The Compound
Never Pay Off Your Mortgage | Animal Spirits 436
10/29/2025, 1:00:02 PM
Economic Summary
- A breadth thrust after the April washout has coincided with very strong market rebounds, and historically six- and twelve-month returns following that signal have been overwhelmingly positive, implying momentum-driven gains (relevant to broad indices and tech).
- AI is likely to drive a cycle of layoffs disguised as automation, possible rehiring when automation underdelivers, and could produce a mild, CapEx-led recession tied to tech overinvestment (affects big tech employers and labor markets).
- Tariff pass-through estimates from Goldman suggest U.S. consumers will ultimately absorb a majority of tariff costs (projected 55% eventually; ~37% observed so far), implying upward price pressure and a consumer tax-like effect.
- Spending patterns show food away-from-home outpacing food-at-home, indicating persistent consumer preference for convenience despite higher prices and suggesting stickier inflation in services.
- Housing demand has not meaningfully picked up despite lower mortgage rates; mortgage purchase applications fell and many metros show year-over-year home price declines, implying price adjustments rather than a rate-driven boom.
- Private markets are being pushed into retirement vehicles (401(k)s) with material flows reported by large managers, indicating institutional appetite for private credit/assets even if retail advisor demand is limited.
Bullish
- Breadth thrust off April washout historically precedes strong six- and twelve-month returns.
- JP Morgan enabling BTC/ETH as collateral deepens institutional crypto adoption.
- Tech's rapid rebound shows powerful momentum and rotational leadership.
- Record private-asset flows (e.g., Blackstone) show continued institutional demand.
Bearish
- Narrow leadership with few stocks outperforming raises bubble concerns and fragility.
- AI-driven layoffs could cause prolonged labor disruption and rehiring reversals.
- Tariffs act like a hidden consumer tax and may push costs onto households.
- Housing price declines in many metros and weak mortgage purchase activity signal softness.
- Cryptocurrency proxy stocks (e.g., MicroStrategy) underperforming their underlying assets.
Bullish tickers
BTCETHJPMMSBX
Bearish tickers
SFIXMSTRETHZILLAPTON
JPM
Bullish
Plans to accept Bitcoin and Ether as loan collateral deepen institutional crypto access and signal mainstream adoption.
Bearish
Greater crypto integration could raise operational and regulatory risks; lending against volatile assets can amplify shocks.
BTC
Bullish
Institutional acceptance (JPM collateral plans, Morgan Stanley access) supports broader adoption and utility.
Bearish
Volatility and regulatory headlines can depress crypto-linked equities and cause speculative unwind.
ETH
Bullish
Acceptance as acceptable collateral and platform integrations point to growing institutional usage.
Bearish
Like BTC, Ether faces volatility and contagion risk when used as collateral by financial institutions.
SFIX
Bullish
Product innovations (AI styling features) may improve customer experience and long-term engagement if monetized.
Bearish
Stock has cratered (~90% from highs); CEO departure and meme volatility highlight execution and sentiment risks.
MSTR
Bullish
Continued Bitcoin appreciation could eventually support upside given the company’s BTC exposure if that narrative returns.
Bearish
MicroStrategy’s stock has lagged Bitcoin gains and shows a depressed ratio to BTC, reflecting investor skepticism of its crypto-playbook.
ETHZILLA
Bullish
No credible bullish case presented; initial enthusiasm briefly drove price before fundamentals reasserted themselves.
Bearish
Example of firms pivoting to crypto treasuries that spiked then collapsed; sold ETH to fund buybacks, showing risky treasury strategies.
PTON
Bullish
Past rallies illustrate how meme-driven interest and product momentum can create sharp upside, though unsustainable for many.
Bearish
Peloton cited as example of a stock that could crater after hype, underscoring cyclical and execution risks for growth names.
MS
Bullish
Morgan Stanley enabling crypto access on E-Trade highlights mainstream retail distribution, supporting adoption.
Bearish
Extending crypto access can invite new compliance and custody risks for retail channels.
BX
Bullish
Blackstone reporting record flows signals strong institutional demand for private credit and alternative assets.
Bearish
Private-asset allocations into retail channels could create liquidity and valuation mismatches for average investors.
People mentioned
MichaelBenRob AndersonNeil DuttaShanali BasakLance LambertBen CarlsonSam NeillMark ZuckerbergEmily BluntZac GalifianakisPatrickKobeGeorge