons are going to get really tough. On a weekly chart, I don't like this as much because it sort of doesn't feel like you're getting a shakeout. There is sort of a mini handle on a daily chart. But here, would you have been shaken out if you bought this somewhere along the way?

Would the last four or five days have shaken you out? And probably not. But it's acting very well. So I'd like to see – there's earnings in seven days. So I just sort of feel like maybe you could have a pullback. I keep on missing this one. I probably will keep on missing it. That's the thing because I just can't – I don't have the conviction. I can't go up further, right? It can't. And yet it keeps on doing it. So I don't mock it, but I tend to stay away from it. But, yeah, it's definitely one people should be looking at.

Now, you mentioned earnings, and I guess no conversation with you would be complete because not only are you econ ed, you're also earnings ed. You and Alexis do a weekly show, the Earnings Cheat Sheet, that comes out on Fridays. So if folks haven't caught that, definitely worth watching. We're heading into earnings season. There's the risk here that with the uncertainty that companies start pulling guidance and just saying, look, we don't know right now. So any kind of...

words of wisdom for our listeners on what to do with earnings season this time around. It is really tough because we're not seeing... We're seeing companies, some of them saying Q2 because they probably feel like, okay, we sort of can figure out... I mean, even the ones that are... So they're doing Q2 guidance, but then they're reaffirming guidance, but probably not with a lot of enthusiasm or pulling it or giving dual guidance where they say, well, if the economy is fine, there's this, but it's like... It's sort of like...

Doing a business but excluding the business cycle is not very helpful, I mean, in turbulent times. So, yeah, I mean, everybody's thirsty for guidance. I think it'll be interesting to see.

I'm looking to see like some of those mega caps like Amazon and Microsoft, Meta, Google, you know, like are they going to spend as much? Both because of maybe the economy and both because of AI. You know, are you going to see capital spending budgets come down at all? Or will they not? You know, that would be something in there. But I don't know. We may not get much guidance out there because I don't think the companies have any idea how

To be fair, like how much do you want to make a forecast? And then you find out your tariffs are a lot better or a lot worse that advantage you or disadvantage you or you don't know. And again, even if tariffs stay the same, businesses are trying to grapple with how they're doing it. And then they have to find out what their suppliers and their customers. I mean, it's like how much are customers going to stop buying or how much are they going to stop traveling or this and that?

That's a lot. That's a lot of change. And so companies, even if they really felt confident this is what the tariff situation was going to be, they're probably not going to be saying they'd probably be a little nervous. I don't know what that means for us beyond 90 days. So but definitely pay attention to guidance. But we may not get much.

Yeah. And I mean, look, Apple used to famously give guidance that they kind of knew that they could smash. And yeah, you don't want to do it the other way, right? Oh, let me give guidance and I'm going to have to lower that throughout the quarter because, you know, that can really, really hurt a stock. So.

But certainly people should be watching your earnings cheat sheet on a weekly basis because, as you said, a lot of uncertainty here. But if there's any clarity given, that's where you're going to get it. Awesome.

Great. Well, Hey, Ed, I really appreciate you coming on the show. A lot of folks in the YouTube, uh, we're, uh, YouTube comments. We're talking about, Hey, it's about time we get Ed back on. Um, and for those that aren't aware, you also are a regular panelist on IBD live. Um, you have a great column on, you know, uh, stock market today that kind of wraps up, um,

what happened in the day, what's going on with the futures. You update that multiple times over the weekend as news comes out, and there's a lot of it. So it's a great way to kind of keep on track of what's happening at the markets in reaction to the news, especially in those aftermarket times where you might not be paying attention. So definitely something I read on a regular basis. So thanks for everything that you do at the paper.

Thank you, Justin. I love working with you and I love having you when, when I'm hosting on IBD live on most times, because you, you bring such great insight to the, to the market. That's going to wrap it up for us this week. And we'll go ahead and also let you know about our next week.

you know, well, a few things coming up, you know, for those of you that are on IBD live, uh, investors.com slash IBD live, or you can do a trial. We're going to have Joe Fahmy on that show, uh, on Friday. So that's something that's coming up. And then next week on the podcast, we're going to have Andrew Chanin back on the show. He's the CEO of procure. Um, I,

I've chatted with him a number of times about different ETFs that he's built, UFO, one on disaster recovery, FEMA. Very interesting. And so we get kind of deep into the analysis of where he sees the future going in a lot of stocks. So I can't wait to have him back on the show and kind of get through that with him and his thoughts. So hope you join us for that. And we will see you next week. Take care.