Introduces Joe Mazzola and sets up the topic: disappointing retail sales, bond market strength (10-year yield at one-month low), and asks what this means for GDP estimates and the Fed.
Sam
Joe Mazzola
Markets pricing three rate cuts in 2026 might be aggressive. The data is old (December). Interesting part is the consumer slowdown and pessimism around job growth.
Joe Mazzola
This leaves the Fed in a tricky position. They are transitioning from slowing an overheated economy to potentially needing to stimulate growth due to a slowing job market.
Notes yields are dipping and asks about the state of the rotation trade, citing Dow records and software (IGV) strength.
Sam
Joe Mazzola
The performance spread between chips and software is the widest in years, suggesting a catch-up trade in oversold software.
Joe Mazzola
The rotation trade is real and continues. The Mag 7 and Nasdaq 100 haven't made new highs since October, while the equal-weight index has.
Cites a note about market 'short-term memory loss' regarding debt, contrasting Oracle's recent debt concerns with Google's new $20B bond sale and Japan's fiscal responsibility strengthening the Yen.
Sam
Joe Mazzola
There's a difference in balance sheet strength between Oracle and Google. Companies are transitioning from using cash to using debt markets to fund AI spend.