Thoughtful Money with Adam Taggart
Thoughtful Money with Adam Taggart

False Breakout? Or Is A Wave Of New Market Highs Ahead? | Michael Lebowitz

August 8, 2026

AI Summary

5 min read

In this week's market recap, Michael Lebowitz fills in for Lance Roberts and walks through a surprisingly busy week beneath a surface that looks calm. The big story is the July payrolls report, which missed expectations by a wide margin and sent a clear signal that the labor market is weaker than the headlines suggest. But that is just one piece of a larger puzzle that also includes rising bond yields, a massive leveraged blowup in the AI trade, and the quiet return of a market rotation that has already rewarded disciplined portfolio management.

The payrolls miss and what it means for the Fed

The July payrolls report came in as a "five sigma miss" — meaning almost nobody had a drop of that size on their forecast. The number was roughly 23,000 jobs below expectations. The unemployment rate fell from 4.2% to 4.1%, but for a troubling reason: the participation rate dropped. As Lebowitz explains, that means people who were in the workforce last month are no longer looking. "There's a lot of frustrated people that are just giving up on looking for jobs," he says. The previous months' numbers were also revised downward, continuing a pattern that suggests the labor market is not as healthy as it has been sold to be.

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What you'll learn

  • 1 (00:57) **Payrolls Miss and Market Reaction** - Adam and Michael discuss the disappointing July payrolls report, a five-sigma miss that sent bond yields lower and precious metals higher.
  • 2 (07:42) **Fed Hike Odds and the Disinflation Case** - The payrolls miss has dramatically lowered the probability of a Fed rate hike at the September meeting, though Michael cautions that one more CPI and jobs report are due before the decision.
  • 3 (12:02) **Lacy Hunt's Secular Inflation Thesis** - Michael previews his upcoming article analyzing Lacy Hunt's recent shift from deflationist to predicting secular inflation, framing it as a potential macroeconomic regime change.
  • 4 (16:31) **Oil's Role in Near-Term Inflation** - Michael explains why he is not overly worried about oil-driven inflation, arguing that the Iran-driven spike is an "event-driven" and likely transitory factor.
  • 5 (22:54) **Bond Yields: Supply, Japan, and Sentiment** - Michael dissects the forces pushing bond yields higher, arguing that the move is driven by sentiment and term premium, not by inflation or inflation expectations.
  • 6 (32:38) **Crowding Out and Corporate Financing** - Michael explains that the "crowding out" pressure on bond yields from corporate debt issuance may be self-limiting, as companies have other financing options.
  • 7 (37:18) **Stock Market Breakout: False or Real?** - Michael analyzes the S&P 500's recent breakout to new all-time highs, questioning whether it is a durable move or a false breakout like the one seen in late June.

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Guests on this episode

Michael Lebowitz

Show Notes

Stocks have recently ripped to new highs, after spending months in a trading range.Is this a sustainable breakout?Or a false one, as we saw back in June?Portfolio manager Michael Lebowitz discuss the odds, as well as the new surprise payroll numbers, his outlook for bond yields, as well as his firm's latest trades.For everything that mattered to markets this week, watch this Market Recap.

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