May 1, 2025 • 46 mins
When market volatility erupts, understanding the mechanics behind price movements becomes crucial. In this illuminating conversation with Jay Hatfield of Infrastructure Capital, we dive deep into the surprising dynamics of the recent market sell-off and subsequent recovery following Trump's tariff announcements.
The discussion begins with what Hatfield calls "the small cap tariff problem" – the counterintuitive underperformance of small cap stocks despite their lower exposure to international tariffs. Rather than fundamental concerns, this divergence stems from technical factors: small caps are high beta assets that naturally experience greater volatility during market disruptions. It's a powerful reminder that market commentary often follows price action rather than leads it, creating what Hatfield describes as "momentum market commentary."
Most provocatively, Hatfield challenges the conventional wisdom around tariffs and inflation. Unlike the stagflationary environment of the 1970s when oil prices rose 1200%, today's economic landscape features falling oil prices (down 20% year-to-date) combined with one-time tariff impacts. "Tariffs are one-time price increases, not inflation," Hatfield emphasizes, arguing that the Federal Reserve fundamentally misunderstands this distinction, keeping rates unnecessarily high based on a flawed framework that ignores money supply dynamics.
Looking forward, Hatfield remains constructive on markets with an S&P target range of 5,000 to 6,000 in the near term and 6,600 by year-end. He sees earnings season as a stabilizing force that will replace fear with factual corporate data. For investors navigating this landscape, his Infrastructure Capital ETFs offer different strategies for varying risk appetites – from value-focused small caps (SCAP) to high-yield fixed income (PFFA and BNDS) and covered call strategies (ICAP).
Ready to look beyond the headlines and understand what's really driving markets? This conversation provides the framework you need to separate market noise from investment opportunity during periods of policy uncertainty.
Sign up to The Lead-Lag Report on Substack and get 30% off the annual subscription today by visiting http://theleadlag.report/leadlaglive.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
From an interest rate sensitivity perspective, do you
think that the bond marketmaybe has it wrong in terms of
the reaction on tariffs andmaybe Trump walking some of
these back?
Speaker 2 (00:08):
Well, I think there was a technical issue away from
the fundamentals of, about tradeunwinds, basis trade unwinds,
rather Notwithstanding theTreasury Secretary's assertion.
I think that foreigners maybethey didn't sell their
treasuries, but they I meanChina was not buying treasuries,
we're confident of that so theynormally buy.
So if they stop buying, thatimpacts the tenure.
(00:31):
What I would say is that it'snot very dislocated.
Now it's recovered.
It's at 435.
Our target before the Fedfigures out they need to lower
rates and some members havefigured that out, like Waller,
but most of them are incompetent, don't understand tariffs at
one time, can't forecastinflation.
Speaker 1 (01:01):
Jay's been really on fire in terms of the way he's
been seeing a lot of the stuffgoing on in markets.
So I think many of you aregoing to enjoy his perspective
on things and this is a sponsorconversation by Infrastructure
Capital, one of my clients and,as I mentioned, jay has been on
fire, so I'm looking forward tothis back and forth we're going
to have here.
Some of you may argue that I'vebeen on fire a little bit too,
especially last Wednesday.
(01:22):
That was a hell of a day on acruise ship when I said that
we're going to see one of thegreatest intraday reversals
higher in the stock market inhistory, just as everything was
falling apart.
So I think Jay and I werealigned on that without having
spoken.
So, with all that said, my nameis Michael Agayat, publisher of
the Lead Lag Report.
Joining me here is Mr JayHatfield of Infrastructure
Capital.
I named this podcast, thisconversation, the small cap
(01:45):
tariff problem, and I say thatbecause, if anybody hasn't
noticed, small caps have gottendestroyed, in this most recent
period at least, when you lookat passive indices like the
Russell 2000, much more so thanthe large cap averages, which
seems a little bitcounterintuitive, jay, because
you'd think that tariffs wouldmost impact anything that's more
focused on global revenue asopposed to more domestic small
(02:09):
cap sources of revenue.
I want to get your take firstof all, in terms of the initial
reaction that we saw in thatwave, lower when it came to
large caps versus small caps.
Did it make sense to you?
Speaker 2 (02:21):
It did and you know we were surprised.
We call it the chart of death.
You know Trump's chart, whichwas wholly irrational.
So not surprised that themarket sold off hard.
And for that reason no oneshould be surprised that small
(02:43):
caps sold off simply becausethey're high beta stocks.
So by high beta I mean they'remore volatile than the stock
market as a whole.
So you're going to see in adowndraft, you're going to see
small caps underperform, theNASDAQ underperform, meme stocks
will underperform, bitcoin willunderperform.
(03:05):
So it's normal in a sell-offthat the highest correlated
stocks sell off, not justaccording to their correlation,
but probably worse, and then thelow correlation or low beta
stocks actually get some flowsor lack of selling.
So lower beta outperformshigher beta.
(03:27):
So that really explains 99%.
And then there's always marketcommentary, but it's what we
call momentum market commentary.
So like, if the market's down,everybody lowers their S&P
targets.
If tech stocks are down and OAIis falling apart, if tech
stocks are down, then oh, ai isfalling apart.
If small caps are down, oh,they have tremendous tariff
(03:50):
exposure.
But, as you're implying,michael, they actually have way
below average tariff exposure.
Even the global manufacturershave overseas production that
they can move around.
So we don't see any materialhits to earnings for the small
caps.
(04:10):
And if you had asked me beforeit happened, you know, if we
have a 10% drawdown, what aresmall caps going to do?
I'd say, oh, they'll be down 12or 13 because they're higher.
It just people don't treat themas safe havens.
They're higher.
It just people don't treat themas safe havens, understandably.
Like would you rather be, youknow, in a small cap bank or JP
(04:30):
Morgan?
Probably JP Morgan.
So not too surprising what'shappened.
If you believe, like us, thatthe current tariff tantrum is
over, we're going to get moregood news than bad, we're in
earnings season, then small capsare a good way to play.
Do increase in the marketbecause, just like today,
(04:52):
they're up a little bit morethan the market.
That's likely to continue if weget this stability, increased
stability and potential rally.
We have a 5,000 to 6,000 range,so really like a 6,000 target.
We do think 5,000 is a good,solid support area, even if
(05:13):
something incremental happens.
So we are constructive.
We have a 6,600 target for theS&P at the end of the year.
Speaker 1 (05:20):
How much does sector movement play into this?
It seems like we got the newsearlier today around NVIDIA and
it seems like now there's morefocus on tariffs not impacting
some of these tech companies andthe semis in general.
Those are obviously much morelarge cap than small cap.
Speaker 2 (05:39):
How do you think about sector sort of that's what
the other thing that peoplemiss it's not relevant now, but
(06:03):
small caps go down.
So that's the sector allocation.
And even though REITs aresupposed to be defensive, they
got smacked just like theirregular financials
underperformed, techunderperformed, but small caps
are only about 10% tech, so waylower than the S&P.
(06:23):
But the financial and REITsreally hammered those indices as
well.
And also money losing companies, not in our fund but SCAP, but
in the IWM.
It's a lot of money losing,particularly biotech companies.
So those are the highest riskcompanies in the market as well.
Speaker 1 (06:44):
So they're going to get smacked in a downturn?
Yeah, it's interesting that youdon't see yields dropping in
the same way that equities arerising in this most recent
rebound in any sort of veryaggressive way.
From an interest ratesensitivity perspective, do you
think that the bond market maybehas it wrong in terms of the
reaction on tariffs and maybeTrump walking some of these back
(07:04):
?
Speaker 2 (07:05):
Well, I think there was a technical issue, away from
the fundamentals of, abouttrade unwinds basis trade
unwinds, rather, andnotwithstanding the Treasury
Secretary's assertion, I thinkthat foreigners maybe they
didn't sell their treasuries,but they I mean China is not
buying treasuries, we'reconfident of that, so they
(07:28):
normally buy.
I think that foreigners maybethey didn't sell their
treasuries, but they I meanChina was not buying treasuries,
we're confident of that, sothey normally buy.
So if they stop buying, thatimpacts the 10-year.
What I would say is that it'snot very dislocated.
Now it's recovered.
I'm at 435.
Our target.
Before the Fed figures out, theyneed to lower rates and some
(07:49):
members have figured that out,like Waller, but most of them
are incompetent, don'tunderstand.
Tariffs are one time.
Can't forecast inflation.
We're forecasting PC coreprints around zero.
The consensus is only 0.1, andthat it rolls down to 2.4,
consensus 2.5.
So if even a 2.5 number occurs,the Fed absolutely should cut.
(08:13):
So that will help rates.
We have a 3.75 target, butuntil they figured it out, we
have a 4.
A quarter.
So 435 is only 10 basis pointsdislocated.
Everybody focused on the factwe went from 390 up to like 450
in short order, but 390 was anoverreaction to a potential
(08:38):
recession.
We're at a 1% to 2% growth ratefor the US economy, mostly
because, basically, the marketcut rates for the Fed, so 10
years off 50 base points fromits highs.
That should stabilize.
Housing Tech spending continuesto be strong.
You should always look atinvestment if you're trying to
(09:00):
predict a cycle.
Consumer spending has nevercreated a recession, which is
funny because everyone alwaysreferences consumer spending.
They just don't understand basicmath.
It's two-thirds of the totaleconomy, but it's not volatile
at all.
Just think of your own spending.
You're like, oh my gosh, I needto spend less.
(09:20):
How much less do you reallyspend?
Probably not a lot.
Low-income people have to spend.
High income people want tospend.
Consumers consume just likewoodchucks chuck wood.
It just is what they do.
They will stop consuming ifthere's a big investment
drawdown and they get laid off.
That's it.
Speaker 1 (09:41):
There was this theory going around which maybe I'm
too blamed for a little bit,because I've had this argument
for a while that in order tocause yields to drop, they have
to, in quotes, crash stocks, andit almost looked like what was
happening in the initial stagesof this.
Trump was even posted on truthsocial a video that made that
(10:02):
very argument.
You know that it's thebrilliant strategy for Trump is
to crash stocks so that yieldscome in quite a bit lower on
this refinancing wave.
In advance of that, does theTrump administration want lower
rates?
Ultimately?
Because if they are trying todo tariffs here, it doesn't seem
like that's the way to do it.
Speaker 2 (10:17):
Well, you know, actually I have a contrarian
view on this as well.
There's a lot of cross currentsnow, if you really think about
it.
So we came in to the Trumpadministration and I was asked
about this on television,possibly by more liberal
journalists oh well, trump'sgoing to be way worse for the
budget deficit than Biden.
And I said well, how is thatpossible?
(10:39):
The Biden administration triedto pass a $6 trillion welfare
bill spending bill over 10 yearsand the Trump administration is
cutting expenses on Doge,raising revenue from tariffs.
We strongly believe, and Wallerdoes as well tariffs are one
(10:59):
time, not inflation Not greatfor consumers, by the way, bad
politically but economically notinflation.
Inflation is ongoing increasesin prices, not one time
increases.
And when you raise taxes salestype taxes then you reduce
consumer spending.
That's also deflationary andyou pay down debt.
(11:20):
So and the Treasury secretaryis pretty powerful right now
wants to bring the budgetdeficit down to 3% the Fed is
holding rates way too high.
So I don't think the strategyis to tank the stock market and
get Treasuries lower.
It's to reduce oil prices andthat's, by the way, nobody cares
(11:44):
about that.
But it's a complete offset tothe current 10% tariffs, so we
actually have lower headlineinflation than without tariffs,
at least if oil stays around 60.
We see all the dynamics beingthe opposite of what the pundits
thought, which is that most ofthe Trump policies are pro
(12:10):
savings by the federalgovernment well, reduced rates.
But the most important variableis the Fed and whether they
figure out and agree finallyagree with us which is the right
way to treat sales taxes.
Is this a one time cost?
Should not be included inmonetary policy.
I do understand and I get a lotof blowback that everybody's
(12:33):
upset about it because theydon't want to pay higher prices,
but that doesn't mean the Fedneeds to try to offset that.
Speaker 1 (12:38):
Speaking of that oil drop and the point about it
being a larger deal maybe thanpeople realize Typically, how do
oil prices impact small capversus large cap outperformance
and does weaker oil really tendto benefit small caps more
disproportionately?
Speaker 2 (12:53):
Well, the first thing just to note is that it's 6% of
CPI.
So if oil prices drop 20%,which they have since the
beginning of the year, that's a1.2% decrease.
But every company in the UnitedStates uses energy about 5% of
the average company.
So you're going to get anotherbleed through of 1% to core over
(13:17):
long periods of time.
And then, in terms of affectingsmall versus large, it's just
the percentage of energy stocksand they're roughly the same
between small caps and largecaps is quite small, but that
those are the stocks, of course,that got hit the hardest.
And then you know, like I said,it helps the cost function a
(13:39):
little bit because you get.
You know, if you have 5% energyand oil comes down, but it's
not really material enough tosay, oh well, oil lower by small
caps.
It's more like market higher bysmall caps than it is oil lower
.
If the market rower is becauseoil is going down, which it
(14:00):
should I don't think anybody'sdoing that, but it should do
that Then you know small capitalbenefit.
Speaker 1 (14:08):
One of the things that I think was surprising
about the sell-off at least tome, was that credit spreads,
while they widened, they didn'treally blow out by any means.
Certainly, given the magnitudeof the S&P's decline, you would
have expected yields would havereally gone vertical and given
the VIX spike, was thatsurprising to you to see credit
spreads be that resilient?
Speaker 2 (14:29):
No, because we don't think that tariffs are that
important to the US economy.
So, even though fears ofrecession and strategists,
there's one thing to look outfor from strategists which is a
terrible, terrible thing.
It's what we call momentumanalysis.
So stock market's down, thenwe're going to go into recession
(14:51):
.
Stock market's down, as Italked about already, oai is
blowing up, but it could be juststock market's down because
it's down, and so we think thenotion that taxing 13% of the US
economy produces a recession isridiculous.
It might trim 30 to 50 basepoints of growth.
We do think the economy isslowing because of the Fed being
(15:15):
way too tight.
They're about 150 base pointsover neutral rate.
So that's the issue.
Nobody agrees with us, but it'simportant to understand that
dynamic so you don't get toonegative about tariffs.
Speaker 1 (15:30):
So about S-cap and how it performed.
First of all, during thevolatility, what was happening
internally at infrastructurecapital?
I saw all kinds of stats aroundhow bid S spreads just blew out
.
It's like one of the biggestspread differentials we've seen
in a while.
Just market structure.
What was going on internally asthe volatility was playing out?
Speaker 2 (15:50):
Well, we were ahead of the curve, because what we
focus on is the earning cycle.
So we became neutral on themarket in mid-February, so we
had reduced our exposure to themarket in mid-February.
So we had reduced our exposureto the market, so our beta or
(16:11):
correlation market was way down.
We were well positioned, justbased on the cyclical nature of
the earning season and notearning season.
Now, obviously this was a wayworse not earning season or
non-earning season because ofthe tariff war, the tweets about
the tariff war and ultimately,what we call the chart of death.
But so we were pretty wellpositioned.
(16:34):
And then we also had anticipatedthat this week would be at
least less volatile, if not up.
So we added that back.
So that's the way we dealt withit and it's the way we normally
deal with things.
So if you, we have this calllike a month and change after
this earnings season, we'll seewhere we rally to.
(16:55):
If we do rally or up, we'regoing to be incrementally more
cautious when we get out ofearning season, because then the
only catalysts are non-companyrelated most of the time and
usually that's negative, it's anegative tweet, it's a natural
disaster.
Whatever other new warningearnings warning ahead of the
(17:19):
earning season.
So playing that cyclicaldynamic, it makes you pretty
easy to call the mark.
Speaker 1 (17:26):
So about any sort of longer term shifts that you
might be contemplating.
Has any of this resulted instrategically sort of thinking
about where to overweight orunderweight differently than
prior to tariffs?
Speaker 2 (17:39):
Well, certainly we didn't want to, you know,
counsel our clients to go downwith the ship.
So we were cautious last weekin terms of recommending, you
know, riskier stocks.
But now we believe that, like Isaid, that the tariff news is
going to be mostly positive.
(18:00):
The economy is going to hang inthere, particularly when the
Fed figures out that they haveto cut rates, because that's
really the only issue with theeconomy right now.
Tariffs are immaterial, oil ismaterial and they offset each
other.
Oil decline, that is.
We're not actually changing ourrecommendations.
So we still like financials,which are a riskier sector.
We still like investment banks.
(18:22):
We think they're reallyresilient.
They did well this quarter,which is surprising, mostly on
equity trading, but we do thinkM&A is going to heat up.
That again.
You know, this idea thatthere's not going to be any
mergers because people areuncertain is, you know, maybe
they're uncertain for two weekswhile the market's crashing, but
(18:43):
then they're more certain whenthe market's stabilizing.
So we don't believe any of that.
Mergers take a while toannounce IPOs, take a while to
get through SEC registration.
So we still forecast the secondhalf investment banking boom,
which will be good for all themajor banks, particularly the
pure investment banks.
Speaker 1 (19:04):
I know you're a big fan of selling calls.
I'm curious how was that duringthe volatility the last week
and a half, two weeks?
Speaker 2 (19:12):
Well, you know, the strange thing about that is it's
best to sell calls when thevolatility is low, unless it's
just irrationally high.
Volatility is low unless it'sjust irrationally high.
But so we actually almoststopped selling calls.
Because we did, you know,because you, what you don't want
to do is sell a bunch of callsat the bottom and then you get
(19:33):
the type of analysis we had onwednesday and then you get run
over by them.
So we do use hi or humanintelligence and actually
attenuated and it can be waymore profitable to sell because
you know you can have themexercise to sell them when
volatility is lower.
And so we avoided blowing up oncall writing during that nine
(19:57):
and a half percent rally in theS&P, rally in the S&P.
So that's why we don't reallybelieve in these index funds
that just always sell calls,because they probably
under-participated in that 9.5%rip You've got six different
ETFs.
Speaker 1 (20:15):
We touched on S-Cap.
We'll touch on Sorry tointerrupt.
Speaker 2 (20:17):
Michael.
But there's just one otherpoint about that is we only sell
calls that are first, veryshort term and where we have
profits.
So if the market plunges, we'renot, there's not going to be
that many stocks where we haveprofits.
So those rules we don't have tobe geniuses about calling a
market, just rules just say well, why would we want to write a
(20:38):
call on that stock?
Because we're, you know,underwater on it by like 30
bucks, so why do we want to lockin losses?
So using that as a guidepost,which no other index, no index
funds use, is a good way to keepyourself out of trouble.
Where you don't sell callsexactly the wrong time, sorry to
interrupt.
Speaker 1 (20:57):
No, no, no, for sure.
No, that's a good clarification.
You've got six different ETFs.
Were any of them?
They're all your baby, I get itright.
But in the midst of thevolatility, were any of them, in
your mind, showing the mostopportunity, meaning that there
was a larger dislocation in thisfund versus that fund, just
based on-.
Speaker 2 (21:18):
The.
You know we have three fixedincome ETFs and three equity
income ETFs and so going intothe downdraft not just the
Liberation Day downdraft but youknow the cyclical earnings
season downdraft you definitelywanted to be like in PFFA BNDS
(21:42):
those are fixed income funds thebeta is pretty much is about
0.3 for BNDS 0.5.
So you under-participate in thedrop by owning those funds.
Plus you get great income 8%and 10%, roughly under 10% now
because it's right back.
So you get great income.
So that's a good place to bebefore.
(22:03):
But things you know, really,icap, amza got this and SCAP all
were dislocated roughly similaramounts for different reasons.
Small caps we mentioned.
The betas are high In ICAP.
We are bullish on investmentbanks.
Everybody was freaking aboutinvestment banks in our opinion,
(22:24):
so that got hit pretty hard butit's getting that back over the
last couple of days.
People realize these are prettyresilient companies.
And then AMZ probably got hitthe hardest because of that
downdraft in oil, not as hard asE&P companies, but in the short
run pipelines go down, mlps godown, but in the long run,
(22:49):
within a band not like negative$37 like during the pandemic,
but in kind of a $60 to $80 band, the throughput continues.
There continues to be naturalgas upside.
The price of natural gasdoesn't matter.
It's always way cheaper in theUS, and so the opportunity is
still there for all thepipelines, so it's mostly
(23:11):
irrational.
We get great yields and goodgrowth, so that's probably hit
the hardest.
Speaker 1 (23:17):
Let's talk about bonds a little bit further with
BNDES.
I think a lot of people arestill nervous about bonds in
general because they go back tothat narrative around tariff for
inflationary and bonds are notthe place to be and equities are
where all the action is.
Convince them that that's notthe case.
Speaker 2 (23:34):
Well, the good thing about higher yielding bonds.
So there's like anothercompeting fund, that's BND.
We're BNDs.
Bnd is what's called an ag fundor aggregate bond market fund.
So you get a ton.
There's more treasuries andmortgages than anything else.
So you get basically just pureinterest rate risk.
(23:54):
So if you're more bearish thanwe are and say, oh, the 10 year
is going to end at four andthree quarters five, it's not
going to be good for anysecurity except cash.
The higher yielding fixedincome will outperform the lower
yielding because they have lessinterest rate sensitivity.
So within same thing, within aband, they're going to continue
(24:16):
to do, be stable or evenappreciate if the stock market
stabilizes.
So that's why we actually favorhaving more higher yielding
fixed income where you get abetter blend between some
interest rate risk, some stockmarket risk, if you do Vanguard
total bond funds.
(24:36):
Another example of the BND typefund there you get all interest
rate risk and not a lot ofspread or stock market risk.
So we'd rather have a mixture.
Of course it's good to have adiversified portfolio so you can
have some totally low spreadkind of treasury equivalents and
then something that's a littlebit more weighted towards
(24:57):
equities exposure small butstill weighted that way.
Exposure small, but stillweighted that way, with better
income and then also most likely, better long-term returns.
Speaker 1 (25:09):
Let's talk about macro views beyond tariffs.
I mean, obviously all theattention has been around Trump,
but not as much attentionaround Powell, and I saw some
headlines I think around was itBesant that was saying they're
going to start looking at other,the next Fed governor, or
they're going to startinterviewing.
So it looks like they may wantto replace Powell.
Let's talk about central bankpolicy changes and how Trump
(25:33):
might impact them.
Speaker 2 (25:34):
Well, you know, we've identified the fact that the
Trump administration definitelyhas the power to remove Powell,
not so much for current policyreasons.
He can remove them and it getschallenged in court, and he
would probably lose if it's justbecause he's blowing it and not
lowering rates which he isblowing or making a mistake, but
(25:56):
he can remove him for creatingthe great inflation of 21.
So he can absolutely be removed.
I wouldn't do it, though, justgratuitously and appoint another
bureaucrat to pursue the sameframework, because the Fed's
framework is fundamentallyflawed and we're seeing that
(26:17):
today.
You know I said oh well, coreinflation is 2.4 likely, or 2.5
maybe if consensus hits, butthat's not corrected for the
very distorted shelter component.
It's two years lag.
This is why the Fed missed theinflation.
It's why they're missing thedeflation.
So they look at the wrong index,should look at multiple index.
(26:39):
Their target's way too specific.
It should be two to three.
Too specific and too low.
It created the great financialcrisis which they're in denial
about, but absolutely did tohave such a low target.
And then they also shouldtarget growing the money supply
within a range Like it shouldnormally grow four to six.
(26:59):
It's growing a negative oneright now, if you just grow the
money supply four to six,everything will be very stable.
Probably won't have a cycle.
It's when the Fed raises rates.
You know the money supply 70%during the pandemic you're going
to have an inflation.
Then they get way too tight.
During the great financialcrisis they kept the monetary
(27:21):
base, or money supply, m0 flatfor three years and so that's
terrible policy.
They're keeping it negative nowterrible policy.
So you have to look at themoney supply and of course you
should look at unemployment.
They kind of implicitly do thatand say you have like a 4% to
5% target range for unemployment.
Speaker 1 (27:42):
Is there anything on the international front
concerning you at all that couldimpact the US economy, US
markets?
It seems like we see thatinternational markets obviously
are performing this year, but itseems like there's still some
geopolitical risks that maybeare being underappreciated.
Speaker 2 (27:58):
Well, it kind of makes sense to us that Europe,
particularly, is outperforming.
They have a rational centralbank.
They're going to cut, mostlikely again this week, as ours
should.
So they're central banks aheadof cutting, and most investors
massively underestimate thepower of monetary policy and way
overestimate the power ofthings that are more tangible to
(28:19):
them, like you know, the pricesof imports or even energy
prices, because most people, oralmost no one, looks at the
money supply, except me and like50 other people maybe and so
everybody underestimates thepower of money, the money supply
(28:40):
.
Europe's ahead of us.
They're spending more money ondefense, which is re-inflating
their economy, and there's apossibility, or even probability
, of a peace in Ukraine beingreached at some point.
So all those are tailwinds,whereas we have a headwind.
And then we have erratic tariffpolicy, no resolution of our
(29:03):
tax bill those should have beenpaired, by the way.
So way too fast on the tariffsand then, most importantly
though, a incompetent Fedpursuing a fundamentally flawed
policy framework.
Speaker 1 (29:20):
I love when Jay's unfiltered folks, as you can
tell.
Let's talk about earningsseason for a bit here.
You had started theconversation.
You said that people wereamazed and confused, that you
were talking about how earningsseason could be a positive Seems
like I'm going to make theassumption a lot of the earnings
.
There's going to be someconservative wording around
policy uncertainty I'm surealmost every company is going to
(29:42):
use that term policyuncertainty when it comes to
forward guidance, policyuncertainty when it comes to
forward guidance.
But earnings overall, do youthink it's going to matter as
much?
Or are investors going to sayto themselves those were
earnings pre-terrorists?
Speaker 2 (29:55):
I think it matters more, because what happens
during these periods wherethere's no earnings is that
fears run amok.
So, oh, there's going to bemassive losses in the credit
card portfolios of banks andwe're going to have a massive
recession, and all these thingsare going to happen, but there's
no real data coming out and youget a little bit of economic
(30:16):
data.
Now the companies are reportingand, lo and behold, they're like
Bank of America CEOs on TV thismorning saying, well, actually,
consumer spending there'sminimal defaults, economy strong
, and to your point, theyacknowledge that there's policy
risks.
(30:38):
But I would follow the Bank ofAmerica CEO more than Jamie
Dimon, not because one's smarterthan the other, but Jamie
Dodden's always giving out kindof his stress test and that's
great if you're running a bank,so he'll sell, rates are going
to go to eight and this and that, whereas Moynihan's more
balanced and also uses hiscredit card data to give you
(31:01):
some insights.
And so he said, yeah, there'spolicy uncertainty around
tariffs, but there's also taxcuts and deregulation, so he
presents a balanced view and hedoes have all that information
that Jamie Dimon does and otherbank CEOs do.
So when you get all the CEOsout at once, like Jamie Dimon
might come out, you know, inmid-March, and say oh, the
(31:25):
world's coming to an end.
Everybody freaks.
So Moynihan is not probablygoing to do that because he's
more conservative.
So we wait to earnings.
So we think, even if thereality is not spectacular,
getting the specifics is betterthan the fears.
Speaker 1 (31:43):
Looking at the infracapfundscom website and I
see stag deflation as a wordthat's used there.
Most people don't know aboutstagflation.
They know about inflationdeflation.
What the hell is stag deflation?
Speaker 2 (31:58):
Well, we try to be not funny but slightly amusing,
because finance isn't reallyfunny but slightly amusing.
So it's just a way of sayingthat we think the stagflation
call is ridiculous.
You really only get stagflationand you only really had it in
the seventies when um oil priceswent up 1200%.
(32:22):
So they went from three to $39a barrel.
It's like our oil going from$60 to something like $720.
So almost an unimaginable rise.
That's when you get stagflationbecause it hurts economic
growth.
We didn't produce much oil backthen, either partly because of
(32:42):
regulation or mostly because ofregulation, but it didn't
benefit anybody.
In the United States, 100%deadweight loss caused inflation
to skyrocket.
That's the only time you'regoing to get it.
Now we have the opposite.
Oil is going way down.
That's deflationary.
Fed's super tight.
That's deflationary.
There's this one thing which istariffs.
Everybody's way too focused onit.
(33:04):
It is one time and you'll seeit in the short run.
So the Fed said oh, we can'treally discern what.
You know what it's going to be.
Well, you know we forecastyou're going to get like a 0.3
increase, maybe in CPI on thehigh end for two months, so a
0.6 increase, but then the nextmonth you're going to get a 0.2.
(33:25):
So it would be 0.5, right?
So normal inflation is likeroughly 0.2.
So you get a couple of 0.5s andthen the next month you're
going to get a 0.2 or 0.3.
And the next month 0.2 or 0.3.
So only a blithering idiotcouldn't figure out that that
was a one-time increase, so theFed qualifies for that, and so
(33:50):
they'll figure that out.
And then they'll start to say,well, the run rate inflation is
right around two, maybe two, andchange way below that if you're
for shelter, and they'll cutrates.
So this stag inflation notionis ridiculous.
We think we're really in adeflation where low oil prices
and very tight monetary policyare driving prices lower.
(34:12):
They're just not fullyreflected in the indices.
Speaker 1 (34:15):
I want to share the screen and talk about again the
different funds.
Again, folks, for those thatare watching, this is a sponsor
conversation from InfrastructureCapital.
This is Jay Hatfield and I, ofcourse, am Michael Guyad of the
Lead Lag Report, so let's showthis screen here Again.
(34:35):
You mentioned six ETFs, threeequity, three on the bond side.
Let's talk through each ofthese.
Rather than just reading thedescription of each, you know
sort of the underlyingstrategies around each of these
funds, sort of the underlyingstrategies around each of these
funds.
Speaker 2 (34:48):
Yeah.
So SCAP is a company I meansorry an ETF that's a
value-focused ETF.
So we avoid all themoney-losing companies.
We look for GARP we call itGARPY companies.
So they're trading atreasonable multiples compared to
their growth plus their income.
(35:08):
For some stocks you have tolook at income.
Most of you can ignore itbecause they're de minimis
income and we rate small amountof index calls to add some alpha
, add a little bit of income.
But we do it in a way that wedon't get run over.
So we didn't get run over bythat 9% rally in the market
because we'd written them onlyon 30% of the portfolio out six
weeks.
So we didn't get run over bythat 9% rally in the market
because we'd written them onlyon 30% of the portfolio out six
(35:30):
weeks.
So they were so far out of themoney it didn't impact that fund
.
So that fund has done extremelywell relative to the index.
Typically it's more stable.
It's downturn it was roughlythe same as the index but in
normal markets it's lessvolatile than small caps.
Because of that value bent wedo have some preferreds in that
(35:54):
fund too.
It tends to stabilize the fund.
Icap is, from a call writingperspective, really spectacular.
We're writing those calls thatwe curate over the next one, two
, three weeks, so very shortterm.
So, like in that downturn, mostof them have expired.
(36:15):
So we didn't get ripped whenthe market rallied, only at
gains where we had gains andwhere we think the stock's
pretty fully valued.
So, using a lot of HI, figureout where we should write them.
We get a ton of theta.
We target 8% theta.
That's the decay in a portfolio.
(36:36):
So we're trying to get, youknow, very strong amount of
alpha out of those options.
And I think that's importantfor large cap companies because
we do run some preferreds tolowers the volatility.
But it's a reasonable criticismto say, well, you know you own
all these marquee names or youknow some of them are in the Dow
(36:57):
.
I could just go buy those namesand replicate the portfolio and
, by the way, you could.
You could do it because wereport all our positions.
You can do it because we reportall our positions.
But it's a tremendous amount ofwork to figure out what calls
to write, to write the calls tomanage the taxes.
So it's a good way to outsource, in our opinion, highly
effective call writing.
(37:19):
And then PFFA is, in ourflagship funds, outperformed,
the index dramatically.
Active fixed income.
You should be active in fixedincome because you have to
manage call risk, industry risk,default risk.
It's not relevant to equities.
And then AMCA we talked alittle bit about is our pipeline
(37:39):
fund.
We do think their pipelines areoversold, just like they were
during the pandemic.
That fund was up 500% since thepandemic.
Of course it did poorly intothe pandemic, but that's just
the way.
Mlps are more volatile thanthey probably should be, so you
can take advantage of that.
Pffr is a smart beta version ofPFFA, really Only in real estate
(38:03):
.
Good credits has a smart betacomponent.
No leverage PFFA runs very low,20% leverage.
And then BNDES is our highyield fund no leverage.
Good yielding bonds that wethink have low default risks.
(38:25):
So should do well over time,just like PFFA.
Lower volatility than PFFAabout half, about a third of the
market, half of PFFA.
So if you're still nervousabout the market, don't believe
our 6,600 target or even our6,000 short-term target, then
(38:46):
adding to BNDES or PFFA is agood conservative way to get
income, put some money to work,but not take as much market risk
.
Speaker 1 (38:56):
Which of the various funds do you think is, on a
relative basis, the mostundervalued or where you think
there might be the most upsidepotential?
Speaker 2 (39:06):
I think it's ICAP.
Because of those I mentioned,those large cap financials got
smacked.
Large cap REITs got smacked forno particular reason, because
the fundamentals are good.
Amca is similar upside, but youhave to get the oil part right.
So although they're massivelyoutperforming oil today, but you
(39:29):
know if oil goes to 50, you'rekind of stuck with that.
So those two funds are probablythe ones that got hit the
hardest and have the most upside.
What do you think people aregetting?
Speaker 1 (39:39):
most wrong about Trump in this?
We talked about policyuncertainty and perception is
reality for investors in general, at least in the short term.
What are people getting wrongabout policy uncertainty and
perception is reality forinvestors in general, at least
in the short term.
What are people getting wrongabout policy uncertainty?
Speaker 2 (39:52):
Well, I think that what's happened is the trade
hawks, or even you could saytrade nuts, lost power because
they blew up the US stock marketand bond market for that matter
.
Us stock market and bond marketfor that matter, and now Scott
Besson and Hassard as well.
The Council of EconomicAdvisors seem to have taken over
(40:14):
and they are more pro-growth,more rational, want to improve
trade, have some tariffincreases, but not have this
nutty notion that every countryhas to have a trade balance.
It's just not going to happen.
It's impossible, particularlywhen the US government's running
(40:36):
a huge budget deficit, becausemost people don't appreciate
that trade flows have to equalfinancial flows.
So if you're borrowing a ton ofmoney from the rest of the
world, you have to have a tradedeficit.
Otherwise, because people don'tjust give you things, you have
to trade one thing for another.
Almost no one understands that.
So their notion that we'regoing to have a trade surplus
(40:57):
with everyone is patentlyridiculous, particularly in the
short run and particularly withthe budget deficit.
But they've been pushed aside.
I haven't seen, thank God,navarro on TV for a week or two,
which is stabilizing, becausehe's a destabilizing force and
was, by the way, in the firstTrump administration as well,
(41:19):
and so I think now we could bewrong about that.
We don't text with thepresident or anything, but
that's what seems obvious to usnow.
So everything that was done inthe past was really not done by
us, and he was almost certainlyopposing it.
So if that's the case, thenwe're setting ourselves up for a
lot of good news on tariffs,like agreements with Japan and
(41:42):
other countries, and so I don'tthink a lot of people have just
have internalized that the tradehawks got pushed out of power,
at least for now.
Speaker 1 (41:52):
Yeah, I think that's super interesting, Dave, for
those who want to learn moreabout the funds and get more
access to you and your thoughts.
I know you have a sub stack,but where would you point people
to?
Speaker 2 (42:03):
If you go to InforCap , wwwinforcapfundscom, you can
send us direct messages.
We do respond most of the timeIn my case, most of the time.
Otherwise, we always respond.
We have a monthly webinar,which we've been extraordinarily
accurate, including callingthis stabilization slash rally
and a hundred other things, andalso a great opportunity to ask
(42:27):
about the funds we get and alsoyou can benefit from other
people's questions about thefunds.
We take all the questions andso those are the ways you can
call Craig Starr and we willtalk to all any of our.
We like talking to our clients,so you can set up a private
meeting if that's appropriate.
Speaker 1 (42:43):
By the way, I got to ask have people actually texted
you on this?
I didn't actually know.
This was a thing.
Speaker 2 (42:49):
You actually have the ability for people to text you.
Yeah, they haven't any coldcall texts, but we're open to
that because we can do it in ourcorporate environment.
But I get a lot of cold emailsfrom clients that I don't know.
I do get some texts from ourexisting clients which I respond
(43:11):
to, you know, real time.
So we do pride ourselves oncommunicating with our clients.
There's no criteria that youhave to reach to be in direct
communication with us.
And just to emphasize that wefeel like the questions you know
because there's always implicitinsight in questions make us
(43:32):
smarter.
If we don't have the greatestanswer to that, then we need to
do more research and it'sprobably going to further our
process.
We're in continuous improvementmode, so if we're missing
something, you know.
Like somebody asked me aboutJapan, I studied Japan.
Now I'm smarter about Japan, sowe'd love talking to our
(43:56):
clients and that's a benefit ofour firm versus like a black
rock.
I would imagine it's harder toget in touch with them.
Speaker 1 (44:01):
Yeah, I'm going to say that's a given.
I appreciate the cause to watchthis live.
Again, this will be an editedpodcast under LeadLag Live.
This is a sponsoredconversation by Infrastructure
Capital.
Learn more about InfrastructureCapital's funds.
Make sure you follow JayHatfield and we'll see you all
on the next episode.
Thank you, jay, appreciate it.
Thanks Michael, it was great.
Cheers everybody.
From an interest rate sensitivity perspective, do you
think that the bond marketmaybe has it wrong in terms of
the reaction on tariffs andmaybe Trump walking some of
these back?
Speaker 2 (00:08):
Well, I think there was a technical issue away from
the fundamentals of, about tradeunwinds, basis trade unwinds,
rather Notwithstanding theTreasury Secretary's assertion.
I think that foreigners maybethey didn't sell their
treasuries, but they I meanChina was not buying treasuries,
we're confident of that so theynormally buy.
So if they stop buying, thatimpacts the tenure.
(00:31):
What I would say is that it'snot very dislocated.
Now it's recovered.
It's at 435.
Our target before the Fedfigures out they need to lower
rates and some members havefigured that out, like Waller,
but most of them are incompetent, don't understand tariffs at
one time, can't forecastinflation.
Speaker 1 (01:01):
Jay's been really on fire in terms of the way he's
been seeing a lot of the stuffgoing on in markets.
So I think many of you aregoing to enjoy his perspective
on things and this is a sponsorconversation by Infrastructure
Capital, one of my clients and,as I mentioned, jay has been on
fire, so I'm looking forward tothis back and forth we're going
to have here.
Some of you may argue that I'vebeen on fire a little bit too,
especially last Wednesday.
(01:22):
That was a hell of a day on acruise ship when I said that
we're going to see one of thegreatest intraday reversals
higher in the stock market inhistory, just as everything was
falling apart.
So I think Jay and I werealigned on that without having
spoken.
So, with all that said, my nameis Michael Agayat, publisher of
the Lead Lag Report.
Joining me here is Mr JayHatfield of Infrastructure
Capital.
I named this podcast, thisconversation, the small cap
(01:45):
tariff problem, and I say thatbecause, if anybody hasn't
noticed, small caps have gottendestroyed, in this most recent
period at least, when you lookat passive indices like the
Russell 2000, much more so thanthe large cap averages, which
seems a little bitcounterintuitive, jay, because
you'd think that tariffs wouldmost impact anything that's more
focused on global revenue asopposed to more domestic small
(02:09):
cap sources of revenue.
I want to get your take firstof all, in terms of the initial
reaction that we saw in thatwave, lower when it came to
large caps versus small caps.
Did it make sense to you?
Speaker 2 (02:21):
It did and you know we were surprised.
We call it the chart of death.
You know Trump's chart, whichwas wholly irrational.
So not surprised that themarket sold off hard.
And for that reason no oneshould be surprised that small
(02:43):
caps sold off simply becausethey're high beta stocks.
So by high beta I mean they'remore volatile than the stock
market as a whole.
So you're going to see in adowndraft, you're going to see
small caps underperform, theNASDAQ underperform, meme stocks
will underperform, bitcoin willunderperform.
(03:05):
So it's normal in a sell-offthat the highest correlated
stocks sell off, not justaccording to their correlation,
but probably worse, and then thelow correlation or low beta
stocks actually get some flowsor lack of selling.
So lower beta outperformshigher beta.
(03:27):
So that really explains 99%.
And then there's always marketcommentary, but it's what we
call momentum market commentary.
So like, if the market's down,everybody lowers their S&P
targets.
If tech stocks are down and OAIis falling apart, if tech
stocks are down, then oh, ai isfalling apart.
If small caps are down, oh,they have tremendous tariff
(03:50):
exposure.
But, as you're implying,michael, they actually have way
below average tariff exposure.
Even the global manufacturershave overseas production that
they can move around.
So we don't see any materialhits to earnings for the small
caps.
(04:10):
And if you had asked me beforeit happened, you know, if we
have a 10% drawdown, what aresmall caps going to do?
I'd say, oh, they'll be down 12or 13 because they're higher.
It just people don't treat themas safe havens.
They're higher.
It just people don't treat themas safe havens, understandably.
Like would you rather be, youknow, in a small cap bank or JP
(04:30):
Morgan?
Probably JP Morgan.
So not too surprising what'shappened.
If you believe, like us, thatthe current tariff tantrum is
over, we're going to get moregood news than bad, we're in
earnings season, then small capsare a good way to play.
Do increase in the marketbecause, just like today,
(04:52):
they're up a little bit morethan the market.
That's likely to continue if weget this stability, increased
stability and potential rally.
We have a 5,000 to 6,000 range,so really like a 6,000 target.
We do think 5,000 is a good,solid support area, even if
(05:13):
something incremental happens.
So we are constructive.
We have a 6,600 target for theS&P at the end of the year.
Speaker 1 (05:20):
How much does sector movement play into this?
It seems like we got the newsearlier today around NVIDIA and
it seems like now there's morefocus on tariffs not impacting
some of these tech companies andthe semis in general.
Those are obviously much morelarge cap than small cap.
Speaker 2 (05:39):
How do you think about sector sort of that's what
the other thing that peoplemiss it's not relevant now, but
(06:03):
small caps go down.
So that's the sector allocation.
And even though REITs aresupposed to be defensive, they
got smacked just like theirregular financials
underperformed, techunderperformed, but small caps
are only about 10% tech, so waylower than the S&P.
(06:23):
But the financial and REITsreally hammered those indices as
well.
And also money losing companies, not in our fund but SCAP, but
in the IWM.
It's a lot of money losing,particularly biotech companies.
So those are the highest riskcompanies in the market as well.
Speaker 1 (06:44):
So they're going to get smacked in a downturn?
Yeah, it's interesting that youdon't see yields dropping in
the same way that equities arerising in this most recent
rebound in any sort of veryaggressive way.
From an interest ratesensitivity perspective, do you
think that the bond market maybehas it wrong in terms of the
reaction on tariffs and maybeTrump walking some of these back
(07:04):
?
Speaker 2 (07:05):
Well, I think there was a technical issue, away from
the fundamentals of, abouttrade unwinds basis trade
unwinds, rather, andnotwithstanding the Treasury
Secretary's assertion, I thinkthat foreigners maybe they
didn't sell their treasuries,but they I mean China is not
buying treasuries, we'reconfident of that, so they
(07:28):
normally buy.
I think that foreigners maybethey didn't sell their
treasuries, but they I meanChina was not buying treasuries,
we're confident of that, sothey normally buy.
So if they stop buying, thatimpacts the 10-year.
What I would say is that it'snot very dislocated.
Now it's recovered.
I'm at 435.
Our target.
Before the Fed figures out, theyneed to lower rates and some
(07:49):
members have figured that out,like Waller, but most of them
are incompetent, don'tunderstand.
Tariffs are one time.
Can't forecast inflation.
We're forecasting PC coreprints around zero.
The consensus is only 0.1, andthat it rolls down to 2.4,
consensus 2.5.
So if even a 2.5 number occurs,the Fed absolutely should cut.
(08:13):
So that will help rates.
We have a 3.75 target, butuntil they figured it out, we
have a 4.
A quarter.
So 435 is only 10 basis pointsdislocated.
Everybody focused on the factwe went from 390 up to like 450
in short order, but 390 was anoverreaction to a potential
(08:38):
recession.
We're at a 1% to 2% growth ratefor the US economy, mostly
because, basically, the marketcut rates for the Fed, so 10
years off 50 base points fromits highs.
That should stabilize.
Housing Tech spending continuesto be strong.
You should always look atinvestment if you're trying to
(09:00):
predict a cycle.
Consumer spending has nevercreated a recession, which is
funny because everyone alwaysreferences consumer spending.
They just don't understand basicmath.
It's two-thirds of the totaleconomy, but it's not volatile
at all.
Just think of your own spending.
You're like, oh my gosh, I needto spend less.
(09:20):
How much less do you reallyspend?
Probably not a lot.
Low-income people have to spend.
High income people want tospend.
Consumers consume just likewoodchucks chuck wood.
It just is what they do.
They will stop consuming ifthere's a big investment
drawdown and they get laid off.
That's it.
Speaker 1 (09:41):
There was this theory going around which maybe I'm
too blamed for a little bit,because I've had this argument
for a while that in order tocause yields to drop, they have
to, in quotes, crash stocks, andit almost looked like what was
happening in the initial stagesof this.
Trump was even posted on truthsocial a video that made that
(10:02):
very argument.
You know that it's thebrilliant strategy for Trump is
to crash stocks so that yieldscome in quite a bit lower on
this refinancing wave.
In advance of that, does theTrump administration want lower
rates?
Ultimately?
Because if they are trying todo tariffs here, it doesn't seem
like that's the way to do it.
Speaker 2 (10:17):
Well, you know, actually I have a contrarian
view on this as well.
There's a lot of cross currentsnow, if you really think about
it.
So we came in to the Trumpadministration and I was asked
about this on television,possibly by more liberal
journalists oh well, trump'sgoing to be way worse for the
budget deficit than Biden.
And I said well, how is thatpossible?
(10:39):
The Biden administration triedto pass a $6 trillion welfare
bill spending bill over 10 yearsand the Trump administration is
cutting expenses on Doge,raising revenue from tariffs.
We strongly believe, and Wallerdoes as well tariffs are one
(10:59):
time, not inflation Not greatfor consumers, by the way, bad
politically but economically notinflation.
Inflation is ongoing increasesin prices, not one time
increases.
And when you raise taxes salestype taxes then you reduce
consumer spending.
That's also deflationary andyou pay down debt.
(11:20):
So and the Treasury secretaryis pretty powerful right now
wants to bring the budgetdeficit down to 3% the Fed is
holding rates way too high.
So I don't think the strategyis to tank the stock market and
get Treasuries lower.
It's to reduce oil prices andthat's, by the way, nobody cares
(11:44):
about that.
But it's a complete offset tothe current 10% tariffs, so we
actually have lower headlineinflation than without tariffs,
at least if oil stays around 60.
We see all the dynamics beingthe opposite of what the pundits
thought, which is that most ofthe Trump policies are pro
(12:10):
savings by the federalgovernment well, reduced rates.
But the most important variableis the Fed and whether they
figure out and agree finallyagree with us which is the right
way to treat sales taxes.
Is this a one time cost?
Should not be included inmonetary policy.
I do understand and I get a lotof blowback that everybody's
(12:33):
upset about it because theydon't want to pay higher prices,
but that doesn't mean the Fedneeds to try to offset that.
Speaker 1 (12:38):
Speaking of that oil drop and the point about it
being a larger deal maybe thanpeople realize Typically, how do
oil prices impact small capversus large cap outperformance
and does weaker oil really tendto benefit small caps more
disproportionately?
Speaker 2 (12:53):
Well, the first thing just to note is that it's 6% of
CPI.
So if oil prices drop 20%,which they have since the
beginning of the year, that's a1.2% decrease.
But every company in the UnitedStates uses energy about 5% of
the average company.
So you're going to get anotherbleed through of 1% to core over
(13:17):
long periods of time.
And then, in terms of affectingsmall versus large, it's just
the percentage of energy stocksand they're roughly the same
between small caps and largecaps is quite small, but that
those are the stocks, of course,that got hit the hardest.
And then you know, like I said,it helps the cost function a
(13:39):
little bit because you get.
You know, if you have 5% energyand oil comes down, but it's
not really material enough tosay, oh well, oil lower by small
caps.
It's more like market higher bysmall caps than it is oil lower
.
If the market rower is becauseoil is going down, which it
(14:00):
should I don't think anybody'sdoing that, but it should do
that Then you know small capitalbenefit.
Speaker 1 (14:08):
One of the things that I think was surprising
about the sell-off at least tome, was that credit spreads,
while they widened, they didn'treally blow out by any means.
Certainly, given the magnitudeof the S&P's decline, you would
have expected yields would havereally gone vertical and given
the VIX spike, was thatsurprising to you to see credit
spreads be that resilient?
Speaker 2 (14:29):
No, because we don't think that tariffs are that
important to the US economy.
So, even though fears ofrecession and strategists,
there's one thing to look outfor from strategists which is a
terrible, terrible thing.
It's what we call momentumanalysis.
So stock market's down, thenwe're going to go into recession
(14:51):
.
Stock market's down, as Italked about already, oai is
blowing up, but it could be juststock market's down because
it's down, and so we think thenotion that taxing 13% of the US
economy produces a recession isridiculous.
It might trim 30 to 50 basepoints of growth.
We do think the economy isslowing because of the Fed being
(15:15):
way too tight.
They're about 150 base pointsover neutral rate.
So that's the issue.
Nobody agrees with us, but it'simportant to understand that
dynamic so you don't get toonegative about tariffs.
Speaker 1 (15:30):
So about S-cap and how it performed.
First of all, during thevolatility, what was happening
internally at infrastructurecapital?
I saw all kinds of stats aroundhow bid S spreads just blew out
.
It's like one of the biggestspread differentials we've seen
in a while.
Just market structure.
What was going on internally asthe volatility was playing out?
Speaker 2 (15:50):
Well, we were ahead of the curve, because what we
focus on is the earning cycle.
So we became neutral on themarket in mid-February, so we
had reduced our exposure to themarket in mid-February.
So we had reduced our exposureto the market, so our beta or
(16:11):
correlation market was way down.
We were well positioned, justbased on the cyclical nature of
the earning season and notearning season.
Now, obviously this was a wayworse not earning season or
non-earning season because ofthe tariff war, the tweets about
the tariff war and ultimately,what we call the chart of death.
But so we were pretty wellpositioned.
(16:34):
And then we also had anticipatedthat this week would be at
least less volatile, if not up.
So we added that back.
So that's the way we dealt withit and it's the way we normally
deal with things.
So if you, we have this calllike a month and change after
this earnings season, we'll seewhere we rally to.
(16:55):
If we do rally or up, we'regoing to be incrementally more
cautious when we get out ofearning season, because then the
only catalysts are non-companyrelated most of the time and
usually that's negative, it's anegative tweet, it's a natural
disaster.
Whatever other new warningearnings warning ahead of the
(17:19):
earning season.
So playing that cyclicaldynamic, it makes you pretty
easy to call the mark.
Speaker 1 (17:26):
So about any sort of longer term shifts that you
might be contemplating.
Has any of this resulted instrategically sort of thinking
about where to overweight orunderweight differently than
prior to tariffs?
Speaker 2 (17:39):
Well, certainly we didn't want to, you know,
counsel our clients to go downwith the ship.
So we were cautious last weekin terms of recommending, you
know, riskier stocks.
But now we believe that, like Isaid, that the tariff news is
going to be mostly positive.
(18:00):
The economy is going to hang inthere, particularly when the
Fed figures out that they haveto cut rates, because that's
really the only issue with theeconomy right now.
Tariffs are immaterial, oil ismaterial and they offset each
other.
Oil decline, that is.
We're not actually changing ourrecommendations.
So we still like financials,which are a riskier sector.
We still like investment banks.
(18:22):
We think they're reallyresilient.
They did well this quarter,which is surprising, mostly on
equity trading, but we do thinkM&A is going to heat up.
That again.
You know, this idea thatthere's not going to be any
mergers because people areuncertain is, you know, maybe
they're uncertain for two weekswhile the market's crashing, but
(18:43):
then they're more certain whenthe market's stabilizing.
So we don't believe any of that.
Mergers take a while toannounce IPOs, take a while to
get through SEC registration.
So we still forecast the secondhalf investment banking boom,
which will be good for all themajor banks, particularly the
pure investment banks.
Speaker 1 (19:04):
I know you're a big fan of selling calls.
I'm curious how was that duringthe volatility the last week
and a half, two weeks?
Speaker 2 (19:12):
Well, you know, the strange thing about that is it's
best to sell calls when thevolatility is low, unless it's
just irrationally high.
Volatility is low unless it'sjust irrationally high.
But so we actually almoststopped selling calls.
Because we did, you know,because you, what you don't want
to do is sell a bunch of callsat the bottom and then you get
(19:33):
the type of analysis we had onwednesday and then you get run
over by them.
So we do use hi or humanintelligence and actually
attenuated and it can be waymore profitable to sell because
you know you can have themexercise to sell them when
volatility is lower.
And so we avoided blowing up oncall writing during that nine
(19:57):
and a half percent rally in theS&P, rally in the S&P.
So that's why we don't reallybelieve in these index funds
that just always sell calls,because they probably
under-participated in that 9.5%rip You've got six different
ETFs.
Speaker 1 (20:15):
We touched on S-Cap.
We'll touch on Sorry tointerrupt.
Speaker 2 (20:17):
Michael.
But there's just one otherpoint about that is we only sell
calls that are first, veryshort term and where we have
profits.
So if the market plunges, we'renot, there's not going to be
that many stocks where we haveprofits.
So those rules we don't have tobe geniuses about calling a
market, just rules just say well, why would we want to write a
(20:38):
call on that stock?
Because we're, you know,underwater on it by like 30
bucks, so why do we want to lockin losses?
So using that as a guidepost,which no other index, no index
funds use, is a good way to keepyourself out of trouble.
Where you don't sell callsexactly the wrong time, sorry to
interrupt.
Speaker 1 (20:57):
No, no, no, for sure.
No, that's a good clarification.
You've got six different ETFs.
Were any of them?
They're all your baby, I get itright.
But in the midst of thevolatility, were any of them, in
your mind, showing the mostopportunity, meaning that there
was a larger dislocation in thisfund versus that fund, just
based on-.
Speaker 2 (21:18):
The.
You know we have three fixedincome ETFs and three equity
income ETFs and so going intothe downdraft not just the
Liberation Day downdraft but youknow the cyclical earnings
season downdraft you definitelywanted to be like in PFFA BNDS
(21:42):
those are fixed income funds thebeta is pretty much is about
0.3 for BNDS 0.5.
So you under-participate in thedrop by owning those funds.
Plus you get great income 8%and 10%, roughly under 10% now
because it's right back.
So you get great income.
So that's a good place to bebefore.
(22:03):
But things you know, really,icap, amza got this and SCAP all
were dislocated roughly similaramounts for different reasons.
Small caps we mentioned.
The betas are high In ICAP.
We are bullish on investmentbanks.
Everybody was freaking aboutinvestment banks in our opinion,
(22:24):
so that got hit pretty hard butit's getting that back over the
last couple of days.
People realize these are prettyresilient companies.
And then AMZ probably got hitthe hardest because of that
downdraft in oil, not as hard asE&P companies, but in the short
run pipelines go down, mlps godown, but in the long run,
(22:49):
within a band not like negative$37 like during the pandemic,
but in kind of a $60 to $80 band, the throughput continues.
There continues to be naturalgas upside.
The price of natural gasdoesn't matter.
It's always way cheaper in theUS, and so the opportunity is
still there for all thepipelines, so it's mostly
(23:11):
irrational.
We get great yields and goodgrowth, so that's probably hit
the hardest.
Speaker 1 (23:17):
Let's talk about bonds a little bit further with
BNDES.
I think a lot of people arestill nervous about bonds in
general because they go back tothat narrative around tariff for
inflationary and bonds are notthe place to be and equities are
where all the action is.
Convince them that that's notthe case.
Speaker 2 (23:34):
Well, the good thing about higher yielding bonds.
So there's like anothercompeting fund, that's BND.
We're BNDs.
Bnd is what's called an ag fundor aggregate bond market fund.
So you get a ton.
There's more treasuries andmortgages than anything else.
So you get basically just pureinterest rate risk.
(23:54):
So if you're more bearish thanwe are and say, oh, the 10 year
is going to end at four andthree quarters five, it's not
going to be good for anysecurity except cash.
The higher yielding fixedincome will outperform the lower
yielding because they have lessinterest rate sensitivity.
So within same thing, within aband, they're going to continue
(24:16):
to do, be stable or evenappreciate if the stock market
stabilizes.
So that's why we actually favorhaving more higher yielding
fixed income where you get abetter blend between some
interest rate risk, some stockmarket risk, if you do Vanguard
total bond funds.
(24:36):
Another example of the BND typefund there you get all interest
rate risk and not a lot ofspread or stock market risk.
So we'd rather have a mixture.
Of course it's good to have adiversified portfolio so you can
have some totally low spreadkind of treasury equivalents and
then something that's a littlebit more weighted towards
(24:57):
equities exposure small butstill weighted that way.
Exposure small, but stillweighted that way, with better
income and then also most likely, better long-term returns.
Speaker 1 (25:09):
Let's talk about macro views beyond tariffs.
I mean, obviously all theattention has been around Trump,
but not as much attentionaround Powell, and I saw some
headlines I think around was itBesant that was saying they're
going to start looking at other,the next Fed governor, or
they're going to startinterviewing.
So it looks like they may wantto replace Powell.
Let's talk about central bankpolicy changes and how Trump
(25:33):
might impact them.
Speaker 2 (25:34):
Well, you know, we've identified the fact that the
Trump administration definitelyhas the power to remove Powell,
not so much for current policyreasons.
He can remove them and it getschallenged in court, and he
would probably lose if it's justbecause he's blowing it and not
lowering rates which he isblowing or making a mistake, but
(25:56):
he can remove him for creatingthe great inflation of 21.
So he can absolutely be removed.
I wouldn't do it, though, justgratuitously and appoint another
bureaucrat to pursue the sameframework, because the Fed's
framework is fundamentallyflawed and we're seeing that
(26:17):
today.
You know I said oh well, coreinflation is 2.4 likely, or 2.5
maybe if consensus hits, butthat's not corrected for the
very distorted shelter component.
It's two years lag.
This is why the Fed missed theinflation.
It's why they're missing thedeflation.
So they look at the wrong index,should look at multiple index.
(26:39):
Their target's way too specific.
It should be two to three.
Too specific and too low.
It created the great financialcrisis which they're in denial
about, but absolutely did tohave such a low target.
And then they also shouldtarget growing the money supply
within a range Like it shouldnormally grow four to six.
(26:59):
It's growing a negative oneright now, if you just grow the
money supply four to six,everything will be very stable.
Probably won't have a cycle.
It's when the Fed raises rates.
You know the money supply 70%during the pandemic you're going
to have an inflation.
Then they get way too tight.
During the great financialcrisis they kept the monetary
(27:21):
base, or money supply, m0 flatfor three years and so that's
terrible policy.
They're keeping it negative nowterrible policy.
So you have to look at themoney supply and of course you
should look at unemployment.
They kind of implicitly do thatand say you have like a 4% to
5% target range for unemployment.
Speaker 1 (27:42):
Is there anything on the international front
concerning you at all that couldimpact the US economy, US
markets?
It seems like we see thatinternational markets obviously
are performing this year, but itseems like there's still some
geopolitical risks that maybeare being underappreciated.
Speaker 2 (27:58):
Well, it kind of makes sense to us that Europe,
particularly, is outperforming.
They have a rational centralbank.
They're going to cut, mostlikely again this week, as ours
should.
So they're central banks aheadof cutting, and most investors
massively underestimate thepower of monetary policy and way
overestimate the power ofthings that are more tangible to
(28:19):
them, like you know, the pricesof imports or even energy
prices, because most people, oralmost no one, looks at the
money supply, except me and like50 other people maybe and so
everybody underestimates thepower of money, the money supply
(28:40):
.
Europe's ahead of us.
They're spending more money ondefense, which is re-inflating
their economy, and there's apossibility, or even probability
, of a peace in Ukraine beingreached at some point.
So all those are tailwinds,whereas we have a headwind.
And then we have erratic tariffpolicy, no resolution of our
(29:03):
tax bill those should have beenpaired, by the way.
So way too fast on the tariffsand then, most importantly
though, a incompetent Fedpursuing a fundamentally flawed
policy framework.
Speaker 1 (29:20):
I love when Jay's unfiltered folks, as you can
tell.
Let's talk about earningsseason for a bit here.
You had started theconversation.
You said that people wereamazed and confused, that you
were talking about how earningsseason could be a positive Seems
like I'm going to make theassumption a lot of the earnings
.
There's going to be someconservative wording around
policy uncertainty I'm surealmost every company is going to
(29:42):
use that term policyuncertainty when it comes to
forward guidance, policyuncertainty when it comes to
forward guidance.
But earnings overall, do youthink it's going to matter as
much?
Or are investors going to sayto themselves those were
earnings pre-terrorists?
Speaker 2 (29:55):
I think it matters more, because what happens
during these periods wherethere's no earnings is that
fears run amok.
So, oh, there's going to bemassive losses in the credit
card portfolios of banks andwe're going to have a massive
recession, and all these thingsare going to happen, but there's
no real data coming out and youget a little bit of economic
(30:16):
data.
Now the companies are reportingand, lo and behold, they're like
Bank of America CEOs on TV thismorning saying, well, actually,
consumer spending there'sminimal defaults, economy strong
, and to your point, theyacknowledge that there's policy
risks.
(30:38):
But I would follow the Bank ofAmerica CEO more than Jamie
Dimon, not because one's smarterthan the other, but Jamie
Dodden's always giving out kindof his stress test and that's
great if you're running a bank,so he'll sell, rates are going
to go to eight and this and that, whereas Moynihan's more
balanced and also uses hiscredit card data to give you
(31:01):
some insights.
And so he said, yeah, there'spolicy uncertainty around
tariffs, but there's also taxcuts and deregulation, so he
presents a balanced view and hedoes have all that information
that Jamie Dimon does and otherbank CEOs do.
So when you get all the CEOsout at once, like Jamie Dimon
might come out, you know, inmid-March, and say oh, the
(31:25):
world's coming to an end.
Everybody freaks.
So Moynihan is not probablygoing to do that because he's
more conservative.
So we wait to earnings.
So we think, even if thereality is not spectacular,
getting the specifics is betterthan the fears.
Speaker 1 (31:43):
Looking at the infracapfundscom website and I
see stag deflation as a wordthat's used there.
Most people don't know aboutstagflation.
They know about inflationdeflation.
What the hell is stag deflation?
Speaker 2 (31:58):
Well, we try to be not funny but slightly amusing,
because finance isn't reallyfunny but slightly amusing.
So it's just a way of sayingthat we think the stagflation
call is ridiculous.
You really only get stagflationand you only really had it in
the seventies when um oil priceswent up 1200%.
(32:22):
So they went from three to $39a barrel.
It's like our oil going from$60 to something like $720.
So almost an unimaginable rise.
That's when you get stagflationbecause it hurts economic
growth.
We didn't produce much oil backthen, either partly because of
(32:42):
regulation or mostly because ofregulation, but it didn't
benefit anybody.
In the United States, 100%deadweight loss caused inflation
to skyrocket.
That's the only time you'regoing to get it.
Now we have the opposite.
Oil is going way down.
That's deflationary.
Fed's super tight.
That's deflationary.
There's this one thing which istariffs.
Everybody's way too focused onit.
(33:04):
It is one time and you'll seeit in the short run.
So the Fed said oh, we can'treally discern what.
You know what it's going to be.
Well, you know we forecastyou're going to get like a 0.3
increase, maybe in CPI on thehigh end for two months, so a
0.6 increase, but then the nextmonth you're going to get a 0.2.
(33:25):
So it would be 0.5, right?
So normal inflation is likeroughly 0.2.
So you get a couple of 0.5s andthen the next month you're
going to get a 0.2 or 0.3.
And the next month 0.2 or 0.3.
So only a blithering idiotcouldn't figure out that that
was a one-time increase, so theFed qualifies for that, and so
(33:50):
they'll figure that out.
And then they'll start to say,well, the run rate inflation is
right around two, maybe two, andchange way below that if you're
for shelter, and they'll cutrates.
So this stag inflation notionis ridiculous.
We think we're really in adeflation where low oil prices
and very tight monetary policyare driving prices lower.
(34:12):
They're just not fullyreflected in the indices.
Speaker 1 (34:15):
I want to share the screen and talk about again the
different funds.
Again, folks, for those thatare watching, this is a sponsor
conversation from InfrastructureCapital.
This is Jay Hatfield and I, ofcourse, am Michael Guyad of the
Lead Lag Report, so let's showthis screen here Again.
(34:35):
You mentioned six ETFs, threeequity, three on the bond side.
Let's talk through each ofthese.
Rather than just reading thedescription of each, you know
sort of the underlyingstrategies around each of these
funds, sort of the underlyingstrategies around each of these
funds.
Speaker 2 (34:48):
Yeah.
So SCAP is a company I meansorry an ETF that's a
value-focused ETF.
So we avoid all themoney-losing companies.
We look for GARP we call itGARPY companies.
So they're trading atreasonable multiples compared to
their growth plus their income.
(35:08):
For some stocks you have tolook at income.
Most of you can ignore itbecause they're de minimis
income and we rate small amountof index calls to add some alpha
, add a little bit of income.
But we do it in a way that wedon't get run over.
So we didn't get run over bythat 9% rally in the market
because we'd written them onlyon 30% of the portfolio out six
weeks.
So we didn't get run over bythat 9% rally in the market
because we'd written them onlyon 30% of the portfolio out six
(35:30):
weeks.
So they were so far out of themoney it didn't impact that fund
.
So that fund has done extremelywell relative to the index.
Typically it's more stable.
It's downturn it was roughlythe same as the index but in
normal markets it's lessvolatile than small caps.
Because of that value bent wedo have some preferreds in that
(35:54):
fund too.
It tends to stabilize the fund.
Icap is, from a call writingperspective, really spectacular.
We're writing those calls thatwe curate over the next one, two
, three weeks, so very shortterm.
So, like in that downturn, mostof them have expired.
(36:15):
So we didn't get ripped whenthe market rallied, only at
gains where we had gains andwhere we think the stock's
pretty fully valued.
So, using a lot of HI, figureout where we should write them.
We get a ton of theta.
We target 8% theta.
That's the decay in a portfolio.
(36:36):
So we're trying to get, youknow, very strong amount of
alpha out of those options.
And I think that's importantfor large cap companies because
we do run some preferreds tolowers the volatility.
But it's a reasonable criticismto say, well, you know you own
all these marquee names or youknow some of them are in the Dow
(36:57):
.
I could just go buy those namesand replicate the portfolio and
, by the way, you could.
You could do it because wereport all our positions.
You can do it because we reportall our positions.
But it's a tremendous amount ofwork to figure out what calls
to write, to write the calls tomanage the taxes.
So it's a good way to outsource, in our opinion, highly
effective call writing.
(37:19):
And then PFFA is, in ourflagship funds, outperformed,
the index dramatically.
Active fixed income.
You should be active in fixedincome because you have to
manage call risk, industry risk,default risk.
It's not relevant to equities.
And then AMCA we talked alittle bit about is our pipeline
(37:39):
fund.
We do think their pipelines areoversold, just like they were
during the pandemic.
That fund was up 500% since thepandemic.
Of course it did poorly intothe pandemic, but that's just
the way.
Mlps are more volatile thanthey probably should be, so you
can take advantage of that.
Pffr is a smart beta version ofPFFA, really Only in real estate
(38:03):
.
Good credits has a smart betacomponent.
No leverage PFFA runs very low,20% leverage.
And then BNDES is our highyield fund no leverage.
Good yielding bonds that wethink have low default risks.
(38:25):
So should do well over time,just like PFFA.
Lower volatility than PFFAabout half, about a third of the
market, half of PFFA.
So if you're still nervousabout the market, don't believe
our 6,600 target or even our6,000 short-term target, then
(38:46):
adding to BNDES or PFFA is agood conservative way to get
income, put some money to work,but not take as much market risk
.
Speaker 1 (38:56):
Which of the various funds do you think is, on a
relative basis, the mostundervalued or where you think
there might be the most upsidepotential?
Speaker 2 (39:06):
I think it's ICAP.
Because of those I mentioned,those large cap financials got
smacked.
Large cap REITs got smacked forno particular reason, because
the fundamentals are good.
Amca is similar upside, but youhave to get the oil part right.
So although they're massivelyoutperforming oil today, but you
(39:29):
know if oil goes to 50, you'rekind of stuck with that.
So those two funds are probablythe ones that got hit the
hardest and have the most upside.
What do you think people aregetting?
Speaker 1 (39:39):
most wrong about Trump in this?
We talked about policyuncertainty and perception is
reality for investors in general, at least in the short term.
What are people getting wrongabout policy uncertainty and
perception is reality forinvestors in general, at least
in the short term.
What are people getting wrongabout policy uncertainty?
Speaker 2 (39:52):
Well, I think that what's happened is the trade
hawks, or even you could saytrade nuts, lost power because
they blew up the US stock marketand bond market for that matter
.
Us stock market and bond marketfor that matter, and now Scott
Besson and Hassard as well.
The Council of EconomicAdvisors seem to have taken over
(40:14):
and they are more pro-growth,more rational, want to improve
trade, have some tariffincreases, but not have this
nutty notion that every countryhas to have a trade balance.
It's just not going to happen.
It's impossible, particularlywhen the US government's running
(40:36):
a huge budget deficit, becausemost people don't appreciate
that trade flows have to equalfinancial flows.
So if you're borrowing a ton ofmoney from the rest of the
world, you have to have a tradedeficit.
Otherwise, because people don'tjust give you things, you have
to trade one thing for another.
Almost no one understands that.
So their notion that we'regoing to have a trade surplus
(40:57):
with everyone is patentlyridiculous, particularly in the
short run and particularly withthe budget deficit.
But they've been pushed aside.
I haven't seen, thank God,navarro on TV for a week or two,
which is stabilizing, becausehe's a destabilizing force and
was, by the way, in the firstTrump administration as well,
(41:19):
and so I think now we could bewrong about that.
We don't text with thepresident or anything, but
that's what seems obvious to usnow.
So everything that was done inthe past was really not done by
us, and he was almost certainlyopposing it.
So if that's the case, thenwe're setting ourselves up for a
lot of good news on tariffs,like agreements with Japan and
(41:42):
other countries, and so I don'tthink a lot of people have just
have internalized that the tradehawks got pushed out of power,
at least for now.
Speaker 1 (41:52):
Yeah, I think that's super interesting, Dave, for
those who want to learn moreabout the funds and get more
access to you and your thoughts.
I know you have a sub stack,but where would you point people
to?
Speaker 2 (42:03):
If you go to InforCap , wwwinforcapfundscom, you can
send us direct messages.
We do respond most of the timeIn my case, most of the time.
Otherwise, we always respond.
We have a monthly webinar,which we've been extraordinarily
accurate, including callingthis stabilization slash rally
and a hundred other things, andalso a great opportunity to ask
(42:27):
about the funds we get and alsoyou can benefit from other
people's questions about thefunds.
We take all the questions andso those are the ways you can
call Craig Starr and we willtalk to all any of our.
We like talking to our clients,so you can set up a private
meeting if that's appropriate.
Speaker 1 (42:43):
By the way, I got to ask have people actually texted
you on this?
I didn't actually know.
This was a thing.
Speaker 2 (42:49):
You actually have the ability for people to text you.
Yeah, they haven't any coldcall texts, but we're open to
that because we can do it in ourcorporate environment.
But I get a lot of cold emailsfrom clients that I don't know.
I do get some texts from ourexisting clients which I respond
(43:11):
to, you know, real time.
So we do pride ourselves oncommunicating with our clients.
There's no criteria that youhave to reach to be in direct
communication with us.
And just to emphasize that wefeel like the questions you know
because there's always implicitinsight in questions make us
(43:32):
smarter.
If we don't have the greatestanswer to that, then we need to
do more research and it'sprobably going to further our
process.
We're in continuous improvementmode, so if we're missing
something, you know.
Like somebody asked me aboutJapan, I studied Japan.
Now I'm smarter about Japan, sowe'd love talking to our
(43:56):
clients and that's a benefit ofour firm versus like a black
rock.
I would imagine it's harder toget in touch with them.
Speaker 1 (44:01):
Yeah, I'm going to say that's a given.
I appreciate the cause to watchthis live.
Again, this will be an editedpodcast under LeadLag Live.
This is a sponsoredconversation by Infrastructure
Capital.
Learn more about InfrastructureCapital's funds.
Make sure you follow JayHatfield and we'll see you all
on the next episode.
Thank you, jay, appreciate it.
Thanks Michael, it was great.
Cheers everybody.
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I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
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The latest news in 4 minutes updated every hour, every day.
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.