J.D. DURKIN: Good Friday morning, subscribers. After a busy week of economic data, Sarge Guilfoyle joins me now for a look at what is next for the market. Sarge, good morning. Thank you for being here.

STEPHEN GUILFOYLE : Hey. Good morning. Thank you for having me.

J.D. DURKIN: OK. So, let's talk about some of the prints this week when it comes to CPI-PPI retail sales, buzzwords like "hooter," "cooler," "inflationary." These words get thrown around a lot with not very much context. Sarge, combine your experience as a trader and an investor for us. What does what we learned this week actually mean for the average investor watching at home?

STEPHEN GUILFOYLE : All right. What it means is, well, you heard from a lot of the other guys. We saw hotter consumer-level inflation, hotter producer-level inflation, but largely only because of outdated shelter data, which really has inflated the number, but it's going to suppress the number going forward, and energy. Energy is really what has changed this summer. It's up, what? Oil is up, like, 30 something percent since June, I think.

So that's really been what's been taking a huge bite out of a consumer's ability, I guess, to do what they want to do to move, to act in a discretionary way with their dollars. And we saw that with the retail sales. I mean, the numbers at the headline look fine. But once you look into the actual sectors where money is being spent find, you out that it's almost all being spent on gasoline, with maybe a little bit on back-to-school items, like electronics and clothing, but almost everything was down.

I mean, if you look at what I call the "fun index," which is sporting goods, hobbies, books, and music. That line was down 1.6% for the month. So, basically, people are not spending money on anything they like. They're spending money on what they have to buy. So it was really, I think, a poor month for retail sales. Going forward, I think what Jerome Powell is going to have to do next week, we know that the Fed is not gonna change rates next week. I think they've priced in a 97% probability that there will be no change at all.

But he's going to have to open up optionality, open up flexibility, which means he's going to have to be hawkish when he speaks, or maybe, within the dot plot, or in the economic projections, they're going to have to send a somewhat hawkish message, because, right now, Fed futures markets, although they do have that November hike, the potential for a November hike, back up to, maybe, 41%, 42%. Yesterday, during the afternoon, it fell from 41% to 32%. That's why you got a rally yesterday. It's being erased right now.

We need to see that, I think closer, to a 50-50 chance, moving through October towards November, after they do not hike in September, because I think the Fed, right now, feels like they're being pushed into a corner, and they're not they're not going to be able to act, if they need to, without surprising the market. I think they'd much rather be able to act, when and if they need to, without causing a big brouhaha.

J.D. DURKIN: Brouhaha! I love that! Now we've got a brouhaha reference. By the way, I just want to check, that is the Sarge Guilfoyle official fun index, right? I heard that correctly?

STEPHEN GUILFOYLE : Oh, that's the fun index. Every month, we look at it. It's the one line that says, "sporting goods, music, books, and hobbies." So, basically, whatever you like as a human, it's probably in this category. So, I mean, most of us, we have a hobby. Most of us like to play sports, or play music, or listen to music, or read books. So I think-- Although some books are bought for other purposes, like learning and stuff like that. Most people, what they do what they like to do is in this one category, and this category was down 1.6% month over month.

J.D. DURKIN: And that's why we track it closely. Let me ask you about the ongoing strikes we've got here, Sarge. It's a bit of a new reality we're waking up to today, as well as the strikes' impact on the market and the economy. UAW has joined the fray for the first time in 88 years, with thousands striking against the big three automakers. What do you make of this moment, Sarge, and how do you think our viewers should be positioned?

STEPHEN GUILFOYLE : Well, I mean, I'll tell you what I'm doing. I'm waiting for Ford Motor, if the strike becomes severe enough and lasts enough to get it down below $10. I'd like to buy it for myself, but I'm probably gonna buy it for the "stocks under 10" portfolio if it does so, because I can't do both. And I wrote to those folks yesterday, and told them that I'm looking for a print below $10. And that's down a couple of dollars from here, so it's not happening yet.

But if you just look at it, I think that the big three-- I hate to sound like a union buster, or a management creep, because I have union in my family, and I'm really not anti-union. But when you look at their demands, their demands are exorbitant. I mean, 40% pay increase, OK, that sounds like a lot, but I know they went without pay increases for a while. But, I mean, five weeks paid vacation, 17 days paid holidays a year? I mean, they're asking for benefits that I don't think I've ever heard of anyone receiving.

So, I mean, maybe they're asking for the moon, so maybe they get half the moon, but it looks like all of the big three have already come more than halfway in these negotiations. So I really think that, I know he's playing hardball, this leader of the UAW, Mr. Fain. I think he's probably gotta show a little more respect to the other side of the negotiation and not play such hardball, be willing to maybe talk to the other side, compromise a little bit.

So, I don't know, that's just my personal opinion on the matter. I'm not interested in General Motors or Stellantis. Ford is the one that I think will present a discount, if you can get a cheap-enough price. You want to see it below the August lows at least, but I'd love to see it under $10, where we could grab a little bit.

J.D. DURKIN: As we're having this conversation, Sarge, we are seeing the S&P 500 down 5/10 of a percent. Overall, give me your sense, is it your expectation here today the market will continue to largely shrug off the UAW strike, or do you see this changing?

STEPHEN GUILFOYLE : It probably will impact GDP at some point, if it lasts long enough. I don't if this is really a reaction to that right now, the sell-off we're seeing. I think it's more a reaction to the move up higher in the probability for a November rate hike, as well as slightly higher yields for the US 10-year, and a couple of the other Treasury products. Let me see. The 10-year is paying 4.32% right now. It was paying 4.29% last night. The two-year is paying 5.05% right now. It was only paying, like, a little over 5% last night. So yields are higher, so they're selling bonds, and they're selling stocks accordingly.

And the dollar, I'm sure the dollar is probably-- What the ECB did yesterday weakened the euro, therefore strengthened the dollar, and I see dollar index above 105, 105.2. So the dollar is a bit too strong also. We probably should see equities come in a little bit here. We probably should see some commodities that are priced in US dollars come in a little bit here. And if you see that headline commodity, you know, WTI crude oil, come in, that will help, in a big way, some other sectors stabilize. We'd rather see a weaker energy sector and stronger sectors elsewhere than the reverse, because I really think, what is it, energy is only about 7% or 8% of the entire S&P 500 right now. So it's stopping some of the other parts of the marketplace.

J.D. DURKIN: Sarge, it's been a while since you and I have discussed AI. You've been very closely following NVIDIA, of course, among other names. Are there other stocks standing out, especially after we did have that hearing on Capitol Hill in front of the US Senate a few days ago?

STEPHEN GUILFOYLE : Yeah, I mean, NVIDIA is still the big name. It's probably-- Let me see if they gave up the 50-day just now. I think it just did again. The 50-day moving average is $454. It's trading at around $447. So, NVIDIA is getting a little bit weaker. AMD is the one that will challenge them later this year. They're softening as well right now. As I've told you in the past, and I've told others, outside of NVIDIA, nobody else is making bank on AI right now. Nobody else is really that close to monetizing artificial intelligence in a way that I think would help their top and bottom lines, especially their bottom lines, because it's an expense right now.

So it's time for this to cool off a little bit. I probably will take off a little NVIDIA. I'm not looking at it as a buyer right now. I'm looking at it as a guy who's probably gotta reduce some exposure. So if we get down below, I guess, the lowest earlier in the week, which was right about $444, I think, I probably will shave a little bit off that position. So I'm not as bullish as I've been on that position. I'm still bullish long term, but it's going to have to start at NVIDIA and spread out a little bit. I don't believe-- You know, the Salesforces and the ServiceNows, I'm getting a little of both, but those kinds of firms, it's going to take a while for them to realize any monetary gain, any net profit from such a burgeoning new idea.

J.D. DURKIN: Sarge, let's stick with the world of tech. Earlier this week, over on Real Money, you published a bit of a contrarian take as it pertains to Oracle. What is Wall Street getting wrong there, you think?

STEPHEN GUILFOYLE : Oh, they just oversold it. I mean, they weren't really wrong to take some off. I did buy some Oracle. I'm long that one. I bought it after my article was published, so I wouldn't be front running my own article. And let me see here. I got in around a little above $111. Trading at $113.50, so I'm up 2.25%. I just think they oversold Oracle. I think the cloud is growing. The cloud is their business. They are going to be one of the drivers of AI going down the road, but that's not where their bread and butter is right now. I do think Oracle is a free cash flow beast. I think the balance sheet is healthy. There was no reason to sell the stock the way they did.

J.D. DURKIN: What does what we saw last night from Adobe fit into your thinking? We did get a beat on quarterly estimates, but I'm curious what most stood out to you.

STEPHEN GUILFOYLE : Yeah, actually, I'm writing on Adobe right now for Real Money, and I'm not in that stock right now. I think Adobe it's a great company, great cash flow, solid balance sheet. It's growing, but it's growing 10% or 11%. It's priced at 35 times forward looking earnings. Well, in this environment, that's a little bit rich. They don't need to borrow any more right now. I mean, I think they've got about $3 billion worth of debt on their balance sheet, but most of that debt was borrowed at very low rates, and they have more than enough cash to pay it off if they have to.

So the balance sheet is in great shape. Cash flows are in great shape. All their business lines are running pretty much as well as they should, or could. It's just the stocks are a little expensive. So it's being punished today for that reason, and I guess rightfully so, because why would you pay 35 times for a cloud king, for a software company, at a time when that's not really the going rate anymore? I mean, where's Microsoft? Microsoft is trading-- I'm missing the PE and Microsoft, but I think it's in the 20s, right, high 20s? Let me see here. Microsoft is trading at 30 times even.

So, really, are you gonna pay five times more for Adobe than Microsoft? I wouldn't, because Microsoft will be, probably, one of the first software companies that capitalizes on AI and makes a buck there, because they're so invested in open chat GT, whatever that is, GPT. So, Microsoft is probably closer than any other software type name to monetizing artificial intelligence.

J.D. DURKIN: All right. Fair enough. Thank you for the insight, as always. Sarge, it's great to have you, and best of luck to your New York Jets against the Cowboys this weekend.


STEPHEN GUILFOYLE : Army tonight. Army is playing UTSA tonight on ESPN. So, go Black Knights.

J.D. DURKIN: Go Black Knights. We'll be watching that as well. Sarge, thank you. Members, Chris Versace we'll be back on Monday to get ready for another busy week ahead. Until then, have a great weekend, and we'll see you then.