This is Mike Larson coming to you from the 2026 Money Show Orlando where the big question is the AI boom. Is it going to keep going? Is it a bubble? And depending on your view, what can you do about it? Meanwhile, we have higher oil prices, higher interest rates, yet the stock market is setting new highs right alongside. To figure out what's going on and what you can do about it, I sat down to interview a pair of our best experts here in Orlando. One is Bob Accino with Path Trading Partners. The other is Jeffrey Hirsch with the Stock Trader's Almanac. I hope you enjoyed both of these segments and find interesting things you can do in your portfolio from them.
Hi there, I'm Mike Larson coming to you from the 2026 Money Show in Orlando. Today I'm sitting down with Bob Accino, co-founder of Path Trading Partners and the Unfiltered Investor Newsletter. Bob, how you doing?
Yeah, glad you could make it here. A busy day, busy week, busy in the markets. What are you seeing out there? It's one day we're talking about oil and if we're not talking about oil, it's interest rates. It seems like we just ping pong back and forth here.
From a stock market perspective, I would worry less about interest rates than I think most people do. It's become the fear du jour for what's going to happen with the stock market. We're still looking at a nominal GDP somewhere between four and 6%. That's pretty strong. I know it's mostly capex, not consumer spending, but that still isn't going to slow stocks. And the last time we had the two-year move by this much, 50 basis points plus, that was 2022. Next month, S&P up 5.7%, NASDAQ up 6.2%. So, I'm not predicting that's going to happen. Sure. But I'm just saying this as a binary event, I don't think it should worry people as much as it does.
Got it. And it's interesting you point that out because we've got rates up, but the NASDAQ is here basically at a new high or very close to setting one. Does that speak to what? Just the underlying power of this AI trend?
Yeah, that's the trend, right? I've found AI trades in things you wouldn't expect. For example, Caterpillar, we sent that out as a trade a week and a half ago in our newsletter. It's going our way. And the reason we did is not only because of the technical pattern, although it structurally was a technical pattern. When you start to look behind the scenes for Caterpillar, they're going to benefit from the data center trade. Obviously, they have to grade the land and dig the holes and they're the number one company selling equipment to do that. But also, they're selling generators to these AI data centers, a lot of them. They have a $72 billion backlog in orders. And I think that's going to grow. A lot of this may be priced in already, but longer term, I don't think you're going to lose that much being in Caterpillar.
Got it. And I'm glad you brought that up because we've had people speak at our events and they say, "Okay, sure you can make money by buying the chip names, the hyperscalers, but you do have so much the data center infrastructure. You have the utilities, power grid plays, materials, and things like copper for that matter. What are your thoughts on some of these other tangential things you can do?"
I think copper is a great long-term hold. I really do. The way I do it is of course through the copper futures, but there are some basic industrial metal ETFs out there. I don't want to recommend any because I'm not in them. But when you look at copper, that is going to be a long-term story. So even when you get a dip in copper, it shouldn't be worrisome. People have to size their positions and hold it long term. The same thing I feel about gold. Gold is struggling because of interest rates, but interest rates are really being normalized. When you look at the long-term 10-year average, about 5.9%. So again, you have to be as old as me to have remembered that my first home loan was at 6.58%. And I was doing a dance in the street about that. [laughter] But again, I understand that for people who've only been trading about 20 years, that feels painful. I think this is all going to go away in terms of it being like a block to the stock market moving to new highs.
Got it. Any thoughts on breadth and seasonality? I have some people that say they look at August and September, they say besides some tech stocks, breadth was lousy. A lot of sectors struggle. And then you have other people that are saying, "Okay, we're through September and now this is probably going to be a time of year where you run." What do you think there?
As of Friday, breadth was at about 25%. Not good.
Also, you can chart breadth technically and we're looking if it breaks 23%, it's going to go down to about 10. That's a buy. If it doesn't break the 23%, it is a buy. October is historically a bad month for stocks, but it's not the worst. September's the worst. And we're through that. To your point about being through some of these things. So, from my perspective, the buys that you make in October, even though you may take a little heat on them, are the best buys you can have. That sort of October to May period is the strongest performing period for the stock market. So to me it's really do you really think the Fed is going to go into a 250 basis point tightening cycle? I'm not buying it.
Okay. Other thing people are talking about is midterm elections. So forget the politics of it. Just what does it mean for markets? Is it just that we're going to be set up to run once we know who's going to be controlling what or what are your thoughts?
Well, here's what makes me laugh about that. If the Fed hikes in October, they're being political. If they don't hike because of the midterms, to me that's political. I think the media, and I'm talking about the mainstream financial media, not the media of some of the guys that are speaking here, sure, have made anything the Fed does political. So, at that point, I don't necessarily put any sort of credence into anything they do in October or December for that matter. Did they fall behind in October and now they have to do 50 basis points in December? I don't think so. Even the December probability right now is only about 67%. That may seem high to people, but there's such a long way for that to come down. We saw the PCE numbers last week and they were not as strong as people thought they might be. The thing that worries me the most, okay, is PPI because that's where diesel is going to show. And diesel obviously I'm not the first person to say it. That's the problem for the broader economy.
Let's talk about the trading mechanics of this market. And when you're in there day-to-day, what are some of the things you're seeing? What are some of the things you're telling people that are watching you or listening to you? This is what you have to pay attention to as a trader in this market.
When we enter trades, the Unfiltered Investor newsletter is based on technicals, but we generally have a fundamental thesis. I'll give you an example. Netflix, we're not in it yet, but it's trading at about a 21 trailing PE, okay, off trailing earnings. Its median historically is 58. So, is Netflix cheap to where it normally trades? Sure, it is. But when you look at the overall streaming story, I need to see a bottom form because companies like Tubi and Roku, some of these free ones that are running commercials, the cheapest Netflix now is running commercials. I was talking to my wife last night and I said, "Well, watching Amazon, we use the one that runs commercials. I now pay to run commercials where I'm old enough to remember watching TV. It was free and there were commercials." Sure. So, it's a weird setup now with streaming. I think for Netflix itself, it's more about what is the company worth rather than is it going away. It's not going away. It's got too long of a runway on everybody else. So, I suspect they'll make some changes and I suspect that will be a long-term long for us trying to get their PE maybe back up to 35 or 40. We're not in it yet, but I think we're going to be.
We're here in the fourth quarter. Obviously, a lot of the Wall Street strategists are going to put out their outlooks in a month or two. Any early look at 2027, kind of what you're expecting, where you think there might be opportunity or risk.
Yeah, I think the tightening cycle is going to end in early 2027, if it's a cycle at all. I really do. The diesel problem is a long-term problem. That's not something that goes away. When you look at the destruction of the refineries in Russia and Ukraine, when you look at some refineries being destroyed in Saudi Arabia, it's a global pricing problem. President Trump started a refinery or approved a refinery. He didn't start it. He didn't shovel the ground out and start building it. But he approved a refinery in Brownsville, Texas in 2016. It's still not running. So that's part of the problem. Regulations in the US make it untenable. Darren Woods, I believe he's the CEO of Exxon, but I always get that confused with the CEO of Chevron. He said 10 years ago there will never be another refinery in the US. Diesel is the biggest problem for inflation. The Fed can't do anything about diesel.
Yeah. Any opportunity maybe we haven't talked about yet here that you're excited about?
Amazon. I like Amazon. I do. By the way, I like gold, but that's... You go back and look at me saying that in 2023. I don't think the currency debasement trade is over. But the Amazon trade, I think they're going to surprise people. They're still the biggest provider of cloud, AWS, even though they're growing at a slower rate than Google and some of their other competition. But I think they're going to kick that back into high gear. Also, AWS aside, holiday season's coming, Prime Days are coming. Amazon generally ramps up into those times. So, I like that one as well.
