• CPI came in exactly where the market expected it to be this week, and whenever that happens, the market is happy.
• Year-over-year inflation is the lowest it’s been since 2021, which is before inflation really took off.
• Despite all the persistent talk about inflation, it’s getting harder and harder to find it.
• Depending on which measure you look at, CPI is running in the mid-2% range — not at the Fed’s 2% target, but very much in line with where inflation averaged for the 15 years before COVID.
• Once again, the Fed made interest-rate decisions before getting the CPI and jobs data they’re supposed to be using to make those decisions.
• Fortunately, this time the data didn’t make them look foolish — but we think it’s a strange way to run monetary policy.
• With inflation behaving and economic data continuing to confirm, we remain firmly in invest mode.
• We see the current trend persisting through the end of the year, at least based on what we know today.
• Historically, about 80% of the time the market moves higher between Christmas and early January — the classic Santa rally.
• We didn’t really get a Santa rally last year, so maybe this year Santa makes up for it.
• While this week hasn’t been especially volatile, sentiment feels ready and wound up if the right catalysts show up.
• Capital expenditures — capex — remain a big driver of the AI story, as companies build out massive data centers and infrastructure.
• Nvidia gets most of the attention, but Oracle is a major player as well, especially on the data and warehousing side.
• Oracle committed enormous amounts of capital to AI infrastructure, much of it financed with debt.
• Reports surfaced that a major AI customer may be pushing its rollout back by a year — and the market reacted fast.
• Technology stocks dropped sharply on what was essentially one rumor, which shows how sensitive this trade has become.
• Oracle pushed back and said everything is still on schedule, but the reaction tells us how closely this space is being watched.
• This is where our bubble watch comes in — or as we’re now calling it, “embrace the bubble.”
• The concern isn’t just infrastructure spending, but whether adoption happens fast enough to justify it.
• If companies build it all out and adoption lags, profits won’t show up when expected — and markets don’t like that.
• We’ve seen this movie before during the tech build-out of the late 1990s, when the market fell nearly 50%.
• Back then, tech was about 35% of the S&P 500 at its peak; today, AI-related companies are closer to 50%.
• That makes the similarities hard to ignore, even though there are real differences this time around.
• Companies today generally have more cash, less leverage, and real profitability compared to 2000.
• AI adoption is real, but it may be slower and messier than people expect.
• If adoption disappoints, these stocks could fall dramatically — which is why we don’t rely on invest mode alone.
• Our strategy is built around unlimited upside with a tolerable downside, so we don’t have to guess when the bubble might pop.
• For now, we stay invested, we ride the wave, and we embrace the bubble — while staying protected if things change.
Transcript:
Ken Moraif
Hello everyone, and welcome to our Weekly Market Alert Video. And as usual, we’re going to have more fun than a human being should be allowed to have when talking about all of this financial stuff, we have a lot to get into. First of all, we got the inflation numbers, and there was some talk about the internals of that that I think you’ll find very interesting. We also are going to continue, if you’re wondering why this is here with me, we’re going to continue on our bubble watch. We got some additional information that I think you’ll find interesting in terms of, you know, where are we in the potential continuum of the bubble. And I’m actually going to call that would embrace the bubble, okay? Because that’s what I saw, that this analyst said that we should embrace the bubble. So I’m going to embrace the bubble. All right. We’re embracing it, all right. So, so let’s get started. Let me bring Jordan into the conversation. Jordan Roach, our Chief Investment Officer, Jordan, how you doing? We’re doing really wCleef and Arpels there. You’re going to go in that store, and when you get inside, FaceTime me. So I’m like, Okay, done. So I drive over, I find a parking spot. I walk in, look to the left. Sure enough, there it is, Van Cleef and Arpels, just like she said. I go in the store and I FaceTime I say, All right, I’m here. She goes, All right, show me the display case and kind of go down it. So I’m going down the display case. You go, stop. I’m, stop. Okay. She goes, get mommy that. So I said, All right, cool. Got it. So the sales guy, I put him in his late 50s, comes up, and he goes, you know, can I help you, sir? And I said, Yeah, you know, I want to get that for my wife. And he goes, Great. Okay, this is you’ve decided already. I’m like, Yep, that’s it. I’m getting that for my wife. So he says, Okay, do you want to put that on the Neiman’s card, or do you want to put that on your credit card? And I’m like, I have no idea. You know, I don’t know if I have a Neiman’s card or not. So I said, just put it on the credit card. Here’s my credit card. So I gave him the credit card, and he looks at it. And this was, you know, when I was on the radio, and I was famous at the time. I mean, people in Kuala Lumpur at the airport said, You’re KenMoraif, aren’t you? I mean, people recognize me everywhere. And so he looks at the card, and he goes, Ken Moraif, Ken Moraif. And I’m like, Yeah, it’s me. You’re right, it’s me. And he goes, You must be Mrs. Moraif’s husband. And I was like, Yeah, I am. And my daughter, who’s on FaceTime, she’s laughing. She goes, Daddy, when it comes to Neiman Marcus, mommy wears the pants. So anyway, let’s talk about CPI. All right, so the CPI number came out, it was exactly what everybody expected. And whenever that happens, the market’s happy. Market’s very happy about it. Yeah, again. Now, why is the market happy? What did those numbers tell us? Well, it
Jordan Roach
tells us that, you know, CPI year over year, lowest has been since 2021, okay, that’s a good thing. So that’s certainly a good thing, right? Because that’s before, really, we saw inflation, just ramp, ramp, ramp, like it did. So again, this persistent talk of inflation, inflation, inflation, it looks like, again, it’s nowhere to be seen.
Ken Moraif
Yeah, where is it? Where is it? Was it 2.3 right?
Jordan Roach
Two Point Well, depends, yeah, you have, you know, you have core and regular, and it’s 2.6 ish, okay, I think regular is 2.7 there are some numbers that are showing 2.3 as well. But again, that’s not where the Fed has stated they wanted to be, which is two, but it’s certainly in line with kind of where we’ve been over the last on average, 15 years or so.
Ken Moraif
So you know, we’re. Talking about this last time. So the Federal Reserve lowered interest rates before they got the jobs numbers and CPI, which are their two mandates, right? The two things that they’re supposed to be in charge of are jobs and inflation. And they make a decision about lowering or raising interest rates before they get the data that they should be using to make this decision correct.
Jordan Roach
So fortunately, this data didn’t make them look like fools, but it’s wild.
Ken Moraif
Yeah, what happens if they lower interest rates and all of a sudden, you know, inflation is down to 2% and jobs are super fine, and everything’s where it’s perfect. And I just don’t understand how you make decisions without the data you need to make the decision. I don’t know, it’d
Jordan Roach
be fun to be in some of those meetings, I’m sure. But for now, the market
Ken Moraif
likes it. Market likes it. So we’re still invest mode, right? So we’re invest and protect. So when we’re in the market, when we’re fully invested, we’re in invest mode, and we’re in that now, right?
Jordan Roach
We are. We’re seeing, you know, good, right now. We’re invest mode. We see the trend persisting for, you know, at least through the end of the end of the year, at least we would say, right?
Ken Moraif
So are we seeing a Santa rally perhaps? Do you think, well, I
Jordan Roach
say historically, the odds are in our favor. One, I mean, about, you know, 80% of the time the market moves up between around Christmas and the first of January. That’s kind of when that that period is so I think, look, there is sentiment that could drive this higher. I think also, we actually didn’t get one last year. So, I mean, I would say we
Ken Moraif
got a hunk of coal last year. We did a good year. So Santa was not right. Santa knows if you’ve been naughty or nice. So we were naughty. We got a That’s right. Hunk of coal
Jordan Roach
didn’t help us out. So this year, hopefully. We’re still down for the week. This week has been not real volatile, but I think again, we keep getting confirming economic data. I think sentiment is ready and wound up. You get capex and spending, and again, maybe through the end of the year. We do get a move higher,
Ken Moraif
all right, so we’re still bullish, still bullish, still in invest mode, not ready to sell anything, no. And we think we have a Santa rally coming. So you use the word that maybe people aren’t familiar with capex, right? So let’s talk about capex, because that’s the whole AI thing, right? So capital expenditures, capex is building out all these data centers and building out all this stuff, but we got a little bit of a tremor there with Oracle, right, right?
Jordan Roach
I mean, so, you know, we talk about Nvidia, I think that’s kind of the Darling, but Oracle is one of the big ones as well. You know, they got to be part of that process, because they’re the warehousing, they’re in the part of the data infrastructure play. And they were one of the few to commit loads and loads billions of capital to data build out, right? Infrastructure build out. And there are reports coming out that already the first big player when they thought this would be up and running.
Ken Moraif
Push it back a year. Oh, ouch. Push it back a year, a year.
Jordan Roach
Now, Oracle is coming out and say, no, no, no,
Ken Moraif
wait, let me, let me embrace the bubble here for just a moment while you’re talking. Okay, I’m listening. Let’s keep going. Just be that thing nicely, not too
Jordan Roach
tight there. I’m embracing it. Oracle right now. You look at it already, and Oracle’s financing it with loads of debt. Yeah, they’re saying maybe it’s not going to be when we said it was going to be, Oh, yeah. Is it already cracking? Right? We’re barely into this. Are we already seeing cracks?
Ken Moraif
Be calm. Stay nice. Not yet. Not yet. Do not pop. Please don’t pop.
Jordan Roach
So it’s interesting, right? Again, Oracle saying, Oh no, no, no, we’re still on schedule. But it was pretty loud, and a lot of a lot of microscopes,
Ken Moraif
and the market went down significantly on that news to went down almost 2% technology immediately, all of it. So yeah, on one rumor, imagine what would happen if it got more widespread? What could happen. So, you know, the fact that we have our protect strategy, not just our invest strategy, gives me peace of mind. I can sleep at night knowing that we have that and if, and you know, the thing about also that is, I think, a little concerning, is that as we’re building out all this infrastructure, it’s the promise that everybody’s going to adopt it immediately and the profits are going to flow. But it’s that intersection between adoption and the infrastructure build. And if they build it all out, then the adoption doesn’t follow right away. Profits won’t be there. And that’s when you see something like what happened to us in in the year 2000 when the market went down 49% when all the technology stocks that built out the internet crashed. So the similarities, to me are scary between that crash and this one, exc
Jordan Roach
That’s right now. Again, the thing that we say, maybe this can go longer, maybe the bubble doesn’t pop right, maybe it just kind of slows a little bit eventually in Arizona, is that. So there are fundamentals that are pretty healthy across the board, you know, more cash on hand, less debt financing. There is actual profitability in these companies that wasn’t as pervasive back in 2000 so if the fundamentals stay strong, maybe that can keep this thing moving
Ken Moraif
in the right direction. Yeah, and I think people are adopting AI to a certain degree. We’ve adopted several things that make us more efficient, absolutely, but it’s, it’s it’s weird, you know, like, for example, I found that I don’t trust any one of the AIS, you know, like chat, GPT, I’ll ask it a question, but then I’ll ask Gemini the same question, and I’ll ask grok the same question, and it’s almost like it’s an opinion. So, you know, a lot of people take these AIs as they’re so smart, by the way, you know what artificial means, right? I do it means not real Yes. And you know what intelligence mean smart. So AI stands for not real smart. Okay, so be aware of that. So, and when I compare all three of them, even on something that you would think is like a pretty easy statement of fact, I get a different answer. So it’s almost like it’s an opinion. So I think people need to be aware that AI is not, you know, it’s not like perfect, it’s not the right answer. And so because of that, the adoption, I think, might be slower than people think, and that realization could cause these stocks to fall dramatically, but we have a strategy to address that. But if it doesn’t, you know, our str
Jordan Roach
No, that’s what we want to be, because we don’t want to be guessing when it’s when it could be popping.
Ken Moraif
Yeah? I mean, we want to ride this wave as long as it’s going we just do not know what this is going to look right? Yeah? So we’re
still in invest mode. It looks like a Santa rally is coming, hopefully, and we’re embracing the bubble literally and whatever the other word is. So ladies and gentlemen, as usual, I hope you had more fun than a human being should be allowed to have, and I hope you enjoyed this as much as we enjoyed giving it to you all you SCWPerS out there, I hope you are SCWPering your tails off. And for those of you who are not aware yet, SCWPerS is the acronym for second childhood without parental supervision. So when one of our clients retires, we call you a SCWPer, and we want you to go play and have fun and enjoy. And I hope that’s what all of you are doing. So thanks for watching. Share this video with friends and family, like and subscribe, and we’ll talk soon.
Please note: transcript has been modified after the time of recording.
Economic indicators and stock market performance cannot be predicted. Opinions expressed regarding the economy and the stock market belong solely to Ken Moraif on behalf of Retirement Planners of America and may not accurately portray actual future performance of the economy or stock market outcomes. Opinions expressed in this video is intended to be for informational purposes only and is not intended to be used as investment advice for individuals who are not clients of Retirement Planners of America. All content provided is the opinion of Ken Moraif, CEO and Founder of RPOA Advisors, Inc. (d/b/a Retirement Planners of America ) (“Retirement Planners of America”, “RPOA”). ©Copyright 2023