# Everyone’s Bearish… But Are They Wrong? w/ Caleb Franzen Source: https://www.youtube.com/watch?v=DXiQo9htHig Recap page: https://rapidrecap.app/video/DXiQo9htHig Generated: 2025-11-02T12:02:55.219+00:00 --- ## Quick Overview Caleb Franzen argues that despite recent market pullbacks, the underlying macro environment remains fundamentally bullish, evidenced by continued new all-time highs in small-cap growth stocks (IWO) and high-beta assets relative to low-volatility stocks (SPHB/SPLV), suggesting investors should remain net long and actively deploy capital into discounted risk assets rather than trying to time unpredictable events like political tweets. **Key Points:** - Small-cap growth stocks (IWO) and High Beta relative to Low Volatility (SPHB/SPLV) are making new all-time highs, signaling strong risk appetite. - The relative strength of IWO versus IWN (Small Cap Value) and SPHB/SPLV suggests a macro environment favoring growth and risk-on assets. - The ICE BofA US Corporate Index Option-Adjusted Spread (credit spreads) remains low relative to Treasury yields, which historically accompanies bull markets, not bear markets. - The divergence between the S&P 500 making higher highs and credit spreads not diverging significantly suggests the market has largely digested the recent volatility, unlike previous downturns. - Franzen is actively buying discounted stocks (e.g., semiconductors) that have pulled back 20% because the underlying trend supports continued upward momentum. - Investors should focus on technical analysis and asset allocation within the established uptrend rather than trying to predict unpredictable events like political tweets. - The current environment demands investors remain net long and take advantage of volatility dips to add risk assets, rather than trying to time market tops. ![Screenshot at 00:35: Caleb Franzen displays a chart showing the long-term upward trend of the Nasdaq 100 index, illustrating the sustained strength despite recent volatility.](https://ss.rapidrecap.app/screens/DXiQo9htHig/00-00-35.png) **Context:** This is an interview segment between John Gillen of Milk Road Macro and guest Caleb Franzen, a macro analyst, discussing the current state of the equity markets. The discussion centers on analyzing key intermarket relationships and technical charts (like the Nasdaq 100, IWO vs. IWN, and SPHB vs. SPLV) to determine if the recent market weakness is a true reversal or a healthy pullback within a larger bull market structure. ## Detailed Analysis Caleb Franzen asserts that the market is currently in a confirmed bull market uptrend, contradicting widespread bearish sentiment. He supports this by pointing to the relative strength of risk assets: Small-Cap Growth (IWO) and High Beta stocks (SPHB) are making new all-time highs relative to Small Cap Value (IWN) and Low Volatility stocks (SPLV), respectively. Furthermore, the ICE BofA US Corporate Option-Adjusted Spread (credit spreads) is not diverging negatively against the S&P 500, a divergence that historically precedes major market downturns. Franzen notes that while drawdowns have occurred, the market structure remains intact, unlike during the period leading into the 2022 downturn. He suggests that investors should not be trying to time unpredictable risks like political tweets but should instead be actively adding to positions, particularly in discounted areas like semiconductors, to benefit from the expected continued production of higher highs and higher lows in the broader market indices. ### Market Strength Indicators - Nasdaq 100 making new all-time highs - IWO/SPHB outperforming IWN/SPLV - High Beta vs. Low Volatility breaking out above a multi-year resistance zone. ### Credit Spread Analysis - ICE BofA US Corporate Index Option-Adjusted Spread remains low relative to Treasury yields, suggesting strong underlying risk appetite, a pattern typical of sustained uptrends. ### Historical Context - Previous major drawdowns (like late 2021/early 2022 and COVID) were preceded by significant divergences between market indices and credit spreads, which are currently absent. ### Investment Strategy - Franzen advocates for actively deploying capital into discounted risk assets (like semiconductors that pulled back 20%) rather than trying to time market tops based on unpredictable events or waiting for clear bearish confirmation. ![Screenshot at 00:35: Caleb Franzen displays a chart showing the long-term upward trend of the Nasdaq 100 index, illustrating the sustained strength despite recent volatility.](https://ss.rapidrecap.app/screens/DXiQo9htHig/00-00-35.png) ![Screenshot at 01:35: Chart comparing Growth \(VUG\) vs. Value \(VTV\) stocks, showing growth stocks making new all-time highs, confirming risk appetite.](https://ss.rapidrecap.app/screens/DXiQo9htHig/00-01-35.png) ![Screenshot at 01:39: Chart comparing High Beta \(SPHB\) vs. Low Volatility \(SPLV\), showing high beta outperforming and breaking resistance, indicating risk-on sentiment.](https://ss.rapidrecap.app/screens/DXiQo9htHig/00-01-39.png) ![Screenshot at 03:58: Chart showing the ratio of Russell 2000 Growth \(IWO\) vs. Russell 2000 Value \(IWN\) continuing its multi-year uptrend, confirming cyclical strength.](https://ss.rapidrecap.app/screens/DXiQo9htHig/00-03-58.png) ![Screenshot at 07:28: ICE BofA US Corporate Option-Adjusted Spread chart showing credit spreads remaining relatively low, indicating low perceived corporate default risk.](https://ss.rapidrecap.app/screens/DXiQo9htHig/00-07-28.png) ![Screenshot at 08:01: Overlay chart comparing the S&P 500 \(top, black\) and Credit Spreads \(bottom, blue\), highlighting that credit spreads did not show the same level of divergence seen before past major drawdowns.](https://ss.rapidrecap.app/screens/DXiQo9htHig/00-08-01.png)