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00:00 Speaker A
Let’s talk about metals. Wow, Gold surging again topping $5,500 and then pulling back a little bit from those levels. Silver’s higher, copper’s higher. It’s not just precious, right? Like wow, it has been quite a move in these metals.
00:10 Speaker B
Yeah. So who are who’s buying all this stuff? We know there’s incredible investment demand. And that by the way, is 2,175 tons. And uh I don’t even know how many ounces that is, but that’s huge. Central banks have been the biggest marginal buyers over the last few years. And in fact, that trend started about 10 years ago, but we’ve seen starting in 2022, they have been buying 1,000 tons a year and I just got some statistics only a few hours ago from the World Gold Council. They say that fell off a little bit in terms of the pace, but still central banks bought about 863 tons. So down from over 1,863. and then ETFs is part of that 2,175 tons, 801 of that, so almost equaling central banks is ETFs. and we have just seen explosion in all kinds of things. Not only the regular plain vanilla ETFs, but the leveraged ones as well. And then you’ve got the inverse ones, so people betting on both sides of the market there. Uh when you put it all together, just huge demand. So that’s gold. And then in silver, we have just seen uh ETFs that have been dead for years and really had no assets under management come to life over the last few months. And uh I was just doing an episode of stocks in translation with Steve Sosnik yesterday and our number sponsor, our number of the day was $210 and that was the price inflation adjusted high from way back in 1980. Uh there’s a story about the Hunt Brothers cornering the silver market. Look it up. It’s a fascinating story. But if you adjust for inflation, that means you uh we had a high of $50 and change back then multiplied by 4.2 because everything is 4.2 times as expensive as it was 40, 46 years ago, then you get to $210. And uh so that’s kind of an upside price target. We’re looking at silver what, 115, 120 right now. And if we go quickly to the Wi-Fi interactive, I just want to show you the year-to-date totals on our heat map. So this is year to date. Up in the upper left, that is silver up 53%. Number two is gold up 20%. Then we’ve got platinum, palladium, 19 and 17%. Then we got some energy, heating oil, Brent, crude, Rbob, OJ, etc. and copper. Copper’s been hitting record highs too. That’s up 8.5%. So uh you put it all together and this is and look at there’s not a lot of red on this heat map there. So arguably we are in a commodity super cycle and this is predicated on dollar weakness which we have seen recently.
02:29 Speaker A
Yes, we have. Um we’ll talk we’ll save a bigger discussion of the debasement trade for another time. Maybe that’s a good stock in translation. Uh but next up let’s talk about Caterpillar because the industrial giant jumping on earnings thanks in part to AI. Sales sales of power equipment driving sales. That business is now caterpillar’s largest and fastest growing unit. Profit there uh overall rising 25% from a year ago. Now I think this is still something that people don’t quite realize. You think of Caterpillar as a big earth moving company.
03:09 Speaker B
It’s an AI trade.
03:10 Speaker A
I was just looking at the numbers, power and energy and this by the way, isn’t just data centers, it’s also sales to the energy business, to the oil and gas business. $9.4 billion in the quarter. Construction sales by contrast, 6.9 billion, mining 3.4 billion. So it’s definitely it’s the biggest.
03:26 Speaker B
Yes, by far. Um and then just one of the numbers that really stood out to me was the backlog. This is kind of a shocker. Uh $51.2 billion and that is up $11.3 billion quarter over quarter. The expectation was for $2 billion. Oppenheimer, which rates the stock and outperform saying the standout data point was backlog growth of 11.3 billion quarter over quarter. By side looking for that $2 billion mark and that was up 71% year over year. Then you have AI linked power gear which you just touched on. That’s doing the heavy lifting even as headline profits are getting squeezed by tariffs. I’ll get to that in a second. Power and energy sales up 23%, profits there up 25%. And then you have tariffs as a swing factor. The stock is doing very well this year. It’s one of the top
04:26 Speaker A
It’s at a record, is it not?
04:28 Speaker B
Yeah, it’s been hitting records. If we go to the Wi-Fi interactive, I’ll just do uh chart this real quickly. We have our Dow heat map up here. This is year to date. Uh and we have caterpillar up 13.8%. I’ll sort by performance so you can see it’s number two second to Honeywell. But look at this is a three-year chart. It has been hitting record highs consistently for the last few months. So the last thing was tariffs. Um incremental tariff costs seen at $800 million in the first quarter and $2.6 billion for 2026. City rates the stock of buy saying we anticipate Cat stock to have a fairly muted reaction. Uh although it’s up today, somewhat underwhelming 2026 guide, but explosive growth in the backlog. So if the margins were to improve, if the tariff threat threat were to come off a little bit, imagine what the stock would do then.
05:22 Speaker A
Yeah, and and the tariff by the way is larger, expected to be larger this year than last year and will put some pressure on the margin. So that’s an example of a company eating some of that tariff cost. Um let’s talk about Lockheed Martin finally. That stock is rising as the company’s guidance beat analyst expectations. Um and they also um record deliveries of their F35 and it sounds like they have a new agreement with the Pentagon as well. We know that Congress is, you know, has approved some new defense spending, is deliberating over more defense spending and we’ve seen big moves in a lot of the defense stocks.
06:16 Speaker B
Yes, uh let’s go back to the Wi-Fi interactive and just highlight that here because we’ll see only only GE here down 5.4%. Um but Lockheed Martin which I’m circling right now, that’s up 30.8% this year. and I will just show you this is again a three-year chart, just broke the 2024 highs and you can see what a pace. Let me just dial that down.
06:47 Speaker A
And that’s a record as well, right?
06:49 Speaker B
Yes, let me dial that down to a three month and you can see it has come alive this year. And one thing I noticed last year in the big post liberation day sell off where we almost had a bare market in just inside of a few days was that the aerospace and defense sector really held its own. It held up better than just about any other industry and it also came roaring back. Let me just show you a one-year chart because you can see that here. Um here, there was basically flat lined over that period when everything else was tanking. then it had a little bit of a dip in June or July and then it kind of took off for a few months came back. This is Lockheed, but the it kind of follows the sector overall and uh the aerospace and defense sector was one of the strongest and most consistently performing stocks last year. So lower volatility and it’s just that kind of I don’t want to say guaranteed, but there is a government backstop because of those revenues.
07:51 Speaker A
Right. But of course they’re not immune to tariffs. They’re you know, they’re taking that as well. Just a quick note for this year, the company said earnings per share are going to be at least 2935. analysts on average had looked for 2909. So not too bad.
08:14 Speaker B
Thanks so much.