Money Life with Chuck Jaffe

Charles Rotblut, vice president for the American Association of Individual Investors — overseer of the AAII Sentiment Survey — discusses the dramatic drop in bullish sentiment last week and how the big spread between bullish and bearish investors increased so dramatically that it teeters on the edge of becoming a contrary indicator. The sentiment survey has a history of showing that when emotions swing too far in one direction, the market responds by moving in the opposite direction. Still, Rotblut notes that bearish sentiment is "unusually high" and has been above its historical averages for 15 consecutive weeks. Vijay Marolia, chief investment officer at Regal Point Capital, looks at the wild swings in bond-market sentiment and expectations, whether consumers will keep spending in the face of flagging sentiment and higher costs and introduces us to his alter ego, "Captain Inflation," whose superhero sidekick could be Kevin "The Hawk" Warsh, the new Federal Reserve chairman who will get his first shot at addressing inflation on Thursday. Plus, Tom Bernard discusses his new book, "The Index of America: How the S&P500 Works and Why You Should Invest In It," and how the leading market indicator will keep up and remain the flagship benchmark for long-term investors. He addresses issues like concentration, diversification, globalization and more.

Eric Stein, chief investment officer at Voya Investment Management, says that investors can expect interest rates — particularly on longer-term bonds — will keep rising, but those higher reates "will lead to lower rates because you will see a response on the demand side whether it's through the consumer or through the [capital expenditures] cycle." Stein says that if "demand destruction" doesn't slow the economy too much, recession remains avoidable, particularly in the muted economic cycles that the U.S. has been going through in recent years. In The NAVigator segment, Bryce Doty, senior portfolio manager at Sit Investment Associates, also says that rates will be coming down, with his estimation being that it happens by the fall because "the worst is over as far as yields going up." Doty says that if oil prices stay below $110 per barrel, it's viewed as inflationary; above that level, "We have a problem, and so does the rest of the world." He says central banks will solve that problem by cutting rates to "save economies from disaster," and likes two-year TIPS, municipal bonds and high-yield corporate bonds to ride out the storm. Plus, Mark Hamrick, senior economic analyst and Washington bureau chief at BankRate.com — who recently launched The Hamrick Brief on Substack to give his take on current financial events — discusses mortgage rates and inflation both reaching recent highs, the historical context of those numbers and how, why and when conditions may ease and change.

Brendan Ahern, chief investment officer at KraneShares — which manages a number of funds tied to China — says that President Trump's recent trip to China was viewed very differently overseas than it was in America. In China, the trip was viewed very positively for establishing trade boards, improving communications and laying a foundation for future negotiations. Domestically, however, the view of China has been that a tepid consumer is making the economy struggle, and that's before inflation kicks up globally based on oil prices. Ahearn, who also is the author of China Last Night, says China is prepared for oil and gas shortages, but it is looking at domestic consumption stimulus to help rev up consumers to help drive economic growth and improvement. "It's not all rainbows and unicorns over there, economically," he says, "but it's certainly not the apocalypse you would expect either." One statement in Ahern's Big Interview is that "There's no such thing as China-ex investing," meaning it's hard to buy any funds or ETFs where the holdings truly exclude businesses from China, but Todd Rosenbluth, head of research at VettaFi, actually makes the point that in rare-earth metals, investors may want to take steps to avoid exposure to China. He makes the month-old Sprott Rare Earths Ex-China fund his "ETF of the Week," noting that rare-earth metals are a thematic play akin to buying gold miners, and that the new ETF, by avoiding China, follows a very different path than its longer-established competition. Plus, Chantel Bonneau Stewart, wealth management advisor at WiseFit Wealth Management and Insurance Solutions, discusses the launch of Northwestern Mutual's Personal Prosperity Index, which in its initial reading found that Americans feel good about the health of their relationships, body, mind and money, but they're not feeling nearly so good about the economy and politics.

Andrew Almeida, director of investments at XYPN, says that investors shouldn't be too active in responding to the news, but he says that geopolitics is a real threat to portfolios, especially as current tensions linger and change the inflation landscape. Almeida — co-host of XYPN's new Balanced PM podcast, which launches today — notes that the risks you take in reacting to the news are at least as big as the risks you accept when you leave your current portfolio in place and ride it out; he discusses the discipline investors need to pursue their goals while not reacting to the proverbial elephant in the room. Brendan McCann, research analyst at Morningstar discusses the firm's annual U.S. Fund Fee Study, released Tuesday, which showed that reduced fees saved investors $6.8 billion in fund expenses. He says, however, that while the long-term trend in expenses has been down, the industry may be reaching a point where -- thanks to the creation of new types of funds -- future cost reductions become increasingly difficult. Plus, John Barr, portfolio manager for the Needham Growth and Aggressive Growth funds — featured on yesterday's show for an investment process that earned him the title of "Stock Market Maestro" by author and researcher Lee Freeman-Shor — returns to the show to highlight that methodology talking growth stocks in the Market Call.

John Blank, chief investment strategist and chief economist at Zacks Investment Research, says that global central banks — including the Federal Reserve — have shifted to a rate-hiking mode. While some will wait to see when the Strait of Hormuz opens and how long higher oil prices impact inflation, he thinks the lingering tensions will force their hand. Further, he worries that the market's current levels "don't make sense," saying "multiple compression in the stock market should be [investors'] primary concern." Still, Blank says investors want to be fully invested, but possibly building a cash stash to get through some rougher times that he sees ahead. Vincent Randazzo, chief market strategist at ViewRight Advisors — co-manager of the recently launched Defender Risk Adaptive 500 ETF — says the market is in a "recovery mode" from a decline it went through just as the war in Iran broke out, and because it's still in the early stages, the recovery is "lumpy," and led by the biggest names. Randazzo, who focuses his research on market breadth, expects this market to broaden out and include more smaller names as the recovery continues to build. John Barr, portfolio manager for the Needham Funds — selected as a "Stock Market Maestro" by author and researcher Lee Freeman-Shor — discusses having market discipline and what it takes to deliver superior investment results through long-term, patient stock-picking. He also discusses how his methods are different from all of the other maestros Freeman-Shor identified in his book (discussed on the March 26th show), highlighting how there is no one right way to profit in the market.

Dec Mullarkey, head of investment strategy and asset allocation at SLC Management, says that earnings are strong and should keep the stock market rolling, but that signs of weakness shown by the bond market and concerns about how the war in Iran is impacting oil are going to be limiting factors. Mullarkey worries that a longer conflict could turn oil into a global crisis, where rationing and other measures could create more severe and long-lasting economic troubles. If, however, the situation can be resolved quickly, Mullarkey says the shadows over hanging the market should clear quickly, providing a real boost going forward. In "The Week That Is," Vijay Marolia, chief investment officer at Regal Point Capital, looks at the bond market's sell-off from the end of last week, and while investors can cheer bond yields reaching their year-to-date high, he notes that higher rates could stunt economic growth and hurt the stock market's trajectory. The big thing he expects to impact markets in the week ahead, however, is Nvidia earnings on Wednesday, where he is expecting gonzo numbers but a disappointed market response, simply because investor expectations are sky high. Plus, he discusses community protests over data centers, noting that there are economic consequences buried under the headlines, as limiting data center growth could curtail capital expenditures by tech companies and limit the speed with which artificial intelligence can reach its potential. Plus, David Trainer, founder and president at New Constructs puts Shake Shack back in the Danger Zone, noting that the stock — which currently trades in the $60 range after being as high as $144 in the last year — has a negative book value, and is using accounting measures that are clear signs of trouble.

Carley Garner, senior commodity strategist at DeCarley Trading, says the stock market looks unbalanced to her, with the current rally built around mechanical issues, like an explosion of option sales that impact market performance. She is expecting a pullback, and says things could get ugly — with the Standard & Poor's potentially losing at least 1,500 points, — about 2,000 points — which is why she has moved an overweight part of her own portfolio into Treasuries. She sounds a note for caution during the conversation, noting that "Markets are unforgiving in the short run, but in the long run they are very forgiving. Almost always, you will get an opportunity — it might be months or years down the road — to get back at a price that is reasonable and something you are comfortable with, as opposed to chasing it." Veteran market observer Nick Sargen, a regular contributor to The Hill, returns to The Big Interview to discuss the updated version of his book, "Global Shocks: An Investment Guide for Turbulent Markets." Sargen says the market is going through a lot of events — from the war in Iran to the fighting in ukraine, and more, but these events haven't had the historical impact on the market expected by these shocking events because artificial-intelligence spending has been so big that it just keeps the market powering along. "The optimism over A.I. in the stock market is having more impact on investors than the pessimism that consumers are currently feeling." John Cole Scott, president of CEF Advisors and the chairman of the Active Investment Company Alliance, returns to the show to discuss how recent troubles in business-development companies created a haves and have nots" among BDCs, with the ones that have exposure to software loans suffering and struggling while the ones that aren't in software represent a strong opportunity to get double-digit yields and solid returns on equity.

Ross Mayfield, investment strategist at Baird, says that the Federal Reserve "is going to be very hard pressed to find a reason to cut [rates] here," and he thinks that if the central bank does have to make rate reductions down the road, "it won't be for reasons investors would be excited about." Mayfield says he remains bullish, noting that "a consolidation period is probably in order," setting up a volatile summer setting up a continuation of the bull market later in the year, barring any sort of exogenous shock. And speaking of shocks, Mayfield addresses what he sees as building signs of a market bubble, and while he says they bear watching, he is not expecting that kind of action to result from current conditions. Todd Rosenbluth, head of research at VettaFi, makes Roundhill Memory — a brand-new fund that has raked in billions of dollars in assets in just weeks since it opened — his "ETF of the Week," noting that the fund has gotten off to a gangbusters start but that the fund's focus on just a few hot stocks should have investors concerned about whether it's a flash in the pan or here to last. Will Rhind, chief executive officer at GraniteShares, returns to the Market Call, and focuses largely on business-development companies, which got hammered due to software lending in March, rebounded sharply in April but remain unloved by the market today. GraniteShares' HIPS U.S. High Income ETF invests largely in BDCs and closed-end funds; Rhind outlines the current yield outlook in that space and for master limited partnerships.

Simeon Hyman, global investment strategist at ProShares, says that we have "had the most stunning earnings season in pretty much anybody's recollection," exceeding expectations and making it that the market is more focused on the earnings story than anything else, including bad news about war, inflation and more. He sees that trend continuing, even if inflation rises or stays sticky, until or unless it bumps into a recession, which he sees as unlikely. Hyman also discusses ProShares' new ETF based on the S&P 500 Buyback Aristocrats Index, and how that fund and a sister dividend aristocrats fund can be used to add consistency to a portfolio for investors who fear the bad news. He also discusses why he is overweighting small-cap now, seeing it returning to its historic role of providing above-average market returns. Rachel Perez discusses Choice Mutual's 7th annual Funeral Preferences Survey, which found that nearly one in five Americans have no financial plan whatsoever for their funeral, leaving family or friends to shoulder the burden, which averages in the $8,000 range but which can easily be double or triple that cost. In the Market Call, Wayne Thorp, chief executive officer at BetterInvesting — which is part of the National Association of Investors — brings the well-developed principles of the group's Stock Selection Guide to look for high-quality growth companies that can be held for the long term.

Andy Wells, chief investment officer at Sanjac Alpha, says he expects the stock market to continue on its positive roll and wouldn't be surprised if it's up by about 6% from current levels over the next six months, but he also says that investors should expect interest rates to go up this year — even as he thinks the Federal Reserve will look to make a cut — because there is so much incoming bond supply driven by the artificial-intelligence boom and the need to fund A.I. projects. Further, Wells says that investors' bond funds are becoming "a tech bet" as the market changes and tries to absorb the massive funding needs behind new technologies. Matt Harris, chief investment officer at The Hausberg Group, says the current trend can drive the market higher, though the trend would need more breadth and participation to generate more optimism. He says investors should be using volatility to their advantage, especially in areas where consumer sentiment is weak, to buy into sectors that are on sale. Specifically, he is looking for alternative ways to play artificial intelligence, such as with energy companies and other adjacent industries. Martha Moore, chief economist for the American Chemistry Council and survey chair for the National Association for Business Economics discusses NABE's latest Business Conditions Survey, released Monday, which showed that corporate economists see shrinking profit margins and, as a result, higher prices being passed along to consumers, which could keep inflation higher for longer. Despite that, the economists remain modestly positive on the next calendar quarter. Plus, Chuck answers a listener's question about how to view a portfolio that just set a personal peak, but that is overloaded with growth stock funds.

Vince Duffy, news director, Michigan Public, joined Chuck at the Society for Advancing Business Editing and Writing Conference in Philadelphia to discuss how the media handles its coverage of soft versus hard data and whether those stories — and others — are politicized. Duffy also talks about coverage priorities and the difficulties of balancing news that consumers need with the things they most want. Vijay Marolia, chief investment officer at Regal Point Capital, joins the optimists in his assessment of last week's jobs data, though he does suggest the numbers have room to flex and will make it hard for the Federal Reserve to cut rates quickly or deeply. He also discusses the wild GameStop bid to buy eBay, and revisits Jane Street Capital, the market maker he discussed a week ago, covering why it has become so important and why foreign regulators believe the company may be gaming the system. David Trainer, founder and president at New Constructs, looks at the cash burning tendencies of some popular stocks — including two members of the Magnificent 7 — and puts them in the Danger Zone, noting that the burn rates suggest that there are potential troubles ahead. Plus Chuck gives his surprising takeaway from the SABEW event, one he says he formed mostly during the long drive home, which he interrupted to fill his gas tank at prive levels that were painful.

Parag Sanghani of the Westwood Holdings Group, manager of the firm's Enhanced Energy Income and Enhanced Midstream Income ETFs, says that the ongoing war in Iran has pulled volumes from inventories early, creating synthetic demand that will keep prices higher for several years. That benefits the oil companies and stocks that Sangahni likes, but it hurts by creating a tax at the gas pump, which he expects to remain in place longer than most projections. Sanghani says he currently likes the entire spectrum of energy investments, not just oil and gas, noting that power demands are expected to keep growing beyond current capacity constraints for years to come. Matt Freund, co-chief investment officer at Calamos Investments, says that productivity, GDP growth and earnings are "what matters," and that the headline risks that are driving consumer sentiment are "distractions" from a market backdrop that is solid. He says inflation remains the big risk, but notes that the investor sentiment is creating opportunities, particularly in closed-end funds where they are reflected in discount trends. Plus, Stephen Lubben, a law professor at Seton Hall University, discusses his recent book, "To Protect Their Interests: The Invention and Exploitation of Corporate Bankruptcy," and how the nation's bankruptcy laws have been used in ways that don't protect the broader economy from the failure of big firms but instead protect wealthy power brokers from facing financial consequences of mistakes and misdeeds.

Erik Aarts, senior fixed income strategist at Touchstone Investments, says the last few weeks have shown a disconnect between stock and bond markets, with the bond markets getting particularly cautious while stocks have raced back to record highs. What the bond market is worried about, Aarts says, is that higher oil prices will bleed into another round of higher inflation. ... At its base case, that's why yields are up today." Aarts also discusses how high-yield bonds are not living so much up to their label as "junk bonds," and that much of that high-risk exposure has moved to or stayed in private credit markets, changing the risk-reward profile of high-yield bonds and making them more attractive than other categories now. For his ETF of the Week, Todd Rosenbluth, head of research at VettaFi, goes in an unusual direction, picking an emerging markets sovereign debt fund that gets poor grade from Morningstar but that Rosenblth says fits the bill for a growing group of investors looking for overseas bond exposure that's tied to the dollar. Wall Street veteran Anthony Gallea, chief executive at Working Profit and publisher of the Working Profit Investment Letter, adds the twist of finding a catalyst to a Benjamin Graham-Warren Buffett style of value investing. In the Market Call, Gallea discusses how that works and where he sees potential catalysts now.

James St. Aubin, chief investment officer at Ocean Park Asset Management, says that the stock market's flirtation with record highs is showing some overvaluation — increasing the potential downside risk — but he only expects that risk to be realized "if the narrative changes, if something comes out of left field that shakes the whole foundation of what is building market optimism today." His most likely candidate for that confidence-breaker is not war or current events, but some change in the artificial-intelligence boom that has been driving spending and earnings growth. St. Aubin says that if negative data on sentiment and feelings winds up showing up in changed habits and spending patterns, it could create economic problems, but until that happens, he says inflation and other concerns are not likely to derail the market's uptrend. Andrew Chanin, chief executive officer at ProcureAM — which runs the Procure Space ETF (ticker symbol: UFO) talks about how space may be the next frontier in investing, particularly in light of the excitement coming off of the recent Artemis moon mission, which highlighted not only the potential investment avenues but the prospects for private companies to drive the future of space exploration. He explains how concepts like "solar space energy" could help to power Earth-bound needs for more energy, and how satellite changes are impacting communications industries and more. Plus, researcher Allison Hadley discusses a study conducted for Partnercentric.com, which focused on Americans' impulse spending, which found that more than four in five consumers have made at least one impulse buy already this year, with an average of seven purchases made in the first quarter alone, and a median spend of $50 per purchase.

Brad McMillan, chief economist for Commonwealth Financial Network, says that there's "an enormous feel-bad headline economy," but the underlying fundamentals are solid enough to keep earnings growing, which will make it that the market does well, or at least avoids a protracted, deep downturn. McMillan worries that when the supply-chain breaks for food, for holiday shopping and more several months from now that it could trigger a recession, but he says that, for now, the numbers that normally signal that a grizzly bear market — a combination of a recession and a crashing market — aren't lined up to happen yet. Mark Newton, global head of technical strategy at Fundstrat Global Advisors, also is staying out of the recession camp, but he does "suspect that we can't just go to the moon right away," and thinks the market could be in for a 5% haircut this month. Newton says that earnings and the economy have been better than expected, which is why he is telling people to "put on the blindfold and put on earphones" to concentrate on strong technical trends and economic data that remain in good shape. Cary Sinnett, senior manager of financial planning at AICPA, discusses the group's survey which showed that while nearly 80% of Americans report having money set aside to cover living expenses and emergencies, the depth of those savings varies dramatically by age and gender, and the even among the savers less than one in five has enough on hand to cover more than a year's costs.

Doug Roberts, chief investment strategist at Channel Capital Research Institute and the author of "Follow the Fed to Investment Success," says that it doesn't matter much to the stock market when a rate cut happens, so long as investors can expect decline and believe the central bank will step in with one if employment numbers change significantly. Roberts says that the market wants to know that "the Fed has your back," and he expects new chairman Kevin Warsh to signal that, even if it is not accompanied immediately by rate cuts. Roberts also says that current conditions and the Fed's outlook should be leading investors to domestic stocks and particularly to small- and mid-cap names. Vijay Marolia, chief investment officer at Regal Point Capital, discusses why the market liked Alphabet's earnings results last week but hated Meta Platform's numbers, and what that says about each company moving forward, discusses the disappointing crash landing of Spirit Airlines, and delves into the curious story of Jane Street Capital, the little-known Wall Street market maker that made headlines when it was revealed that its average compensation per employee last year was roughly $2.7 million, more than seven times higher than the average staffer at Goldman Sachs. As the latest earnings season starts to wind down, David Trainer, founder and president at New Constructs, says that companies with core earnings lower than their reported net income — a status that gets names kicked out of the Bloomberg New Constructs Core Earnings Leaders Index — are in the Danger Zone, largely because they are less profitable than Wall Street thinks they are. He singles out two companies, Boeing and Broadridge Financial Solutions, as examples of stocks where the true profitability is obscured. Plus, Lester Jones, chief economist for National Beer Wholesalers Association, discusses the latest Beer Purchasers' Index, where the April numbers suggest that a "beer recession" looks to be over, with purchases strongly on the rise in preparation for the summer season, a result that is somewhat surprising because economic conditions suggest that consumers may be cutting back on spending. He says shifting consumption patterns are boosting sales, but he also expects inflation impacts to be more muted than many observers expect.

Matt Stucky, chief portfolio manager for equities at Northwestern Mutual Wealth Management, says in the Market Call that scary headlines over higher gas prices, inflation and war haven't created a significant headwind to overcome the solid earnings growth picture. Stucky adds that beyond the earnings results, the economy is benefitting from tax and tariff reductions that are helping to balance out the new concerns; he discusses how a broader growth picture is good for small and mid-cap stocks, why he thinks the financial-services sector was oversold and more. Jeff Corliss, managing director at HighTower Signature Wealth, discusses the behavioral traps and pitfalls that stop well-meaning investors with solid financial plans from achieving their real goals, noting that it's the details more than the markets that derails retirement savings before all of a plan's aims are met. John Cole Scott, president of CEF Advisors and the chairman of the Active Investment Company Alliance, recounts the legacy and the lasting investment legacy of Dr. Mark Mobius, widely considered the father of modern emerging-markets investing. Mobius, who passed away on April 15, was a contemporary and colleague of Sir John Templeton, and spent decades seeking out investments in the farthest reaches of the world; Scott looks at some of the wisdom collected in years of interviews done with George Cole Scott, the founder of The Closed-End Fund Letter.

Jason Hsu, chief investment officer at Rayliant Global Advisors, says that "thee's the real economy and there's what the S&P 500 and Nasdaq are measuring" and they're different, which is why it's "not crazy for the stock market to reflect something almost separated from reality." As a result, consumers can freak out at what they see at the gas pumps and grocery stores and concerns over war can be on everyone's mind at the same time the market is re-testing record highs. In a wide-ranging Big Interview, Hsu also discusses why the U.S. and China have backed away from trade-war tensions and how artificial intelligence may have a bigger impact on work forces in India and China than it does in the U.S. and more. In the Market Call, Nancy Prial, co-chief executive officer and senior portfolio manager at Essex Investment Management, discusses the current ongoing rally in small-cap growth stocks and why she expects smaller stocks to return to their historical path of delivering gains that are slightly better than brand-name stocks over time. Todd Rosenbluth, head of research at VettaFi, looks to a domestic dividend-driven fund for his ETF of the Week, noting that it's a defensive pick in part because "that's what has worked this year."

Shawn Severson, chief executive officer and the head of market and thematic research at Water Tower Research, says that oil futures prices looking out into 2027 and reacting as if "$70 is the new $60," a sign that the market does not think any oil shock will be long-lasting. Meanwhile, he says that the economy's continuing strength is showing that it can absorb and tolerate higher inflation and other current headline risks without falling into a recession. As a result, he sees downturns while the market digests the uncomfortable news as if there's a "pig in the python" as buying opportunities. Jenny Harrington, chief executive officer and portfolio manager at Gilman Hill Asset Management says in the Market Call that artificial intelligence having sucked up so much attention and investment dollars has actually created "more excellent opportunities in the past year than I have had in a long time." Despite that, Harrington says it's a tough overall market to pick stocks because current events are distorting and disrupting markets and "I don't think we've even begun to feel what the reverberations and aftershocks may be from the closing of the Strait of Hormuz." Stephen Kates, financial analyst at Bankrate.com, discusses the latest national housing affordability numbers that were released on Tuesday, and how cooling home prices offer modest relief to prospective buyers. He notes that with 30-year mortgage rates seemingly stuck at or above 6% nationally for a while, the market is not likely to feel much better even if affordability numbers keep showing moderate improvement.

Steve Laipply, global co-head of iShares Fixed Income ETFs for Blackrock, says that with fixed-income yields staying high and with evolving tools in new funds, investors have a generational opportunity to generate solid real returns and, more importantly, a solid income stream. BlackRock today released a new paper on current fixed-income opportunities, and Laipply discusses laddering bond ETFs with different maturities versus holding more general short-, intermediate and long-term funds, as well as the benefits of adding different types of fixed-income funds, including private credit and more. Russell Rhoads, professor of financial management at Indiana University and co-host of Academic Market Insights, says in the "Talking Technicals" segment that he's "a beat-up bear," but he cautions that volatility remains elevated and that when the VIX volatility index is elevated when the stock market is going strong, "That usually doesn't end very well." He says that stocks are about six months into an over-valuation cycle, with the Cape Shiller PE Index hitting its highest levels in decades; "When it reaches a higher level like that," Rhoads says, "we have typically gotten a correction in the next year or two." Plus, Chuck — who wrote two different books on choosing and working with financial advisers — answers a question from a listener whose financial adviser is retiring, who now has to decide if they accept that adviser's recommended replacement, go with an adviser with whom there are family ties or starts over with someone new.