In this episode, we sit down with Jim Paulsen to analyze the latest economic and market data through his lens of decades of market experience. Jim shares insights from his Paulsen Perspectives research, covering the job market, the Fed, inflation, valuations, investor confidence, and what they all mean for the future of the economy and markets. We explore why confidence is so low despite a bull market, how Fed policy is shaping market dynamics, and where investors might want to focus as the cycle evolves.
Topics covered in the episode:
The job market’s pivotal role in driving the economy and Fed decisions
Why recent Fed rate cuts may mark a turning point in market support systems
The narrowness of the bull market and how innovation-driven firms diverge from traditional cycles
Investor confidence, the “misery index,” and recession probability models
How easing may broaden market participation beyond large-cap growth
What “animal spirits” mean for small caps, high beta, and IPOs
The disconnect between inflation, bond yields, and growth measures
Gold, cash, crypto, and tech as “fear assets” in today’s environment
The impact of tariffs on profits, wages, and inflation expectations
Valuations in context: historical perspective and the upward bias of multiples
Timestamps:
00:00 Introduction and market overview
02:00 Fed easing, inflation, and recession risks
09:00 Bull market without normal supports
17:00 Narrow leadership and innovative companies
23:55 Confidence and the misery index
29:35 Yield curve, recession probabilities, and Fed policy
34:00 Broadening of market participation
37:00 Animal spirit stocks and small caps
38:00 Inflation, bond yields, and resource unemployment
43:20 Copper-gold ratio and yields
45:10 The role of gold in portfolios
50:00 Cash, crypto, and tech as defensive assets
54:00 Tariffs, inflation, and profit margins
59:00 Inflation persistence vs. wage growth
01:01:10 Valuations and the upward bias in multiples
01:07:00 Closing thoughts and takeaways
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
In the premiere episode of our new monthly series, The Jim Paulsen Show we dig into Jim's latest research and the charts that define today's economic and market landscape. Jim lays out a compelling case for why the private sector is more resilient than many believe, why a recession may not be on the horizon, and why so many parts of the market still look cheap despite record index levels. We explore the implications of tariffs, the underappreciated productivity boom, the potential for a market broadening, and the risks posed by policy uncertainty.
Whether you're a macro thinker, a data-driven investor, or just trying to make sense of this confusing market, Jim brings clarity, charts, and contrarian insight.
🔍 Topics Covered:
Why recession odds may be lower than consensus believes
The disconnect between pessimism and actual economic conditions
The impact of tariffs and why they may be disinflationary
What’s really happening with the hard vs. soft economic data
Why tech jobs are flat even as tech market cap soars
The mystery of weak dividend growth during a bull market
Why most corporate profits are below trend despite strong S&P earnings
What could drive a broadening of the rally
Valuation dispersion and why 76% of industries still look cheap
Evidence micro caps may be leading a shift in market leadership
What falling confidence among the wealthy might signal for stocks
How we’re mismeasuring productivity in the AI era
⏱️ Timestamps:
00:00 – Jim’s contrarian view: why a recession may not happen
02:00 – Private sector balance sheet strength
06:00 – The problem with policy staying tight during slow growth
08:00 – Surprise index vs. hard data and what’s changing
10:50 – Are tariffs truly inflationary?
15:00 – Why financial markets aren't signaling inflation risk
17:50 – Can hard data finally move the Fed?
20:00 – Tech market cap vs. employment: why jobs aren’t growing
25:30 – Dividend growth is stalling—what it means
29:00 – Corporate profits: below trend for a decade
33:00 – S&P profits vs. broader corporate earnings
35:00 – Could the rally broaden beyond the Mag 7?
38:00 – Micro caps and early signs of leadership shift
40:00 – Why falling confidence among the wealthy may be bullish
45:00 – 76% of industries are still cheap—how is that possible?
48:00 – Sector breadth is historically narrow—why that could change
50:00 – Tech’s risk-adjusted returns show surprising strength
52:00 – Trump, the Fed, and the risk to central bank independence
