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00:15Good morning. Welcome to the Myers Report Fast 15. It is Friday, April 10th. We would have had
00:23our weather guy, Don Day, today, but he reported in last night that aside from some minor drought
00:29conditions in parts of the Central Plains and the West, there's not a lot happening in weather this
00:34week, so Don took off. We have with us our logistics guru, Isaac Issa. He's back and enduring the pain
00:44of high fuel prices. We have with us today Carlos Legaspi, our international finance broker-dealer,
00:52who will be discussing the markets and filling in for Dr. Robert Janetsky,
01:01who is vacationing in Mexico. Isaac, one month into the fuel issue, prices are exceeding $5. How are
01:13truckers managing to handle this increase? Prices are exceeding $5.50. I saw $5.70 on my way home
01:20yesterday, and you know what? It's obviously top of mind every truck driver, every trucking company
01:25right now in the nation. Truck drivers are putting a tremendous amount of pressure, and I think
01:31rightfully so, on trucking companies to pay an appropriate fuel surcharge. Most companies, you
01:38know, benefit from getting fuel surcharge from their customers, but not all of them do. So a lot of these
01:43companies, especially the midsize smaller companies, are coming out of pocket right now, paying their
01:48drivers the additional fuel just to retain driver capacity right now. Again, you know, and trucking
01:54companies across the nation, I've been on the phone all month with our customers trying to get our fuel
02:01surcharge where it needs to be. You'd be surprised the challenge we're having right now when the entire
02:07planet is seeing fuel play out on the global stage. But yeah, we're managing it as best as we can.
02:13We're recouping as much cost as we possibly can, but it's certainly not covering all of it, Gary.
02:20How are volumes going, and how's driver capacity, and where are the freight rates trending?
02:26Driver capacity is continuing to lead the market. Indiana just moved forward with passing their
02:34version of the Delilah law, the non-domiciled English speaking. So they're one of the first in
02:38the country to actually pass it through legislation. In Indiana, right here in our backyard Midwest,
02:44we already are seeing the ripple effects of truck drivers that aren't going to Indiana.
02:50We got guys who are legal citizens who struggle with English, especially across the entire Chicagoland
02:56area, that won't even enter certain states because of the rumors that they're hearing right now.
03:02So driver capacity is continuing to lead the marketplace. Demand is coming back in a huge
03:08way. Rail just hit their big month, the month of March, I'm sorry, was the biggest month we saw
03:15on rail since 2021, which was in the guts of the COVID era, right? The super cycle we experienced.
03:23So things are definitely moving, moving fast in terms of the right track. So we're thankful for that.
03:30Are we seeing any regional imbalances in capacity that could create pricing power?
03:37Oh, absolutely. The epicenter by far, arguably the epicenter is Chicago. A lot of this nonsense
03:45unfortunately took place in Chicago in a post-COVID environment.
03:51What nonsense, what do you mean by nonsense?
03:54The biggest one by far is the double log books, Gary. Drivers running 22 hours a day,
03:59that's the biggest one by far. Team ghost drivers. And then you got the non-domicile, you know,
04:05You mean dishonesty?
04:07Dishonesty, correct. I'd say illegal, running an illegal operation. I'd say,
04:13you're giving, you know, so yeah, running illegally.
04:18Carlos, boy, it's been a hell of a week, a hell of a couple weeks.
04:24With everything going on in Iran, which stock market segments do you think will benefit
04:31if there is a peace settlement?
04:35Well, right now, we're still,
04:38the base case scenario is right now the market as a whole will be trading water.
04:42You know, after the relief rally,
04:44post-cease fire, everything seems to be holding.
04:50So, we kind of had a big shift back to the economy.
04:54We had the CPI just came out this morning,
04:57came in hot as expected.
05:01How hot was it?
05:02The survey was for CPI to come in at 0.9,
05:08which would take us to a 3.4 year-on-year basis.
05:13And then, so it came in right in line with what's expected.
05:19The good thing is that the core came in also in line at 0.23.
05:28So, the move in energy prices has not trickled down yet to 0.4.
05:37And so, that's why the market is pretty much flat this morning.
05:42All the indices are flat.
05:44Interest rates, the end-year bonds still at around 4.3.
05:48Nothing really moved.
05:49And I don't think anybody wants to move until,
05:54especially ahead of a weekend,
05:55that there's going to be talks in Pakistan.
05:57So, everybody's kind of on hold trading water.
06:01So, right now, we're looking at a core year-on-year of 2.7%.
06:08That's not too bad.
06:10Well, the concern is that, if you look deeper,
06:15is that this only captures about a 20% increase in the price of gasoline.
06:22And so, it's moved around about 40%.
06:25So, that means that it's not fully reflected yet.
06:28So, we'll be looking at the April numbers to see.
06:32So, we anticipate another hot number in April.
06:35So, there is some good news that can relate to that with a little bit of hope and a prayer.
06:42And that wholesale diesel prices came down about 60 cents a gallon over the last few days.
06:48And gasoline, wholesale gasoline prices came down about 20 cents.
06:53So, hopefully, if the settlement holds and prices fall,
06:59by the time we get higher inflation numbers that are temporary,
07:03we'll already see that lower inflation is well on its way.
07:07Well, also, the market seems to believe that it's going to hold because, like I said,
07:14it's holding the gains of the rebound have been maintained.
07:21So, right now, it's kind of like cautiously optimistic.
07:26That's kind of how I would probably put it.
07:29Which market segments will benefit, excuse me,
07:33which market segments will be hurt if there is a peace settlement?
07:39Well, I think everybody, where everybody hid, you know, when the conflict started,
07:44there was a big rotation from some of the growth names into defensive names.
07:52There's, you know, consumer staples, things like that, toothpaste and, you know,
07:57household items and things like that because normally that's what happens.
08:00It's a quasi-gold, you know, it's like when there's fear of gold,
08:05just stuff that people will continue to consume.
08:08So, we believe that if there's a settlement and the market turns around
08:14and continues to recover, then people will just rotate out of where they hid
08:19into some of the growth names.
08:22So, I think, so, I advise, caution, it's a little bit too late to go defensive right now
08:28because you might get hurt if it reverses.
08:32So, what you're saying is in the times of stress,
08:35what they may do is park their money in some stocks that seem relatively stable
08:39and when the dust settles, then they pull out of those markets.
08:45So, I guess you were talking the other day about cereals and cosmetic stuff
08:50that's flat usage.
08:52Correct.
08:54So, how are stocks doing this week?
08:58So, we're still up for the week.
09:01You know, like I said, the gains recovered.
09:04So, just as a reference for the S&P 500, so we closed Friday at $65.82
09:19and then we're at $68.24, so in a week, you know.
09:24And that's only off by about 150 points from the S&P all-time high.
09:31Yeah, the all-time high was about 7,000.
09:387,000 right around at the end of January.
09:41So, it's recovered significantly, significant of the loss.
09:47What we're looking at is kind of the 50% retracement level was 67, 65.
09:56So, we went north of that.
09:58So, we believe that that's the new support.
10:01And so, I think that's where it's going to be kind of trading sideways at around this level
10:05to see where the ball rolls regarding the Iran conflict.
10:11Even with the uncertainty and the higher inflation numbers, how are interest rates doing?
10:17They seem to be holding.
10:18They're holding.
10:19So, like I said, the level was already anticipating the high inflation numbers.
10:27So, it was already baked in the cake.
10:31What we're seeing is expectations of a rate cut in the Fed funds in the short end of the curve
10:38this year have continued to go down.
10:41So, right now, consensus is maybe just one cut this year.
10:45Later in this year, we're in the – we're a little bit on the outlier.
10:49We believe there's going to be no cuts this year, even with a change of how we met the Fed.
10:53But just because of you need to let these inflation numbers, even if the conflict resolves, it has to push
11:02– this bubble has to push to the system.
11:05And so, it's a hard environment to cut rates when you have this thing.
11:10Over the next couple of days, we'll huddle with you and with Isaac and revise and review our forecast to
11:17see what's going to hold and what's not.
11:19How is the labor market looking?
11:21Labor market continues to be kind of a no hire, no fire.
11:25So, weak job creation, but also below forecast jobless claims.
11:33So, there were some high publicity layoffs in tech companies, you know, all blaming it on AI.
11:49However, that still has not reflected on the labor statistics.
11:52So, maybe those guys are able to find jobs because it hasn't gone into the jobless claims.
11:58So, it is interesting how, you know, the headlines and data, sometimes there's a lag.
12:08We're still waiting for those things to converge.
12:10Yeah.
12:10It was interesting that this – with the war and with the stock market falling a few weeks ago, falling
12:19a little,
12:19there was an anticipation that there could – that the market could fall lower and that there would be a
12:25buying opportunity.
12:27I don't see that happening now.
12:29Do you?
12:31Oh, it depends on the trajectory of the conflict.
12:33Right now, the market seems to believe that somehow the ceasefire will call.
12:42So, and if the conflict ignites again, you know, we may revisit the lows, the 6,400 lows on the
12:53S&P.
12:53So, it's wait and see.
12:57So, kind of like I said, I'm cautiously optimistic.
12:59I think that it's going to hold.
13:01So, enough not to sell, but it's not good enough to commit more capital.
13:09Just kind of just a holding pattern.
13:12Isaac, from the people you know overseas, is there any idea of whether or not there's any optimism that this
13:20piece will hold?
13:23It's a mixed bag, Gary.
13:25It's all about who you ask.
13:26It's people – the optimistic people are the people who are more moderate, who want to see this hold.
13:32And, you know, you've got the pessimistic people that want to see war continue.
13:36Truly a mixed bag.
13:37And it tells you everything you need to know about the complexity of this conflict.
13:43Well, of the people that I speak to over the last few days, including our mutual IDF retired general, nobody
13:54really knows.
13:58And the president has added that – deliberately added that level of uncertainty in to improve his negotiating position.
14:07And I think he's done it quite successfully in that nobody really knows what's going to happen next.
14:15That being said, Carlos, going forward, are you optimistic or pessimistic?
14:22I'm always optimistic.
14:24There's always ways of making money, long or short.
14:26Okay.
14:28Isaac, what about you?
14:30I'm optimistic.
14:31Again, the industry is – we're tightening up on the capacity.
14:34Demand is coming back.
14:36Rates are headed up.
14:38So things are looking bright, Gary.
14:41Optimistic.
14:41I am also very optimistic.
14:44And I want to share something, which I think we will find – I think this is interesting.
14:53This is the description of socialism versus capitalism and the utter stupidity of the left.
15:00They live in a capitalist society, complain about it, and they want to destroy it, the same society that gave
15:09them what they've got.
15:11Bizarre.
15:12Anyway, with that, have a great weekend.
15:14Be safe.
15:15And God bless America.
15:31God bless America.
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