Facts vs Feelings with Ryan Detrick & Sonu Varghese
This podcast takes a deep dive into the market-moving events to cut through the noise and help you identify what really matters. Facts vs Feelings is hosted by Chief Market Strategist, Ryan Detrick and VP, Global Macro Strategist, Sonu Varghese, and is a product of the Carson Investment Research Team.
The information included herein is for informational purposes and is intended for use by advisors only, and should not be copied, reproduced, or re-distributed without the consent of CWM, LLC. Carson Partners offers investment advisory services through CWM, LLC, an SEC Registered Investment Advisor. Carson Coaching and CWM, LLC are separate but affiliated companies and wholly-owned subsidiaries of Carson Group Holdings, LLC. Carson Coaching does not provide advisory services.
Facts vs Feelings with Ryan Detrick & Sonu Varghese
Social Hour With Josh Schafer and Talmon Smith (Social Hour Ep. 4)
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The Social Hour is back for its 4th episode — and this one covered a lot of ground. Ryan Detrick, Chief Market Strategist at Carson Group, and Sonu Varghese, Chief Macro Strategist at Carson Group, are joined by two sharp voices from the financial media world: Josh Schafer, Newsletter Editor and Investing Personality at Barron's Investor Circle, and Talmon Smith, Economics Reporter at The New York Times.
Fair warning: Ryan's 140-pound Great Pyrenees may or may not have been snoring in the background, Talmon showed up fashionably late on Central Time, and somehow the conversation ended with a tease about something big coming to Omaha. But in between? Plenty of substance.
They dig into semiconductors ripping 18 days in a row, the Intel comeback story nobody saw coming, and why AI infrastructure names from chips to optical networking to data center builders keep defying expectations. Josh breaks down what's actually driving the earnings surprise story, why FOMO is back in the market, and what the tailwinds (or lack thereof) look like for the back half of the year. Talmon brings the macro and human side of things, connecting the dots between surging corporate margins, collapsing consumer sentiment, and what affordability really means for everyday Americans. Sonu drops some eye-opening services inflation data that reframes the whole "inflation is solved" narrative.
Key Takeaways:
- Semis on a historic run: The SOX up 18 consecutive days with broad breadth, not just Nvidia
- Intel's surprise: Earnings estimates doubled overnight and the turnaround thesis is gaining traction
- AI infrastructure trade alive and well: Telecom ETF names like Iridium and Lumentum up 100%+ YTD
- Earnings boom: 26% EPS growth across 25% of S&P 500 reporters and this isn't just Big Tech
- Consumer sentiment vs. stock market: Why both can be true at the same time
- Services inflation running hot: Personal care, dental, and vehicle rentals all well above target
- The Fed's hands are tied: Labor market steady, inflation sticky, no clear path to cuts
- GDP watch: Real GDP print incoming, brace for noise and focus on nominal
Josh Schafer and Talmon Smith are not affiliated with CWM, LLC. Opinions expressed by these individuals may not be representative of CWM, LLC.
Jump to:
0:00 Disclosures and Social Hour Kickoff
1:15 Meet Barron's Josh Schafer
6:30 Semiconductors Rip on AI Buildout
10:20 Intel's Surprise Turnaround Narrative
14:10 Powell Drama Fades as Stocks Rally
18:35 Tech Layoffs and the Capex Squeeze
22:10 Earnings Boom Meets Inflation Pain
25:40 Talmon Smith on Affordability and Sentiment
37:50 The Fed's Dilemma and the 2% Target
52:40 GDP Angst and Market Narrative Confusion
59:30 Where to Follow and What's Next
Connect with Ryan:
• LinkedIn: https://www.linkedin.com/in/ryandetrick/
• X: https://x.com/RyanDetrick
Connect with Sonu:
• LinkedIn: https://www.linkedin.com/in/sonu-varghese-phd/
• X: https://x.com/sonusvarghese?lang=en
Connect with Talmon:
• LinkedIn: https://www.linkedin.com/in/tal-smith-b1898a326/
• X: https://x.com/talmonsmith
Connect with Josh:
• LinkedIn: https://www.linkedin.com/in/josh-schafer-b24723132/
• X: https://x.com/_JoshSchafer
Questions? We’d love to hear from you! factsvsfeelings@carsongroup.com
Investment advisory services are offered to CWM LLC, FCC Registered Investment Advisor. This reporting is for information purposes only and is intended for an audience of financial professionals. It should not be copied with the consent of CWM LLC. Guest presenters of our show are not affiliated with CWM LLC. Opinions expressed by these presenters may not be representative of CWM LLC. Was that my voice there, Sonu? Did it sound like me? It sounds like me.
SPEAKER_00I don't know, unless they have an AI version of you.
SPEAKER_04Yeah, it's like that's why I've read that. It didn't sound like me, but I I think it was me. I don't know. Um, well, welcome everyone. I guess this is our third or fourth.
SPEAKER_00Jeez, I'm literally counting on my fingers. Lime lies when you're having fun. I think it's number three. I think it's number three.
SPEAKER_04The last time I was in Disney World, so and I was in uh Denver. So yes, I'm in my the confines of my house right now. I've got my 140-pound Great Pierone sitting next to me, sleeping and snoring. So if you hear any snoring, that's probably what it is. Um, but welcome everyone to the third ever social hour, Ryan and Sony who is always. And we're joined by a good friend Josh Schaefer. We might have a fourth person show up. We'll see. It's the joys of doing live. Um, we've known Josh for a long time, been big fans. I I guess I met you, Josh, at Yahoo! Yeah, we connected over March Madness Talk in New York City, and now you're at Barons. We like titles around here, so give us your title and kind of what you do all day.
SPEAKER_02Yeah, so I am the newsletter editor at Barron's Investor Circle. Also, part of my title is investing personality. As I joke to people, I think that basically means I go on TV and talk about the stock market. Um, but essentially what what we've been doing at the Barron's Investor Circle is so it's it's a build-on to a normal Barron subscription. It's additive to that, and it's giving you everything Barron's normally gives you, but more and more engaged from our audience. So I'm writing our newsletter and it sort of brings together a lot of our stock picks. So the Barron's Investor Circle team, we work with a technical strategist, we have some former equity analysts that are picking stocks for us, and we're looking for opportunities in the market. And I write a newsletter that sort of ties those opportunities into what's going on from a broad sense. You know, what stocks are we picking that might benefit from that might benefit from more? What stocks are we picking that might be defensive if you think that the conflict is going to build out further? What AI stocks are we looking at, etc. Uh, that's that's a large part of my day. And as you guys know, I still love charts. I write a uh chart of the week newsletter searching for signals on Substack, which is a lot of fun. And that's just a chart of the week trying to make sense of something complicated with hopefully hopefully a simple chart. I like to try and make the charts as simple as I can.
SPEAKER_04Well, that's uh I made a I've made a career doing that. I'm I'm living proof they'll put anybody on TV. So I know I I just don't understand it. They keep throwing me on there. I actually I told Sono I was invited to come on like right during this. And now that I'm a CME contributor, when I go on, they throw a little money at me. I was like, Oh, Sono, I almost want to cancel this to go make some money. Yeah, CNBC. Congratulations to you. Yeah, well, thank you. No, yeah, I'm I'm pumped. It it's exciting, and I will say this. Um, you know, as strategist guys like me, we just kind of make fun of magazine covers. Well, look, this magazine's wrong. This I will say I'm on record, and I'm not just saying this because you're here, but it helps. Barron's has been by far, in my opinion, the least contrary indicator when it comes to magazines. I mean, everybody's been wrong, trust me, I'm wrong a lot. But I I am a huge fan, been reading it for over 20 years, and you know, some I mean, Barons had a lot of bulls on covers, and the market kept going up. So, I mean, I just give a little little uh let me just jump in. Uh Yahoo to Barons. What's the difference? I mean, I get it, but like what's the difference? Well, what are you doing that you're enjoying more?
SPEAKER_02Yeah, I I think the biggest difference is at Yahoo, we were writing a lot about. I mean, think about why a reader would come to Yahoo Finance. You're probably checking some sort of portfolio that you've had for years, you have your favorite stocks on there, you're looking to just see what the market's doing, right? A lot of people use Yahoo Finance for market data. So at Yahoo, the key question I was answering every day was simply what did the market do and why? A lot of people just go to Yahoo Finance to see, okay, the SP 500 fell 1% today. I'm writing that article that answers that question. At Barron's, the difference is we're we're digging a lot more into the investing implications of what's going on. It's a lot more investor focused. And specifically, the team I work on now is a lot more stock pick focused and trying to find opportunities within what we're talking about within the news that we're talking about and looking specifically at stocks. Working with our technician Doug Bush has been a lot of fun. Including that in the how we're thinking about things has been sort of an additive experience. And then we also have a quant research firm, Vesmo, that we work with. Um, and so they provide some quantitative analysis on the stocks, but definitely digging more into stock picks and coming up with ideas in the market, I think, is well.
SPEAKER_04Shout out to Doug. I've known Doug a long time, friends for a long time. So I know how long's he been with Barons? Five years, maybe time for who knows?
SPEAKER_02No, no, less. Doug joined our team that's relatively new, probably only.
SPEAKER_04Yeah, okay. Well, good. Well, shout out to Doug.
SPEAKER_02He's been in the, as you know, he's been in the technician game a long time.
SPEAKER_04Oh, he's he's he's uh he's got some gray hairs like me. We've all seen some of this. Well, I'm gonna I am gonna say I'm pouring a little first class of my Dietrich whiskey. We're probably not supposed to advertise too much, but um got a little D-trick whiskey. So no, what do you uh Josh has to go on TV after this? You have to be careful. I got coffee because he's wink wink coffee. I got it, Josh. Yeah, I understand.
SPEAKER_00I whimped out today, too, because uh I just had coffee before this. And um okay. Yeah, it's been a long day, and and so it's just a glass of water for myself. I have to drink three times as much to make up for you guys. There you go. There you go. By the way, I did hear from Talman. He'll be here. He he's on Central Time. He thought it was you know 3 p.m. Central. He'll be here in about 25 minutes or something.
SPEAKER_04Whatever. That's fine. Yeah, I mean, I just I joke, so we'll get into it, but I joke like I'm in I'm in Eastern time. Carson is central time, Sony is central time. So the hardest part of this job for me, you you just did a new job, Josh. Hardest part for me with Carson, I'm not joking. It's this central Eastern time thing. Like I was missing meetings in the beginning, and oh, yeah, that was the hardest part of this job was to uh get the times right, but um yeah, uh anyway.
SPEAKER_02You don't start until the clock to central, right?
SPEAKER_04Uh I I yeah, I do. So let's start with this one. Let's start with this one, then we'll get into this stuff. The Sox is up, semiconductors up 18 days in a row. Josh, what in the world do you make of that one? It's up again today, right? Yeah, that's what I'm saying. Today will be 18. So today will be 18. What do you make of that?
SPEAKER_02Yeah, it's been an unbelievable rally at this point. I think you could say it's historic for sure. I think it's one of the best runs that it's ever had. Um, I don't remember the exact facts that we were pulling earlier today off the top of my head, but it's the best in at least a couple decades. Um, yes, I was writing about this a bit in my Substack last week, looking at hardware versus software. So I used the socks and then I was looking at IGV. And what's been interesting is it's pretty much every stock in the index, too, Ryan. It's not like we're looking at an industry group and okay, Nvidia is pushing the socks higher every day. Well, today it's Intel. You know, a week ago or two weeks ago was Micron, it's memory stocks, it's everything. And I think my takeaway from it has been the AI, we are still in the AI build-out phase where we can't figure out how much demand there is, other than there's likely more demand for AI than there is supply.
SPEAKER_00I think that's the only thing. There's a lot of demand, and there's not enough supply.
SPEAKER_02Right. So it's been an easy trade for investors to just say, let's buy the suppliers, buy the suppliers until we figure out how much demand is really here, because right now the demand, it's not infinite. We know it's not infinite, but there's an aspect of the market that is almost trading like it's infinite, where you're buying every single chipmaker that you can find. And if you look outside the socks too, I mean other things that have been working, you still have had energy working if we look broadly across the year, and other AI infrastructure plays. One of our picks, Sterling Infrastructure, which helps build out AI data centers, stocks up 60% this year. Um, so just the AI infrastructure trade continues to be the leader, and that's been the takeaway for the socks doing well, which I should mention. My Red Sox are not. So at least at least some socks.
SPEAKER_04Well, I will say this well. Oh, let me jump in, Sono. Sorry. I will point out we've we we're off to a rough start because we've lost one of our guests. And Sono, this is our fourth one. This is not our third.
SPEAKER_03Oh, it's our fourth one. I know, we don't know what's going on. Uh well, whatever. Go ahead, Sonu.
SPEAKER_00No, no, I was gonna say, so beyond even semis, I was just sharing this with our team with Ryan and uh you know Barry and Grant, who we manage portfolios with here, Carson. We've been overweight telecom for since October. And this is not your father's telecom, right? The ETF we have, and I'm gonna mention a name. This is not a recommendation. I'm gonna mention some stocks as well. Not a recommendation. I'm not a stock picker, I'm not smart enough to do that. XTL is a ticker, right? This is State Street Telecom ETF, so it's not LodgeCaps. The top 10 names, all of them, like Iridium Communications, right? It's it's sort of AI adjacent, 136% here today. VAV solutions. I don't even know if I'm saying it right. I don't know that one. Yeah, 159%. Sienna, the third largest name in that ETF, right? Sienna, it's optical networking, things like that. 121% year to date. Global Star, GSAT, up 33%. Now the lowest return on there is Lumen Technologies, which is up 16% year to date. Right? Lumentum and other, you know, optical components, photonic chips used in data centers, things like that, up 130% year to date, just year to date. That ETF is up like 30, 40, 35, something like that year today. But to your point about you know, the infrastructure piece of AI, if it goes even beyond semis.
SPEAKER_02It's and it's crazy too, because so we picked Intel last week. My colleague Al wrote, Al Root wrote bullishly about Intel. Intel had already been up 220. Normally, we'd never pick something like that. Uh, Barons does a lot of value picks, and everyone's in the comments. What are you doing? How could you pick a stock that's up 220? This this feels absurd. And Al's whole point behind the pick, though, was yes, the stock is up, but is there still room for surprises here? When he picked it again, literally a week ago, 2026 earnings projections, Intel is expected to produce 50 cents of earnings. After last night's report, consensus is already up to almost a buck per share for earnings. So the earnings overnight, the estimates doubled. So the market is just not quite, or expectations for some of these stocks still aren't actually high enough. And so I think you look at some of these rallies and you're like, okay, it's all priced in. Like, all good news must be priced in here. I think Intel today, up over 20%, is a great example of in some of these names, maybe all the good news isn't actually priced in at this point. What's the good news around Intel?
SPEAKER_00Like in, you know, they've struggled for years, right? It's been about Nvidia and AMD. What is the good news around Intel? So the other beyond the central the federal government. I was gonna say central government, but maybe you know, like that's in my mind.
SPEAKER_02So that's a fun one. We got to mention it since we brought it up. The US has made 30 billion dollars on that trade. Yeah, yeah. They bought they bought Intel at like 20 bucks a share. But what's been going on with Intel from a positive perspective, Sony, is so the foundry business where the AI business is growing faster than people expected, and then they're signing a lot of new deals. So on Wednesday night, actually, what kicked off the rally into earnings, Elon Musk, the Tesla CEO, was talking about Intel on the call. They're gonna use Intel chips and build out something with them in Austin that will provide AI chips for not just Tesla, but SpaceX, etc. Um, so they're signing all these partnership deals. There's all the I feel like finance Twitter. I've been seeing a lot of memes about Lip Boutin, the CEO, being like a king deal maker. People are acting like he's like their favorite sports GM now, but they are making a lot of different deals, and so they're growing, they're growing the business. I mean, to your point, it had been a very bad story. Yeah, or sucked. Yeah, for like a decade. No Wall Street analyst liked it. It was when is this turnaround ever going to happen? I do think they're one of the beneficiaries from what we were talking about at the beginning, which is just there's not enough supply in this industry, so you know, not like NVIDIA makes great chips, but they can only make so many, right? So at some point, depending on what your specialty is, and I'm not a tech analyst, so I won't go too far into what the chips do because quite frankly, I don't know the difference sometimes. But I think at some point, just with demand so high, you're gonna see other chipmakers that also have to benefit because people want the computer.
SPEAKER_00I don't know about the deals thing. That's interesting. Is it because the federal government gave them a ton of money and now they have enough money to go out and do deals?
SPEAKER_02I think that probably helped, yeah. And I think also the confidence that there's sort of a market backstop, whether it's true or not, I think a lot of people looked at the federal government investing money in and getting a nine percent stake in Intel at 20 bucks a share and saying, okay, maybe there's a floor in how low this business can go now. And so from an investor standpoint, you feel like maybe there's a floor there. And then I think from a business-to-business standpoint, maybe you feel like okay, with the support of the government, that's someone that I can help out. Also doesn't look bad if you're trying to get in uh the good graces of the administration.
SPEAKER_00Oh, I bet now we just need our Intel checks since the tariff refund checks are probably not coming.
SPEAKER_02They're going into the uh the Trump accounts, don't you? Yes, that too.
SPEAKER_00Yes. See, that would be a thing. They should do that.
SPEAKER_04I was gonna say, um, oh, NVIDIA owns what between four to five percent of Intel, also, I believe. I saw, right? In that tree, I think.
SPEAKER_02Yeah, yeah, I believe NVIDIA has also had an investment there. That stock's been, I think it might close at a record high again today. Very quietly, it seems like you don't hear a lot of people talking about NVIDIA anymore.
SPEAKER_04Very quietly, you know. One other thing that happened today, I want to point out here. Um, Jerome Powell's no longer in trouble, apparently, right? The DOJ dropped the um what does it call it, Sony? The charges against him, I guess. Yeah, the criminal charges.
SPEAKER_00They referred it to the Fed's internal whatever.
SPEAKER_02Like, so I don't know if it's over, but you know, I don't think it's over over, but I think the outcome is becoming more likely that yes, exactly.
SPEAKER_04What's neat there or interesting there is you look at the um all the betting markets this time a week ago, and you know, they were making it sound like you know, this is gonna happen, right? I mean, the odds that um we'll have a new chair, Fed chairperson coming up, Warsh coming up sooner and later. That's the odds we're saying. And so markets kind of take it in stride. I mean, the time we're doing this, SP 500 is gonna be its eighth all-time high um of this year. NASDAQ's at all-time highs, the rally continues. One thing Soto and I kicked around on our podcast, Facts versus Feelings, this week. Josh, you know, when you look at like these huge rallies we've seen, let's call it the last three weeks. The majority of them go back in history, took place after like the bear markets. Well, this one took place after about a 9.1 percent or on the SP 500. Do you have any guesses or theories why we've rallied so much this time when usually you're down a lot more?
SPEAKER_02Yeah, so the way I've been thinking about this rally was I think the the headlines over the last month and a half from a human standpoint were just not great, right? And there was a lot of overall concern. So it felt worse than the market ever actually got, to your point, Ryan. With how bad and bearish things felt a month ago. And you tell me the SP 500 didn't even actually enter a correction at 10%, right? Um, it definitely stands out. But I think what happened was people just stopped talking about AI too. Like we stopped talking about corporate profits and how much does oil really matter for what's been driving this rally. Then you sort of zoom out, and one thing I've been posting about is simply earnings estimates, right? If you look at what SP 500 earning estimates were on February 27th, the index was projected to grow earnings a little bit under 15%, according to Factset. Today, John Butters, the great Factset analyst, just put out his note 19%. Like the the story, the fundamental story has just been getting better for stocks. And we're talking about the market here and the stock market and what drives that, not necessarily gasoline prices, how we're gonna feel going to the grocery store, etc., because maybe that won't be better in two months, but the actual fundamental story really has just continued to be a V-shape. So I think it makes sense when you then get a V-shape recovery in stocks. And then I mean the other thing, Ryan, too, that I've been talking about. I mean, FOMO just feels very back in this market, too, where it's how can I be caught out of the market with how quick things have been. And I think you had a little bit of a sense of okay, the buying started happening, it was April again. People started thinking about April last year, and it's oh boy, I gotta get in this market now before it's too late. And then it turned into a just absolutely ferocious rally.
SPEAKER_00One thing is I feel retail, we've heard less about retail participating this time around. Last year, to your point, like it was all like retail was you know, yeah, retail's back and retail's pushing this rally. I've heard less about that, and maybe it is because retail is focused on I don't know, uh, you know, memes and things like that. Whereas this rally seems to be coming on the back of profits, to your point.
SPEAKER_02I've seen some I've seen some data on that that retail definitely participated less in the beginning of this rally. Uh, I know I think it was Tom Lee over at Front Strat. I saw citing that he thinks that that's one of the reasons he who'd you say what's his name? Who is that?
SPEAKER_04Never heard of the guy. Nah, please.
SPEAKER_02Um I I think that was one of the things I believe it was him. I'm trying to properly. I'm sure it was. People have been talking about that as far as like you're gonna need more buyers to come in here, right? If you mark want the market to keep going higher, who didn't buy over the last six weeks?
SPEAKER_00But all the hedge funds seem to be bearish, right? Like, or not bearish, but they have a lot of cash.
SPEAKER_02I mean, yeah, yeah, no, there's still plenty of cash out there, it seems like, for people to get in if they want to. Um, yeah. To your point about earnings, go ahead.
SPEAKER_00Uh no, I was gonna say about earnings, right? But I have some numbers, but go ahead.
SPEAKER_04Well, I was gonna hijack earnings. We'll put a pin in earnings for a second. I just thought of this one. Um, also in the news this week is obviously Microsoft optional layoffs for the first time in 51 years. Meta's in a cutting 10% of their workforce. We've seen uh due to AI, they're gonna leverage AI. Um, you know, what's your thoughts on the labor market or kind of what we're seeing from big cap tech just this week with potential layoffs and a lot of people losing their jobs?
SPEAKER_02These were I don't know if surprising is the right word, because I think we've all been waiting for when our company is gonna start laying off employees and talking about it being part of their AI strategy. So I guess from that side, from that standpoint, I won't say it's surprising, but to your point, Ryan, I mean, it definitely catches your eye when you start having two big companies do it because, in the from a market sense, if Microsoft and Meta are doing it, and I'm a smaller tech company that was maybe afraid to do it because then people are gonna wonder how I'm doing with my business, it sort of opens the floodgates, at least from a sentiment perspective, of okay, remember Meta started the year of efficiency, right? That was Mark Zuckerberg and Meta deciding that they were gonna take this path, and then it pretty much became trendy. If you were a tech CEO to get on your earnings call and say, We're getting more efficient, and that became a big story. I mean, I think if you look at the data, which I know Sonu will have a great hold on this as well.
SPEAKER_00You still have a theory on this, but go ahead.
SPEAKER_02You still haven't quite seen it yet. Um, like you don't see it in weekly jobless claims, right? One of the theories I have with that, Sonu, is I mean, weekly claims you're looking at people that actually file for unemployment benefits. If you're getting weighed off and taking a severance in the case of Microsoft, are you then going and filing for unemployment benefits the next week or even in two?
SPEAKER_00We don't see it in jolts either. Like we've been talking about tech layoffs for about 15 months now.
SPEAKER_02Yeah.
SPEAKER_00And it's not showing up, you know, in aggregate, like the jolts data is like the end all and be all, like with respect to the layoff data. It's running well below, like even in absolute terms, 1.7, 1.8 billion layoffs, which is lower than what it was before the pandemic. And we had a larger labor force, right? So my theory here is that they're laying off people, especially the big hyperscalers. When I see them laying off people, I'm like, they need to spend a ton of money on capex, they need to cut, they need to find the money. Yes, previously they're very cash flow heavy and things like that. I don't think they're cash flow heavy anymore. They're generating a lot of cash, but that's all going into CapEx, and they need to spend even more than that. So, what do you do? You lay off workers. And I think it's just that's my theory. I don't know if I'm right. I guess when they, you know, when we get the earnings report, we'll see how much the cash flows have gone down. But generally, you've seen the cash flows trend down from all of these companies, right?
SPEAKER_02Oh, yeah.
SPEAKER_00And I I I think it's just that story that's playing out that we need to spend more on CapEx, so let's cut labor. Yeah. So actually, on earnings, too. I mean, you know, this goes back to EPS growth. I was just looking at 25% of SP 500 companies are reported so far. Sales growth for these reported companies running at 10% year over year growth. EPS growth is running at 26% year over year. This is not just five companies or anything like that. This is 25% of the SP 500. Right?
SPEAKER_02That's net profit margins are at the highest level since Amazon started tracking in 2009.
SPEAKER_00So IT companies, tech companies, yeah, not a lot of the big ones obviously haven't reported, but still 14 out of 71. 105% year over year growth. Materials. 90% year over year. Energy. 43% year over year. Josh, you mentioned profit, forward-looking profit estimates have been going up. The three sectors driving that, we talked about this on our podcast earlier this week. Technology, energy, materials. I look at that and I think the other side of this from a macro perspective is inflation. We have AI bottlenecks. And I was like, yes, it's not, but I don't think that means what you think it means. You look at CPI for computer software, which is in the goods category, 59% annualized in Q1. Energy price, we know what's happening, but the other side of that, energy companies are going to make money hand over fist, Q1, Q2, materials, plastics, packaging, all of this stuff. You know, profit estimates are have gone up 8, 9, 10%, both for 2026 and 2027. The other side of that, it's an inflation story. So I feel like, and I've said this multiple times, one company's margin expansion is yours and my inflation. I think I feel like it goes hand in hand together what we're seeing in stocks and what everyone's worried about with respect to inflation. I don't think it's like uh dichotomy or anything like that. I think it's the two sides of the same coin.
SPEAKER_02Well, and and that's one thing that helps explain. We just had the lowest consumer sentiment uh reading on record this morning, right? Right, yeah. So if if company margins are going up, that helps me explain why the stock market's at a record high. And if it's because of inflation and we have all gone and bought gas recently or gone to the grocery store, etc., that tells you why sentiment's as low as it is, and that really helps explain that entire dynamic. Because I feel like that's a question we get every now and then, Ryan. I'm sure you get it on TV every now and then, which is how is the stock market at a record high if consumers feel so bad? And like that's kind of the whole story that Sonu just laid out there.
SPEAKER_04Yeah, what's the Bezos quote? Your margin is my opportunity. I think Sonny's uh somewhat in the your margin is my inflation.
SPEAKER_00Well, Sunu's gotta exactly, but uh even on the AI side, one company's spending is another company's revenue and profits, right? So it goes hand in the more capex we have, I mean, the up more optimistic we should be in a way.
SPEAKER_05Yes.
SPEAKER_04Um I mean let's see here.
SPEAKER_00Going back to the story you laid out for AI and all that, yeah.
SPEAKER_04At the top of the hour, you're on TV. Who are you going on with, Josh? What do you what do you know?
SPEAKER_02Um, so it won't air until later. I will be on uh Barron's Roundtable tonight at 7:30 on Fox Fizz.
SPEAKER_03Okay.
SPEAKER_02Uh every every Friday at 7.30, Barron's Round Table.
SPEAKER_00So you guys gonna talk about?
SPEAKER_02We'll tease it up. What do we got? We're talking about uh we're talking about Kevin Warsh, uh Powell's last meeting, what will the Fed look like under Warsh? Uh my colleague Andrew Berry has been doing a lot of fun reporting or interesting reporting. I find it fun on Avis budget uh and that crazy rally. Um, so that will be a fun one. And then yeah, that those are some of the highlights, I think. But Avis, I'm excited to talk about Avis. That's been a crazy one. Andrew did the math. You said that the two investors own effectively more than 100% of the shares leverage, etc. It's been a wild move.
SPEAKER_00So now we know who's driving Avis.
SPEAKER_03Good point. I like it.
SPEAKER_04It looks like we have uh who is this? Is someone just ring a doorbell? Who who wait a minute? Who do we have down there? Talvin Smith. Hello, sir. Hey, hey, thanks for having me on, y'all. You're yeah, absolutely. Very welcome. Glad you could uh glad you can make it. Uh Talman, before we go further, we like titles around here, just so we don't get in trouble. Um, yeah, what's your what's your what's your title now?
SPEAKER_01My title is that I'm a uh New York Times economics reporter at the business desk. Um, so fairly simple, but also very uh generalist. But I like that because if you have a generalist beat, um you very rarely get bored, right? What's not connected to the macro economy, basically everything is so um even though it's uh maybe sometimes general to a fault, I try to find the fun in it. Awesome.
SPEAKER_04Well, let me finish this train of thought just for a second here, Tolman. Um, Josh, so you it seems like you're doing more TV than I remember. I guess you did some at um Yahoo. This is obviously something I find interesting. You enjoying it? You're you enjoying kind of being in front of the camera a little bit more, it feels like.
SPEAKER_02Yeah, I get to come on with you, Ryan.
SPEAKER_04I know we're not, yeah.
SPEAKER_02No, it's it's been fun. I mean, at Yahoo, a lot of it was we had our own sort of studio network set up there, right? So I did a lot on Yahoo where you would go on several shows throughout the day, or sometimes I was guest hosting or co-hosting, filling in, etc. Um, because we have less of a video production here directly at Barron's. I host one show on Wednesdays, but I have more time to just where do people want to have me on? Let's talk about markets and the economy. Um, so yeah, it's been fun.
SPEAKER_04Are you the sixth floor in the building there? Is that where you are with floors?
SPEAKER_02We're on five. Barron's at five. The journal is uh just a book I've done. Okay, got it.
SPEAKER_04I've been a bit over there. I'll say hi next time make it the yeah, definitely. Well, Sonu, how about let's ask Tallman some stuff. What uh what do we wanted to ask him here?
SPEAKER_00Talman, I wanted to start with you're writing a book on if you don't mind sharing, what's the book about? What's because I thought the title itself and be talking about it.
SPEAKER_01The title, um, it was a working title. It's the the title that sold the book is Clout and Capital. My publisher made the uh very fair suggestion that that sounds great, and this idea that you have connected to the you know, reviving the 20th century ideas of this French sociologist, Pierre Bordeaux, how there's not actually just one form of capital, financial capital, there's also two other forms of capital, social capital and uh social capital and cultural capital, and they all interact. Like, that sounds like a great thesis, a bit academic, which was a fair point. Um, so they were like, try to find something that feels a little bit more connected to the moment that feels just as true to your book. And I came up with the idea of what can we afford? Because one, yes, I am pandering to the uh affordability buzzword for sure, but it's also you know a bit of a double entendre in that yes, I am asking in some sense, what can US households afford, you know, in this moment, in this decade? But it's also these broader questions that date back to you know the very beginning of you know Keynesianism and sort of modern economic uh modern economic thought. What can the government afford to do? What can it not afford to do? What are the actual constraints on um our ability to lift baseline standards of living for everyone and to grow the economy? And what are the supposed constraints that um are either real or fake or somewhere in between or half right, which also means they're half wrong? Or when are models, you know, at one time perfectly fine and actually useful, though, as we know, all models are technically wrong, wrong. And when are other times when models were true, but now they're dated and we need a new compass for employment, for the minimum wage, for our tax system, for growth, on and on and on. And I try to ground it, especially during this time of AI slop, in uh basically a year to three-year reporting period from the early 2020s to what I guess now is the mid-2020s, um, and and trying to have that sort of magazine style on-the-ground reporting, connecting these very in-the-clouds ideas to the live realities of of people's lives, whether they're you know, DoorDashers in Maine or you know, whether they're businessmen in Memphis. Um, and I had a blast doing it. Now, of course, I'm in the throes of revisions, which I was told, like, oh man, just wait for revisions, won't be as fun as the reporting. Now I was like, how bad can revisions be? My one of my first jobs at the times was I was an editor, and I was like, I you know, I've edited before, I got this. Oh my God. I I apologize to everybody that I, you know, downplayed things in front of. They were absolutely right. Um, but it's it's still been a great experience. So um, thanks for asking about that's my pitch. I'm still tightening up the elevator pitch, but that's sort of like the the landscape of um the subject matter.
SPEAKER_00That's great. Congrats, you should send us a copy. Hopefully, we are in the book.
SPEAKER_01I was kidding, but you you actually are Sonny for for your for your very quick call about about margin um margin expansion and and marginal. We were just talking about that. There you go.
SPEAKER_00We were just talking about consumer sentiment with Josh here. Like, you know, I know you and I have uh talked about this in the past, about these two things being the same, you know, two sides of the same coin, inflation and margin expansion contributing to higher stock prices, stock prices being at record highs and consumer sentiment being, you know, just sort of falling off a cliff right now. And I know you've thought a lot about affordability. Uh you know, one side note, we started the conversation about Intel. Looks like the government can certainly afford to buy Intel, but that's what why do you why why is consumer sentiment this bad? Is it just inflation? And how how how do consumers think about inflation? Because when I talk about inflation six percent or three percent or two percent, like what you know, what does that even mean, right? From a lived experience standpoint. I'm curious how because I know you talk to a lot of people, like you said, DoorDashes and Maine, places like that. Like, what is why is consumer sentiment just collapsing?
SPEAKER_01Yeah, so I've I find myself actually siding with the folks um in in this debate, right? I think there's the uh there's a discourse going on that I think all four of us are aware of. I'm sure many people watching the stream are aware of, where essentially wonks who are you know, right, making the correct calculations, adjusting for inflation, looking at um macro indicators that we've been relying upon for at least three or four generations, they're all doing historically well. But as we know, and right, the stock market at an all-time high, you know, or hovering around there. And yet consumer sentiment's at an all-time low. And I think the conclusion that a lot of the want class has come to in my sort of econ world is well, people are just not with it enough to know that they should be feeling better based on the fundamentals. And so what really must be going on is that there are these cultural shifts in which um maybe things like our phones, and and we're all addicted to our phones, and one of the things that we're addicted to on our phones is social media. And so maybe envy via social media is actually what's underlying this. And people are relatively doing okay, and they kind of need to get over it and stop turning to populists of the left or populats of the right to condemn the system and call it rigged than it's actually producing for them, right? That's that's one side of the coin. The flip side is people just speaking their truth, so to speak, and just saying, well, you know, the price level is 25 to 30 percent higher than it was only, you know, eight years ago, give or take. Um my loans from a car or you know, if I want a new house, a house are much higher, right? Housing prices are up, what, 40-50%? Great if you're already a homeowner and six and ten Americans are homeowners, but that leaves four and ten people in the country, four and ten households, that's we say, in the country. It's a lot of folks. Um and and we can go on and on, right? Uh healthcare, extremely expensive, right? Um, unless you're able to benefit from Medicaid and Medicare. And the funny thing about that is Medicaid kicks you off once you're doing well enough, just well enough to not qualify for it. So I look at the the terciles of U Michigan consumer sentiment, because we all know that partisanship skews the survey, right? Um when Democrats are in power, Republicans say things are awful with the economy, uh, vice versa. But if you actually break out the Michigan sentiment survey into income terciles, the top third, middle third, bottom third, you lose a lot of that fog. It really dissipates. And you see, I think, a pretty straightforward and cogent story that verifies sort of the populist arguments that we hear from, especially folks in the bottom 50%, folks you might hear on the local news at night, because consumer sentiment peaked in 1999 when healthcare, housing, um, you know, especially rent, all the sort of staples of life were much, much cheaper. Now, were the 90s perfect? No. If you grew up in a city like I did, uh, yeah, I grew up very fortunate, but not too far from me was you know an awful ghetto. We know that that was the case across many of cities, uh, many cities throughout the country. We could go on and on. It wasn't perfect, but the 90s, there was a lot of momentum and a greater sense of affordability. We have lost that. And if you also just look at simple measures, and I'll end here, like wage growth, with the exception of Trump 1.0, basically 2017 until the pandemic, 2019, wages were flat, adjusted for inflation. That's a pretty straightforward story for me. Now, how do we fix it? That's a whole other conversation, and we're not going to solve it in on this live stream. But I do caution against, you know, folks that are mostly making six figures to varying degrees, scratching their heads and stroking their chins and saying, hmm, maybe those folks making five figures actually just don't know what's good for them. Yeah, I think with with this, if you look at the data and and dig deep and try to get rid of some of the things skewing it, you you do come to understand that um people aren't just envious. Um, there are a lot of folks struggling out there, even if they can hold down a job and can afford things just enough to pay their bills and get by, that doesn't mean that there's nothing for them to not be um upset about.
SPEAKER_02I think there's like an absolute value argument here too. And I'm talking a little bit more from vibes than reporting, but I like just literally how I feel. When you go to the grocery store and just your bill has just gone up so much over the last five years, it's not my wages haven't matched it, and I feel extended by you know a hundred bucks going to 150 or whatever. Yeah, it sucks to pay more, right? Yeah, you just feel bad about it. Like, even if it's still at the same percentage of what you were making from an income standpoint five years ago, you just look at the number, and the number got bigger coming out of your account, and it just doesn't feel good. I think is part of it for me when I just get frustrated with some of the pricing stuff. It's just literally the bigger numbers, you know, it's not great.
SPEAKER_01Yeah, yeah. We just got out of this funk that you're talking about, just barely, even on the technical level, in the sense that I think it was right mid-2023 when finally real wage growth was positive.
SPEAKER_05Yeah.
SPEAKER_01So we got to the end of 2024, it was still marginally positive. Then in 2025, bam, tariffs, and then now we're flat year over year in terms of real wage growth. So it's like, are people supposed to be happy with what's what's the collective of 2017 through 2020 plus a year and a half um after the pandemic? I mean, that those aren't a lot of great years to staple together. So I yeah, I I I think it's understandable. Obviously, we can see what side I'm on.
SPEAKER_04There was a time in the summer of 1999. So I went to Zave University in Cincinnati. That's my big East uh um connection there with Josh. But um, I remember one time I got gas and it was 79 cents a gallon. This is the summer night. It was a place called Thornton's or Thornton's, one or the other. I don't think they exist anymore. If they do, they're not around me. Um, but they always had the cheapest gas. But 79 cents. I I I mean, you talk about consumer confidence stuff. I mean, yeah, listen, you feel pretty darn good when you're paying 79 cents to to buy a gallon of gas. That's um, that's that's something now. Obviously, it's a little more. Um, Josh, you know, do you have to leave a tad early, probably before the top of the hour?
SPEAKER_02Yeah, I don't 355 or that's fine.
SPEAKER_04That's fine. What have we missed, Josh? What do you want to point out that we haven't talked about yet?
SPEAKER_00Actually, I I'll I'll ask I'll segue you know this inflation thing. And since you are going to talk about the Fed at your round table, let's talk about what should the Fed do? Are should they do, can they do something? Should they be doing something about inflation?
SPEAKER_02At this point, I don't know what the Fed can do, Sona, at least in the immediate sort of outlook, right? If we're talking about the next six months, it feels like I and I know this is I'm not saying anything out of consensus here, but I think the hands-tied sort of narrative that you're getting from economists, strategists, folks like us that interview those people, interview you guys, and then write it, it I think it just makes sense, right? You have the labor market. We were talking about some of the layoffs earlier that you're seeing in tech, but when you look at the actual aggregate macro data, the labor market is not screaming at you to cut interest rates. It's not screaming at you to be in a different position either, but you're kind of just still steady there. And then you look at inflation. I mean, there are certain parts of inflation that are still picking up before you even get into the energy shock, before you get into the fertilizer of it all. I was talking to Michael Reed, the chief economist over at RBC, and I wrote this in a story a few weeks ago, but he was pointing out, I mean, the fertilizer cost that you're seeing, that's not this season of crops, that's next season of crops.
SPEAKER_00Yeah, that's all that's coming, right?
SPEAKER_02Yeah, that's the pipeline.
SPEAKER_00That'll come into restaurant prices, all that.
SPEAKER_02Yeah, with inflation not probably not moving closer to the two percent target, unless, of course, the Fed changes how they're gonna look at inflation and what they're gonna include and not include. We know that's coming.
SPEAKER_04Talman, do you buy the two percent target? I think it's ridiculous. I think it's silly, but what's your take on the two percent target?
SPEAKER_01So I'll I'll answer that question with a non-answer, which is uh which is uh Ben Ben Carlson, um, who we all know here, um, has this great chart that he puts up every once in a while on Twitter showing that actually, I don't know whether it's through 2019 or through 2023 or just through the 20th century. It's one of those three, but it's the powerful point, it's a powerful point nonetheless that the actual inflation average is 3.3%. Right now, that includes times where inflation was far too high, the 70s and early 80s come to mind, but also periods where inflation was quite tame. So it's it is it is inherently, or at least somewhat arbitrary. Um, we did not have a 2% target until implicitly the 90s, explicitly the the uh 2012. Yeah, yeah, yeah. Yeah, yeah, that's true, because even in the 2000s was it was implicit. Um I mean, I I think Jason Furman, uh who I sometimes argue with um on the phone and online, uh like I give him tons of credit here because I think he was really early in terms of the sort of establishment orthodox um economist saying, look, guys, I mean, what about 2.5? Or what about two-ish? Um, it's it's considering how volatile the world is and how volatile it's become, I um I do think that it's it's fair to ask how important is 2.0 and how sane is it to um you know drive this institution, the Fed, towards um a sense of trying to control this macro economy, which of course is not just affected by the United States, but but um all you know, all global national economies put together, it's it just seems like a hard ask and maybe an impossible ask. But I think price stability is absolutely important. Um and I'm you know, I'm right there with the FOC FOMC on that. There are a lot of folks that think if you look at their actions, they've not actually been that committed to target, but we did have legitimate scares in the labor market. In hindsight, you can say, and maybe this is Sonov's position, we've texted a little bit about this. Yeah, you can say, well, they they were not right to be scared. They got spooped when they shouldn't have gotten spooped. I mean, I've said that for for understandable reasons.
SPEAKER_00I've said this on the podcast. I mean, maybe it's partly talking our book here, like Ryan and my book, that you know, we were positive about the labor market coming into the year, and I thought last year's rate cuts are a mistake, but I've we we're overweight equities. I'm not complaining about rate cuts. I want a rate cut because we're separate thing, right? Like if for anyone who cares about what I think. But no, to that one thing is with the inflation debate, is yeah, like I think there's a thing about all this is about goods inflation, but you just like services prices are pretty high. I'll give you some numbers, right? Personal care services. So this includes like haircuts and things like that. 2015 through 2020, before the pandemic, you know, what you paid for $100 worth of personal care services by February 2020, that was worth that was $114. Okay, that's our pre-pandemic baseline. 2020, what was worth $100? 2026, February, that's not worth $144. Over the last year, inflation, personal care service, nothing to do with I don't know, maybe shampoo has something to do with, you know, petroleum products or something. But over the last year, inflation's averaged 7% personal care services, dental services last year, 6.7%. Vehicle rentals over the last year, 3.8% before the pandemic, five years before the pandemic, it was 1%. I mean, everyone talks about goods and tariffs, and I'm like, no, like we got this services inflation for a lot of salient items that we all purchase every day, every week, every month, it's running pretty hot and goes back to, you know. I and this is where I think the Fed is, I'll put it this way somebody had this interesting question on Twitter. I wish I could attribute them. You know, my Twitter account has been hacked, that's a whole other story. But somebody if inflation today was running at 2% and the unemployment rate was running a whole percentage point higher, let's say about 5.3, 5.4%. There's no question that the Fed would be cutting rates like no tomorrow. Now we are at 4.3%. Like it's fair to say historic. Low unemployment, right? Set aside payrolls and it's going up and down for 10 months. And maybe it's because the break-even, you know, rate of uh employment growth has gone down, maybe it's zero, which is incredible in and of itself. But our employment rate is pretty low and inflation's running above three percent, it's going the wrong way.
SPEAKER_01So I'll agree with you and disagree with you. Um, I'll I'll start with the like soft disagree, um, which is that Ryan, to your point about you know, 2%, is it the right one in terms of target? Should we you know adjust it? When Volker essentially declared victory in the early to mid 80s, 83, 84, actually, one of my favorite nuggets from uh some of the historical research I did for the book, you know, as I mentioned, it's a very 2020s slash right before the pandemic focused book, but it did some historical research for context. This BLS Monthly Labor Review report, right? So, right from the labor department, also declared victory, and they they celebrated it's it's a it's a great headline, I can't remember exactly what it was of the report, that inflation in 1984 was low. And then I look at the you know opening graph of the report and they're declaring victory over 4%, right? CPI was 4% that year in 1984, which was right morning in America. It was this resurgence. So so we maybe because we've experienced so much inflation so recently, we rightfully are less tolerant of it remaining so sticky. Um, but I will agree with you that services inflation is running hot. And um, I think I've talked about um this with uh Ryan, you and Sonic, we I think we definitely talked about this, which is we have to, you know, especially folks like me who in my reporting, I try to be labor-oriented, I try to be understanding what populists say, and yet consumer pricing sensitivity is real. And that top third, especially, that we're just we're just not saying no to the $25 burgers, right? We are not saying no to our barber when he's like, hey man, the price is 60, 70, 80, whatever, how much are however much a haircut cost now, right? Um, and and that does drive inflation. The problem is, and this is why to your point, Josh, the heads uh the the Fed's hands feel so tied, is that well, we relied on goods inflation, goods disinflation, and sometimes deflation to offset a strong economy that produces a labor market where your barber can, you know, put you on that or your nail salonist, you know, for our wives, girlfriends, et cetera, out there can, you know, right? And and we don't have that right now, and that's because of tariffs, but also before tariffs, you know, deglobalization was slowing, and that goes back to the Biden years, but we have lost that disinflationary tailwind, and I don't know how we get it back.
SPEAKER_00Do we get that back, Josh? Or what do you think? I mean, because there is a globalization, a reversal, because everyone talks about near shoring, french shoring, fair enough, fine, but that means maybe we pay more.
SPEAKER_02It's so how do you get back there, right? I think is sort of how I'm I'm reconstructing that question in my head. And it would to Tal's point, it would have to come from eventually the consumer not being willing to pay the prices that we're talking about. That's at some point that's going to be key to this. And so essentially, Sona, you're you would need some version of an economic downturn, right? Isn't that kind of what resets what's going on here? Otherwise, we've all accepted that this is the current state of the economy that you're in. And as long as everyone still has jobs and people are spending on AI and that continues to drive that economic narrative, then yes, this is now just the environment that you're in. And I think one other thing I was gonna bring up, because I put I pulled this up while you guys were talking about the different decades of inflation. So uh Nick Collis had at Data Track highlighted this this week. He was looking at average CPI by decade. So in the 90s, the average CPI was 3%, 2000s, you go down to 2.6, 2010s, you go down to 1.8. Now we're only five years into the 2020s, but it's 3.9. And the way I think about some of those kinds of charts, and we've written about this with interest rates before and like the tenure yield and why 5% spooks people. When you can get to a point where you have an entire generation of investors or consumers, like that's two decades worth of people where inflation was significantly lower. They're not used to the fact that inflation is above three percent, and so that impacts things at a different level, too. I mean, you guys know I'm I'm young, right? I'm 28. That's that has not been a function of my life.
SPEAKER_00Wait, get out of here. That's 28. You shouldn't have been me. Like we're like, no, I want to go. I w I want to everyone knows how old Ryan and I are.
SPEAKER_02I shouldn't have spooked you with my age, but you know, the people in my generation, and the it's again, I use this a lot in investing context when we talk about higher rates or sort of why different things seem to spook people. But when you get to a point where an entire generation of people have not seen something, I think the impact holds a little bit more. Maybe we are shifting into a different regime, an inflationary one.
SPEAKER_04So I'll jump in. We have maybe 10 minutes or so of our latest um social hour, facts versus feelings. I did hear the words Ben Carlson. So holding it up right here. Ben sent did you get it? Did you get this onu? Did he say right? So Ben sent risk and reward. It's his brand new book. It's not even out yet. It comes out on like March 12th, I think. But um looks awesome. It's a big fan of Ben. So um, it's incredible. A lot of the people who joined us on this podcast have written a book, so that's uh or or are currently writing a book. What are they doing? Everybody's doing it these days. Yeah, everybody's doing pretty good.
SPEAKER_02All right, that's that's good for my book dreams. There you go.
SPEAKER_04Well, Josh, you've got about five minutes left. So I want to make sure you have time. Anything else you wanted to hit on here before you uh go and be famous on TV?
SPEAKER_02So we talked about the the higher inflation regime and that maybe being where things are going to be moving forward. And that's something I'm writing about a lot. So I I think that's a huge story right now. Another thing, Ryan, that I'm writing about, this will be in the Substack this week that I think you'll be interested in, is I had Savitar Subramanian uh from Bank of America on my show this week. And we were talking about she had this great chart showing that the best earnings years are actually, on average, not even close to the best years for the stock market. And talking about where do the surprises go from here? Like everyone wants to talk about almost 20% earnings growth. We spent time talking about it at the beginning of the show, right? But with such a rosy outlook, and the market's already moved on from the war, so you're not gonna get tailwinds that like where are your tailwinds for the rest? And I'm not trying to be too bearish here, but like, where are your tailwinds for the rest of the year at this point? And can it continue to just be AI surprises and AI continues to just do better than expected, and that drives you higher? I don't know.
SPEAKER_00Is it global?
SPEAKER_02I get I start to question that narrative a little bit after a while.
SPEAKER_00Yeah, is it global? You go outside. Um international stocks, I mean.
SPEAKER_02Is that where you go as an investor because of that? Yeah, maybe because I I think if you look at although the one thing, Sonio, I would argue, is a lot of people, and I think this is true, when you think about the impact of higher oil and that probably impacting the rest of the world more than the US. I don't know if you can go fully global. Maybe you can be selective, but because at this point, I mean Brent's in 105 bucks again. Like, when is that coming down? Is that is that coming down anytime soon? I thought we were told that was coming down.
SPEAKER_00I mean, not just Brent, I was looking at August July and August futures for WTI. That's been creeping up. Yep, yeah, it's not been going down, yeah. Right? It's just is a reminder that the crisis is not over. And again, not to be you know, belabor the whole inflation point. I feel like the longer the strait stays closed, the larger the impact on core inflation down the road.
SPEAKER_04Well, so new Sony does a week daily note for our advisors here at Carson. And last night you did a note that said, you know, a week ago today, the 17th president Trump said the straits open, and one of the heads.
SPEAKER_00Somebody said this.
SPEAKER_04Somebody said the same thing, and yet less ships the last seven days have gone through the strait than the seven days before, even though everybody said it was open. So well, Josh, I mean, maybe we'll give you a couple minutes to leave early. Final comments from you, Josh. Um, let you go. What do you want to finish with here?
SPEAKER_02I don't know. I got nothing. Check out, check out the Barron's investor circle again. Searching for signals on Substack. I'll pump up some of my stuff, but it was great hanging with you guys. I appreciate you guys having me. And hopefully, Sonu gets back on Twitter soon or X.
SPEAKER_04There we go. Yeah, gets out of jail. Yeah, we miss you, Sonu. All right, Josh. Well, thank you, Josh. Good luck on the uh TV stuff, and we'll chat soon. Take care, man. Appreciate it. Thanks, guys. See ya, bye-bye. All righty, that was that was fun. That was good. All right, well, what um what else we want to talk about, guys? What do we have? 10 minutes or so?
SPEAKER_01Well, yeah, one thing I'm gonna stuck, you're stuck with me now. So I mean it's downhill from here, boys.
SPEAKER_00I've got my I've got my D trick whiskey, it's all good. One thing I want to touch on, and I think this is going to hit a lot of people the wrong way. We're gonna get real GDP growth next week. Yep. And that's going to be, you know, set us going to be so mad. People have been so mad, yeah. Because it's it could be negative. I'm not saying it's negative. Like the Atlanta Fed is right now 1.2%.
SPEAKER_01It's a real GDP growth. Bank of America is around two. I can't remember above or below. It was like either like a 1.9, uh, with like final demand actually holding up pretty strong as well, or it might have been a bit above, like in the low twos. But yeah, and I think a lot of the shops around the street are kind of in that that um that range with with um okay, like with like half a point, um, uh half a percentage point uh of GDP being you know basically revised down because of the inflation hit, real GDP.
SPEAKER_00And and the Atlanta Fed hasn't accounted for March PCE.
SPEAKER_01Really?
SPEAKER_00It's just I I don't think that's in the data yet. Because you know, March PCE will come out only next week. They've accounted for just as far as I know, I could be wrong, but as far as I know, they've accounted for January and February PCE, but inflation went up, and so I'm like, we could get a really low number here. I'm not saying it'll be negative, we could get a really low number, and then if April inflation is also pretty hot, right? Because remember, gas prices went from about 360 a gallon to about 410 a gallon nationwide average. You or take that's yeah, that's going to hit CPI, PCE, all that in April, because headline inflation is what goes goes into this, right? So we could get a hit in Q2 as well from all the inflation adjusted numbers.
SPEAKER_01What great should we be though, right? Because I I'm uh a veteran of the 2022 recession scare. And you know, uh technically I was right there with the Carson group saying, no, you all both on the macro and and eventually the markets. Obviously, 22 is a nasty bear market, but the underlying economy was actually so strong. The labor market was rocking. I mean, yeah, like I've never heard of a recession in which there's a labor shortage, and every single business person I talk to be talking about a labor shortage, right? And those jobs prints were insane, so hundreds and hundreds of thousands of jobs. Now we're not there anymore, which is a scary thing, right? Um, you know, but there are a lot of other fundamentals that are still strong. It's just a question of whether we have this temporary hit. And uh to Josh's point, um, you know, right, you know, right when I was coming on, you know, and we'd continue this throughout the question of hold on, we keep telling ourselves Trump will eventually eventually resolve this because it has to be resolved, but you know, it's actually not a foregone conclusion. But yes, I mean, there we are in this weird limital space where we can either push through and it's like, oh, wasn't that another nasty mid-year scare? And here we are, markets up, um, economy expanding once again, or you know, things could go sideways, but things could always go sideways. I mean, it's great for newspapers, but and maybe podcasts too, but and yeah, and podcasts, yeah. Y'all in the podcast game now. But I do always wonder, um, you know, here's a thought. I think a lot of people really appreciate narrative and and coherence and coherence in narratives, and they look to the stock market, not just GDP prints, but the stock market to affirm good or bad policy, right? So, you know, when normies who don't like Trump see Trump do something erratic or something that compared with past presidents would have been considered irresponsible, they almost want like the stock market to be his report card, some principle that says, no, slap on the wrist. Now we've seen the bond market and also at times the stock market actually form as a you know serve as a check on some of this administration's policies. Obviously, uh Liberation Day and the bond market response to it being the most uh prominent example of that. But generally, as you all try to tell everybody, your clients, people on Twitter, people on TV, the market cares most about Ford earnings. And we've had multiple compression for basically since October until recently. So you know, from my you know, labor market and macro corner, I totally understand this rally. But everybody, everybody I know that I talk to on Main Street, so to speak, is just well, not everybody, but the folk, you know, folks on a certain side of the aisle, just just it infuriates them almost. And it's just I think it's a misunderstanding of how capital markets and equity markets work.
SPEAKER_00And I feel like when you get the real GDP numbers, everyone's going to be like, wait, this doesn't compute. But then I'll be like, no, if you look at nominal GDP growth, it's running at five, six percent. Sales and revenue and profits come from nominal GDP growth. Yeah, that's it. That's why stock markets are doing pretty well.
SPEAKER_04Yeah, a lot there to try to unpack it. Um, you know, when you uh as a reporter, I think it's that's a neat angle here. You talk to a lot of people, right? Portfolio managers, strategists, economists, and and the like. Back in late 22, early 23, I mean, yes, Sonu and I, Carson Group, we were one of the very few optimistic ones. Um, how lopsided was that back then? I mean, was it I mean you you were kind of with us, but how lopsided was this that activity four years ago, right about that?
SPEAKER_01It was it was incredibly lonely. And of course, like as a reporter, I don't necessarily make calls, sure, right? But uh we all know that even in news reporting, each story has a certain weighting to it, right? Like how much you weight bearish voices, skeptical voices, bullish voices, people in between, etc. And um, you know, I I have very supportive colleagues, but there are definitely people in the industry that just thought I was like being unbearably dovish and then dah dah dah dah. But but I was just sticking to to what I thought to be the case. Now, if you were um strictly reporting for the investor class and you your reporting was tilted towards bearishness in 2022, congrats, you hit the nail on the head. Um, but you know, I write for a general interest audience trying to capture, you know, to your point, all these different aspects and all these um different sort of layers and walks of life in our 300 333 million um person country. Um, I I don't I don't know how lonely was it for you all?
SPEAKER_00Right as the one, you know, it was on TV and getting sex match.
SPEAKER_04I still have some bruises from getting just yelled at by literally everybody. Um, I mean, there was a period I well I should probably not tell that story. Never mind, never mind. But I wasn't even allowed to go on certain TV, I wouldn't even allow to go on certain TV networks because I was bullish because they said there are no such thing as bulls, like you can't go on TV if you're bullish. I mean that that's where it was. And I remember going back to our team saying, okay, we're overweight equities, we might go with a little bit more of weight equities because they're not even letting bowls on TV anymore. But we uh we do our best to make sure we do keep this an hour. Uh Tal, this was great. What do you want to uh finish with? What do you want to remind the readers where to or listeners? Sorry, where to find you, the stuff you're doing, one more time in your book. Um, it's amazing how fast an hour goes, by the way.
SPEAKER_01Yeah, um, thanks for having me on. Y'all are great. Um, get tons of insight from both the research you all put out and your commentary, whether it's to me or whether I, you know, um, you know, catch you, Sanu, on a podcast or you, Ryan, on TV. You're on mute always. Um, yeah, I mean, what can we afford? Um, set to come out, I think, early next year, early 2027. The uh the editing process I've mentioned before takes some time as well as doing the art for the cover, yada yada yada. And yeah, please subscribe to the New York Times. Uh, it's a fantastic paper, really proud of my colleagues. Learn a ton from them. And uh yeah, I I think I think I'm really excited for the data that we have coming up next week, and I'm sure I'll be talking to both of you about it. Love it.
SPEAKER_04Well, everyone, this was the fourth Sonu. The fourth, that means the next one. That's the fifth. We forgot. You weren't here, Tal earlier. We forgot what number this was. It's not like we've done a hundred of them. We've only done three or four, but anyway, the fourth episode over the social hours facts vs. Feelings social hour. This was amazing. Uh, thanks, Tyle Smith and um Josh Schaefer for joining us. As always, Ryan and Sonu here. Sonu and I'll be back next week with the regular scheduled Facts vs. Feelings podcast come out Wednesday morning, but it's not gonna be Wednesday morning. It's gonna be a tad late. And don't worry when it's not there because we've got some really special things planned for Tuesday. We're in Omaha, where Carson is based. We're gonna do some unique things. So when you don't have your podcast first thing Wednesday morning, don't start texting us and calling us and messaging us and all this stuff. Don't worry, it'll come out a little later, but it's because we're doing some really cool things Tuesday afternoon when we record that podcast. So it'll be a tad later than normal. Well, all that everyone, thank you for joining Social Hour. We'll see everybody. I guess, yeah. I well, we'll do another one of the month. I don't we don't have a date yet or anything, but we always try to do last Fridays. I'm not sure it'll be last Friday.
SPEAKER_00Or the next one may be extra special. We won't give it away yet.
SPEAKER_04Well, that's what it was. You're right. Yeah, well, just follow us. Just follow us. Just follow us. There's we've never we've never done it like this if it all works out. So we'll leave we'll leave it there. That's a good way to leave it. Everybody, take care. Thank you. Appreciate it. Thanks, Sabbath. See y'all. Thank you. Investment advisory services are offered through CWM LLC, SEC Registered Investment Advisor. This reporting is for informational purposes only and is intended for an audience of financial professionals who should not be copied or reproduced without the consent of CWM LLC. Guest presenters of our show are not affiliated with CWM L L C. Opinions expressed by these presenters may not be representative of CWM L L C.
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