00:00So earnings season kicks off and you expect 8% growth and is that, I mean, is that what you expect?
00:06Because companies always beat expectations. So is it really what you expect? Is that your whisper number?
00:11No, that is not really what anybody expects, I would say. That's the consensus.
00:15But as we know, companies, 70 or 80% of companies have tended to beat those expectations.
00:19They tend to beat like by 4 or 5% according to Datastrack.
00:22But probably I would say all in, let's say we get 4 percentage points of upside to that 8% number.
00:28So probably we can get close to 12%.
00:31So that, you know, what's really important is we've had a string of positive earnings quarters.
00:35And, you know, as I mentioned, some of it is driven by the economy, but some of it is driven by productivity and margin expansion, believe it or not.
00:43So one thing that really caught my eye looking through the numbers for the earnings for the entire year
00:48is that consensus is expecting for margins to actually expand to 13.9% despite the tariffs that we've had to absorb,
00:56despite, you know, perhaps some of the layoffs that are coming through.
00:59And I think a lot of that has to do with productivity.
01:01You know, the fact that productivity rose close to 5% quarter over quarter annualized rate
01:06and productivity sort of had the step level change in the last three years post the launch of ChadGBT.
01:12So that's important.
01:14If you can be more productive with the same amount of resources,
01:16if you can drive some cost savings, even if you can't quite drive the top line revenue with AI yet,
01:23you know, the productivity certainly does add to those financial results.
01:27And I think that's what we are likely to see for earnings this quarter and this year.
01:31For as well as equities have done, precious metals have done even better.
01:34This is, I saw Kevin Gordon of Schwab put this out on X,
01:37that gold's on track to outperform the S&P 500 for the sixth consecutive month.
01:41The last time it did that was 2008 and 2009, which was a very different environment.
01:46And lots of fears in that.
01:47Is there any signal in that, that gold and silver keep reaching new highs?
01:51Yeah, I think investors, equity investors, have likely figured out that, you know,
01:56it's not a good idea to stay away from equities because of geopolitical risks.
02:00And as I mentioned, you know, this undercurrent of geopolitics and politics is always with us.
02:04You know, whether it's Venezuela, Cuba, Greenland or Ukraine or, you know,
02:10you name the number of geopolitical flashpoints, it's not a great idea to hedge that in equities,
02:14but it is likely a great idea to hedge that in precious metals.
02:18And I think that's why gold has been the go-to for that.
02:21You know, and on top of that, we are shifting kind of to a new regime,
02:25I would say, from the monetary policy standpoint.
02:28You know, you have the labor market in the U.S. that is clearly weakening.
02:32You know, if you look at the three-month average pace of job creation, it's negative 22,000.
02:36You know, if you look at the CPI report that we just got,
02:40there are actually just very few categories that now have an inflation reading above 3%.
02:44So we're moving closer and closer to that 2% target.
02:48So all things equal, I do think that the Fed has scope to cut interest rates.
02:52So once again, kind of lower, you know, real interest rates support also the outperformance of metals.
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