Juggling Dynamite

Timeless perspective is offered in this segment…the more things stay the same.

In this episode of The Real Eisman Playbook, Pulitzer Prize-winning journalist Gretchen Morgenson discusses her career in investigative journalism, focusing on the dark side of Wall Street, the AIG scandal, and the financial crisis. She highlights the role of private equity in modern finance and its impact on various industries, including healthcare. Morgenson emphasizes the importance of exposing corporate fraud and the need for accountability in the financial sector.  Here is a direct video link.

Economist Lacy Hunt offers a sobering look at the long-term economic forces shaping the U.S. outlook—and why inflation might already be in retreat, even as the Federal Reserve stays cautious. He argues that we’re in the midst of a disinflationary trend driven by excessive debt, declining velocity of money, and the structural weakening of global demand. The headlines may still focus on price spikes and strong consumer spending, but underneath, the economy is quietly slowing. Here is a direct video link.

Danielle DiMartino Booth, CEO and chief strategist at QI Research, returns to Monetary Matters to update listeners on her read of the economic cycle and credit markets. She shares her thesis that the U.S. economy entered recession in early 2024, exited it, and is now entering another recession in a process similar to the double dip recession of 1980-1981. Recorded on June 26, 2025. Here is a direct video link.

Vanguard founder and ETF pioneer, Jack Bogle, warned that if index funds came to own half of the U.S. stock market, it could lead to significant issues, like too much influence concentrated in just a few institutional owners, which he believed would be “a problem” for corporate governance and overall market function.

According to the most recent data, more than 70% of inflows into the stock market have gone into passive or index strategies, with the first half of 2025 seeing a record net buying by retail participants.

Simplify’s Mike Green has pointed out that a large portion comes from payroll deductions, and when unemployment rises, these flows naturally slow. Outflows increase as retirees and the unemployed sell securities to raise needed cash.

This can all sound relatively gradual, but there are no assurances of that.  Consider that the ‘conservative’ Dow Jones Index dropped 37% over 3 weeks in February to March 2020, and everything else plunged with it. Rapid evaporations cannot be explained by reversing payroll flows.

Today’s investor complacency is unfounded. The stock market is far from stable, and passive flows are not downside protection.

The discussion below offers some insight.

Mike is portfolio manager & chief strategist at Simplify Asset Management. And today, we’ll tap his latest thinking on the stock market, the credit markets, the economy, and where the new Administration’s policies are taking us.

Mike is one of the top experts on how passive capital flows (aka the “giant mindless robot”) have been propelling stocks to record levels of (over?)valuation.

Well, for the first time in a long time, we’re starting to see those passive inflows falter. Here is a direct video link.