In Episode 208 of Facts vs Feelings, Carson Group’s Ryan Detrick, Chief Market Strategist, and Sonu Varghese, Chief Macro Strategist, make the case that market breadth is overrated. With the S&P 500 less than half a percent from an all-time high and the Nasdaq printing a new record, the hosts explain why tech and tech-adjacent stocks, roughly half of the index, are carrying the market even as 10 of 11 sectors finished September in the red. They point to Micron’s strong earnings, South Korea’s surging chip exports, and rising AI capex estimates as evidence that profit growth is overpowering the rise in yields.
From there, Ryan and Sonu break down the revised PCE data, arguing that inflation remains stubbornly hot, and cover the dovish turn from Fed officials that dropped October hike odds from about 70% to roughly 20%. They also discuss why the weak headline payrolls mask a healthy labor market.
The episode wraps with a look at fourth-quarter seasonality, cautious investor sentiment near all-time highs, and their view that a global bull market supports staying diversified with a tilt toward tech and AI.
Key Takeaways
- September’s S&P 500 was nearly flat (down 0.3%) with 10 of 11 sectors in the red, but tech rose about 5%. The hosts expect a breakout in the tech sector ETF to lift the broader market as earnings season begins.
- Q4 is historically strong, averaging a 4.2% gain and rising more than 80% of the time. A negative Q1 followed by a 10%+ Q2 has never produced a down Q4, with an average return of about 6%.
- Inflation remains hot despite PCE revisions: Core PCE is running about 3% year over year, market-based core inflation is two to three times its historical pace, and ISM prices indexes are at multi-year highs, pointing to an inflationary growth environment.
- Fed hike odds for October fell from about 70% to roughly 20% after softer PCE data, light payrolls, and dovish Fed comments, though one more hike in December remains possible.
- The labor market is healthier than the headline 29,000 payrolls suggest, with the prime-age employment-population ratio at 80.7%, low layoffs, and Challenger job cuts at their lowest September level since 2022.
- Sentiment remains cautious near highs, with the CNN Fear & Greed Index in fear territory. The hosts view that lack of excitement as a net positive, and note that AI capex and profit growth are outweighing the drag from higher yields.
Jump to:
0:00 — Welcome and What Matters Now
0:31 — Steve Jobs Legacy and Apple’s Run
6:24 — Why Breadth Headlines Miss the Point
10:56 — Tech Concentration and Sector Damage
15:26 — Q4 Seasonality and Earnings Setup
20:11 — Yields Rising Credit Stress Global Moves
22:11 — Europe Debt Fears and Politics Inflation
27:29 — Sentiment Still Cautious Near Highs
32:39 — PCE Revisions Still Hot Inflation
42:09 — PMIs Say Demand Strong Prices Hot
45:00 — Fed Hike Odds Payrolls Yield Curve
54:58 — Final Takeaways and Listener Requests
Connect with Ryan:
- LinkedIn: Ryan Detrick
- X: @ryandetrick
Connect with Sonu:
- LinkedIn: Sonu Varghese
- X: @sonusvarghese
Questions about the show? We’d love to hear from you! factsvsfeelings@carsongroup.com
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