5 thoughts I had while chatting with smart finance podcasters 💬
Plus a charted review of the macro crosscurrents 🔀
📈The stock market rallied to all-time highs last week, with the S&P 500 setting an intraday high of 6,284.65 and a closing high of 6,279.35 on Friday. The index is now up 6.8% year to date. For more on how the market moves, read: Stocks usually look past geopolitical events 🫣
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Writing TKer is a process. I first catch up on news and research, and I see what topics are being debated. Then I settle on an angle. Then I draft the newsletter. Then I edit. Then I have an editor take a look. Then I think about the editor’s notes. Then I make some tweaks. And then I send out the newsletter to you.
Going on a podcast or YouTube show as a guest is totally different. While the hosts usually flag topics in advance, I often can’t predict where the discussions will take us.
That can lead to some unexpected exchanges: about connections between religious traditions and investing advice, how AI is shaking up my job, and even some lessons from a hypothetical ice cream shop.
Below are some points you might find thought-provoking. If you haven’t listened to any of these great podcasts before, I encourage you to check them out during the summer lull.
There’s a risk the economy goes into a recession 👀
Aside from my expectation that the stock market will be much higher years from now, I don’t like to make too many predictions about the markets or economy.
But last Monday, Investopedia’s Caleb Silver asked me for a prediction or “hot take'“ for the next six months. Here’s how I answered:
I'm not gonna say this is a baseline scenario, and I don't like to commit too much to predictions. But I think that there is very much a real risk that the U.S. economy goes into recession at some point this year. It might already be there. It might happen sometime during the summer. It might happen during the fall. I don't know if it's going to be particularly deep. But even with a lot of the economic data still positive, a lot of it has also been cooling. And we were just talking about all the uncertainty out there. I think it's possible that we hear about the economy going into recession — maybe a short and shallow one. I’ll add this sort of curveball to it: I think it’s possible that that happens, and I also think that it's possible that the stock market continues to set new highs. And then we're gonna have a lot of think pieces at the end of the year talking about why the stock market and the economy are not the same thing.
The once-hot economy has become far less “coiled,” and it’s reflected by numerous economic metrics that have cooled. Again, I wouldn’t say that recession is my base-case scenario. But I definitely think the near-term risk of going into recession is the highest it’s been in years.
To be clear, this does not mean I’d dump stocks. It’s incredibly difficult to time these trades.
Earlier in our discussion, I told Caleb that I consider myself an optimist in the long term, but a cautious optimist in the short term.
This is because while I’m bullish about being invested in the stock market, I’m well aware that the economy often goes into recession and stocks often go into corrections. This is just part of the deal.
Listen to the whole conversation at Investopedia, Apple Podcasts, or Spotify!
Past events were often worse than we remember 🤔
When we’re in the throes of some risk event, it can sometimes feel like things have never been worse.
Maybe we’re just misremembering the past.
When I read history or go through old journals, I’m reminded that past events were often, in fact, far worse than I imagined or remembered. And in many cases, they were worse than what we’re going through today. (More on this here.)
Someone recently brought up 2010’s Deepwater Horizon oil spill. My memory was that it went on for more than a few days — for a couple of weeks, surely.
I was shocked to read that the well was spewing oil into the Gulf of Mexico for three months before it was initially capped. And it took another two months for the well to be declared sealed.
Memory is a weird thing. We have lots of bad memories. For some of us, the further we move past a bad event, the more we forget just how bad it really was.
This might be good for our general mental health.
But the more we forget, the more we risk erroneously concluding that a current risk event is unusually bad. Of course, this same recency bias can apply to positive outcomes as well. Regardless, this misunderstanding could lead to mistakes with our investments if we aren’t mindful of it.
This came up in a conversation I had with Barry Ritholtz on Bloomberg’s At The Money podcast. Catch it on Bloomberg, Spotify, Apple Podcasts, or YouTube!
AI disruption doesn’t spell doom for all of us 🤖
Every couple of days, we hear about another company making layoffs. And in their announcement, management often mentions how artificial intelligence technology is disrupting their business.
Carson Group’s Ryan Detrick and Sonu Varghese brought up AI when I joined them on the Facts vs. Feelings podcast. I shared a minor AI-related existential crisis confronting me:
This is a technology that is going to save you a lot of time and a lot of money and a lot of headache. And the quality is improving very, very, very rapidly. Any of us, who have played around with this stuff for the last couple of years, knows that, increasingly, when we do do that fact-checking, it's airtight. This stuff is getting really, really, really good. And that's a problem for the people who are providing all of that information! Because they have newsrooms and they have people– I have to pay rent!
Sometimes I use Google to look up topics and maybe even look up some of my past stuff. And instead of getting links to TKer or Yahoo Finance or Business Insider, I'm getting the summary of what Sam Ro said! And how he explained it! And I'm looking at it, and not only is it accurate, it's written better than how I would have written it!
Many media companies rely heavily on referral traffic from Google searches. That traffic is facing a crisis as readers increasingly read AI summaries instead of clicking into the underlying content.
That said, history is riddled with examples of major technological breakthroughs that disrupted industries but ultimately supported goods and services people continued to value.
The advent of Microsoft Excel eliminated a lot of bookkeeping work, creating an existential crisis for accountants doing it by hand. But Excel also cleared the way for a boom in accounting and financial analysis jobs. Despite the availability of cheap, mass-produced bread, the market for artisanal baked goods has never been bigger. Cars and ride-sharing services are everywhere, and yet demand for bicycles has never been higher.
I think AI is going to take on a lot of tedious, repetitive work. But amid this disruption, I believe there will be continued demand for goods and services that come with a human or analog touch. If anything, awareness of the intangible and undefinable value of such products will rise.
Catch the discussion on CarsonGroup.com, Spotify, Apple Podcasts, or YouTube!
Don’t pick winners and losers if you don’t have to 🤲
Jared Blikre and Sydnee Fried invited me onto Yahoo Finance’s Stocks In Translation podcast for an interesting, wide-ranging discussion.
Before we taped, Jared asked what I’d be doing if I weren’t writing about markets as my profession. I hadn’t really thought about it before. Maybe it’s the recent heat wave, but the first thing that came to mind was running an ice cream shop in a small town.
Jared then asked a most unexpected question:
It is time for our runway showdown featuring two titans of frozen treats. Stage left, gelato glides in on a polished chrome cart. Small batch, slow-churned, and priced for connoisseurs. Think lean inventories, premium margins, and management guarding every basis point of profit. Stage right, we have soft serve. … Light and airy and built for speed. It wins by pumping out cones all day long. A high volume, low margin strategy that keeps cash flowing even in choppy weather. Call it resilience versus throughput. So Sam, when the economic headwinds swirl and valuation stretch, which type struts with the crown?
Maybe it’s a question about investing styles. Maybe it’s a question about ice cream.
“As someone who preaches the merits of diversification and index fund investing, why do you have to choose one or the other?” I responded. “Why can't you go with both? If one fails, you still have the other one, and you limit your downside.”
There are times when your conviction is high and the move is to go all-in on an investment.
But if you can’t risk losing it all and diversification is an option, diversification is often the smarter move.
This is especially the case in the stock market where most stocks underperform and the market’s gains are largely driven by a few, hard-to-identify names.
Catch the whole conversation on Yahoo Finance, Apple Podcasts, Spotify, or YouTube!
We value repetition 🔁
I spent many years in the news industry. In this business, there are senior editors who always demand fresh, wholly new stories. They really stress the “new” in “news.”
But in investing, history and its lessons often repeat.
In fact, I could make the case that almost all consequential stories about the stock market relate to one of 10 themes.
Accordingly, my writing has a lot of repetition.
This came up in a conversation I had with Joe Fahmy on his podcast, Joe’s Happy Hour.
Among other things, we talked about how we were both religion majors in school. The exchange reminded me of a parallel between religion and investing:
We have to repeat to ourselves, “Here's the data.” … Most of the stuff that I publish in the context of market volatility and market routs and sell-offs, always involves stats like we were just talking about. In an average up year, you have these big drawdowns. Or over short periods of time, the odds of a positive return are relatively low relative to when you extend those time horizons. And you just have to keep repeating it.
I think this actually ties back to the whole religion thing too, by they way, and how the most popular book that's ever been sold is the Bible. I grew up in Louisville, Kentucky, in a religious household. We went to church every Sunday. And anyone who's affiliated with any religious group knows that once a week, you go somewhere, and someone's teaching lessons from very old texts. And most of the time, when you listen to that lesson, they are reciting the same scripture, or the same scrolls, or the same verses that you've probably heard 50 times. How many times are they going to tell the Noah's Ark story? Or how many times are they going to tell the story about David versus Goliath? But the story gets told over and over and over and over and over again because people need to hear it. I think it’s the same thing with investing and financial markets.
I’m sure many subscribers have noticed that I often repeat the same stats, the same historical parallels, and the same perspectives.
This is not because I’m running out of ideas. It’s just often the case that the same lessons and fundamentals apply to new developments in the markets and the economy.
And at least for me, I find it helpful to repeat those lessons. Because for whatever reason, they can be easy to forget when you're in the throes of some new market rout or some new economic downturn.
Catch my full conversation with Joe on Spotify, Apple Podcasts, or YouTube. Enjoy!
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More from TKer:
2 ways of thinking about this chart of stocks and recessions 📈
Remembering moments when I thought things took a permanent turn for the worse 🙇♂️
How capitalism will keep AI from destroying the things we love 🤖
Warren Buffett: 'It takes just a few winners to work wonders' 🏆
Review of the macro crosscurrents 🔀
There were several notable data points and macroeconomic developments since our last review:
👍 The labor market continues to add jobs. According to the BLS’s Employment Situation report released Friday, U.S. employers added 147,000 jobs in June. The report reflected the 54th straight month of gains, reaffirming an economy with growing demand for labor.
Total payroll employment is at a record 159.7 million jobs, up 7.4 million from the prepandemic high.
The unemployment rate — that is, the number of workers who identify as unemployed as a percentage of the civilian labor force — declined to 4.1% during the month. The metric continues to hover near 50-year lows.
While the major metrics continue to reflect job growth and low unemployment, the labor market isn’t as hot as it used to be.
For more on the labor market, read: The labor market is cooling 💼 and 9 once-hot economic charts that cooled 📉
💸 Wage growth could be lower. Average hourly earnings rose by 0.2% month-over-month in June, down from the 0.4% pace in May. On a year-over-year basis, June’s wages were up 3.7%.
For more on why policymakers are watching wage growth, read: Revisiting the key chart to watch amid the Fed's war on inflation 📈
💼 Job openings tick higher. According to the BLS’s Job Openings and Labor Turnover Survey, employers had 7.77 million job openings in May, up from 7.39 million in April.
During the period, there were 7.24 million unemployed people — meaning there were 1.07 job openings per unemployed person. This continues to be one of the more obvious signs of excess demand for labor. However, this metric has returned to prepandemic levels.
For more on job openings, read: Were there really twice as many job openings as unemployed people? 🤨 and Revisiting the key chart to watch amid the Fed's war on inflation 📈
👍 Layoffs remain depressed, hiring remains firm. Employers laid off 1.60 million people in May. While challenging for all those affected, this figure represents just 1.0% of total employment. This metric remains below prepandemic levels.
For more on layoffs, read: Every macro layoffs discussion should start with this key metric 📊
Hiring activity continues to be much higher than layoff activity. During the month, employers hired 5.50 million people.
That said, the hiring rate — the number of hires as a percentage of the employed workforce — has been trending lower, which could be a sign of trouble to come in the labor market.
For more on why this metric matters, read: The hiring situation 🧩
🤔 People are quitting less. In May, 3.29 million workers quit their jobs. This represents 2.1% of the workforce. While the rate is above recent lows, it continues to trend below prepandemic levels.
A low quits rate could mean a number of things: more people are satisfied with their job; workers have fewer outside job opportunities; wage growth is cooling; productivity will improve as fewer people are entering new, unfamiliar roles.
For more, read: Promising signs for productivity ⚙️
📈 Job switchers still get better pay. According to ADP, which tracks private payrolls and employs a different methodology than the BLS, annual pay growth in June for people who changed jobs was up 6.8% from a year ago. For those who stayed at their job, pay growth was 4.4%.
For more on why policymakers are watching wage growth, read: Revisiting the key chart to watch amid the Fed's war on inflation 📈
💼 New unemployment claims tick lower. Initial claims for unemployment benefits rose to 233,000 during the week ending June 28, down from 237,000 the week prior. This metric remains at levels historically associated with economic growth.
For more context, read: The labor market is cooling 💼
💳 Card spending data is mixed. From JPMorgan: “As of 26 Jun 2025, our Chase Consumer Card spending data (unadjusted) was 0.8% above the same day last year. Based on the Chase Consumer Card data through 26 Jun 2025, our estimate of the US Census June control measure of retail sales m/m is 0.40%.”
From BofA: “Total card spending per HH was up 0.2% y/y in the week ending Jun 28, according to BAC aggregated credit & debit card data. Relative to last week, in our sectors, department stores, general merchandise & clothing saw the biggest rise in y/y spending. Meanwhile, entertainment, lodging and transit saw the biggest decline relative to last week.”
For more on consumer spending, read: Americans have money, and they're spending it 🛍️
👍 Manufacturing surveys improve. From S&P Global’s June Manufacturing PMI: “June saw a welcome return to growth for US manufacturing production after three months of decline, with higher workloads driven by rising orders from both domestic and export customers. Reviving demand has also encouraged factories to take on additional staff at a rate not seen since September 2022. However, at least some of this improvement has been driven by inventory building, as factories and their customers in retail and wholesale markets have sought to safeguard against tariff-related price rises and possible supply issues. It therefore seems likely that we will get pay-back in the form of slower growth as we head into the second half of the year.”
The ISM’s June Manufacturing PMI reflected further contraction in the sector, but improved since May.
👍 Services surveys signal growth. From S&P Global’s June Services PMI: “The US service sector reported a welcome combination of sustained growth and increased hiring in June, but also reported elevated price pressures, all of which could add to pressure on policymakers to remain cautious with regard to any further loosening of monetary policy.“
ISM’s June Services PMI also signaled growth in the sector.
Keep in mind that during times of perceived stress, soft survey data tends to be more exaggerated than actual hard data.
For more on soft sentiment data, read: The confusing state of the economy 📊 and What businesses do > what businesses say 🙊
🏭 Business investment activity improves. Orders for nondefense capital goods excluding aircraft — a.k.a. core capex or business investment — increased 1.7% to $75.9 billion in May.
Core capex orders are a leading indicator, meaning they foretell economic activity down the road.
For more on core capex, read: An economic warning sign in the hard data ⚠️
🔨 Construction spending ticks lower. Construction spending decreased 0.3% to an annual rate of $2.138 trillion in May.
🏢 Offices remain relatively empty. From Kastle Systems: “Peak day office occupancy was 62.4% on Tuesday last week, down 1.8 points from the previous week. Dangerously hot weather affected occupancy on Monday and Tuesday in some Eastern cities, led by New York, where Tuesday occupancy fell 6.2 points to 64.2%. The average low was on Friday at 32%, down 2.2 points from the previous week, as many workers scheduled a long weekend following the Juneteenth holiday on Thursday. Washington, D.C. was the only tracked city to experience an increase on Friday after mass protests the previous week, up 3.4 points to 30.4%, although still much lower than the city’s typical Friday occupancy of about 36%.”
For more on office occupancy, read: This stat about offices reminds us things are far from normal 🏢
🏠 Mortgage rates tick lower. According to Freddie Mac, the average 30-year fixed-rate mortgage declined to 6.67%, down from 6.77% last week. From Freddie Mac: “The average 30-year fixed-rate mortgage decreased for the fifth consecutive week. This is the largest weekly decline since early March. Declining mortgage rates are encouraging and, while overall affordability challenges remain, more sellers are entering the market giving prospective buyers an advantage.”
There are 147.8 million housing units in the U.S., of which 86.1 million are owner-occupied and about 34.1 million are mortgage-free. Of those carrying mortgage debt, almost all have fixed-rate mortgages, and most of those mortgages have rates that were locked in before rates surged from 2021 lows. All of this is to say: Most homeowners are not particularly sensitive to the small weekly movements in home prices or mortgage rates.
For more on mortgages and home prices, read: Why home prices and rents are creating all sorts of confusion about inflation 😖
📈 Near-term GDP growth estimates are tracking positively. The Atlanta Fed’s GDPNow model sees real GDP growth rising at a 2.6% rate in Q2.
For more on GDP and the economy, read: 9 once-hot economic charts that cooled 📉 and You call this a recession? 🤨
Putting it all together 📋
🚨 The Trump administration’s pursuit of tariffs threatens to disrupt global trade, with significant implications for the U.S. economy, corporate earnings, and the stock market. Until we get more clarity, here’s where things stand:
Earnings look bullish: The long-term outlook for the stock market remains favorable, bolstered by expectations for years of earnings growth. And earnings are the most important driver of stock prices.
Demand is positive: Demand for goods and services remains positive, supported by healthy consumer and business balance sheets. Job creation, while cooling, also remains positive, and the Federal Reserve — having resolved the inflation crisis — shifted its focus toward supporting the labor market.
But growth is cooling: While the economy remains healthy, growth has normalized from much hotter levels earlier in the cycle. The economy is less “coiled” these days as major tailwinds like excess job openings and core capex orders have faded. It has become harder to argue that growth is destiny.
Actions speak louder than words: We are in an odd period, given that the hard economic data decoupled from the soft sentiment-oriented data. Consumer and business sentiment has been relatively poor, even as tangible consumer and business activity continues to grow and trend at record levels. From an investor’s perspective, what matters is that the hard economic data continues to hold up.
Stocks are not the economy: There’s a case to be made that the U.S. stock market could outperform the U.S. economy in the near term, thanks largely to positive operating leverage. Since the pandemic, companies have aggressively adjusted their cost structures. This came with strategic layoffs and investment in new equipment, including hardware powered by AI. These moves are resulting in positive operating leverage, which means a modest amount of sales growth — in the cooling economy — is translating to robust earnings growth.
Mind the ever-present risks: Of course, we should not get complacent. There will always be risks to worry about, such as U.S. political uncertainty, geopolitical turmoil, energy price volatility, and cyber attacks. There are also the dreaded unknowns. Any of these risks can flare up and spark short-term volatility in the markets.
Investing is never a smooth ride: There’s also the harsh reality that economic recessions and bear markets are developments that all long-term investors should expect as they build wealth in the markets. Always keep your stock market seat belts fastened.
Think long-term: For now, there’s no reason to believe there’ll be a challenge that the economy and the markets won’t be able to overcome over time. The long game remains undefeated, and it’s a streak that long-term investors can expect to continue.
For more on how the macro story is evolving, check out the previous review of the macro crosscurrents. »
Key insights about the stock market 📈
Here’s a roundup of some of TKer’s most talked-about paid and free newsletters about the stock market. All of the headlines are hyperlinked to the archived pieces.
10 truths about the stock market 📈
The stock market can be an intimidating place: It’s real money on the line, there’s an overwhelming amount of information, and people have lost fortunes in it very quickly. But it’s also a place where thoughtful investors have long accumulated a lot of wealth. The primary difference between those two outlooks is related to misconceptions about the stock market that can lead people to make poor investment decisions.
The makeup of the S&P 500 is constantly changing 🔀
Passive investing is a concept usually associated with buying and holding a fund that tracks an index. And no passive investment strategy has attracted as much attention as buying an S&P 500 index fund. However, the S&P 500 — an index of 500 of the largest U.S. companies — is anything but a static set of 500 stocks.
The key driver of stock prices: Earnings💰
For investors, anything you can ever learn about a company matters only if it also tells you something about earnings. That’s because long-term moves in a stock can ultimately be explained by the underlying company’s earnings, expectations for earnings, and uncertainty about those expectations for earnings. Over time, the relationship between stock prices and earnings has a very tight statistical relationship.
Stomach-churning stock market sell-offs are normal🎢
Investors should always be mentally prepared for some big sell-offs in the stock market. It’s part of the deal when you invest in an asset class that is sensitive to the constant flow of good and bad news. Since 1950, the S&P 500 has seen an average annual max drawdown (i.e., the biggest intra-year sell-off) of 14%.
How the stock market performed around recessions 📉📈
Every recession in history was different. And the range of stock performance around them varied greatly. There are two things worth noting. First, recessions have always been accompanied by a significant drawdown in stock prices. Second, the stock market bottomed and inflected upward long before recessions ended.
In the stock market, time pays ⏳
Since 1928, the S&P 500 generated a positive total return more than 89% of the time over all five-year periods. Those are pretty good odds. When you extend the timeframe to 20 years, you’ll see that there’s never been a period where the S&P 500 didn’t generate a positive return.
What a strong dollar means for stocks 👑
While a strong dollar may be great news for Americans vacationing abroad and U.S. businesses importing goods from overseas, it’s a headwind for multinational U.S.-based corporations doing business in non-U.S. markets.
Economy ≠ Stock Market 🤷♂️
The stock market sorta reflects the economy. But also, not really. The S&P 500 is more about the manufacture and sale of goods. U.S. GDP is more about providing services.
Stanley Druckenmiller's No. 1 piece of advice for novice investors 🧐
…you don't want to buy them when earnings are great, because what are they doing when their earnings are great? They go out and expand capacity. Three or four years later, there's overcapacity and they're losing money. What about when they're losing money? Well, then they’ve stopped building capacity. So three or four years later, capacity will have shrunk and their profit margins will be way up. So, you always have to sort of imagine the world the way it's going to be in 18 to 24 months as opposed to now. If you buy it now, you're buying into every single fad every single moment. Whereas if you envision the future, you're trying to imagine how that might be reflected differently in security prices.
Peter Lynch made a remarkably prescient market observation in 1994 🎯
Some event will come out of left field, and the market will go down, or the market will go up. Volatility will occur. Markets will continue to have these ups and downs. … Basic corporate profits have grown about 8% a year historically. So, corporate profits double about every nine years. The stock market ought to double about every nine years… The next 500 points, the next 600 points — I don’t know which way they’ll go… They’ll double again in eight or nine years after that. Because profits go up 8% a year, and stocks will follow. That's all there is to it.
Warren Buffett's 'fourth law of motion' 📉
Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac’s talents didn’t extend to investing: He lost a bundle in the South Sea Bubble, explaining later, “I can calculate the movement of the stars, but not the madness of men.” If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases.
Most pros can’t beat the market 🥊
According to S&P Dow Jones Indices (SPDJI), 65% of U.S. large-cap equity fund managers underperformed the S&P 500 in 2024. As you stretch the time horizon, the numbers get even more dismal. Over a three-year period, 85% underperformed. Over a 10-year period, 90% underperformed. And over a 20-year period, 92% underperformed. This 2023 performance follows 14 consecutive years in which the majority of fund managers in this category have lagged the index.
Proof that 'past performance is no guarantee of future results' 📊
Even if you are a fund manager who generated industry-leading returns in one year, history says it’s an almost insurmountable task to stay on top consistently in subsequent years. According to S&P Dow Jones Indices, just 4.21% of all U.S. equity funds in the top half of performance during the first year were able to remain in the top during the four subsequent years. Only 2.42% of U.S. large-cap funds remained in the top half
SPDJI’s report also considered fund performance relative to their benchmarks over the past three years. Of 738 U.S. large-cap equity funds tracked by SPDJI, 50.68% beat the S&P 500 in 2022. Just 5.08% beat the S&P in the two years ending 2023. And only 2.14% beat the index in the three years ending in 2024.
The odds are stacked against stock pickers 🎲
Picking stocks in an attempt to beat market averages is an incredibly challenging and sometimes money-losing effort. Most professional stock pickers aren’t able to do this consistently. One of the reasons for this is that most stocks don’t deliver above-average returns. According to S&P Dow Jones Indices, only 24% of the stocks in the S&P 500 outperformed the average stock’s return from 2000 to 2022. Over this period, the average return on an S&P 500 stock was 390%, while the median stock rose by just 93%.
