Podcast

Will and Adam provide their perspective on the market impact of events in Israel and Gaza, which come at a perilous time from a market perspective with yields reaching psychologically important levels. We also discuss how flows into passive funds have had an outsized impact on the so-called Magnificent Seven stocks and juxtapose their performance (and valuation) versus the rest of the market. Finally, we look at some real-time data on what is happening for economic canaries like shipping and small business.

In the midst of typical seasonal weakness, we examine the causes for the stock market’s recent volatility, as well as the unprecedented moves in the bond market. We also look at oil’s ability to help the economy to a Goldilocks scenario, how labor unrest is affecting inflation and consumer sentiment, and whether one person can riot.

After enjoying the festivities, including a fantastic caricature, we delve into the underappreciated risks associated with both zero-day options and put writing, given the launch of a new ETF that combines the two. We examine the market’s recent reaction to CPI data and the potential for inflation to re-accelerate with soaring oil prices and wage pressure from the current UAW strike.

We parse Fed Chair Powell’s Jackson Hole speech and assess the odds (and timing) of further rate hikes versus a pivot. We also examine the impact on the global economy of China’s weakening property market. We conclude with a look at the recent weakness in U.S. consumer stocks and debate whether expectations for megacap tech earnings are too high in the wake of this week’s market reaction to everyone’s favorite AI stock.

We return from hiatus with a recap of the happenings in emerging markets, including Chinese property problems and Argentinian elections. We juxtapose the echo boom in tech names with the so-called dot com darlings, and look at how those high-flying companies fared in terms of sales growth (outstanding) and investment returns (dreadful). We close with the odds of and implications for a pivot by the Fed.

We welcome special guest Kalee Kreider, president of Ridgely Walsh and former communications director for Vice President Al Gore. She offers a unique perspective on the recent debt ceiling resolution, as well as the broader implications of “Bidenomics”. She, Will, and Adam discuss the implications of fiscal policy on the Fed, inflation, and the political landscape for 2024. We close with a conversation on the emerging power of the executive branch, and its supporting bureaucracy, in the wake of a dysfunctional legislative branch, and the role a changing Supreme Court may have. It’s like eight grade civics, only entertaining.

We discuss the continuing game of chicken being played over the debt ceiling, and why any ultimate resolution to increase the government’s borrowing ability is a negative for bond yields and equities. Also, you cannot have a podcast in 2023 without talking about AI, and we explore its impact on equity market returns so far this year (positive) as well the murkier longer-term impact on things like inflation and unemployment.

Technology investors keep dancing as the NASDAQ enters a bull market. We compare the performance of the largest names in the index versus the rest and evaluate the reasons why the performance of the average stock has been so lackluster. We also delve into the seemingly irreconcilable difference between the outlook for earnings and interest rates, as well as the ongoing fallout higher rates have caused for the banking industry. We close with our opinion on the market’s relative upside versus downside based on the positioning of both retail investors and institutional quant funds.

We delve deeply into pun-ditry, as well as a continued post-mortem of Silicon Valley Bank. Will casts doubts over Adam’s ability to be a bond guy (or girl), and they also discuss the Fed’s strong conviction, Wile E. Coyote-style stretching of the economic rubber band and the potential implications of its snap back in the event the Fed is forced to pivot.

Will and Adam provide an update on the continued fallout in the banking sector, including what it means for consumers and markets. The surprising rebound in technology stocks despite a nascent banking crisis is also analyzed and compared to what we experienced during the financial crisis. We also debate what the opposite of inverted is and why it is important to our outlook for the economy. For even more, click here to read Will’s comments on Silicon Valley Bank in Barron’s.