The Stock Market Is About to Surprise Everyone

Louie predicted 5% GDP growth. The Atlanta Fed is now forecasting over 6%. [music] Manufacturing just posted its best reading in years. Yet investors are still asking if the economy is slowing. [music] Today, we'll break it all down. What Wall Street might be missing. Welcome back to Naval [music] Market Buzz. [snorts] We have two very different earning stories this week. Intest preliminary quarter 2 numbers and Palanteer popping ahead of reporting last Monday night. Which one actually impressed you? >> Palanteer was by far the best. I mean it gets fundamental A in our eight factor fundamental model and you know this is the third quarter row that I can remember that the earnings are perfect. You know well above balance estimates raise guidance well above estimates. But I think the thing that got everybody excited was their US commercial sales orders up 149.7%. It was ridiculous. That got everybody all excited. Did monetize AI last last quarter. That that's helping the entire sector. That narrative that AI is going to replace all the companies is falling apart because clearly this monetizing AI Palunteer is monetizing it. All those evil short sellers are running for cover right now. And I think the strength is a short squeeze. >> Now, Intest beat their own revenue guidance, but they're cutting quarter 1 gross margins. How do you read that? >> Well, Intests all the uh electronic components. Okay. But obviously, Wall Street liked their guidance. That's why the stock went up. And this is an expansion of the AI trade because we're picking up all the companies that help manufacture semiconductors and test them. Intest would be an example. Another example is AEIS. They're in the wafer business. They beat and they popped as well. This is the interesting thing is we we found more stocks to buy, but they're still AI related. And I'll give you even an extreme example. Uh Caterpillar is now giving AI credit for its earning search because they're helping build out all the data centers. You know, you need to you need to bring in the construction equipment to pour a lot of concrete and all. I think everybody realizes that AI is for real now and companies are monetizing it and it's really us versus China. Europe is far behind. They they want to do a government initiative with private investment as well to start to catch up, but they're never going to succeed because they're too far behind and their electricity is too expensive. That's why the data centers are in Poland, should be in Norway, anywhere where you get cheaper electricity. I want to go back to Palunteer because they jumped nearly 2% before even reporting buying the anticipation or has the market gotten ahead of itself? >> You know, that's a real good uh question. You know, Palunteer in the previous two quarters off even though the results were perfect because they were fighting that narrative that AI is going to replace all companies, which is false. Okay. But, you know, Wall Street's a man crowd and and a false narratives get out there every now and then. You know, I I think that was a very very good sign that it rallied in anticipation of the earnings, but it's possible new spectacular was coming. >> But bottom line, which one do you like better right now, Palunteer or Intest? >> Well, I like whatever pulls back, but long long-term Palanteer is a phenomenal company. It's still down for the year and even though it's had three perfect quarters in a row, yeah, back up the truck and Palanteer. >> Faxet is now forecasting 47.4% 4% year-over-year earnings growth for the S&P 500 in quarter 2. That's a huge number. Is it as bullish as it looks? >> It's beyond bullish. It's almost to infinity and beyond. Uh if you don't mind me borrowing from Buzz Lightyear. The previous week it was 37.9%. Now it's 47.4. That they reported that before Palanteer's results, maybe it's going to be over 50% now. I mean, we're hot and heavy now in earnings. We got lots of surprises. This is just incredible. And uh it's incredible that if we only had 1 1.5% GDP growth, corporate America is cranking out all these earnings. And a lot of it is still AI related. A lot of it is just optimism for the future. Obviously, they're trying to control oil prices. There's a temporary agreement between Oman and Iran to open up the trade of Hormuz. And if the you know the President Trump wants them at the negotiating table, Iran, but the bottom line is it's just a wonderful economy right now and we're the economic engine of the world and there's a lot of onshoring underway. A lot to be excited about. >> But the real question is should investors chase this or is it already priced in? >> No, it's not priced in. What you'll notice is the stocks are not going up as much as the earnings. And as we approach the midterm elections, there's just a lot of people that like to trash America. Um, read the British press. It's painful. But the Financial Times does not like America. I'll tell you that right now. And that permeates the entire European media. They like an America that does what they want us to do versus us telling them what to do. Okay? And they clearly don't like President Trump. you know, he he went to Davos and told him either you follow us or you get left behind. And uh it's going to be interesting to see if we have any friends over there. In the meantime, they're all hellbent on finding our tech companies, opening up back doors on on the tech. They can surveil their citizens. You know, it's not just Europe, but all of Europe right now is a surveillance state. When you get there, your your text, your emails are monitored. And if you are I don't know on X and click like on you might get arrested in whether you're in in in Britain, Germany or France. It's a it's a surveillance state and uh this is the war we're having between us in Europe and the tech companies have all run the to President Trump for protection. >> Now I want to talk about a big one here. Is manufacturing hit 55.6% in July, the strongest since May of 2022. Does this finally show up in the GDP? Yeah, apparently it is because the Atlanta Fed just raised it to a a ridiculous number. But uh this is the strongest in four years as you mentioned. It's the seventh straight month of expansion obviously building all the data centers tax a lot of you know uh copper all kinds of things and materials concrete I can go on and on. Again Caterpillar gave credit for AI for their bottom line. It's real and uh we can't stop it. And I realize there's people running for office that are opposed to data centers, but if you are serious about opposing data centers, you got to start opposing cell phones because as long as we have cell phones, we're going to need more and more data centers. >> Now, Dad, I got to give you credit here. You called for 5 quarter 3 GDP growth and now it's tracking 6.2%. How does it feel to make that call? >> Yeah, it's interesting history. I I said 5% in December on Fox Business. Howard Lutnik one up me. He's a common secretary. He said 6%. I had a chat with Howard at Marlargo about that. He assured me we're going to hit 6%. It looks like Howard's right at this millisecond. I think the only drags are on GDP are going to be the trade deficit. We're importing a tremendous amount of tech equipment, memory, GPU, CPUs from Asia. We're there's an inventory adjustment. That was a big drag on the second quarter GDP growth. Although all the components look wonderful, uh consumer uh spending and business spending was all expanding under the surface. It'll be fascinating if we can hit there. I suspect it's going to be revised down a bit, but we'll just have to see the the actual numbers. >> Now, if it does land near 6%, what does that mean for investors this year? >> Well, normally strong economic growth is inflationary, but a lot of our economic growth comes from productivity gains from AI, and that is not inflationary. And that is Kevin Walsh's big job at the Federal Reserve to convince everybody that AI's not not inflationary. He's reworking the Fed from the bottom up with all the economic reports, but AI in the end makes us much more productive. >> Now, I have one more question before we get into subscriber questions. Let's talk about Iran. Does this change how you feel about energy stocks? >> No. There is a refinery shortage right now. And in fact, uh the London airport ran out of jet fuel. Now that I don't think it was Heathrow I think it was a smaller one. Okay. But there is a shortage of refined products. We own refiners. The ships are going further around the world. The day rates are up. I own at least six oil tankers that I know know about. The world is all dependent upon us or natural gas. I have a good LG carrier. And then we have a lot of good integrated energy companies. Everybody has to replenish their depleted inventories. A lot of worlds have strategic petroleum reserves, but they were depleted, including us in America. Everybody's going to have to refill them. With that said, worldwide demand is going to drop after Labor Day because there's more people in northern hemisphere hemisphere. I do expect oil prices to really stabilize after that. Whe whether they'll be below $80 a barrel or not on WTI, we'll see. But, you know, it's like the energy bet. Now, of course, President Trump said he didn't like all the record energy profits, but you know, he's for the people, and he he basically said out loud what people are saying. >> Now, let's get into your questions. First up, let's talk about Eli Lily. What is your opinion on them right now? >> Well, they're the GLP1 leader. Novanoresk is obviously started this business, but we're going to a new generation of GLP-1 drugs, and we assume Lily is going to continue to lead. They have better distribution, but yeah, GLP1s are are quite common. Now, let's talk about Comfort Systems, FIX. Is this still in your portfolio? >> Yes. Yeah. The only uh AI related stock that I I trimmed was MCORE, and it just blew out earnings, too. Uh I still recommend the newsletter, but trimmed it under management, and that's EME, but no, I I still have all the data center related stocks. >> Now, we have another stock question about Nebius, NBIS. What's your opinion on them? >> Yeah, that showed up on my radar after their first quarter earnings beat, which was phenomenal. Uh this is a company in the Netherlands. They build stack systems to help build out the AI infrastructure, the cloud, etc. They're very integral. They're not the only European companies I have involved in in in the cloud and electricity and everything, but just, you know, their sales are ridiculous. They're forecasted by the analyst community to rise 454.7%. And uh that is why it's it's on the radar. The operating earnings are positive. overall earnings or not, this is a very popular stock in the AI crowd. >> Now, I want to talk about another stock as well that PSN. >> This is a defense contractor. They do a lot of work for the federal government. They had a pretty big surprise here in the second quarter. That's a good sign. My only comment is is the forecasted sales and earnings are lackluster and we do have minor analyst trims. I have hope for the stock company, but it's just not strong enough on my eight factor fundamental model for me to recommend it. Now, one of our subscribers wanted to know why you prefer Seagate STX over Western Digital WDC. >> That's a very good question. Western Digital was the best performing stock last year. It's just a slightly more volatile. That's all. We do that quant research alpha over standard deviation and Seagate was just tracking a bit better. Okay, that's it. Okay. And while we're talking about volatility, when the the hedge fund situation awareness blew up, it has been revealed that they were major holders of Bloom Energy and SanDisk and SanDisk was acting very odd, especially compared to Western Digital and Seagate. Stocks do funny things and because situational awareness was on the stocks on leverage, they were being fed by the prime brokers, the market makers. That's how you can leverage four to one or more. They were put on alert list. They had to start unwinding everything they do and and that's why SanDisk was acting odd. But I own SanDisk. I own a lot more Seagate and I own a a lot of Micron technology. But yeah, it's UDC is highly rated stock. I have no problem if you buy. I just already have a lot of members. >> And last one, you've mentioned Arinia Pharmaceuticals before. AUP. Do you still like them? >> Yeah. Uh they're top ranked in my system. Again, I do the the the quantitative analysis. I do the eight factor fundamental model but you know Arena Pharmaceuticals their sales are supposed to be up 15% their earnings supposed to be up 50%. We have positive balance revisions up a good 20% in the last 90 days. Very good surprise history. Yeah. Yeah. It's it's a very good stock. As long as you hit my criteria, I'll buy you. >> Well, thank you all so much for all your questions. Let us know in the comments what you're watching closest into next week and any questions that you want us to answer. But thank you all so much for watching. Please give this video a like and subscribe to our channel for more videos. But see you this Sunday for a new video. [music] Heat. Heat. [music] >> [music] [music] >> Nat.