Podcast

In this episode, we talk a lot about the job market, which is anything but hot, and its implications for the Fed, which is under pressure. All of the below tend to support President Trump’s criticism of Powell being “too late”: - weakening job growth this summer (only +22k jobs in August, mostly in health care). - likelihood of significant negative revisions this week. - unemployment that would be over 5% if not for lower labor force participation.

In this episode, Will and Adam examine former Secretary of Labor Robert Reich’s comments comparing today to the Gilded Age. We acknowledge there are several similarities, including increasing wealth disparity, the emergence of disruptive technology, and widespread commingling of government with business. We specifically discuss the recent discussion around the government taking stake in public companies, which, though has a precedent, was used in the past during times of financial crisis, i.e., to keep automakers afloat during the financial crisis.

In this episode, we provide a recap on earnings so far in Q2, which, so far, have been good enough for the market to remain near all-time highs. We also delve a little deeper into some of the megacap earnings, especially as it relates to whether accounting rules are optically improving earnings while cash flow is shrinking as spending on capital expenditures, specifically AI chips, is draining corporate coffers. To wit, free cash flow versus capex for the four biggest spenders (GOOG, META, AMZN, and MSFT) is as follows (in billions):

In the first half, we look at the OBBBA, and what its passage may mean for investors, as well as for the government’s balance sheet. Debt from baseline projection of 154% of GDP to upwards of 200% of GDP with the OBBBA. Deficits from around 6% of GDP to over 7% with the OBBBA. Despite the ballooning deficits and debt, markets are celebrating the prospect of fiscal stimulus, as well as favorable tax treatments on investment as well as other corporate goodies. In the second half, we discuss President Trump’s penmanship as it relates to his letter to Chair Powell on interest rates and why the “hottest country in the world” should “LOWER THE RATE!!!” We also look at the risk associated with the loss of Fed independence due to either political pressure or a dual role for the Treasury Secretary. In the second half, we discuss the market’s rapid rebound from its April nadir and juxtapose returns (and valuations) for different parts of the equity market. Is it finally time for diversification to help after a 15-year run for the U.S.?

In the first half, we examine the (rumored) literal fisticuffs in D.C., and the implications of the proposed “Big, Beautiful Bill” on taxes, spending, the deficit, interest rates, and the dollar. We discuss the timing of tax cuts versus spending cuts, especially in light of the employment data we have seen since 2022. In the second half, we discuss the market’s rapid rebound from its April nadir and juxtapose returns (and valuations) for different parts of the equity market. Is it finally time for diversification to help after a 15-year run for the U.S.?

In this episode, we have a no-holds-barred conversation featuring Kalee Kreider, a seasoned political strategist and expert in climate policy. Together, we dig into the uncomfortable truths about markets, politics, and the economic pressures facing everyday Americans. From election forecasts and the appeal of government gridlock to the harsh realities of student debt, the conversation is unscripted, unfiltered, and unexpectedly funny. We explore why investors often prefer a slow-moving Congress, how middle-income families are still reeling from financial burdens nobody talks about, and why economic narratives need more honesty and a lot less spin.

In the first half, we discuss the showdown between the U.S. and China on tariffs. While the headlines have been stolen by who is calling whom first, we look into the effect the tariffs are already having on container ship volumes, and what implications that has for the rest of the supply chain, and the economy. Tariffs are just starting to hit consumers as they look to buy online, with the tariff exceeding the purchase price in some cases. While there is optimism over a resolution, historically trade agreements have involved lengthy negotiations, and we are weeks away from the initial impact of being felt, making this akin to a slow moving shipwreck. We also discuss the impact of student loan payments turning back on after years of forbearance. In the second half, we discuss the rebound in U.S. equities, which are anticipating a quick and painless resolution to the trade war, along with three or four cuts by the Federal Reserve during the rest of this year. In our opinion, that number of cuts would only occur if we saw the onset of a recession, which has significant market implications. Since World War II, the average recession sees gross domestic product (GDP) decline 2.3%. The average earnings decline for the S&P 500 is 11% during a recession However, around 1/3 of the time, earnings decline 5% or less. Total debt - $34 trillion Domestic holders - $26 trillion Japan - $1.1 trillion China - $820 billion (though may be understated as offshore entities, i.e., other countries, are likely being used as well) Other countries - $5.3 trillion In the second half, we discuss the volatile reaction of equities to headlines. Post-Liberation Day, over a 10% decline in two days. The third largest daily gain ever for the S&P 500 on April 9th (when the 90-day pause was announced).

In the first half, we discuss Liberation Day, the violent reaction of, initially, the stock market and, subsequently, the bond market. In terms of the bond market, we look at the frantic trading from last week that ultimately forced the administration to announce a 90-day pause on most tariffs. Who holds U.S. debt? The answer might surprise you: Total debt - $34 trillion Domestic holders - $26 trillion Japan - $1.1 trillion China - $820 billion (though may be understated as offshore entities, i.e., other countries, are likely being used as well) Other countries - $5.3 trillion In the second half, we discuss the volatile reaction of equities to headlines. Post-Liberation Day, over a 10% decline in two days. The third largest daily gain ever for the S&P 500 on April 9th (when the 90-day pause was announced).

In the first half, we discuss the imminent arrival of “Liberation Day”, and why uncertainty over tariffs is causing consternation to consumer, business, and investor confidence. We look at the most recent inflation data from the government and examine the widely divergent inflation expectations based on political affiliation. We also tie this to the likelihood of further rate cuts and the necessity to drive rates lower as sizable government debt is due to be refinanced in 2025.

In the first half, Will and Adam discuss the rapid deterioration in consumer sentiment and how it is cutting across both economic and political divides, albeit to differing degrees. Some sentiment indicators, especially concerns over job loss, are at levels normally seen during a recession, in part due to the uncertainty over tariffs with large trading partners like Canada. Another concern is spending cuts. We look past the headlines to see that cuts have not yet taken hold, though with 85% of job growth in 2024 attributable to government spending, we could be in for a volatile transition period as a result of the “detox” the administration is seeking.