Bullish opportunities in 2026. With Mish Schneider.
Audio Brief
Show transcript
This episode features Mish Schneider discussing her Economic Modern Family framework, the enduring case for precious metals, and her outlook on broader commodity markets.
There are three key takeaways from this conversation. First, monitor the relative performance of small caps against the Nasdaq to gauge the real economy's health. Second, do not assume traditional inverse correlations between stocks and metals will always hold. Third, pay attention to niche commodity markets for clues about future macro trends.
Schneider's Economic Modern Family tracks real-economy sectors like small caps, transportation, retail, and regional banks. Their recent outperformance against tech stocks signals a strengthening U.S. economy, potentially indicating a significant market rotation towards value-oriented sectors. The Russell 2000, specifically, serves as a crucial lead indicator for a broad-based economic recovery.
In today's environment, stocks and precious metals can rise together. A dovish Federal Reserve, persistent geopolitical risks, and rising national debt support a bullish case for metals, even as equities appreciate. Investors should view precious metals as valuable diversifiers despite stock market strength.
The broader commodity market often follows classic supply-demand cycles. Low prices reduce production and investment, creating future supply shortages and price spikes. Specific commodities act as contrarian indicators; for example, silver can gauge inflation, while sugar may forecast social unrest or broader instability.
This discussion offers a unique framework for understanding market dynamics and identifying potential shifts in economic leadership.
Episode Overview
- Mish Schneider introduces her "Economic Modern Family" framework, which tracks real-economy sectors like small caps and retail, to argue that a recent rotation into these areas signals a strengthening U.S. economy after a long period of underperformance against tech.
- The discussion explores the enduring bullish case for precious metals, driven by a dovish Fed, persistent geopolitical risk, and rising national debt, challenging the idea that stocks and metals cannot rise in tandem.
- Schneider shares her outlook on the broader commodity market, highlighting the classic supply-demand cycle and identifying key barometers like silver for inflation and sugar as a contrarian indicator for social unrest.
Key Concepts
- Economic Modern Family: A proprietary set of market indicators tracking key real-economy sectors—small caps (IWM), transportation (IYT), retail (XRT), and regional banks (KRE)—to gauge the true health of the U.S. economy beyond tech.
- Market Rotation: The potential for a significant and sustained shift in market leadership from growth-oriented technology stocks to value-oriented, real-economy sectors.
- Small Caps as a Lead Indicator: The Russell 2000 (IWM) is presented as a crucial barometer for a broad-based economic recovery, as its outperformance would signal strength beyond the dominant tech names.
- Simultaneous Rise of Stocks and Metals: The idea that equities and precious metals can appreciate at the same time, particularly in the current environment of high debt, geopolitical tension, and dovish central bank policy.
- Commodity Cycle Dynamics: The principle that low commodity prices lead to reduced production and investment, which in turn creates future supply shortages and inevitable price spikes.
- Contrarian Indicators: The use of specific, often overlooked markets as barometers for broader trends, such as using silver to gauge inflation and sugar to forecast potential social unrest.
Quotes
- At 0:37 - "I've questioned all along whether or not the economy was really doing well until recently because my indicators... my Economic Modern Family... has been underperforming compared to the growth stocks for most of the year." - Mish Schneider explains her long-held skepticism about the economy's strength, contrasting her key indicators with the performance of growth stocks.
- At 4:46 - "A lead indicator for me would have to be the Russell 2000 because... it has underperformed for so many years [against the] Nasdaq and the semiconductors." - Mish Schneider explains why small-cap stocks are a crucial barometer for a potential rotation into real-economy sectors.
- At 14:18 - "I know a lot of people seem to think that, right? That stocks can't go up while the metals go up. And clearly we've seen the opposite of that this year. We've seen stocks, metals go up at the same time." - Mish Schneider argues against the inverse correlation narrative between equities and precious metals.
- At 15:33 - "And that's the thing about commodities. When things get too cheap, they stop mining, they stop drilling, they stop growing to get the prices up. And then sometimes you get a situation where all of a sudden they're caught with short supply." - Schneider outlines the cyclical nature of commodity pricing driven by production adjustments.
- At 16:13 - "I love to watch sugar as my barometer for social unrest, for higher inflation." - Schneider reveals one of her key contrarian indicators for broader economic and social trends.
Takeaways
- Monitor the relative performance of small caps (IWM) against the Nasdaq (QQQ) to gauge the health of the real economy. Sustained outperformance by small caps can be an early signal of a durable economic recovery and a broad market rotation.
- Do not assume traditional inverse correlations, such as stocks versus gold, will always hold. In an environment of persistent geopolitical risk and high debt, both asset classes can rise together, making precious metals a potentially valuable diversifier even in a stock bull market.
- Pay attention to niche commodity markets for clues about future macro trends. A significant price move in a key soft commodity like sugar can signal rising inflation or social instability long before it appears in mainstream economic data.
