The Market's Wild Ride: What's Behind The Numbers?

The Market’s Wild Ride: What’s Behind The Numbers?

What's driving this volatility? Is it the possibility of a deal with Iran, or something more fundamental?

Politics, not economics, driving market swings and volatility
Suppliers absorbing inflation rather than passing it to consumers
SpaceX IPO reflects shift in investor focus to high-growth tech

Markets Take A Plunge Amid New Inflation Numbers And Continuing Iran War — Source: Michael M. Santiago / Getty

The Market’s Wild Ride: What’s Behind The Numbers?

The stock market’s recent rollercoaster ride has left many investors scratching their heads. Just last week, the market plummeted 900 points, only to bounce back 900 points the very next day. What’s driving this volatility? Is it the possibility of a deal with Iran, or something more fundamental?

Economist Dr. Matt Will joins Tony Katz to break down the numbers and offer some insight into what’s really going on. “The market is irrational… but it’s not entirely irrational. It’s just that the politics are driving the market, and Wall Street doesn’t like that.”

One of the key topics discussed was the Producer Price Index (PPI), which hit a record high in 2022. However, despite this, the market didn’t seem to react. Dr. Will explained, “The numbers are already baked in. This isn’t news to us. We saw the PPI report, and it was the second highest inflation rate we’ve seen since 2022.” So, what’s behind the market’s seeming indifference to this negative news?

According to Dr. Will, it’s because the suppliers and manufacturers are absorbing the inflation rather than passing it along to consumers. “They’re eating the tariffs, they’re eating the inflation,” he said. “Their profits are so big that they’re eating the lion’s share of it.” This is a fascinating concept, and one that has significant implications for the economy.

The conversation also turned to the topic of SpaceX, which recently went public with a massive market cap of $1.5 trillion. Dr. Will noted, “This is unparalleled in the history of the market. They’re going to put them immediately in the top ten of all companies in the world.” But what does this mean for the market? Will it change the way investors think about value and growth?

Dr. Will pointed out that the market’s reaction to SpaceX’s valuation is similar to the way it reacted to the Internet explosion in the 90s. “It changed how the market thinks about everything,” he said. “It changed the concept of a blue chip and over time we went away from IBM being the stock that you buy, and we got into the FANG stocks.” But what does this mean for the future of investing?

The episode also touched on the topic of valuation and growth. Dr. Will noted that investors are always looking for growth, and that’s what they’re seeing in SpaceX. “It’s always been a growth company,” he said. “The question is, Tony, where’s the growth?” The answer, of course, is that the growth is in the company’s revenue, which is forecasted to increase from $19 billion to $474 billion by 2030.

So, what can we take away from this episode? The market’s wild ride is not just about politics or Iran deals. It’s about the fundamental forces driving the economy, including inflation, growth, and valuation. As Dr. Will said, “People are buying growth. They’ve always bought growth. The challenge is how do you find it? How do you identify the growth?” If you want to learn more about the market’s wild ride and how to navigate it, tune in to this episode to hear the full conversation with Dr. Matt Will.