'We've seen a number of non-U.S. markets actually outperform the U.S.': Brown

Hinzugefügt: 2026-05-30

[00:00:00]The S&P is opening near record highs today as investors remain optimistic that the US and Iran will soon reach a peace deal that will lead to the reopening of the straight of Hormuz. Our next guest says what's most concerning to her in the market isn't the high valuations or concentrated earnings growth but the inflation concerns driving up bond yields. Here to tell us more is Melissa Brown, managing director of investment decision research at Simcore. Melissa, thanks very much for joining us.

[00:00:27]>> Good morning.

[00:00:28]uh your concerns, what uh what's driving that?

[00:00:32]>> Well, you know, I think if we look at the inflation print from yesterday, uh just the general trends that we've seen in inflation, um I think it's reached a a point that's sometimes we look at inflation as being good because it means the economy is growing. But at some tipping point, it's inflation starts to be bad for for stocks and bonds. Stock investors really don't seem to be concerned about that right now. Maybe they view this uh current inflation environment as being very transitory. Um but bond investors clearly are showing more concern as they're driving um longer yields up.

[00:01:13]>> Now, now the yields, did they not flatten a little bit or have they started creeping back up again?

[00:01:18]>> Um the when I when I looked yesterday, [laughter] um they were still uh creeping up. um you know it it they may be flattening but they're certainly up quite a bit from where they were a month ago let's say.

[00:01:32]>> And and with the inflation what's what's a concerning number for you for that with that?

[00:01:38]>> Well you know really um anything um over about 2% which is you know the Fed's target and it's at the Fed's target for good reason. Um after that you know we start to see the the balance tip towards being you know you know companies can't raise prices but wages are going up for example or consumers are seeing prices higher than they can spend. So they, you know, what what we see now, for example, is consumers are spending on, you know, gasoline because they have to or food because they have to, but um I think, you know, many consumers are therefore having to cut back on other areas of spending.

[00:02:20]>> And are we seeing noticeable pullbacks in those other areas?

[00:02:24]>> Well, what's interesting and and you know, my theory is that right now we're not really. If you look at, you know, the earnings uh picture, you know, earnings were very good for the first quarter. I think you have this um stock market wealth effect where uh you know, people who are invested in the stock market, which is by no means everyone, but those who are have seen really big gains. And so they're probably spending right now. their spending may be making up for uh this this um spending that's not coming from people who were otherwise you know using their money for for necessities. Uh you know if the market keeps going up we could see that continue but um you know I think that's a kind of precarious way to be generating earnings >> and and and with that just look the consumer sentiment index uh it's a record low 44 uh 44.8 eat.

[00:03:24]>> There's a little there. Well, I was going to say a little bit. There's probably a lot of disconnect between what consumers are saying in these consumer surveys and what they're doing in terms of of spending. And that's kind of why I think we've got this, you know, spending um, you know, pretty freely on one part of the economy, but the inability to to buy things other than necessities on the other because and I think that's where that lower consumer sentiment is coming from.

[00:03:56]>> And so where are you look where do you see opportunities with this? Is it still in the US? Is it emerging markets?

[00:04:02]What's uh >> well >> yeah certainly outside the US we've seen um emerging markets have probably had the best performance if you look at you know the global emerging markets um but we have seen a number of non- US markets actually outperform the US mean you know the US has been so strong so these other markets are are particularly strong they may have farther to go because they've lagged for for many years before this year. And so I you know it does seem um that in the absence of a global recession which is going to you know sink all boats um I think that there probably are more opportunities outside the US as compared within the US.

[00:04:51]>> And are there any thoughts of I mean we just saw some numbers here in Canada that technically leaves us in a recession but global recession are there any indicators that are pointing toward that? uh not that we've seen so far. Um and so I guess I guess that's the good news. You know GDP growth in the US has been strong. So that's going to um you know signal for the rest of the world uh you know where growth might be. Um but you know we have this war going on. Uh we have oil prices even if they're coming down are still substantially higher than they were two months ago, three months ago. Um, and so, you know, you've got some of the signposts that may drive recession in the future.

[00:05:36]We're not seeing that yet.

[00:05:37]>> All right. And you you mentioned about the war, the impact on inflation. Uh, where are some other areas that where maybe people aren't thinking uh it's having an impact, but it's being felt.

[00:05:47]>> Well, I mean, we're we're seeing it's not just oil prices. It's many different commodities that have to go through the straight of Hormuz. So if you look at um ura which you need for fertilizer or aluminum um you know there are many commodities that are you know kind of being uh choked off and driving their prices. In fact those two um their prices are substantially higher you know probably 50 to 100% higher than they were three months ago. Um uh you know if you can't get fertilizer it's going to hurt start to hurt agriculture. you can't get aluminum, it's going to hurt building. I, you know, so we're not, again, we're not seeing that yet, but there is the potential. And I think it's going to take a while for those prices to come down, even if they do open the street tomorrow. I mean, they it's not going to just all of a sudden everything's going to open up and ships can start going through.

[00:06:42]>> All right, Melissa, we have to wrap it up there, but thank you very much for joining us. Have a great weekend.

[00:06:46]>> Thank you. Bye-bye. Melissa Brown, managing director of investment decision research at SIMCOR.