Episode summary
Market Bloodbath! What The Heck Just Happened? | Michael Lebowitz
Thoughtful Money
· · 1 hr 49 min · Hosts: Wolf Richter · Guests: Michael Lebowitz
Summary
Michael Lebowitz argued that Thursday’s market plunge looked more like a technical unwind after the election than the start of a new fundamental breakdown. He said investors had been positioned for the vote, then had to rebalance, hedge, and unwind trades once the event passed, and that a hedge fund or multiple hedge funds may have been forced to cover margin or liquidate. In his view, the election did not materially change the AI or data-center story, because those projects were already facing local and state-level scrutiny before the vote and still “will get built.”
He was skeptical that the Nasdaq’s roughly 15% pullback from its high should be treated as an official correction in the sense of a true regime change. He said earnings estimates have not collapsed, bonds and gold did not behave like a classic flight-to-safety trade, and the dollar was little changed. For now, he sees the selloff as a consolidation within a volatile market rather than evidence that the AI trade has definitively peaked.
Lebowitz was much more constructive on bonds. He said the market is starting to price in a Fed hike and that long rates may ultimately trend lower if tighter policy slows growth. He also argued that 5% yields offer an attractive “kick the field goal” opportunity for investors, especially in shorter-duration Treasuries, high-quality corporates, and select municipals, while credit spreads and liquidity conditions are worth watching closely for signs of strain.
Key takeaways
- Lebowitz said the post-election selloff looked technical, with hedge-fund positioning and margin pressure likely amplifying the move.
- He argued that election results did not materially change the AI buildout thesis, because data centers will still be built even if the pace slows.
- He said the Nasdaq’s drop is a consolidation, not proof of a bubble burst, unless earnings estimates or market internals deteriorate further.
- Lebowitz said the Fed hike already looks priced in, and he expects long-term yields to trend lower if tighter policy slows growth.
- He sees 5% bond yields as compelling for investors who want to de-risk, especially in shorter Treasuries and high-quality credit.
- He said credit spreads are rising from the bottom up, so he is watching liquidity more closely even though he is not alarmed yet.
Notable quotes
“I think, this is much more technical than it is um anything other than that”
“fundamentally, I'm not sure much changed from what we knew before the election to afterwards”
“Have earnings have earnings forecasts collapsed? Have they changed? No”
“Generally, I do think we trend upward through the through the rest of the year”
“I'm more worried about next year than the next couple months”
How the episode opens
Generally, I do think we trend upward through the through the rest of the year. A lot of buybacks need to happen. Rebalancing there.
There's reasons for it to go upward. Plenty of reasons I can say it could go downward, too. I'm more worried about next year than the next couple months.
Welcome to thoughtful money. I'm thoughtful money founder and your host Adam Tagrant. Welcome you here at the end of the week for another weekly market recap.
This time featuring my good friend the exanguinated portfolio manager Michael Iitz. Mike, how you doing?
I'm doing great. What does what' you say exanguinated? — Exanguinated. — What does that mean?
Means all the blood's been removed. So, we had a massive bloodletting yesterday in the markets and um I got a number of questions for you, Michael, but I think the one that's just on everybody's mind is what the heck just happened. So, we'll talk about that in a second.
Our good friend Lance is away today, so Michael is stepping in. Um but yeah, Michael, you know what? S&P down over 4%.
Uh NASDAQ down nearly six. Um it was a hell of a day. Um we're seeing a little bit of a recovery here uh on Friday, but what what in your mind um was the trigger?
I know, you know, Lance is always telling us that we always try to ascribe some sort of narrative to market forces. A lot of times it's not really the full explanation, but what is the current thinking on the street for for why this bloodletting happened yesterday? So you know I think first of all it's important to understand that people investors especially institutional investors invest going into the election thinking things are going to whatever their thoughts are what's going to happen.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- market selloff
- s&p and nasdaq moves
- bond yields
- ai buildout
- credit spreads
Companies and tickers mentioned
- PANW
- Palo Alto Networks
Watch the episode
Watch “Market Bloodbath! What The Heck Just Happened? | Michael Lebowitz” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Thoughtful Money, this episode and its artwork belong to Adam Taggart | Thoughtful Money. Octagon is not affiliated with the show; this page is an independent summary.
