The war is three months old, stocks are at record highs and the Fed is talking hikes

Three months into a Middle East war, Brent crude is sitting comfortably above US$100 and the Federal Reserve is openly discussing rate hikes rather than cuts. By any conventional reading, markets should be struggling. Instead the S&P 500 is hovering near all-time highs and the whole AI thing, while showing signs of selectivity, is nowhere near finished. Even the man analysing it finds it hard to believe.

In this episode of Market Focus Weekly, a podcast from The Business Times, Howie Lim speaks with José Torres, senior economist at Interactive Brokers, for a conversation that is refreshingly candid about what markets are doing, why it defies logic and where the real pressure points are quietly building.

Why listen

• Why the AI trade is not over but is becoming far more selective  Free cash flow and margins are now the metrics that matter most. Torres explains what separates the companies that will keep running from those that will not and why the SpaceX and OpenAI IPO pipeline still has the power to bring fresh money into the market.

• What a Strait of Hormuz reopening would actually do to prices Torres puts a number on it. A sustained reopening could take Brent from US$105 to US$85 almost immediately, but he explains exactly why that remains a high bar.

• Why inflation is now re-accelerating across almost every category except housing  Non-housing services, food, goods and AI-driven commodity demand are all pushing in the same direction. Torres does not sugarcoat the Fed’s position or its credibility risk.

• Why the dollar has no realistic challenger and what that means for gold  The debasement narrative is real but the dollar dominance is more real. Torres explains why gold’s traditional hedging role is being undermined by rising real yields and why the precious metal is increasingly hard to size properly in a portfolio.

The numbers are extraordinary and the contradictions are real; all of which is probably fuelling your persistent headache. This conversation helps you make sense of both. Listen now.

Discover more episodes at bt.sg/podcasts. Got feedback? Email us at btpodcasts@sph.com.sg.

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Written and hosted by: Howie Lim (howielim@sph.com.sg)

With José Torres, senior economist at Interactive Brokers

Edited by: Howie Lim & Claressa Monteiro

SEE ALSO

Can the AI rally really ignore inflation, geopolitics and a Fed under pressure?

Produced by: Howie Lim & Chai Pei Chieh

A podcast by BT Podcasts, The Business Times, SPH Media

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