RiskReversal Pod Is This Just The Start For Market Euphoria?
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Sep 11, 2025 Liz Thomas, an insightful analyst at SoFi, dives into market dynamics and economic trends alongside Dan Nathan. They discuss the latest CPI and its implications for the Federal Reserve's interest rate decisions. The conversation explores consumer spending behavior amid economic normalization and the job market's recent revisions. Additionally, they highlight the impact of rising long-term yields on tech stocks and the risks of market euphoria, particularly referencing companies like Oracle. Tune in for a lively analysis of what these trends mean for investors!
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Fed Faces Conflicting Signals
- The Fed faces competing forces: cooling labor market cracks vs. sticky inflation and tariff uncertainty.
- Liz Thomas expects a 25bps cut while warning political and inflation risks complicate policy timing.
Short Vs. Long Yields Tell Different Stories
- Two-year yields reflect Fed cut expectations while the 10-year prices longer-term inflation and fiscal risks.
- Rising term premium shows investors demand more compensation for longer duration amid political and borrowing uncertainty.
Valuations Are Relying On The Wrong Rates
- Market prices long-duration tech off falling short-term rates, not long-term yields used in proper DCFs.
- That mismatch can justify re-rating risks if 10+ year yields remain elevated.