This is how the RECESSION starts in 2026 | Phil Neuhart

Summary

Podcast Summary: Full Signal — "This is how the RECESSION starts in 2026"
Host: Phil Rosen | Guest: Phil Neuhart
Date: April 2, 2026

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Episode Overview

In this episode, award-winning business reporter Phil Rosen sits down with Phil Neuhart, a seasoned market strategist, to dissect current market dynamics, economic uncertainty, labor markets, the Fed’s stance, and the unfolding impact of AI. The conversation zeroes in on the paradox facing investors: structurally higher uncertainty but stubbornly resilient markets, with particular emphasis on what could trigger a recession as early as 2026. Neuhart delivers nuanced commentary on bear case probabilities, monetary policy, and why the labor market is the crucial variable to watch.

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Key Discussion Points & Insights

Elevated Uncertainty vs. Market Resilience

• Structural Uncertainty: The 2020s have seen much higher structural uncertainty than the previous decade, mainly driven by geopolitical shocks (e.g., Ukraine, Middle East).
• Market Resilience: Despite geopolitical turmoil, markets have been trained to "look through the noise." Drawdowns have been limited compared to historic shocks.  - Quote: “Drawdowns around geopolitical noise may not be as dramatic as one might think.” — Phil Neuhart [00:18]

Tail Risks and the Bear Case

• Assessment of Geopolitical Tail Risks:
   - Markets are alert but not "unhinged." The real risk comes if oil jumps to $150–$200 and stays there.  - “There absolutely is tail risk...but what markets are telling us so far is that the risk is 100% material, but it's not unhinged.” — Phil Neuhart [01:35]
• Labor Market as Key Risk Variable:
   - The U.S. is a consumer-driven economy—labor market health is critical.
   - Sharp rises in jobless claims would be the clearest market-moving trigger.
   - “If the labor market weakens, that weakens the consumer and that really does drive that risk higher. So labor market is what we're watching.” — Phil Neuhart [02:35]

The Hidden Weakness in the Labor Market

• K-Shaped Recovery:
   - Aggregate unemployment (4.4%) seems low, but masks a disparity. Lower incomes are disproportionately squeezed by inflation and higher energy costs.  - “We have a K-shaped recovery… Higher income folks, they've benefited from positive wealth effects...But in the details, we do have a problem.” — Phil Neuhart [03:42]
• Job Quality vs. Unemployment:
   - Growth in gig economy roles, weak real wage growth, and lack of job security aren’t captured by headline numbers.

Mega Caps, Fundamentals, and Valuations

• Insulation of Mega Caps:
   - The so-called Magnificent Seven are more insulated from energy shocks than previous industrial giants, but valuations have contracted even as fundamentals look decent.  - “A lot of these companies are just cheaper than they were at the start of the year because earnings… are still improving. But price has come down.” — Phil Neuhart [05:18]
• Earnings vs. Prices:
   - Market downtrend reflects valuation (P/E) contraction, not collapsing earnings.  - “If earnings, the fundamentals remain in place, and the market is cheaper then that becomes really interesting for long term investors.” — Phil Neuhart [07:07]

Market Outlook & Bear Case Probability

• Outlook:
   - Initial price target for the S&P 500 was 7,200 (now 7,300 after February update).  - Reasons for Caution: Recognition that valuations had risen sharply from the 2022 lows, so expecting 'catch-up' from earnings rather than price.
• Bear Case Odds:
   - Probability of a bear case (S&P down 20% from here) is up to 25–30% from 15–20% a few months ago, mainly hinging on labor market deterioration, not just oil price spikes.  - “The bear case has clearly risen… I would say 25, 30% chance.” — Phil Neuhart [24:42]

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The Fed, Rate Cuts, and Monetary Policy

• Fed on Hold:
   - With inflation above target and rising commodity prices, further rate cuts seem unlikely unless something ‘breaks’ in the labor market.
   - “The Fed is between a rock and a hard place… I think the Fed's on hold.” — Phil Neuhart [10:03]
• Triggers for Cuts:
   - A trigger for cuts would be a sharp deterioration in labor (rising layoffs, jobless claims).  - “If it's a trigger, that usually means something broke. So yes, labor market's the first thing.” — Phil Neuhart [12:45]
• On New Fed Chair Kevin Warsh:
   - Unlikely to cut solely because he’s new. Will need to build committee consensus, and focus will remain highly data dependent.

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AI Revolution: Early Innings, Productivity, and Market Rotation

• AI Adoption Still Early:
   - Only ~19% of US companies have adopted AI, projected to rise to 22% soon.
   - “I like to think of it as...Internet, personal computer, 1995. We didn't really know how to use it.” — Phil Neuhart [16:51]
• Rotation Into Small Caps:
   - AI productivity gains are expected to broaden beyond mega caps to smaller firms.
   - Overweight small cap and international developed small cap equities for this reason.
• AI & Labor Market:
   - Some layoffs attributed to AI are partly scapegoating for needed workforce trims.
   - Historically, tech revolutions do cause social disruption, but adaptation has prevailed.

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The AI Boom & Risk of a Bust

• Watching Capacity Utilization:
   - Overbuild in AI infrastructure (data centers) without equivalent demand could replay the "dark fiber" bust of the 1990s.  - “Listen to management teams and start to think about data centers as, as a factory and what's the capacity utilization of that factory?” — Phil Neuhart [22:01]
• Finding Data on Capacity:
   - Alternative data and digging into sources is necessary; not always publicly disclosed.

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Notable Quotes & Memorable Moments

• On Market Sentiment:
   - “Sentiment moves with the wind… It can change very quickly depending on headlines coming out in coming days.” [09:21]
• On AI Cycle Analogy:
   - “A lot of the winners weren't even companies yet in 1995. So I think we're still early days.” [16:51]
• On Social Unrest & Tech Booms:
   - “Most technological booms… almost always culminate with social unrest. And that piece… is going to start coming from the labor market, rising unemployment side of the AI story.” — Phil Rosen [21:26]
• On History as a Guide:
   - “This is a unique time and I think it's a stretch to say it's not.” — Phil Neuhart [27:27]

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Timestamps of Important Segments

• Uncertainty & Market Resilience: 00:00–01:35
• Tail Risk Discussion: 01:10–02:29
• Labor Market Focus: 02:35–04:49
• Mega Caps & Earnings Contrast: 04:49–07:53
• Fed’s Dilemma & Rate Cuts: 09:59–14:29
• AI Revolution: Early Innings: 15:10–16:51
• AI's Impact on Labor Market: 19:34–21:26
• AI Boom/Bust—Capacity Utilization: 22:01–24:19
• Recession/Bear Case Probabilities: 24:19–26:29
• Historical Comparisons’ Limits: 27:12–28:22

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Where to Find Phil Neuhart’s Work

• Website: firstcitizens.com/wealth/market-outlook
• LinkedIn: Posts and updates reposted regularly
  (as mentioned at 28:34)

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Summary Tone & Style Note:
This episode blends sharp macroeconomic analysis with grounded optimism and a clear-eyed view of key risks. Neuhart’s approach is data-driven and balanced, emphasizing fundamentals, historical parallels, and an appreciation for the unique features of today’s market regime.

Recommended for:
Investors seeking context for 2026’s market volatility, those grappling with how AI and labor trends may shape the next recession, and anyone trying to separate market noise from foundational risks.

Transcript

[A]

Phil, I'm so glad you're here today. I was reading one of your recent notes and you were talking about how uncertainty is structurally higher right now. But my sense is also that markets have been surprisingly resilient. Can you walk us through that tension on whether you think the signals actually the uncertainty or maybe the resilience of the market?

[B]

Yeah, so. So to the point on uncertainty being higher, if you look at really any measure of uncertainty, the 2020s have just been structurally higher than the 2010s. Right, right. When you think about the invasion of Ukraine, et cetera, we have just seen higher geopolitical uncertainty. But I agree 100% with you. The market has been remarkably resilient. We were down 9% peak to trough. Think about just last year with tariffs. That was a 19% drawdown. So this has been pretty modest. I do think that investors have been a little bit conditioned to look through some geopolitical noise. Right. If you look historically, drawdowns around geopolitical noise may not be as dramatic as one might think. And I think the market is probably waiting all these outcomes and might be looking through some of the noise. That doesn't mean it can't get worse, by the way. But we have been a bit trained to say, okay, there's a disruption. Now, what about fundamentals?

[A]

Yeah, I think that makes sense in regards to the Iran conflict. If we have an average, on average. Right. Draw down 6, 7% for geopolitical shock, I think the average kind of hides the outlier events. And sometimes if you have a threat of nuclear war or some catastrophe that gets hidden in these smaller numbers. How are you thinking about maybe the tail risk here?

[B]

Yeah, look, there's always tail risks. History doesn't repeat itself, but it does rhyme. And I think when you think about any market, whether that's crude, the equity market, other commodities, it's all probability weighted. Right. So there, there absolutely is, is tail risk. But what markets are telling us so far is that the risk is 100% material, but it's not unhinged. And that is certainly our base case. But you're right, there is a tail risk. Let's say some of the, the near term. What, what might be progress does not happen. And we see crude oil not at $100, but 150 to $2. Right. It's easy to forget crude oil was $150 in 2008. Right. We can certainly go higher. Sustained. That is something. Then you have to start to think more about the bear case. That's not where we are now, but that risk absolutely exists.

[A]

If we had to get into the bear case, where would you start? Would it be those higher oil prices?

[B]

Look, it's part of the picture. I think oil is just one variable out of very many. Though the thing I'd point to that's a higher risk is the labor market. We're in a low hire, low fire environment. If that were to turn to low, higher, high fire, then we're starting to talk about real risk. Remember GDP in the US 70% of its personal consumption. We are a consumer economy. If the labor market weakens, that weakens the consumer and that really does drive that risk higher. So labor market is what we're watching. One data point we always keep an eye on is weekly jobless claims that comes out every Thursday morning, still very low. If we start to see jobless claims move higher, that is something I think worth watching and I think the market will move on that.

[A]

I think one thing people point to, especially in the media, the 4.4% unemployment rate. Historically, that's actually pretty mellow.

[B]

Yes.

[A]

And you hear companies making big layoffs all the time. You hear a lot of people are struggling to find jobs. But all of that's kind of masked beneath this modest unemployment rate. What do you make of that?

[B]

Look, we have a K shaped recovery, right? No matter whether you look at income, real spending, we have folks that are really struggling and inflation has hurt them more by the way. Higher gasoline prices will hurt them more as well. So yes, you might have still fairly low unemployment and aggregate spending data might look pretty good. But in the details, we do have a problem. Higher income folks, they have benefited from positive wealth effects. The stock market, that's the, that's near all time highs. Still home price appreciation, that has really been a positive wealth effect. So the higher income that has pulled up the aggregate data. Also when you think about the labor market, we have a low unemployment rate, but that doesn't necessarily measure quality of jobs. So that is something we think a lot about as well.

[A]

Can you give an example of what you mean by quality of jobs?

[B]

So what if you're employed but you're in the gig economy and you are not seeing real wage appreciation? You're not unemployed, you are employed, but you may not be seeing those wage gains that you would need to keep up with inflation. And that's where we're seeing some folks squeezed.

[A]

Okay, that makes sense. Phil, let me ask you about the stock market. Right now it seems like the mega caps have been pretty solid because the perceptions that they're sort of insulated from higher energy costs, rising oil prices. But my instinct tells me the second and third order effects of higher energy means a weaker consumer, potentially some economic growth softness. Do you think we're misunderstanding the mega cap story right now?

[B]

Look, I, I think that the mega caps are more insulated than maybe in decades past when a mega cap might have been big industrial, for example. I think they're more insulated but of course everything's correlated, right? It's not just higher energy costs, it's higher fertilizer inputs into plastics, et cetera. It does impact everyone. But. But I actually am a believer in the idea that many of the Magnificent seven are just more insulated than big companies from the past. What's interesting though is the Mag 7 when you look at the year to date is still underperforming. Right? So there is a valuation story there that's becoming interesting where a lot of these companies are just cheaper than they were at the start of the year because earnings, the E of PE is still improving. But P price has come down. So we've seen multiple contraction there. One thing we're watching very closely, Mag 7 and elsewhere is earnings season. We have one right around the corner. Consensus expectations are for 13% earnings growth. That is a great number. Long term average is 7.5%. It's a reminder that fundamentals are still okay. We want to see what management teams are saying though. What are we seeing in terms of AI spend, AI adoption, impacts from the war? That is where we're focused as we look at those fundamentals.

[A]

The paradox of markets right now, I think stock prices are generally in a downtrend. I would say we've seen a bit of an uptick in the last day or two. But over the last quarter stocks had a pretty bad quarter. But as you say, earnings keep getting, getting better, earnings expectations keep being revised higher. How do you reconcile those two things? If let's say the, the data in the day to day is saying one thing and the actual fundamentals are saying the other.

[B]

It's the multiple right price to earnings, for example. Those are the animal spirits we came into this year. Our outlook was titled cautiously constructive. We had an up price target on the s and P500 but only single digits and, and below consensus because we felt that the market was priced to perfection. We had a very expensive market. Well now we have a stock market that's several turns cheaper on price to earnings. So in our mind if, if earnings, the fundamentals remain in place and the market is cheaper Then that becomes really interesting for long term investors. We're not market timers, we don't know when the exact bottom is. But for long term investors, which is really our client base, which what that means is that's a better setup than where we were on December 31st.

[A]

What was your price target coming into the year?

[B]

7,200. It is currently 7,300. We adjusted it. We adjusted each quarter's 12 month, by the way, 12 month forward, not year end. We adjusted in February. So that was up single digits. Now that's up low double digits. Consensus is a couple hundred points higher than that.

[A]

So the reason that you're more cautious than consensus, can you explain that?

[B]

Yeah, look, it's, it's interesting we expecting an up market. Sometimes you can be painted to a corner of oh, you're bearish. Not really. We're saying the market's up. What we were acknowledging is that the stock market had rallied from its lows in 2022 to late last year over 100% and valuation was quite elevated. Well, we want to see maybe this is what's going to happen, who knows? But we wanted to see was earnings start to catch up valuation. So IF earnings grow 17% this year, which is consensus right now, bottom UP consensus for 2026 and the market is up, but only up say single digits on the year, that's actually valuation contraction and that's okay. So our focus is on the fundamentals remaining in place, but at the same time acknowledging that we were coming from quite an expensive place, which by the way, we look cheaper now.

[A]

We do look cheaper and evaluations are coming down. Do you think that's maybe a bearish signal on the sentiment side of things?

[B]

It certainly is. Investors vote on their sentiment or reply to the survey based on what they do. I think it means that you see some caution coming into the marketplace. That's okay. I like seeing some rationality come into the marketplace. When you have a war in the Middle east and, and obviously a major move higher commodity prices, then you'd expect sentiment to be hurt. But that's okay. Sentiment moves with the wind, to be honest. It can change very quickly depending on headlines coming out in coming days.

[A]

How does the Fed fit into the picture right now?

[B]

So the Fed is between a rock and a hard place. Right. We have this, this low hire, low fire labor market. Right, which we discussed. But at the same time we have inflation above their target and probably accelerating with the move up in commodity prices. I think the Fed's on hold. We saw futures early this year, Fed funds futures were pricing two to three Fed cuts back half of the year. Now that's zero. I think we have a Fed that's on hold. What could change that? Well, that really depends on the Strait of Hormuz, what happens there, what happens to commodity prices. But if I'm on the FOMC today, I'm on hold and waiting to see how this plays out from a price perspective.

[A]

But let's say if the conflict in the Middle east resolves suddenly, does that put cuts back on the table? And if so, what do you see that timeline?

[B]

Like assuming that resolution includes crude oil prices falling? It could. I think that will take time. I think there is now a risk premium in the price of crude oil that puts a floor under how low it can go. Who knows what that exact level is? But do we go back to the lows of say, last year? I think that's quite a challenge. But yes, if you see resolution price accrued comes in, it could put cuts back on the table. This takes time to feed into the economy.

[A]

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[B]

Yeah, I think you use the right word, trigger. If it's a trigger, that usually means something broke. So yes, labor markets, the first thing that comes to mind for me, we see a major pickup in layoffs and initial jobless claims. For example, Then the Fed, yes, maybe price pressures still exist, but then they're going to start to look to the labor market and favor that. Right now you have a Fed that's saying, okay, unemployment has risen, but still Fairly low at 4.4%. We have cut pretty dramatically since September 2024. Not too restrictive, not too easy relative to the pace of inflation. I think they're on hold. But a trigger usually means something breaks. It's not just a smooth ride to that trigger.

[A]

So the talk in around December was Kevin Warsh coming in.

[B]

Yes.

[A]

Right. And he was expected at the time to come in and make a lot more cuts than maybe his predecessor certainly, but also than the market would have expected. Do you think that is still a variable this year?

[B]

I think Kevin Warsh, when he comes in as chairman, I honestly think he's going to look at the facts on the ground and going to look at inflation and going to look at the labor market in a sober way. I've never really been the camp that just because you were approved, you come in and cut no matter what. And I just, that's not my read. And by the way, it's not future Fed funds futures read. Right. They're saying the Fed's on hold. So I'm not in the camp that Kevin Wash, just because he is new, appointed by the President, voted in by Congress that he would come in and immediately start cutting. I think he's going to look at the facts. What are the facts?

[A]

I think the other point that maybe a lot of the media hype missed, he has to come in and also convince everyone else to do whatever decision is. So he has to generate consensus effectively. He can't come in as a one man wrecking crew and say, hey, we're smashing rates down to zero.

[B]

It's a committee. Right. There's many votes on that committee. He is one vote. So he has to build consensus and if he doesn't, the committee may not

[A]

vote with him and it would make him look very bad and very weak if he can't build that consensus too.

[B]

He needs to build consensus and I think the consensus is going to center around data. Right. We have a data dependent Fed and I think that's what they're going to watch.

[A]

Okay, so I want to move on to the AI story right now. We've seen a pretty broad rotation out of tech and sort of out out of the winners of last year. Do you think that's a structural change? Do you think we're going to get back into it? How are you thinking about it.

[B]

So we're positioned in our asset allocation for broadening. We're overweight, small cap, for example. And a lot of that just has to do with these names have lagged the Magnificent Seven and Mega Caps for years now. But also there's a narrative in my mind of if AI is going to really benefit productivity and thereby margins of corporate America. That benefit can't only be to the biggest companies. It can't only be to the hyperscalers. It has to spread out. Anecdotally, I spend a lot of time on the road talking to our clients. Anecdotally, AI adoption is increasing. I'm seeing it from real world economy. It is happening. I think that some of the move outside the Mega Caps is a recognition that there's productivity gains to be had among smaller companies. Not to mention these companies just look cheaper relative to Magnificent Seven coming into the year. I think there is some real benefit there from AI.

[A]

So I saw a note last night from Goldman Sachs, and they pointed out that AI adoption for US companies is at 18.9%. But they expect that to rise, I think, to 22% in the next six months. To me, that is not a big number. I mean, that's very low, right? One in five, one in four companies. And that makes me feel like sort of, you know, taking to what Dan Ives has been saying, this is the very early innings of the AI revolution.

[B]

I agree with that. I think it's early innings. As you know, we have a Silicon Valley bank division. I'm lucky enough to talk to folks that work in AI every day. I always ask them that. Actually, that exact baseball analogy. And I'm still hearing early innings. I like to think of it as it's kind of Internet, personal computer, 1995. Right. You aren't early days, not 1992. Prodigy. Anyone who remembers that. But it is. Windows 95 is out. We're starting to see personal computers. We didn't really know how to use it. The Internet was young, it was slow. If someone said the Internet's going to change the world, they were right. If they also said we don't know who the winners and losers are going to be, they were also right. In fact, a lot of the winners weren't even companies yet in 1995. So I think we're still early days. We're early in adoption. There's a lot of movement to be had. Knowing the winners and losers is very difficult. But recognizing the theme, I think it's pretty clear now. I think adoption is picking up as you mentioned and continue to rise.

[A]

What do you think about specifically with AI? You mentioned small caps. Why do you think small caps are attractive right now?

[B]

Look, one, valuation was a major story coming into the year. Two, if you've lagged them at magnificent seven and they're trading on AI, well, if you're going to benefit from AI, there should be some catch up there. So we have been overweight there by the way. We're still fully invested in large cap growth. It's not that we don't think those names can't perform. Where we're borrowing from is places like emerging markets where we're underweight. Volatile asset class in an uncertain world is a place that we own, but we are underweight. So we're shifting more of that towards broadening, particularly in the US Also within international developed small cap particularly is a place where we see some opportunity.

[A]

Are you able to speak to the, let's say the international outperformance last year and what that did to inform your decision making coming into this year?

[B]

Yes. So it was one in terms of the broadening theme. Good to see. I mean after just years of waiting. We're global investors by the way. We have a US bias in our optimization process, but we do own the globe one it was good to see a lot of it was after years and years of trading cheaper. Some of it's just a catch up. I'm not sure as a structural move in terms of our allocation. Some of these allocations we've had on for quite some time. In fact, our overweight terra national small cap helped us a lot last year. So I wouldn't say that outperformance drove us there, but we have a factor based quantitative method and a lot of the things that pointed us to things like international small cap is why we think that there was a bit of a catch up last year.

[A]

I mean the one that everyone talks about is Korea has been just crushing it for a long time. Let me ask you again about this AI trade here, but specifically the AI impact on the labor market. Because if AI is so early, but you already have so many headlines built around AI driving layoffs, do you think that is just sort of a scapegoat for these companies or is it a real secular move here?

[B]

So it's interesting. I do a lot of client events. We just did one in New York yesterday and this question comes up every event I do. So one, it's very much on people's minds. I think the answer is somewhere in the middle. I do think that there are Companies, it's very, very smart companies do this that are laying folks off. The truth is they need to. And AI is a good excuse. Is there some truth in there? Maybe. But I do think it's a bit of an excuse. I do think that, that AI were early innings, but I think we're starting to see a little bit of this low hire, low fire implication, which is, well, I can get more efficiency from my team. I don't need to reduce the size of my team. I get more efficiency. I think that has been a real driver in terms of the labor market. Where do we end? The truth is I don't think anyone knows. I tend to take a more positive view, which is if you look at major technological revolutions, Henry Ford and the assembly line, the computer in the ninet, agricultural mechanization, yes, people lost their jobs, but we've always been very good, especially in America, of finding other roles and people just changing what they do. Is that painful? Yes. I don't want to say it's not. It absolutely is. But usually or always with technological revolution, we've just found a better use of our time.

[A]

I'm with you and I'm very optimistic about how the future can unfold in both the near term and short term or long term. But I do also know that most, let's say technological booms, they almost always culminate with social unrest. And that piece is something that today, if I had to guess, it's going to start coming from the labor market, rising unemployment side of the AI story. If you were to think about like an unwind of the AI trade, where do you think that starts?

[B]

Yeah, so especially from the AI trade perspective, the thing we are laser focused on is capacity utilization. So if you think back to the 90s, we had a fiber optic boom and bust. And what we had was we laid tons of fiber, right? Fiber all over this country. And the truth is the Internet video streaming just didn't catch up in time. And we ended up with what was called dark fiber, unused fiber, in other words, low capacity utilization of our fiber network. And that that led to a bust unwind in AI. I start to think it is building data centers that aren't being fully used, overbuilding companies that instead of increasing, and we have an earnings season coming up, instead of continually increasing their capacity, they start to cut capacity. So listen to management teams and start to think about data centers as, as a factory and what's the capacity utilization of that factory? Right now that's extremely high, high 90s, right. This data can be Hard to find. But what we see, it's still extremely high. That starts to come down. I think we have to think about that, unwind. There is going to be winners and losers. We cannot spend this much and not say there's not some sunk cost. There is. That happens in technological revolutions though. It happened with the Internet. Right. Figuring out who those winners and losers are, I think is extremely difficult. Why? We want to own the market as a whole, but acknowledging that it is a game changing technology, I think is a different discussion. I think it is a game changer.

[A]

Yeah, I agree with that. Your point on capacity?

[B]

Yeah.

[A]

Is that something that public companies are publishing or you just have to listen to it?

[B]

You have to dig in. It's alternative data and you really have to dig in on that. So you have to, you have to do some, some legwork. Thankfully, I have a good analyst team who's, who's been able to do that. The data is lagged, I will say. But you can find information on the usage of this capacity we're putting into place.

[A]

Is there any way that let's say an independent investor with a Robinhood account can find that information?

[B]

The Internet.

[A]

Okay.

[B]

Yeah, you do have to dig in.

[A]

Okay, that's fair. So I know that your base case is not a recession. And I know we're mentioning the weakening of the labor market. If you had to play out your recession odds, one, how does that start? And two, can you give us a probability on a bear case here?

[B]

Yeah, look, I think the bear case has clearly risen. In our bear case for the S and P, it's down another 20% from here. I would say 25, 30% chance, you know, and maybe I would have said three months ago 20% or 15. So I think it's risen. I don't think it's at base case levels yet. I am not a believer that the rise in crude oil is enough to put us in a recession, especially at these levels. I mean, just think about the fact I mentioned a moment ago that crude oil was at $150 in 2008. Other than flat screen TVs, what in your life costs a third less than it did 2008. So inflation adjusted, it's well off those levels. Right. In fact, it's well off even more recent levels. So it is a shock. It does not feel good. I don't think it's enough to bring us down alone. I think it takes the labor market and we talked about that a lot. But seeing a deterioration in the labor market, that is where I start to think recession likelihood is rising dramatically.

[A]

Real quick, we'll get right back to the interview. Just wanted to pop in and say if you like this content, I read a newsletter every single morning called Opening Bell Daily. I cover macro, the stock market, asset prices, why things are going up, why they're to going, going down. And if you want to get that for free, you can sign up at the link in the description. Let's get back to the interview. Wow. I, I didn't even think about the 2008 comparison as far as the inflation adjusted point. Okay, so it sounds like if the war is coming or the conflict's coming to an end, this scenario pretty much goes off the table.

[B]

It's a great question. I think the question, and we don't, we don't know this, recording this today, if it comes to what that looks like, I think the stray of Hormuz remains very important. And if it comes to an end and the stray of Hormuz is completely opened and, and everything is perfect, well, well, that's a great outcome. Doesn't mean there's not a risk premium still in crude. I, I am skeptical that crude just drops back to where it was at its lows, say last year. But of course it would come in. The real question is what's the status of the strait? That remains an unknown to me. So I'm hesitant to say we just swing back to pre 2026 levels of crude oil. But yes, we would certainly see a move down and that would be a positive.

[A]

Okay. Is there something that this specific macro regime, this specific president and White House administration, that makes historical comparisons sort of moot?

[B]

To a certain extent, yes. And I think that the reason is, it is the frequency of news points, the frequency of headlines. And I think we have a different social media environment, different media environment as well. So I think the frequency is much higher. But there are definitely some comparisons. Right. Your mind goes to the Gulf War in the early 90s, oil embargo in the 70s. Those are not perfect comparisons. Right. None of them were in the midst of an AI boom, for example. None of them were in the midst of our largest companies being a little bit more shielded from crude oil. So no, I think perfect comparisons are difficult. But I also am not in the camp that that watching history has no value. It definitely has value. I've mentioned the 90s a couple of times today, for example, I think you do have to think about our lived experience and, and the impact that that might have on our current views. This is a unique time and I think it's a stretch to say it's not.

[A]

Yeah, I'm a big history guy myself. I always use historical data. What are the charts from this and that era say about today? So I'm with you on that. Phil. Where can people find your work online?

[B]

Yeah, we'[e-mail] wealth marketoutlook and market outlook is hyphenated. Also, follow me on LinkedIn. We repost our stuff, and you can sign up for updates through those posts as well.

[A]

Okay. I read your notes and they're great. Phil. We'll have to do this again soon. I really enjoyed our conversation.

[B]

Thank you for having me.