Guys, let's start with the big predicament for corporate america, profit squeezes right now, despite all of the noise about profiteering that we're hearing uh from the administration. Producer prices continue to run way ahead and way faster than consumer prices. We've got in fact on the screen here. Producer prices up 11 consumer prices up 8 - that's not profit tearing.

What it does mean, though, is that these companies have to eat the difference and that's giving target shareholders uh heartburn right now. Phil target warned that their margins are going to be under pressure. For the rest of the year, so what does that mean for the overall economy in the market? Well, look. The consumer was quite strong going into this, but unfortunately the high cost of gasoline and then in the issues when the inventories some getting earlier, some getting late created a scenario where target didn't do a very good job of managing this outcome.

If you compare them to a say, a cost code, look how much better costco did versus a target. So some of this is company specific home depot versus walmart different businesses, but managed properly. You focus on the strength of the consumer. You'll do just fine economics.

Let me jump in one second, because i got a lot of stuff. I want to go over you and kevin, but last time you were on you, you see, you said the consumer was very strong. I got to tell you my twitter feed was outraged. They could not believe you keep saying that i mean people don't understand like do you have any poor relatives, do you have any relatives who have middle income? Is everybody in your family wealthy? Because there is a major divide between the halves and half knots right now? It seems have gotten worse.

The stemies have run out all that extra money is gone, and i don't know i'm not sure where this this strong household stuff you're seeing is coming from it comes from when we look at how much people owe versus how much they make it's the best. It's ever been, and yes, if you're making fifty thousand dollars paying five dollars, the pump hurts no doubt about it, but instead of making 45 like you did last year, you might be making 55 or 60 this year and that's the difference. I get right now. There's pain because of the price of gasoline specifically, but in whole, when you take a step back and you look at gainfully employed earning more money on a path to having a better life because of it.

You can make the case that the consumer today is in better shape than they've ever been, despite all right, don't get some high inflation. My wife bought two lamb chops yesterday and it cost twenty three dollars. Okay, when my wife starts complaining about lamb chops, i know we're in trouble kevin. Let me get you into this conversation.

All right, there's been a lot of talk about the shift into value coming into the session. Here's the thing target had a 13 and a half forward. P e ratio, 15.7 p e ratio that was less than half of what costco had. So how does anyone even discern? What's value and what's not value anymore? You know it's gotten, really difficult.

The msci tech relative to the s p, 500 and then compared value to the s p 500 shows us that tech is almost as cheap now as value and that's a sign that the market just doesn't know where to flee to safety. But i think i have a path, and i want to share that here. We know that spending on stuff is going down. We know that in response to you asking where's the money look folks still have more money than they did in 2019, they're just spending on things to do rather than things to own and that's following textbook inflation.

First, coca-cola and heinz told us that it was harder for them to raise prices at the beginning of the year now, target and walmart are saying we're seeing higher income spenders still spending on gaming consoles, but that lower income demographic is spending less money, they're spending less. On apparel and home goods, this is expected: here's what's next nike lululemon under armour. They get hit next, followed by procter and gamble, and then home depot home depot is going to get hit when housing prices go down. The ones that are more resilient in this time are going to be those that cater to higher income.

Consumers, for example, apple's average household incomes closer to 90k. They might be further down the line tesla caters to that hundred forty thousand dollar a year, average household income. So they might be more resilient, kevin, getting hit pretty hard yeah and what happens with them, though those households are impacted by the stock market going down and there's a certain threshold level of wealth effect that starts working in reverse, even for the top 20 percent of Earners, hey phil. I got up the income statement for for um for target.

I want to share this with you in the audience. So total revenue to your point was higher. It was up. It was four percent, so so we we got total revenue up.

That's not bad, but cost of sales up 10 percent selling in general, administrative, that's workforce they're, paying their warehouse workers more. They hire too many people between those two inputs. Their operating income was down 43 net earnings down 52 so from a stock market. Point of view, forgetting about the debate on where the consumer is we're seeing staples that was supposed to be a safe haven, getting crushed the worst performer two days in a row.

Where's the flight to safety here and yet, when you look at the broadcasting b, 500 we're expecting 12 total bottom line growth, which will be the best numbers ever where you go here. You go to companies that pay dividends, how you survive inflation, how you survive! Markets like this is you've got to be paid to wait around tilt towards large cap value tilt towards mid cap value, earn a three to four percent dividend. Like you get out of costco or some of the big caterpillar john deere names they're going to pay. You money to weight the volatility out and you'll be just fine.

That's how you survive this so kevin. In the meantime, goldman says: okay, they've downgraded equities the neutral for the next three months. They're talking about stack voicing being this macro. Having all this macro momentum, they say: overweight cash is cash, a good place to hide out uh uh.

Just or or do you want to still mess around and try to find a sector? That's least impacted yeah. Absolutely first thing people have to get out of debt. Stop using margin vandatrak said this morning that younger individuals are getting into margin because they're trying to make up the losses they've had in the last six months, whereas older individuals are moving to cash. I think cash is good for those with higher incomes, because you're not really affected by inflation with a higher income, because the stuff you want to buy assets like stocks and real estate are actually going down.

So inflation is actually, ironically helping your cash become more valuable, not less valuable, so i do still like cash, but i also can't help myself that, when tech and value are almost aligned relative to the s p 500, this is the opportunity of a lifetime to get Into tech place, so that's what i'm doing i i admit i am salivating, i'm trying to hold people's hands i'm salivating at some of these opportunities, i'm looking at i'm ready to leap real soon, just going to give it a little bit more time, phil kevin! Thank you both very, very much really appreciate it. Guys.