This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Randy Frederick, vice president of trading and derivatives at the Schwab Center for Financial Research.
“The risk of a larger pullback is growing even though [sentiment] indicators remain mostly neutral,” says Frederick, who has taken notice of the remarkable similarities between the post-Covid and post-financial crisis bull runs. If form holds, we’re very close to the same point in 2010 at which a 16% correction took place. While Frederick doesn’t expect nearly that large of a downdraft in stocks this time around, today’s markets - with new record highs hit almost every day - are vulnerable to a move lower.
Longer-term, Frederick remains bullish. He reminds of last week’s personal income/savings report showing personal income up 21% thanks to stimulus checks, but spending ahead just 4%. That leaves a lot of money currently sitting idle and waiting to buy any dips.
What might derail the bull market is a rise in inflation forcing the Fed’s hand far quicker than the currently promised 2023. While Frederick acknowledges the current economic boom and price pressures, he’s on board with the Fed’s description of “transitory.” Covid, he says, has caused massive supply disruptions - just look at the large number of ships sitting in the waters outside West Coast ports. This too shall pass, he says, and with it will be the current inflation scare.
There’s plenty more, including a discussion of what current volatility and put/call readings are telling us, crypto, and why the collapse of the a number of mini-bubbles is a healthy thing for the broader market in the long term.
Listen to or subscribe to Alpha Trader on these podcast platforms:
Apple Podcasts
Spotify
Google Play
Stitcher
Learn more about your ad choices. Visit megaphone.fm/adchoices