Stop, Drop, & Rotate (FvF Ep. 194)

In Episode 194 of Facts vs Feelings, Ryan Detrick, Chief Market Strategist at Carson Group, and Sonu Varghese, Chief Macro Strategist at Carson Group, take on the "June swoon" and the powerful market rotation shaking up underlying sector leadership. They analyze insights from Sonu's time at the Economic Club of New York, covering Scott Bessent’s speech on national security industrial policy, Kevin Warsh's influence at the Fed, and the broader message of the global market.

The episode also digs into an unprecedented market breadth anomaly, a massive weekly outperformance in healthcare, the state of small caps, and why the current bull market is far from finished.

From Apple’s steep hardware price hikes and roaring nominal consumer spending to structural lessons from the 1990s dot-com bubble, the conversation connects the week's biggest headlines to the harder macroeconomic data underneath.

Key Takeaways:

• The S&P 500 logged a five-day losing streak, yet advancing stocks outnumbered decliners every single day, a market anomaly unseen in nearly 30 years. Meanwhile, major advanced-decline lines hit all-time highs.
• While mega-cap tech paused, mid-caps rose 2.9% and small caps grew 3% month-to-date. Concurrently, healthcare staged an extraordinary 8% weekly jump, marking its largest weekly outperformance on record.
• Market warnings are often early; the S&P 500 doubled over the three years following Alan Greenspan's 1996 "irrational exuberance" speech. Navigating secular waves like AI requires strategic re-diversification, not exiting the equity market early.
• While inflation-adjusted real consumption sits around 2%, nominal spending rocketed at an 8.6% annualized pace over the last three months. Because corporate revenue is nominal, this massive wave of consumer spending continues to bolster corporate earnings.
• Driven by AI-related memory chip shortages, Apple announced steep price hikes including 30% for the HomePod mini and 55% for Apple TV. This demonstrates how one company's supply chain inflation becomes another tech supplier's margin expansion.
• Massive fiscal deficits at 6% to 7% of GDP mirror the late 1960s, continuing to inject liquidity and minimize near-term recession risks. We expect the Fed to keep rate cuts on pause as core services inflation remains sticky at a 4% annualized pace.
• While June represents a seasonally weak timeframe, July is historically the strongest month for stocks over the past 20 years, closing positive in 13 of the last 14 years.

Jump to:

0:02 - Welcome And NYC Market Leaders

6:36 - June Swoon Turns Into Rotation

9:50 - Breadth Thrust And Sector Breakouts

16:24 - AI Momentum And Dotcom Lessons

27:40 - Inflation Pressures And Apple Pricing

33:32 - Fed Pause Risks And Fiscal Deficits

35:42 - July Seasonality And Wrap Up

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

Questions about the show? We’d love to hear from you! factsvsfeelings@carsongroup.com

Transcript

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SPEAKER_01 0:02

Welcome to the Facts versus Feelings Podcast. I'm your host, Ryan Dieter, and I'm joined by my co-host, Sony Varke. Coming through the noise, we've got Ryan Dieter, Chief Marcus Strategist, and Son of Arky, our Chief MacroStrategist. Taking out the board and helping investors focus on what really matters. All right, Sonny. Rumor has it last week in New York City, you were rubbing shoulders or rubbing elbows at the expression, rubbing elbows with some of the biggest people in the financial industry. Who are you hanging out with? I did manage to catch Scott Besson, but I've heard of him.

SPEAKER_00 0:48

I've heard of him. Yeah. Treasury Secretary Scott Besson. It was a little far away. But I did rub shoulders. No, big thank you to Neil Dutta over at uh Renmax for the invite. This was at the Economic Club of New York. Scott Besson was giving a speech uh related to the 250-year anniversary of America's independence. But yeah, it was a great event. It was at the Waldorf here in New York. I'm still in New York. I'm in a hotel room. You know, after our own adventures here last week. But yeah, no, that was a great event. Uh I did catch from a far Mohammed Alarian. Oh. And uh sitting at our own table was uh Sonali Bansak as well, who I know you know. So yeah, no, quite a nice conversation with several different people around. And Scott Besson's speech is very interesting too. I mean, I think he's trying to straddle everything I think the president stands for, you know, with trade. And you know, he's got a very mercantilist view of a lot of things, which is we need more exports, simply put. You know, import less, export more. And Scott Bessons is like you and I, a markets guy. Let's markets figure this out. You know, that's his background, right? But he has to, you know, he's the president's appointee. He serves at the pleasure of the president. So you have to kind of put a square pack into a round hole sometimes, if that's the phrase for it. And he tried. And you know, like I don't disagree with anything he said, to be honest. He was like, you know, we need to do our own industrial policy too, right? But now that will be from the viewpoint of national security. I would argue that the US has been doing industrial policy for decades now with defense. We favor, we purchase more stuff from Boeing, for example. We purchase a lot of stuff from Dockheed. We don't go to Airbus for that, right? For the US government and the Pentagon and stuff like that. So I think that extends into everything else. I mean, we could talk, uh we'll I know we'll talk about momentum in markets. Because part of the SP Fire Momentum Index is Intel. You can already Intel is part of this current administration's industrial policy, right? But they're looking at it, how Bessent looks at it is from the national security standpoint, which is arguably, you know, fair. And he wants supply chains resilient, right? VPN went through a situation where just last year China was like, you know, yeah, you can increase tariffs, but we won't give you rare earths. You don't want to be in a situation like that, right? And then final point I'll mention, he did say with respect to Kevin Walsh in the Fed, I know Neil Dada had a nice note about this, sort of giving the green light. And I think to Walsh for rate hikes, I think it was I read it more as he wants to stay out of Walsh's way. He thinks Walsh will do the right position. Of course, they appointed him, so you would think they would think Walsh would do the right position, make the right decision. At least within the first couple weeks of being appointed. Exactly. Now the president may have a different view if Walsh ultimately raises rates because just last week's I don't know, I've been traveling, but just last week, I think the president was like, rates should fall. Right? He was talking about housing. I mean this that was it, right? He didn't sign the housing bill, that Congress bipartisan housing bill. He didn't sign it. He was like, this is not what we need. We need rates to fall. Guess who controls rates? I'll just stop with that.

SPEAKER_01 4:11

Um what did you say? He's he's at the he's at the leisure of the fed uh the president. What is how'd you describe it?

SPEAKER_00 4:17

The the the pleasure he serves the pleasure of the president.

SPEAKER_01 4:20

The pleasure of the president. I've never heard someone say that before.

SPEAKER_00 4:22

He's at the pleasure of the president. Now, the cabinet secretary, not Kevin Walsh, because he's appointed well, even the Treasury Secretary is appointed by the Senate, but or confirmed by the Senate, I should say, as Secretary of State, but they do serve at the pleasure of the president. There we go. Well, whereas the Fed chair is slightly different, and that gets to the Supreme Court case that came the decision that came out yesterday saying Trump cannot fire Lisa Cook. Right, right. So that would uh, you know, I I think the administration is still trying to figure out. I saw I thought I saw a headline this morning saying we are still trying to figure out throw her out.

SPEAKER_01 4:55

Well, I'm sure this is yeah, door number seven at this point. Um, so this is not our normal podcast, as people looking on the YouTube channel might realize by now. Sony, you are in a hotel room up in New York City, and I am at a condo up in Michigan on a family vacation. Normally we don't do our podcast this way, but we know we have a lot of new listeners. So um we appreciate so much last week in New York running around Jordan, the compounded friends with um Josh Brown and Michael Batnick, uh, the Rith Holtz gang. That was awesome. I know our podcast last week had a ton of downloads. We have a bunch of new listeners, so we wanted to make sure we give the people what they want so new. Um, so hopefully our internet works and our sound quality is good. We promise next week everything will be more back to normal. But I think so far, so good. This is episode 194. Stop, drop, and rotate. Yeah, I thought that was kind of funny. Do you remember as a kid, did they do this where you grew up selling the Middle East? Stop, drop, and roll, V Caught on Fire. Did you did G guys do that? I did no, we didn't have that. So that's a a thing probably most Gen Xers think of. So, like if you were to catch on fire, which the odds of that are so this is you knock your classroom or something. This is like if yes, like if I were in the third grade, just hanging out, playing with my friends, all of a sudden I caught on fire. You're supposed to stop dropping roles. You and your third grade friends playing with. I that's what I'm saying. I don't know. I mean, I've joked before in the 1980s, there literally was a commercial that came on at 10 o'clock at night that said, Do you know where your kids are? They had to remind parents in the 80s they had children and they needed to know where they were. Okay. Now we have anyway, so stop drop and rotate. That's probably more for the Gen Xers, but maybe um lots of different ways to take this, Sonu. How about let's just start with um, oh, let's start with the June swoon. So uh Podpony, I did send this first chart about the June swoon. It's incredible to me, as we're sharing on YouTube now. The month of June peaks around the 17th and bottoms around the 27th or 28th. That's the weakest time frame almost of the year, honestly. And sure enough, the SP 500 last week was down all five days. Now, listen, three of those days were not down much, and we'll talk more about market breath being positive, but hey, down is down, right? Um, it was down seven of the previous eight days. We're in this kind of seasonally weak time frame, and we had some pullbacks. We had the Mag 7 lagging. We're gonna get into all of this stuff, but it's incredible to me how that seems to have played out perfectly after you know a 15% rally in April and May in um in the SP 500 to give a little bit back in June. I don't think is shocking. Now, the time we're doing this, June's down just a tad for the month. So I think that's encouraging. What do you think about the June swoon that I want to get in the rotation and momentum and all that stuff, Sony? It was really just a mag 7 swoon.

SPEAKER_00 7:38

Yeah, there you go. Yeah, the mag swoon. Yeah, yeah. How uh right, maybe the mag swoon. I don't know. Yeah, I don't know. There's a title of an episode for you. Yeah, uh look, the SP 500, I'm just looking at staring at my numbers. It's hard to do this with just one screen. I know you deal with one screen. I usually have three or four.

SPEAKER_01 7:57

I know, you yes, yes. And you have and here's another fact about Sony, there's like 97 tabs open at any one time. So we we learned when this computer wasn't working when we recorded these. He's like, Well, I've got facts set open, I've got Bloomberg open, I've got that. It's like, well, maybe turn all that off, Sonny.

SPEAKER_00 8:11

Yes, yeah. So the SP 500 is down 1.8% for the month. This is to the second last day. We're recording this on the morning of June, June 30th. So we don't know what the last day will hold. But tech is down 2.8 percent. Okay, but tech is still up 29% year to date, right? The second best uh sector is energy at 21 and a half, but tech is not momentum. We've talked about this and we can talk more about this. Momentum, the SP Finder Momentum Index is up five and a half percent for the month, right? The equal weight ETF, RSP, is up 2.4%. So that starts to it just hit a new high.

SPEAKER_01 8:48

It hit a new high yesterday.

SPEAKER_00 8:49

Yesterday. And that starts to give you a clue as to what mid caps are doing. Obviously, small cap is it no equal weight is pretty much a proxy for mid caps. Mid caps are up 2.9% year to date. Uh no, for the month. It's up 15% year to date. Right. Small caps. The Russell 2000 was up three percent, Ryan, on the month. First 29 days, I guess, of June. So no swooning there. And small caps are up 22% year to date. And one last thing, the low volatility ETF that we use in our models uh LGLV, that's up 3.3% month to date. Wow. That's done better than a lot of these. So, but it is rotation, right? Industrials, for example, are up about almost six percent month to date. Right. And then you think, oh, wait a minute, you know, is it what about defensives? Yes, I just spoke about low volatility, utilities up four percent, staples up two and a half, real estate up three percent, healthcare up eight percent, eight percent. Think about that. I'll stop there.

SPEAKER_01 9:48

So I'll I'll dive in there. So last week, just I'm not talking for the month, but last week healthcare was up like 7.9%. We'll call it 8%. Now the SP was down 2% for the week last week. So if my math is right, that's a 10% outperformance. So at least looking at like the XLV, no rec not a recommendation, but the XLV, that big healthcare ETF, um, that's like the largest weekly outperformance we've ever seen, right? And if you think about like a breath thrust, um, that's that's definition one of a breath thrust. I mean, and also healthcare just broke out the new highs. So, you know, we're gonna talk more about this, or maybe I'll just do it now. You know, you tech is led. Yes, Mag 7 is is lagged. Now, before the bounce on Monday, the Mags M A G S, the Mag 7 ETF, which only been around, I think like three years, was on pace for its worst month ever, down 13%. If you would have told me or you or probably anyone else, hey, the Mag 7's down 13% in June, I would have probably said, well boy, bet the SP is down five or six percent. There's probably a bloodbath out there. Like you just said, most stocks, most sectors are higher. It's tech, large cap, maybe some communication services. Most things are higher. Now, one more stat for me, Sony, and I love whatever you else want to talk about about this breath, um, uh the change in breath we're seeing. Last week, the SP 500 was down all five days, five days in a row. Again, the last three were not down by much, but it counts. Every single day we saw more advancers than decliners on the SP 500. So no, I've got data going back close to 30 years on this. That's never happened. We've never had a five-day losing streak with every single day having higher breath than that. Um, that again is the story of this rotation that we're seeing. If we were seeing rotation purely in the staples or maybe the defensive parts of healthcare, I'd be worried. But like you just said, healthcare, I'm sorry, well, healthcare's got some different, we'll say this go this way. Industrials, financials, I mean, they are getting a bid. We talked with Josh and Mike last week. Community banks, 52-week highs, all-time highs, regional banks, 52-week highs, all-time highs. That's not to me, as an old school John Murphy guy, message of the market. That's not a bearish message of the market. If you're overweight, big time Mag 7, and that, yeah, I mean, this has been a terrible month, honestly, a terrible month. But if you have a diversified portfolio, overweight equities, like we've been preaching all year, it hasn't been so bad. Um, let's one more for me, Sonu. Look, put this on the chart right now, on the table. Or what am I trying to say, Sonu? On the screen right now, Podpony. It's market breadth. It's the stock charts chart, SP 500 doing what it's doing. But underneath the panels, we have the percentage of stocks, both their 20-day, 50-day, and 200-day moving averages. Those are all trending higher and have been for weeks, even though the market's been kind of weak-ish. This is something I've been saying for the whole time. That's that doesn't mean you can't have a 5% pullback at any time. You can have that for any reason at all. But is this how a bear market's going to start? Is this how a major market correction is going to start with many stocks participating? Well, I would say no. And now here we are with the market again hanging in there. And again, just recently, as of yesterday, like 65% of all the stocks in the SP 500 are above their 200-day moving average. What's that mean? That's the most we've seen since like the big sell-off when the war started, and that's a pretty healthy number. Um, I just said a lot. Sony, what else do we want to talk about on this discussion?

SPEAKER_00 13:01

I mean, one thing we've talked about throughout this year, not just coming into the year, is that we are slightly overweight tech. And it gets to when everyone gets to the fact that when everyone thinks tech, they think mag 7, because that's been tech for the last three years, for the last decade, maybe the last 15 years. But as I said, we the way we've played that is not by going overweight the Mag 7, it's been overweight momentum. And momentum is a pure AI story now. That's why I said, like, oh, momentum's up over five percent. It's done better than all of this stuff, right? And it gets to, we talked about this briefly with Josh and Mike last week. But the, you know, I wrote a piece, what was it last yeah, last week, uh saying how I learned to stop worrying and loft the bubble. It was sort of tongue in cheek. Like maybe let's let's send out the pod panel.

SPEAKER_01 13:54

Let's put that image up of what are you doing on that rocket, Sony, or what are you doing? I'm writing a bomb. Or is that a bomb? I don't know what that is. I don't know.

SPEAKER_00 14:00

Yeah, I think it's a nuclear bomb. Yeah, yeah. Be careful, Sony. We need you. Yeah. I know, exactly. But hopefully. But uh no, the idea was look, I don't know if it's a bubble. You know, last but last year, this time, maybe six months ago, I would have said, yeah, no, I don't feel think so. Now, I don't know. It could be I think we could look back five years from now and say, oh, that was the middle of the bubble. Doesn't mean if I say bubble, it's going to end or anything like that. It could go on for another two years. To be clear, go on for another year. Maybe the Fed kills it. If I had to pick on what kills this bull market, I would pick the Fed more than anything else. Bull markets don't die of old age. I think something as some cattle is supposed to come and kill it. Maybe it's inflation. We can talk about that.

SPEAKER_01 14:41

Let me what did Bernanke say? Bull markets don't die of old age, they they're murdered. I think is how something, or maybe economic economic recoveries don't die of old age, they're murdered, is how Bernanke put it. But go ahead there. Yeah.

SPEAKER_00 14:51

Right, right. So I I look at the dot-com bubble and we can put this chart up. And again, let's say January of 1998. And this is not to say that's where we are in the cycle. I have no idea, right? But let's say this is January of 1998. You still had 27 more months before the peak. Yeah. Yeah. And no, looking back, January 1998 would have been part of the bubble. Right? I like it. I don't know. You could be 96, he'll be 98. We I think Dan Ibes, when we last spoke to him, that was maybe six months ago, eight months ago. He thought we were in like 97, so that 98 frame.

SPEAKER_01 15:29

I'll just admit, I mean, I I was on TV with Dan not long ago. He's still saying fourth inning, at least for the AI rollouts and AI boom. Dan's calling it's a fourth inning.

SPEAKER_00 15:36

And that gets you why the Mag 7 have struggled. I mean, set aside Tesla, Tesla is doing its own sort of thing. I don't know what Tesla is doing. We can talk about Blake again sometime. We'll bring him back, right? The portfolio manager on that team. But I think the Mag 7, the question is, okay, these guys are spending a lot. What's it going to amount to? But then the market looks at who's the beneficiary of all the spending. We can talk about the microns of the world. Oh, yeah. And I know you have a chart of Apple increasing the prices, so we'll go there next. But you know, one person's inflation or Apple's inflation, or yours and my Mac, or well, maybe my MacBook's inflation or iPhone's inflation is Microns Martin X patch. Right. Right. And we have the beneficiaries.

SPEAKER_01 16:21

So we'll we'll definitely talk inflation in a second. I want to dive a little more into breadth though. You mentioned like the you know the shock clock, so to speak, when things. So just literally yesterday, everyone, like yesterday, as in Tuesday of this week, the time people listen to this, um, the New York Stock Exchange advanced decline line, common stock only hit an all-time high. The SP 500 advanced decline line hit an all-time high. The SP 600 small caps hit an all-time high, mid-caps hit an all-time high. We have various advanced decline lines. And honestly, this is happening globally too. There's one called the global um SP or the uh global Dow advanced decline line. Stock charts has this one that hit an all-time high. What I'm getting at is market breadth leads price. The time we're doing this, what'd you say? SP is about 2% from all-time high, I think, Sona. Two, two and a half percent time we're doing this ballpark. I'm close.

SPEAKER_00 17:06

About 9% yet today, including dividends.

SPEAKER_01 17:08

Including dividends. So a couple percent away, but we're seeing breath hit all-time highs. That usually means breath leads price. Yes, I can give you an example when breath hit a new high and price didn't, we can do that. But if you look at the aggregate, usually this is a positive sign. And here's what I'm getting at. You said 98, this is what reminded me of this. Like the S the um advanced decline line, at least on the New York Stock Exchange, peaked somewhere in like the middle of 98. Okay. Now the market went up for like another 18 months, give or take. But what was happening, and if you remember that time frame or read your history books, is because tech was going higher and lots of other stuff was breaking down. Even in nine, in 2006, 2007, more 2007, financials are breaking down, other areas are breaking down, market making new highs in the middle of 2007, but Breath wasn't participating. What just happened now? Breath hit a new high. So, again, to me, that is not a sign that we're near the end of this bull market. Um, as we've been saying that like a broken record. Yes, this bull market is now the eighth longest in history, at least since World War II, I should say. Um, look at the previous seven, six of them made it at least five years, average of seven years. We have no idea how long this one will go, but I think it continues. And then you consider the fact that small caps and mid caps are just now starting to lead. And listen, we've had seen fits and starts healthcare too. Healthcare is starting to lead, maybe. We've seen fits and starts with healthcare and small caps and mid-caps. And then what happens? Well, the Mag Seven and tech comes back and says, you know, the Kimbe Matumbo with the with the finger wag. No, no, no. Um, but you know, if this rot these rotations are happening, it's hard for me to think that this bull market is anywhere close to over. And I know that sounds crazy because we've been bullish. People like, oh, you're just super bullshit. But yes, in a bull market, I tend to be bullish with new highs and advanced decline lines with credit spreads not really showing any signs of stress with the economy that you look at looking pretty solid. These are all positive things. Now, I think we've hammered the breath a lot. You want to say anything else on breath or rotation, Sony, before we go to some other uh concepts?

SPEAKER_00 18:56

No, going back to the 98 looking forward, right? What are you looking for? I want to see some rotation, but I want to see, I don't want to see too much. Yep. Because if the air comes out of momentum, that would leave me very worried. That would leave me very worried. Let's say low volatility outperforms momentum right now. Yep. That would be a problem. 98 to January 98 to March 2000, we can put this chart up. Uh the dot-com bubble bubble ended with rotation, it didn't collapse. Momentum gained over those 27 months, 98 January through March 2000, momentum gained 158%, right? 158%. Low velocity was down 6%. Wow. The SP 500 is up 59%. It was tech, tech was up 260%. But everything, almost every sector except for consumer staples, is up. So there was a rising tide lifts all boats. I think AI will lift all boats going forward. So you want everyone to perform, you don't want only, you don't want this huge dispersion. But I do think we need we're in the AI story now. We are on that wave. We need that to continue. If that, you know, I dare I say a bubble or if the air comes out, then we have a problem. April 2000, so after the peak, now the peak is not only in high side hindsight, but April 2000 to December 2000, we saw rotation. The market didn't collapse, the SP finder is down only 11%. Right. Because you look at 11% drawdown, your numbers show, hey, you know, we should expect that at least once a year. But momentum was down 30%. Low volatility was up 32%. You want rotation, but you don't want too much rotation. And then from 2001, the air, things just crashed.

SPEAKER_01 20:52

So I remember 2000, because that's when I got in the industry, and I was in all the high-flying tech stocks and networking stocks and all that stuff. And it just, I mean, I didn't know what I was doing. I was on margin. You live and learn, you know. But um, I remember I lived in Cincinnati at the time, right? And still do actually, and and Procter and Gamble was a big stock, and like that company did just fine, like in 2000. I mean, maybe fine's relative, but it did a lot better than a lot of other areas. And a lot of people owned PG and the defensive value stocks in Cincinnati. And they were, they weren't acting like it was all that bad on this guy and all these tech stocks getting killed. But then you realize, okay, you know, PNG didn't go up as much in the late 90s. We understand, but that's why you have a diversified portfolio and you can benefit from a lot of things. But we still think momentum is here. One more comment, and I did maybe mention this last week, but we'll do it again. December 5th, 1996, Alan Greenspan's famous uh speech about irrational exuberance. Obviously, he passed away. We talked about him last week, RAP Alan Greenspan. Um, but he mentioned that December 6th, 90, or December 5th, 96, the SP 500 doubled over the next three plus years, and the Nasdaq was up 300%. This is one of the smartest people in the world with more information than anybody at the time, giving little nuggets that listen, I'm a little worried here. This might be a little over the top. And look what still happens. So, again, if that could happen to him, you know, kind of being wrong or maybe a little early with the warning. Um, it could happen to anybody. And again, that's why we're still riding the wave. Our outlook comes out, our major outlook comes out very, very Soon we're gonna talk about that. It's a little tease there still, riding the wave.

SPEAKER_00 22:21

Um, on that, even if we don't count 96 to 97, and this gets to why we come at riding the wave as opposed to you know being a perma bear. Yeah, maybe you can talk about the joker and you know oh my the thing with uh Jeremy Graph next, but but again, one last act. 98, January 98 to March 2003, March 2003 is a bar, but five years and three months. The SP 500 is down six percent. Okay, right over it. So you think, oh my god, five years, five close to five and a half years, you didn't make any return or negatives. It's not bad. That's not a good thing. Momentum was up 11% despite the big crash, momentum was up 11%. Low velocity was up 17.5%, accumulative over those five and a half years. But the average, I took the average of healthcare, financials, energy. You think these are not correlated with tech, right? Healthcare and then financials energy, the average return of the average of these three over that entire five and a half year period, 15%, right? And so this is why how do you avoid the wipeout? Be diversified.

SPEAKER_01 23:25

No, no, well well said. So again, last week, we're a little personal now, a little fun. Last week you and I were in New York City. We ran around, you did two different hits from New York Stock Exchange. I did one hit from New York Stock Exchange. Shout out to JD Durkin. You did his show. What was the other show you did? I I forget. FinTech Media, FinTech TV. Yes. And shout out to Remy Blair. Yeah. So that was fun. I did two different CNBC hits, um, one in the studio up in New Jersey, the other I hit the Nasdaq on Squawkbox with Kelly the day before, and then uh Joe Kernan, you mentioned on Thursday. And then, of course, we did the podcast, uh um the compound of friends. Please listen to that. Like over 45,000 people have already on YouTube and even more. So a lot of people have, so check it out. It was awesome, and we had such a great time. And thanks again to the Ruth Holtz gang for having us back. Um, but I was on with Joe. It was a pretty I sat down on the seat at like 616 a.m. I didn't get out of that seat. Now it didn't mean I was on TV the whole time, I want to be clear, but you know, most of it. I didn't get out of the seat until 632. This is like never happened. I talked to Joe and Andrew, you know, standard stuff, nothing out of the ordinary. Did my thing. Like Joe's from Cincinnati. I said, Hey Joe, I flew from Cincinnati. You kind of get on his good side, you know. I I like Joe. I like Joe. Um, is he a little cranky in the mornings? No, here's the thing. And you know, I'm a CNBC contributor, so you know, I'm team CNBC. Let's be clear. But no, it's like when the camera's off, he's great. Like everything's fine. Like he kind of has a persona, maybe I guess. I don't know. I mean, he and Andrew, they seem very cordial and friendly. Like, you know, you like do the TV thing, and maybe maybe there's a little TV thing there. They were like genuinely getting to see each other again because Andrew had been traveling, they haven't seen each other for a while. They're like talking on air and off air. Nice to get to see each other again. And I thought it went fine, but then I was done. Joe said, Thanks. I still sit there, right? Then they're still talking, and then all of a sudden, I'm just I'm thinking I'm off air because I am. I'm just sitting there because I'm done. And all of a sudden, like Joe like turns to me and goes, What do you think? So I was back on. So I was on TV for like almost 15 minutes. Uh so it's that was pretty cool. That was cool, it was a good conversation. Then the next so Joe was nice, everything was fine. Then the next day, Jeremy Grantham comes on, and you've probably seen this, everybody. It's a viral clip. Joe, uh, you know, he was he was fired up. Uh, he was going after Grantham for Grantham being a perma bear. And every time Grantham talks, it's how bad everything is, market goes up, Grantham dripping Bitcoin. Joe, I don't know. I I don't know what you girls take on Bitcoin was, but it was interesting that conversation. So thankfully, Joe was much nicer to me than he was to Grantham. You want to add anything to that um interesting conversation we saw last Friday morning?

SPEAKER_00 25:45

No, it it was an example of uh one thing, what happens on TV, what's said on TV, versus what somebody even writes about and what someone perceived to be writing about, in this case, Grantham being a former mayor, versus what they do. You look at Grantham's foundation, somebody had some interesting data, and they have a ton of private equity stuff, right? And now private equity, to be clear, it's you know it's correlated with markets in the sense that you know if the economy does well, these companies will do well. Smaller companies that are not you know public yet probably do really well. That's the idea. If there's a recession, those struggle, right? So in a sense, it's an extension of the equity market. That's how we think about private equity as well, right? If you want to diversify, yeah, it's a good way to diversify. Why just stop at small caps or micro caps? Go beyond that into private equity. But that's what Grantham has a lot of. So he's almost like bullish on the economy and in his own investments, his own foundation, right? Even though he's perceived to be this perma bear talking about valuations and things like that.

SPEAKER_01 26:45

Well, I mean, perceived, because literally every podcast I see him, he's talking that way. Have you got to know? I mean, his book is something like The Making of a Permabare. I mean, he literally uses the title in the book. So anyway, and I know he's way wealthier than you or I, or anyone pretty much anyone listening. But again, a lot of his calls haven't been right. But it was interesting to see um, you know, live TV go viral. And I did, I was proud of myself, I guess, or happy to see, because you can go on YouTube and look at all the different clips on CNBC uh throughout the week that they post on the YouTube channel. The clip I had was like one of the second or third most views the entire week, which I thought was pretty cool. That's pretty cool, but I was nowhere close to the viral Grantham and Joe uh argument, but that's okay. Oh, I don't think I can. Uh not yet, not until the data changes. That's uh anyway. I was so new. I um we're gonna go kayaking in a little bit, like a little bit as in like I think. That's what you do. Yeah, we're going kayaking up here in Michigan. Um, I know my family's getting antsy, so I probably have a hard 15 minutes. So let's just think like that. I know you've got your boy, you dude with your boy and daughter in the other room. Yeah, so you and I probably need to wrap it up in 15 minutes. Let's um what else? You want to go the inflation around a little bit and then talk macro?

SPEAKER_00 27:58

Um Yeah, yeah, let's let's I I think again, going back to the AI thing, uh, I think it is a macroeconomic story. So I was talking to J.D. Durkin on a show uh to the NYSC last week. I think it is a macro story. It's not just, oh, it's just equities on one side and my economy is doing its own thing. No, right, you know, we just got GDP data. Okay, GDP data. I mean, it was revised up for the this is what first quarter was revised up from 1.6 to 2.1%, but it was mostly like the volatile parts of GDP, right? Exit, right? Net imports, like we imported less and inventories are revised up, so that's why it was you know uh revised up from 1.6 percent, annualized pace to 2.1 percent. But all that to say the economy is doing okay, consumption is doing okay once you adjust for inflation. That's consumption's running at 2.1%. We can put this chart up, but Ryan, nominal consumption over the last three months, and this is beyond Q1, nominal consumption over what is it, March, April, May, is running at 8.6% annualized pace. 8.6%. So this gets to what you and I see or everyone sees out in the world around them. Is that I can see Ryan going, you know, uh shifting someone, but I assume that's what yes, yes, people are coming in the room sooner. So yes, we we have visitors. And this gets to yes, real consumption, consumption 70% of the economy, real consumption is running about 2% annualized base. That's less likely below trend. 2023, 2024, real consumption, inflation adjusted, was running about 3.5%. That's why we got three percent GDP growth. Okay, like now it's about two percent. That's why we're getting two percent GDP growth. That's okay, right? But nominal consumption, that's what matters for profits and revenues. That's running at 8.5%, 8.6% annualized base. That is mind-blowing to me. That gets to, I'm in New York City, everyone's spending.

SPEAKER_01 29:48

Yes, it was crowded last week.

SPEAKER_00 29:50

Everyone's spending. We live in a nominal world, companies make money in a nominal world, right? Talk about you, you you shared that chart of or you I know you have the chart about the MacBook prices going up. Right.

SPEAKER_01 30:02

We can put that up. That was one we sent the pod pony. Let's put that up now. All the different prices uh that Apple just uh price increases that Apple just announced.

SPEAKER_00 30:09

And and by the way, that's those price increases will show up in you know inflation data at some point, right? That's not energy, that's not tariffs, right? Tim Coco's talking about memory chips, these are AI-related bottlenecks. Now, like I said, one person's inflation is somebody else's margin expansion.

SPEAKER_01 30:27

I'll just jump in. I've gotten from you, just I'll just throw a few and just start to jump in, but it is on the YouTube channel now. The uh home pod mini is gonna be up 30%. The Apple TV is gonna be up 55%, the iPad up 29%, the iPad Air says 25% plus, 20% iPad Pro, 20% iPad mini. The Vision Pro is gonna be up 6%. So apparently that was not up nearly as much. Last one, uh, the Mac Studios 25% also. So I mean, these this is the real world stuff about inflation. We talk about inflation, but when people go out and buy this stuff, that's gonna cost a lot more than it did, you know, three months ago.

SPEAKER_00 31:00

And you bet people are gonna buy it. That's okay. I know uh oh the day Tim Cook said they're raising prices, Apple actually went up slightly. Right, but then it went down once I think it was Friday morning. Last Friday morning, the prices came out, and everyone sort of got sticker shocked. But I bet a month from now, Apple will be okay. I I'm not giving there's not a recommendation to buy Apple or anything like that.

SPEAKER_01 31:22

But I think we actually recorded on Thursday with Compound. We talked about it briefly there. Apple's down six percent last Thursday, so I don't know if it was official then, but the rumors they might not have maybe they announced it officially, but the rumors were out the stock was down six percent last Thursday. And the market was like flat. I mean, because again, that was the story last week. Yeah, yeah. Mag 7 poor, everything else did okay.

SPEAKER_00 31:43

And and I'm sure Apple, I was talking about this with someone. I think Apple with yes, it they are going to blame the memory chipmakers for higher memory prices and AI and all of that. Well, I'm sure Apple's finding a way to expand their margins. They'll just say, hey, blame the chipmakers, it's not us, you know. But when their margins come out, I bet their margins will look even better. But it also gets back to the inflation issue not being about the Iran war or tariffs, anything by itself, right? You look at we got PCE inflation data, core PCE, core inflation, which is the Fed's preferred metric, last three months running at three and a half percent annualized pace. Core PC came in at everyone's like, oh, it's soft, 0.32%. Okay, right? But you annualize that, Ryan, that's 3.9% annualized. Okay. Now you think, okay, you know, maybe that's because of tariffs and things like that, because core PC is you got goods and services and housing, right? Three buckets if you think about it. Take out goods, take out housing. Set that aside. Right now the AI bottlenecks show up within goods, but for now, okay, set it aside. Core services X housing, it's about 50% off core PC. Okay. Last month it was up 0.5%. That's six percent annualized. Last three months it's up four percent annualized. We have an inflation problem, but that's what you and I'll be talking about. An inflationary growth period, which is good for company revenues, not so great for the bond market.

SPEAKER_01 33:09

Okay. No, and that's that's what's been playing out. Obviously, earnings season is around the corner. Micron did have earnings last week. They blew out. We probably need to say too much more than it was uh the big event of the week. It happened. The stock was up 16%. I guess it would have been on Thursday, yet they were flat on the week. So that tells you how volatile the week was. Um, but earnings season, once again, we expect it to be pretty positive, and Micron still looks pretty strong on that front. Um, let's see here. So that's inflation. It still looks like a little bit of a worry. We've laid out the Fed many times. We don't think the Fed is going to do anything. We think the Fed's on pause, even if Fed fund futures are saying there's gonna be potentially a couple of potential hikes going forward. What else we want to talk about here, Son, as you wrap this one up?

SPEAKER_00 33:50

I think we started with Bessent, and you know, we maybe we round up with like you just mentioned the Fed, right? And we talk about what kills what potentially kills a bull market, it would be the Fed. I mean, one thing that's been playing out in my head, we this we wrote about all the way back in January, in our well, technically November, because that's when he wrote a 2026 outlook. Yep. I feel like we are in, I know there's a nineties comparison, which we just made as well. I made that in my blog post last week, which by the way, all of you can look at Carson Group.com slash research. That's where Ryan posts his blog, my blogs, all of that, all the team's blogs go up there. But yeah, the 90s comparison is sort of like beaten to the X, right? Including by ourselves, myself. But I think late 1960s is interesting because then you had a period of because what's the other thing that's happening? We have massive fiscal deficits now. True, true, true. Yeah, Warren Pies has mentioned that. You've been on that too. Yeah, yep. Late 90s, by the way, we were going into a fiscal surplus. So you could argue there was less money coming in from this coming into the system from the government. Okay. Now we're having a flood of money coming in. Now the deficit could go down later this year or next year. I doubt it. You know, we can get to the politics of why. I mean, that might get to what happens in midterm elections. What? The deficit sitting at six six to seven percent of GDP. That's a ton of money flowing into the comedy. It's very hard for me to see a recession when that's happening. Same thing happened in the 60s, 66, 67. Then the Fed was cutting rates, but suddenly inflation became they ran up into elevated inflation. They didn't have a target or anything at the time, but they by 67-68, they were like, uh oh, we have an inflation problem. We need to increase rates. Remember the nifty fifties, all of that. Oh, yeah. 1970, we got a recession, we got a bear market, all of that. I I feel like that is a potential playbook here. What kills the bull market? I don't know. I don't think it's going to be immediate. But at some point, I think the Fed looks back. Maybe it's 2027, maybe it's 2028. Look back and say, we've had seven years of 3% inflation. We need to do something about it.

SPEAKER_01 35:51

Yeah. Um, lots of people coming in the room, Sonu. It's about time to wrap this up. All right. Um, let's see here. So we'll share on the screen right now July. I sent this one Pod Pony as well. Uh, July, listen, we don't invest blindly in seasonality, we'll be very clear. But it's interesting that you know, June did what it did. Uh, June historically is the weakest month in a uh midterm year. So that kind of played out a little bit with the volatility we saw. But the last 20 years, July is actually the strongest. I think it's 13, the last 14 years stocks have been higher in the month of July. Um, in a midterm year, July is like the third strongest month since 1950, the fourth strongest month. Uh, the last 10 years is like second or third strongest month. So listen, we've been saying for a while this summer rally is not over. We had a little bit of a June swoon, yes, but I think we're gonna have a pretty decent earnings season, some continued innovation with this broadening out, and probably higher prices as we continue to move into June, then maybe get a little fall volatility ahead of the midterm elections. That's how this stuff works. But those are some concepts and things we're thinking about. So what uh else this week, besides our country's 250th birthday, what else you're watching?

SPEAKER_00 36:58

Yeah, happy birthday. It's a big birthday. I don't know what do you call what do you call you know a 250th? I know it's a silver juggly fifty platinum, all of that for 25th and 50th, but 250 is special. But uh no, I was gonna say the World Cup again, and I know we have a lot of listeners. There was one listener from the Netherlands, so hello to you as well. They lost last night, right? Didn't in the didn't they lose heartbreaker? Yeah, it was a heart yeah, it was a heartbreaker and went to penalties, but I think you could argue that they kind of deserved to lose the way they played. Okay, you know, but they were up ahead there and you know, this this is how it rolled, so we'll see. I I still think maybe it's France that takes the whole thing, but Argentina's in there with Messi. If you don't have to spend too much time talking about the World Cup, I know. Uh next week. Yeah, no, what am I looking forward to? I think uh payrolls, right? I know it's more of an inflation story right now because the labor market is fine, but the more data we see that shows the labor market is in pretty decent shape, I think the more pressure it puts on the Fed to get ahead of inflation. Now I am in the camp. We talked about this. Like, I don't think they raise rates this year. I think for this year they'll they're gonna be like, you know, we had the Iran shock, the tariff thing, that's going to pass, so inflation transitory. And I forget who said this, but I know the dot plot moved in a hawkish direction, but they said count the votes, not the dots. Count the votes, and the votes so far don't seem to be there.

SPEAKER_01 38:33

Okay.

SPEAKER_00 38:34

I think the New York Fed president, John Williams, Powell, maybe one more person, maybe Wallard. I don't think they're there yet to raise rates. Some of the other members are there, which means I think the majority is in favor of a hold. I don't think cuts are coming anytime now.

unknown 38:50

Right.

SPEAKER_00 38:50

Right. But I think majority are in favor of a hold. But it also gets to Kevin Walsh not putting any dots into the dot plot. That's true. You can sort of step back and say if the let's say the committee, but I think every meeting becomes a live meeting because it's going to depend on the data. July, maybe 30% probability of a rate hike. I think it should be zero. October, I think markets are pricing in a rate hike. I think I don't think that's happening. But I can see why it's a 50-50 proposition every single meeting. Because as long as even going forward, look, if the labor market strengthens, that's going to be more inflationary crash, right?

SPEAKER_01 39:29

Not less. Yeah. And then devil's advocate is crude oil's down 40% back to pre um pre-war levels. Although I'm aware, you know, we're talking about energy there and other parts as you've laid out services and the AI bottlenecks and goods have been going higher. But there's one positive there, I guess. In theory, uh, it's going to cost less to fill your car up. Uh, maybe even those, I'll tell you airline tickets. Oh boy, they've had big jumps also. Maybe airline tickets can go a little lower as well. So we'll we'll keep we'll keep following it every week, right? I guess that's what we do here on uh Facts versus Feelings. Now, I guess when is our outlook? Is it in two, two, two weeks? I think two weeks. Two weeks, two weeks. Fingers crossed two weeks. So in two weeks, so we'll just do a regular um episode next week, but then in two weeks we'll have our 2026 mid-year outlook um discussion. But honestly, if you listen to this podcast every week, you probably know what we're gonna say. In fact, we might have just given some of it away today if you listen closely. Um well, so when do you guys come back? How much longer in New York?

SPEAKER_00 40:23

Tonight, today I'm definitely staring out at Central Park as I speak. Uh nice view here from the hotel room. But it's a beautiful day, so we'll take a walk around, maybe hit we haven't gone to the Brooklyn side to see it's a nice view of Manhattan from that side of the the other side of the Brooklyn Bridge. Oh, it's gorgeous. So I haven't done that with the kids, but we did pretty much everything else. And tonight we go back, and then it's just two days of work and a long weekend now again.

SPEAKER_01 40:48

I mean, you have been on the road, it feels like, even in New York for a week. Uh yeah, that's that is that's definitely one of my favorite things to do in New York that actually doesn't cost anything. Go to Brooklyn and then walk across towards uh towards Manhattan, you know, especially like at nighttime. It's really neat to do something like that. So enjoy, enjoy that. And listen, thank you to all the listeners, everyone out there. Give us a like, give us a follow, give us a positive review, give us a negative review, give us comments on YouTube, positive or negative. We just like the algorithms to uh see that. And thanks all the new listeners and due to our friends at the compound and friends who really appreciate it. Uh so no, I think that's it. I think I need to wrap this up. So you need to get going. Um yeah, hopefully this all worked. I'm looking down here. We're still recording. That's good. I don't want to look down and realize we lost the Wi-Fi in this uh condo. I mean, it looks like the Wi-Fi is still working. So that's all that. Everybody enjoy the week, enjoy the holiday, enjoy the 250th um birthday of our uh great country, and we'll see everybody next week. Take care. Thank you. Information provided on facts versus feelings with some of our geeks and Ryan Dietrich are for general information only and are not intended to provide specific advice or recommendations for any individual. The statements and opinions of show guests may not be reflective of CWM LLC or its affiliates. Past performance is no guarantee of future results. All industries are unmanaged and may not be invested in directly. Investing involves risk, including possible loss of principal. No strategy assures success or protects against loss. To determine what may be appropriate for you, consult with your attorney, accountant, financial, or tax advisor prior to investing. Guests on facts versus feelings are not affiliated with CWM L L Chaha.