The New Valuation Regime | Jim Paulsen on Confidence, Inflation and the Coming Market Supports

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8d ago 1:08:41

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In this episode, we sit down with Jim Paulsen to analyze the latest economic and market data through his lens of decades of market experience. Jim shares insights from his Paulsen Perspectives research, covering the job market, the Fed, inflation, valuations, investor confidence, and what they all mean for the future of the economy and markets. We explore why confidence is so low despite a bull market, how Fed policy is shaping market dynamics, and where investors might want to focus as the cycle evolves.

Topics covered in the episode:

The job market’s pivotal role in driving the economy and Fed decisions
Why recent Fed rate cuts may mark a turning point in market support systems
The narrowness of the bull market and how innovation-driven firms diverge from traditional cycles
Investor confidence, the “misery index,” and recession probability models
How easing may broaden market participation beyond large-cap growth
What “animal spirits” mean for small caps, high beta, and IPOs
The disconnect between inflation, bond yields, and growth measures
Gold, cash, crypto, and tech as “fear assets” in today’s environment
The impact of tariffs on profits, wages, and inflation expectations
Valuations in context: historical perspective and the upward bias of multiples

Timestamps:
00:00 Introduction and market overview
02:00 Fed easing, inflation, and recession risks
09:00 Bull market without normal supports
17:00 Narrow leadership and innovative companies
23:55 Confidence and the misery index
29:35 Yield curve, recession probabilities, and Fed policy
34:00 Broadening of market participation
37:00 Animal spirit stocks and small caps
38:00 Inflation, bond yields, and resource unemployment
43:20 Copper-gold ratio and yields
45:10 The role of gold in portfolios
50:00 Cash, crypto, and tech as defensive assets
54:00 Tariffs, inflation, and profit margins
59:00 Inflation persistence vs. wage growth
01:01:10 Valuations and the upward bias in multiples
01:07:00 Closing thoughts and takeaways

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