Tech Is Rolling Over. Yields Are Falling. Why Jim Paulsen is Watching the Walmart Recession Signal

Justin J. Carbonneau (0:00)

In the latest episode of the Jim Paulsen Show, Jim walks through the charts behind his cautious outlook for stocks, explains why even a modest slowdown in AI spending could threaten tech's leadership, and shares what his Walmart recession indicator is signaling about the economy. We are sharing this episode in the Excess Returns feed, but to receive future episodes, subscribe to the Jim Paulsen Show on your preferred podcast platform using the links in the episode description. Thank you for listening. We hope you enjoy the show.

Always nice to see you. Thank you for joining us again today.

Jim Paulsen (0:28)

You bet, Justin. Thanks for having me.

Justin J. Carbonneau (0:31)

Like we always do with you every month, we're going to work through many of the great charts and the information that you're putting out on Paulsen Perspectives, which is your substack, to try to help our viewers understand what you're paying attention to, what is going on in the economy and the markets, and at least, and I think with some of these charts, based on some historical past data, what the market has or how the market has reacted after some of these types of indicators have hit some of these levels, which we're going to talk through today. So we're only, I think, about two weeks away from Halloween, so hopefully these charts don't scare too many people. I don't think they should, should they?

Yeah.

Jim Paulsen (1:11)

I'm not wearing a costume, anybody, if you think I am. I'm really not.

Justin J. Carbonneau (1:16)

Yeah, this is, with AI, Jim, with AI, we can put you in the thumbnail, we can put the YouTube thumbnail, the costume on you, if we wanted to. What would Jim Paulsen's Halloween costume be?

Jim Paulsen (1:27)

That would be for her. I don't know. I've never done this a lot.

Justin J. Carbonneau (1:33)

So, yeah, and for our viewers that want to check out Jim's sub stack, it's paulsanperspectives.substack.com.

Please go there and support him. You can get on the free version, but he also has a great paid version too. And Jim's kind enough to come on every month and share some of these charts and things that he's looking at. So where we think we'd like to start, Jim, and where we always start with you is before we get into the charts, just kind of hear from you about some of the bigger things that you're paying attention to in the market right now.

Jim Paulsen (2:04)

Yeah, I think we'll talk a little more about this, but two things that kind of sit on top, a few things that sit on top of my head, I guess, or I'll talk a lot about this a little bit later, but I think there's really a lot of complacency building into the stock market as a whole.

It's been pretty good for pretty long, and people are feeling kind of wealthy and that are involved in the market, and I think it's been pretty easy to make money. We'll visit about that. It might not even be that this thing finally takes a breather just because of a rational exuberance or anything as much as it's just complacency, just comfort a little bit. So I'm kind of monitoring now a little bit, and I think I see a lot of evidence of sort of that. And then we're putting pressure on the system here. We keep putting pressure on the system in a number of ways, with policies and also just other events, I think, overall. And then it just seems this cycle just seems increasingly misbalanced, you know, becoming more concentrated and out of bounds relative to other parts of the economy. I don't know how sustainable that is.

And at the end of the day, I'm like everybody else. I'm waiting probably for some kind of very disappointing data on the economy or very disappointing earnings results out of the tech sector or AI or some announcement isn't quite working as thought. Haven't got that. There's no doubt about that. But I'm kind of thinking too about the catalyst that might cause there to be more difficulty.

The reality is you don't really have to figure that out. I'm always been one more inclined to keep focused on the vulnerability and the pressure. And that's kind of what I am mainly focused on. But I can't help myself. You wonder, well, will it be this? Will it be that? Will it be the midterms? What could it possibly be? So, you know, and then there's some side shows too, Justin, like, you know, what's the Fed going to do here? Are they going to keep tightening? Are they going to pause again? Or, you know, where that at? Does the war ever end? Or is this perpetual now in the Trump presidency? You know, those kind of things, which do matter a fair amount at the margin, how those play out.