Dennis DeBusschere: The Economy Must Respect The 'Speed Limit'

Danny Moses (0:02)

Welcome to the On The Tape Podcast. I'm your host Danny Moses, and today I welcome back the founder, CEO and Chief Market Strategist of 22V Research, Dennis DeBusschere to the pod. Dennis was last on an April, and he made some bold predictions, not just about the New York Knicks, but about the stock market as well. This past April was also just before Kevin Warsh took over his Fed chair, and we get Dennis' thoughts on the Fed's first rate hike since 2023, and what it means for markets. Dennis also shares his thoughts on Treasury Secretary Bessent's recent moves at Treasury and his attempts to control longer term yields. Dennis discusses the role AI continues to have on the economy and the stock market, and the sectors that he believes will benefit in the short and longer term. As oil remains elevated as a result of the war in Iran, Dennis shares his thoughts on the impact to the US economy, and with elections around the corner in both the US and Brazil, we discuss the potential impacts to the markets. Last but not least, we discuss 22V's recent launch of 22V Advisory Direct, where Dennis serves as CEO and head of portfolio strategy. Enjoy my conversation with Dennis DeBusschere.

Dennis, welcome back to On The Tape.

Dennis DeBusschere (1:08)

Thanks for having me back. Great to be here.

Danny Moses (1:11)

Okay. You were on April 21st during the first round of the NBA playoffs. Oh, yeah. The Knicks had just lost game two in the first round to the Hawks. You were unfazed. For anybody that doesn't know, Dennis is the son of the great Dave DeBusschere, number 22, which is where 22V comes from.

12 to 1, the Knicks were at that point roughly to just win the East. And without hesitation, you go, so what do you mean? That's a gift or something in that word. So by the way, in all sincerity, congratulations on the Knicks. I know that's very meaningful to you in many ways. And I know on October 20th, I assume you will be at Madison Square Garden when the banner is unveiled, correct?

Dennis DeBusschere (1:51)

Yes, I will absolutely be there. One and two, what else was I going to say at the end of April when they lost?

So I'd love to take credit for that. Like was this great prediction? But come on, what else was I going to say?

Danny Moses (2:01)

No, but you were, but the people saw your face in that record. You were like, what do you mean? Of course, but it wasn't like it's an of course because I love the Knicks. It was like, really? It's those are the odds? Yeah, take it. Anyway, that was good. You also said something else then that the S&P, which was trading around 7,100 at the time, would hit 7,800 at some point in 2026 I, of course, said that probably would not happen. You continuously take me for everything. Masters jackets, bets, whatever. I owe you a lot at this point. That happened on August 13th. It did not close there, but I think it hit it during the day. So that was correct. Lastly, which I really want to get into here, when you were on in April, it was right before Warsh was about to take over as Fed chair, and he was going to have his first meeting.

You and I both agreed that the next move that the Fed would make would be actually a cut at some point, not a raise. That's what we thought was likely. We also couldn't predict that this war would keep going and oil would be where it was. So let's start there, since that's kind of fresh, what the Fed did, why they did it, whether you agree with it or not, and what it means to the markets.

Dennis DeBusschere (3:03)

Yeah, so first and foremost, do I agree with it? Because let's get there, yes, right? So I definitely agree with it. I would think part of the reason we hit the 7,800, they're tied together, is has to do with the economic strength that is much more significant than what we had thought.

And so, yes, the supply shock lasting a lot longer, the war lasting a lot longer, is a large part of the reason why you had the urgency of a hike. But keep in mind that you're ending up with significantly stronger economic growth relative to what anybody forecasted. So just stepping back for a second, we're sitting here at like 6.5 percent nominal GDP, which is not slowing in 3Q, right? This is really important with a 4.1 percent unemployment rate. Now, the Fed's own forecast for the unemployment rate was 4.3 by the end of this year, 4.2 by the end of next year. You're on 4.1. So you have an unemployment rate that's moving lower. You have not only GDP that's much stronger than expected.