In this week’s Glass Half Full, Ryan Detrick, Chief Market Strategist at Carson Group, flies solo while Sonu Varghese, Chief Macro Strategist, handles a family emergency, and makes the case that the calendar is your friend heading into the final months of a midterm year.
With the S&P 500 up more than 13% for the year and less than 2% from an all-time high, Ryan walks through why October and November of a midterm year are historically the best and second-best months on average, and why the fourth quarter of a midterm year historically kicks off the three strongest quarters of the entire 16-quarter presidential cycle. He notes that the calendar is never a reason to invest on its own, pointing to this year’s nearly 15% second-quarter gain, one of the strongest ever, in a quarter that is usually one of the weakest for midterm years.
He also addresses the weak breadth narrative, explaining that 52-week lows are concentrated in defensive, yield-sensitive areas like utilities, staples, and real estate, while high beta is outperforming low volatility, a classic bull market signal. Ryan previews earnings season after last quarter’s record-breaking results, highlights revenue growth of about 15% year-over-year, and explains why an inflationary growth environment with 6% to 8% nominal GDP growth means higher yields and pain for bond investors. He closes with the case for global diversification and why the bull market, which turns four on October 12, is still alive and well.
Key Takeaways
- Markets have been strong despite the noise: The S&P 500 is up more than 13% this year and within 2% of an all-time high, after a nearly 15% second quarter. We caution against investing on the calendar alone, but see it as one more positive.
- Weak breadth is less worrying than it looks. Stocks making 52-week lows are mostly defensive, yield-sensitive areas like utilities, staples, and real estate, while high beta is beating low volatility, which is what we want to see in a bull market.
- Fundamentals remain supportive: earnings growth is running well ahead of early-year expectations, revenue growth is about 15% year over year, and AI capex from hyperscalers is expected to reach roughly $800 billion this year and $1.1 trillion next year.
- This is an inflationary growth environment, with 6% to 8% nominal GDP growth, stubborn inflation, and higher yields. That is a headwind for bonds, with the Bloomberg Aggregate down almost 2% this year, but we believe it is not a threat to equities, and we stay diversified globally.
Jump to:
0:00 — Welcome and a Solo Update
0:24 — Yields Oil and Geopolitical Risk
1:04 — Midterm Seasonality and Q4 Strength
2:43 — Breadth Weakness vs. Bull Signals
4:06 — Earnings Season and Revenue Reality
5:18 — Inflationary Growth and Bond Pain
6:49 — Global Diversification and the Close
Connect with Ryan:
- LinkedIn: Ryan Detrick
- X: @ryandetrick
Connect with Sonu:
- LinkedIn: Sonu Varghese
- X: @sonusvarghese
The views stated in this podcast are not necessarily the opinion of Cetera Wealth Services, LLC, or CWM, LLC. and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.
Ryan Detrick and Sonu Varghese are non-registered associates of Cetera Wealth Services LLC.
A diversified portfolio does not assure a profit or protect against loss in a declining market.
Please note: Cetera Wealth Services, LLC is not registered to offer direct investments into commodities or futures. Instead, we provide access to this asset class via mutual funds, exchange-traded funds (ETFs) and the stocks of associated companies. Investments in commodities may be affected by the overall market movements, changes in interest rates and other factors such as weather, disease, embargoes and international economic and political developments. Commodities are volatile investments and should form only a small part of a diversified portfolio. An investment in commodities may not be suitable for all investors.
The return and principal value of bonds fluctuate with changes in market conditions. If bonds are not held to maturity, they may be worth more or less than their original value.
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