To reach a new low in the S&P 500, Jeremy Lefebvre states that a new "black swan" event is needed. He explains that the current tariff drama is insufficient, and events such as China invading Taiwan would be necessary to create the kind of dramatic, unexpected shock that could cause such a decline.
This video is a reaction video by Jeremy Lefebvre where he discusses several market analysts' perspectives on the current market condition. He covers opinions from Tom Lee, David Solomon (Goldman Sachs CEO), and Professor Jeremy Seagull (Wharton School of Business and chief economist at WisdomTree), interweaving his own analysis and predictions. He also shares his expectations for Tesla's upcoming earnings report.
Professor Jeremy Seagull supports his argument for the Federal Reserve to lower interest rates with the following data points:
Long-term inflationary expectations are down: He specifically mentions that long-term inflationary expectations, based on indicators like the 5-year 5-year forward rate of inflation and the personal consumption deflator (PCE) index, are significantly lower than the current Fed funds rate. He notes that the long-term inflationary expectation using the Fed's preferred PCE index is at 2%.
Commodity prices are down: He points out that the GSG commodity index, a key indicator of inflation, is down 3% in the past year, indicating a decrease in inflationary pressure from this sector.
CPI and PPI are not alarming: He mentions that the Consumer Price Index (CPI) and Producer Price Index (PPI) are not showing significant inflationary pressures. He highlights that the CPI is currently massively lower than the Fed funds rate.
Money and credit growth are too slow: The M2 money supply growth is less than 4%, while he argues a healthy economy needs between 5% and 6% growth. He believes lower interest rates would stimulate this growth.
