WEBVTT 00:00:00.000 --> 00:00:02.660 OK, welcome back to the deep dive. Yeah, good 00:00:02.660 --> 00:00:06.139 to be diving in again. So today we're waiting 00:00:06.139 --> 00:00:08.560 through a pretty packed collection info. You've 00:00:08.560 --> 00:00:10.460 shared some really interesting pieces. Definitely. 00:00:10.619 --> 00:00:13.080 We've got that political news compilation from 00:00:13.080 --> 00:00:15.660 April 22nd. Right, touches on potential changes, 00:00:16.000 --> 00:00:19.519 personnel shifts, even some strange social media 00:00:19.519 --> 00:00:21.219 stuff. We'll get to that. And then the market 00:00:21.219 --> 00:00:24.079 side too. Hedgeye and Horizon Weekly. Exactly. 00:00:24.280 --> 00:00:27.839 Both from the 21st. So market analysis, political 00:00:27.839 --> 00:00:30.379 undercurrents. And the mission, as always, is 00:00:30.379 --> 00:00:33.399 to try and, you know, make sense of it all, pull 00:00:33.399 --> 00:00:35.780 out the key threads, connect the dots, give you 00:00:35.780 --> 00:00:37.960 that clearer picture. Without getting lost in 00:00:37.960 --> 00:00:39.840 the weeds, it's about seeing how these different 00:00:39.840 --> 00:00:42.780 spheres might be interacting. Precisely. Politics, 00:00:43.219 --> 00:00:45.719 economics. How do they influence each other? 00:00:45.880 --> 00:00:47.960 What's driving things underneath? OK, so where 00:00:47.960 --> 00:00:50.579 should we start? Politics. Yeah. Let's kick things 00:00:50.579 --> 00:00:53.579 off there. That April 22nd compilation, it mentioned 00:00:53.579 --> 00:00:56.880 some potential turbulence. Department of Defense. 00:00:57.280 --> 00:01:00.560 Ah, yes. Secretary Hegseth. Seems they're rumblings. 00:01:00.780 --> 00:01:02.560 Right. Trump allies concerned about his judgment. 00:01:03.320 --> 00:01:05.819 Accessibility issues, focusing on personal connections. 00:01:06.299 --> 00:01:09.430 And even talk of looking for a replacement. That's 00:01:09.430 --> 00:01:11.549 what the report suggests. So what's your read 00:01:11.549 --> 00:01:13.730 on that? Potential instability there. Well, look, 00:01:13.829 --> 00:01:16.769 even the suggestion of instability at DOD leadership 00:01:16.769 --> 00:01:19.170 is significant, isn't it? Yes, definitely. If 00:01:19.170 --> 00:01:23.250 key allies are voicing doubts, it could signal 00:01:23.250 --> 00:01:25.629 deeper issues within the administration. And 00:01:25.629 --> 00:01:28.010 impact decision making. Absolutely. Especially 00:01:28.010 --> 00:01:31.609 now. You know, the global situation. Any hint 00:01:31.609 --> 00:01:34.409 of internal friction in a place like the DOD, 00:01:34.510 --> 00:01:37.040 that can have ripple effects. Makes sense. Okay, 00:01:37.200 --> 00:01:39.239 sticking with politics for a moment, there's 00:01:39.239 --> 00:01:42.239 this whole legal situation. Deportations. Right. 00:01:42.359 --> 00:01:44.980 The emergency stay related to the Alien Enemies 00:01:44.980 --> 00:01:47.719 Act. Which is quite an old law, it's worth pointing 00:01:47.719 --> 00:01:51.140 out. Very old. And complex. So a Texas judge 00:01:51.140 --> 00:01:54.459 initially blocked the deportations. Concerns 00:01:54.459 --> 00:01:57.439 about due process. Uh -huh. Lack of proper legal 00:01:57.439 --> 00:02:00.480 procedure. But then the Fifth Circuit Court overruled 00:02:00.480 --> 00:02:03.010 that judge. allowing the stay on those deportations 00:02:03.010 --> 00:02:05.390 to proceed. Correct. It's a real legal back and 00:02:05.390 --> 00:02:07.090 forth. So what's the bigger picture here? What 00:02:07.090 --> 00:02:09.449 does this tug of war tell us? Well, fundamentally, 00:02:09.449 --> 00:02:11.909 it's that classic tension, isn't it? Executive 00:02:11.909 --> 00:02:14.449 power versus individual rights, especially with 00:02:14.449 --> 00:02:17.169 immigration. The due process concern seems key. 00:02:17.370 --> 00:02:19.569 It really is. The fact a federal judge flagged 00:02:19.569 --> 00:02:22.129 it initially saying these expedited processes 00:02:22.129 --> 00:02:25.729 under this old act might violate rights. That's 00:02:25.729 --> 00:02:27.770 significant. And the different rulings just show 00:02:27.770 --> 00:02:31.240 how legally messy it is. Exactly. Very contentious. 00:02:32.080 --> 00:02:33.879 And it seems like even with the Fifth Circuit 00:02:33.879 --> 00:02:36.400 ruling, those due process worries haven't vanished. 00:02:36.599 --> 00:02:39.539 No. The report mentioned accounts, people being 00:02:39.539 --> 00:02:43.900 put on planes, potentially without clear explanations 00:02:43.900 --> 00:02:47.099 or a chance to appeal properly. Yeah, that sounds, 00:02:47.180 --> 00:02:49.900 well, concerning if that's how it's playing out. 00:02:50.039 --> 00:02:51.840 It really does. If those accounts hold water, 00:02:51.979 --> 00:02:55.139 it raises serious questions. Fairness, transparency. 00:02:55.319 --> 00:02:57.879 Access to lawyers too. Right. and just the speed 00:02:57.879 --> 00:03:00.060 of it all. It suggests a process that might not 00:03:00.060 --> 00:03:02.580 allow for, you know, careful consideration of 00:03:02.580 --> 00:03:05.460 each case. Troubling stuff, legally and humanly 00:03:05.460 --> 00:03:08.900 speaking. OK, let's shift gears a bit. Something 00:03:08.900 --> 00:03:11.979 different, also in the political news. Oh, this 00:03:11.979 --> 00:03:16.219 mention of unusual social media activity, digitally 00:03:16.219 --> 00:03:19.780 altered images. Ah, yeah, like doctored photos 00:03:19.780 --> 00:03:22.500 circulating in political circles. Exactly. The 00:03:22.500 --> 00:03:26.360 example given was. digitally added tattoos on 00:03:26.360 --> 00:03:28.759 a picture. What do we make of that kind of thing? 00:03:28.900 --> 00:03:31.539 It's fascinating isn't it how even small digital 00:03:31.539 --> 00:03:34.520 tweaks can be used to shape narratives. Precisely 00:03:34.520 --> 00:03:37.520 or just muddy the waters. In today's social media 00:03:37.520 --> 00:03:40.800 driven politics visual authenticity is well it's 00:03:40.800 --> 00:03:44.530 everything or it should be. So seeing these altered 00:03:44.530 --> 00:03:47.210 images pop up. It suggests maybe a strategy to 00:03:47.210 --> 00:03:49.849 influence opinions subtly. Or maybe even testing 00:03:49.849 --> 00:03:52.550 disinformation tactics. Hard to say, for sure. 00:03:52.629 --> 00:03:54.449 Just highlights that challenge, right? Figuring 00:03:54.449 --> 00:03:57.189 out what's real online. Constantly. Alright, 00:03:57.870 --> 00:03:59.710 now, something maybe a bit lighter, but still 00:03:59.710 --> 00:04:01.990 pointed. That politico lens. Oh, the most shameless 00:04:01.990 --> 00:04:04.370 attention -seeker. That's the one. And it's bipartisan. 00:04:04.620 --> 00:04:07.340 You got Senator Chris Murphy, Senator Ted Cruz. 00:04:07.800 --> 00:04:09.400 Representatives Crockett, Marjorie Taylor Greene, 00:04:09.599 --> 00:04:11.599 Nancy Mace. Yeah, quite the lineup. What does 00:04:11.599 --> 00:04:13.780 that tell us, that it hits both sides? Well, 00:04:13.960 --> 00:04:16.720 it suggests this drive for the spotlight isn't 00:04:16.720 --> 00:04:19.139 a partisan thing, right? It's maybe more about 00:04:19.139 --> 00:04:21.139 the current political environment. Like what? 00:04:21.439 --> 00:04:24.839 Social media demands? Could be. The 24 -7 news 00:04:24.839 --> 00:04:28.339 cycle, fundraising pressures. Maybe even a shift 00:04:28.339 --> 00:04:31.180 in how politicians see their job. Less purely 00:04:31.180 --> 00:04:34.189 legislative, more... Public figure. Performative, 00:04:34.310 --> 00:04:38.149 maybe? Perhaps. And the mix of styles and seniority 00:04:38.149 --> 00:04:40.829 on that list, it shows it's not just one type 00:04:40.829 --> 00:04:43.290 of behavior. It's complex. Yeah, it does make 00:04:43.290 --> 00:04:45.970 you wonder, though. How much does chasing attention 00:04:45.970 --> 00:04:48.850 impact actually governing? That's the million 00:04:48.850 --> 00:04:50.449 dollar question, isn't it? OK, let's pivot to 00:04:50.449 --> 00:04:53.529 the markets now. April 21st. Hedgeye, Horizon 00:04:53.529 --> 00:04:56.189 Weekly, both flag a rough day. Yeah, Dow, S &P 00:04:56.189 --> 00:04:59.269 500, NASDAQ all took a hit. Significant drops. 00:04:59.370 --> 00:05:02.060 And the consensus seems to be Fed worries. Pretty 00:05:02.060 --> 00:05:04.259 much anxiety that the Federal Reserve might keep 00:05:04.259 --> 00:05:07.019 monetary policy tight, keep rates higher for 00:05:07.019 --> 00:05:09.000 longer than people expected. And why does that 00:05:09.000 --> 00:05:10.920 spook the market so much? Well, higher interest 00:05:10.920 --> 00:05:13.180 rates generally cool things down. Borrowing costs 00:05:13.180 --> 00:05:15.000 go up for businesses, right? Yeah. Which can 00:05:15.000 --> 00:05:17.019 mean less investment, slower growth. And make 00:05:17.019 --> 00:05:19.860 safer stuff look better. Exactly. Bonds become 00:05:19.860 --> 00:05:22.360 more attractive compared to riskier stocks. So 00:05:22.360 --> 00:05:24.540 investors might shift money out of equities. 00:05:24.810 --> 00:05:27.290 The market reaction suggests worry about corporate 00:05:27.290 --> 00:05:29.769 profits and the economy overall if rates stay 00:05:29.769 --> 00:05:32.490 high. Okay, bigging into Hedgeye specifically, 00:05:33.209 --> 00:05:36.250 their top three things from that day. Right, 00:05:36.430 --> 00:05:38.110 they're looking at US dollar weakening against 00:05:38.110 --> 00:05:40.930 the euro and yen, oil prices dropping further, 00:05:41.050 --> 00:05:45.120 maybe entering hashtag quad for crash mode. Quad 00:05:45.120 --> 00:05:48.000 4 in their framework usually means slowing growth, 00:05:48.100 --> 00:05:50.839 falling inflation, often tough for commodities 00:05:50.839 --> 00:05:53.980 like oil. Right. And then the QQQ, the NASDAQ 00:05:53.980 --> 00:05:57.100 100 tracker, underperformance, more volatility 00:05:57.100 --> 00:05:59.480 expected there, tie to earnings season coming 00:05:59.480 --> 00:06:01.519 up. Yeah, that sounds like a fairly cautious 00:06:01.519 --> 00:06:04.279 outlook from Hedgeye, potential economic headwinds. 00:06:04.379 --> 00:06:06.699 A weaker dollar, falling oil, suggesting weaker 00:06:06.699 --> 00:06:09.420 demand, tech stock worries. It paints a picture 00:06:09.420 --> 00:06:11.620 of concern, for sure, especially heading into 00:06:11.620 --> 00:06:14.000 earnings reports. But then, Horizon Wea - Blakely's 00:06:14.000 --> 00:06:17.000 recap offered a maybe slightly different perspective, 00:06:17.420 --> 00:06:20.540 or at least a nuance. How so? Well, despite President 00:06:20.540 --> 00:06:22.959 Trump talking publicly about possibly firing 00:06:22.959 --> 00:06:25.480 Fed Chair Powell. Which you'd expect to rattle 00:06:25.480 --> 00:06:27.519 markets, especially at the bond market. Right. 00:06:27.860 --> 00:06:30.620 But Treasury yields apparently stabilized, and 00:06:30.620 --> 00:06:32.779 the 10 -year yield even went down a bit. Hmm. 00:06:33.139 --> 00:06:35.439 That is interesting. Unexpected resilience there. 00:06:35.620 --> 00:06:37.740 What could explain that? Why would the bond market 00:06:37.740 --> 00:06:41.399 freak out? Couple of possibilities, maybe. One, 00:06:41.939 --> 00:06:44.079 the market might just be discounting the chances 00:06:44.079 --> 00:06:46.339 of it actually happening, maybe seen this kind 00:06:46.339 --> 00:06:48.660 of talk before, or they believe in the Fed's 00:06:48.660 --> 00:06:52.180 independence. Or two, there could be deeper economic 00:06:52.180 --> 00:06:55.600 forces at play, maybe strong demand for safe 00:06:55.600 --> 00:06:58.980 U .S. debt. Overriding the political noise for 00:06:58.980 --> 00:07:01.819 now, it suggests a certain underlying confidence, 00:07:01.980 --> 00:07:04.339 perhaps. Interesting. Horizon also mentioned 00:07:04.339 --> 00:07:07.100 that while those big tech and growth stocks were 00:07:07.100 --> 00:07:10.220 still selling off, overall market volatility 00:07:10.220 --> 00:07:13.959 actually decreased. And they saw a, quote, return 00:07:13.959 --> 00:07:17.019 of diversification. Ah, so money flowing into 00:07:17.019 --> 00:07:19.459 other areas, small caps, international. Exactly. 00:07:19.560 --> 00:07:22.240 Positive returns there. Which feels like a shift, 00:07:22.360 --> 00:07:25.000 doesn't it? After so long with just a few big 00:07:25.000 --> 00:07:27.579 names driving everything. It really does. That 00:07:27.579 --> 00:07:30.079 kind of broadening participation, if it holds, 00:07:30.379 --> 00:07:33.019 is usually seen as healthier, less reliant on 00:07:33.019 --> 00:07:35.920 just one sector. Suggests investors are looking 00:07:35.920 --> 00:07:39.069 wider for value? Potentially, yeah. Reassessing 00:07:39.069 --> 00:07:41.029 where the opportunities might be. And Horizon 00:07:41.029 --> 00:07:43.069 also pointed out, with earnings season kicking 00:07:43.069 --> 00:07:45.910 off... The focus shifts, right? ...to individual 00:07:45.910 --> 00:07:48.310 companies. How are they doing? What's their outlook? 00:07:48.689 --> 00:07:51.050 Less about the big macro picture for a bit. And 00:07:51.050 --> 00:07:54.389 the early read was... Decent results, apparently. 00:07:54.930 --> 00:07:57.949 But cautious guidance. Companies being careful 00:07:57.949 --> 00:08:00.209 about predicting the future. That makes sense. 00:08:00.610 --> 00:08:02.769 Even with good past numbers, if management sounds 00:08:02.769 --> 00:08:06.009 worried, it can temper enthusiasm. Lots of uncertainty 00:08:06.009 --> 00:08:08.910 still. Plus, those US -Japan trade talks were 00:08:08.910 --> 00:08:12.730 ongoing and upcoming data like the PMIs. Lots 00:08:12.730 --> 00:08:15.550 for the market to watch. Definitely. Always something. 00:08:15.769 --> 00:08:18.350 OK, so let's try to tie this together for everyone 00:08:18.350 --> 00:08:21.009 listening. We've got this potential instability 00:08:21.009 --> 00:08:23.350 at the top of the DOD. We've got these really 00:08:23.350 --> 00:08:26.829 complex legal fights over immigration and due 00:08:26.829 --> 00:08:29.449 process. We've got this commentary on, let's 00:08:29.449 --> 00:08:31.629 call it, political visibility and attention seeking 00:08:31.629 --> 00:08:35.080 in Congress across both parties. And then, switching 00:08:35.080 --> 00:08:37.740 to the economy, market jitters about the Fed 00:08:37.740 --> 00:08:40.480 and interest rates. But also, this surprising 00:08:40.480 --> 00:08:42.679 stability in treasury yields despite political 00:08:42.679 --> 00:08:45.559 talk and signs of investment broadening out beyond 00:08:45.559 --> 00:08:48.110 just big tech. Yeah, it's a really mixed picture, 00:08:48.250 --> 00:08:50.889 isn't it? Political uncertainty layered onto 00:08:50.889 --> 00:08:54.590 economic cross -currents. It feels complex, contradictory 00:08:54.590 --> 00:08:57.250 even in places. It does. The political risks 00:08:57.250 --> 00:08:59.889 are there, no doubt. But the market isn't always 00:08:59.889 --> 00:09:02.710 reacting in a straight line to headlines. That 00:09:02.710 --> 00:09:05.009 bond market stability is a key example. Right. 00:09:05.110 --> 00:09:07.549 It suggests maybe economic fundamentals or just 00:09:07.549 --> 00:09:09.889 broader investor sentiment are driving things 00:09:09.889 --> 00:09:12.129 differently right now. And the shift to earnings, 00:09:12.289 --> 00:09:15.659 the diversification, that shows a market actively 00:09:15.659 --> 00:09:20.379 thinking, reassessing. OK, so for you listening, 00:09:21.340 --> 00:09:24.379 the key takeaways. Keep an eye on potential defense 00:09:24.379 --> 00:09:26.740 leadership changes, the ongoing legal battles 00:09:26.740 --> 00:09:28.919 around immigration policy. Maybe think about 00:09:28.919 --> 00:09:31.080 what drives political communication styles these 00:09:31.080 --> 00:09:34.059 days. And on the market side, watch the Fed's 00:09:34.059 --> 00:09:35.940 signals, of course, but also look at company 00:09:35.940 --> 00:09:38.460 earnings, guidance, and whether this trend of 00:09:38.460 --> 00:09:41.299 broader market participation continues. Notice 00:09:41.299 --> 00:09:43.980 the resilience in certain areas, like treasuries, 00:09:44.279 --> 00:09:48.039 despite the noise. So it leads us to a final 00:09:48.039 --> 00:09:49.820 thought, maybe something for you to chew on. 00:09:49.820 --> 00:09:53.340 Yeah. Given this apparent disconnect sometimes 00:09:53.340 --> 00:09:57.000 between the political headlines and, say, the 00:09:57.000 --> 00:10:00.679 relative calm in parts of the bond market, what 00:10:00.679 --> 00:10:02.559 do you think is really driving investor thinking 00:10:02.559 --> 00:10:05.919 right now? Hmm, good question. Is the market 00:10:05.919 --> 00:10:07.980 just getting numb to certain kinds of political 00:10:07.980 --> 00:10:10.179 drama? Or are there deeper economic currents, 00:10:10.340 --> 00:10:11.820 things we haven't even touched on much today, 00:10:11.980 --> 00:10:14.399 that are actually the stronger force overshadowing 00:10:14.399 --> 00:10:16.080 the day -to -day stuff? Definitely something 00:10:16.080 --> 00:10:18.580 to ponder. What are those underlying factors 00:10:18.580 --> 00:10:19.700 worth thinking about?