Forward Guidance The Data Is Screaming Two-Speed Economy | Weekly Roundup
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Sep 12, 2025 This week, the hosts discuss surprisingly low PPI data and the Fed's pivot from inflation concerns to labor issues. They unveil a troubling ‘two-speed’ U.S. economy, showcasing a stark division between booming sectors like AI and struggling Main Street. The conversation touches on the risks of mega-cap stocks and their buybacks, alongside the challenges facing young workers amid rising inequalities. Expect insights on market resilience and shifting investment trends as they navigate the complexities of today's economic landscape.
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Inflation Fears Are Losing Traction
- PPI came in lighter-than-expected and market forward indicators do not price a big inflation spike.
- Quinn and Tyler see markets fading the inflation narrative and moving focus to labor dynamics.
Credit Market Complacency Persists
- High-yield spreads remain tight and inflows persist despite talk of recession, implying credit market complacency.
- Lower cost of capital is enabling financing for risky projects and supporting equity prices.
Markets Price A Very Dovish Rate Path
- Fed fund futures price multiple cuts and markets treat a dovish path as likely, which Tyler frames as political victory.
- This pricing makes fiscal stimulus and lower cost of capital more probable in their view.