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Editor’s Note: This is the transcript version of the show we recorded on Wednesday. Please note that due to time and audio constraints, transcription may not be perfect. We encourage you to listen to the show embedded above, if you need any clarification or bring your questions and join us live every Wednesday at 12 pm ET.
– Welcome everybody to Stock Market Live. Thanks again for joining us this week.
– Welcome back.
– If you are new, if you are new to Stock Market Live, this is great time where we get to hang out with you this hour. We’re going over a stock that was pitched to us from the audience last week.
We’ve got a special guest, Eric Basmajian from EPB Macro Research joining us here at the bottom of the hour. This guy knows everything about when it comes to macroeconomic data. I mean, we saw the producer price index this morning. We got inflation numbers tomorrow. We have so much to talk to him about. So, we appreciate you joining us. I wanna see who’s here with us, ’cause we always have people that come back. We do every week.
We got a lot of new people actually joining us this week. We got Dan Forest, Basmajian, Anna, oh, Tad, VT, Zib, Yage, Saiya’s back. Welcome, Saiya. Rena’s in the house. Penelope, me, Michael, Mark, everybody is here hanging out. Love to see you guys hanging out with us this hour for Stock Market Live. What do you say we get right into this, Austin?
– Let’s do it. And hey, you can’t forget Alfonso. Alfonso’s hanging out with us almost every week. Can’t forget him. He’s a rockstar.
– You’re a hundred percent right here. So I wanna go ahead and just start things off. Let’s take a quick look at the overall market. Just looking at the charts, seeing where everything he’s at. Obviously producer price index came in a little hot this morning. We’re seeing kind of a trading range. This is the VIX. You guys know I watched the VIX: the volatility index. When the VIX rises, the market typically goes down. It’s an inverse correlation. We keep an eye on this open gap below the market. Still have a ways to go to get there, but also what we’re watching now is this two standard deviation move, which we’re getting close to.
And with CPI numbers tomorrow, if they come in hot, I’d expect we probably hit that level pretty easy. Taking a look at the SPY ETF, or correlation of the S&P 500. We’re seeing a breakdown a little bit between these June lows. Still not crazy far below that though, so we’re kind of in this little bit of a trading range right now. Of course, waiting for inflation data going over to the queues. Same kind of story. Cues are breaking down, interest rates going higher. We know the correlation there. Huge gap above the market up here. Moving averages are all in a downward momentum stance. This 50 might cross over the a hundred here. I keep an eye on that to see if any of the algo trading programs are following those two averages.
And of course, IWM Russell, seeing kind of a bounce off this bottom trend lines. It’s continuing to hold. So that’s kind of interesting as well. And that’s kind of a quick look at the markets. Now, let’s go ahead and get in though to my favorite segment. Probably yours too, is initial thoughts. Let’s get in to Bulls or Bears, initial thoughts. Awesome. You wanna go?
– Let’s do it. Yeah, how about you kick us off this time, Daniel?
– Let’s do it. Oh, I’d be so happy. So first up, two Cramer ETFs were filed last week. An inverse and a long. So one will be longest recommendations, the other is inverse of whatever he says to do, whether it’s on CNBC and his publications, whatever it is. It’s gonna be an actively managed ETF. It’s gonna be very volatile, high turnover rate, probably. So are you bullish or bearish, or do you think that these ETFs don’t even get approved?
– I, okay, so first off, I have to have a shameless plug here. I dabble in the dark arts of venture capitalism, and I have invested into a company called Quant Base. And what Quant Base does is you could think about them as a high risk robo advisor, right? And they’ve got a ton of these different types of strategies that they create quantitative strategies around, and they implement them, right? One is like a crisis fund, one’s like a social media thing. But one of them that came out last year alongside of Nancy Pelosi fund, was a Inverse Kramer ETF. And I saw just how well that that ETF performed, the popularity of it.
– The last year you mean?
– Yeah, this was last year. I’m sorry.
– Talking about the Cathy Wood Fund, you mean? ‘Cause I think these are the first Kramer funds, right?
– No, no, no. This is not an ETF. This is like a quantitative strategy inside.
– Oh, gotcha.
– A company called Quant Base, right? So I mean, just like Wealth Front or Betterment, you know, they have like their own robo advisor strategies. This company is called Quant Base, and they have an inverse Kramer sort of strategy that they follow and execute upon. And the popularity was insane. The performance was pretty great in my opinion. And yeah, I think, when it comes to like, you know, regulations, the SEC, things of that nature, I don’t know if they’re gonna pass this stuff, right? It’s like we’re getting more and more into this. How crazy can we make it to differentiate ourselves, type vibe. I think obviously we saw that with SARKK. We saw that with a bunch of other, I think, what is one called, Y’all? There’s like an anti ESG ETF called Y’all. Like, there’s a bunch of these weird ETFs. So maybe this does pass, but I have, I saw the performance of the Anti Cramer or Inverse Cramer ETF on their platform, or strategy rather on their platform. So it did pretty great.
So I’m gonna go bullish on the fact that Cramer is not too good at picking stocks at a perfect time. And I will be buying that ETF if it goes live.
– I will, I have to applaud him though myself. I mean, the guy has brought so much interest to the stock market for everyday investors, so you gotta applaud him even if he does have ETS to his name. I mean, I wonder, he should have trademarked his name, right? He would be getting paid off of that. But, all right, onto the next one. This was just announced yesterday.
I’m a little intrigued by this ’cause I have now one of the older products because they released the new one, is Meta’s (META) new VR headset. It’s called the Metaquest Pro, right? And it looks like an AR headset as well where you can actually see the real world in VR this time, which I thought they were first were all against. They were gonna take the straight VR route. Apple was gonna take the straight AR route. So they announced this new headset yesterday with a retail price tag of $1,500. Bullish or bearish?
– So I actually brought the exact same talking point to you. So I think we should both kind of give our points on this one, but I’m kind of bullish on it, and I’ll tell you why. I think that, so I spent a lot of time watching Hulu. I like to watch “Shark Tank.” I like to watch different types of shows with my girlfriend. And I can’t tell you how many ads that I’ve seen between these episodes of Meta sharing these videos of them helping, showing scholastic opportunities, business opportunities, architecture opportunities, all these different opportunities to help people explore the metaverse and unlock really cool learnings perhaps. Like, you know, it was really interesting, and in the video advertisement that they shared, they were exploring Saturn’s rings and helping this Master student better understand how Saturn’s rings are comprised of different types of debris.
And she was wearing the headset looking around. And so I mean, if we think about like, oh, let me go to the Metaverse and drink drinks with my buddies. Like, that’s 2020, right? That’s 2021. Looking forward to 2022, 2023, 2025, 2030. I don’t know how far we should be looking about with this headset. I would imagine that this is gonna become sort of a tool for education. It’s gonna be a tool for modeling.
I mean, and they give a good example of helping with traffic to help you save 30 minutes on your commute, or having bus routes be better, or like, all these are the different things leveraging the metaverse and applicable, and utility-first kind of approaches. And I think having a headset that can help with that understanding, that education. I mean, let’s be real, man. This is pretty obvious, but tuition for schools is sky high, because-
– It’s insane.
– It’s all backed, and you know, the debt’s free for the most part. It’s all backed by the government. So like these schools are making money regardless. They gotta spend it somewhere. They’re gonna go spend on a bunch of VR headsets. Yeah, we have the best in technology with the Metaverse. Hell, it’ll be even be a major at the University of Tennessee in four years, I’m sure, right? I think that this is a major opportunity to unlock revenue for that company. It’s not gonna happen overnight. It’s not gonna happen in a couple years. But I think that they’re moving in the right direction and in 10 years we’re gonna look back at this and be like, you know what? That was actually a pretty big idea and it now makes up 10%, 20% of their annualized revenue.
– Mm. Interesting point. I’m gonna take the inverse on this actually.
– Okay.
– I’m with Stephanie over here in the chat. “Who purchases a headset at $1,500?” That’s my initial thought exactly.
– A school, a business, someone who has the money to do it. This isn’t retail in my opinion.
– But the consumer base is what’s, the everyday consumer is what’s gonna drive this, right? This goes back to, and my idea is first product is not always best, right? There were other smartphones before the iPhone was released. Just because you get first a market doesn’t mean you’re gonna have the best product and that you’re gonna be able to lock in market share. And if the everyday consumer, which is where, I mean think about all the iPads, computers, right? All that does go to schools. Schools are gonna continue to stay on laptops.
They just purchased laptops last year, two years ago for all the kids. They had to go from home and everything else. Everything was just purchased. They don’t have a need for these specific use cases. Now enterprise, I could definitely see that, right? Whether you’re talking about this VR workspace is what they actually are trying to push really hard right now in the Metaverse, is you can collaborate around the world, you can go to a design studio, design a car out, check out the aerodynamics, all that stuff. I just don’t see it yet. ‘Cause Microsoft (MSFT) HoloLens has also been trying to do that for years. And back when I worked at Disney (DIS), I worked a part of the team that we were trying to be on emerging technology of doing VR, and doing AR for video production and stuff.
And Microsoft HoloLens, I mean the audio that they created was incredible. The visuals were also incredible. Microsoft had the Army contract from the US government to try to create these headsets.
– Yeah, yeah.
– So that soldiers could use them. But then the contract fell through because the Army, the guys actually in the field are like, these headsets do not do it for us. Like, I don’t know if it was disorienting them, or taking away this special training that all these guys have, and they’re just like, it doesn’t work for us. It’s not there yet. And I think that’s the issue is, did the Zuckerberg team and his passion and everything, and his turnaround story that he’s trying to do here, did he release it too soon?
And especially with that price tag, just like Stephanie say, I don’t see a lot of people buying it at that price, but I would love to be wrong. I think all of Wall Street would love to be wrong on this. Actually, I’m gonna ask everybody that’s tuning in right now, ’cause we have Jenna and Joy over on LinkedIn. We’ve got everybody here in the chat. Let us know in the comments right now, would you buy this headset for $1,500? Do you think this is a crazy idea? Does this interest you at all? I wanna kind of get an opinion from people, but that’s my thought. I’m very.
– Stephanie’s gonna say, “Hell no!” Stephanie’s not buying any headset for 1500 bucks. Now I’m right there with you, Stephanie, right?
– In this market? In this economy?
– In this market. And Daniel, I think, do you remember when the Google Glasses came out? How much were those? Were those over $1,000?
– I think they were over a thousand. I’m pretty sure they were over a thousand.
– Yeah, I don’t know. And yeah, so to that point, it’s, yeah, Enrique says no, no way. Richard says no. Okay.
– That’s the idea.
– So maybe I’m crazy here. Maybe I’m a little too visionary with Zucks on the idea of just getting adopted by people too quickly. Something to keep an eye though for sure. Absolutely, Daniel.
– Yeah. All right, so let’s go into this one real quick for you. We actually just talked about this. I just saw it today for the first time. I think it’s brilliant. Delta (DAL) and Starbucks (SBUX) announce a partnership where you link your loyalty accounts, and Starbucks purchases will help you now earn airline miles. Bullish or bearish?
– I’m bullish beyond belief, right? Okay, so let’s think about this for a second. People, and I know them, I’m sure you know them too, Daniel, and everyone that chat knows them. Alfonso knows them. Anna knows them. They all know those people who live, breathe, and die at Starbucks coffee, right? They got the rewards points. They got the stars. They swipe it every time. I mean even I think you go look in a couple quarters ago, didn’t Starbucks have like over a billion dollars in like prepaid coffee in their app? It’s more like a bank.
– Yeah, they’re like a bank. Right?
– Right, yeah. And so it’s like people, they have that consumer base of the diehard Starbucks fans and now Delta’s somehow kind of able to finagle their way into a relationship with them to have those people now also fly Delta. How cool would it be if they have to do nothing but just continue buying their Starbucks every day, a couple days a week, every week, whatever the cadence is. And now Delta is gonna see an influx of thousands, if not hundreds of thousands of new customers because they’ve got these awesome miles, and then they sit down and say, “Whoa, Delta’s kind of nice.” “This is better than Spirit.” You know, “This is better than Southwest.” “I think I’m gonna fly Delta next time too.”
And now Delta’s just getting all these people. And then I think personally, I think Delta has a really good loyalty program as well. They got their partnership with American Express. And I think also the people who can afford Starbucks all the time probably also have some sort of, you know, they’re more affluent, right? So maybe they do use an American Express credit card. I think there’s a lot of synergies here. It makes a lot of sense for partnership. I’m bullish and that’s my take.
– And that’s interesting. We’ll see what happens. I believe they have earnings tomorrow as well. Delta does. I think it’s after the close. I could be wrong on that, but I believe it’s tomorrow. Double check before you look at it. But obviously, I mean CEO, Ed Bash, and I’m a big fan of his. The guy’s done absolutely remarkable things with the company. Airlines, as we mentioned last week, they’re hard to invest in. Keep that in mind if you’re thinking about an investment.
But I think that’s really interesting that they teamed up with Starbucks. Obviously they had a partnership with Uber (UBER) I think as well to earn miles as you were mentioning. I mean, they serve Starbucks coffee on the planes while you’re traveling. It kind of just makes sense to me. So I’m glad to hear that you’re bullish. I’m bullish on it as well. I think it’s a good opportunity there.
– Good stuff. Let’s jump in. I know we, honestly those were two of my three as well. So we talked about Starbucks.
– Great minds think alike.
– I know, that’s right. We talked about the Meta, but let me kind of think on my feet here. Something I’ve seen recently, Daniel, is layoffs, I think, was it Intel (INTC)? They just had to lay off some folks because of below expected demand with their PCs. AMD came out with a preannouncement of their earnings as it relates to PC demand. I think came in a billion dollars less than expected from a revenue perspective. And Nvidia (NVDA), I saw an interesting chart where Nvidia was compared to Cisco (CSCO) back in 2000. The stock price, if you overlay them from a percentage perspective, they go up and now they’re both going down, right?
So are you bullish or bearish on the idea of semis and different type of chip makers call it over the next maybe 12 to 24 months? Or is all this kind of PC slow down really getting to people?
– I’m bullish over the longer timeframe, right? So what they say also, you know, check the markets, look at the financials, and look at the semiconductors, and you can kind of see where the market’s going, and why is that? Well, financials create credit for our system that we operate within. Semiconductor chips are used in everything, everything nowadays. And there’s gonna be a continued need, especially as we’re seeing 5G, medical equipment get improved. I mean, what do you wanna talk about? Unless it’s an airplane, right? We talked a few weeks ago about how they’re still running on floppy disc, (man chuckling) but I mean, semiconductors are used everywhere.
I think Intel, the interesting thing, I was doing some research on Intel recently ’cause we were talking about Taiwan Semi (TSM) yesterday in a webinar that I had with Mike Saul for about earnings. We were talking about the chip sector specifically and how Taiwan Semi has the fab they’re building in Arizona and Intel, I believe, they’re doing theirs in Ohio and we’re seeing these fabs created. Taiwan Semi’s biggest customer I believe is Apple (AAPL). And so if you’re thinking that you’re Google (GOOG) (GOOGL), and you’re making these Pixel phones, and you’re making everything else, and you’re trying to compete within that space, and have your self-driving cars and everything else, where are your chips coming from?
If the foundry of TSM, the biggest manufacturer chips in the world is pretty much already taken by your competitor, you’re gonna need to find the next fab that can do your chips. Well you also want them to be made in America ’cause you need them here now. We’re seeing that whole shift happen by globalization coming back to domestic. The government favors companies here that operate within America. You see it with Microsoft, and Amazon’s (AMZN) trying to be that play and everything else. For military and security reasons, they like to see that.
So I think Google would then become the biggest client or customer of Intel. So over the long term, I could see it being bullish if it plays out that way. And I still believe in the semiconductor chip entire sector for the long run. We’re just seeing the hard, macroeconomic wins right now.
– All right, I’m gonna agree with that. I would say that, you know, it’s, yeah to every, I mean you, you nailed it right in the head, right? If you think forward for the next 5, 10, 15 years, semis are gonna be in every single thing that we interact with, every single way to communicate. It’s a very no brainer. So we talked about semis, we talked about this headset. The last thing I wanna talk about here, Daniel, is something we’ve kind of talked about recently. Disney. Disney just announced that they’re delaying “Blade,” “Deadpool Three,” “Fantastic Four,” “Avengers: Secret Wars,” among other movies. What’s going on here? We bullish, we bearish? What’s Disney up to? Why are they doing this?
– All right, so first of all, Disney’s very smart when it comes to movies. They are solely focused on blockbuster films. That’s how they make their money. They are actually probably one of the studios that puts out the least amount of blockbuster, or films in the movie theaters per year if you look across all the companies. And they do that purposely.
Alan, oh shoot, I forget his last name, Chairman of like the movie picture side of the business. Very brilliant guy, has led Marvel and all these great franchises to the great success, and animation, and everything else. I think what’s going on here is they’re just looking, look, I went to the movie theater for the first time in maybe months this last and watched, what was that movie? “Don’t Worry Darling.” The new one that came up.
– Was it a scary movie? Is that why you went?
– No, it was like a psycho thriller. The Harry Styles movie. The drama with Shia LaBeouf, all that. Go check it out. It’s pretty interesting.
– Okay.
– But I think what’s going on is you’re just seeing a slowdown, right? We saw Cine World come out and declare bankruptcy when it came to Regal Cinemas here in the States and around the world. They have a bunch of theater chains. I just think because of whether it’s recession fears, or streaming, or whatever else, I mean, these companies are thinking that they have their plan figured out and realizing, oh wait a second, our customers behaviors are changing and we’re not getting as much as we thought, and we’re taking this year being like the first year out at COVID right, where people are actually going back to the theaters.
We’re trying to use it as a science experiment to figure out what’s the distribution pattern ahead. And then not to mention all the creative differences that always pop up when you’re making films and TV shows. It’s a very creative process. Everybody gets very passionate about their ideas and I think, you know, it’s a little juggle. That’s all. It’ll still come through, but it’s all right.
– Cool.
– Overall.
– I think that makes a lot of sense.
– Bullish on Disney.
– I agree. I think it makes a lot of sense, right? I think there’s a lot of diehard fans among some of these franchises, and I think to your point, Disney understands that, you know, I think even it was Jamie Dimon on Monday, Joe Biden yesterday. Jamie Dimon saying recession. Joe Biden saying we’re not having a recession. So there’s a lot of kind of uncertainty right now. And I think Disney is kind of taking a step back and saying, we’re still gonna make these. Don’t worry. People that love ’em, people that want it, they’re still coming out, but we’re gonna do it when we’re a lot more certain as to what the macroeconomic factors are gonna look like. Make sure you got some money in your pocket to go to the movie theaters and can take the time off if it’s during a weekend or something like that. Totally agree.
– It’s ’cause those movies are so expensive, right? You need the ROI.
– Yeah.
– The rule of movies at that level, is if you’re paying 200 million for a movie budget, you can expect to spend another 200 million just for marketing around the world, so it’s a very intensive process.
– Makes sense.
– All right. And is that it, or do you have one more? I forget what that-
– Oh no, that was it. Yeah, we overlapped twice, man. We overlapped twice. We gotta, I like the hot takes, but I feel like we need to plan better next time maybe. I don’t know.
– Ah, that’s all right. That’s why we don’t share with each other. That’s what it is. It’s initial thoughts, your gut instinct, it always tells you something. But anyways, I love to point out, Stephanie here in the chat says, “Does Starbucks benefit from the lipstick effect?” I believe it does, right? In times of of recession or feeling a pinch pocket book, in times of pullback and the economic activity of the globe, and especially American, and stuff, there’s certain things people still wanna do to feel like they’re enjoying themselves and experiencing life and not worrying about the problems of the world. Used to be going to movies, going to concerts, drinking things like Starbucks, going and buying lipstick, putting it on your face, you know, you do these things, and that’s the lipstick effect. You spend money just to feel like it’s normal in a sense, or AKA, make it feel like you’re in a bull market, really, if you really break it down.
So I agree with you, Stephanie. Good job. All right, see some other things here. I see some other things, but let’s go ahead and get into our big segment. I mean, I want to get to Eric Basmajian.
I see you in the chat as well. We maybe get to these at the end of the show. To keep things moving, let’s do a little game. We like to do this little game too. It’s called Guess the Stock. It’s the stock that was pitched to us last week, I think it was last week, maybe the week before, by John, who likes to show up and hang out with us. Appreciate you, John. And all right, lemme just start going through some facts. If you think you know the name of the stock, of this company, leave it in the chat, and let’s get into it. So, the name of this company was created in 1892 and that’s what we claim to be the founding date of it, even though the underlying companies had been started before that.
It’s one of the original Dow Jones stocks and was a part of the Dow added in 1896 until it was replaced in 2018 by Walgreens. Their legendary CEO, I’m not gonna tell you who it is just yet, from 1981 to 2001 took this company from 26.8 billion in revenue to almost 130 billion in just two decades. You’re talking about like a hundred billion dollars of revenue growth in two decades. How wild is that? In 1919, company goes way back, the US government brought this company together with United Fruit Company, Westinghouse, and AT&T to create the Radio Corporation of America, also known as RCA.
And in 1925, RCA purchased a station from AT&T to launch the National Broadcasting Company, what we know as NBC. This company then brought, sorry. This company then bought RCA outright in 1986, meaning they completely owned NBC, later merging with the Vivendi Universal Entertainment to become now what we know as NBC Universal. And in 2013 they sold off NBC Universal to Comcast. This company used to be innovative beyond belief. It would also buy and sell companies like it was a hand of poker. And they won every time until they didn’t and their luck ran out. Warren Buffet and the government had to bail out this company in 2008 and 2009 during the great financial crisis because the debt loads were too heavy on the balance sheet. Now there’s a lot. There we go. We got some, Boost Alliance, Universal, John. NYSE:GE. We’ll see. The company came from such innovative beginnings starting as the Edison Electric Light Company and then in 1889 merged with more companies to become the Edison General Electric Company. And then in finally in 1892, landed on the name General Electric. John knew it, ’cause John’s the one that pitched it. John!
– I know, but John’s cheating, man. John, you can’t give it away.
– But also great job, Alfonso, always see you there. Well, appreciate you guys hanging out and doing that with us. So General Electric, that’s what we’re talking about today. A legendary industrial stock of America. Awesome. Why don’t you go ahead and run us through General Electric?
– Happy to, man. So lots going on with General Electric, right? They’re an industrial company that operates worldwide through four business segments. Aviation, healthcare, renewable energy, and power. The company has this rich hundred 30 year history of innovation and technology that has improved quality of life all around the world. But today their innovative focus is on three main initiatives. The future of flight, precision healthcare, and energy transition. And so before we dive into the recent earnings results, I think it’s incredibly important for you to know that announced late last year was a new pathway to simplification as the company plans to spin off their business segments into three publicly traded companies by 2024.
This comes after several years of trying to simplify and trying to deleverage efforts that still resulted in like this messy conglomerate that is too complicated to gauge what the true underlying earnings power is. So splitting up the business should make segments more transparent for investors and allow each company to be more focused in accountable. The company shared with us their intention to execute these tax free spinoffs of GE Healthcare in early 2023, and GE Renewable Energy in early 2024.
This GE Renewable Energy has since been rebranded as GE Renova because energy is a bad word these days. Leaving the legacy GE business to focus on aviation. So just so we’re on the same page here, right? We have the legacy, GE business as we know it, and they’re spinning off two companies, a healthcare and an energy company, right? GE Healthcare and GE Renova, and this legacy GE business that used to have all these different types of business segments is transforming into an aerospace-focused company. We all got that. Cool. So recent earnings results for this still conglomerate business looked like this. We had GE Aerospace doing 6.1 billion in revenue this last quarter, up 27% year over year. The GE healthcare business segment doing 4.5 billion in revenue, which was pretty flat. And their GE Renova, this renewable energy business segment, doing 7.3 billion in revenue, which was down actually 12% year over year.
If we look toward those gross profit margins and what’s kind of pushing towards their operating margin, we see the aerospace has a 19% gross profit margin. Their healthcare business has a 14% gross profit margin, and Renova lost money. So it’s very clear to me that the aerospace business segment is driving the earnings growth. Healthcare is kind of hanging in there, and energy, and power, and this sort of renewable energy type business segments driving down the, or pulling down these figures. If we kinda switched to an operational perspective for a moment, there’s a few things I want to note. So the first one is total revenue for the business came in higher than expected being up 5%, catalyzed by this 26% bump in volume, in order volume rather, from their aerospace business segment.
This was to be expected. However, if you think about it, right, we have all this overall air transportation recovery, so I kind of understand where that’s coming from. Adjusted operating margins expanded 380 basis points driven largely by higher services growth and a new focus on pricing with aerospace being the underlying strength for that. This surprise of adjusted operating margin expansion drove a positive free cash flow for the quarter, up $200 million in free cash flow, compared to the streets’ estimates of negative 800 million.
Their management team maintained their 2022 revenue margin and adjusted EPS outlook to the low end of their initial range, but now see an additional billion dollars on working capital drag as they try to protect their customers against the impact of supply chain challenges. This is a possible $1 billion in free cash flow that won’t be realized for several quarters to come. So that’s their most recent quarterly earnings.
That’s kind of all the hot takes. But here’s what I’m thinking, right? So again, GE spinning off to healthcare and energy business into completely different companies, right? We were asked to talk about GE, and when I think about that, I’m thinking about the legacy GE business, which is this aviation, right? So if you wanna go invest in those newly spun off companies, be my guest.
I just really wanna encourage you to fully understand the data, management teams, operational expenditures, the debt load, things of that nature. But, and when thinking about just this legacy GE business, this aerospace company, it’s decently appealing. The business segment has the highest margin profile, coming in at around that 20%. Their quarterly growth over the last 12 months has hovered over low double digits. That’s been very consistent.
And GE’s management team reiterated that their aerospace is gonna see strong demand for the rest of the year. They announced this summer that both Delta Airlines and Qatar Airways selected their LEAP 1B engines to power new 737 aircrafts. That’s really encouraging. And according to their 2021 Investor Day presentation, their aerospace business has a $260 billion of backlog in contracts, right? Which I’m sure has maybe changed since 2021, but it’s still worth calling out, right? The demand is there. And if you back into the entire company’s free cash flow profile for the year of 2022, their aerospace aviation business segment is driving 4.3 billion of the 5.2 billion of expected free cash flow for the year.
That jumps to 4.8 billion of the 6.6 billion expected in 2023, right? So free cash flow for the business segment is looking to grow by about 500 million next year. We just saw the business segment report organic growth above estimate, which had included a 9% headwind from supply chain constraints. So despite supply chain, they’re still crushing it. Wall Street is expecting their aviation business segment to do 30 billion in revenue next year with a 2% bump in operating margin. 2% bump? Is that free cashflow? I think it sounds like free cashflow to me, baby. I’m not an expert on aerospace engineering or aviation businesses, but if GE is able to spin off their healthcare and their energy companies, and it’s primarily focused on growing this aviation business, a business slated to do 5 billion in free cash flow next year? I’m getting interested.
That’s interesting to me, right? We have above pure margins and visibility into the future with their contracts and backlog. I mean, I’m here for it. I wanna learn more. I think this is an interesting case study if they’re able to move off of these different spinoffs, right? So Daniel, those are my thoughts. That’s where I’m coming from. What do you think?
– Yeah Josh, let’s go ahead and throw up the first slide that we’ve got here, which is actually something, that awesome poll, just so that everybody can see exactly what he’s talking about when it comes to the aviation forecast. I mean, this is remarkable, right? When you think about aviation and airplane engines, there’s not very many people that can make an airplane engine. I mean, you’re talking about General Electric, which the spinoff is gonna be aviation, and then you’re talking about companies like Rolls Royce. And when it comes to Roll Royce, it’s more of, okay, well do we wanna make plane engines, or do we wanna make ’em for private jets, right? That’s a very specific market that they like to touch on as well. So let’s go ahead and go to the next slide as well, because you bring up the spinoff and, oh is it not in there? Oh, it’s not in there.
All right, let me see if I can find it for you. Anyways, we can go ahead. Leave that on for now. So I’ll go ahead and tell you. Yesterday, as we’re talking about these spinoffs and general healthcare spinoff, the GE filed the SEC registration form for the planned healthcare spinoff just yesterday, which means it’s right around the corner, guys. So if you own GE stock today, you’re going to be receiving stock of this GE Healthcare spinoff next year. As you mentioned, it’s gonna be tax free for GE and GE shareholders. The company plans to distribute at least 80.1% of the common stock to the GE shareholders, and GE will retain 19.9% stake in that company. And obviously these are the Seeking Alpha rating summary card. We have the Seeking Alpha authors as a buy. Wall Street analysts are a buy, and the Quant rating system are all a buy on GE.
Let’s go ahead and go to the factor grades. I’m just gonna run through this, guys, ’cause we wanna get to Eric Basmajian who’s patiently waiting, and we got so many questions for him. So factor grades, here we go. We got the valuation at a D+, the growth is at an A+. The profitability’s at an A+, momentum’s at a C+, and revisions are a C-. Those earnings per share revisions and revenue revisions are getting better as you can see compared to three months ago, six months ago. Analysts are liking exactly what’s Austin that just told you, right, the $200 million of free cash flow compared to the negative 800 million that the street was expecting.
Let’s go ahead and go to the next slide. I wanna point out too, from the Quant rating system, this company is ranked number three out of eight in it’s industry; something to take note of. I dive deeper. Let’s go to the valuation grade. Next slide, Josh. GE valuation, sure, it’s high. The company’s been having to turn around stories better than it was, you know, years ago. And we’ll go into the chart. We’ll point some things out as well in regards to that. Just some notable things on here.
Obviously, according to GAP accounting principles, this company is extremely overvalued. Let’s be honest. I mean, where it is, the amount of debt it has, and what they’re trying to do is do these spinoffs to unlock shareholder value, and we’re gonna get into that in a second as well. Next slide, Josh. These is the profitability grades. I mean, just look at that cash from operations is 4.77 billion. I mean, that is tremendous. Obviously the cash is flowing in. Probably, it’s like you mentioned from the aviation sector. Let’s go ahead and take these slides down, and I’ll take it over here. Now I saw in the chat, you’re talking about management.
You were talking about management here in the chat. John is very passionate about General Electric, if you guys can’t see. Management comes from aerospace. Different markets didn’t understand. So I mentioned in the Guess the Stock segment that there was a legendary CEO they had from 1981 to 2001, and that was none other than Jack Welch. I mean, the guy, there’s stories of him ruling with an iron fist, but his management ways were so incredible.
And then you have Jeff Immelt, who came in from 2001, who then resigned in 2017, and this is where you saw things kind of start to fall apart. Let’s be honest. So they sold off their home appliance sector to a Chinese manufacturing company, Hair, for 5.6 billion. He winded down the GE capital side of the business. Like I said, they used to buy and sell companies and be really, really great at buying when they were cheap, selling ’em off for a nice profit. And they took a stake in Baker Hughes for some reason. And then they started investing in Internet of Things, and they just diversified way too much. It became too much. Conglomerates can be become too much, right? You gotta remember that, guys. So he just made the entire company more complicated. So, he’s out, John Flannery, who came from within the company, became CEO in 2017.
He was pretty much handed a burning ship in the middle of the ocean saying, hey, let’s save this dividend. Couldn’t save the dividend. Let’s save the company. Not really working. So they kicked him out, brought in Larry Culp, who was a GE board member actually at the time, and a CEO of Danaher. And then he’s leading the turnaround story, right? And he’s been doing an incredible job in my opinion. He’s got a long way to go. Let’s not be, you know, let’s not get ahead of the horse here. Plassey sold off, was a cash cow. There you go, John. I mean look, John’s already done the research. We should have just had John do the show.
– I know. You should have this John pitch the stock to us, right? (man chuckling) – Exactly. Let’s take a quick look at the chart as well, just so you guys can see what we’re looking at.
– [Austin] Oh, the chart’s ugly.
– Perspective. Oh, this chart. So I’m actually gonna go back to the monthly, max monthly. This is back in 1985. The stock here at just $18.54 was the low. I mean you have the dot com bubble here in the middle, 4.84, right? Of course it pulls back. Everything did after dot com. But I wanna zoom into this last section. Actually, let’s just go to the weekly chart. I think we can squeeze it all in on the five year weekly. So this complete high from 190 down to the bottom here, this was exactly what I was talking about. This is the infamous, one year trying to turn around John Flannery where the stock just could not gain any momentum. The company couldn’t gain momentum. Leadership was crawling, shareholders were leaving, nobody wanted to be a part of it. And I’ve went ahead and point out here with my text, this is where Larry Culp came in. So Larry Culp came in, and gave a boost of confidence for the company. Obviously COVID smashed it again here.
We saw the rise with the overall market. I mean, this chart has just been absolutely demolished. What is this little white dotted line here? Well, if we go back to this, this is all the way back to the bottom of the great financial crisis. I mean not a great looking chart by any means whatsoever. Obviously a couple gaps above the market here. We always talk about that. You got earnings coming up. I would hope to see more free cash flow like we were talking about ’cause that would really help investors start to think, okay, well maybe this is all working, especially with the healthcare spinoff and everything else coming down the line. So definitely a stock to watch.
Personally, I would not, well actually, right now I’d potentially start a position. If I was holding the stock from higher levels, I mean that is just a tough, a tough look, ’cause obviously it doesn’t pay a dividend right now. I used to have this stock actually in my portfolio. I sold it two years ago now, one year ago now. I forget exactly. I have to go back and look. I used to hold this stock. But obviously between COVID, and aviation slowing down, and everything else, I mean this, this company just could not get any love. Let’s be honest. Between renewable energy, like you were talking about, energy is a bad word. Renewable energy’s been getting hit. They’ve been doing layoffs in that sector as well. They just can’t find the momentum. And I’m hoping they can, ’cause I believe in Larry Culp. I believe in the story. I believe in the company overall. This is one of those long term standing, US companies that we love to hope to see succeed and continue their story forward.
So, it’s on my watch list. I will tell you that. Would I enter right now? Maybe after earnings actually. I wanna hear what they have to say on their earnings call coming up to see how free cash flow is going, see how these spinoffs are gonna turn out. And the big thing about the spinoffs, is why are they doing it? Well there’s this thing called a conglomerate discount.
And what it is, is shareholders actually discount the value of the overall company because this department’s losing a lot of money, even though this department over here, aviation, is making a lot of money, because energy is getting hit so hard, shareholders are like, we’re not gonna value you as a company where you should be valued. And that’s part of this whole spinoff transition plan that he’s put in place.
So that’s something definitely to keep in mind. Definitely an exciting moment in time for this company to see over the next two years to see how this all plays out. And that’s the rundown of GE. Any last words before we get to Eric?
– No, that that that was perfect, right? I mean, at the end of the day, their aviation seems to be the business segment. That’s exciting. They got the margins, they got the free cash flow growth. I’m not excited about this company with the renewable energy, or the healthcare. I don’t care about any of that, right? But once this company spun off all that stuff and they say, hey, our backlog’s still 200 billion. Hey, our margins are still 20%. Hey, our free cashflow is growing billions a year. Like, cool, let me learn more. This is fun, right? But until then, I’m gonna stay on the sidelines. I’m not too excited. ’cause to your point, they’re gonna see this conglomerate discount. – Don’t expect the dividend to come back right now.
So John’s asking, what level would you start accumulating? I mean, personally, I’m gonna wait till earnings to see what they have to say. There’s potential I think with, look, airlines are not going away. That is such a staple of our everyday life now. And I think business travel is starting to slowly come back. Just like you’re seeing people have to go back to the office. I mean, travel’s not gonna slow down. Airlines have to be upgraded, or the airplanes have to be upgraded. You’re gonna continue to see that over time. So there’s a long pathway there, in my opinion, when it comes to the aviation side of things and the healthcare side of things, right?
When healthcare, when they go in and hospitals buy these new machines, they buy them in large quantities. They’re dropping major cash. So there are some potentials. Energy is the one that I think shareholders are like, yo, it’s time to go. You should have sold that off instead, as John mentioned, you should have sold off the energy instead of the plastics, but we’ll see. So I would personally wait to see what they say on their earnings call before starting a position if I’m gonna get back in. I hope that answers your question, John, but that’s just my take.
– Good stuff. Thanks for the idea, John. And if anyone else has any stock ideas, be sure to send ’em our way.
– Stockmarketlive@seekingoffer.com, send over your stock ideas. We’ll pick one for next week and we’ll have you join us hopefully, and engage in the chat like John is. John, I love it. So, let’s keep the show moving. Bring on Eric Basmajian from EPB Macro Research, our guy for all economic data. I mean this guy, if you guys haven’t checked out his stuff, I mean, he’s on Twitter. He’s on YouTube. He’s on Seeking Alpha. The guy has frameworks that just, they helped me understand.
Look, I did not understand macroeconomics at all. I didn’t go to school for it. I didn’t understand it. I didn’t realize how much it influences the market in certain sectors. And this guy right here, that I met, what has it been, a year and a half ago now or something like that? You would helped me understand so much. I gotta share you to the world, which is why I wanted you to come on this show, because obviously you break it down to make it super simple to understand. So Eric, I mean you were the first guest ever on this show. There’s new people here that weren’t with us back then that are also listening on the podcast. Why don’t you go ahead and give a quick blurb about yourself and EPB Macro?
– Sure. So I’m an analyst of economic trends. I focus on two main timeframes, what I call secular economic trends, which are the three to five year, or longer trends that are mostly impacted by the very, very slow moving things like debt and demographics. When we think about the 40 year decline in interest rates, and is that over or is that gonna continue? That would be a secular trends question.
But then I also look at cyclical trends, which are the fluctuations and growth that happen within a business cycle. You know, from 2010 until before COVID in 2020, that was one long business cycle expansion, but we had several cyclical upturns and cyclical downturns within that business cycle. For example, we had a 2012 growth scare with the European crisis. Then we had a period of decent growth, and then we had a big slowdown in 2015, 2016 when oil fell to $20 a barrel.
Then we had a big upturn, which coincided with the election of Trump, and the tax cuts. And then we had another slowdown from 2018 and 2019 before COVID. The Fed was actually cutting rates, if we can remember back then before COVID even started. So that’s just context around how within a business cycle we can have these really strong ups and downs in the rate of growth that really drive asset prices, stocks, interest rates, commodities.
So whenever I look at the world, I’m trying to establish what are the secular trends, where we headed three to five years from now, and what are the cyclical trends, where’s growth and inflation heading over the next six to 12 months, six to 18 months, and I put all that together inside of my Seeking Alpha service, basically highlighting those trends on a monthly and quarterly basis, and what I expect asset prices to do as a result of those trends. – Yeah, perfect. I want to dive right in to kind of kick things off.
And everyone, you know, as you’re listening, you may not be big into macroeconomics, and I’m sure you have questions, so if you have questions, leave them in the comments, leave ’em in the chat and we’ll ask ’em here to Eric in real time and he can help walk you through it. But I wanna bring up this first, what I actually just noticed, I mean you just put this up a little a while ago. So we got producer price index this morning, right?
And you put up these charts showing us the trends of import price and everything else. Can you just kind of walk us through what this is telling us and how we should interpret this?
– [Eric] Okay, so what I’m trying to show in this chart, and I’m gonna take a step back and talk about the inflation process more broadly and what that means for what the Federal Reserve is trying to do. So, inflation is really misunderstood. Everyone says that it’s a wage price spiral. It is completely incorrect. It’s in every single textbook, but as not the way that the sequence plays out. All you have to do is go back and look at the sequence of events to show that is not the way that the sequence plays out. So it’s not wage price. The way that inflation works is it’s a money price wage spiral. So what does that mean? It means that first you have a monetary acceleration and then prices rise, and then wages respond to the rise in prices.
No employer will go to their employees and say, “Hey, I think prices are gonna rise six months from now. I’m gonna give you a preemptive raise.” That’s not the way it works, right? So you have a monetary acceleration, prices rise substantially, and then employees go to their employers and say, prices are rising. I’m demanding a wage increase. So it’s money, price, wage. When we think about what happened in 2020 and 2021, we had a significant monetary acceleration that led to a rise in prices broadly at the end of 2021 and into 2022. And now we’re seeing significant rise in wages and the tightness in the labor market come through, right?
Money, price, wage. The problem is that also works in the opposite direction. So you have a monetary deceleration, the Fed contracts monetary aggregates, then you see prices come down, and then wages are employment lag afterwards. So, what’s going on here is the Federal Reserve is engaging in a very, very, very significant monetary deceleration. The first part of the sequence. And that’s been going on for the last four or five, six months. And we’re starting to see the early signs of that monetary deceleration filter through to prices.
You see the price of used cars coming down, you see the price of industrial commodities coming down like copper. You see freight rates have normalized to where they were before COVID, container rates normalized. So anecdotally, you see all prices in the economy starting to come down, but it hasn’t yet filtered through to employment or wages. So monetary deceleration, the first part of the sequence is coming down.
Now prices are starting to fall. The second part of the sequence is coming down. The Fed has to hold this stance until they see evidence that it’s coming down in employment or in wages. The problem here is that they have a significant slowdown in the economy going underway, namely in the housing market. So if you look at the housing market right now in isolation, you would say that the housing market is desperate for monetary easing, or monetary stimulus, lower interest rates.
The housing market is basically frozen right now with 7% rates, but the Fed’s not gonna be able to get off of this very tight stance until they see that money, price, wage, spiral filter all the way through. They’re unlikely to see significant progress in that regard until the end of the year, likely Q1 of ’23. And my concern with this setup is that the slowdown in the housing market by then will have reached a point where it’s almost unsalvageable and will require some substantial easing. So they have a real balancing act between real pending disaster going on in the housing market and an inability to address that issue while inflation is still running above their target. So it’s a very, very, very significant issue.
And at the risk of being alarmist, I would say that it’s hard to exaggerate the risks to the economy in the next six months as a result of this. – Eric, one of my favorite things to do is listen to people talk who are much smarter than me. And so right now I’m doing one of my favorite things. Would you agree, Daniel? This guy is a genius.
– Oh, a hundred percent.
– I love this. I love this, right? So again.
– I gotta come on this show more often.
– Yeah.
– You’re really pumping me up here.
– We’ll make your day, yeah.
– So, here’s my question, Eric, right? I’ve seen a lot of kind of back and forth, and I actually made a video about this on TikTok, and if we, those who are on the chat @AustinHankwitz, which is my TikTok, wanna go watch it, but I made a video about how every time in the past when inflation has been red hot, I think there’s probably four or five other times going back to maybe the mid 1950s or so, anyway, that the unemployment rate had to spike above this kind of five, 6% range, right?
Right now that’s obviously not the case, right? We’re still in the mid threes. Do you think that that has to happen before we’re gonna see some sort of relief from the inflation and relief from the Federal Reserve from all this monetary, this tight monetary policy? Or do you think that’s just an outlier, and that’s not gonna have to occur?
– Yeah, so directionally, the unemployment rate definitely gonna have to rise, and that’s just by nature of what they’re doing to the economic cycle, right? I mean, they’re hitting the brakes harder than they’ve basically ever hit them in history. So, you know, it’s almost difficult to understand why some people don’t feel like the economy is going to slow when they’re literally hitting the brakes as hard as they’ve ever hit them in the last 60 or 70 years. As far as, does it get to five or 6%? I’m not sure about the level. Directionally, I’d have more confidence in saying that.
And basically, they’re gonna have to see the unemployment rate go up a little bit because that’s what’s gonna soften wages. And it’s, you know, the problem is that that movement is always lagged. It always happens at the end. So basically by definition here, they’re gonna have to stay tight too long and probably tighten too much, and then they’re gonna see the evidence of that appear in employment. But by that time, that earlier part of the sequence that I was mentioning earlier will have been underway for 12 months, 16 months. And it’s not so easy once that process is entrenched in the other direction to pivot and have employment come right back down, and have the housing market come right back. So there’s a lot of risk here. But yeah, I would say that based on what they’ve done, it’s basically an inevitability that the unemployment rate starts to rise here.
You know, it’ll happen with a lagged effect to the rest of the economy, but that process is already underway. You see the early signs of it already occurring.
– Eric, we got two questions from the chat. Let’s go ahead and start with the one over here for you. Maxamillion, I believe that’s how you say your name. Sorry if I’m saying your name wrong. “Any thoughts on the new PPI numbers and its impact on CPI?” is their question.
– Yeah, so the PPI number, it came in, quote unquote, hotter than people were expecting on a month, on month basis. I don’t look at it that way. I’m not sure if you could throw up the chart that you just had.
– Yeah.
– Up there. I look at things on either a year over year basis, or on a six month annualized basis. And on that basis, right in the middle, you could see the core PPI actually decelerated from 6.6 to 6.1%. So, and the headline number cooled as well. So, the way that I analyze it, is the inflation rate for producers is coming down directionally, but as the green in the chart shows, that’s the 10 year average. So producer prices, or core producer prices, are normally in the two and a half percent range. So directionally, the Fed is making progress, but there’s still way above trend or average of where it needs to be. So, is the process working? Absolutely.
You know, we have a monetary deceleration. Prices are coming down, It’s happening internationally first, as you can see on the left, which is the import prices ’cause of the strong dollar. Then it’s filtering through to producers, and then it’ll filter through to core CPI, which is most influenced by rent, which is most influenced by wages in that money price wage spiral. So the process is working, the Fed is making headway. The problem is they’re just so far away from their target that it’s going to take time. It’s not like inflation spiraling outta control. Inflation’s not accelerating from here. It is coming down.
And I’m not trying to be a Fed sympathizer here, it’s still way above target, but the early part of the process is really underway and underway in a very significant fashion to the point where, in my view, the risks of an overshoot on the unemployment rate going up or the risks of an overshoot with inflation coming down and having deflation in the end of ’23, ’24 is really significant at this point.
– Awesome.
– Got it.
– Thanks for clarifying that. One more question over here from Joseph who messaged me on social says, “What’s his take on the ARC company and their open letter to cutting rates instead of raising rates?”
– Yeah, no. So the ARC obviously is a company that desperately needs zero interest rates forever to thrive ’cause they’re invested in long duration like tech companies. I’ll answer that question by saying what I think the Fed should do, and answer it in that context. Obviously we all know that the Fed was super late to tighten monetary policy, but that’s water under the bridge. In my view, the problem with inflation was mainly a problem of excess liquidity. It wasn’t necessarily a problem of interest rates.
And what the Fed is doing now is they’re raising interest rates really, really aggressively when the problem is mostly excess liquidity. So raising rates will mop up that liquidity. It’s just gonna take a lot of time. I think that the Fed would have been better served to raise interest rates to something above the neutral rate, which people estimate is about two and a half percent. So they would’ve been better served in my view, to raise interest rates to something like three, signal to the market that we’re gonna hold rates here no matter what, and then focus on unwinding the balance sheet and really try and tackle the mountain of liquidity that’s out there. I think that they would’ve had more success if that was the path that they’ve taken.
My worry is that they are going too aggressive on interest rates, a tool that doesn’t work right away, and when we look back on this period in hindsight we’re gonna say they way over did it on interest rates and caused a bigger economic downturn than was needed to solve the problem. I don’t think it’s appropriate for the Fed to be easing monetary policy because, as we saw in those inflation charts, we’re still so far above trend and that really is a significant part of their mandate. They have to hold a tighter monetary policy until inflation comes down.
But the consequence of doing that is just more economic damage. And Powell said it himself, it’s not something that I said. He said this is gonna require pain to households and businesses. You can’t really get more point blank than that. It’s actually surprising a Fed chair said that, but that to me signals how serious they are about getting inflation back to where it needs to be, and there’s gonna be some downside associated with that.
– Eric, before we jump into this, probably last question, ’cause we’re running out of time here. I just wanna remind everyone, Eric has a marketplace service here on Seeking Alpha, right? He’s all around. He’s on Twitter. He’s on YouTube. He’s here with us. I mean, go check the guy out. Go follow his socials. Go subscribe to what he is doing, Go follow him all around. The guy’s an absolute rock star. Not to gas you up more than I already have, Eric.
– This has been like the best afternoon I’ve had in a long time. (men laughing)
– All right, so we got a question from Manish Gupta here on LinkedIn. “What are the probabilities of a meltdown in the property markets, and how long until we see concrete signs of recovery, or a recession?”
– Okay, so I’m writing about this actually in my next update in my marketplace service, which should go out on Friday or Saturday, is that, for a while I was writing that this downturn was not at all similar to the 2007, 2008 scenario. And in many ways that’s still true. There’s not a lot of banking sector leverage, and most of the debt isn’t concentrated in the household sector. What is becoming more and more similar, however, is that you have a very, very, very significant slowdown going on in the housing market that is not being addressed with easier monetary policy.
Historically, whenever you have a downturn in the housing market, it always ends in a recession unless the Fed preemptively eases monetary policy. For example, in December of 1994, the economy was slowing down and the Fed stopped hiking interest rates in ’95 and started to cut interest rates, and the housing market was able to recover. The economy had a soft landing.
The housing market is slowing down in a really significant way, and monetary policy is gonna get tighter over the next three or four months, which means that by the time the Fed gets around to easing, which is probably gonna be, you know, Q1, Q2 of ’23, if things work out in their favor, the magnitude of the downturn in the housing market will, in volume terms, will resemble something like a late 2007, early 2008 scenario.
So I do think that a risk is developing here, that we have a really, really deep downturn in the housing market. I don’t think that a housing downturn will morph into a banking crisis in the way that it did in 2008. So I do think that there’s a difference there. I think that the banking system is much more solid capitalized, but I do think that when you analyze the dynamics in the housing market, we are looking at, you know, price declines. We are looking at significant volume declines.
So I do think that that’s gonna happen. As far as when are the signs of a recession gonna be sort of front page? Again, I’m writing about in my next update. And I think that that’s in the immediate view here. So in the next three to six months, I think it’s going to be front page that economic conditions have deteriorated enough where people are convinced we’re in a recession. I’ve been one of the people holding out on making this recession forecast in terms of the two negative quarters of GDP.
I’ve always maintained that that’s not the definition of a recession. It’s not a political comment. It’s just not. So the economy has not fallen into a recession yet, but I think in the next three to six months, that’s going to be an inevitability here.
– Whew! (sirens blaring) That was a lot.
– That’s got me thinking all sorts of things. We’re running out of time here. I just wanna say again, Eric, thanks for joining us on this show, EPB Macro Research.
I mean, you have over 50 5 star reviews. I’m looking right here. You’re a five star guy. I’m seeking out the marketplace. He does have a 14 day free trial. If you had, Victoria, sorry we didn’t get you your questions this week, but you can always go take the free trial of his service. There is the chat function within that as well. You can talk to Eric. He talks back to you, guys. I mean, is not like you don’t get a, you get to talk to these people. It’s not like we keep them hidden away from you. Eric, thanks so much for your insight, man. Really appreciate it.
– I wanna spend my afternoon with you guys as much as you’ll have me. That was the best thing. (man chuckling)
– Let’s go.
– We’ll gas you up, man.
– We can totally gas you up. Yeah, for sure. Eric, really appreciate it, man. We’ll talk to you again here soon, all right? – All right, guys. Thanks.
– All right, take care. Now, just a reminder to everybody else still here, stockmarketlive@seekingalpha.com. If you have any stock ideas that you want us to cover within the show, you can find Austin on Seeking Alpha. He has his own author profile. Go check his stuff out, and on LinkedIn, of course, Twitter. He’s on TikTok at Austin Hankwitz. And I’m on LinkedIn. You can find me there. Follow me there. I posted this morning about Pepsi earnings. If you guys haven’t seen, Pepsi earnings looking amazing. Great kick off to the earning season. And of course.
– [Austin] John over here dropping a ball on us. We got several companies that he wants us to look into. So, we’ll-
– [Daniel] John!
– [Austin] We’ll add ’em to the list.
– [Daniel] You must have liked the GE breakdown. I mean, I appreciate you John, I really do. Everybody else, if you don’t see it here in the chat, obviously stockmarketlive@seekingalpha.com. We check that email all the time. If you have any comments or any other questions, or you’re like, wait! I wanted to ask Eric this, and you’re not taking a free trial.
First off, I don’t know why you’re not taking a free trial, but we can probably get a question answered over to you as well. Hope you like the show. Austin, anything you wanna say before we go? – I’m good, man. This was a blast. It was really good episode. Thanks everyone for listening to us. Give Daniel his flowers on Twitter, and shout out to Pepsi’s solid earnings. (upbeat electronica music) (man chuckling)
– That’s right, that’s right. All right everyone, have a great earning season. Have a great rest of the week. We’ll see you here next Wednesday, 12:00 PM Eastern with me, Austin Hankwitz, and of course all of you, and we love interacting with you, so thanks for hanging out with us, and good luck with CPI tomorrow, huh? – Yeah, hopefully they push print. (men laughing) – But now we all know the position, all right. So let’s go front run to Austin, everybody. All right, take care. Josh, get us outta here. (upbeat electronica music continues)
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