Ricky Mulvey (3:54)

I mean, hear me out. You had, you had the contest. You could have the pause. I could see a way where George somehow insults a trade representative of another country and incites a tariff war that he finds himself in the middle of, that he has to reverse in some way. You could, you could do that if you want to bring that show back in 2025.

Jason Moser (4:13)

Well, let me listen. Art Vandelay. Art Vandelay was an exporter importer. I mean, or was he in that exporter? It's one or the other. But yeah, point remains.

Ricky Mulvey (4:20)

When we were at so full palooza, that's our like all company event. Or we were for the past couple of days because everyone who works on the show was at the all company event. That's why we were off. It was an interesting time to, to see our colleagues, but also to watch the market where, you know, this 90 day pause was actually sort of hinted at on I believe Monday.

Jason Moser (4:41)

Yeah.

Ricky Mulvey (4:42)

Where it's, it becomes a tweet that's on some like lower ranked X Finance account that gets picked up by other accounts that then gets picked up by cnbc. It's a headline. Trillions of dollars in movement in the stock market and then the White House comes out and says, nope, that's fake news. We're not negotiating these tariffs are in Effect we had that roller coaster from like plus 4% to minus 1% in one day. Now we're having trillions of dollars moving again on this truth social post. This is a roller coaster ride that is a market driven, president driven return. Are there any lessons that you're taking from that? Just the sheer violence in the market happening right now?

Jason Moser (5:26)

Lessons? Yeah. Well, I mean, I think, you know, obviously this, that, that initial, it has obviously been a very volatile, volatile time. And I mean that, that initial post seemed to be based on something where Ben said something to the extent of like the administration is going to do whatever the administration is going to do. And then somehow that was parsed and interpreted as like, well, there's going to be a pause. And then someone gets out there on the social media, they say there's going to be a 90 day pause. It then goes viral. And of course the markets react immediately because stuff just gets picked up so quickly. And I think for me, I mean, honestly, it's just, it's a good reminder of you have to be able to take everything with a grain of salt and make sure that you don't overreact or react too quickly. Because oftentimes when it comes to financial media or when it comes to even social media, people love to be able to be the first one to break the story. Right? That's just like the go, I want to be the one that breaks this story. And there are often times where it's the case where it's actually not a story at all. And it turned out to be that that was not correct. There was not a 90 day pause announced at that time. And then we saw the markets quickly correct again because we found out it was kind of flawed information. So I think to me it sort of goes back to, you know, that old Silicon Valley axiom, move fast and break things. And I think for investors, we need to kind of look at it from the other side of the coin there. Move slowly, right? And don't get emotional, right? Don't sit there, just make hasty decisions based on something that you are not even sure whether it may or may not be the case, because in that case it turned out to be not true. Now we've seen today where it does seem like this information we've gotten is verified and actually is true. But if you made a hasty decision based on that information yesterday, you could have really put yourself into a hole that would have been very difficult to climb out of.

Ricky Mulvey (7:26)

It was a rumor, it was fake news, then it was real news. And I'm not about to throw stones here. I mean, I made two mistakes on the show last week that I want to correct now. When we were first doing the day after Liberation Day, which Liberation Day seems much longer ago than about a week ago, I didn't give, I didn't give enough context that it was that one of the trade barriers that was being punished were trade deficits, which can be a good thing. I have a trade deficit with the Spotify Corporation, I have a trade deficit with Costco. And I'm, look, I'm trying to break this stuff down and basically like mentioning that dairy from the US To Canada gets this crazy tariff if it's above quota. In 2024, the US exported more than a billion dollars in dairy products to Canada and currently American producers do not export enough dairy to meet the Canadian tariff quota. And there's different issues with non monetary tariffs. But I'm trying to take, you're trying to take all of this information in and deliver it to listeners. And I made a couple of mistakes last week that I'm correcting right now. And, and you know what, it's good to be here and not CNBC where we're not moving trillions and trillions of dollars.

Jason Moser (8:34)

JASON so Ricky, I think that's a great lesson for people, by the way, we all get things wrong and being able to say that can make all the difference in the world. I think it makes you think a little bit more going forward in investing. We have to admit we get things wrong all the time. That's part of the deal, right? But once you get to the point where you can actually make those mistakes and embrace those inevitable mistakes, I think it ultimately makes you a much stronger investor going forward because you know that you're learning, you're keeping an open mind and being willing to change your mind when the facts change. And to me, that is a key part of being a good investor. So stay humble. Right.

Ricky Mulvey (9:15)

For newer listeners, I think we're getting an influx of newer listeners that just want to find out what's going on. And there's a feeling that markets are moving on. These truth posts charts headlines about phone calls between the President and other world leaders. And you know, I'm going to get political for a sec. Our president does have a meme coin. He is involved in the markets and I think there can be a feeling that, you know, the stock market is rigged and this is one big casino, especially as I'm looking at these big movements. For a newer listener, for a newer investor, what would you say to them if they're, if they're having that feeling right now. Because in some ways like it, it's not entirely wrong.

Jason Moser (9:55)

No, I, I, I don't think it is. I think in today's day and age, with the things like meme coins and meme stocks and stonks and all that stuff, it, it can definitely feel more rigged or more like a casino than it did perhaps 20 years ago. So I get it, it can feel that way sometimes. I think part of it really boils down to understanding what game you as the individual investor are playing because in most cases we are just not playing the same game as your money managers and big institutions out there. It reminds me, it takes me back to that old Ben Graham saw where I mean, he says in the short run the market is a voting machine, but in the long run it is a weighing machine. And this really is true. I mean we are focused on being owners of businesses over time that will continue to get heavier, Right? In a good way. But we have no edge when it comes to getting in and out of positions. There's so much information that flows so quickly, we just simply aren't privy to it. And then the costs that come with being wrong in the trading game are simply not worth it. And when you're trying to trade, I mean, wrong an awful lot of times. So it just doesn't make a lot of sense. Now if you look at the chart, it tells the tale. I mean, sure, the S P is well before, before this 90 day pause was announced, down around 15 year to date and it's only up, you know, maybe 11 over the last three years. But look, over the last 10 years it's up 140%. Over the last 30 years it's up 882%. Now there are a lot of bumps along that journey, of course, but getting invested and then the key here, staying invested, is the only way that you can ensure that you'll actually be a part of that.

Ricky Mulvey (11:44)

Our co founder, David Gardner is on X. I encourage you to follow him. He's our chief rule breaker and he wrote, quote, in my 58 years, not sure I can remember a market drop more akin to a self inflicted gunshot wound wound. Mind you, it's a two day actually two month drop. Let's do even more tariffs. Am I right? We got a good thing going. Pour it on. Sarcasm is the wit of fools. And I think there's, there's two elements here I want to talk to you about. We talk about a lot of market crashes in the past Lessons from them. Some things are the same. The feelings of panic, people wanting to move to cash, people wanting to trade more often when they're experiencing the pain of seeing months and months of hard work Vanish in their 401k and stock portfolios. What seems to be different this time is that it is not systemic. Not like 2008, it's not like the carry trade even from a couple of months ago. What's it mean for stock investors that the market dropped in the ups and downs we're seeing right now is self inflicted and not systemic.

Jason Moser (12:44)

Yeah, well I think this is something where ultimately what that means, this is something that there was, there was a choice in what to do and also how to do it. You can imagine if we weren't going through all of this tariff stuff then the market likely wouldn't be performing the way it's been performing over the last few months. I mean we might end up being in the same position we are today, who knows? But the volatility I have to imagine would have been, would have been far, far lower. And it's funny just based on the timing of this because, because of this 90 day pause that just came out. But imagine if a headline came out tomorrow saying these tariffs are suspended right indefinitely or 90 days or whatever and countries are negotiating ways to move forward on a more sustainable path together. I mean that would certainly have an impact. And lo and behold, we saw this headline that just came out and that at least I think has the markets encouraged that we might be on that path for productive negotiations towards more sustainable solutions.

Ricky Mulvey (13:46)

So what would you say to the investor who sees today's very large market increase, says this is my chance to get out for a little bit. We just had one of the best days and this is going to be followed by more tit for tat trade war negotiations with China which is still heating up despite the large increase and that could be very bad for the US economy. I want to get some more cash or I want to get out of my US stock position and put myself into more international equities.

Jason Moser (14:14)

Yeah, I think a lot of this. So first and foremost I would encourage. Folks, granted the headline today has obviously had a very positive impact on markets. I would not say that. Okay, well everything's taken care of now, problem solved. Because I don't think that's going to be the case. I mean I think we're going to see more volatility as, as time goes on here. But I do think a lot of this boils down to what stage of Your investing your life that you're in and we, we talked about this on the show before. If you're younger and you're working and you're to grow your wealth mode. Well, I mean getting out of the market makes zero sense. It makes no sense whatsoever. I mean you need to continue to add, continue to diversify your holdings as well as you can in order to offer some, some sort of stability there to help offset some of this volatility. Dividend stocks, I know they're really boring sounding, Ricky, but dividend stocks are great for investors of all ages. So keep that in mind. If you're in more protect your wealth mode, right. You're a little bit older, you're kind of looking towards retirement. You need to make sure you're protecting that wealth. Well then absolutely, you need to make sure that you're allocated accordingly and have more stability in your portfolio. The cash is always nice to have and it's a nice way to hedge these downturns. It's also a good reminder to make sure that your money that you know that you're going to need over the next three to five years. Right. If you, if you've got college tuition bills to pay or whatever else, it may be something over the course of the next three to five years if you know you need that money, probably shouldn't have that money in the market or at the very least it should be in a stable instrument that while offers lower returns, it isn't subject to the vagaries of the market.

Ricky Mulvey (15:50)

We're going to talk about the trade war heating up with China and what's going on with Walmart. Just after this.

Jason Moser (15:58)

McDonald's meets the Minecraft universe with one of six collectibles and your choice of.

Ricky Mulvey (16:03)

A Big Mac or 10 piece McNuggets.

Jason Moser (16:05)

With spicy nether flame sauce. Now available with a Minecraft movie machine. Participating McDonald's for a limited time. A Minecraft movie only in theaters.

Ricky Mulvey (16:19)

All right, jmo, we got too much news today. No B segment. We're sticking to our A segment outline. The trade war with China continues to heat up. According to the Wall Street Journal. This was before the 125% tariff from the United States. A few minutes ago, China said it was going to increase tariffs on all U.S. imports to 84%. But the thing that's important for this is that it may go beyond tariffs and the situation may not just be import export duties. It could go to other things. It could go to export controls of critical, critical minerals used to make chips. Could be more regulatory Investigations to punish US Companies blacklist more US Companies from the the Chinese market. And the big one, which is a sort of economic nuclear option, is that as of January, China had about $761 billion in U.S. government bonds. There is a nuclear option where they just want to sell all of those into the market and sort of crush the price of U.S. u.S. Bonds, which increases the interest rates on those bonds. Yep, that's the one I'm worried about. How about you?

Jason Moser (17:29)

So I wouldn't say that I'm worried, but I'm really glad that you framed that the way you did, because I think what you did is you, you made the point that this is a very complex issue with a lot of moving parts. But to the bond question specifically, I wouldn't say I'm worried, but it's something to watch for. Sure. I mean, normally during these volatile times, I mean, we would see a flight to safety and money would be flowing from higher risk instruments like stocks to more risk free type instruments like government bonds. But there are certainly some questions regarding bonds today, particularly as those prices continue to fall. And I mean, there are a couple of different perspectives. There's a conversation about the basis trade, for example, where the basis trade is basically the basis, the difference between the price of a government bond and its future contract, which is an agreement to buy that bond at a later date for a specific price. And so hedge funds, institutional money, when they see a meaningful delta there, right, they'll buy the cheaper bond and then they'll short the more expensive future contract in order to try to play a little bit, kind of an arbitrage deal. Right? And at some point when the prices converge, then they will go ahead and cash out and make a little bit of a profit there. And I think it's interesting to note in regard to this basis trade, Apollo Global's chief economist noted recently here, the basis trade today represents about $800 billion in growing. So it's not insignificant at all. But to your point about China, in other countries dumping U.S. bonds, I think that's a great observation as well. Give a shout out to Matty earlier today. He noted on our website that, you know, traditionally larger buyers of those Treasuries, countries like China and Japan, they obviously have been prime targets of the tariffs and it could materialize. Where these countries decide to unload those bonds and unload those bonds, prices go down, yields go up, and now all of a sudden we're stuck in a little bit more of a tricky interest rate environment. Which then begs the question, what does the Fed do? And kind of going back to what I, what I was giving you kudos for at the very beginning there. It is a very complex situation with a lot of different outcomes.

Ricky Mulvey (19:43)

I'm sure it's a busy day for Jerome Powell. And speaking of institutional investors, I think it's important for all investors to zoom out on what's going on right now. We talked about the danger of reacting to headlines, but there could be fundamental paradigm shifts happening. We already know about some of them, like artificial intelligence. And Ray Dalio wrote about it in an article on X spicily titled don't make the mistake of thinking that what's happening, that what's now happening is mostly about tariffs. I got an edit for that headline. If he's looking for any. One idea is that the debt that the US has taken on is unsustainable. And that quote, it is obviously incongruous to have both large trade imbalances and large capital imbalances in a deglobalizing world in which the major players can't trust that the other major players won't cut them off from the items they need, which is the American worry, or pay them the money that they are owed, which is the Chinese worry. So basically the US has taken on a bunch of debt to buy goods from China and now that order is getting fundamentally restructured. Dalio can be kind of a perma bear. I'm not saying I'm a smarter investor than him, but that's just an observation he likes to call a market crash.

Jason Moser (20:58)

Right.

Ricky Mulvey (20:59)

Any observations about what he wrote in that article or any takes based on what he's saying here?

Jason Moser (21:05)

Yeah, I get it. I mean, I really like reading Ray Dalio stuff. I mean, he can come across as a little bit more glass half empty at times, I guess. I mean, I get where he's coming from, though. I think he makes some really good points here, though, in regard to instability and unsustainability on several fronts. I mean, economic in the sense of debt levels. I mean, I think we all probably agree that our debt levels are unsustainable. You have to figure out a way to crack that code. Domestic political order is very chaotic and very polarizing to say the least right now. I mean, and this certainly then extends out to geopolitics and relationships with other countries and then, you know, the constant evolution of technology and how that's changing our lives and careers. So I think he raises a lot of great points there. Things to be concerned with, to follow and keep our eyes on now by the same token, I don't think the world is coming to an end and I think these issues will very likely persist in the future, but hopefully just to a lesser degree.

Ricky Mulvey (22:03)

We've done a lot of big macro and there's still big macro to talk about. But let's get to some of the individual companies and one of those is Walmart. So I think it was last week or the week before we were talking about like if you're a company that sells stuff and you're importing stuff, why are you issuing guidance right now? You have no idea what's going on. Walmart kind of did that. This is what they said in the press release. I'm going to let you translate it. They said, quote, the company expects Q1 sales growth to continue to be in line with its 3 to 4% outlook in annual sales and operating income growth. Guidance remains unchanged. The range of outcomes for Q1 operating income growth has widened due to less favorable category mix, higher casualty claims, expense and the desire to maintain flexibility to invest in price as tariffs are implemented. End quote. Sort of the headlines we're seeing on this is that Walmart is cutting guidance, but that doesn't seem to be entirely true. What's Walmart telling Wall street here?

Jason Moser (22:59)

Well, I think Walmart is telling Wall street that they are unsure as to how the costs of doing business are ultimately going to impact their bottom line. And I think, you know, in regard to Walmart and how they get their stuff right, their supply chain, I think it's important to note that, I mean it's, it's estimated that about 60 to 70% of Walmart's globally sourced products actually come from China. Now if you go one layer down, that figure could be close to 70 to 80% of merchandise sold in the actual U.S. and so the U.S. is even a little bit more susceptible to that. So I mean that's not surprising. Walmart was very dependent on China in regard to their supply chain. But by the same token Walmart plays a very interesting role in the global economy clearly here domestically, but globally as well. And I think that this is a situation, we see these situations a lot where companies enter these stretches. Some fare way better than others. Right. But this, these are situations where I think the strong can get even stronger. And I thought it was really interesting to see that Walmart shares were actually up 5% on this release. Now that was before the 90 day delay headline just came out. Now Walmart shares are up 10%, which, that's a big move for a stock like this. And there was just a noteworthy conference from Chief Financial Officer John Rainey said an investor presentation here, that he believes that the company emerges with greater share when it leans in to periods of economic uncertainty. And that kind of goes back to my point of the strong only get stronger because they have the scale to deal with this situation. They can take a little bit of a hit on pricing in the near term in order to gain share in the long term. And if you just take that, take that to the nth degree. McGoll years ago, that's what Amazon did, right? That was their playbook. We're going to lose money to gain share because we know 10, 20 years down the road it's going to be the share that matters and that's ultimately what's going to help us make money. Now, Walmart, obviously a little bit of an older business than Amazon, but I think they're still playing a little bit from that playbook there. And so it doesn't surprise me to see the market receiving Walmart's news the way it is, because typically when you see companies get out there and withdraw guidance, much less cut guidance, the market doesn't typically receive it very well. But today we're seeing George Costanza, right? It's the opposite.

Ricky Mulvey (25:33)

The Seinfeld references are in full force right now. So to put that in context, Walmart jumps 10%. It's more than a $700 billion company. That means that the jump just today is the entire market cap of Kroger, which is one of its larger grocery competitors. It's pretty astounding just on this announcement. It is a wild time to be an investor. I don't have anything smart to say on that. Big banks are kicking off earnings season this week. And you can be sure that a lot of the Wall street analysts are going to be looking, Jason, for clarity, clarity on what's going on in the. Poor corporate executives, very poor, we should feel bad for them, are going to be, you know, you know, it's going to be cloudy outlooks. A lot of questions for these retailers, really, for any company when you're looking through the earnings transcripts that are about to come out, what are you going to be? Control effing for? What are the terms? What are you looking to see from the companies you follow as earnings season kicks off?

Jason Moser (26:29)

First and foremost for me, it's going to be the R word, recession. And I think the main reason why I say that is because now all of a sudden we're seeing a lot of these ban banking leaders come out and really start calling for the likelihood of us entering a recession if we're not already in a recession. We saw Larry Fink say something to that extent the other day. Jamie Dimon came out and said that here recently. Morgan Stanley saying basically the same things. I think to me it's going to be very interesting to see how these leaders feel about the economy and a recession and ultimately sort of the relationship that the Fed plays with this because that there is this, there is this notion. Right. I'm not saying this is what's happening, but there is this notion that the Trump administration is kind of trying to force the Fed's hand into cutting rates a little bit. Right. And that has played into some of the decision making here. I'm not saying that's the case, but I'm saying that's a notion that's out there and it'll be very interesting to see if they have anything to say about that as well. But, but for me, I think the recession talk is going to be what's, what will be top of mind for, for a lot of folks.

Ricky Mulvey (27:40)

For me it's going to be supply chain. You know, right before this recording, let's say, let's say I'm Nike and I make more than half of my shoes in Vietnam. And these tariffs, this 46% tariff that was previously going to come into effect in Vietnam, maybe I'm thinking about opening a factory in the United States of America. Now I've got a 90 day pause. What am I going to be doing about this capital investment that is sort of hot and cold? Yes and no, in and out. And are companies really going to bring more manufacturing to the United States given the unevenness of these announcements and trade disputes?

Jason Moser (28:15)

Yeah, I think, I think that's a great question. I mean that's, that's, it seems like that's clearly a part of this. It's about reshoring and attempting to bring manufacturing back to the US Which I think is a great long term goal. I think we'd all probably be on board with that. But that's not something that happens overnight either. Right. So if that is something that's really steering the ship, I mean that, that takes a while and that really, that I think adds to a lot of uncertainty. Particular when it seems like the headlines change every single day.

Ricky Mulvey (28:42)

I want to finish off by talking about one company I know you follow closely, one I've started to take more of a look at because it seems like people are getting more negative on it and that's Adobe now trades at about 16 times free cash flow and that was before whatever happened during this recording. And also has a 25 billion dollar share repurchase authorization, which is a lot. I think the total market cap's around 140 ish billion dollars. There is a storyline that, you know, companies are going to cut back spending. Maybe some of their subscription software that they offer is going to get steamrolled by AI. Who needs Photoshop when you can just have AI edit your photo, that kind of thing. That's true, but as, as we close out, maybe. How are you looking for any opportunities right now and any, any thoughts on Adobe? Just for me, is your colleague and coworker looking at stocks?

Jason Moser (29:34)

Well, as your colleague Ricky, I will say I'm also an Adobe shareholder and I've recommended the stock and in our services as well. So it's a company that I'm still fond of and I still believe in. AI has been a big point of conversation with many of us on the investing team when it comes to Adobe. That said, it's not like they aren't chasing that opportunity. They most certainly are. And anecdotally people I speak with who use these tools like them a lot. But it's clearly a much more competitive market for digital content creation. So Adobe is going to have to work to maintain its position in the market and figure out ways to grow it. As I said, it's one I own personally and I intend to continue holding. But I think for investors it's just keeping an eye on signs that they are losing meaningful share. If we see signs that that's happening, then we need to reassess. I mean the company's still growing the, the top line at a double digit rate and they really, they continue to bring even more down to the bottom line, which is encouraging. Makes a ton of cash. The balance sheet's still in very good shape with plenty of cash and in low rate long term debt. That staggered out nicely and as you said, they continue to utilize that cash to buy back shares and they bring that share count down. I think it's just going to be paying attention to how sticky that subscriber base remains because that's one of the, one of the great parts about Adobe historically as an investment is this sticky subscriber base. But as the market becomes more competitive and there are more options out there, you have to ask yourself, are there really switching costs there? I don't know. I mean, we're going to find out here I think soon enough. But I like the things that they're doing. And I'm willing to give this company some, some leash here to kind of let them go do their thing. As far as other companies, you know, I've not changed my investing behavior really at all through this. I mean, I haven't sold anything. I've continued to invest by virtue of just making sure my paycheck is contributing to my 401k and I'm investing in, you know, my Vanguard Total Stock Market index fund there individual stocks I've come to find. And this is really one of the greater lessons David Garden's ever taught me. It's. I'm really only interested in these companies that I already own. I like adding to positions that have done very well for me through the years. And I think of companies like Home Depot and UPS on the dividend side, for example, where those share prices are depressed. But these are long term successful businesses. On the growth side, I look towards companies like Shopify and Axon Enterprise as examples of companies where I would be very happy to add to those positions as well. But I'm taking it very slow. Growth. Like I said back in, you know, the beginning of the show there, we're doing the opposite of what Silicon Valley does, Ricky. We're not breaking things fast. We're not, we're not moving fast and breaking things right. We're going to take it slow and make sure we don't let our emotions get the best of us.

Ricky Mulvey (32:21)

He's an expert on imports and exports. Art Van de Life, appreciate you being here. Thank you for your time and insight.

Jason Moser (32:26)

You got it. Happy to be here.

Ricky Mulvey (32:33)

As always. People on the program may have interests in the stocks they talk about and the Motley fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley fool editorial standards and are not approved by advertisers. The Motley fool only picks products that I would personally recommend to friends like you. I'm Ricky Mulvey. Thanks for listening. We'll be back tomorrow.