On Investing

Liz Ann Sonders and Collin Martin begin this episode by analyzing the powerful role earnings are playing in driving the U.S. stock market higher and what that means for investors. Liz Ann highlights that S&P 500 earnings growth is tracking around 51% for the second quarter, an unusually strong pace outside of a post-recession recovery. Collin explains why Schwab expects a "higher-for-longer" rate environment, with short- and longer-term Treasury yields likely remaining elevated as the economy stays resilient and inflation remains above the Fed's target.

Then Collin sits down with former Federal Reserve Vice Chair Dr. Richard Clarida. They discuss how the Fed thinks about inflation, labor markets, supply shocks, productivity, and AI. Clarida argues that policymakers are trying to determine whether today's inflation pressures are temporary or indicative of a higher underlying trend. He also discusses the transition to new Fed Chair Kevin Warsh, potential changes to Fed communications, and why AI could be inflationary in the near term but ultimately disinflationary through improved productivity over the next several years.

On Investing is an original podcast from Charles Schwab. For more on the show, visit schwab.com/OnInvesting. 

If you enjoy the show, please leave a rating or review on Apple Podcasts.

Important Disclosures

The comments, views, and opinions expressed in the presentation are those of the speakers and do not necessarily represent the views of Charles Schwab.

This material is intended for general informational and educational purposes only. This should not be considered an individualized recommendation or personalized investment advice. The securities, investment products and investment strategies mentioned are not suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decisions.

All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Past performance is no guarantee of future results.

Investing involves risk, including loss of principal. 

Performance may be affected by risks associated with non-diversification, including investments in specific countries or sectors. Additional risks may also include, but are not limited to, investments in foreign securities, especially emerging markets, real estate investment trusts (REITs), fixed income, municipal securities including state specific municipal securities, small capitalization securities and commodities. Each individual investor should consider these risks carefully before investing in a particular security or strategy.

Currencies are speculative, very volatile and not suitable for all investors.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors. 

Diversification, rebalancing, and asset allocation strategies do not ensure a profit and do not protect against losses in declining markets.

All names and market data shown are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.

Forecasts contained herein are for illustrative purposes only, may be based upon proprietary research and are developed through analysis of historical public data.

The policy analysis provided by Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.

Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions 

ISM refers to the Institute for Supply Management.

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With Liz Ann Sonders away, Collin Martin is joined by Schwab Head of Macro Research and Strategy Kevin Gordon for an in-depth conversation on the economy, Federal Reserve policy, bond yields, equities, and global markets.

The episode opens with the idea that "good news can be bad news" for markets. Kevin explains that strong economic data, particularly in the labor market, can sometimes hurt stocks because it increases the likelihood of tighter monetary policy. The conversation then turns to interest rates and the surprising resilience of markets despite elevated bond yields. Collin and Kevin discuss the Fed's increasingly hawkish tone, the unusual presence of multiple dissents favoring rate hikes, and concerns about communication from Chair Kevin Warsh. 

Looking ahead, Collin and Kevin identify inflation data, labor-market reports, Fed commentary, retail sales, and inflation-expectation surveys as the key indicators investors should monitor in the weeks ahead.

On Investing is an original podcast from Charles Schwab. For more on the show, visit schwab.com/OnInvesting. 

If you enjoy the show, please leave a rating or review on Apple Podcasts.

Important Disclosures

This material is intended for general informational and educational purposes only. This should not be considered an individualized recommendation or personalized investment advice. The securities, investment products and investment strategies mentioned are not suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decisions.

All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Past performance is no guarantee of future results.

Investing involves risk, including loss of principal.

Performance may be affected by risks associated with non-diversification, including investments in specific countries or sectors. Additional risks may also include, but are not limited to, investments in foreign securities, especially emerging markets, real estate investment trusts (REITs), fixed income, municipal securities including state specific municipal securities, small capitalization securities and commodities. Each individual investor should consider these risks carefully before investing in a particular security or strategy.

Currencies are speculative, very volatile and not suitable for all investors.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.

Diversification, rebalancing, and asset allocation strategies do not ensure a profit and do not protect against losses in declining markets.

All names and market data shown are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.

Forecasts contained herein are for illustrative purposes only, may be based upon proprietary research and are developed through analysis of historical public data.

The policy analysis provided by Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.

Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions

A hyperscaler is a large-scale cloud service provider that offers vast computing, storage, and networking resources through a distributed infrastructure of interconnected servers and software.

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This week, Liz Ann Sonders and Collin Martin discuss one of the market's biggest themes, AI, and why the enormous capex spending on AI reinforces the importance of portfolio rebalancing. Liz Ann explains how AI-related companies now make up a significant share of major stock indexes and explores the risks that come with growing concentration in a handful of large-cap names. Rather than trying to predict which AI winners will emerge next, she highlights rebalancing as a disciplined way to trim outperformers, add to lagging areas, and maintain diversification. The conversation also touches on opportunities beyond the largest technology stocks, including equal-weight index funds, small-cap stocks, and quality-focused investing.

On the fixed income side, Collin discusses how investors can think about rebalancing bond portfolios by balancing interest-rate risk and credit risk. He explains why investors sitting in cash or very short-term investments may be able to capture higher yields further out on the yield curve and why selective exposure to higher-quality corporate bonds may still make sense despite relatively tight credit spreads. Finally, Liz Ann and Collin discuss how inflation, AI-related investment spending, and the strength of the consumer could shape both Fed policy and market performance in the months ahead.

On Investing is an original podcast from Charles Schwab. For more on the show, visit schwab.com/OnInvesting. 

If you enjoy the show, please leave a rating or review on Apple Podcasts.

Important Disclosures

This material is intended for general informational and educational purposes only. This should not be considered an individualized recommendation or personalized investment advice. The securities, investment products and investment strategies mentioned are not suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decisions.

All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Past performance is no guarantee of future results.

Investing involves risk, including loss of principal. 

Performance may be affected by risks associated with non-diversification, including investments in specific countries or sectors. Additional risks may also include, but are not limited to, investments in foreign securities, especially emerging markets, real estate investment trusts (REITs), fixed income, municipal securities including state specific municipal securities, small capitalization securities and commodities. Each individual investor should consider these risks carefully before investing in a particular security or strategy.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors. 

Lower rated securities are subject to greater credit risk, default risk, and liquidity risk.

Diversification, rebalancing, and asset allocation strategies do not ensure a profit and do not protect against losses in declining markets.

Rebalancing may cause investors to incur transaction costs and, when a non-retirement account is rebalanced, taxable events may be created that may affect your tax liability.

Futures and futures options trading involves substantial risk and is not suitable for all investors. Please read the Risk Disclosure Statement for Futures and Options: https://www.schwab.com/Futures_RiskDisclosure prior to trading futures products.

All names and market data shown are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.

Forecasts contained herein are for illustrative purposes only, may be based upon proprietary research and are developed through analysis of historical public data.

The policy analysis provided by Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.

Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions 

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A better-than-expected June Consumer Price Index (CPI) report offered some welcome relief for investors concerned about persistent inflation pressures. But while the headline numbers came in below expectations, Liz Ann Sonders and Collin Martin explain why underlying inflation trends, including higher oil prices, rising costs tied to AI-related investment, and components that feed into the Fed's preferred inflation gauge, suggest the inflation story is far from over.

They also discuss why macroeconomic factors such as inflation, monetary policy, and labor-market conditions remain essential inputs for portfolio decisions, even when investors are looking for more specific investment guidance. The conversation covers the Federal Reserve's outlook, what recent data means for bond investors, small-business sentiment and hiring plans, growing concerns about inflation among business owners, and the economic indicators they'll be watching in the weeks ahead.

On Investing is an original podcast from Charles Schwab. For more on the show, visit schwab.com/OnInvesting. 

If you enjoy the show, please leave a rating or review on Apple Podcasts.

Important Disclosures

This material is intended for general informational and educational purposes only. This should not be considered an individualized recommendation or personalized investment advice. The securities, investment products and investment strategies mentioned are not suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decisions.

All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Past performance is no guarantee of future results.

Investing involves risk, including loss of principal. 

Performance may be affected by risks associated with non-diversification, including investments in specific countries or sectors. Additional risks may also include, but are not limited to, investments in foreign securities, especially emerging markets, real estate investment trusts (REITs), fixed income, municipal securities including state specific municipal securities, small capitalization securities and commodities. Each individual investor should consider these risks carefully before investing in a particular security or strategy.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors. Lower rated securities are subject to greater credit risk, default risk, and liquidity risk.

Diversification and asset allocation do not ensure a profit and do not protect against losses in declining markets.

All names and market data shown are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.

Forecasts contained herein are for illustrative purposes only, may be based upon proprietary research and are developed through analysis of historical public data.

The policy analysis provided by Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.

Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions 

Treasury Inflation Protected Securities (TIPS) are inflation-linked securities issued by the US Government whose principal value is adjusted periodically in accordance with the rise and fall in the inflation rate. Thus, the dividend amount payable is also impacted by variations in the inflation rate, as it is based upon the principal value of the bond. It may fluctuate up or down. Repayment at maturity is guaranteed by the US Government and may be adjusted for inflation to become the greater of the original face amount at issuance or that face amount plus an adjustment for inflation. Treasury Inflation-Protected Securities are guaranteed by the US Government, but inflation-protected bond funds do not provide such a guarantee.

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In this episode, Liz Ann Sonders and Collin Martin discuss what may be one of the most important long-term shifts facing investors: the end of the "Great Moderation" Era, the roughly 25-year period characterized by globalization, low inflation, relatively stable economic growth, and favorable conditions for both stocks and bonds. Liz Ann argues that investors may be entering a more "Temperamental" Era marked by greater inflation volatility, shifting supply chains, geopolitical disruptions, and a different relationship between bond yields and stock prices. 

The conversation explores how globalization, abundant labor, cheap goods, and plentiful energy helped suppress inflation for decades—and why those forces may be fading. Collin then examines the bond market, highlighting why Treasury yields remain elevated even as oil prices have retreated from recent highs. Inflation pressures beyond energy, resilient economic growth, and expectations for Federal Reserve policy are helping keep yields high. Finally, Collin and Liz Ann preview earnings season and next week's economic calendar. 

Visit Schwab.com to read the article by Liz Ann Sonders and Kevin Gordon titled "Great Moderation Era: Drift(ing) Away."

On Investing is an original podcast from Charles Schwab. For more on the show, visit schwab.com/OnInvesting. 

If you enjoy the show, please leave a rating or review on Apple Podcasts.

Important Disclosures

This material is intended for general informational and educational purposes only. This should not be considered an individualized recommendation or personalized investment advice. The securities, investment products and investment strategies mentioned are not suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decisions.

All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Past performance is no guarantee of future results.

Investing involves risk, including loss of principal. 

Performance may be affected by risks associated with non-diversification, including investments in specific countries or sectors. Additional risks may also include, but are not limited to, investments in foreign securities, especially emerging markets, real estate investment trusts (REITs), fixed income, municipal securities including state specific municipal securities, small capitalization securities and commodities. Each individual investor should consider these risks carefully before investing in a particular security or strategy.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors. Lower rated securities are subject to greater credit risk, default risk, and liquidity risk.

Diversification and asset allocation do not ensure a profit and do not protect against losses in declining markets.

All names and market data shown are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.

Forecasts contained herein are for illustrative purposes only, may be based upon proprietary research and are developed through analysis of historical public data.

The policy analysis provided by Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.

Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions 

A hyperscaler is a large-scale cloud service provider that offers vast computing, storage, and networking resources through a distributed infrastructure of interconnected servers and software.

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Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.