The Market Is "Very Fragile" | Lance Roberts

**SPEAKER_1** (0:01)
When the holidays start to feel a bit repetitive, reach for a Sprite Winter Spiced Cranberry, and put your twist on tradition. A bold cranberry and winter spice flavor fusion, Sprite Winter Spiced Cranberry is a refreshing way to shake things up this sipping season, and only for a limited time. Sprite, obey your thirst.

**SPEAKER_2** (0:25)
The Subaru Share the Love event is on. From November 20th to January 2nd. During this event, Subaru donates to charities like Make-A-Wish, helping grant more than 3,900 wishes so far. When you purchase or lease a new vehicle during the 2025 Subaru Share the Love event, Subaru and its retailers will make a minimum $300 donation to charity. Visit subaru.com/share to learn more.

**Lance Roberts** (0:52)
When you have the amount of margin debt that you have, you have the complacency that you have, you have the correlation between assets as high as they are right now, that just makes the market very fragile. And the range of returns right now run between about 8,000 on the S&P and about 5,500. So there's a lot of potential. And of course, that means that market could do anything in between those two ranges. So there's a lot of potential outcomes for next year, which means that, you know, which leaves room for plenty of unexpected events, things that nobody's counting on.

**Adam Taggart** (1:29)
Welcome to Thoughtful Money, I'm Thoughtful Money Founder and your host, Adam Taggart, welcoming you here at the end of the week for another weekly market recap featuring my good friend, the ascendant portfolio manager, Lance Roberts. Lance, how you doing, buddy?

**Lance Roberts** (1:44)
It is all intents and purposes. It is Friday and I'm very happy for it this week. So, just glad to be getting this week over with.

**Adam Taggart** (1:53)
Good. Full transparency, you and I just talked about, we need to make this one a little bit shorter than normal because we both have daughters that are coming home for the holidays and we're both excited about that. So, well, look, I picked ascendant because a lot of things have been rising. And we'll talk in just a minute about kind of the news, the Fed dropped that really pleased the markets. As of yesterday, so we recorded this on Fridays, as of yet closed yesterday, S&P and the Dow closed at all-time highs. A number of other assets are in that same territory, especially silver. Now, the markets are selling off a little bit in the morning we're talking about here. So who knows where things are going to end up at the end of today. But Lance, we do seem to be in a state where the tide is rising. And this is largely tied to at least the past couple of days. And I know, Lance, you always say we're always looking for the narrative and it doesn't necessarily match what's actually driving the markets. But the Fed came out this week and it cut as everybody was expecting the Fed to do. But what the Fed did surprise the markets with was that it's going to start basically buying $40 billion or so worth of T bills a month. So to make sure that, quote, there are ample enough reserves in the system, I think the market heard QE. Is that what you said? And said, this is great. The Fed put his back. And so markets did quite well and a lot of assets that benefit from Fed, we'll call it printing. Like the precious metals reacted very strongly as well. Bitcoin started showing some life again. So anyways, why don't we start here?
What were your key takeaways from what the Fed announced this week?

**Lance Roberts** (3:50)
So let's start with what the Fed said. And it actually made a couple of interesting statements on Friday. By the way, I'm covering this a lot more detail in this weekend's newsletter as well. So you go by realinvestmentadvice.com and click on the bull bear report. I'm going in a little bit more detail. But so first thing they said was is, to your point, they're going to start buying $40 billion worth of bonds. How long that's going to last, who knows? It may be a month, it may be two months, maybe three months. It's not really a permanent fixture. But the Fed does not classify that as quantitative easing. They classify quantitative easing as the purchase of long-duration bills, where they're purchasing, and actually purchasing is the wrong word. They're swapping 10-year durations for bank reserves. So the Fed does not print money at all. They do not influence the monetary supply. What they do is they swap reserves for banks. They basically credit the reserve account, it's a digital transaction. They take the asset, the 10-year treasury in that case for quantitative easing, and swap reserves. So that's all that happens. It's an even swap of assets. What they classify as reserve management is when they're buying bills on the short end to make sure there's plenty of reserves in the system. So that's what they're doing now is to make sure they're providing ample reserves for the banks to operate and function. And of course, we've talked about recently the repo stress, etc. I thought the more interesting thing that they discussed was really about the economics.