Market Crosscurrents: Will Stocks, Cash, or Commodities Lead?

本站添加: 2026-05-22

[00:00:00]Chris middle of May, markets up 7 1/2 % year-to-date and and according to this first slide asset managers still seem very bullish and particularly in that tech and AI trade over the next 3 to 6 months, but there are some crosscurrents showing up in the markets.

[00:00:15]What do you think? You know, I mean whenever it gets that crowded to one side. I mean earnings have been very good, but when it gets so crowded you start to wonder could there be other things to work, right? I mean you look at this next chart. Fed chairs have generally been tested out of the gate when it comes to new terms.

[00:00:33]Yellen had it a little easier coming out of kind of the expansion from the Great Recession. I mean stuff got I mean as cheap as it gets.

[00:00:42]>> Meanwhile, we said this last week, you know, the rate hike possibilities have gone up as a result of $120 oil.

[00:00:52]>> it. Yeah, I mean so the the crosscurrents are real. On the one hand, you've got higher inflation, okay? That implies higher rates, right? When oil doubles, it implies you could have a recession historically. Will we? Who knows? I'm not saying that. I'm just saying there could be reasons in both directions to consider that you know, gee, what if cash is the thing that outperforms? What if commodities are the things that outperform? This would imply that it ain't going to be rates that are that you know, bonds that are outperforming.

[00:01:24]>> In fact, look at this last chart right here.

[00:01:27]Look at the 2-year yield that we have circled. That would be the proxy for where Fed funds ought to be. It's telling you what it ought to be 4 to 4 and a quarter.

[00:01:34]>> Yeah, which is one to two hikes above where it is right now, yeah.

[00:01:38]>> it's currently at 3 1/2 to 3 and 3/4.

[00:01:41]You know, look, the the big hinge pin is still oil. If oil starts dropping materially, then then you're going to see a return to a risk-on kind of environment. Meanwhile, volatility stays pretty near its long-term average.

[00:01:56]>> Yeah, but I mean rates are telling you there's a reason for interest rates to potentially go up. And that cocktail kind of makes for an interesting time.

[00:02:06]So, will equities be the thing? Maybe.

[00:02:09]Could be commodities. Could be cash. Who the heck knows? We'll we'll see. We'll find out.