Oil Shocks, AI Dominance, and the Sectors Building Real Wealth Right Now

Consumer sentiment just hit an all-time low. Americans are spending more than ever. And nobody can explain why. Until now.

This week on Wealth Transparency, Michelle Connell of Portia Capital Management and Andrew Tang of Turner Financial Group did not just connect the dots. They redrew the entire map and handed it to you.

OPEC dropped output 27% in a single month. The IMF slashed global growth forecasts. Green investing is collapsing. And the sectors emerging from the rubble are generating the kind of wealth that rewrites retirement plans.

We got into all of it. And then some.

The spending never stopped. The answers just arrived. Watch it now. Share it with everyone whose money deserves this moment. Subscribe to Wealth Transparency. And like it so loud the whole market hears you.


Chapwood Investments, LLC, is a partner of Ethos Financial Group, LLC, a Securities and Exchange Commission registered investment advisor. No mention, opinion, or omission of a particular security, index, derivative, or other instrument in this webcast or video constitutes an opinion on suitability of any security. The information and data in this video were obtained from sources deemed reliable. Their accuracy and completeness are not guaranteed. At any given time, principals at Chapwood Investments, LLC may or may not have a financial interest in any or all of the securities or instruments discussed in this webcast or video. The guests appearing on videos do not receive compensation or provide endorsements or testimonials. Past performance is not indicative of any future results.

All investing involves risk, including the possible loss of principal. Past performance is no guarantee of future results. 
No mention, opinion, or omission of a particular security, index, derivative, or other instrument in this webcast or video constitutes an opinion on suitability of any security. The information and data in this video were obtained from sources deemed reliable. Their accuracy and completeness are not guaranteed. The guests appearing on videos do not receive compensation or provide endorsements or testimonials. 
Securities are offered through Innovation Partners, LLC (member FINRA/SIPC). Ed Butowsky is a Registered Representative with Innovation Partners LLC. Ed Butowsky is licensed to business in: CA, FL, LA, TN, TX. 
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Transcript

SPEAKER_01 0:25

Hello, this is Ed Butowski. Welcome to Wealth Transparency, our very famous podcast with Andrew Tang with Financial Group and Michelle Connell with Porsche Capital Management. I'm thrilled that both of you are here. And what we do on this podcast is we talk about headlines that are not that well known or storylines that are not that well publicized. And we try to discuss what you should do with your portfolio as a result of these headlines. So one of them is oil. We're all talking about oil and the supply shock, but a lot of people think that the shock was worse than what people had forecasted. OPEC output dropped 27% in a single month. Andrew, why don't you take us uh on what the implications of that is?

SPEAKER_02 1:16

Sure, we'd love to. As you have graciously pointed out in the previous podcast, that you can't believe that uh the daily global demand or usage of oil is over 100 million barrels, right? That's really crazy. So from that angle, we have to also take a look at, well, what's OPEC's portion of that? So when I dig a little deeper, 27%, that it's only equal to roughly about 7% of global supply. So we also know that due to the uh the the Strait of Hamoose blockage and the oil supply disruption, the existing oil producers they are increasing capacity. So that's we know that Saudi Arabia is probably the biggest player that has the capacity. They can most likely increase about one and a half to three million barrels per day if they can. Kuwait, Iraq, Iraq, I mean the US, Canada, South America, Brazil, Argentina, all the way to Africa, they're all increasing supply. So I think this scare, it's just headline grabbing. And the reality is that it is not as bad as most people think. That, you know, to your point, you're correct that this is just a psychological headline item. In reality, the supply is doing a lot to try to catch up as well.

SPEAKER_01 2:34

So, Michelle, to be very specific, what does this do to the investment market? Because we do know the supply constraints last a lot longer than price rise raises. So, what what does this do to the stock market?

SPEAKER_00 2:49

Well, I I feel like we're in a push-me-pull you environment between what's going on with energy versus what's going on with the build-out of AI. We're continuing to have inflation uh pressure from energy and LNG and fertilizer, but at the same time, we have a good growth machine that's helping us out. And I think the focus has been until recently, the last couple of days, on the growth side. So we're we're discounting what's going on in the Middle East to a large degree and focusing more on the growth quotient. And earnings have been really good. Uh, and EPS estimates for uh the SP stays strong for this year and for for next year. They're like in the 15 to 17 percent range. So I think investors are thinking, you know what, this is something that's short term. I'm gonna look at it, you know, in context.

SPEAKER_01 3:49

So uh along with things being looked at in context, we have to look at the global growth rate uh that the IMF have put has put out. Uh it it's down from 3.4% to 3.1%. So, you know, Andrew, this sets up perfectly for stagflation in the world.

SPEAKER_02 4:10

Yeah, uh it's a it's a really good point. This downgrade, it's not exactly a sign of recession. It is slowing growth, but it is uh if you know, if I can pull up the chart here and you'll be able to see that it is not spread across evenly. There are some countries that are having a smaller output and smaller piece of a pie, and their contribution to global growth and their participation rate, it's different. But at the same time, we can also see that like India, it's growing gangbusters at about 6%. China is still expected to grow about 5%. So US, we see that underneath that GDP number, what's really slowing us down is the infrastructure building. So in the larger capital-intensive projects, we are having a setback in that. Other than that, obviously 70% of our economy is still based on consumer and the consumers are still spending. And so, from that regard, this particular downgrade, I don't think it's it's going to be too much of a shock to the system. And I don't believe that we're having stagflation by all means.

SPEAKER_01 5:20

Well, you you you bring up some very good points, Andrew. Michelle, why don't you touch on your view about are we in stagflation or not? And I'm sure that we're not in a recession in the United States, but I don't think we're in a global recession either. But also, what kind of impact does the oil issue have on this number?

SPEAKER_00 5:40

I think it depends on what income group you're in, right? I mean, in general, I'm seeing estimates. I think this is probably an overestimate, but that in the United States, the average family is now paying$400 more in their monthly budget. I think the majority of what we're being hit on is gas and uh travel, somewhat on our food. But you have 60% of the consumer spending in the United States is the upper 10%. In my research, I found that out. And that they're doing just fine. I mean, Delta's uh CEO came out and said they can't sell you know, or they can't they can't keep up with demand for the upper tier travel because they've raised their uh airfares, international airfares are up or like 25%. People are still buying. Uh and on that point, airlines have been absorbing the energy cost, but they that may not continue going forward. But you know, the upper end consumers are just flush with money. And so, for instance, if you have a million dollar portfolio and if you're doing on average, let's say this year, you've made$30,000, okay, or more. So you see that and it makes you feel wealthier and you you're going to want to get back on that plane and pay five to eight thousand dollars for business class or more to have that experience. I think we just have so many wealthy people here that 60% of our consumer spending, that's a lot.

SPEAKER_01 7:15

Yeah, and you look at retail sales, retail sales in the month of March reached a high, which blew everyone away. Even with higher gas prices, you still had very high retail sales, which then kind of brings me naturally to consumer sediment hit extreme lows. So there's a huge difference between consumer sentiment and investor sentiment. Andrew, why don't you uh take us on that one?

SPEAKER_02 7:39

Yeah, it it's pretty it's pretty evident that we're seeing a divergence between the haves and have nots. So this Cape Shape economy continuing to play out. As most people contributing to the consumer sentiment low number around 47, which is the all-time low, it's really is a reflection of their insecurity of their jobs. They don't know when they're gonna be fired, they don't know when AI is gonna replace them. And when you don't have that security, you're gonna feel very insecure. And that's why uh this consumer sentiment number is low. But on the flip side of this is that when I look deeper into the spending data, so I look at Visa and I look at American Express, their spending actually increased 10% and 20%. And then when I also look at consumer consumption, like retail sales, like you said, they're all actually up. And underneath that, you see a lot of uh computer equipment and many other goods that there are tech related as well. So I understand where that's coming from as well. But traveling, it is still red hot. You know, you have revenge traveling, and you have people just across the board from all income levels are traveling. The divergence between sentiment and actual spending, it is still completely out of whack right now. And so I don't think we can do much about the consumer sentiment number or the data. It's just a reflection of the psychology versus what really goes on in the real world.

SPEAKER_01 9:14

Andrew, I have to ask you, you said something about revenge sentiment. Revenge traveling. Revenge traveling. What is revenge traveling?

SPEAKER_02 9:23

Revenge traveling is that when people were all cooped up at home at COVID times, when there was a global shutdown and people were forced to be stuck with their loved ones 24 hours a day in their tiny apartments, time to get out, and that's revenge traveling. It's a term that I didn't make up, but uh just conveniently used.

SPEAKER_01 9:44

So, Michelle, when you compare investor sentiment to consumer sentiment, what what is your takeaway from comparing both of those?

SPEAKER_00 9:53

Well, the consumer side is much more um emotional in general. The saying goes, when times are bad, Americans will spend. When times are good, Americans will spend. I think there's some truth to that, whether it's taking yourself out to a restaurant because you don't feel well, or as Andrew was talking about, traveling. And by the way, traveling has not declined at all since the end of COVID. Desire it just seems to be increasing. And that's very different than investors. And I think when this entire period that we've had since the war, I've had people saying, you know, they're really surprised at how the stock market has stuck in there. But I think we've seen that, you know, we've had so many shocks since COVID. We had COVID, we had Ukraine, then we had that financial crisis. I can't remember the blank if you bank if you could call it that. And now we have uh Ira, you know, Iran. So I think we're just almost desensitized to those. And we think the stock market's gonna continue to do well over time, which it does. And so until we really get something that's gonna sideswipe us, I don't think the investor institutional or retail are going to sit on the sidelines. I don't. I think they're just gonna keep saying, you know, this is where I I know I can make money, you know, steadily over time. And they're just not, you know, unless they're really emotional and most investors aren't, they're gonna hang in there and they're gonna stay invested.

SPEAKER_01 11:25

So this is a subject that drives me crazy, and that has to do with climate change. And it drives me out of my mind to think that individuals have an impact on the climate, but that's a whole other discussion. But what I'd like to focus on is is there a shift in how people are investing today away from the climate focus, Andrew?

SPEAKER_02 11:47

Absolutely. This is a very hot topic, and I'll keep it short. I'll try to speak as fast as I possibly can. Now, if we go back in time, okay, I don't want to even go there, but let's just say how did this thing start? Okay, I can go all the way back to Bill Gates, uh, you know, in his letter to the investors, uh claimed, you know, basically saying that there was a doomsday view of climate change. And then he also said that unfortunately all of us, this view is wrong. So he openly admitted that that you know, we don't have a doomsday scenario, and you know, people are going to live and thrive in most places on earth in the foreseeable future. They're just gonna be fine. So this goes hand in hand with the World Bank's Climate Change Action Plan Act uh based in 2021 to 2025. If you can believe it, there's, you know, close to$100 billion that is allocated to these efforts. I wouldn't exactly say that these ROIs are negative or return on investments is negative, but there are different priorities there are more important. And that's what that's what made IMF the decision, because at the end of the day, there are votes that happen behind the scenes. So the Treasury sets the policy, for example, for the USI, and the executive director votes it, and then Congress influenced this these decisions. And so all these uh basically that act is expired, and the current administration just basically said, hey, let it expire, because we have different priorities to deal with. For one, we have to prioritize to secure the energy level. We're not producing enough, for example, for this AI build out. And then secondly, we just have to deal with inflation, but the cost of items are more important. And so this initiative, it's shifting from climate focus to different policies, you know, to basically to help improve the the lifestyle of people generally around the world. I'll stop it here.

SPEAKER_01 13:48

Okay. Michelle, why don't you pick up and give us your view? Do you see investors shifting from climate-focused stocks more over to energy infrastructure and geopolitical alignment?

SPEAKER_00 14:02

I think the phrases that I found when I was looking at IMF and the World Bank are they want geopolitical stability, meaning that they want stable prices and they want areas like Africa, et cetera, that, you know, that are having difficulties with food insecurity. They want to help with that. That's why they've backed away from the green initiative. At the same time, they still do want energy independence, because that's an issue that we're finding ourselves, not us in the United States, but look at the problems that Europe is having, how much their growth numbers are being pulled back because they're being held hostage first by Russia and now by what's going on in the Middle East because they don't have the fuels and the fertilizers that they need. So I think maybe less green, you know, you're seeing an emphasis, and the data centers are helping with that. Nuclear, I don't think that's gonna go away. I think we need to be able to build that out so that we can, on a cost-effective basis, supply energy to the data centers without hurting consumers. So I think there are gonna be areas that provide that energy independence versus, you know, just chasing something like wind, et cetera, that, as Andrew said, you know, there there is no negative there's no positive ROI unless you have like tax incentives. So we're gonna focus on things that are positive in terms of return, like like nuclear.

SPEAKER_01 15:35

I mean, that's that's ultimately what we're all paid to do is to find ways to make money for our clients, not some you know, goodwill mission.

SPEAKER_00 15:46

Exactly.

SPEAKER_01 15:47

So I wanna uh f uh finish with talking about the overall markets. Uh they're being led by tech right now. Andrew, uh, do you think that that's going to continue?

SPEAKER_02 16:00

I have to say with bias, yes. With bias, yes. You know, continuing what uh echoing what Michelle was saying is that the market climbs a wall of worries. We throw anything at it, you know, the market has been time tested, and it is driven with a very strong undercurrent of many innovation platforms converging at once. So this is the undercurrent that people don't talk about. They only talk about what's on the service. But the undercurrent growing is so strong, it is more powerful than as if you're building the internet all over again back in 1999. This AI didn't come from any, like you know, this really came from big data until you have the chips that have the ability to compute that big data is no use. And now, because you have to compute, now the big data became AI. Now AI can generate synthetic data, synthetic data train becomes synthetic intelligence, and so on and so forth. So, this is a hockey stick that is going parabolic, and the entire world is lifted in terms of our ability to solve problems. And so it is a strong undercurrent, it is such a strong scenario, and tech is leading the way, and I know it's expensive right now because we're still using the existing method of looking at the market. But this monumental change behind the scenes is so much bigger than what people understand right now. We have to really be a little bit more forward-thinking, be cautiously optimistic, but cautiously optimistic because we still have to deal with the short-term volatility. But bar none, tech is the leading sector that, in my view, will generate the most wealth. And it will lift all the other sectors because when AI solves the problem, for example, in biotech, when money is going to be more affordable, when cost of capital becomes sensible again, then NA activities will continue, deregulations, increase in investments, and all that will be returned back to the back to the investors. Strongly believe that.

SPEAKER_01 18:12

I take that you're a raging bull.

SPEAKER_02 18:14

Yes, I guess. Yes.

SPEAKER_01 18:15

Yeah, which is a great thing to be. And and Michelle, you take the tech stocks and put them aside. What's another sector that you see starting to gain ground?

SPEAKER_00 18:25

I think people are starting to look at healthcare because we have an aging population globally, except if you push out to Africa, which has a very young population, and AI is going to start helping solve a lot of these problems combined with biotech. So I think there's going to be some higher interest in that particular area where technology is combined with healthcare and things like even uh medical devices. I invested in a company a couple of years ago that has an AI chip that they put into an portable ultrasound, and you can take it anywhere versus using something in a hospital setting. There's a couple of companies that have have done this, and you're able to diagnose things out in the field in third world countries that you haven't been in the past. So that's a device that is utilizing an AI chip inside. You're going to continue to see things like that. Like Andrew, probably because of my background as a semiconductor analyst in a prior, prior life. I love tech. Tech is growing double the rate of the underlying economy. And so I think anything that's innovation oriented, that's how you're going to double your wealth over time at a quicker pace than an underlying SP index.

SPEAKER_01 19:51

Well, this has been a terrific conversation. I appreciate uh both of you, Andrew Tang with Turner Financial Group, and Michelle Connell with Porsche Capital Management. Michelle is out of Fort Worth and Andrew Jersey, would I say?

SPEAKER_02 20:07

New York, New Jersey.

SPEAKER_01 20:08

New York, New Jersey.

SPEAKER_02 20:10

Yeah.

SPEAKER_01 20:10

And I I encourage all of you who are watching, not only should you subscribe so you get this each week, but also pass this along to your friends. And if you need any help with your finances, reach out to Andrew or Michelle. They're excellent people and very, very knowledgeable. So thank you very much for joining us with Wealth Transparency.

SPEAKER_02 20:30

Thanks for having me.