What Record Highs Might Be Hiding
Summary
Lizanne Saunders and Colin Martin analyze the shift to a hawkish Fed and the return of an inverse relationship between bond yields and stock prices. They explain why the S&P 500’s all-time high masks significant market churn, noting that only a tiny fraction of stocks are at 52-week highs. The hosts advise investors to favor short- and intermediate-term bonds over cash or long-duration assets while monitoring upcoming jobs and PCE data for inflation signals.
Topics discussed
Introduction and show overview
Hawkish Fed, bond yields, and the end of the Great Moderation
Explaining the term premium and its recent decline
Orderly rise in long-term yields reflects strong economy
Equity market breadth, churn, and mega-cap concentration
Implications for active strategies and investor time horizons
Client questions: cash vs. short-term bonds after Fed hike
Tactical vs. strategic views on long-term bonds near 5%
Next week's data: jobs report, housing, and PCE preview
What the Fed will watch: PCE breadth and labor market stability
Diesel prices and persistent supply shocks as inflation risks
Closing remarks, social media, and podcast recommendations
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