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Month: June 2024

US Economy Too Strong for Fed, Where to Invest Now (Szn 6, Epsd 10)

With Leo Schmidt, River Eddy Capital

Leo Schmidt, founder of family office River Eddy Capital, rejoins the podcast to discuss his views on economy, markets, and where to invest capital in what may be a ‘stagflation lite’ environment.

This podcast episode was recorded on Friday, June 7, 2024 and made available to premium subscribers the following Monday. Visit the Substack or Supercast for more information about premium subscriptions.

  • “Labor markets are way too hot.” There will be “no landing” (1:48);
  • Non-farm payrolls came out much stronger than anticipated. What this says about the labor market (4:59);
  • ‘Stagflation lite’ (8:31);
  • Our views of credit creation are outdated. The shadow banking system has replaced commercial banks as the primary source of credit. What this means (11:59);
  • The Federal Reserve probably needs to cut rates. Could they? Probably not — this year (22:21);
  • What does an investor do now? First up: Stocks that are AI/Nvidia (NVDA) plays. Celestica (CLS), Flex (FLEX), Sanmina (SANM), Jabil (JBL) (27:51);
  • Pharma spin-outs: Haleon (HLN), Kenvue (KVUE), Organon (OGN), Viatris (VTRS) (31:54);
  • Dollar stores, especially Dollar Tree (DLTR), are poised to outperform once there is an economic slowdown (39:07);
  • The bullish case for pipeline companies (46:59).

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Stock Market Expectations Getting Ahead of Economic Realities (Szn 6, Epsd 9)

With Bob Elliott, Unlimited

Bob Elliott of Unlimited rejoins the podcast to discuss his view that stock markets are pricing in a lot of optimism that may not be based on economic realities…

Content Highlights

  • Stock markets are pricing in a lot of optimism. Just how unrealistic is that? (1:19);
  • What is there to indicate the economy could slow this year or even next? (4:34);
  • A recession may be years away rather than months under current conditions. But conditions, as we know, can change quickly… (8:58);
  • There is a precedence to interest rates going up dramatically without it causing an immediate and dramatic entrenchment in economic growth (11:52);
  • Tech stocks might be overvalued but comparisons to the dot-com bubble are unfair and inaccurate — and may preclude a spectacular bust (16:10);
  • Today’s economic expansion is income-driven. Not a result of credit expansion (18:13);
  • What kinds of indicators should investors study to spot a slowdown in this particular type of economic activity? (30:45);
  • Regional banks are for the most part fairly priced at present… (35:50).

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