Animal Spirits Podcast

Will Higher Rates Kill the Stock Market? (EP. 484)

45 snips
Sep 30, 2026
Rising rates give investors a fresh reason to worry as bond yields climb, valuations compress, and a stock-market correction looms. The discussion spans attractive 5% bonds, resilient consumer spending, 7% mortgages, housing gridlock, and private-market redemptions. AI assistants, the creative economy’s decline, and a spirited ranking of the century’s best TV shows round out the conversation.
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INSIGHT

Why Higher Rates Have Not Killed Stocks

  • Rising rates have not automatically damaged stocks because investors may interpret them as evidence of stronger growth and AI-driven earnings.
  • Since Treasury yields bottomed near 0.5% in 2020, the S&P 500 still gained about 19% annually as yields rose above 5%.
ADVICE

Trust Flows More Than Sentiment Surveys

  • Judge investor behavior through actual flows rather than surveys, which can contradict what people truly do.
  • Tech ETF inflows and Robinhood buying were near records even as Goldman’s positioning indicator moved deeply negative.
ADVICE

Buy Bonds For Yield Not Perfect Timing

  • Consider bonds for their attractive yield and potential upside if growth or inflation stalls, not because you can precisely time rate peaks.
  • The Bloomberg Aggregate just experienced an exceptionally bad cycle, combining low starting yields, rising rates, and high inflation.
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