In Episode 188 of Facts vs Feelings, Ryan Detrick, Chief Market Strategist at Carson Group, and Sonu Varghese, Chief Macro Strategist at Carson Group, welcome new Fed Chair Kevin Warsh the only way they know how: with data, context, and zero sugarcoating.
When Jerome Powell took over in February 2018, the Dow dropped 4.6% on his first day, the worst debut of any Fed chair in modern memory. This time, it’s not the equity market doing the hazing. It’s the bond market. The 30-year Treasury yield sits above 5% for the first time since 2007, and Japan’s yields just hit levels not seen since the 1990s. Ryan and Sonu explain why the dynamics that once pushed foreign money into Treasuries are quietly reversing and what that means for U.S. investors.
From there, Sonu walks through industrial production data that almost nobody is talking about. Manufacturing is running at nearly 5% annualized. High-tech equipment production is up 61% above 2019 levels in real terms. This is hard data, not a survey, and it runs directly counter to the narrative that the economy is softening.
Then comes earnings. With 91% of S&P 500 companies reported, earnings growth is running at 27% against expectations of 13%. Communication services, expected to be down nearly 4%, came in up roughly 40%. The consumer is holding up, too, with retail sales running at 13% annualized and 95.2% of all household debt paid on time per the New York Fed.
The episode closes with a look at what to watch: NVIDIA earnings, FOMC minutes, and a bond market both hosts are keeping a very close eye on.
Key Takeaways:
- The bond market is testing Kevin Warsh the same way equity markets tested every Fed chair before him, and the dynamics driving yields higher are not going away quickly.
- AI is showing up in the hard data, not just stock prices. High-tech equipment production is up 61% above 2019 levels in real terms.
- S&P 500 growth came in at 27% against a 13% estimate during earnings season. Communication services swung from an expected decline of nearly 4% to a gain of roughly 40%.
- The two-year Treasury yield above the Fed funds rate signals the market believes the Fed is behind the curve. Rate cut calls from the sell side are, in Sonu’s words, a John McEnroe moment.
- The S&P 500 is up seven consecutive weeks, gaining over 16% during that stretch. One year after prior streaks of this magnitude, the market has never been lower and is up 16% on average.
Jump to:
0:00 — Welcome and Who’s Running the Fed?
6:10 — Bonds Are Testing the New Fed Chair
13:05 — Manufacturing Heats Up and AI Shows Up in Hard Data
21:40 — Japan Sparks a Global Yield Reprice
34:55 — Portfolio Moves on Duration and Cash
43:55 — Earnings and AI Spending
49:20 — Consumer Strength, Retail Sales, and Final Thoughts
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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