In this episode of Excess Returns, we sit down with Simeon Hyman, Global Investment Strategist at ProShares, for a wide-ranging discussion on the current state of the economy, inflation, the Fed, market valuations, and market leadership. Simeon shares his thoughts on the possibility of a soft landing, the impact of AI on productivity and the economy, and the surprising beneficiaries of AI disruption. We also dive into some of the strategies offered by ProShares, including their dividend growth and covered call ETFs.

00:00:00 - Intro
00:01:48 - Inflation readings and the Fed meeting.
00:02:27 - Simeon discusses the soft landing and long-term inflation expectations.
00:05:38 - Predictions on Fed actions and their impact.
00:07:48 - Analysis of the inverted yield curve and its implications.
00:08:51 - Employment market tightness and AI's potential impact.
00:10:49 - Simeon's thoughts on AI's impact on productivity and employment.
00:12:32 - The role of incumbents in benefiting from AI.
00:13:16 - Relationship between interest rates and stock market performance.
00:14:47 - Current valuation of stocks relative to bonds.
00:17:04 - Discussion on the underperformance of mid and small-cap stocks.
00:19:53 - Impact of indexing on stock performance.
00:21:12 - Examination of earnings growth in the S&P 500.
00:23:07 - Narrow leadership in market performance and its implications.
00:25:27 - Sector-specific performance within the S&P 500.
00:26:48 - Challenges in investing in interest rate-sensitive sectors like energy and utilities.
00:28:11 - The case for and against equal weighted strategies.
00:29:54 - Importance of dividend growth versus high dividend yield.
00:30:26 - Benefits of dividend aristocrats and signaling quality.
00:38:11 - Overview and risks of covered call strategies.
00:40:37 - Covered call strategy ETFs.
00:41:43 - Simeon’s outlook on the future of ETFs and the importance of disciplined, rules-based strategies.
00:43:37 - Simeon’s reflections on working at Lehman Brothers during the financial crisis.
00:45:48 - The most important lesson for average investors.

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