Lead-Lag Live

The Bailout Economy: Luke Lloyd on AI, Liquidity, and Why Retirement Thinking Is Broken

• Michael A. Gayed, CFA

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In this episode of Lead-Lag Live, I sit down with Luke Lloyd, President and CEO of Lloyd Financial Group, for a candid conversation on markets, mindset, and the economic forces shaping investor behavior.

From why retirement is not a finish line but a reinvention, to how AI, government liquidity, and bailouts are reshaping wealth outcomes, Lloyd explains why investors must adapt both financially and psychologically to a system increasingly driven by intervention rather than pure capitalism.

In this episode:
– Why retirement is about purpose, not an age or account balance
– How AI accelerates the wealth divide and changes labor markets
– Why government bailouts now shape market cycles
– The role of liquidity in driving risk, speculation, and asset prices
– Why owning assets matters more than timing markets

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SPEAKER_00:

I think actually these private equity and private credit firms are taking some of the big bank slunch. One of the stocks we own is OWL, which focuses on private credit, and they're doing very well. So my point is with that, is it seems like some of the money flows coming out of the traditional banking system and going into more of the private credit kind of realm, private side of the equation to get deals done. You know, when it comes to the banking side, we actually don't own many of the big banks. Our main exposure is in OWL and actually internationally. One of our best performers last year that we continued to own the CIB Grupo Sebesto or Sibest Sebest, which is uh the Bank of Columbia. We think that money flow again is going to be more global, not just U.S. domestic.

SPEAKER_01:

Markets are digesting a fresh batch of economic data this week that's forcing investors to rethink their assumptions. US weekly jobless claims unexpectedly dropped below 200,000, suggesting that the labor market is still resilient even as hiring softens. At the same time, producer prices rose moderately in November, pointing to sticky input costs in parts of the economy. This complicates the inflation picture for both consumers and for businesses. Major earnings start this week as well, beginning with big banks before big tech financials print. To break it all down, my guest today is Luke Lloyd, president and CEO of Lloyd Financial Group. Luke is a frequent voice on Fox News and Fox Business, and his LFG daily newsletter blends market updates with financial planning insight. Luke, it's a great to have you here.

SPEAKER_00:

Thank you for having me.

SPEAKER_01:

So to get uh started right away, a theme in your LFG daily this week is that retirement isn't a number. It's it's a transition. Why do you think so many people are still stuck on sort of traditional retirement age targets instead of focusing on purpose and even reinvention?

SPEAKER_00:

That's a great question. And I think this is something more advisors really need to focus on, or at least the education component of talking about it, because you know, I'll just go through my own personal story. I call it a quarter life, or maybe it's a midlife crisis. You know, being 28 years old, it might be a midlife, you know, that'd be 56. If I live past 60, I'll be very happy. But over the past um, you know, year or so, two years, uh, one of the reasons I launched Lloyd Financial Group is, you know, there was a big lot of life changes happening in my world. I got married, I'm thinking about having kids, you know, I started the business, a lot of big life changes. And going through that, I started realizing, you know, what is why am I being pushed to make these decisions? And it all came down to purpose for me. A lot of people have a sense of purpose when they're working. A lot of, you know, my clients, the blue-collar worker, the millionaire next door, somebody with a million, two million bucks has saved in a 401k and worked their butts off to get there. They made their life purpose, their daily work, you know, working five days out of the week. And then when they retire, they have this mindset of, oh, I'm just gonna sail off into the sunset. I was really stressed and worked hard my entire life, and all of a sudden I'm gonna be happy because now I can sleep in, you know, now I can do whatever I want on my own time. But that's just not the case. After being in the industry and helping people retire, I started realizing that a lot of people become unhappy very, very quickly in retirement. So, this whole philosophy of retirement's a number. I'm gonna work till I'm 62, I'm gonna work till I'm 65, I'm gonna work till I'm 67, whatever that number is, it's not about that. It's a reinvention of yourself, it's a reinvention of purpose. And if you don't reinvent yourself with new purpose, what do you end up doing? You just go back to work. Maybe it's not with the same company, maybe it's not the same job, but you had to fill up your time. You know, again, sleeping in too long or going to the bar or going out to eat all the time, all that stuff gets old. So finding new hobbies, uh, reinventing your own purpose. That's what retirement really is, to spend time you enjoy doing, but you have to figure that out and think about that before you retire. Because the last thing you want to do is get you know depressed in retirement when it should be the happiest time of your life.

SPEAKER_01:

I I really loved reading that uh in your in your newsletter. Sorry, I just want to pin a little bit looking at today's economic data, something that also uh came out this morning with jobless claims under 200,000 and producer prices rising. What does this sort of tell you about where the economy is right now and and what might uh that mean for investors?

SPEAKER_00:

There are so many things to digest right now when it comes to the economics and markets. For us, every single morning we track three things in that newsletter you referenced. It's inflation, growth, and liquidity. And just to kind of sum it all up, inflation's looking pretty well, down a lot from where it was. We don't see many signs of it pushing higher. I'll hit on PPI here in a second. Growth is still looking really good with GDP estimates of almost 5% this year. We'll see if we actually cross that hurdle or not. But growth in companies is still looking good. Margins are looking good. I think 10.9% margins in corporate America right now, the secondest high uh ever been in history. Uh, and then liquidity is looking very strong with all the government deficit spending, all the spending on corporations are going with AI and the money market accounts. I think$8 trillion uh in money market accounts right now, uh almost record breaking. So all this liquidity, all this money in the system. Now, when it comes to inflation, real quick to hit on the PPI number, you can't trust this data. This data is from November, all right? The government was shut down in November. Uh so whatever the data was that was collected, you know, you really don't know what to believe. PPI did come in a little hotter at 3% higher than CPI 2.7%. We'll see if that trend continues. And if it does, I'm not that confident that that cost is going to be passed on to consumers. And the reason being is that 10.9% margin in corporate America, with margins basically being the highest they've ever been in history, though, again, the second highest. A lot of these corporations have leeway to absorb that cost themselves, you know, not pass it on to the consumer. And the reason they would do that is to keep the prices pretty strong and competitive compared to maybe their competitors. And that way they can continue to still do business uh and really help out the revenues down the road. So I'm not too concerned about inflation. I think uh a lot of people talk about how all this growth and liquidity in the system will cause inflation, but there's also a lot of disinflationary pressure. AI inherently is disinflationary. Technology in general is disinflationary, uh, deregulation means more competition. That's all disinflationary. If banks get capped at 10% on their credit cards, that's actually uh not great for the economy. That's also not great for liquidity, which means some of it's being taken out of the system. So there's all this combative kind of headline news. We'll see what actually happens, but everything right now points to higher beta, higher growth, and more aggressive in your portfolio, which is why we're pretty aggressive right now in our portfolio. And frankly, it's worked out well. Hopefully uh our trend the past 15 days of this year continues this year. Uh, you know, we we can't promise performance by any means, but I think we're up about 7% in our portfolio. The market's up, I think, one and a half, maybe 2%. So hopefully we continue that trend. The reason we are up is because of the higher beta-ness uh beta uh stocks in our portfolio. Again, if there was a market downturn, we'd have to adjust pretty quickly. Uh, and that's why we pay attention to those three metrics every single month.

SPEAKER_01:

So it's definitely something uh to be proud of. Lots of data uh uh as you just uh pointed out, but earnings season as well, kicking off, as I'd said, with Goldman Sachs, Morgan Stanley, reporting. What are you watching in this earnings cycle? And and which sectors or stocks do you expect to be uh the most telling of where the market direction is going for at least the you know the first half of the year?

SPEAKER_00:

Yeah, banks have been pretty strong so far. Again, margins are looking good, investment banking for the most part is looking good. That means transaction and deals are getting done. Uh, trading revenues seem to be pretty well. Um, I will say the investment banking sector, there was some talk around, you know, uh some of it being a little lighter than usual, even though guidance seems to be still pretty strong. The reason being, I think investment banking might be an area to kind of look at. Now, why I'm not worried about it is I think actually these private equity and private credit firms are taking some of the big bank's slunch. Um, one of the stocks we own is OWL, which focuses on private credit, and they're doing very well. So, my point is with that, is it seems like some of the money flow is coming out of the traditional banking system and going into more of the private credit kind of realm and private side of the equation to get deals done. Uh, so we are, you know, when it comes to the banking side, we actually don't own many of the big banks. Our main exposure is in OWL and actually internationally. One of our best performers last year that we continued to own is CIB, uh Grupo Sebesto or Sebest Sebest, which is uh the Bank of Columbia. So we're actually looking at emerging market banking a little bit as well. Uh, we think that money flow again is going to be more global, not just US domestic. Uh, but when it comes to some of the earnings, um, at the end of the day, it comes back to AI. AI continues to keep the liquidity bubble uh afloat. And as long as AI uh seems to offer some sort of path to profitability and some path to actually delivering direct revenue, um, that's the most important thing this earnings season. The biggest concern that I worry about and something we will have to pay attention to throughout the next few years, is whether AI replaces jobs or not. I'm in the cant AI is meant to literally replace jobs. Um, but the solution the government will have at that point will be to bail things out. UBI, universal basic income, will be beyond the question. Is if AI replaces jobs, that just means the government will spend more money to help out those that become unemployed, maybe from AI. So AI is going to get politicized eventually, uh, which might cause some issues with some of the data, might cause some market corrections. But my philosophy is a lot of those corrections will get bailed out very quickly because of government liquidity. When we when you live in a government economy, you have to invest like a government economy.

SPEAKER_01:

Yeah. And so one of the one of the sort of themes that comes up in LFG daily, uh specifically that you've just talked about is, you know, the tying financial decisions to emotional and psychological outcomes. How does that framework change when markets feel, you know, unstable or or uncertain?

SPEAKER_00:

So it comes down to what I usually talk to a lot of clients about or prospective clients, whatever it be, the same conversation usually comes up. And that comes back to the long-term game of how the system is meant to work. We have gone through the past five years and we are continuing to go through it, the biggest wealth divide in history. What is AI meant to do? It's meant to increase margins, replace workers, and add more value to the corporations at the end of the day. So this wealth transfer is going to be even, you know, on steroids with AI and technology coming through the system. So my point is with that, is as the wealth separation happens and you study history, whether it's the British Empire, Roman Empire, Dutch Empire, everyone studies just American history. But if you look at global history, the same trends tend to happen. And that's when when some of these issues come at the top, whether it's geopolitical events or dollar devaluation, which has been devalued since 1971, ever since we got off the gold standard, really ever since the Federal Reserve was created in 1913. We can go through all of this stuff. But when you look through uh history, the same thing tends to happen. And that's the rich continue to get richer. What do the rich own? What do the wealthy own? They own stocks, they own assets, they own real estate, they own businesses. My point is you want to partake in that wealth divide. So, yes, some things can get crazy pretty quickly, but again, the governments learned the playbook. That's why COVID, you know, crashed 20%, got bailed out. We hit all-time highs again, like a couple months later. 2022 was a little longer, took about a year to hit uh to get back to all-time highs, but we learned the playbook. Uh 20 the earlier last year, May, March and April with tariff sell-off, 20%. What happened? The market hit all-time highs uh two months later after we uh dropped 20%. So it seems like the government's learned the playbooks. And again, this comes back to my philosophy. Do we truly live in a capitalistic society? Yes, but it's masked by the government intervention of bailing things out, lowering interest rates. That's what the Federal Reserve is there to do. It's there to bail things out when you know stuff isn't looking too good. So um that same conversation usually comes up, and that's why you either partake or you don't. You either own assets or you don't, you either own stocks or you don't at the end of the day. I will say the Mag 7, I'm not too optimistic about compared to the other 493, because the Mag 7 has taken all the lunch from all the other corporations because of that money flow, of that wealth separation. I do think there is somewhat of a mean reversion happening underneath the hood with small cap names and uh the equal weight SP, for example. So we have a lot of those under-the-radar names compared to the Microsoft, Googles, and Amazons. We only own Google and Microsoft out of the Mag 7. We don't own NVIDIA, Amazon, Meta, all those other different stocks right now.

SPEAKER_01:

Yeah, so and Luke, you're talking about like the wealth divided, the wealth treasury, all of these sorts of um big things that make big headlines. And then we have rising capex in in tax, like Taiwan semiconductor, um, and then boosting AI narratives. And and still there's sticky parts of the economy, as you mentioned. Where are you finding opportunity today uh for investors?

unknown:

Yeah.

SPEAKER_00:

Latin America. That's why we're actually, I mean, America, US stocks we are very heavily invested in, but we're actually looking at some of those Latin America names uh with some of the news headlines uh recently. I mean, M E L I is another great example of like a Latin America, Amazon. They're in AI, they're in uh currency, uh, they're in kind of crypto, they're in Amazon or the Amazon kind of type businesses uh when it comes to packaging, shipping. Um, so all of this money flow, again, is not just US focus, it's also global. So we think you want to do want to focus on a little bit of those kind of names, the M E L I's of the world, the CIB, the banking side of the world. Um, and then you also want to focus when it comes to the US side, you want to focus on those higher, at least initially, for the next few months, as long as long as liquidity remains strong, you want to focus on the second and third derivative names of AI. So Accenture has picked up Steam recently. It's been one of the laggards around AI and the implementation of AI with consulting around AI. That's that's starting to pick up steam. So Accenture is a good name, maybe around that. Um, Coreweave, you know, a very high beta, high growth name that's sold off a lot, but that's starting to pick up steam, I think up 10% today. I, you know, I know it depends on the day that uh this gets posted, but Core Weave uh is a uh company that trains AI models with their NVIDIA chips. So very unique kind of business model, but it's a very high growth, high, high beta name. Uh, those are the kind of positions you want to own with Liquidity remaining strong. Because as long as it doesn't matter what the core businesses actually do, as long as there's money flowing throughout the economy, that means more speculation. And more speculation usually means higher beta names do pretty well. So that's what we're focusing on right now. Again, this could change, you know, next week, month from now, three months from now, depending on policy, invest into policy. Intel is a great example. I mean, Intel was 23 bucks a share when the government got involved and started talking positively about buying shares into Intel directly, which again, it's crazy that the government's literally buying shares of a stock. But when that happens, you want to, you don't want to ride against the wave. You want to ride with the wave. So Intel has been one of our best performers as well, up to almost 50 bucks a share. So my point is listen to policy, look at liquidity, look at growth, look at inflation. Those three metrics truly dictate how your allocation in your portfolio should fit.

SPEAKER_01:

Well, I I love hearing your stock stock picks as always. And I would love to have you back on to see how those change over the next uh little while. But just finally, for anyone who wants to learn more from your connect with LFG Daily, where where's the best place for them to go and what's the best uh way for them to stay plugged in?

SPEAKER_00:

I appreciate that, Mel. My website's probably the best way, has all my information on there. Also has a pop-up right when you click on the website for the daily newsletter. It's www.loydfg.com, l-l-o-y-d-fg.com. So I appreciate you, Mel. Thanks for having me as always. Um, it's fun catching up with you.

SPEAKER_01:

Absolutely. Well, Luke, uh thanks as well for joining me, and thanks to everyone else for watching. Be sure to like, follow, and subscribe for more episodes of League Live.

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Michael A. Gayed, CFA

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