Episode summary
Vincent Deluard: Why the Stock Market Is More Fragile Than You Think
The Meb Faber Show
· · Hosts: Meb Faber · Guests: Vincent Deluard
Summary
Vincent Deluard turns more cautious on US equities after a long bullish stretch, arguing that the market’s narrow leadership masks weakening breadth. He points to more than 70% of US stocks below their 200-day moving average, widening credit spreads in consumer names, and a summer marked by churn rather than conviction. In his view, consumption has held up only because the stock market has rallied and households have been drawing down investment accounts and 401(k)s, a setup he compares with 2006-07.
His macro framework centers on tax collections rather than GDP. He says personal income tax receipts are slowing from 8-9% growth to around 5%, which he reads as evidence that real income gains are fading while inflation remains sticky. He expects the next shock to be inflationary because policy responses will default to more fiscal or monetary easing rather than austerity. He also argues the world is effectively living in a $150 to $200 oil environment once refining margins, transport, and insurance are included.
Outside the US, Deluard sees Europe following Japan’s post-2012 playbook, but in a messier way. He says France looks like the weak point in a sovereign debt story, while the UK, Japan, South Korea, and the yen look more attractive. He favors the yen and Korean won as hedges, and sees the UK as undervalued relative to its market weight and sector mix.
Key takeaways
- Deluard says he is turning bearish on stocks because market breadth is deteriorating even as the index hits new highs.
- He thinks US consumer strength is being artificially supported by equity gains and withdrawals from investment accounts and 401(k)s.
- He estimates the world is effectively operating in a $150 to $200 oil regime once refined-product costs are included.
- He sees Europe as a slower, uglier version of Japan’s 2011-12 setup, with France the most obvious sovereign-debt pressure point.
- He prefers the yen and Korean won as macro hedges, and thinks the UK looks unusually cheap versus its global market weight.
Notable quotes
“I would say a majority of US stocks would disagree with you. We have this uh very interesting technical divergence”
“I don't know what the next shock will be, but I know it will be inflationary because the policy reaction will be inflationary”
“Europe today is where Japan was in 2011-12, just uglier”
How the episode opens
US stocks, all-time highs, up over 10% this year. We still in a bull? — The majority of US stocks would disagree with you. — I'm turning bearish on stocks. — We have about a third of US stocks trading at negative beta.
We are living in a $150 to $200 oil world. — I don't know what the next shock will be, but I know it will be inflationary because the policy reaction will be inflationary. You can't raise taxes, you can't cut spending, we tried that already. You can't really take other people's land, we tried that with with Greenland.
Europe today is where Japan was in 2011-12, just uglier. — Perfect fit for France. — We hit every single marker of a sovereign debt crisis. — One thing I find crazy is that if you look at the average defined benefit pension from the UK, they used to have 50% in domestic stocks 20 years ago. Now it's down to 5%.
Samsung makes a billion dollar a day. Eventually the sole justification for the bull market is the bull market itself. It's a very circular argument.
I got a quick favor before we get going today. We just crossed 40,000 subscribers on YouTube and we're trying to get to 100,000 by the end of the year. And real talk, if we hit it, my producer Colby has agreed to shave his head.
I'm not making that up. I'm not sure we want to see it, but if you got something out of these conversations, take 2 seconds, hit subscribe, like the episode. It's the best free thing you can do to help the show.
Let's make Colby bald. On with today's show. What's up, everybody?
Today's guest is Vincent Deluard, director of global macro strategy at StoneX.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- stock market fragility
- tax receipts
- oil pricing
- europe japan comparison
- currency ownership
Companies and tickers mentioned
- SNEX
- StoneX
Watch the episode
Watch “Vincent Deluard: Why the Stock Market Is More Fragile Than You Think” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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