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Chapter 1: Why are oil prices rising while the stock market is dropping?
The stock market is down on Tuesday. Is this an overreaction or the reaction we should have had yesterday? Motley Fool Money with the Hidden Gems team starts now. Welcome to the show. I am Travis Hoey. I'm joined today by Lou Whiteman and Matt Frankel. And guys, we have to start with the news of the day. That's it. The markets are down pretty big.
Both the S&P 500 and the Nasdaq Composite down over one and a half percentage points. Crude oil is up 8% as we're recording. Lou, this is all in reaction to what's going on in the Middle East right now. But what's interesting about this is this didn't happen yesterday. These attacks, all the destructions going on started over the weekend.
You would have thought, theoretically, that yesterday we would have had a big reaction from the market.
Chapter 2: What factors are contributing to market uncertainty?
They waited a day. So what's going on here?
Great question. It started to happen yesterday, and then it suddenly turned around and didn't happen. I think part of this, and we're not a political show or anything, but there is what they call the taco trade. I think there is the assumption always out there in the markets that whatever new thing has happened will get turned around before it spirals out of control.
Maybe today is comments overnight saying, we can go as long as it takes, we're not going to back down, just that energy seeping out of the market. But also, it could just be, wow, taco trade or not, this is serious stuff and it could get complicated quickly. It's risk-off because there's a lot of risk.
Matt, what are you thinking when you look at the market being down like this? Is this something that we should be worried about? Is it a buying opportunity? Where's your head at?
There were a couple of developments since yesterday that I think are contributing to this. To name the big one, a U.S.
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Chapter 3: How does the rise in oil prices affect consumer behavior?
embassy was just attacked since last night. I think that's adding to the uncertainty here. Uncertainty is really the word you're seeing here. When I see a broad-based sell-off like this, pretty much every sector is getting hit. Defense stocks are getting hit. That's the one sector you'd think would be up. Conservative plays like real estate investment trusts are getting hit.
Those are normally considered safety stocks. When you see a big, broad-based downturn, it really just tells me it's uncertainty. The market doesn't know what to make. They don't know if this conflict is going to go on for a week, for six months, or whatever. And that's really what seems to be driving today's action.
One of the things I wanted to get your thoughts on is how this spills over into the regular economy. Because the rise in oil prices, I think, is really notable because that's something that people are actually going to feel in the U.S. Even if you're not going to feel all of the attacks that are going on in the Middle East, you are going to feel that I filled my gas tank this morning.
Chapter 4: What insights can we gain from Target's recent performance?
It was significantly more expensive than it was yesterday. So... The historical parallel, at least in the last 20 years, is that if you go back to the financial crisis, one of the tipping points there was oil and gasoline got really expensive. Suddenly, that exposed a whole bunch of weakness in consumers. We'll talk about Target in a
These kind of actions seem isolated from the economy, but the ways that they spill over actually do impact people's pocketbooks. If a barrel of oil goes to $100, suddenly that starts stretching consumers a little bit more. We've already seen weakness with restaurant stocks. We've seen weakness in certain segments of the retail sector.
Is that something that we should at least have on our radar in 2026?
Absolutely. And look, there are all sorts of reasons to be concerned right now. But as an investor, I think you nailed the biggest concern. We've talked a lot, Travis, about the consumer isn't one person. It's just a critical mass of people who are able to get by, keep going with their routine.
Chapter 5: Is Target at risk of becoming the next Kmart?
That's enough to keep the economy going. I don't think what's happening in the Middle East in and of itself can make a good economy a bad economy. But if it is that proverbial straw that breaks the camel's back, that just fewer and fewer people can continue on with whatever they're spending, they're eating out, I think that's very possible.
And that could be just that final push in what has already been sort of an elevated market. I think that as an investor, that is the exact concern right now.
You said that crude was up by about 8% today. I don't think that in and of itself is going to be a big driver of consumer behavior by itself. Now, if oil spikes to $100 a barrel, like you just referenced, it could be a lot different. That could be also a lot of what's weighing on the market right now. Consumers feel squeezed, they just do. That's why Walmart's doing so well, for example.
When energy goes up, consumers feel even more squeezed. We've seen energy prices during this inflationary period go all over the place. That's why they're excluded from the core numbers, because they tend to be really volatile normally.
Chapter 6: What should management do to improve Target's outlook?
Normally, when we're coming out of winter is the time when crude prices are stablest. You're seeing that change now. It's really the uncertainty at this point. I don't think today's move is going to have a big effect on consumer spending. But if it goes much further than that, it could. The Strait of Hormuz is closed. If that lasts, then $100 oil is not out of the question.
I want to get your thoughts specifically about whether you're seeing opportunities out there today. Obviously, there's different pockets of the market, so there's maybe going to be different opportunities in different places. But when you look at your watchlist, is a day like today a day you're going, wow, I really want to be a buyer here?
Or are you saying, hey, the cash that I do, maybe I have sitting on the sideline, I'm happy it's there, and I'm going to just let this play out? Where's your head at, Luke?
First off, I think it's important to say that the most important thing to me is the moves you don't make. The biggest thing to do is not panic sell, something like this, because inevitably, you sell at the bottom and buy back after. I honestly think that sitting on your hands is an okay solution.
Chapter 7: How do insider buys influence investor sentiment?
As much fun as it is to brag about buying at the lows if you're at your cocktail parties, and it's great if you see opportunities, go ahead and do that. But the biggest, most important thing for long-term wealth creation is to avoid panic selling. As of buying, valuations were sky-high coming in.
I don't really see anything that you couldn't have bought three months ago almost, or they don't have new baggage attached to them like some of these SaaS plays. I am pretty content to just keep an eye out and not really commit. I've bought a couple of things just on valuation, but I think doing nothing is okay here.
I'm with Lou. Yes, I see opportunities in the market, to answer your question. They're the same opportunities that were on my watchlist yesterday. It's a broad sell-off. Most of the things on my watchlist are down in the 3% to 5% ballpark today. One of the most important skills I like to emphasize for investors to have is to be okay with doing nothing.
When this kind of stuff happens, I've said before, I wake up and I look at my brokerage account and I turn it off and I say, today's a great day to do nothing. It's a tougher skill to acquire because people want to rush in before things go cheaper or sell before things get any worse.
Chapter 8: What are the implications of recent insider buying at SoFi and other companies?
Being okay with doing nothing prevents you from making knee-jerk decisions. If something was an opportunity 5% ago, it's still going to be an opportunity when it comes back.
Yeah, taking that step back can be one of the hardest things to do as an investor because, yeah, you're right. This is a broad sell-off. That was one of the first things I looked at this morning. Are there specific names that are down a whole bunch, or is it just, is it everything? And everything that I have in my watch list and in my portfolio is down kind of that same range, 3% to 5%, Matt.
So maybe we have the same stocks in our portfolio. When we come back, we're going to get to what retailers, specifically Target, are expecting in 2026. You're listening to Motley Fool Money.
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Welcome back to Motley Fool Money with the Hidden Gems team. Matt, we got news from Target. This is one of the strange retailers to watch today because it's not the super discount retailer like you have from Walmart. They seem to be doing really well. They're not the high-end retailer. They're sort of stuck in the middle. So Lou's been talking about this K-shaped economy for decades.
Gosh, it must be almost a year now. We're seeing this with Target. Their results, not all that impressive on a trailing basis, but they are expecting a little bit of growth in 2026. What did you take from the quarter at Target?
Their full-year guidance is impressive. It suggests that we might be turning a corner here. I love the leadership change. If I remember correctly, Travis, you live pretty much close enough to Target's headquarters to see it from your window. I do. I wonder if you agree with me that I think Target has a relatively short window of opportunity to avoid becoming the next Kmart.
I don't think they're going to go out of business and start doing blue-white specials and things like that, no. But all the things that used to differentiate it from other big-box retailers, specifically Walmart, are less apparent than they used to be, just in the in-store experience. Their omnichannel presence used to be better than Walmart's, now it's not. It's just one example of it.
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