JD Durkin: Let’s bring in our first guest, Michael Monaghan, Partner and Portfolio Manager at Founder ETF. Good to see you here today. Thank you for joining us.
Michael Monaghan: Great to be here, JD. There’s nowhere I’d rather be on a Friday for the close.
JD Durkin: This is what I’m talking about. We had the New York Football Giants ring the Opening Bell today.
Michael Monaghan: Wow. That’s an incredible day.
JD Durkin: I mean, it’s incredible for all of us. Give me your sense on the markets, because September ended in a little bit of a bearish way, and yet here we are yesterday and today, a lot of green on the Big Board. We’re seeing the generals in big tech and discretionary do a lot of the heavy lifting. What are you seeing so far here as we start Q4?
Michael Monaghan: So we would agree. You saw good performance in the AI complex names today. You saw performance in SpaceX, Dell, CrowdStrike, Bloom Energy.
So as our three-wave model talks about, we’re watching the Middle East, we’re watching the AI buildout, we’re watching jobs. So AI buildout’s looking strong. The jobs number being a little softer today, while not good for Main Street, and we want to help Main Street, that’s going to give the Fed room to not hike rates anymore.
So now all we’ve got to do is get peace in the Middle East and get that energy under control to tame inflation.
JD Durkin: Certainly easier said than done. I do want your take, though, a little bit more. Let’s deep dive on the September jobs report. We were expecting 84,000 jobs to be added to the economy. Kind of a swing and a miss to the downside of 29,000. And we saw unemployment go the other way.
Maybe good news for investors in the short term, but what does that do for the Fed? And how are you thinking about that jobs print today, Michael?
Michael Monaghan: So it was a little bit lighter than expected, although we often see revisions upward and downward in these. But it’s really giving Warsh and the rest of the Fed the ability to pause and not hike rates again, and potentially even lower them in the future if we can get Middle East stability moving.
JD Durkin: Well, your take on a few of these other pressure points. We’re still watching, you and I, right now at the Big Board. Yeah, it’s interesting. I don’t frequently see West Texas and Brent go different directions, but West Texas coming down to a 91 handle, Brent, the global benchmark for oil, going up.
But how about the 10-year? The 10-year Treasury yield, I mean, the yields at the long end of the yield curve, Michael, they started down today, they finished up. How are you thinking about yields and Treasuries as a pressure point on equities in this environment?
Michael Monaghan: Well, I think it’s the read-through that, you know, we are going to get some potential relief from some of this inflation, and the bond market is not going to have to do the work for the Fed, and the Fed can do the work for themselves.
JD Durkin: How about your take on Nike? Because we’re going to do a little bit more of a deep dive onto shares of Nike. It is far and away the weakest name, the smallest name in the Dow Jones Industrial Average here today.
It was trading at like $33 throughout much of the day today. It’s down about 50% from where we were year to date. How do you think about a name like that, such a legacy name that is struggling here on Wall Street at the same time?
Michael Monaghan: Well, JD, as you know, we focus on founder-led investing, and Nike is the absolute epitome of what shows when you have this iconic American brand. I can’t think of anything more American other than maybe Coca-Cola and Nike.
And this is what happens when you replace the iconic leader with their vision, their execution and their grit, and you bring in a board-hired CEO who all they do is look at the numbers. It’s really put their new CEO, Elliott Hill, who’s trying to dig them out of the hole, in a real bind.
But it’s a real example of why founders build the iconic companies and what can happen when one of these iconic founders steps down from leadership.
JD Durkin: Ironically, both Coca-Cola and Nike are the two weakest names in the Dow because it’s a price-weighted index, so they have the lowest share price.
I’ve got less than a minute left. November midterms, they are 32 days away until Tuesday, November 3rd. That or any other catalyst you’re paying attention to that you think investors should also be watching a bit more closely coming up?
Michael Monaghan: It’s an absolutely great question, JD. We’re not so much focused on the midterms, but I do tell you, we are most focused on the third wave of our three-wave model for equity prices, and that is peace and stability in the Middle East and a lowering of energy prices to reduce inflation, or what it’s going to take to keep the growth momentum that we saw today, extending the rally through the end of the year.
JD Durkin: Michael Monaghan. Dude, what a pleasure to kick off a Friday TV show with you live from the floor. Thank you for joining us, brother. It’s good to see you, as always.
Michael Monaghan: Amazing.
JD Durkin: Take care. We’ll talk to you again soon.
