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Oct 17, 2024
Claudia Sahm, a renowned economist known for the Sahm rule, discusses how historical economic indicators can help navigate today's uncertain financial landscape. Meb Faber, co-founder of Cambria Investments, shares insights about innovative investment strategies, particularly focusing on the shareholder yield ETF. The duo also highlights the importance of diversity in economics and examines market trends, resilient investment strategies, and the shifting dynamics of shareholder buybacks. Both guests bring unique perspectives on how personal experiences shape financial decisions.
25:50
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Quick takeaways
- Claudia Somm discussed the SOM rule as a recession indicator that became inconsistent due to mixed economic signals post-pandemic.
- Meb Faber highlighted his Cambria shareholder yield ETF strategy, focusing on mid-cap companies to enhance diversification amidst market concentration risks.
Deep dives
Claudia Somm and the SOM Rule
Claudia Somm introduced the SOM rule, a recession indicator based on rapid increases in unemployment rates, aimed at guiding economic policy toward stimulus measures. Despite its historical accuracy, the rule broke in July when it signaled a recession in an environment where economic indicators suggested otherwise, leading to confusion among economists and analysts. Somm explained that while the current unemployment rate remains low, the mixed signals from consumer spending and GDP growth complicate the economic landscape. She emphasized that understanding the economy is challenging, especially given the unique disruptions caused by the pandemic, and cautioned that low layoffs do not guarantee stability in unemployment rates.
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