Jim Welsh has called four secular bear markets since the 1890s, and he says a fifth one is on the way — just not yet, because the New York Stock Exchange advance-decline line keeps making new highs.
Most strategists are arguing about whether to sell now. Welsh is doing the opposite: riding the advance-decline line higher while penciling in the exact level, around 7,300, where he'll start paying attention.
"All of a sudden you're coming on a road and you're about to approach a bridge and the bridge is gone. What do you do? You don't keep driving."
Welsh publishes Macro Tides and the Weekly Technical Review, and he and Chuck Jaffe have compared notes on the market twice a year for years, using the advance-decline line to flag tops before they arrive.
I listened to the full episode so you can skip it. 58 minutes of audio, 20 minutes of reading.
Here are the 13 takeaways that matter.
👤 Guest: Jim Welsh, macro strategist and publisher of Macro Tides and the Weekly Technical Review
🎙️ Host: Chuck Jaffe, a financial journalist who spent a decade at the Boston Globe and wrote the syndicated column "Stupid Investment of the Week" for ten years
👥 Also on: Jay Hatfield, chief executive officer and portfolio manager at Infrastructure Capital Advisors, where he runs the InfraCap Equity Income Fund (ICAP), the InfraCap Small Cap Income Fund (SCAP) and the Infrastructure Capital Nasdaq Option Income Fund (QVOL)
📰 Published: 9 September 2026 on Money Life's own podcast feed
🔴 YouTube | 🔗 Episode page | ⏱️ 58 min | ✅ Time saved: 38 min
Key Takeaways
The advance-decline line has made new highs for months, which Welsh says makes a big near-term decline unlikely
There have been four secular bear markets since the 1890s, and he expects a fifth — eventually
AI spending is only 1.7% of GDP against a federal deficit running 6% of GDP, so he isn't calling it a bubble yet
He still expects "another 60% correction coming in those semiconductor stocks" someday — chips lost 65% in the 2001-02 bear market
The usual 17-year market-cycle low got pushed out by unprecedented COVID-era stimulus and 6% deficits that have "never ever happened outside of a recession"
His two real risks are oil above $100 and the 10-year Treasury reaching 5%, not the midterms
He's looking for a pullback to about 7,300, potentially below 7,100, over the next two months
Stocks and bonds are moving together again after two decades of trading independently
Contrarian call: he expects the dollar to rally from around 98 toward 105, which would pressure emerging-market and international equities
Bull markets don't die of old age, because most institutional money is managed on a three-to-five-year horizon
Real selling doesn't start until declines reach 20% to 25%
He backs Fed Chair Warsh's push to strip out forward guidance, since the Fed's own December 2021 promise of 75 basis points in hikes for 2022 turned into 425 basis points delivered
Chuck doesn't own an annuity — he has a pension from a decade at the Boston Globe and calls annuities "sold. They're not bought"
Hatfield raised his S&P target to 8,250 even after cutting his multiple, because 2026 earnings estimates are up more than 16%
He isn't worried about circular AI financing, calling it healthy vendor finance backed by hyperscaler equity returns "in the high 20s"
His top conviction call is KKR, which he says trades at 14 times what he thinks is a 20-times business
His model portfolio barbells AI hyperscalers against energy and steers away from consumer staples, which he says have gotten "too expensive"
1. The AD Line Says Not Yet
Chuck opened by asking whether this market, which "likes worry," is finally due for real trouble. Welsh returned to the framework he leans on every time he's on the show.
He watches the New York Stock Exchange advance-decline line — a running tally of how many stocks rose minus how many fell each day — because it shows whether a rally is broad or narrow. "One of the things I focus on, Chuck, is the New York Stock Exchange advanced decline, which is nothing more than, hey, how many stocks went up today minus how many stocks went down."
The line has been climbing to new highs for months, which he reads as a healthy sign. "The advanced decline line has been making new highs over the last few months." "So in terms of a warning signal, that's basically saying the odds of us experiencing a very significant decline is unlikely" — though he doesn't rule out a routine 5% to 10% pullback
He does think a secular bear market is coming, just not imminently. "There's been four of them since the 1890s." Instead of a steady uptrend, the market goes sideways through big corrections for years: "The most recent example was the 2000 to 2009 experience. You had two declines in the S&P of more than 50% during that window[,] 1966 to 82 multiple declines of 40 to 50% as you went sideways"
His framing for near-term risk: "as long as AD line is positive," he expects only the periodic 3% to 7% correction, or a 5% to 10% pullback "if something more significant develops"
2. AI Spending Is 1.7% of GDP
Chuck pushed on the "this time is different" question, asking whether AI is acting differently than past technology booms. Welsh's answer stayed with the numbers rather than the narrative.
He sized AI capital spending against the federal deficit to argue the buildout isn't yet distorting the economy. "It's like 1.7% of GDP," against "And again, it comes down to the government is running a deficit of $2 trillion. That's 6% of GDP" — a far bigger driver of current growth, in his framing
He also credited a wealth effect and this year's tax cut, which he said "added about 7%," and expects AI-related spending to keep running "at least next year"
He said this time genuinely isn't different in kind, only in scale. "The magnitude is different. The longevity may be different. But just like the railroads and the fiber optic cable, all good things come to an end. This will too"
He flagged semiconductor stocks specifically as the vulnerable part of the trade. "In the 2001 and two bear market, the financial crisis, the semiconductor stocks lost 65% of their value," and he expects "another 60% correction coming in those semiconductor stocks" once spending slows and margins narrow — he just doesn't think that's imminent
3. The 17-Year Cycle, Delayed
Chuck raised a pattern he and Welsh have discussed before: US market lows tend to arrive roughly every 17 years — 1939, 1956, 1973, 1990 and 2007 — and asked whether 2022's decline was an early version of a cycle low that should otherwise have landed harder around 2024.
Welsh said the 2022 decline was the cycle showing up early, distorted by an unprecedented policy response to COVID. "The pandemic and the response by both Congress and the Federal Reserve was unprecedented in terms of the amount of money that was pushed into the economy"
He said the deficit spending that followed has no historical precedent outside of a downturn. "Even after the pandemic went away, we're still running deficits of 6% of GDP. That has never ever happened outside of a recession," under both the Biden and Trump administrations
He puts AI spending in the same unusual category. "More is being spent on the AI spending. It's like double what was spent on the railroads." "Railroads were pretty significant to the expansion and growth of the US economy."
He said the advance-decline line has historically topped out well before the market itself in past cycles — peaking in 1972 ahead of the 1973 top, in 1990, and in June 2007 versus the S&P's high that October — which is why he weights it more heavily than the calendar
4. Oil, Debt and a 5% 10-Year
Chuck asked whether midterm elections, dysfunction in Washington, Fed turmoil or record bond yields worry Welsh. His answer separated what he considers noise from what he considers real risk.
He blamed the deficit on both parties equally. "We have been running a 6% deficit. Why? Because one party likes to spend and the other one likes to cut taxes. That's how we get here." He put the total debt "over 40 trillion," growing "at two trillion a year," calling it "a big-time long-term problem" over the long run rather than an immediate trigger
His actual near-term worries are oil and the 10-year Treasury. "The things I'm more worried about, to your point, are oil prices" — a move above $100 a barrel would be problematic — and "The 10-year Treasury, I think, is going to go to 5%. At some point in time, that's going to matter to the equity market"
He said midterm-related jitters could contribute to a 7% to 10% pullback as focus builds through October, and noted technical weakness building "under the surface"
He gave a specific target. "I am looking for a pullback at least to around 7,300 and potentially below 7,100 over the next two months. My take though is that after that correction, however deep it turns out to be, I think we're going to see another move to higher highs and that's in part based on the behavior of the advanced decline"
He noted "the average S&P decline is 36%" in a real bear market, which he distinguishes from the routine pullback he's forecasting
5. Bonds and Stocks Reconverge
Asked about international diversification, Welsh first walked through work he'd done on the relationship between bond and stock prices going back eight decades.
He said he'd personally run the numbers. "I did a deep dive on the correlation between bond prices and stock prices going back to 1945," and found distinct windows where the two move together and windows where they move in opposite directions
He dated the last regime shift to 2001, when Alan Greenspan cut the funds rate below the inflation rate — creating what he called a negative real cost of money. From 2000 to 2022, he said, bonds and stocks "kind of went their own separate ways." Bonds rallied hard during the 2001-02 downturn and the financial crisis even as stocks fell
He said that relationship has now flipped. "What we're seeing now, Chuck, is that as this bond market sells off, that has applied pressure to stock prices. So the correlation between those two is pretty high" — meaning a bond selloff is now a headwind for stocks, not an offset
6. A Contrarian Dollar Call
Welsh's second answer, on where to look outside the US, ran against the prevailing view.
He said the dollar is set up to rally even though most strategists expect it to fall. "I think the dollar is going to rally, Chuck. I know the majority of opinion is the dollar is going to decline for a lot of good reasons. I'm not disagreeing or denigrating any of the reason. Just chart-wise, I think the dollar is more likely to rally potentially from the 98ish where it's trading toward 105ish"
He said the move, while modest, would hit international markets. "That's not a huge move, but if it took place, it would pressure emerging market equities and international equities because historically there's been a negative correlation"
He expects a pullback in the US market over the next month or two to drag emerging-market and European equities down with it, which he framed as a possible better entry point once that plays out
7. Bull Markets Don't Age Out
Chuck's closing question asked whether Welsh — and the market — would still be waiting for the secular bear six months from now, "yet this long one's going longer." Welsh's answer turned on how institutions actually behave, and on the Fed.
He rejected the idea that a bull market's duration alone is a warning sign. "I don't think the clock measures bull markets." Most institutional money — pensions, mutual funds, advisor-guided individual accounts — is told to buy and hold, and "The investment horizon for most institutions is three to five years"
A real decline requires a real reason to sell, not just time passing. "For us to have decent sized declines, there has to be a really good reason to sell that gets them to think things don't look so hot. Maybe I should lighten up a little bit." He said a 10% dip doesn't move anyone: "You get down 20 25% people start to wake up at 3:00 in the morning"
He sided with Fed Chair Warsh's push to drop forward guidance, calling the Fed's own track record on it bad. "As I've written many times, Chuck, the Fed's forward guidance sucks. It's wrong more often than not." He cited the Fed's own December 2021 promise — "Well, we're going to raise the funds rate three times in 2022, all of 75 basis points" — made with inflation already at 5%. "As it turned out, they raised seven out of eight meetings, 425 basis points"
His bottom line, echoing the line that opened the show, is to stay long but watch for a real catalyst to sell. "I agree with Warsh. Hey, let's everybody, you're an adult. You're in the financial markets. Put your big boy and girls pants on, if you will, and decide based on the economic data." He said the one thing that would change his mind immediately is a serious escalation in the Middle East — "if all hell breaks out," the equation changes right away
8. Chuck's Own Annuity Answer
A listener named Glenn wrote in after Money Life's prior conversation with Stan Haithcock ("Stan the Annuity Man") to ask Chuck directly whether he owns an annuity himself. Chuck's answer ran through his own finances in detail.
He doesn't own an annuity, but he has a pension from about a decade at the Boston Globe that he hasn't started drawing. He noted Haithcock has said only 9% of Americans have pensions at all
He ran his own answer through Haithcock's own framework for what an annuity is for — principal protection, income for life, legacy and long-term care. "If you look at what Stan Haithcock was talking about where he says you want an annuity for the pill, right? Principal protection, income for life, legacy, and long-term care"
On principal protection, he said it isn't a priority for him personally given how much he's already saved. He also has no long-term-care insurance, joking that his family tends not to need it — "as my mom used to say" — and said he isn't worried about legacy because he expects his money to outlast him
Income for life is the piece that appeals to him. He's been shifting more of his own money toward income-producing investments, and said he and his wife Gail have discussed relocating closer to their children — a move he could see funding partly with a new annuity to lock in extra guaranteed income
He was blunt about how the product is marketed. "Annuities are sold. They're not bought," and warned against indexed annuities and the sales-dinner circuit: "Stan was talking about the rubber chicken dinners and the rubber steak dinners. I've been to plenty of those because I wrote stupid investment of the week for 10 years. Those things are terrible. I would not be buying indexed annuities or anything else"
His test for whether an annuity makes sense is what he calls "don't mess it up money." "If it can give you what I call your don't mess it up money, right, where you go, I've set aside this amount of money. This is what it's doing for me and I can do whatever I want with the rest of my money, there's tremendous peace of mind in that"
9. Get the Macro Right First
In the show's Market Call, Jay Hatfield walked through how Infrastructure Capital Advisors gets its interest-rate call right before it ever looks at an individual stock.
About three-quarters of the firm's assets sit in fixed income, in funds like PFFA and BNDS, so the rate call matters as much to him as the stock market does. "Fortunately for higher risk bonds and preferred that doesn't really impact their price much because you're getting 7 89 yields," he said, even as the 10-year has climbed toward 4.75%
He described the Fed chair as "herding the cats" with hawkish rhetoric, without direct evidence that's the intent. He said the talk has pushed the 10-year up, and that "Every 25 basis points is one theoretical S&P multiple"
He raised his own S&P target even after lowering his valuation multiple, because earnings are coming in far stronger than expected. "We started the year with an 8,000 target" that assumed 23 times earnings and a 4% 10-year yield. With the 10-year now near 4.75%, his target multiple fell to 20 — which alone would point to roughly 7,000. "But this is an extraordinary year where earnings estimates are up over 16%. So even though we lowered the multiple three points, we're at 8250"
He called 7,500 a support level and said his target multiple is conservative. "We think 7500's a good support level because there you get a 10% upside to our target and we think our target's conservative just 20 times." He estimates the equilibrium multiple at current tax rates is about 22, so his own target is below average even with strong earnings growth behind it, chip stocks included
10. The Case for Circular Cash
Chuck asked whether the Treasury market itself could be the thing that finally breaks the AI trade. Hatfield's answer defended the financing structure that critics call circular.
He said hyperscaler returns justify the spending regardless of where rates land. "We aren't [worried] because the return on invested capital for the hyperscalers is extraordinary. The equity returns in the high 20s," which he compared to his own bond and preferred-stock funds: the exact 10-year level matters less when the underlying return is already high
He called what short sellers label "circular finance" a sign of an efficient US capital market rather than a red flag — the same kind of vendor financing, he said, that's existed for decades in the US and doesn't exist to the same degree in Europe, where financing itself is scarcer
He pointed to Nvidia's own investment track record as evidence the money isn't being wasted. "All the investments that Nvidia has made have been pretty spectacular. They invested in Marvell which we actually love that stock in the '9s and now it's at 230"
His overall message was not to talk yourself out of a market this early in a cycle. "It's important not to convince yourself to get out of the market when you're almost certainly going to get kind of high single double digit returns." Asked directly if anything would change his mind, he said: "Until I see something, problems are buying opportunities, not big problems"
11. Money Supply Beats Fed Talk
Hatfield said the more reliable signal for timing the cycle is the money supply, not the Fed's own commentary.
He said the monetary base — not the traditional M1 and M2 measures — is the number to watch, and it's flashing disinflation. "M0, the money supply is down 10% year-over-year," which he reads as pointing toward lower inflation rather than a reason to sell
He contrasted that with the two periods he considers genuinely dangerous. Money supply growth ran in the double digits in the late 1990s, and in late 2021 it was "growing at 70%" — comparable, he said, to "very poor Fed management" of the kind seen in Argentina
He expects year-over-year CPI to come in at 2.4% when it's reported later this week, and argued the Fed's inflation target itself is wrong. He said: "And the target should not be two, it should be two to three." That's a view he thinks Chair Warsh shares even though other hawks on the FOMC do not
He dismissed the Fed's preferred PCE inflation gauge in favor of core CPI. "I would look at CPI core which is real consumption with real prices, not madeup consumption with madeup prices." Asked if a rate cut would be more rational than a hike, he said: "It really wouldn't if I were all powerful, which last time I checked, I'm not"
He said core inflation is well-behaved but headline costs — airfares, food, transportation — eventually feed into core, so the Fed should hold off on any move until oil prices stabilize, whether through a resolution in the Middle East or oil simply settling into a lower, steadier range he put around $70 to $80 a barrel
12. Barbelling AI and Energy
Asked where the macro call actually leads him on individual sectors, Hatfield described a barbell allocation and named his top contrarian stock pick.
On the equity side, he pairs AI hyperscalers with energy rather than owning either alone. "And then on the equity side, we'd kind of barbell it. We love the AI hyperscalers. Unlike hedge funds who hate hyperscalers, we love them." He said energy — both infrastructure names and higher-quality pure-play producers — was "super out of favor" before the war started and remains a preferred pairing
He's cautious on financials for now. "We like financials, but they're probably not going to outperform while the war is going on because there's fears about the consumer, fears about the fall of private credit"
He's avoiding defensive stocks after their run this year. "And also our models are actually showing that most defensive stocks, not defense, but just defensive stocks, consumer staples, drugs, and utilities are quite fully valued on a PE to growth basis." He said the group has "done extremely well this year." "Great place to be during the war, but they're kind of rolling over now because they've just gotten too expensive"
His top contrarian pick is KKR, which he said the bears have wrong. The bear case was that "Private credit's going to zero and they're going to implode. But that was really more true of a lot of other companies and not KKR" — private credit is only about 15% of KKR's book, and assets under management are growing 15% a year. "Trades at about 14 times. We think that's a 20 times business"
He framed private equity's structural advantage over public markets in terms of how locked-up the capital is. "They get locked up money 10 plus years. Our money is locked up for 10 minutes, actually 10 seconds. You buyer funded and then sell it the next second," which he said justifies a premium multiple once expected share buybacks materialize
13. Five Quick Stock Calls
Chuck closed with a lightning round of listener stock questions, each answered with the same macro-first lens.
Ready Capital (RC) — a buy on the debt, not the equity. "They've been having a lot of trouble with defaults on their loan portfolio." But Hatfield said, "And the reason we flag this is that we don't really love the equity, but we do really like their bonds and their preferred stock because what they're doing is they're delevering. They're unwinding a lot of their securizations, raising capital and making the credit better." He owns the bonds and preferred stock, which he said carry double-digit and high-single-digit yields respectively, rather than the common stock
Oracle (ORCL) — a qualified buy heading into earnings. He called it one of the fund's largest positions and said Oracle is exactly the kind of stock "that a lot of hedge funds hate" for its negative free cash flow, comparing it to cable companies that once boasted about their cash flow while underinvesting in streaming. "Well, guess what? All that depreciation was real." He said Oracle trades around 15 to 16 times earnings growing toward 25%, which he thinks deserves a much higher multiple, but flagged earnings later in the week as a real risk — comparing the setup to a Clint Eastwood movie, "do you feel lucky punk" — since hedge funds tend to cover shorts on a decent report and pile back in if it's merely fine rather than great
Coca-Cola (KO) — a sell. He called it "right at our target around 90" and said "But we just think that trade got overdone. You're going to be totally fine in it, but we don't see a ton of upside." He compared it to Walmart, which traded at 45 times earnings before a soft report sent the stock down 30 points in short order
Exxon Mobil (XOM) — an outright buy. "This is an all-weather stock," he said, adding it's extremely hard to go wrong with, and that unlike pure exploration-and-production names it also carries a refining business benefiting from near-record margins tied to damaged Middle Eastern and Russian refining capacity. He called it "just a great franchise" generating "huge returns right now," pays a large, high-credit-quality dividend, and can be paired with covered calls
MPLX — a core holding, buy. Hatfield has owned the pipeline stock since launching his AMZA fund 12 years ago, calling it a "super high quality company" tied to majority owner Marathon Petroleum, with a beta of about 0.5 that makes it, in his words, a good hedge for the rest of a portfolio while picking up extra yield around 7%
Bonus Insights
Chuck checked his own picks against other recent guests before signing off. "But Oracle a buy today. Max Wasserman from Myiramar Capital was buying it back on July the 14th." By contrast: "Exon Mobile a buy today. Joe Raldi from Quantum Financial Advisors was selling that back on April the 14th" — a reminder that two credentialed managers can land on opposite sides of the same stock within months of each other
Chuck noted Ready Capital is "a penny stock," which he flagged as one of the few names in the episode without much crossover with other recent guests
Welsh's bottom line is to stay long as long as the advance-decline line stays positive, treat a 5% to 10% pullback as routine rather than the start of the secular bear he still expects eventually, and change course the moment a real catalyst — a Middle East escalation chief among them — actually materializes.
Products, Companies & Tools Mentioned
Infrastructure Capital Advisors (Jay Hatfield's firm, which runs the InfraCap Equity Income Fund, InfraCap Small Cap Income Fund, the AMZA pipeline fund and other income-focused ETFs discussed throughout the market call)
KKR (Hatfield's top contrarian pick — he says the market is pricing in a private-credit blowup that doesn't apply to KKR's 15%-private-credit book)
Oracle (A qualified buy on negative free cash flow he says the market misreads, ahead of earnings later in the week)
The Coca-Cola Company (A "sale" — Hatfield says the defensive-stock trade got overdone and the stock is at his price target)
Exxon Mobil (An outright buy for its refining exposure on top of oil, benefiting from near-record refining margins)
MPLX (A core, low-beta holding in Hatfield's pipeline fund, tied to majority owner Marathon Petroleum)
Nvidia and Marvell (Cited as evidence hyperscaler-adjacent investment isn't being wasted — Nvidia's stake in Marvell, which Hatfield says has run from single digits to $230)
Ready Capital (Hatfield likes the bonds and preferred stock, not the common, as the lender deleverages after loan defaults)
Walmart (Cited as a cautionary comparison for Coca-Cola — traded at 45 times earnings before a soft report cut 30 points off the stock)
Diamondback Energy (Named alongside Exxon Mobil as a pure-play energy comparison that lacks Exxon's refining exposure)
Broadcom (Cited as an example of a chip stock that saw hedge funds short-cover into a decent earnings report and then reload)
Books & Resources Mentioned
Macro Tides and the Weekly Technical Review – Jim Welsh (His own newsletters, built around the advance-decline line framework discussed throughout the interview)
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