MacroVoices #392 Jesse Felder: Questioning the Soft Landing Narrative

Jesse Felder returns to MacroVoices to question the prevailing soft landing narrative in markets. He argues that while many expected a bear market resumption, the current rally resembles someone falling off a skyscraper saying 'so far, so good' - the impact of monetary policy tightening hasn't fully materialized yet due to long and variable lags. Felder points to a 'liquidity hole' concept from Bridgewater, where positive liquidity effects from regional bank rescues and Treasury General Account drawdowns masked the underlying tightening, but this is now reversing. He presents the Buffett yardstick showing equity valuations remain elevated despite rising interest rates, with stocks never more overbought relative to bonds. His macro earnings model suggests corporate profits will face significant pressure over the next two years based on rising interest rates, oil prices, and dollar strength. Felder highlights concerning signs including a 40% gap between S&P 500 earnings and government-reported NIPA profits, indicating companies are using accounting maneuvers to inflate earnings. He shows that small speculators have gone massively long again, similar to 2021 peaks, suggesting excessive bullishness on the soft landing narrative. The 'Magnificent Seven' tech stocks now trade at 60 times free cash flow, double their historical average, making markets vulnerable to any growth disappointment.

In the second segment, Eric Townsend presents an unconventional commodity trade proposal involving the complete elimination of global nuclear waste for profit. He calculates that 250,000 metric tons of stored nuclear waste contains about $26 billion worth of recoverable uranium, but traditional reprocessing only becomes economic above $600/pound uranium. His key insight is that current waste holders pay substantial ongoing storage costs for hundreds of years, so they might pay several years of storage fees upfront to permanently eliminate the waste problem. Townsend argues this requires advanced 'burner reactors' that can consume the remaining 5% of concentrated waste after reprocessing, truly eliminating rather than just concentrating the problem. He suggests sovereign actors like Saudi Arabia or UAE could acquire nuclear startups, fast-track burner reactor development, and market this as solving the world's nuclear waste problem while generating massive PR value and profits. The trade would involve acquiring advanced nuclear companies, building reprocessing capabilities, and positioning as the global solution provider for nuclear waste elimination.