Will the Bull Market Continue? Economic Outlook for 2026 with Caleb Silver

0:00This is an iHeart Podcast. Guaranteed Human.

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1:08And he gives us this one last just, ow! And he pitches off. And when he pitches off, he flies right into the gun barrel. I said to the cameraman, do you have him? He said, shoot him. I said, Justin, shoot. You can download this episode and others from Lines and Tines with Spencer Graves on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. I actually drop better when I'm high. It heightens my senses, calms me down. If anything, I'm more careful. Honestly, it just helps me focus. That's probably what the driver who killed a four-year-old told himself. And now he's in prison.

1:48You see, no matter what you tell yourself, if you feel different, you drive different. So if you're high, just don't drive. Brought to you by NHTSA and the Ad Council.

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3:03Brilliantly boring since 1865 is a service mark of the PNC Financial Service Group, Inc. PNC Bank, National Association, member FDIC. Let's talk about some other economic factors. the jobs report was canceled for the first time in America. So what does this say? Data amongst other things. But what does it say about the state of the economy? And what's your thoughts on where we're headed in 2026? Yeah. The fact that we haven't gotten the government jobs data, that is troubling for business journalists like me on the one hand, but we're getting so much data anyway. We get great stuff from ADP every month on the private payrolls.

3:46I think that tells you a lot more than the BLS survey of households and businesses when they're literally calling tens of thousands of them on the phone and emailing and saying, are you hiring? How many people are you hiring? Are you planning to hire in the next three months? They do that in the first two weeks of every single month. So by the time you get it anyway, it's already three weeks late. And it's based on an extrapolation of all those phone calls and emails. So I never thought it was that exact. And it was getting muddier by the second, giving everything that was going on in the Labor Department with the Trump administration.

4:14So the economy, I think, is in better shape than people think and certainly than the way people feel. People feel terrible about the economy right now. Consumer confidence, guys, as you know, is almost as low as it was during the great financial crisis. And we're in much better shape than we were back then. Just people feel terrible because inflation, they feel like it's coming, going to come even more in 2026, especially in the form of higher health care payments and health care premiums. They feel like prices have gotten out of control and nobody can control it. So they blame the government and they blame corporations for that.

4:44But in reality, if the unemployment rate really is somewhere between 4.4 and 5%, that's still relatively low right now. Wages have been increasing like 3.5 to 4%. That's decent. We are hearing about growing drumbeat about more layoffs. And, you know, the AI fears about it taking people's jobs. Those are significant. And just that psychology can weigh in on people. But we continue to spend because that's what we're really good at as consumers. And as long as we're doing that and you have all these, you know, multi-trillion dollar companies pledging to spend tens, hundreds of billions of dollars with each other, that's driving the other part of the economy, economic growth is going to be there.

5:21Economic growth is going to be there with lower interest rates next year. And we're going to hear that on Wednesday when the Fed comes out with its decision, which will probably lower rates by a quarter point. but it'll signal through the dot plot it's you know it's it's sort of summary of where fed governors think interest rates should be a year from now that they're going to be probably a full percentage point lower one year from now so this combination of lower interest rates and the economy not falling off a cliff and tariffs being more smoke than fire really at this point in time and corporate profits are growing all these things signal the fact that the economy is probably going to grow and might be actually okay although people on the low end of things are not going to feel it and they never do.

5:58They're just going to feel worse as the investing class does even better. I saw you on your skateboard today talking about the Fed dot plot. I appreciate that content. So there was a report today over the weekend where they were talking about the MAG-7 and how it's had this amazing run. And at some point, the reality check is going to happen. And some analysts are saying it'll happen in 2026. The same analyst was saying that the S &P is going to have a great year next year. I find it kind of hard to figure out, though, how the two things are going to work, right? If the Max 7, you're talking about some of the biggest companies, these big hyperscalers, I think they make up 35 % to 36 % of the S &P.

6:36So if those don't do well, how do we see the rest of the S &P picking up that lift and saying, all right, we'll carry the market from here? What are your thoughts on this? Yeah, great question. And you guys know this well. If you look at the S &P 500 versus the equal weight S &P 500, remember the S &P 500 is market weighted. The biggest stocks weigh the most and account for the biggest part of the index, like NVIDIA, Microsoft, Meta, Amazon, Apple, you name it. But if you just take it equal weight, it is underperforming the S &P 500 by a fair amount, by about 10 % this year. But what we've seen lately, guys, which I find very interesting, after that 5 % pullback a few weeks ago, which seems like forever ago now, the market rebounded almost to where it was.

7:17We're about 1 % away from all-time highs. And in that rebound, we saw what the technical analysis like to call breath thrusts. Sounds like a fencing term, but what it really is, is a majority of stocks rallying at the same time, right? And that's what you want to see in a healthy bull market. You want to see a lot of stocks rallying, not just 10 stocks, 20 stocks rallying into, you know, to make the market make new highs. And that's really what it was with all these big mega cap tech stocks and AI stocks. Now you're seeing better breath and you're seeing better breath in sectors that actually matter.

7:51You're starting to see a little bit in commodities because interest rates are cooling out a little bit on the short term. You're starting to see it in health care, which we haven't seen in a long time. You're starting to see it in financials because lower rates are coming. That's going to be good for them in terms of their net interest margins. So you're seeing broader participation in the market. And that's a healthy sign of a bull market in its fourth year. And this bull is getting a little bit tired. That said, we're going into a midterm election year. Those are always a little volatile, but the trend is up until the right, especially with lower interest rates on the horizon.

8:22That power small to mid cap stocks and sectors outside of mega cap tech. That's actually good news for momentum. I'm not saying we're going to get another 18, 19 percent year. Probably we'll get a normal year unless something terrible happens. Do you follow up on George's question? Do you think we have a reformulation of the Max 7? Well, do you think it'll be a consolidation into five or do you think they'll keep the max seven and just change the weighting and the structure of it? I think just by the nature of investor preference, it'll it'll change. As you know, you've seen investors, especially big investors like Berkshire Hathaway and others pulling bigger stocks like Apple.

8:59But the leadership is still the leadership and the biggest stocks in the index right now. What if mind control is real? If you could control the behavior of anybody around you, what kind of life would you have? Can you hypnotically persuade someone to buy a car? When you look at your car, you're going to become overwhelmed with such good feelings. Can you hypnotize someone into sleeping with you? I gave her some suggestions to be sexually aroused. Can you get someone to join your cult? NLP was used on me to access my subconscious. NLP, aka Neuro Linguistic Programming, is a blend of hypnosis, linguistics, and psychology.

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11:21It ain't the end of your season. You can always tune in with Broken Play Podcast with NAB Green on the Black Effect Podcast Network. Another team who ain't going to the playoff. The Chiefs. Oh, it's a wrap. It's time to rebuild. Who your MVP right now then? Drake May up there. Josh Allen up there still. Oh, my boy, Matthew Stafford. Where the whole Knicks at? He ain't too far behind. He did all this talking. What Matthew Stafford is doing statistically, bro, is crazy. Bro, you know I ain't no Josh Allen fan. but Matthew Stafford got better weapon. Caleb Williams. Hey, he should be in that conversation.

11:57In what conversation? MVP? He should be in it. Listen to Broken Play with Nav Green from the Black Effect Podcast Network on the iHeartRadio app, Apple Podcasts, or whatever you get your podcast. I actually drop better when I'm high. It heightens my senses, calms me down. If anything, I'm more careful. Honestly, it just helps me focus. That's probably what the driver who killed a four-year-old told himself. And now he's in prison. You see, no matter what you tell yourself, if you feel different, you drive different. So if you're high, just don't drive. Brought to you by NHTSA and the Ad Council.

12:37The social media trend that's landing some Gen Zers in jail.

12:43The progressive media darling whose public meltdown got her fired. I'm going to take Francesco off the network entirely. The massive TikTok boycott against Target that makes no actual sense. I will continue getting stuff from Target and I will continue to not pay for it. And the MAGA influencers whose trip to the White House ended in embarrassment. So refreshing to have a press secretary after the last few years who's both intelligent and articulate. You won't hear about these online stories in the mainstream media, but you can keep up with them and all the other entertaining and outrageous things happening online, in media, and in politics with the Brad vs.

13:17Everyone podcast, hosted by me, Brad Palumbo. Every day of the week, I bring you on a wild ride through the most Delulu takes on the internet, criticizing the extremes of both sides from an independent perspective. Join in on the insanity and listen to the Brad vs. Everyone podcast on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. So, you know, Mag7, I think that was Kramer who came up with that term along with Fang. To come up with a name for that, it's really been, as you guys know, more like, you know, a dozen stocks and you named a few that were a real part of the rally, the oracles of the world, the sales forces of the world.

13:52They were a big part of that rally as well. Anybody that was tied to the AI build out and has a big market cap was useful and helpful in bringing the market to record highs 18 times already so far this year. But you'll get a broadening out of participation. You're seeing stocks making record highs. You're seeing the banks start to roll back into record highs, the JP Morgans and Goldman's. Those were dancing on record highs. So when you see financials doing well and you start to see other sectors rallying along with it outside of tech, that's a good sign. So you'll always have leadership, but we'll come up with a new name in the next year or two for whatever next group of stocks outperforms the rest of it.

14:29Yeah, we've got to figure out how to get Broadcom and TSM inside there. Yeah, Broadcom has been an outstanding stock. Yeah. Also, Walmart, too. Can I do a follow-up real quick, Rashad? The stock is valued at, what, 40 times earnings. I think the stock is up 25 % this year. Why do you think Walmart doesn't get the same respect that Amazon may receive, even though if you look going back to 2018, it was priced at$28.10. It's currently at$113.56. Despite classification of where they land, why do you think that they aren't put in that MAG 7 or Elite 8 type of range? Well, did you notice what just happened in the last couple of weeks?

15:10What happened with Walmart? What exchange did it move to? It moved to the NASDAQ. Great point. Right. It's been on the it's been on the New York Stock Exchange forever. Yeah. Right. And it decided that it needed to be listed on a different exchange, the NASDAQ. Now, why the NASDAQ? Right. That's where the fastest growth stocks in the world live. That's where growth stocks. That's it. That's where you list. And so it wanted to be included in those conversations. So you're not the only one that noticed it. And they noticed it themselves. They are much more than the biggest retailer in the world.

15:40And they are that. but they are a logistics company right they're a data company right that is what they're into these days and i was just out in bentonville for the first time if you guys haven't been out there first of all we should go out there and do a market mondays out there there is nothing it is outstanding i that it blew my mind uh being in that town and you see the the the history of walmart which is really the history of america um and just just all over the place in the infrastructure that's around the walmart super centers there it's phenomenal so it wants to be a tech company. It wants to be thought of as a growth company.

16:12And so it changed where it was listed. And maybe it will get that respect because now you got to include it in the QQQs of the world, right? You got to include it with growth stocks indexes and portfolio managers that own those sectors are going to have to buy it if they don't own it already. And it's actually outperformed. I was checking this out. It's outperformed the NASDAQ over the past five years. So it definitely belongs in that exchange and maybe it'll get the respect that it deserves. What opportunities do or do you see in 2026? Well, I think the sector rotation is helpful and good. We have all been piled into the same group of stocks forever, and it's been great.

16:50It's been very rewarding for shareholders, right? If you pick the 510 fastest growing stocks in the market, especially in tech, especially in internet and communications and AI, you have had an incredible run as a shareholder. No surprise that we have more 401k millionaires than any time in history. We've all been piled into the same stocks. But when everyone's piled into that side of the boat, you can see what happens. We saw the NVIDIAs of the world, the Oracles of the world, the Microsofts and Metas. These were down beyond correction territory. They're almost down in bear market territory. So you've had a healthy valuation resizing there, which is good.

17:24But in a lot of ways, they've become value stocks or safety stocks, right? It's either gold or that, right? And it all depends on the equity risk premium for investors right now. So I think you're going to see a rotation into a little bit more defensive, but also a little bit more broadening into the healthcare sector. As I mentioned earlier, biotech finally caught a bid. And then smaller down the market value chain, as you get into the mid caps and the small caps that are going to benefit from lower interest rates, there's a lot of good companies there that are doing business in a way that's not necessarily tariff sensitive, that are operating great businesses.

17:59So I watch mid caps, you can buy the mid cap ETFs if you want, or you can buy the the small cap dtfs to get some exposure can you explain because some people might not be familiar from your website can you explain the difference when you say mid-cap small cap oh sure large cap yeah small cap stocks we're talking like 5 billion to 10 to 15 20 billion in market cap right and market cap means the stock price times the amount of shares outstanding the the more shares outstanding the bigger your stock price the higher your market cap nvidia obviously the biggest of the mark of of the companies in the world in terms of market cap.

18:34Mid caps are more in that 25, I would say$200 billion market cap range. And these are manufacturing companies. These are financial services companies. Some of these are even tech companies or working on the fringes of AI or on the fringes of semiconductors. And they have fabulous businesses that are super profitable. And right now you want to have very strong profit margins if you are a publicly traded company. This matters more than anything. Revenue per employee. How much productivity are you squeezing out of your labor force? How are you using AI to do that? And how is that powering your profit margins and your profits?

19:11Because at the end of the day, as investors, that's what we're paying for. Grow your profits because it's going to be reflected in your share price and in the dividends you pay back to investors. So in that mid-cap range, they're going to benefit from lower interest rates because these companies borrow a lot of money. And as rates go down and they refinance their debt, that eases the stress on their balance sheets and they're more profitable. And that's usually a benefit to shareholders. So I would look down the chain a little bit as well. And then large cap. Did you talk about large cap? Yeah, large cap are the biggest companies in the world.

19:40The$200 billion to now$5 trillion. Mega cap. Oh, those are mega caps. Those are the$1 trillion to$5 trillion. and large cap would be the$200 billion to$1 trillion in market cap now. But those ranges have expanded over time because we live in the land of the giants. You had to update Invescopedia because we didn't have a trillion dollar company until recently. You're right. I'll get right on that. Because you're sitting in a unique seat and we're trending toward the end of the year. I wonder from a retail investor side, what are you seeing in people searching? Like, what are the things that people are looking into?

20:19I know there's a lot of talk of recession and what the future is going to look like. What are those trends that you're seeing from the Investopedia side that retail investors or any investor really is looking forward to on your site? Ernest, what's up? You ever walk into a small business and everything just works? Like, the checkout is fast, the receipts are digital, tipping is a breeze, and you're out the door before the line even builds. odds are they're using square we love supporting businesses that run on square because it just feels seamless whether it's a local coffee shop a vendor at a pop-up market or even one of our merch partners square makes it easy for them to take payments manage inventory and run their business with confidence all from one simple system one of the things we love most is seeing neighborhood businesses level up there's this west indian spot right in our community that started with a small takeout counter.

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22:23I gave her some suggestions to be sexually aroused. Can you get someone to join your cult? NLP was used on me to access my subconscious. Mind Games, a new podcast exploring NLP, a.k.a. neurolinguistic programming. Is it a self-help miracle, a shady hypnosis scam, or both? Listen to Mind Games on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. A man with Down syndrome tries the impossible, the grand slam in turkey hunting. Four 53 hits, we're legal shooting light. And he gives us this one last testimony. And he pitches off. And when he pitches off, he flies right into the gun barrel.

23:05I said to the cameraman, do you have him? He said, shoot him. I said, Justin, shoot. You can download this episode and others from Lines and Tines with Spencer Graves on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. 14 years in prison for killing a young woman. A 15-year sentence for a crash that caused three deaths. Twelve and a half years for killing a child and critically injuring her mother. All true stories. All caused by marijuana-impaired drivers. No matter what you tell yourself, if you feel different, you drive different. So, if you're high, just don't drive.