2026-08-06 - The Long Hill Report - Guest Mike Carnevale

Summary

This is the August edition of The Long Hill Report, a casual monthly financial/economic commentary show sponsored by Raymond James Financial Services, hosted by Richard Morco with guest Michael Carnevale (financial advisor). Discussion opens with wide-ranging political banter about an unnamed ongoing overseas conflict, historical presidential foreign-policy comparisons, and general commentary on "elites" and institutions, before turning to markets. July was a mixed month — two all-time Dow highs early on, a slump for most of the month, and a narrow (0.3%) positive close on the last trading day, extending an 11-year positive-July streak; AI-related stocks were credited with the late-month rebound. They cover rising interest rates (the 30-year Treasury at a 19-year high near 5.25%), a 9-3 Fed vote to hold rates steady with three dissenting votes favoring a hike, new Fed chair Walsh's unusually opaque communication style (two press conferences, each followed by a >1% Dow decline) contrasted with predecessors Bernanke, Yellen, and Powell, and a possible move toward reporting changes/fewer press conferences. Other topics: Apple overtaking Nvidia as the most valuable company (with a nostalgic aside about Massachusetts once barring residents from buying Apple's 1980 IPO), rising oil prices, global central banks' mixed rate moves, low U.S. strategic petroleum reserve levels, deflationary June inflation/PPI data attributed to oil, weak leading economic indicators (consumer expectations and the work week), historically low layoffs alongside weak hiring (57,000 jobs added), and wage growth keeping pace with inflation. The tone is informal and bantering throughout rather than a formal financial briefing.

Transcript

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1:05 | [music] opinion are as of this date and are subject to change without notice. Good afternoon ladies and gentlemen.
1:13 | This is Richard Morco and I'm here with Mike Carnival at the Long Hill um report
1:21 | and conversations with and um we're here in our uh August edition discussing
1:29 | what's going on in um our corner of the universe and things are a little interesting. As I was talking to our uh
1:37 | director before the show, uh I was downstairs on my phone. Now, why do you think I was
1:45 | on my phone? What do you think I was checking? You have no idea. I'll And I'll tell you. Go ahead. Gas Buddy.
1:52 | Oh, do you know what Gas Buddy is? I do indeed. I never used to check that. Where's the cheapest gas? The universe has changed.
2:01 | There I was.
2:04 | I used to have, you know, a card that I put in at a a filling station and um I
2:12 | would get the gas and it wasn't the may not have been the greatest price, but you know, we weren't discussing that as
2:19 | much. Now, in the history of the universe, there's a big gap between the cheapest and the most expensive. Now,
2:27 | we got to know it. Yeah, the world has, like I said, the world has changed. But I do have one question for Mike.
2:36 | Is the war on today or is it off? Uh, I think it's coming back on. It's coming back. Not on yet, but it's not on yet.
2:43 | We're getting close.
2:45 | Okay. The United States has almost no rocketry or ammunition. How are they going to do this? How are we going to do
2:53 | this? And we get we the peasantry will get blamed for what our leadership does. Correct. But how are we going to fight this war?
3:02 | That's going to be interesting.
3:06 | That's going to be interesting. Uh it's on, it's off. It's on. It's off. Now it seems at least as of today's uh news,
3:15 | it's starting to get back on again. And maybe, well, not maybe, but potentially by the weekend it will be on. It will be
3:23 | on. Well, I hope not because um I do not like to be part of a stupid country.
3:31 | Well, I think it, you know, it hasn't worked out as forecasted, shall we say. This was going to be a couple of weeks at the most.
3:40 | Now, it's going on to six months.
3:44 | Well, it was probably about a It was several months before we even did the first one, the uh Midnight Hannah. Mhm.
3:50 | A guy um in uh I think he he he had at some point probably written for foreign
3:57 | affairs and he might have written this one for foreign affairs and um uh his
4:04 | name last name was Nephew and uh all I can say from what he was said and how things results came out his
4:14 | uncles and aunts have got to be really embarrassed about him uh because he came in We should have one more good faith
4:23 | effort to negotiate with Iran and if they don't come up with the goods bomb them. But that's not exactly what he said but you know you get where I am.
4:33 | Yeah.
4:33 | And he you know foreign affairs part of you council of foreign relations all these people
4:41 | they test for retardation to get to get to work for those people.
4:48 | Is it is it I don't know. There's a fellow I think it was I think it's Peter Turchin is his name and he said we have
4:54 | a a problem with the with uh too many elites. Mhm.
4:59 | If that's elite and they're all fighting for uh what do you call it? Um positions and think tanks.
5:09 | We're not this you know what is college for? They all went to Hario places. Yeah.
5:15 | What's going on? I'm Mike. Come on, talk.
5:17 | That's Well, I think whether it's in the biggest government or the smallest company, you have the same people
5:25 | really, right? There's in a certain group that knows it all. It thinks they know it all. And
5:34 | you hope that the vast majority survive in the end. You know, the vast majority of us survive in the end. But yeah, it's
5:42 | really been uh you know, if you if you I keep saying if you looked back on January 1st and said,
5:50 | "Well, on August 1, this is what's going to you know, where's where are things going to be at?" Nobody
5:58 | predicted where it would be at right now. It's uh a very I mean, you can't really explain it. You know why
6:06 | in the real world we got and then what we have in the fantasy world what we have there two separate
6:13 | distinct outcomes and eventually one is going to be right. Uh I don't know if we really know yet which one is.
6:22 | I don't know if we know. I mean I'm not as young as you. a kid like you.
6:30 | I'm a little I've uh I've I was born at the end of the Korean War around the Korean War. Okay.
6:38 | Uh first two things I remember in foreign affairs was Eisenhower said to the Brits and the French and the Israelis, forget Suez, get out of there.
6:49 | He uh there were p people pushing him and that not going into Suez might have been the best thing postwar anybody
6:58 | president ever did but there were some of the state would pushing him in military to go into Hungary during the Hungarian rebellion.
7:08 | Nah he said nah you didn't say it like that. I mean you know he was more dignified than people the hoy like us. is it basically said that's nuts.
7:19 | Um so then you you get Kennedy after that and uh
7:26 | he didn't he didn't Cuba and Berlin he could have screwed it up but he didn't. Mhm.
7:33 | And um and Vietnam was kind of coming along and there will always be question was did he get shot because he refused
7:42 | to go into Vietnam or big time things like that. [clears throat] I don't know.
7:47 | But Johnson was a jerk and pushed that war and lost it for himself if not the country and had to
7:55 | say I will not seek a run for presidency.
8:02 | No, great idea. And and then Nixon comes along and he basically even though he didn't
8:09 | survive the whole thing, he he basically got us out. Mhm.
8:13 | Because he had no choice, right? You know, that was it. Right.
8:17 | So, I remember watching TV uh after we left and um what's his name? for Ford as
8:25 | president and he's they're at a table with all these guys um state people and stuff like that and they're smiling and happy.
8:36 | Why you remember you don't remember Maraguaz incident? No.
8:41 | No, it was a ship that the Cambodians took.
8:47 | Okay. So we sent the Marines in to beat the hell out of them and take it and then and it and it it worked and these guys are at the table smiling as if we had just won the Vietnam War.
8:58 | It was so embarrassing to. So we had a little bit of arrest and then we have the Gulf. We had got into uh
9:06 | Afghanistan, beat, you know, hurt the Russians there, got into the Gulf War, all these things.
9:15 | It kept going and then the 20th century what they say about Afghanistan took us
9:22 | 20 years but we replaced the par the Taliban with the Taliban right so
9:29 | so here we are successful country yeah nothing really learned or change has changed
9:38 | not at all so ladies and gentlemen if you like that it only gets worse
9:44 | [laughter]
9:47 | All right, we're here with our own Midnight Hammer. Mike Carnival is going to tell us what has happened.
9:54 | Well, you know, July was an interesting month, right? Historically, it's a pretty good month. Ranks near the top, but it was a kind of a tale of two months really. Got off to a great start.
10:04 | We had two all-time highs in the Dow on the s on the 2nd and the sixth. And then we spent the rest of the month, the
10:14 | final three and a half weeks just trying to get even. And we did turn positive for July, but it took the last day of the month to do it. So the streak kind
10:22 | of continued. The last 11 Julies now have been positive. This one only by 3/10en of 1% and only because we had a
10:31 | 500 and something point uh gain on the last day of the month. So who who who were the stalwarts in that
10:38 | 500 point gain? Do you know who were the stalwart?
10:42 | It it was still the uh you know the AI type. They had made a rebound. They had really sold off. Well, I hope and they made a rebound.
10:50 | I hope that stuff doesn't go south sometime.
10:54 | Well, if it does, uh a lot more than that is going to go going to go south. I mean uh you know a lot of those
11:01 | companies have reported earnings and their stocks have gone down because they're you know they're so high priced based to either their revenue or if they
11:10 | have earnings some do but not much but you know that that's the big risk right now but it was still a positive month
11:18 | and historically you know you got that May to October period which is tends to be the weakest six months of the year uh
11:26 | sell in May where's your little sell in Yeah, go away. Come back Halloween day.
11:30 | Yeah. Um but uh July is the only month during that period, mid October that's positive and it was positive this month.
11:38 | So what do we have to look for for October uh through uh for August, September, October? You know, probably nothing. Uh just be a drink,
11:46 | right? Most likely. Um you know, interest rates went up. The 30-year Treasury now is at a 19-year high at 5 and a quarter%.
11:57 | Um that's telling something. Um the yield curve has also gone up which is a positive.
12:08 | Um well I I don't know I'm going to I'm going to disagree there a little because for years for a long time it was
12:17 | negative right and the world did not nothing bad happened. So now that it's good and positive,
12:25 | maybe the end of the world's going to happen.
12:26 | I possibly anything's possible. Uh but based on history, no. But yeah, I mean, sometimes these things work out perfectly and you look like a genius.
12:35 | Other times these things don't work out at all and somebody says, "Well, you might as a dot and throw it at a board, you'll do just as well, right?" Um but
12:45 | um there's no question that interest rates are going up. There was we'll see in the latest inflation numbers we got a
12:53 | little bit of a reprieve but that's all been reversed again mainly because of oil.
12:59 | Well we go down further we might talk with you about how wash is affecting things but not you know we can you can I
13:08 | don't know if you want to do the technicals now.
13:10 | Okay. Yeah. October usually is not a good month. It's uh the 10th out of the 12 for performance. But the good news is the last two have been positive.
13:21 | Uh also keep in mind Octo August tends to be very volatile. You know 10% plus
13:29 | loss gains is not uncommon. So it could be a volatile volatile month. The technical indicators, you know, with the Dow up 3/10en of a percent really didn't
13:38 | do anything. Uh the short-term sentiment did not move at all. So all those indicators, four indicators we look at when you combine them, they all kind of
13:47 | remained where they were a month ago. So that kind of tells you that probably nothing major is going to happen um uh
13:55 | at least on the from the technical indicators uh during the month of uh August.
14:02 | But yeah, we can bring up the Fed situation because they did hold an interest rate meeting.
14:08 | They voted nine to three not to do anything. But there were three votes that wanted to raise interest rates.
14:15 | Well, and I take it they might be aligned with the new chairman.
14:21 | No, they'd be against him. He was the one who was looking to cut rates.
14:25 | He Oh, yeah. He was That's right. He was Yeah. Um he's not gotten off to a good start. Yeah.
14:32 | He's had now two press conferences.
14:35 | He is the only Fed chairman in history whose first two press conferences have
14:42 | led to more than 1% declines in the Dow each time.
14:49 | So he's had two press conferences and each day he spoke the market went down over 1%. Never happened before on the first two meetings of a new Fed.
15:00 | What was the horrible thing he said?
15:02 | Well, he said some unsettling things in the sense that and not what you would think. Everyone was afraid, oh, he's going to be a rubber stamp for the
15:10 | administration. He's going to push rate cuts, rate cuts. No, it was like they're going to dis they formed this committee
15:19 | um with with outside people, outside Fed people about how the Fed should
15:26 | collect and report information, which that goes back to, you know,
15:35 | pre-1970s when the Fed would make an announcement and they wouldn't tell you anything.
15:42 | uh and that led to a that can lead to a lot of you know speculation volatility and so it was it was Bernani who began
15:50 | the um press conferences after the and each Fed chairman after that has followed up he's
15:57 | only committed to through the end of this year. So he's got two more and then after that they'll
16:04 | decide whether they do hold press conferences, whether they hold a press conference but don't allow anybody to ask questions, not hold a press
16:13 | conference, only hold a press conference when they make a change. So this is all kind of, you know, unsettling because,
16:20 | you know, if they go back, you're going to go back in time where you all based everything on was guessing.
16:27 | Okay. You say it's unsettling.
16:30 | What in the last year and a half has been settling?
16:35 | Oh, I'm I'm not that the sense that you know what they're going to do before you really didn't know what they
16:43 | were going to do or why they did it. Uh Bernani and Yellen and Powell were good at explaining why they did what they did.
16:54 | So far Walsh has not explained the way he has said uh well the statement speaks for itself and when people tried to ask
17:02 | questions some of them you know in a roundabout way he caught on every time and he said well he's I know what you
17:09 | want me to say but he says that I think the statement says uh speaks for itself.
17:14 | So there was no like explanation why anything was done and that leads you know when you don't get the explanation
17:21 | it leads to a lot of speculation and you know what are they really doing what do they see that we don't see so to speak
17:30 | that's usually not good you know you want to get information out there and explain why
17:36 | they do what they did uh Bernanki was probably the least forward yellen was excellent as far as explaining and was pretty good.
17:46 | You know, I kind of from news reports, I kind of thought Yellen
17:53 | kind of a bit of a non- entity, but you're saying she came out there and she came out there and spoke the truth or if not the truth,
18:00 | said it in a believable way, right? And gave an explanation of why they did what they did.
18:07 | You know, uh the interesting she was in uh Colorado this I think it was yesterday or today. Um and uh they asked
18:15 | her about, you know, the stock market, how it's performing, how the economy is performing based on the news. And and
18:23 | she said, yeah, she she said what we've been saying really, uh I don't know if that's good or bad, but uh that makes no sense that the market is doing what it's
18:32 | doing, the economy is doing what it's doing based on a war, based on inflation, you know, based on, you know, a few other things. So, she's tried to
18:41 | explain continued to explain why uh things are the way they they are and why the Fed's doing what they're doing. Uh Walsh so far has not explained anything.
18:52 | He's just said this is what we decided to do and we had a great conversation and different sides were presented but
18:59 | in the end we voted to do nothing and he wouldn't go beyond that. And so I think that you know you know how do you make
19:07 | how do institutions sort of make decisions when that's all the information they get no information? Well I'm going to go out on a limb here.
19:16 | Wash is not an unintelligent man.
19:18 | Oh no no no. He's probably the most qualified of of the last three or four. So,
19:25 | why isn't he I'm not going to say why isn't he coming clean, but why isn't he feeling I should say something that people can
19:35 | can bite into and can hear. And why do you think he's not?
19:39 | I don't know. I mean, some people have an ability to explain complicated things in simpler terms. He may not be able to.
19:50 | If you listen to him talk, you know, it's like he's Well, how did he get to where he is if he's not a able to do that?
20:00 | Well, I mean, he's always been in um you know, the upper tier. Yeah, I understand that.
20:08 | And he's been and you tend to associate with people similar to that. So that when you talk to someone who doesn't
20:17 | have that background like a lot of those reporters don't or the public in general he can't communicate beyond,
20:26 | you know, sort of the you know is there anybody in his office a spokesperson who can come down?
20:33 | Oh they would never allow anybody to No, never allow anyone to speak other than the chairman even. Now we've heard nothing from Powell in two meetings. He
20:42 | hasn't even given an interview. Uh so no, they would never do that. I mean, it would be I I think what's going to we're going to see, if I had to
20:52 | bet, we're going to see less press conferences. Maybe one a quarter uh one every six months,
21:00 | but I don't think it's going to be the continued every six weeks. Well, what would be the result of that?
21:06 | I mean, would people just say, "Where is the Fed?" Well,
21:14 | years before these press conferences, people would be looking at
21:23 | the members of the Fed as they were going into a meeting. And it was that old thing, well, if if they if they got
21:30 | a, you know, briefcase that's big, that must mean they're really discussing a lot of things and maybe they'll make a change. If the briefcase was thin, it
21:39 | was like probably nothing's going to happen. And that kind of worked most of the time. But that's what they were doing. What a country.
21:46 | Yeah, that's what they were doing. And and and it was I believe it was Bernanki who said, "No, we're going to you know, Greenspan probably would not not that
21:54 | was during the Greenspan era. It probably would have not worked well because Greenspan had a hard time communicating complicated stuff in
22:03 | layman's terms. So, it probably wouldn't have worked. But uh certainly with the the the other three that have come after
22:10 | him, it's it's definitely worked and it's cut down on the volatility on the day of the Fed meeting. If you
22:18 | look back in, you know, the past 50, 60 years, how the market
22:25 | volat uh fluctuated on days of Fed meetings, the volatility has really gone down
22:33 | because you're getting more information and there's less speculation.
22:39 | So, time will tell. You know, I think the fact that he from his first press conference to his second, there really wasn't any change in his delivery. And
22:48 | the fact that when somebody asked him about future press conferences, he said he's only committed to doing it through the end of this year. I think that tells
22:55 | you the direction it's going in. And both days, the market did not like that. It dropped over 1% each day.
23:04 | So, a world in which he doesn't give press conferences, what happens? Well, I just think it's
23:11 | it's leads to speculation and usually not good. That's usually not good.
23:16 | Well, what is would it be on the specul speculation occur on the day of the meetings that Okay. Yeah.
23:25 | Okay. All right.
23:29 | Um voted 9 to3 make no change which you mentioned. Uh we'll do what it takes to bring down. They say that every time.
23:37 | Yeah. since I have a little boy. Right. It's really worked. Yep.
23:41 | Not all right. Um still looking to make changes in what how information is reported.
23:48 | Umh
23:51 | [sighs]
23:53 | 700 points it fell the last the last one. Yeah.
23:57 | Uh I can see why he might not want to do press conferences. Mhm.
24:01 | Um this one falling 1,200 13th biggest daily point decline in history.
24:08 | Yeah. Doesn't mean much but you know it's a headline. Apple became most valuable company.
24:17 | It took over from Nvidia.
24:20 | Nvidia was the most valuable company uh since June of last year. And that's the market capitalization.
24:28 | Yeah. you know, the price of the stock times the number of shares. I was saying Apple became the most and the interesting I always like this because
24:35 | when Apple came public in 1980, uh Massachusetts would not allow residents to buy it,
24:43 | buy the stock on the offering because they said it was too risky.
24:48 | Uh so had you bought a hundred shares, we wouldn't we wouldn't if we wouldn't be doing this show from here. at no at
24:57 | $22 a share. You'd have spent 2,200 bucks through stock splits. Your 100 shares is now worth 22,400 shares and
25:07 | your $2,200 is worth 7.5 million.
25:12 | Well, I remember the day they they really had the hammer dropped 100 years ago when it looked like it was all over.
25:20 | They brought uh what's his name back?
25:24 | Jobs. draws back and the price was what I think $5 a share.
25:30 | I had a little extra money. I said, "Should I do this?" You can guess what I didn't do.
25:41 | You did not do it.
25:44 | But, you know, there's been a lot of there's been a few things that have I've looked at and
25:51 | they've been enticing and it was good for me that I didn't do them. Correct. Correct. You don't know. You don't know.
26:00 | I still am brokenhearted though.
26:03 | Oh, yeah. I mean, you know, and then think of all the things you've done
26:10 | since October 12th of 1980 and whatever it is, it hasn't added up to 7.6 million.
26:19 | I'm assuming because you wouldn't be here.
26:23 | No, I'm I you have no idea what my Swiss bank account like, right? And so yeah, so that's, you know, it's it's
26:30 | interesting to you, you know, you can read the articles back in that day. Oh, Massachusetts was like absolutely this
26:38 | is this is risky. Uh we the secretary of state would not permit it to still Galvin.
26:45 | I believe it was Galvin who did not he's still he's still secretary. Not that they'd get anybody better.
26:51 | No, but would not permit it to list in Massachusetts.
26:57 | So, so we know I didn't go across the border to New York to New Hampshire. Only to New Hampshire. Yeah. Yeah.
27:05 | Okay. As they say, you can't make this stuff. Or or only in Massachusetts.
27:14 | Only in Massachusetts. All right. Uh, interest rates no change from Bank of England. Who cares? Canada, European Central Banks, South Korea, right?
27:23 | Hiked. Mhm. Russia cut. Russia middle of a war. Cut. Wow.
27:31 | Oil rose to 85 from 69 a barrel. Mhm.
27:35 | I don't know if that's really real. Uh the way things are. Um is that SPV stuff in that thrown into that?
27:45 | What's SPV? Uh the SP uh petroleum reserve. Oh yeah. Yeah. Okay.
27:52 | Yeah. This is the spot market price.
27:54 | Okay. So, and it's somewhere today it's somewhere between 69 and 85. Yeah. In the low 70s, I guess.
28:04 | [snorts]
28:04 | But production fell. Drilling rigs increased.
28:07 | Really wonderful there. Drilling rigs rose by 15 uh to 588. A year ago there were 540.
28:19 | So people are gearing up to get some more oil out of the American ground. Get as many much as you can.
28:28 | Strategic petroleum reserve at low level since March 1983. What is significant about that date?
28:36 | March 8, 1983. I don't know.
28:42 | There was zero at that point because that's when we started it. Okay.
28:48 | So, it's life here in the in the in the ranch. Yep.
28:54 | All right. Inflationary inflation was deflationary for the month, right? Huh. So, prices fell.
29:03 | How did we accomplish that? Solely because oil dropped. Okay.
29:10 | Uh and that's why you're seeing a 30-year Treasury
29:18 | uh note go up in yield because the feeling is that that deflationary
29:25 | report in June is like a one and that's it. That it will be up again in in July
29:32 | and force the Fed to most likely raise interest rates at some point.
29:38 | [sighs]
29:38 | Yeah, I would say um inflation is not stopped, right?
29:46 | It's we're going to see more more here, right, on this coming months. [snorts]
29:53 | All right. So, the past year CPI plus 3.5. Whatever happened to that 2% target?
30:01 | Yeah, they're still talking about it.
30:03 | Talking about it. What are they doing about it? [laughter] Would the word nada come into play here?
30:10 | Well, a lot of this recently is oil and you have to solve the the Iran situation
30:17 | before oil's going to, you know, come down. But we're supposed to be getting so many millions upon millions of
30:24 | barrels of oil from Venezuela. I guess that's not helping at all.
30:32 | I'm guessing that as the ships get closer to Panama, some of it gets diverted elsewhere. I don't know.
30:45 | I would not be surprised.
30:50 | Okay. Uh so anything in there that um the producer price index?
30:55 | No, same thing. It was it was deflationary meaning it fell not to negative but that's only because of oil.
31:05 | All right, let's go to the um leading e economic in indicators.
31:12 | Uh negative as they have been for a while but not as bad in the last six months as the prior six months. But the
31:19 | two biggest ones uh are both negative and those are the ones that have the most waiting in the index which is consumer's expectations and the work
31:28 | week. And that's because so much of our economy is you know based on uh people spending money. Consumers expectations
31:35 | are bad and the work week hasn't been that great.
31:40 | Well, every economy rests on at the end of the day the final consumer something. you gota somebody's
31:48 | got to buy something to so the kids at the factory can work and you know
31:55 | um so layoffs were at their lowest level in since September of 1969.
32:08 | That's amazing because in 1969 the labor force was 80 million. Today the labor force is 170 million. So it's very few people being laid off.
32:20 | Uh the flip side of that is very few people are being hired and you see that in the employment report which only rose
32:27 | by 57,000 and uh you really need double you need almost triple that to really help the economy at least based on past history.
32:38 | So, you know, unemployment fell again, but you're getting to the point where if you haven't been laid off now, you're probably not going to be. That's why the numbers are so low.
32:48 | Uh wages are still growing about at the rate of inflation.
32:55 | That that puts pressure on uh uh the Fed to, you know, have to raise interest rates to bring that down a bit.
33:06 | You got to you can't have wages growing too fast because that will lead to inflation.
33:11 | That's kind of a balancing act. They haven't got it found the answer yet.
33:17 | Ah, how sad we never get to stability.
33:23 | And we got obviously the stuff going on in Washington which continues and continues to be more bizarre.
33:32 | Yes, it does. Wow.
33:34 | Um, I guess it's just going to be it's only the two of us that are the island of stability here.
33:46 | And ladies and gentlemen, if you want more stability, come back next month
33:53 | and for the long hill report, Richard and Mike saying for August [music]
34:06 | [music]