During their recent episode, Taylor, Carlisle, and Jeff Weniger discussed Is the Stock Market Already Crashing Beneath the Surface? Here’s an excerpt from the episode:
[Jeff] Well, you never know, but Nike’s a good example of just the fickle nature of apparel, fashion trends. That one was so fascinating because I’m going to take a wild guess here that that thing was unstoppable for a good 15 years. That’s what it feels like.
That’s the scientific feels like 15 years and then just totally ice cold. I don’t know what the top to bottom draw is on that 60% or 70%. It’s really interesting.
I remember back in the 90s, one of the first things I remember going vertical for a long time and then just dying. This was when I was a child. I guess it’s story time now.
My father is not in the business. He was an insurance adjuster, but he was the type of guy that liked to pay attention to it. There used to be a book that he would get delivered to him in the mail.
It was a charting book. It was like 500 names in there. I would take the ruler and the pencil and do support and resistance.
I remember Gap. The Gap. We’d have to pull up the 40-year chart or something, but it went up like 500%.
I don’t know what year it was, 1992, 1993, 1994. That was the hottest thing. The Gap was really cool.
The Gap was really cool. You wanted to buy your clothes at the Gap. Then you just woke up one day and it was not cool anymore.
You see this evolution in apparel. That’s why that’s one of those areas where you got to be really careful when you start seeing premium valuations on this stuff. Here’s a more recent example.
We don’t have to go back to 1992, the Gap. Remember, Lululemon was just totally unstoppable.
[Tobias] I still remember Lululemon. [Jeff] How much Lululemon are you wearing right now, Tobias? [Tobias] Just on the undercarriage. Yeah, under the covers. [Jeff] But Lululemon and then there’s Athleta. These are not areas of mine. I don’t typically engage with these thought processes.
Then there’s Vlory. It’s like the new nicer one. You come and you go in these things.
That’s one of those things about trying to think about individual stocks, thinking about modes, trying to step aside, I think, from the here and now of something is really popular now, whatever that is. I’m looking around my desk as to what that something might be. But five years from now, it’s going to be decidedly uncool.
I don’t know. Is Nike now uncool? I really wouldn’t have the…
[Jake] I don’t know. I asked my teenage boys this question just out of curiosity, and they said, no, Nike’s still cool. [Jeff] My kids want to wear Nikes. They want to wear Nikes. But I think it got a little bit ahead of itself.
Then there was this big push with a lot of the other sneaker brands. There was a lot of new cushiony sneakers being put out, nice ankle support from some of the competitors. So, I digress.
[Tobias] I similarly took my daughter. My daughter still wears the Lululemon. My wife still wears the Lululemon.
But we did have to go shopping in the Aloe store to get an Aloe visor, and the Aloe visor was $80. I nearly swallowed my tongue. I was like, are you joking?
Fair enough.
[Jeff] Happy birthday. The other one. Yeah, my daughter’s 15 and she likes Aloe, and they’re putting an Aloe up in our neighbourhood in Chicago, and she’s really excited about that.
She’s like, well, five years from now, she won’t wear it anymore. So, it comes and goes. But yeah, look, underneath the S&P 500’s headline number, which I think we’re at 78 and change now on that index, what are we up this year?
Like 12%, 13% year-to-date? What is it? 13% year-to-date, something like that.
There is a notable breakdown in breadth. But I would point this out, guys, is that these breadth breakdowns, really, really thinking, just to put a guess on it here, it’s last month, we had up until the beginning of summertime or thereabouts, generally speaking, of the 11 GIC sectors in the S&P 500, probably nine or 10 of them were in a state of advance. It’s just the September and October action has been tough going.
There has been this narrowing. There’s the MAG-7 working. That might be in anticipation of the Anthropic IPO.
That could be something that’s a little supportive, that run up into an IPO, that excitement of something like that. If it’s, well, we’ll see if it’s a successful IPO or not. That could be something that can help the October and into November action.
That should be about mid-November if the tea leaves are being read correctly on that IPO. But yikes. I mean, in 2025, here’s a good example of a group, if you have deteriorating breadth or concern about the macro environment, you would think this would a decent performer.
Utilities, yikes. In 2025, utilities, that was part of the AI trade. It was all about the data centres are going to need electric power and the utilities were going to be a beneficiary.
It was the first time in any of our lives where utilities were risk on. Risk on. I mean, I have a chart out there somewhere where it’s the MAG-7, like an equal way to MAG-7 and like the XLU.
Those were going up and down together throughout 2025. And then around about a month after the Iranian war, so let’s call it March 31st just to end the first quarter with that, there started to be a big split between the MAG-7 and utilities. And this goes back to what we’re starting with.
I mean, the bond market is deciding everything for this stock market right now. If the bond market wants to keep selling off, then we’ve got big problems in things like utilities, REITs. I mean, these are oftentimes areas that you, I don’t know, shelter in REITs, but yeah.
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