November 10, 2025 • 14 mins
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Welcome back to the Deep Dive. We are digging into the Bulls,
Bears and the Bell Morning Edition for November 10th, 2025.
And what we're seeing today is genuinely fascinating.
There's this massive risk on rally happening, but you know,
if you only look at those surging equity numbers, you are
absolutely missing the, well, the internal strategic conflict
(00:21):
the market's having with itself right now.
That conflict really is the story today.
Our mission basically is to giveyou a shortcut past the obvious
relief rally. We want to zero in on that
contradiction lurking just beneath the surface.
What it comes down to is the market is placing 2 totally
opposing bets on where the US economy is headed.
And while only one can be right.OK, let's unpack that immediate
(00:42):
surge. First, the driver seems
undeniably political. Washington actually managed to
broker a deal. Yeah, finally, that procedural
Senate vote 6040. It signals the end is imminent
for that painful, record-breaking 40 day
government shutdown. The one that basically froze the
flow of all that critical government economic data.
Exactly. It left the entire investment
community guessing flying blind for weeks.
(01:04):
So taking away that huge uncertainty, that's like pure
psychological jet fuel for the market.
Absolutely. It's a collective thank goodness
that's over moment and you see Capitol Rd. really rapidly out
of safety and into equities. It's pricing and renewed
economic certainty, or at least political certainty.
And we see that rotation clearlyin the equity futures breakdown,
don't we? Yeah, Techs leading the charge
(01:25):
as usual. Yep.
The NASDAQ 100, the NQ 100 futures we track soaring up
about what, 1.2% to 1.3%? Something like that and the
broader S&P 500. The ES summon futures also
strong, up .7% to .8%. Right.
But here's the strategic nugget.Pay attention to this.
(01:45):
Look at the Dow Jones, the YM00 futures.
That's the older, more industrial economy lagging,
lagging significantly, barely up.2% or maybe a .3.
Percent. OK, So that spread that gap,
that's the key here, right? It's not just like general
excitement across the board. Not at all.
That massive difference between the Nasdaq's pop and the Dow's
sort of muted move confirms thisisn't a generalized recovery.
(02:08):
It's specific. It's targeted.
It's a reverse. Reversal of what?
Remember last week, investors were dumping high growth tech
names. They were worried about
valuations, especially anything tied to that AI valuation
narrative, right? So the shutdown resolution, it
provided the perfect concrete catalyst to just jump back in
and buy the dip in those specific tech stocks.
It signals confidence, maybe, that the Fed isn't about to slam
(02:30):
the brakes and crash the economyimmediately.
And that confidence seems to be echoing globally, too.
Overnight moves were pretty big.Huge South Korea's coast Pi
surge nearly 3%, Europe's fully participating the Star XX 600 up
1.1% and the UK's FTSE 100 is trading just what, 10 points shy
of its all time record highs, 9777.
(02:53):
Wow. So global markets are clearly
pricing in the end of the political gridlock here.
They're pricing and strength, stability, maybe demand
restoration. But, and this is the big but,
this leads us directly to the massive paradox you mentioned
earlier. If risk is so undeniably on, why
on earth is Gold classic safe haven also surging?
Yeah, that's genuinely strange, isn't it?
(03:14):
Gold's pushing towards $4090.00 an ounce, hitting A2 week high.
Which makes no sense. If the world's feeling confident
enough to buy tech dips and pushthe Footsie towards records,
gold should be retreating, shouldn't it?
Dramatically. It absolutely should in a normal
scenario. So why isn't this gold rally a
traditional risk off signal? How do we know?
(03:34):
Well, we can actually prove it'snot risk off.
Just look at the other main safehavens, U.S.
Treasuries and oil prices. OK?
If capital were really fleeing risk, truly scared, it would
pour into the safety of government bonds, right?
Right, yields would fall. But they're not.
The 10 year U.S. Treasury yield is rising.
It's trading around 4.14%. That confirms capital is
(03:56):
actually selling bonds. To rotate into risk assets like
stocks. Precisely so bonds confirm risk
on. OK, bond market agrees with
stocks. What about energy?
Oil. Oil is also confirming the
demand expectation story. WTI crude It just breached
$60.00 a barrel. On hopes that ending the
shutdown restores U.S. economic demand.
Exactly. Demand for travel, for industry,
(04:18):
for everything. That's another firm risk on
signal. Higher expected demand equals
higher oil prices. So here we are.
Equities surging, bond yields rising, meaning bonds are
selling off, oil prices climbing, all screaming risk on.
And yet gold is soaring. It feels like the market's
stepping on the gas and the brake at the exact same time.
(04:39):
That's a perfect analogy. The gold rally isn't a flight to
safety. It's something else.
It's a specific proactive bet against the economy's underlying
resilience. How so?
It's basically a dollar driven wager, a bet on a future Federal
Reserve rate cut, maybe as earlyas December.
And this bet isn't based on the government data that's about to
come out. No, because that was frozen.
(05:00):
This bet is based on the severe economic weakness that was
quietly signaled by private sector data, the stuff that did
come out during the government data blackout.
OK, that's where the memory of the shutdown damage comes back.
We saw things like that, Challenger, Gray and Christmas
report. Right showing October job cuts
were the highest since what, 2003?
And consumer sentiment tanking to its lowest level since June
(05:23):
2022. Nasty numbers.
Exactly. Those private data points
suggested serious, maybe deep economic damage was already
happening, damage the official government data wasn't
reflecting yet. So the gold mark is essentially
saying, yeah, we're happy the government's back, but the
political mess inflicted wounds,deep wounds, and those wounds
(05:43):
will force the Fed to ease policy very soon.
OK, so this is the crucial take away for you, the listener right
now. You were watching 2 conflicting
narratives playing out simultaneously.
Equities are rallying hard on the end of political
uncertainty. That's a bet on strength
returning. But gold is also rallying,
betting on the presumed economicdamage from that very same
(06:05):
uncertainty, which implies weakness and forces Fed rate
cuts. It's like market cognitive
dissonance playing out in real time.
Fascinating stuff. OK, If the market is this, it's
called schizophrenic at the macro level.
Where does that conflict show upin individual stocks?
Let's zoom into the micro view. Let's look at key movers and try
to separate the real fundamentalshifts from just, you know,
(06:26):
speculative froth. Sure.
Well, the AI infrastructure playthat remains a favorite target,
clear fundamental driver there. Look at Iron Ltd.
Iron up what, 6.66% this morning, Nice number.
Yeah, that company has completely pivoted, right?
Moved aggressively from Bitcoin mining into AI infrastructure
and that massive 9.7 billion dollars five year AI cloud deal
(06:50):
with Microsoft that cemented it.This isn't just shutdown relief
for them, it's a fundamental RE rating of the company.
And that demand for AI infrastructure is lifting
related sectors too, like storage and memory, confirming
the investment idea. Absolutely.
You see Micron MU up over 4.5%, Seagate STX up 4.3%, Western
Digital WDC up over 4.1%. This collective rise shows that
(07:13):
even within this big relief rally, the markets picking its
spots carefully. It's not just buying any growth
stock, it's aggressively chasingcompanies with direct,
measurable exposure to that booming AI demand.
That whole sector seems to be the highest conviction risk on
trade right now. OK.
So that's strategic buying. Now contrast that with some of
the pure speculative noise we'reseeing.
Oh yeah, plenty of that too. Look at integrated media
(07:34):
technology IMTE Soaring 100 27%.Despite facing a NASDAQ
delisting notice today for not filing financials.
Exactly, that's a classic low float gamble, a highly illiquid
stock just moving wildly on tinyvolume.
It's probably tied to some technical appeal process, not
fundamentals. Pure speculation.
(07:54):
Similarly, you've got Mason, Glory, MSGY up 108%.
Zero fundamental news driving that, just momentum chasers
jumping in on the frenzy. These aren't reliable economic
indicators. But micro fundamentals do still
matter, especially when the newsis bad, right?
Even on a huge Green Day like today, that sort of reinforces
the market split personality. It absolutely does.
Look at the decliners. Constellation Energy CEG is down
(08:16):
over 5%. Why?
Simple, Their Q3 earnings missedconsensus EPS estimates.
How much did they miss by? They reported $3.04 per share.
The street expected somewhere between $3 and 9th and $3.13.
So not a huge miss, but in this environment punished severely.
Expectations are high and the healthcare sector seems to be
dealing with ongoing fallout too.
Yeah, Centene CNC is down almost5%.
(08:39):
Still worried after they pulled their fully your outlook
recently. But the real shocker is Molina
Healthcare MOH down nearly 2% today, but that's after a
terrible Q3 earnings miss. How bad was it?
They reported EPS of $1.84. The consensus estimate was
$3.91. Whoa.
They missed by more than half. 52.9% miss.
(09:01):
A massive 52.9% miss. That's a disaster for them, and
it really reinforces that contradiction, doesn't it?
The macro rally suggests strength, but if your company
messes up on execution, forget it.
The market gives you absolutely no quarter if you miss your
numbers. OK.
Let's shift focus a bit. Today's rally feels tactical,
right? So relief trade, but we do have
some crucial earnings that came out before the market open
(09:22):
today. They can provide a real
fundamental test for this bullish mood.
We do first, Tyson Foods, TSN, watching that one closely,
headline numbers are expected tobe pretty weak.
The real focus is going to be onsegment margins.
Specifically, analysts are bracing for a pretty big
operating loss, maybe $118 million in their key beef
segment. Why is that?
High input costs, low cattle herd numbers.
(09:43):
It's squeezing them. How management talks about
managing those cost pressures, that'll be key.
OK, Tyson. Then there's Mabel Bear.
Most people know them as Instacart ticker cart.
This report feels critical, especially since the stock just
hit a 52 week low. Yeah, Instacart desperately
needs a win. They need a clear beat on grist
transaction value. That's GTV, and they need strong
(10:05):
ad revenue growth. Plus, they need convincing
forward guidance to stop the bleeding.
If they disappoint again, that stock could get hammered no
matter what the broad market is doing right.
And one more. Monday.com MNDY The tension
there is interesting. They've got potential growth
from new areas like their CRM and AI features, but they might
also be seeing a slowdown in core customer growth.
(10:28):
Management actually warned aboutthat, blaming Google algorithm
changes affecting their marketing.
So it's a push and pull. So these earnings are kind of
the first fundamental reality checks hitting the market today,
but you've stressed pretty strongly that the strategic
event this week isn't today's rally at all.
That's absolutely right. Today's just the warm up act.
The main event, the strategic move, is what I'm calling the
(10:49):
data deluge. Because the shutdown ending
unfreezes that government data pipeline.
Exactly. The economic dark ages are over
later this week. The market finally gets the hard
facts it needs to try and reconcile those two
contradictory narratives. We talked about strength versus
weakness. OK, So what are the specific
reports the arbiters we really need to watch and when do they
(11:11):
hit? The crucial ones are later this
week we get the official OctoberConsumer Price Index CPI on
Thursday November 13th. Then Friday, November 14th is a
double whammy October Producer Price Index, PPI and a Cobra
retail sales. These reports will finally tell
us if inflation is really sticking around and, crucially,
if consumers actually kept spending their money despite all
(11:33):
the political chaos in October. OK, this is where the rubber
meets the road, where we figure out which bet wins the equity
bet on strength or the gold bet on weakness forcing rate cuts.
Let's connect this back. Talk us through the 2 main
scenarios based on this incomingdata.
What are the implications for investors?
OK. Scenario one, let's say CPI and
PPI come in hot. Inflation is stronger, more
persistent than expected. Retail sales maybe hold up OK.
(11:57):
What does that do? Well, initially it validates the
underlying economic strength narrative, the one lifting
equities today. So maybe a brief cheer, but it
absolutely destroys the gold rally and the whole rate cut
thesis. Hot inflation means the Fed has
zero reason to cut rates. In fact, it might mean they have
to stay higher for even longer. So bond yields would spike.
(12:19):
Bond yields would likely spike hard and that spike could
seriously undermine the equity rally, especially those high
flying tech names that are so sensitive to rate expectations.
The market would have to abruptly stop betting on rate
cuts and reprice for a sustainedhigher for longer world painful
adjustment. OK, so good news for the economy
could actually turn into bad news for the current market
(12:40):
darlings. Got it.
Now scenario 2:00 What if the data comes in week cold?
Right. If CPIPPI retail sales all come
in cold, maybe confirming that weak private data we saw during
the shutdown was real. Then the rate cut bet pays off.
Exactly. That validates the rate cut
thesis. Gold would likely surge even
(13:00):
further. The market would start seriously
pricing in Fed easing, maybe even that December cut.
But wait, if the data is weak, the economy is weak, right?
Isn't that bad for stocks? Precisely that weak data
simultaneously rips the rug out from under the economic strength
narrative that's fueling today'sequity rally.
That tactical rally we're seeingbuilt on just removing political
(13:23):
uncertainty would suddenly look like it was built on shaky
ground. Investors would realize the
actual demand environment might be collapsing, and even though
rate cuts are coming, company earnings forecast would have to
start coming down dramatically. That could be really punishing,
especially for cyclical stocks. OK, so putting it all together,
what this really means is that today you, the listener are
(13:43):
watching a market rally that haspriced in the tactical removal
of political uncertainty. That's done, but strategically
it is somehow managed to price in two completely different
mutually exclusive economic futures at the same time.
Precisely. It's bizarre, but true.
So the core strategic question for you to think about this week
is pretty simple. You've got the shutdown relief
(14:05):
trade implying underlying strength and you've got the gold
trade implying weakness that forces the Fed's hand.
Which of those two opposing stories will the cold, hard,
unfrozen government data hittingThursday and Friday actually
prove right? That decision is likely going to
determine the markets real direction heading into the end
of the year. That is absolutely the real
(14:26):
strategic move to watch this week.
Keep your eyes glued to those inflation and consumption
reports later this week. We'll definitely be here to
unpack the fallout when that data finally drops.
Until then, keep those sources handy.
Welcome back to the Deep Dive. We are digging into the Bulls,
Bears and the Bell Morning Edition for November 10th, 2025.
And what we're seeing today is genuinely fascinating.
There's this massive risk on rally happening, but you know,
if you only look at those surging equity numbers, you are
absolutely missing the, well, the internal strategic conflict
(00:21):
the market's having with itself right now.
That conflict really is the story today.
Our mission basically is to giveyou a shortcut past the obvious
relief rally. We want to zero in on that
contradiction lurking just beneath the surface.
What it comes down to is the market is placing 2 totally
opposing bets on where the US economy is headed.
And while only one can be right.OK, let's unpack that immediate
(00:42):
surge. First, the driver seems
undeniably political. Washington actually managed to
broker a deal. Yeah, finally, that procedural
Senate vote 6040. It signals the end is imminent
for that painful, record-breaking 40 day
government shutdown. The one that basically froze the
flow of all that critical government economic data.
Exactly. It left the entire investment
community guessing flying blind for weeks.
(01:04):
So taking away that huge uncertainty, that's like pure
psychological jet fuel for the market.
Absolutely. It's a collective thank goodness
that's over moment and you see Capitol Rd. really rapidly out
of safety and into equities. It's pricing and renewed
economic certainty, or at least political certainty.
And we see that rotation clearlyin the equity futures breakdown,
don't we? Yeah, Techs leading the charge
(01:25):
as usual. Yep.
The NASDAQ 100, the NQ 100 futures we track soaring up
about what, 1.2% to 1.3%? Something like that and the
broader S&P 500. The ES summon futures also
strong, up .7% to .8%. Right.
But here's the strategic nugget.Pay attention to this.
(01:45):
Look at the Dow Jones, the YM00 futures.
That's the older, more industrial economy lagging,
lagging significantly, barely up.2% or maybe a .3.
Percent. OK, So that spread that gap,
that's the key here, right? It's not just like general
excitement across the board. Not at all.
That massive difference between the Nasdaq's pop and the Dow's
sort of muted move confirms thisisn't a generalized recovery.
(02:08):
It's specific. It's targeted.
It's a reverse. Reversal of what?
Remember last week, investors were dumping high growth tech
names. They were worried about
valuations, especially anything tied to that AI valuation
narrative, right? So the shutdown resolution, it
provided the perfect concrete catalyst to just jump back in
and buy the dip in those specific tech stocks.
It signals confidence, maybe, that the Fed isn't about to slam
(02:30):
the brakes and crash the economyimmediately.
And that confidence seems to be echoing globally, too.
Overnight moves were pretty big.Huge South Korea's coast Pi
surge nearly 3%, Europe's fully participating the Star XX 600 up
1.1% and the UK's FTSE 100 is trading just what, 10 points shy
of its all time record highs, 9777.
(02:53):
Wow. So global markets are clearly
pricing in the end of the political gridlock here.
They're pricing and strength, stability, maybe demand
restoration. But, and this is the big but,
this leads us directly to the massive paradox you mentioned
earlier. If risk is so undeniably on, why
on earth is Gold classic safe haven also surging?
Yeah, that's genuinely strange, isn't it?
(03:14):
Gold's pushing towards $4090.00 an ounce, hitting A2 week high.
Which makes no sense. If the world's feeling confident
enough to buy tech dips and pushthe Footsie towards records,
gold should be retreating, shouldn't it?
Dramatically. It absolutely should in a normal
scenario. So why isn't this gold rally a
traditional risk off signal? How do we know?
(03:34):
Well, we can actually prove it'snot risk off.
Just look at the other main safehavens, U.S.
Treasuries and oil prices. OK?
If capital were really fleeing risk, truly scared, it would
pour into the safety of government bonds, right?
Right, yields would fall. But they're not.
The 10 year U.S. Treasury yield is rising.
It's trading around 4.14%. That confirms capital is
(03:56):
actually selling bonds. To rotate into risk assets like
stocks. Precisely so bonds confirm risk
on. OK, bond market agrees with
stocks. What about energy?
Oil. Oil is also confirming the
demand expectation story. WTI crude It just breached
$60.00 a barrel. On hopes that ending the
shutdown restores U.S. economic demand.
Exactly. Demand for travel, for industry,
(04:18):
for everything. That's another firm risk on
signal. Higher expected demand equals
higher oil prices. So here we are.
Equities surging, bond yields rising, meaning bonds are
selling off, oil prices climbing, all screaming risk on.
And yet gold is soaring. It feels like the market's
stepping on the gas and the brake at the exact same time.
(04:39):
That's a perfect analogy. The gold rally isn't a flight to
safety. It's something else.
It's a specific proactive bet against the economy's underlying
resilience. How so?
It's basically a dollar driven wager, a bet on a future Federal
Reserve rate cut, maybe as earlyas December.
And this bet isn't based on the government data that's about to
come out. No, because that was frozen.
(05:00):
This bet is based on the severe economic weakness that was
quietly signaled by private sector data, the stuff that did
come out during the government data blackout.
OK, that's where the memory of the shutdown damage comes back.
We saw things like that, Challenger, Gray and Christmas
report. Right showing October job cuts
were the highest since what, 2003?
And consumer sentiment tanking to its lowest level since June
(05:23):
2022. Nasty numbers.
Exactly. Those private data points
suggested serious, maybe deep economic damage was already
happening, damage the official government data wasn't
reflecting yet. So the gold mark is essentially
saying, yeah, we're happy the government's back, but the
political mess inflicted wounds,deep wounds, and those wounds
(05:43):
will force the Fed to ease policy very soon.
OK, so this is the crucial take away for you, the listener right
now. You were watching 2 conflicting
narratives playing out simultaneously.
Equities are rallying hard on the end of political
uncertainty. That's a bet on strength
returning. But gold is also rallying,
betting on the presumed economicdamage from that very same
(06:05):
uncertainty, which implies weakness and forces Fed rate
cuts. It's like market cognitive
dissonance playing out in real time.
Fascinating stuff. OK, If the market is this, it's
called schizophrenic at the macro level.
Where does that conflict show upin individual stocks?
Let's zoom into the micro view. Let's look at key movers and try
to separate the real fundamentalshifts from just, you know,
(06:26):
speculative froth. Sure.
Well, the AI infrastructure playthat remains a favorite target,
clear fundamental driver there. Look at Iron Ltd.
Iron up what, 6.66% this morning, Nice number.
Yeah, that company has completely pivoted, right?
Moved aggressively from Bitcoin mining into AI infrastructure
and that massive 9.7 billion dollars five year AI cloud deal
(06:50):
with Microsoft that cemented it.This isn't just shutdown relief
for them, it's a fundamental RE rating of the company.
And that demand for AI infrastructure is lifting
related sectors too, like storage and memory, confirming
the investment idea. Absolutely.
You see Micron MU up over 4.5%, Seagate STX up 4.3%, Western
Digital WDC up over 4.1%. This collective rise shows that
(07:13):
even within this big relief rally, the markets picking its
spots carefully. It's not just buying any growth
stock, it's aggressively chasingcompanies with direct,
measurable exposure to that booming AI demand.
That whole sector seems to be the highest conviction risk on
trade right now. OK.
So that's strategic buying. Now contrast that with some of
the pure speculative noise we'reseeing.
Oh yeah, plenty of that too. Look at integrated media
(07:34):
technology IMTE Soaring 100 27%.Despite facing a NASDAQ
delisting notice today for not filing financials.
Exactly, that's a classic low float gamble, a highly illiquid
stock just moving wildly on tinyvolume.
It's probably tied to some technical appeal process, not
fundamentals. Pure speculation.
(07:54):
Similarly, you've got Mason, Glory, MSGY up 108%.
Zero fundamental news driving that, just momentum chasers
jumping in on the frenzy. These aren't reliable economic
indicators. But micro fundamentals do still
matter, especially when the newsis bad, right?
Even on a huge Green Day like today, that sort of reinforces
the market split personality. It absolutely does.
Look at the decliners. Constellation Energy CEG is down
(08:16):
over 5%. Why?
Simple, Their Q3 earnings missedconsensus EPS estimates.
How much did they miss by? They reported $3.04 per share.
The street expected somewhere between $3 and 9th and $3.13.
So not a huge miss, but in this environment punished severely.
Expectations are high and the healthcare sector seems to be
dealing with ongoing fallout too.
Yeah, Centene CNC is down almost5%.
(08:39):
Still worried after they pulled their fully your outlook
recently. But the real shocker is Molina
Healthcare MOH down nearly 2% today, but that's after a
terrible Q3 earnings miss. How bad was it?
They reported EPS of $1.84. The consensus estimate was
$3.91. Whoa.
They missed by more than half. 52.9% miss.
(09:01):
A massive 52.9% miss. That's a disaster for them, and
it really reinforces that contradiction, doesn't it?
The macro rally suggests strength, but if your company
messes up on execution, forget it.
The market gives you absolutely no quarter if you miss your
numbers. OK.
Let's shift focus a bit. Today's rally feels tactical,
right? So relief trade, but we do have
some crucial earnings that came out before the market open
(09:22):
today. They can provide a real
fundamental test for this bullish mood.
We do first, Tyson Foods, TSN, watching that one closely,
headline numbers are expected tobe pretty weak.
The real focus is going to be onsegment margins.
Specifically, analysts are bracing for a pretty big
operating loss, maybe $118 million in their key beef
segment. Why is that?
High input costs, low cattle herd numbers.
(09:43):
It's squeezing them. How management talks about
managing those cost pressures, that'll be key.
OK, Tyson. Then there's Mabel Bear.
Most people know them as Instacart ticker cart.
This report feels critical, especially since the stock just
hit a 52 week low. Yeah, Instacart desperately
needs a win. They need a clear beat on grist
transaction value. That's GTV, and they need strong
(10:05):
ad revenue growth. Plus, they need convincing
forward guidance to stop the bleeding.
If they disappoint again, that stock could get hammered no
matter what the broad market is doing right.
And one more. Monday.com MNDY The tension
there is interesting. They've got potential growth
from new areas like their CRM and AI features, but they might
also be seeing a slowdown in core customer growth.
(10:28):
Management actually warned aboutthat, blaming Google algorithm
changes affecting their marketing.
So it's a push and pull. So these earnings are kind of
the first fundamental reality checks hitting the market today,
but you've stressed pretty strongly that the strategic
event this week isn't today's rally at all.
That's absolutely right. Today's just the warm up act.
The main event, the strategic move, is what I'm calling the
(10:49):
data deluge. Because the shutdown ending
unfreezes that government data pipeline.
Exactly. The economic dark ages are over
later this week. The market finally gets the hard
facts it needs to try and reconcile those two
contradictory narratives. We talked about strength versus
weakness. OK, So what are the specific
reports the arbiters we really need to watch and when do they
(11:11):
hit? The crucial ones are later this
week we get the official OctoberConsumer Price Index CPI on
Thursday November 13th. Then Friday, November 14th is a
double whammy October Producer Price Index, PPI and a Cobra
retail sales. These reports will finally tell
us if inflation is really sticking around and, crucially,
if consumers actually kept spending their money despite all
(11:33):
the political chaos in October. OK, this is where the rubber
meets the road, where we figure out which bet wins the equity
bet on strength or the gold bet on weakness forcing rate cuts.
Let's connect this back. Talk us through the 2 main
scenarios based on this incomingdata.
What are the implications for investors?
OK. Scenario one, let's say CPI and
PPI come in hot. Inflation is stronger, more
persistent than expected. Retail sales maybe hold up OK.
(11:57):
What does that do? Well, initially it validates the
underlying economic strength narrative, the one lifting
equities today. So maybe a brief cheer, but it
absolutely destroys the gold rally and the whole rate cut
thesis. Hot inflation means the Fed has
zero reason to cut rates. In fact, it might mean they have
to stay higher for even longer. So bond yields would spike.
(12:19):
Bond yields would likely spike hard and that spike could
seriously undermine the equity rally, especially those high
flying tech names that are so sensitive to rate expectations.
The market would have to abruptly stop betting on rate
cuts and reprice for a sustainedhigher for longer world painful
adjustment. OK, so good news for the economy
could actually turn into bad news for the current market
(12:40):
darlings. Got it.
Now scenario 2:00 What if the data comes in week cold?
Right. If CPIPPI retail sales all come
in cold, maybe confirming that weak private data we saw during
the shutdown was real. Then the rate cut bet pays off.
Exactly. That validates the rate cut
thesis. Gold would likely surge even
(13:00):
further. The market would start seriously
pricing in Fed easing, maybe even that December cut.
But wait, if the data is weak, the economy is weak, right?
Isn't that bad for stocks? Precisely that weak data
simultaneously rips the rug out from under the economic strength
narrative that's fueling today'sequity rally.
That tactical rally we're seeingbuilt on just removing political
(13:23):
uncertainty would suddenly look like it was built on shaky
ground. Investors would realize the
actual demand environment might be collapsing, and even though
rate cuts are coming, company earnings forecast would have to
start coming down dramatically. That could be really punishing,
especially for cyclical stocks. OK, so putting it all together,
what this really means is that today you, the listener are
(13:43):
watching a market rally that haspriced in the tactical removal
of political uncertainty. That's done, but strategically
it is somehow managed to price in two completely different
mutually exclusive economic futures at the same time.
Precisely. It's bizarre, but true.
So the core strategic question for you to think about this week
is pretty simple. You've got the shutdown relief
(14:05):
trade implying underlying strength and you've got the gold
trade implying weakness that forces the Fed's hand.
Which of those two opposing stories will the cold, hard,
unfrozen government data hittingThursday and Friday actually
prove right? That decision is likely going to
determine the markets real direction heading into the end
of the year. That is absolutely the real
(14:26):
strategic move to watch this week.
Keep your eyes glued to those inflation and consumption
reports later this week. We'll definitely be here to
unpack the fallout when that data finally drops.
Until then, keep those sources handy.
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