0:10
Kochugovindan: Expect Fed to Hold Rates For Rest of 2026
Fed will likely keep the benchmark rate steady at 5.25‑5.50% through the end of 2026, according to senior economist Sree Kochugovindan. He notes that recent price risk data have eased, letting the Fed focus on nudging inflation back to its 2% goal without further tightening.
At the ECB’s annual forum in Portugal, central‑bank heads echoed the sentiment that the inflation outlook is improving, but they stressed patience. Warsh’s remarks suggest the policy stance will stay unchanged unless new shocks emerge.
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0:57
Why America’s Bull Market Is Still Running, 250 Years Later
The Declaration of Independence may have been one of history’s most bullish filings.
The US has already begun celebrating the nation’s 250th birthday with Revolutionary War reenactments, big deals at autolots and, of course, a fist fight on the White House lawn. But for advisors and clients, the anniversary is also a chance to reflect on why the US has been one of history’s strongest and most durable investment stories. For much of modern history, America has been the epicenter of global finance. Today, US equities account for roughly two-thirds of global stock market capitalization. While new challenges to growth may arise, America’s national spirit has been one of its most surprising superpowers, said Meb Faber, founder and CIO of Cambria Funds.
“It’s almost like there’s something in the water,” he said. “This country was largely founded by immigrants, risk-takers and people who got on the boat. There’s a freedom to take a risk and fail, and there’s nothing more American than failing.”
Much of America’s success stems from that willingness to embrace risk, he told Advisor Upside. An entrepreneurial culture distinguishes the US from much of Europe and Asia, where startup ecosystems tend to be less prominent. “There’s amazing entrepreneurs all over the world, but America has structures in place to enable it and also get out of its way,” said Faber, who documented America’s economic rise in a new book premiering (you guessed it) July 4.
Americans also participate in financial markets at far higher rates than many of their developed-market peers. Roughly two-thirds of US households own stocks directly or through retirement accounts, according to Federal Reserve data, compared with about one-third of households in the European Union and fewer than one-quarter in Japan.
Change Is the Only Constant. Still, America’s dominance has not been uninterrupted:
- At the turn of the 20th century, London remained the world’s financial center.
- Japan briefly overtook the US as the world’s largest stock market during its late-1980s asset bubble.
- China’s equity boom in the mid-2010s briefly threatened to narrow the gap.
“It would be foolish to assume that the US is guaranteed in the future to be No. 1,” Faber said. “It’s the same as if you told someone during the Korean War, ‘Half of your country is going to have a larger stock market than the UK in 2026.’ They’d say you’re crazy.”
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3:45
Guggenheim Calls Time on SaaSpocalypse Fears
Arguably the most bearish forecast on markets this year has been that artificial intelligence will render software stocks fossils. The “vibe coding” enabled by tools like Anthropic’s Claude Code and OpenAI’s Codex, this view holds, will serve as a metaphorical asteroid to the digital dinosaurs about to be wiped out in a SaaSpocalypse.
Guggenheim analyst John DiFucci argued Wednesday that, like a chatbot’s misfired answer, this pessimistic view is “a hallucination.” Software firms, he said, are “one of the best opportunities for patient investors” and, at least for a day, investors came around to the idea that the prevailing sentiment might be overblown.
Fear that AI will make traditional software offerings obsolete has been a leading motivator for investors in 2026: The iShares Expanded Tech-Software Sector ETF has tumbled 12.4%. At the same time, the Nasdaq Composite, an indicator of the broader technology sector’s health, has climbed 12.2%. A rise in redemption requests in the private credit industry, which has led some overwhelmed funds to cap withdrawals, has been partly driven by investors’ concerns that they’re too exposed to software firms.
DiFucci said the deep selloff has reached the point where it has created a buying opportunity. “Valuations imply many software companies will decline into perpetuity because of AI,” he wrote in an investor note. “We don’t believe that to be true.” He upgraded software firms Check Point Software, Salesforce and ServiceNow, and their shares rose 2.9%, 4.2% and 6.6%, respectively. Check Point is trading at 12.6 times its forward earnings, and Salesforce at 11.5, significantly lower than a year ago and well below the Nasdaq Composite’s average of 23.2. ServiceNow’s 23.7 forward price-to-earnings ratio is a fraction of the 62.1 a year ago.
- While DiFucci acknowledges AI represents a “technology paradigm shift,” he made the simple argument that there “is significant staying power in enterprise software. If a company is using it to help run its business, it will continue to use it.’”
- For this reason, he said Guggenheim believes software firms will “at least persist (if not continue to grow at reasonable rates in many instances); they’re trading as if they will not, making for one of the best opportunities for patient investors in our careers.”
Trading Up: The software sector benefited from turbocharged spending by companies that adopted work-from-home policies during the pandemic, leading to a corrective slump in recent years. DiFucci said if revenue growth stabilizes, companies “currently trading as if they’ll decline into perpetuity” will “trade as if they’ll at least be stagnant, if not grow modestly into perpetuity.” Guggenheim’s $188 target price for Check Point and $228 target price for Salesforce both imply a roughly 40% upside from Wednesday’s close. Its $128 target for ServiceNow implies a 21% upside.
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7:02
New Fed Chair Noncommittal on Interest Rates, Emphatic on Central Bank Independence
If Kevin Warsh didn’t just get a new gig, we might suggest he become a professional boxer since he can sure bob and weave.
At the ECB Forum on Central Banking on Wednesday, the Fed chair managed to dodge questions about what we can expect from interest rate moves at the Federal Open Market Committee’s July meeting. It seems he’s trying to keep the conversation focused on inflation — that it’s still too high but is posing less of a risk than it did even a few weeks ago. Energy prices in particular, he noted, have come down “quite substantially.”
Warsh Watch
Since taking over from Jerome Powell in May, Warsh has had Wall Street’s ears glued to every word he’s said about the economy and what it could mean for borrowing costs, while the market’s eyes are glued to the data. This week, the statistics included employment numbers from ADP, which showed that private-sector hiring in June was lower than economists expected. Those economists will be closely watching the Bureau of Labor Statistics’ jobs report coming out this morning as well, especially because the employment picture is a “wild card,” according to Dominic Pappalardo, chief multi-asset strategist for Morningstar Wealth.
The many market watchers keeping up with these figures and what they mean for interest rate projections are probably getting some whiplash:
- Coming into 2026, roughly two rate cuts were priced in by the futures market. Now, CME’s FedWatch tool indicates we’ll probably see a hike by the end of the year.
- “The main driver of that has been the sustained increases we’re seeing in inflation,” with a lot of that inflation increase driven by the surge in energy prices due to the conflict in the Middle East, Pappalardo says. Looking ahead, weakness in the labor market could delay the Fed rate hike markets are expecting, he adds.
Fed Independence: Warsh may be a man of few words, but one thing he seems to want to make clear is that the decision to raise or cut interest rates will be made by the central bank and the central bank alone. “We’ve been an independent central bank for a very long time,” Warsh said at the ECB conference when asked whether he would take President Donald Trump’s calls for cuts into account. “We’re going to be an independent central bank at this moment, and you’re going to see no changes on that.”
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9:47
Budget-Conscious Shoppers Splurge on General Mills’ Cat Treats While Skipping Cereal
One part of people’s budgets is untouchable no matter how thin their wallets get, and that’s Fido’s portion. The only segment of General Mills’ sales in North America that rose in the fourth quarter was its pet business, which includes brands like Blue Buffalo and Tiki Cat. The rest of its earnings, reported yesterday, weren’t as rosy.
The company, which owns brands including Cheerios and Betty Crocker, posted a $2 billion loss last quarter, mainly because of non-cash items. Revenue rose 1% as shoppers skimped, opting for smaller package sizes and sale items.
General Mills said yesterday it’ll try to scrape together $3 billion in cost savings over the next four years, all while innovating in its products. Investors seemed to like the sound of the cereal company’s lean and protein-packed plan, pushing its stock up about 9% yesterday.
Some Aisles Are Sacred
North American sales of pet products rose 4% at General Mills, with its CEO saying, “Cat growth is on fire.” Pet spending has continued to notch gains annually, despite tapering from its pandemic peak. But Crookshanks continuing to get treats isn’t enough for General Mills:
- It cut prices on two-thirds of its products last year to appeal to budget-conscious shoppers — rival PepsiCo announced similar plans. But with shoppers driving a hard bargain, General Mills is now trying to make its products worthy of buying even when they’re not tagged “buy one, get one half off.”
- The cereal-seller’s biggest upsell seems to be protein, which has swept through the food biz, infiltrating everything from Starbucks lattes to Pop-Tarts. After its protein-packed Cheerios flew off shelves, General Mills said its product innovation plans will focus on protein and fiber this year.
Still Soggy: The company’s focus on improving its merch doesn’t mean discounts didn’t work. During last year’s fiscal fourth quarter, when consumers felt like they needed a pot of gold to afford a box of Lucky Charms, the retail segment of General Mills (human food, not pet food) saw North American sales slide 10%. At the same time this year, that slide leveled out somewhat to 4%. Getting the balance right between prices and sales will be like pouring the perfect ratio of cereal to milk.
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12:27
Inside Wall Street’s Leveraged ETF Frenzy
New ETF launches are getting meta.
Roundhill launched a new leveraged product last week that targets twice the daily performance of its own computer memory fund, the Roundhill Memory ETF (DRAM), which itself has become one of the most successful launches of all time. The new T-REX 2X Long DRAM Daily Target ETF (RAM) is one of the latest in the leveraged category, which has brought in hundreds of billions in assets since the start of the year and was, according to Morningstar, responsible for over 300 new product launches last year. But why so many new leveraged funds, and why now? The answer has several parts, one being that they tend to be more lucrative for issuers than investors, said Dan Sotiroff, associate director at Morningstar.
“On the one hand, you’ve got the clients that are gambling with this stuff, they want a quick hit and a quick win,” Sotiroff said. “On the other side, you have asset managers who are going to blast 50 or 60 of these out there all at once, betting that one or two of them become wildly successful. The success of those one or two more or less subsidizes the cost of doing the 50 or 60, and they’re justified in doing that from a business perspective, because they still make money at the end of the day.”
One major feature of leveraged funds is what’s referred to as volatility decay. Decay happens when the growth of an ETF eventually “destroys itself,” Sotiroff said. That’s because when returns are levered, volatility is too. Over time, that volatility eats into the performance of the ETF. “Almost all [leveraged funds] that I’ve seen, eventually what they do is they just asymptotically approach zero over time because of that phenomenon,” he said. “As you lever more and more, that actually accelerates that whole volatility decay phenomenon, so it actually occurs faster and quicker.”
Another thing to keep in mind with leveraged and inverse products is that often, they don’t actually own the underlying stock or the targeted stock. Instead, they use swap contracts. But there are increasing numbers of products that offer direct access to things like private assets, said David Shapiro, Co-Founder & CEO of OpenVC. “There are more and more [ETFs] coming online that actually do enable folks to get these assets without the leveraged context or like derivatized context,” he added.
Hit the Brakes. The SEC in December halted filings of highly leveraged funds, defined as those with more than 2x exposure to their underlying holdings. But some experts, like Joy Yang, global head of index product management at MarketVector Indexes, said it might make more sense to loosen regulations so US investors don’t seek out the products abroad. She told ETF Upside that regulators would be better off “keep[ing] investors where they can see them.”
Sotiroff agreed, adding that investors can’t just sign up for a traditional brokerage account and start day-trading in Germany or London. “Given the riskiness of that, I tend to think that’s probably actually a good thing,” he said.
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15:52
SEC Is Revamping Earnings Season. Will Companies Really Ditch Quarterly Reports?
The SEC is hoping to make quarterly earnings reports a little less … well, quarterly.
Comments are due Monday on the Securities and Exchange Commission’s proposed rule changes to allow public companies to report financial results semiannually. The agency said it could reduce short-termism, in which companies focus on near-term goals rather than long-term objectives. While it may be a worthy aim, the concept of less frequent reporting has struck a nerve in both the investment management industry and the general public. The SEC received roughly 37,000 submissions so far. In addition to pre-written campaign letters, there are also hundreds of individually drafted comments coming from asset managers, law firms, trade associations, academics, investor advocates and good-governance groups.
The irony is that what seems like a seismic shift may turn out to be a tempest in a teacup, according to Jason Moser, senior analyst at Motley Fool. “I honestly think most companies will appreciate the flexibility to do semiannual reporting, but the vast majority would still continue with quarterly reporting,” Moser told Advisor Upside. “It’s what Wall Street has come to expect, and it’s frankly not that burdensome on companies, especially now that AI can help you produce earnings reports at the click of a button.”
Supporters of semiannual reporting argue that quarterly reports encourage an excessive focus on short-term earnings, while increasing compliance costs and even potentially discouraging companies from remaining public. Supporters likewise emphasize that the proposal is optional, not mandatory, and companies could continue filing quarterly reports if investors demand them. Writing in favor of the proposal, Commissioner Mark Uyeda emphasized that point, saying the framework should allow market participants to select the optimal reporting period for their business.
“Issuers will select a reporting period, and investors and market intermediaries will signal whether such period aligns with their expectations,” Uyeda said. There will still be robust reporting rules, he added:
- Companies will continue to communicate important information through means other than the quarterly Form 10-Q.
- They will also remain subject to requirements to file Form 8-K for certain material events.
Opponents, who include Moser and the Motley Fool, worry that Main Street investors could receive less timely information compared with institutional investors, who already possess alternative data sources. They also fear increased volatility between reporting periods and weaker corporate accountability. “Think about how much has happened in the first six months of 2026 with politics, tariffs and the war in Iran,” Moser said. “Nike just got a billion-dollar tariff refund, which we may not have known about.”
Will the SEC Heed? Nobody has a crystal ball, but Moser’s sense from conversations with other analysts and stakeholders like Better Markets, a consumer advocacy group focused on investment industry fairness and transparency, is that the SEC intends to implement the proposal “more or less as is.”
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19:27
A Dual-Currency Stock Market Is Congo’s Latest Bid to Entice Investors
The Democratic Republic of Congo is drawing up plans for its first stock exchange as it seeks to attract more investment to an economy that’s benefiting from soaring demand for minerals critical to the AI buildout.
19:49
BitGo: Volatility Strengthens Infrastructure Case
Bitcoin slipped to a 21‑month low near $26,000, underscoring the market’s recent volatility.
Angela Ang, BitGo’s APAC managing director, says the dip is sharpening the case for robust, compliant infrastructure as retail speculation wanes and institutional capital steps in.
She argues that custodians who can guarantee security and regulatory alignment will capture the next wave of demand, turning volatility from a risk into a catalyst for tighter supply chains.
For listeners who want low‑fee crypto exposure, our markets partner Kraken supports bitcoin — link in show notes.
20:33
What's Behind The Plunging Won And Sudden Liquidity Collapse In Korean Markets
South Korea’s won weakened for a fourth day as overseas investors accelerated their relentless sales of local stocks.
In response, USD/KRW rose 0.1% to 1,552.60, extending its four-day gain to 1.2% (i.e. KRW drop).
According to Barclays, pressure from both resident outflows and more recently in the case of Korea, heavy foreign outflows, could pose further headwinds even as exports performance remains robust and domestic equities extend their bubble.
Let's take a closer look at what's driving the key moves in Korea.
Other than stronger USD, Goldman has been highlighting that rebalancing related equity outflow has been the dominating factor. Equity outflow from Jun 22nd till month-end amounted to US$18bn, bringing total Jun equity outflow to US$30bn. This follows the US$27bn outflow observed in May. As of today, Samsung and Hynix are 32% and 30% of MSCI Korea respectively, which are 7% and 5% above the 25% single stock limit. A combined 12% rebalancing effort would lead to another US$24bn outflow with US$200bn AUM (passive and active) estimated tracking MSCI Korea.
Additionally, other portfolio concentration limits such as UCITS and HF internal concentration limit rule are also likely to be driving the rebalancing related outflows. In terms of timing, some fast money rebalancing is relatively real time, while many real money and passive investors may rebalance at quarter-ends which led to more concentrated outflows.
FX hedging need by foreign investors drove RHS USDKRW demand. Goldman estimates average foreigners’ FX hedging ratio for Korean equities to be 10-15%, and the hedging mainly happens in offshore NDF market. As of March-end, foreigners’ exposure to Korean equities was US$1tn. Due to the 68% expansion in market cap in KOSPI in Q2, the associated FX hedging need rose by an estimate of US$68-US$102bn (US$1000*68%* 10-15%) during the quarter. This has led to sharp increase in RHS NDF hedging demand, some of which concentrated at quarter end as well.
Other than above-mentioned hedging dynamics, FX hedging demand by USD-denominated total return swaps with leveraged equity underlying provided to offshore clients by local security houses via intermediaries also likely added to FX hedging demand in NDF market, especially as equity marketcap expanded quickly in Q2.
- Sharp rise in borrowing by securities firm was likely the main driver behind tighter onshore liquidity. Surge in onshore retail margin trading and leveraged single-stock ETFs caused sharp rise in funding needs of local securities firms. In particular, with leveraged ETF, the need to post futures margin for hedging positions for securities firms drove the borrowing demand.
- Local news reported securities firms’ commercial paper and short-term bonds issuances exceeded KRW100tn each month and accounted for 80% of short-term bond issuance in recent months.
- Decline of collateral value for securities firms facing offshore counterparties worsens the liquidity situation. When local securities firms face offshore intermediaries on total return swaps, they not only have rising needs to post margins from underlying stock advance, but also from declining collateral value as KRW FX depreciated and KTB sold off. These dynamics further increased securities firms’ margin requirement in KRW terms, which in turn added to their local borrowing demand. Similar situation happened in late 2022 with KRW and KTB sold off sharply at the same time during BOK hiking cycle. Looking forward, local news reports Samsung securities plans KRW600tn short-term issuance in Jul, indicating such liquidity tightness is unlikely to ease.
- Forthcoming BOK hike (starting in Jul per GIR base case) likely also added to the expectation of higher funding costs ahead.
- Goldman has observed widening of spread between NDF curve offshore and onshore FX swap. This could be a result of unwinding onshore-offshore arbitrage positions as RHS hedging demand caused sharp surge in NDF points.
Looking ahead, if Korean equity continues to charge higher in a volatile fashion, combined with likely BOK hikes, Goldman thinks such liquidity environment is likely to stay or tighten further. Thus NDF points are likely to stay elevated and the bank prefers pay on dip. In a strong USD environment, KRW FX pressure is unlikely to ease from external forces, which does not help NDF points to fall either. On the other hand, if Korean equities fall meaningfully, NDF points may retrace, as smaller notional exposure to Korean equities by foreigners (either direct or leveraged) would reduce the associated FX hedging.
On FX spot, it is much harder to see sustained equity inflow in the short term: If Samsung/Hynix continue to lead KOSPI higher, equity rebalancing related outflow would further dominate; if equities fall, broad-based outflow is likely to follow which is likely to offset the positive FX impact from unwind of RHS hedging.
