Will the Fed Buy Stocks? | Animal Spirits 473 — Key Takeaways
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Will the Fed Buy Stocks? | Animal Spirits 473
The Compound1h 12mJul 15, 2026
Watch the originalForward PE ratios for tech stocks are below their 10-year average and falling, meaning bearish valuation arguments against the AI trade lack empirical support.
Key takeaways
Bearish case requires a recession — outside recessions, analyst earnings estimates are 67% accurate within 5%
Bearish case requires a recession — outside recessions, analyst earnings estimates are 67% accurate within 5%
- Chart Kid Matt data: actual S&P earnings land within 5% of forward estimates 67% of the time when no recession occurs.
- The only times estimates diverge badly is during recessions — so bears must first predict a recession, which analysts historically cannot do.
52% of Russell 2000's first-half 2025 return came from AI-exposed companies; 24% of the index ties to AI
52% of Russell 2000's first-half 2025 return came from AI-exposed companies; 24% of the index ties to AI
- Sonu Varghese (Carson Group) breakdown: industrials (17% of Russell 2000) are a major AI conduit, not just the 18% tech weight.
- Small-cap outperformance is not a broad economic recovery story — it is concentrated in AI-adjacent industrials and tech.
Tech sector forward PE is below its 5-year and 10-year averages despite bubble fears
Tech sector forward PE is below its 5-year and 10-year averages despite bubble fears
- Duality Research shows tech forward PE near lowest levels since early 2025, falling even as AI spending surges.
- Nvidia's PE is cheapest since early 2019 — the valuation compression case against tech is weaker than consensus assumes.
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In this video
- 1mOpening banter: IBM earnings, inflation data, and interest rates
- 8mHyperscaler capex vs. semiconductor free cash flow chart of the year
- 15m10 reasons to be bearish (and why the bullish case still wins)
- 24mBroadening market rally: equal weight, advance-decline lines, and valuations
- 30mStock market as household wealth and too-big-to-fail thesis
- 38mK-shaped economy narrative, AI job creation, and doomer predictions
- 48mBond market opportunities and cash vs. bonds debate (Pimco segment)
- 52mFirefighter salaries, status symbols, and the fake-rich phenomenon
- 57mComcast split, Netflix binge model vs. HBO weekly release strategy
- 1h 2mDecline of reading, audiobooks, and GLP-1 impact on snack sales
- 1h 8mPop culture roundup: Dave Matthews concert, movies, and Adam Sandler romcoms
“investors keep chasing performance but they never seem to catch it”
— Jason Zweig
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