In this episode, we break down the state of the economy, the Fed’s policy stance, inflation risks, and what’s really happening beneath the surface of the stock market. Jim explains why the headline numbers often mask the struggles of many companies, why the S&P 500 looks stretched while much of the market remains undervalued, and what investors should watch as we head into the fall.
Weak GDP growth, jobs slowdown, and why the U.S. may avoid recession despite sluggish data
How fiscal policy, tariffs, the dollar, and monetary policy are shaping growth
Why corporate profits outside the S&P 500 remain below trend despite large-cap strength
The Fed’s inflation obsession, the 2% target debate, and Jackson Hole policy shifts
Jim’s case that inflation fears are overblown, with supporting data on CPI, PPI, wages, and expectations
Historical supports for bull markets (liquidity, interest rates, dollar, confidence) and why they’ve been missing
Divergence between S&P 500 valuations vs. the rest of the market
Structural disconnect between small/mid-caps and large-cap earnings
The opportunity for market broadening if the Fed eases policy
What Jim will be watching heading into year-end
00:00 – Economic growth slowdown and risks of recession
02:00 – Policy backdrop: fiscal, monetary, dollar, and tariffs
07:00 – Why recession may still be avoided
15:00 – Powell, Jackson Hole, and the Fed’s inflation stance
24:00 – Are inflation fears overblown?
36:00 – Inflation surprise index and momentum
37:00 – What supports bull markets (liquidity, rates, dollar, confidence)
41:00 – Trendline analysis: S&P vs. broader market
47:00 – Russell 2000 earnings vs. S&P 500 divergence
52:00 – Corporate profits divergence and policy implications
59:00 – What Jim is watching heading into year-end
