Oct 6, 2026 · 46 min
Markets weigh equity momentum against fiscal and currency risk
Risk Cycles Across Equities, Bonds, and Currencies
The episode connects the equity bull market, France’s fiscal stress, renewed bond income, and currency shifts into one portfolio-allocation question.
- 1Earnings growth, buybacks, and AI investment could extend the equity bull market beyond today’s dominant technology theme.
- 2France’s fiscal turmoil is pressuring European credit and the euro while raising questions about contagion and ECB intervention.
- 3Higher bond yields improve portfolio income and strengthen the case for global diversification, rebalancing, and less concentrated risk.
Don't miss
Steven Englander argues that the latest currency weakness is primarily a euro story tied to France’s fiscal and political concerns, not simply broad dollar strength.
The brief
Brian Belsky argues that the secular equity bull market can outlast the AI theme, with earnings revisions, buybacks, and institutional demand supporting further gains.
Belsky sees emerging markets and commodities as possible drivers of the next major cycle, urging investors to focus on fundamentals rather than valuation ratios alone.
France’s fiscal and political turmoil is moving into European credit and weighing on the euro, while Ozan Tarman assesses contagion risks and possible ECB support.
PIMCO’s outlook finds global growth resilient but fragile: AI investment, household balance sheets, and equity wealth effects support demand while creating vulnerabilities.
Steven Englander frames recent currency weakness mainly as a euro story and examines whether yen stabilization, Japanese yields, and U.S. fiscal policy could reshape trade opportunities.
Across the discussion, higher bond yields make income available again, strengthening the case for diversified global bonds and rebalancing after strong equity gains.
What was said on this episode
26 statements · 17 positive · 9 negative
The secular equity bull market has at least eight to ten years remaining and will exceed 25 years.
“we have at least eight to 10 years left of this run. It's going to be longer than 25 years.”
Listen at 4:38
The 2030s peak of the current bull market will not be driven by AI.
“I don't think the top of this bull market in the 2030s is going to have anything to do with AI.”
Listen at 4:49
The bull-market peak will involve a new emerging market and commodity supercycle.
“It's going to have something to do with probably a new emerging market and a commodity super cycle”
Listen at 4:54
Equities can rise further because earnings and corporate fundamentals remain strong.
“we do think that this market can go higher, driven by fundamentals.”
Listen at 7:35
Nvidia’s stock has further upside as the broader market continues rising.
“Sure there is, because I think there's a lot more room for the market to run.”
Listen at 8:17
Concentrated stock selection can generate alpha and differentiate portfolios.
“we pick stocks, and we're more concentrated in certain areas. And that's how you're going to not only deliver alpha, but deliver differentiation relative to our competitors.”
Listen at 9:59
AI investing can succeed when portfolios are diversified beyond a single AI exposure.
“I think it does if you have some common sense that you're not all your eggs in one basket.”
Listen at 10:25
Markets expect ECB TPI intervention if French stress worsens.
“at the end, everybody, maybe in a cute way, expecting that TPI, that intervention to come if things get worse.”
Listen at 15:15
The ECB will prevent France’s crisis from becoming fully systemic.
“ECB won't let it become too systemic.”
Listen at 16:01
French fiscal stress may spread into European credit markets and banks.
“It may spread into European credit. It may spread into European banks.”
Listen at 17:14
The euro is expected to fall to 1.09 before reaching 1.15.
“Most people do see it going to 1.09 before 1.15.”
Listen at 18:13
Current market conditions favor short-euro positions.
“the wind is with short euro.”
Listen at 18:29
U.S. economic and market outperformance relative to Europe continues.
“US exceptionalism continues.”
Listen at 19:30
Latin American markets have further upside.
“I think that has legs to go, Latin America.”
Listen at 19:52
Long Latin America and short Asia should continue delivering returns.
“Overall, long LATAM, short Asia, sometimes consensus is right. I think the people believe in that trade and it will continue to deliver.”
Listen at 20:13
The S&P 500 will reach 8,200 before falling to 7,400.
“I think we see 8,200 before 7,400.”
Listen at 21:06
Congressional control split between parties would benefit markets.
“If we get your splits, I think market would love it.”
Listen at 22:34
Scott Bessent will reduce Treasury issuance at the long end, following Yellen’s approach.
“I think he will do a Yellen, even though he kept criticizing Yellen and issue less on the long end.”
Listen at 23:20
Dollar-yen and euro-yen may have reached their peaks.
“We're beginning to be a little bit more optimistic that maybe we've seen the top of dollar-yen and certainly the top of euro-yen.”
Listen at 36:59
Long-term Japanese yen yields are currently attractive to investors.
“yen yields, certainly at the long end, are kind of attractive.”
Listen at 37:29
Treasury yields will rise further.
“we think they'll go higher”
Listen at 38:31
A dollar rally pause would not necessarily mark its end.
“a pause is very reasonable, but it doesn't mean it's the end of the rally.”
Listen at 39:13
Japan’s yield-driven private-sector capital outflows may begin slowing.
“the private sector outflows. which have been very yield driven in the case of Japan, that those might begin to slow down”
Listen at 40:32
European currencies currently appear vulnerable to further weakness.
“european currencies are looking vulnerable”
Listen at 41:31
Productivity growth would reduce the U.S. deficit, but less than during the late 1990s.
“strong productivity growth is great for a lot of reasons. And it will help our deficit problem, but not nearly as much as it did, say, in the late 90s”
Listen at 42:19
Stronger real wages and employment are needed to reduce the deficit, but are not imminent.
“We have to see stronger real wages and stronger employment growth before that becomes a deficit saver. And that's not on the horizon yet.”
Listen at 43:09
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.