Economic Boost Coming from Tax Refunds, Opportunities in BX & DDOG

0:00Let's now get some insights on the news, shaping these overall markets. And for that, we welcome in Tony Savigala, Chief Operations Officer and Senior Weld Advisor at Strategic Weld Partners. So thanks so much for joining us. Of course, on this Thursday, you've said, though, that markets now have more tailwinds than headwinds. What really is the main force driving your confidence and perhaps some upside from here? Yeah, so the tailwinds that are starting off are first in May, we got a more dovish, more accommodative fed chair coming in, which you guys were talking about, interest rates with Powell. But we got a more dovish one coming in in May, hopefully, a big, beautiful bill. This year's refunds are going to be the largest on record. That's just going to help the retail investor or the retail side of the thing on markets, so that people are going to go out and spend more money. And we're a nation of spenders. Unemployment is below historic averages. The market earning growth is poised for double digits again. And futures are actually pricing at lower oil in the coming months, more in like June and July.

1:02And let's face it, the US stock market is still the most attractive equity market. We're less dependent on Iranian oil than most. The drill baby drill initiative looks to be paying off because gasoline prices at the pump are not skyrocketing right now. They have gone up, but they're not going hyperbolic. And then we are also just an innovation nation, right? We are innovation leaders. We have companies like Microsoft and NVIDIA, like no other companies exist other than here in the United States. And then we are also experiencing this broadening out of the market. It's not just ran by 10 stocks anymore. So it is a stock picker's market. It is an active management market. Now, I'm not going to sit here and say everything's all rosy. Any more geopolitical turmoil can create more volatility, which it's doing right now. An extension of the Iranian conflict is just going to cause higher oil for longer. And if we really take a look at historic averages of inner-year market pullback,

2:06the average is around 12% pullbacks. In an election year, it's closer to 16%. And what are we at like this year, maybe three or four percent? So there is room to go down, and I don't want to say I'm bearish or anything, but this is just the movement of the market in any given year. We can't just constantly go up, but I feel that most investors have been spoiled for the last three and a half years. Okay, innovation nation, I love that. I'm totally going to steal that myself. You mentioned some of the elements that I mean driving the really force of the U.S. economy, like low unemployment, also record breaking tax refunds this year. So how much of that do you see down translating into this meaningful consumer spend in earnings growth, which we need, frankly, to revive some of this, I mean, recent economic data, which has been a bit lackluster, frankly. You know, I mean, the fact that everyone has jobs is one of the biggest components, because if people have jobs, they have money to spend. Now, are things tighter?

3:09Yes, over the last several years things, you know, they say that what that earnings growth is in line with inflation, but I think people are still railing from the nine and eight or nine percent interest or inflation hikes over the last several years. So I think everyone is starting to absorb all the higher prices that are around us, and we don't have, you know, high single digit inflation anymore. So I feel that, you know, that jobs are still plentiful, and with people having money in their pocket in us being a nation of consumers, I feel that, you know, the consumer discretionary is going to still be well in this market environment. And when we start getting tax returns, we're going to have money in our pocket to go and use that, and that was President Trump's idea is to have, once you have more money, it creates people to spend because we are a nation of spenders. Yeah, and absolutely, and I think that that has been one of

4:09the most resilient themes of what's been the driving force of the economy, and also the markets as the consumers spend it, frankly. But to completely pivot here, Blackstone has been under some significant pressure after getting caught up in private credit concerns. And so what do you think the market is missing as far as that recent narrative surrounding Blackstone? Yeah, and that's our view completely is that they got caught up in this private credit concern. They're down roughly what, 40 percent in the last six months. And it's due to this blue owl software exposure. You know, blue owl has roughly what, 75 percent of their exposure to software companies. Blackstone is more around 35 percent. And Blackstone, they're the leader in quality alternatives, private equity, real estate, private credit, infrastructure. And the good, there's a couple things of layers of protection that they have built around all of these alternatives. First, it's the lending. The loans are more senior secured, and majority of the loans have a floating rate. The next thing is is that they have set redemption

5:14caps for protection on the alt side. And there's an application process to get into their alternatives. It's not a, hey, I'm going to go buy it today and sell it tomorrow in my Schwab account, right? However, when we have this exposure, we do like owning the stock in this particular environment to get the exposure to the alternatives, all of the growth, all the money that they're making in all of these different areas that they're a world leader and a global leader, because it provides us by owning the stock liquidity and they pay a strong dividends. Somewhere around 4 percent. Okay. And also, you recently did step into data job after, of course, this broad software sell off. And so, what about this company now stands out as far as differentiating itself from, say, the traditional software trade? Right. So, we bought the position a few weeks ago. So, the easy money might be gone out of this stock, but we see long-term growth. You know, we listen to the earnings calls, we read all the research, and data to give you just some background, if you're not familiar with this stock,

6:16is an app, it is not an application software. It's a monitoring software. So, what it does is it aggregates data across all company applications, and AI actually helps the engineers see real-time problems so that the engineers can go and fix it. So, and what DataDog does is that rather than monitoring seven different layers of infrastructure independently on different screens, what they'll do is they'll put everything on one dashboard for the engineers to view. So, we actually see AI as a positive catalyst to help this company increase their software sales. Yeah, and this name, I will say, I know, pulled back, but actually has recovered pretty nicely in bouncing off of that recent pressure. So, hopefully, continuing to divert itself from some of the weakness we've seen in broader tech. But, so appreciated helping us take off our show today, Tony Savigala, Chief Operations Officer, and Senior Wealth Advisor at Strategic Wealth Partners.