‘Own what the Mother of All Bubbles crowd doesn’t.’ This market strategist expects stagflation and is investing for it now.

There’s always a bull market somewhere — if you can find it.

Keith McCullough encourages investors to join him in the hunt. You’ll need to be agnostic and open-minded, the CEO of investment service Hedgeye Risk Management says. If you’re wedded just to U.S. stocks, or the market’s latest darlings, you’re setting yourself up for disappointment — particularly in the hostile environment McCullough sees coming.

This coming challenge for U.S. stock investors, in a word, is stagflation, McCullough says. Stagflation — higher inflation plus slow- or no economic growth — is hardly a bullish outlook for stocks, but McCullough’s investment process looks for opportunties wherever they may be. Right now that’s led him to put money into health care, gold, Japan, India, Brazil and energy stocks, among others.

In this recent interview, which has been edited for length and clarity, McCullough takes the Federal Reserve and Chair Jerome Powell to the woodshed, offers a warning about the potential fallout from Powell’s upcoming speech at Jackson Hole, Wyo., and implores investors to discount happy talk and always watch what they do, not what they say.

MarketWatch: When we spoke in late May, you criticized the Federal Reserve for being obtuse and myopic in its response to inflation and, later, to the threat of recession. Has the Fed done anything since to give you more confidence?

McCullough: The Fed forecast of the probability of recession should be trusted as much as their “transitory” inflation forecast or a parlor game. People should not have confidence in the Fed’s forecast. The “no-landing” or “soft-landing” thesis is looking backwards. The Fed is grossly underestimating the future, doing what they always do, in looking at the recent past.

Their policy is wed to what they say. They claim they’re not going to cut interest rates until they get to their target. But any hint of the Fed arresting the tightening gives you more inflation. So there’s this perverse relationship where the Fed is the catalyst to bring back the inflation they’ve spent so much time fighting. 

Read: ‘The Fed is way late and they’ve already screwed it up.’ This stock strategist is banking on gold, silver and Treasurys to weather a recession.

MarketWatch: U.S. Inflation has come down quite signficantly over the past year. Doesn’t that show the Fed is well on the way to achieving its 2% target?

McCullough: A lot of people are peacocking and declaring victory over inflation when we’re about to have reflation that sticks. We have inflation heading back towards 3.5% and staying there.

Our inflation forecast is that it’s set to reaccelerate in the next two inflation reports, which will lead to another rate hike in September. The Fed’s view is that until they get to the 2% target they’re not done. A lot of people are really confident because inflation went from 9% to 3% that it’s getting closer to 2%, therefore the Fed is done. Given what Fed Chair Jerome Powell said, the next two inflation reports are critical in determining whether we hike rates in September. I think maybe even one in November. This is a major catalyst for the next leg down in the equity market.

The Fed is going to see inflation go higher, and they’ve already articulated to Wall Street that no matter what happens, that should constitute a rate hike. That’s a policy mistake. They’re going to continue to tighten into a slowdown. When the Fed tightens into a slowdown, things blow up.

MarketWatch: By “things blow up,” you mean the stock market.

McCullough: I don’t think the Fed cuts interest rates until the stock market crashes. The Fed is going to be tightening when the U.S. economy and corporate profits are at a low point, going into the fourth quarter. It’s not dissimilar from 1987 where all of a sudden a market that looked fine got annihilated in very short order. There are a lot of similarities to 1987 now; the market’s quick start in January, people in love with stocks. That’s a catalyst for the stock market to crash.

When the Fed has an inconvenient rule, particularly for the U.S. stock market, they just move the goal posts or change the rule. If they actually started to cut interest rates, inflation would go up faster. This is exactly what happened in the 1970s and what Powell explains is the risk of going dovish too soon – that he becomes [much-criticized former Fed chair] Arthur Burns. That’s why you had rolling recessions in the 1970s; the Fed would go dovish, devalue the U.S. dollar
and the cost of living for Americans would reflate to levels that are prohibitive.

People can’t afford reflation at the gas pump, or in their health care. It’ll be fascinating to see how Powell pivots from fighting for the people to bailing out Wall Street from another stock market crash, which will therein create the next reflation.

‘The Federal Reserve has set the table for a major event in the U.S. stock market and the credit market.’

MarketWatch: Speaking of a Powell pivot, the Fed chair speaks at Jackson Hole this week. Last year he put markets on notice for rate hikes. What do you think he’ll say this time?

Powell’s going to see inflation accelerating. I think Jackson Hole is going to be a hawkish meeting. That might be the trigger for the stock market.

Take the bond market’s word for it.  The bond market is saying the Fed is going to remain tight and seriously consider another rate hike in September. The reasons why markets crash in October during recession is that the fourth quarter is when companies realize that there’s no soft landing and they need to guide down.

The Federal Reserve has set the table for a major event in the U.S. stock market and the credit market. We’re short high-yield and junk bonds through two ETFs: iShares iBoxx $ High Yield Corporate Bond
and SPDR Bloomberg High Yield Bond
 On the equity side the best thing is to short the cyclicals; I would short the Russell 2000

MarketWatch: What’s your advice to stock investors right now about how to reposition their portfolios?

McCullough: Own what the “Mother of All Bubbles” crowd doesn’t. The things we’re most bullish on include gold
 The Fed is going to keep short term rates high and both the 10 year and 30 year go lower. Gold trades with real interest rates. I think gold can go a lot higher, towards 2,150. Our ETF for gold is SPDR Gold Shares

Also, you can be long equities and not take on the heart-attack risk that is the U.S. stock market. I’m long Japanese equities — ETFs for this include iShares MSCI Japan
and iShares MSCI Japan Small-Cap

We’re long India with iShares MSCI India
and iShares MSCI India Small-Cap
Both Japan and India are accelerating economically. Were also long Brazil iShares MSCI Brazil
which is weighted to energy. We are bullish on energy. 

MarketWatch: Clearly accelerating inflation and slowing economic growth is an unhealthy combination for both investors and consumers.

McCullough: What I’m looking for, with inflation reaccelerating, is stagflation.

Stagflation pays the rich and punishes the poor. You want to be the landlord. The prices of things people own are going to go up, and the prices of things you need to live are also going to go up. So for example, we are long energy, uranium and timber as stagflation plays. ETFs we’re using for that include Energy Select Sector SPDR
Global X Uranium
and iShares Global Timber & Forestry

One positive thing that happens from stagflation is that because it’s so hard to find real consumption growth, there’s a premium on the growth you can find.

If there is something that actually accelerates, then those stocks will work, which puts a nice premium on stock picking. You can be long anything that is accelerating because so many things are decelerating. So avoid U.S. consumer, retailers, industrials and financials, which are all decelerating. Health care is our favorite sector, which we own through the ETFs Simplify Health Care
and SPDR S&P Health Care Equipment

Instead, people are betting we’re going to go back to some crazy AI-led growth environment. Now everyone thinks everything is AI and rainbows and puppy dogs. I’m old enough to remember we were in a banking crisis in March. From an intermediate- to longer-term perspective, I don’t know why you wouldn’t want to protect yourself until this inflation cycle plays out.

Also read: Jackson Hole: Fed’s Powell could join rather than fight bond vigilantes as yields surge

More: Will August’s stock-market stumble turn into a rout? Here’s what to watch, says Fundstrat’s Tom Lee.

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‘We don’t need a public holiday, we need more funding’: Politicians urged to match Matildas’ fervour with funding

Prime Minister Anthony Albanese has told the Australian public to “watch this space” when it comes to more funding for women’s sport in the wake of the Matildas’ World Cup successes.

With much of the country swept up in football fever, pressure has been mounting on politicians to match platitudes with investment in the sport.

“We don’t need a public holiday, we need more funding,” Fitzroy Lions soccer coach Hayley Truskewycz told ABC’s Oliver Gordon for AM.

“We in fact have a waiting list, and we can’t find enough coaches. And we don’t have enough grounds, so we’re restricted by our resources and our facilities.”


Opposition Leader Peter Dutton this week pledged $250 million for grassroots women’s sport if the coalition wins government.

He wants the states to match that figure, bringing it to $500 million.

“We’ve still got young girls who are going to soccer games getting changed in the car or in the car park, which is completely unacceptable,” he told Today.

But Prime Minister Anthony Albanese slammed the opposition’s credentials on funding women’s grassroots sports, pointing to the Morrison government’s sports rorts scandal.

“He sat in a cabinet that provided women’s sports programs to clubs that didn’t have women’s teams,” Mr Albanese told Sky News.

“Watch this space. We’ve been considering issues of sporting infrastructure and these issues for a long period of time.

“We’ll make an announcement at an appropriate time.”

Prime Minister Anthony Albanese attended the Matildas v Lionesses semifinal.

Matildas captain Sam Kerr highlighted the call for more funding after the team’s loss to England’s Lionesses.

“We need funding in our development. We need funding in our grassroots. We need funding. We need funding everywhere,” she said.

“The comparison to other sports isn’t really good enough. And hopefully, this tournament changes that because that’s the legacy you leave — not what you do on the pitch. The legacy is what you do off the pitch.”

Chloe Logarzo, who plays for Western United in the A-League and competed with the Matildas in the last World Cup, said investment was needed in stadiums and training facilities from governments and sponsors. 

“We need people to be able to come to the games and help support us, because we don’t just want to let what happened in this last month slip away, we want to be able to capitalise on it,” she told ABC News 24. 

“Imagine what it could be like if we had the right investment, and where the national team could go — maybe win a World Cup and have an Olympic gold medal.”

Women earning a quarter of men’s World Cup prize money

Disparities between the men’s and women’s game are stark.

The men’s World Cup prize pool was $US440 million ($686 million). The women’s World Cup prize pool is a quarter of that, at $US110 million.

Sam Kerr running with hand in a fist.

Sam Kerr has joined the call for more funding for women’s soccer.(AP: Tertius Pickard)

In the Australian A-League, women are contracted for 35 weeks a year, compared to 52 weeks for men, giving female athletes a smaller pay packet.

Central Coast Mariners goalkeeper Sarah Langman told 7.30 she was not paid for her first season playing with the A-League, and was paid just $1,200 in her second season. The minimum wage for players will be $25,000 for the upcoming season.

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Jordan’s connection with his horse is like ‘father and son’. But his hopes of showing it off are hanging in the balance

Jordan Hill describes his connection with his horse as “like father and son”.

When he’s riding “Spidey”, any stress and frustration fades away, leaving the equestrian rider with a grin from ear to ear.

It’s a similar smile to the one Jordan gets when he describes his excitement at the idea of the Special Olympics World Games — described as the world’s largest inclusive sporting event — coming to Australia in 2027.

“I really, really want it to come here because I really want to compete … [in front of] all my friends and my family and my girlfriend as well,” he said.

Perth had been in the box seat to host the games, winning the early approval of international organisers to bring together thousands of athletes from across Australia and the world.

Equestrian athlete Jordan Hill says he will be devastated if the event is not held in Perth. (ABC News: Keane Bourke )

But those hopes now hang in the balance with growing uncertainty about whether the games will get the government support they need to go ahead.

Time running out on host bid

Organisers had been hoping for around $95 million of government funding, with $45 million from the federal government and $25 million each from state and local governments.

It was also proposed that the state government would cover the costs of allowing the event to be held at state-owned venues like Perth Stadium, without the need to build any new infrastructure.

“That has been agreed at various points in time, and certainly the deputy premier at the time, now Premier [Roger Cook] has been supportive of that,” organising committee chair Tanya Brown said.

A lady with long light brown hair wears a white jacket and is pictured in front of a photo of Perth Stadium

Perth 2027 committee chair Tanya Brown said the event would deliver a big economic return to WA. (ABC News: Keane Bourke)

But so far, no level of government has committed to funding the games, also leaving potential partnerships with dozens of companies in doubt.

Special Olympics’ governing body needs funding agreements to be resolved before the end of the month, or Australia could miss out.

Ms Brown says with other cities already lining up to host the games, 2027 is Australia’s only opportunity in the foreseeable future.

Jordan said he would be “a bit devastated” if that’s what happened.

WA government priorities elsewhere

Australia losing its chance has become more likely in recent days, with Mr Cook ruling out spending any government funds on the event at a press conference announcing Perth would host a series of Rugby 7’s games.

“In 23/24 we will spend $1.3 billion on disability services for Western Australians and that’s our focus,” he said.

A man in a suit with a yellow and gold scarf speaks.

Roger Cook has knocked back organisers’ hopes for state funding. (ABC News: James Carmody)

“Particularly as we’re starting to bed down the NDIS and as part of the review we think it’s important to focus upon disability services rather than these large celebrations.

“Our focus at the moment is on disability services in Western Australia, utilising taxpayers’ funds to make sure we support those people with a disability to lead rich, rewarding lives.”

A state government spokesperson said there were also “questions” about the event’s price tag.

But Ms Brown said the NDIS was a completely separate issue.

“There’s no assurance of where that money lands and there’s no commitment to people with intellectual disability,” she said.

“NDIS doesn’t really have anything to do with Special Olympics.

“Special Olympics is about ending discrimination against people with intellectual disability.”

Jordan says he has a special bond with his horse ‘Spidey’. (ABC News: Keane Bourke)

Funding limbo

At the same press conference, Mr Cook said both the federal government and the City of Perth had also declined to fund the event.

But Ms Brown later told ABC Radio Perth she was yet to have formal responses from any level of government, including the state.

A Commonwealth spokesperson only said the government was “aware of Special Olympics Australia’s interest” in bidding for the Perth Games.

“The government considers proposals for support to host major sporting events in Australia as part of budget processes,” they said.

“The government remains committed to delivering a green and gold decade of major sporting events that will create significant socio-economic benefits for all Australians.”

City of Perth Lord Mayor Basil Zempilas said it was disappointing the event might not go ahead, but that any funding from the city would need to go through council processes.

The Lord Mayor wears a navy suit jacket and pink tie

Perth Lord Mayor Basil Zempilas says he supports the games, but understands concerns about the cost.  (ABC News: Keane Bourke)

“These big events are always incumbent on receiving state and federal government funding,” he said.

“But would the City of Perth [have] considered a financial contribution to the levels which our ratepayers could support? Absolutely, because it’s such a good event that would have brought so many people to Perth.”

A return on investment

The most recent World Games, held earlier this year in Berlin, attracted around 7,000 athletes and 23,000 supporters and coaches from 190 countries, according to Special Olympics.

Fireworks burst in the sky over a big German monument, as crowds gather with a big screen in the background.

Thousands of Special Olympics athletes from around the world descended on Berlin in June. (AP: dpa/Jean-Marc Wiesner)

Plans for Australia’s version estimated it could bring in as many as 19,350 international visitors, and another 7,650 from interstate.

Analysis of the plans prepared by EY in late 2021 estimated the cost of the event at $136 million but projected it would result in $212 million of economic benefits – or a return of $1.56 for every dollar spent.

That included $86 million of tourism spend before, during and after the event, as well as an estimated $40 million benefit to the health system by avoiding “inactivity of previously inactive participants and inspired spectators” over a 10-year period.

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How the Hobart stadium spend is a game-changer in Australian sport

On a bracing Hobart morning in autumn, many Tasmanians were greeted with the news that they had been waiting years to hear.

On the cusp of delivering his government’s second budget, Prime Minister Anthony Albanese has committed $240 million to building a stadium at Hobart’s Macquarie Point site, pending the AFL granting Tasmania a licence for a league team.

“The Commonwealth will be providing, in the budget in 10 days time, $240 million of funding for this site and $65 million for the upgrade of UTAS stadium in Launceston as well,” Mr Albanese stated.

“We want to make sure that the benefits of having an AFL team based here in Tasmania means that they can play both in Hobart and in Launceston, as well to develop to deliver the economic benefits for the whole state of Tasmania.”

The $240m promised is a historic figure, the largest a federal government has ever promised to spend on a football stadium.

The budget promise ticked off the last of 12 “workstreams” the AFL articulated for the entry of a standalone Tasmanian team into the AFL competitions.

It is expected in the coming days that the 18 AFL club presidents will vote to grant Tasmania the 19th AFL licence.

The proposed Tasmanian stadium spending adds to the billions of dollars spent on football stadiums across the country in recent years.

Importantly, the spend on the new Hobart stadium breaks new ground for federal government involvement in spending on football stadiums in Australia.

The spending on Macquarie Point may change the relationship between governments and spending on major sporting infrastructure.

Size of the spend

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‘I am concerned’: Emails from Tasmanian premier to AFL boss show strains before funding offer increased

The AFL squeezed an additional $54 million out of the Tasmanian government for a new state team, despite the premier initially arguing extra funding would “compromise sound economic governance”, right to information documents reveal.

The series of emails — dated between June 7 and November 17 last year — appear to show the relationship between AFL chief executive Gillon McLachlan and Tasmanian Premier Jeremy Rockliff becoming increasingly tense, as the pair negotiate the state’s funding contribution to a new team.

The emails show the premier’s correspondence but do not include responses from Mr McLachlan.

In May last year, the Tasmanian government made an offer to the AFL of $10 million per year for 10 years, plus an additional $50 million to cover the team’s establishment costs.

On June 7, Mr Rockliff met with Gillon McLachlan in Hobart to discuss that offer further and sent a letter to all 18 existing club presidents asking them to support Tasmania’s funding proposal, describing it as “well above what has been acceptable to the AFL for new teams in the recent past”.

Following that meeting, Mr McLachlan described the funding offer to the media as “a good start”.

Macquarie Point has been chosen as the site of a yet-to-be-funded AFL stadium in Hobart.()

More than a month later, on July 23, Mr Rockliff sent an email to Mr McLachlan saying the offer had not changed, calling it “fair and strong” and at the high end of the range outlined in the report compiled by former Geelong president Colin Carter on the establishment of a 19th AFL team.

The report had recommended state funding of between $7-11 million per year.

Premier to Mr McLachlan, July 23:

…No expansion club has ever come near replicating an offer like this, and while there is value because the state will derive a return, I will be clear that our government will withdraw its offer if the AFL doesn’t respect its magnitude.

In the email, Mr Rockliff also referred to state’s need to contribute funding to a new purpose-built AFL stadium, which the AFL had outlined the need for in its business case for a Tasmanian team.

…The government has made it publicly clear that we will not fully fund a stadium, and in fact we will draw a line under a maximum contribution of up to 50 per cent, delivered on a site and at a cost that is acceptable to Tasmanians.

This is a decision for the State of Tasmania, not the AFL.

Premier ‘concerned’ by AFL’s ‘latest requirements’

A month later, Mr McLachlan sent an email to Mr Rockliff which is not included in right to information release. However, it includes a cover letter that describes it as including “the key elements of the proposed partnership between the AFL and Tasmanian Government for a 19th AFL licence”.

While it is not clear exactly what the AFL CEO considered the “key elements” for a deal to be, the premier appears to have been unimpressed. A week later, he wrote back:

Premier to Mr McLachlan, August 29:

…I am concerned that the latest AFL requirements compromise current community expectations, sound economic governance and ultimately the sustainability of the club.

Achieving a common objective … will require further substantive engagement between our respective teams that is both socially responsible and mutually beneficial.

In respect of timelines and having only received the response to our May offer last week, I believe this engagement should be expedited as a matter of priority.

But less than a month later, on September 14, Mr Rockliff sent another email to Mr McLachlan, saying Tasmania had now upped its offer to $10 million per year for 15 years.

Mr Rockliff said this upgraded offer came following a “shift in the economic environment and the increase in forecast operating costs for a Tasmanian team since the formulation of the taskforce’s business case”.

He also stressed that Mr McLachlan did not have free rein to speak for Tasmania when talking with other club presidents.

“I must also reiterate that any information going to club presidents that represents Tasmania’s position and interests in regard to the Tasmanian team bid, must first be approved by me,” Mr Rockliff wrote.

He ended the letter with:

Premier to Mr McLachlan, September 14:

My very strong view is that the government’s commitment … underpins a case that cannot be refused by any fair minded person, particularly anyone that has the best interests of the code at heart.

I look forward to your response to the above.

The stadium will only become a reality if the federal government commits funding to it, with a decision expected in next month’s federal budget.()

That revised offer was presented to the AFL club presidents, again calling for their support.

A week later, the Tasmanian government announced that the taxpayer contribution to the team has been revised to $144 million over 12 years, plus $60 million to establish a high-performance complex in Hobart.

That equates to an increase of $44 million for yearly funding since the initial offer plus an additional $10 million in establishment costs.

Concept designs and a “cost plan” for the “AFL Team High Performance Training and Administration Facility” were attached to an email to Mr McLachlan on August 11 but those documents were not available in the freedom of information document release. 

The government had initially hoped a vote by the club presidents on whether to offer Tasmania a 19th licence would take place in August last year, and continually stressed the need for the AFL to agree on a funding deal so the clubs had a proposal to vote on.

However, the funding of the Hobart stadium has become a sticking point.

While the Tasmanian government is willing to contribute $375 million, it will need substantial federal investment to get the project off the ground.

While the state is hoping funding will be provided in the May federal budget, no pre-funding announcement has been made, and it appears the AFL would not take the Tasmanian team bid to the club presidents until they feel assured the stadium will be built.


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Submissions to Senate concussion inquiry call for national registry, more research, consistent guidelines

Australia’s peak body for general practice has called for government investment to tackle the issue of concussion in sport, including research funding, bigger Medicare rebates for longer consults and the establishment of an Australia-wide concussion registry. 

The Royal Australian College of General Practitioners (RACGP) is one of a number of groups and individuals to put in submissions to a Senate committee inquiry into the impact of concussion and head trauma in contact sports.

The RACGP said the current lack of consistent definitions for concussion was resulting in confusion and an inconsistent approach to treatment and management of concussion, while differences in protocols between sports were adding to the problem.

RACGP national president Dr Nicole Higgins said there was insufficient evidence to fully understand and determine the long-term impacts of concussion and head trauma, and that significant research was needed. 

“We need a national approach to management of concussion, with evidence-based guidelines across all sports and codes, ” Dr Higgins said.

“It’s also important that all sports — and across all states and nationally — there’s a commitment to management and reporting to ensure we have the data available.”

The latest international Consensus Statement on Concussion in Sport is due to be handed down later this year.

Dr Higgins said she hoped the release would allow a consistent definition of concussion.

The RACGP’s submission said the development of an Australia-wide concussion registry would provide a valuable source of data to determine long-term impacts of concussion and repeated head trauma.

The submission said GPs play a vital role in monitoring and managing prolonged concussion symptoms, such as post-concussion syndrome and suspected chronic traumatic encephalopathy (CTE).

“Applying a 10 per cent increase to Medicare rebates for longer consultations and introducing a new 60-minute-plus consultation Medicare item would make a real difference for GPs and practice teams managing these complex health issues.”

Other submissions received by the committee include:

Sydney-based neurologist Dr Rowena Mobbs said in her submission that the community had “turned a blind eye to systematic concussion”.

“The absence of mandatory reporting on concussion, neurological care after concussion, and stories of returning to the field too early are harrowing,” Dr Mobbs said.

“Furthermore, the dearth of meaningful, fully independent, and appropriately funded research has represented a dark chapter in Australian sport.”

Among her recommendations were:

  • Federal government funding for longitudinal research on patients with existing symptoms of CTE
  • The federal government to mandate a code of conduct for sports organisations including a public register of suspected and confirmed player concussions, funding independent neurological player assessments after concussion, and establishing sub-specialist concussion and CTE clinics for at-risk athletes

Insurance for long-term injuries ‘inadequate and inequitable’    

Monash University law academic Dr Eric Windholz said existing insurance arrangements for long-term injuries from concussions and repeated head trauma in contact sports were inadequate, inequitable and in some cases may operate in breach of worker’s compensation laws.

Dr Windholz said injury payment schemes had maximum payment periods and ceased on the expiry of players’ contracts.

He said state and territory workers’ compensation schemes had exemptions for professional players, but that the arguments for the exemptions were “redundant in a world in which sport has been corporatised and commercialised”.

Support ‘basically non-existent’ says former Australian Rules player 

Retired Queensland Australian Rules player Lydia Pingel called for accountability for sporting clubs and organisations to ensure they took protocols and guidelines seriously.

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