Trading Tomorrow - Navigating Trends in Capital Markets

Reruns and Revolutions in the Market Cycle

• Numerix • Season 5

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Markets in 2025 are testing investors’ ability to read a changing cycle. Between AI-driven innovation, shifting monetary policy, and new waves of economic nationalism, signals are mixed but momentum is building in unexpected areas.

In this episode, David Russell, the Global Head of Market Strategy, TradeStation, joins host Jim Jockle to discuss how today’s environment mirrors past inflection points, why AI and automation are widening their reach across sectors, and what indicators he’s watching most closely as 2026 approaches.

James (Host):

Welcome to Trading Tomorrow, Navigating Trends in Capital Markets, the podcast where we deep dive into technologies reshaping the world of capital markets. I'm your host, Jim Jockle, a veteran of the finance industry with a passion for the complexities of financial technologies and market trends. In each episode, we'll explore the cutting-edge trends, tools, and strategies driving today's financial landscapes and paving the way for the future. With the finance industry at a pivotal point, influenced by groundbreaking innovations, it's more crucial than ever to understand how these technological advancements interact with market dynamics. Markets are entering another period of transformation driven by automation, AI, and global change. But beyond the technology itself, the real story is how macroeconomic forces, sector trends, and investor sentiment are coming together to shape the market environment we see today. To help us make sense of this pivotal moment, we're joined by David Russell, global head of market strategy at TradeStation. David joined TradeStation in 2017. Prior to that, he was a senior manager at ETrade and previously worked at Bloomberg News and CNBC. With nearly two decades of experience as a financial journalist and strategist, David brings deep expertise across equities, fixed income derivatives, and emerging markets. A frequent voice in Bloomberg, Market Watch, and Reuters, David analyzes what's moving markets day-to-day from macro policy shifts and sector rotations to the behavioral patterns driving investor decision making. David, thank you for joining us and so nice to meet you. Great to meet you, Jim. Thank you. All right, well, why don't we just start with a pulse check? How would you describe the current state of the markets? And what are you watching most closely as we head into 2026?

David (Guest):

Well, I think that this year, 2025, um, we'll go down the record books for kind of drama and um changes of emotion and sentiment in a short period of time. Um as you look right now, I think it's important to kind of take a step back and realize that we started the year with kind of, I would say, at least a trio of positive catalysts. We were expecting an acceleration of earnings growth. We were expecting inflation to come down and interest rates to come down, and we were expecting tax cuts to pass. And then we got some of that, but in in you know, um instead of that, we got uh the whole negative catalyst of the of the trade war, and then also a slowdown of the labor market, which has been kind of interesting as well. So I think those things have kind of worked out and have created this obviously significant amount of volatility along the way. But now that we're kind of seeing is that um we're kind of um going back to those, well, we have been for the last few months, going back to those themes we had before. So AI is back, and it's almost like investors are kind of dancing with the, you know, the girl who brought into the dance or the guy who brought into the dance. That was how it started, and we're going back to that. And I think that is um the first thing that's really clear here. And what we're really seeing is that the AI trade is very much widening when you look at things like what's happening with companies like Oracle, a lot of industrial companies involved in it, and the way it's been spreading to all these other areas like data storage. I mean, this is a true secular trend. So I think in many ways, that is the dominant thing to realize in the market. People can look at the Fed and different things with interest rates, but ultimately, I mean, if the Fed is really hawkish or really, you know, dovish, that's one thing. But in an environment like this, in many ways, the fundamentals are what matter. We have a clear secular growth trend that's happening, maybe the most important one since the 90s, or maybe the most important one in a longer period of time. But that is a dominant underlying thing for investors right now. And um, so I think it's important to realize so that is so dominant that that has reasserted itself. Then you also have rate cuts coming back into focus, which is something that, you know, at a certain point in time, you know, we started a year ago expecting four cuts this year, and then it reduced, and people were nervous about that. And now we're looking toward the future and kind of seeing that improve. What's also interesting is that we now have this idea of some of this economic nationalism, which is creating a new kind of bullish narrative, a new kind of catalyst, like we're seeing in things like um in which happened with um you know with Intel, and there are other companies like this. So I'd say right now we're in an environment that um we have very accommodative policy from the Fed and expecting more, but in some ways it's really more important that kind of creates, or I would say, really augments that you know easy monetary policy is the fact that we also have um this enormous secular growth boom happening, which is kind of like you know, other booms in history, whether it was like the the rise of telecom or the the rise of automobiles, you know, things like that. We're talking something on that level of history.

James (Host):

Now you said the markets today remind you of the 1990s. Uh what parallels are you seeing, and and what, if anything, can investors learn from that past?

David (Guest):

Well, I think on one hand, you have an obvious similarity, which is we have a new technology. It's tech stocks, it's Nasdaq, and some of the same companies like Microsoft are still leading. Um and so I think that's obviously one clear thing. But the other thing is that we are recovering from a kind of bout of inflation. Um, so in many ways, everyone talks about the 90s being a tech era period, but in many ways, the boom started when the Fed stopped cutting, stopped raising interest rates, I believe, in 1995. And then the market basically went on a historic run when that happened. So in many ways, we had the inflationary bout from COVID that to varying degrees, you know, has been easing. And as we escape from that and we go from a period of a restrictive monetary policy to, you know, a Fed that's more dovish, that is also something that is similar to the 90s. Now, another thing that's interesting to me right now, and we've shared some um, I shared some charts. I don't know if you're able to see them or if the viewers will be able to see them. But if you look at the SP 500, um, and you look right what's been happening in many ways when the SP broke out in in 95, and when it broke out earlier this year, it barely pulls back. So you see is you see the the relative strength index, the while there's RSI is, you know, it goes up to overbought, and then it doesn't come back much below 50. It just stays between 50 and 75 or 80, and it doesn't have deep pullbacks, it stays consistently above kind of intermediate term trends like the 21-day exponential moving average. So you have these incredibly shallow pullbacks, and it's very similar if you look at the charts. 1995, this smooth run to the upside, and the way the market is today. Um, and so I think that's another similarity because I'm always looking at charts, um, you know, it's a kind of a market strategist. But the other thing that's similar is that we have a new generation of investors. I remember in the 1990s, you had baby boomers who were coming in, they had their 401ks, and that was a uh a novelty kind of at the time. It was a whole new um sort of um of element in the stock market. You had a new generation of investors, and in many ways, we now have another new generation of investors. COVID brought people online um into the market, got them interested, and a lot of them are staying. So I think in some ways, the 1987, October 1987 crash, it was interesting because I remember I was a teenager at the time, but I remember people thought we were gonna have another Great Depression, and it was just was brushed off. And in some ways, COVID is like that. And it kind of shows that when you have the earnings growth and you have the economic fundamentals in place, you can you can move past these sort of challenges. In many ways, those sell-offs that don't turn into a crisis are actually what build the bull market. And um, and I so in those ways it's it's similar to me. I think COVID and the recovery from COVID um really kind of created you know millions of new investors.

James (Host):

For me, I when I think back to the 90s, uh, you know, the the one organization that stood out is pets.com, right? I it was kind of coming down and uh and and being almost uh you know the the fall guy for for the dot com bubble. Uh uh are are you concerned concerned about any pets.com out there right now.

David (Guest):

Well, if memory serves correct correctly, pets.com went public, I think, in 2000. So there was a lot before that. And if you look back at Microsoft, Cisco, Oracle, a lot of these Intel, I mean, they had already gone up, you know, several thousand percent in the preceding five to eight years. So I think um we have not yet reached that point when it doesn't make any sense. And I think you know, the internet started, you know, in some ways in the late 80s, early 90s, um, on a base level, it became mainstream in the mid-90s, and then the froth came five five to six years later. So I think in some ways, you know, we are now still relatively early, and there's obviously always gonna be companies that promote themselves as like an AI thing that's not really real and things. But this does not yet, to me, have that kind of sense of um of frothiness. Um, a lot of the companies may trade at high multiples, but the the underlying situation is that most people are not really using AI now. I remember in like 1994, you could walk into an office and a lot of people still had typewriters. And there was a lot of movement that had to happen where everybody ended up having PCs. And so I think we're at a spot now where, yeah, we know about AI, but there's a lot of things that are not being done with AI that in five years will be done with AI. And as we go from point A to point B, that is where the money is made, and that is where we are right now, I think, in the cycle.

James (Host):

So we're starting to see AI and automation shape how trades are executed. And you know, when I think back to my first job, there were still a lot of typewriters around. But, you know, when trades are, you know, we're seeing how trades are executed slightly differently and information flows, but also how investors are starting to react. Um, you know, how much of today's market behavior do you think is driven by new technologies versus just traditional fundamentals?

David (Guest):

I wouldn't separate the two um myself because um fundamentals always drive markets. 100 years ago you'd read a newspaper, um, 30 years ago you'd watch CNBC, 10 years ago you'd maybe read Twitter, and now you talk to ChatGPT. But it's all the same fundamentals that you're getting. So I think sometimes people over-emphasize how change changes how new technology changes the market. The market itself has existed and gone through cycles if you look going back to the 1800s. Um, in some ways, um, I think it's important to realize that you have fundamentals, you have companies doing well or not doing well, you have economic cycles. Um, so that I think isn't just important to realize because um to me that I I I wouldn't separate that. Now, at the same time, there is definitely an impact. So I think right now, in terms of the ways that AI is impacting trading, um, on the first hand, it's making it a lot easier for people to understand what is going on in the market. Um, what I've been using it for is I've been using it when you will find stocks that are doing things, and I can quickly go through and look on um, you know, the ability to find stuff across news and then to also find relationships and to explain events and to understand stocks quickly. So for me, it's really important from it from a trader's perspective. Now, it's also just beginning to impact, I think, how trades are done now at TradeStation. We have been starting to work with something called the model context protocol, which is MCP. And what this is this is basically um a tool that is not an AI thing itself. What it is is it is um a service that can be given to an API so that the API can then make more informed, can generate more informed output and context content for people. So for example, um it can pass information about a company, a person might be interested in trading a certain company, and um the the MCP can pass it information about the company's performance, uh, you know, when its earnings are. And in many ways, what I have found with AI is that when you ask it something, it can really make mistakes. If you say, you know, is this a good uh stock? It'll say all kinds of random stuff. But you say this stock is going up, why is it doing well? Then the model can work. So in some ways, it's not just a question of um of using AI, it's a question of using like more primitive technology to point AI in the right direction. So I think this MCP is gonna be an important thing, and um it's something we're just starting. And I think it's gonna be interesting because kind of as the year goes on, I think by the end of the year, we're gonna start to see some of it trickling out um in different ways. Um for me, MCP is kind of like um when you know, USB, we just take for granted a USB port or Wi-Fi protocol. You can build a piece of hardware now, and oh, Wi-Fi just exists. But that had to be standardized. And when you look in many ways, the thing that leads to innovation is the standardization that comes first. It's like Henry Ford. When you standardize, you democratize. And um, that is what MCP is going to allow so that people can build AI tools and they can become mass-used products. So um I think in some ways that is the thing to focus on. And it will start in some ways with incremental applications and then suddenly really big, important um um applications as well.

James (Host):

Yeah, it's funny you the way you talk about people consuming information. There's one guy on my train in the morning, he still has a paper copy of the Wall Street Journal. If you're over 50, you look at him with nostalgia, and if you're under 30, he just gets a lot of side eyes. So um, but you know, when you look across sectors, you know, where where are you seeing leadership or momentum that tells you how investors are positioning for this next phase of the cycle?

David (Guest):

Well, um I think that um we're at a spot now where the obvious thing is the application of AI, and then um it has now expanded, I think, to like a lot of these kind of hardware areas, um the areas that are continuing to build the data centers. And some of that's what we saw recently. We saw this huge move in some of the companies like Micron and Seagate to provide um the um you know the memory that goes into it. Just today, the applied digital APLD had this strong report that emphasizes hardware side of things. So, from my view, that is something where they have run, but it continues to be something where when we look out into the future, that is an area that people are returning to. And I think it's important also to realize that because of things like sovereign AI and this whole idea of economic nationalism, you actually have a pretty significant um kind of set of um of users out there. All countries, maybe not all countries, but a lot of countries are going to be investing billions of dollars in different kinds of data centers and things. So that hardware side, I think, remains very much in effect. And obviously, names like NVIDIA remain um relevant there. Um, as I look at the some other areas that I think are kind of um interesting, is that what we're seeing like areas like defense, new kinds of defense companies, the military companies that make things like drones. This is now emerging, I think, as a very new area. And so I think it's interesting to look when you look at some of the things that have actually happened in the war right now in Ukraine. There have been novel uses of drones by both sides that the United States has not been involved in. And right now, in some ways, militarily, the United States will have to play catch-up to some of these innovations that are happening there. And there's a handful of companies that have been active in that. Um, we're also seeing people seem to really be embracing the crypto as a sort of payment going into the future. There are a lot of crypto uh cryptocurrency companies that have been running recently, even with Bitcoin not going to new highs, which I think is um is pretty interesting. So, right now I think that people have this sense of there being um um the likelihood of interest rate cuts. Um, and it's kind of going back to the way things were before COVID, when we basically had an anemic job market, but an explosive innovation space. Back then it was things involving cloud computing, a lot of things with subscription software. I'm talking back like 2019, and that was very much the thing, and you had a kind of anemic GDP, and now the GDP numbers look strong, and I I'm not even sure how always how to interpret them because there's been a lot of moving pieces, but we don't have a particularly strong job market. We're expected to have a relatively weak consumer uh cycle going into the holidays. This year is going to have reportedly the weakest holiday hiring since 2009, I think. So we're looking at an environment that in some ways is cyclically not really strong, but it is strong innovation. So it in many ways focuses us back on the idea of growth, secular growth, innovation, and less of a sort of explosive cyclical economy. Now, it's important to realize that because coming out of COVID, we did have the explosive cyclical economy. We did have the things like the industrials and the airlines. We had the big uh stimulus plan that created significant investment in factories and a lot of industrial things that were in play. And I think a lot of those trades are now kind of fading, and people are coming back to the areas that um, like these innovative sort of areas. And we're seeing um also, for example, return to some of the software companies to do cybersecurity. These have lagged for months, and now they're just starting to show signs of breaking out again. So, from my view, you basically have a secular growth environment, and the strength is moving from one place to another. And from my view, now we're going back to actually something that's more purely growth, because a lot of what we've seen this year has not been just growth. It's been stuff like gold and those sort of trades. So, right now there's some interesting news with Trump and China that I haven't fully, you know, appreciated or, you know, kind of um digested yet. But if we look at where the trends were, you know, before we started talking or before a few hours ago on this Friday, um, you know, that those are the kind of um of trends people seem to have. The idea that we're more or less expecting two to three rate cuts in the next three to six months. And as long as we don't deviate radically from that, um then people are not going to be terribly worried about monetary policy. And um some other sort of areas in the market that have been also showing some new kind of growth include the rare earths area. Now, this is a an area that most people haven't thought about. We take things like batteries for granted, but there actually is um something there that is um important to focus on and that has become a national security issue, has become a major supply chain issue. And we are seeing a handful of companies involved in this niche really gain a lot of attention. Another area that is a niche area that seems like it has potential to get significantly larger is quantum computing, um, which uses quantum mechanics instead of traditional kind of semiconductors to do mathematical calculations for computation. Um, and this has a national security implication because it can be used theoretically to hack all kinds of security and cryptography. But this is also something when you look at the rise of AI and just the mass use of computing, this kind of technology is very likely to find wider applications and use cases. There's been about four to five companies that have been moving on this, and this is a trend that very well may continue going to the future. Another area that I've just seen has been various things involving space travel and satellites. Um, we seem to be at a spot now where rocket technology and other kinds of miniaturization and things have evolved to a point where this can now be done on a larger scale, and there's a handful of companies involved in that that have been really gaining attention. And then the other area I think is also a revival of nuclear energy and uranium. Um, there has been a revolution in terms of power generation because of AI. Um, we've seen utility companies that nobody cared about before become major outperformers because they have nuclear energy and striking deals directly with Amazon with uh Microsoft, for example. Um, so this kind of connection between power generation and data centers is very big. And there's a handful of companies involved in nuclear energy and uranium that have been really kind of coming back into focus. So when you look at things that are longer-term secular growth areas that maybe have that potential to last for several years into the future, um those all kind of stand out.

James (Host):

No, I think uh, David, you're absolutely right. A lot of a lot of the recent activities from a global perspective have brought some of those sectors onto the radar, whether it's the potential rare earth deal with uh Ukraine as part of uh some of the negotiations that are being talked about uh uh with uh between the the the White House and and and Russia, you know, clearly that's uh uh something that people haven't really thought about. When you talk about uh job growth or or stagnation at this particular point in time, do you but do you think we're starting to see some of um the AI trends uh in terms of uh uh employment uh and and taking away jobs starting to creep in, or are there other drivers at this particular moment in time?

David (Guest):

Well, there has been a degree of uncertainty because of trade policy that I think is is in is um has had an impact. Um what's interesting to me is that white-collar jobs have been kind of struggling for a while. We started to see, you know, even in Trump's first term, a kind of improvement in the lower end of the wage scale and kind of growing stagnation in the in the white-collar sort of area. And I think that has accelerated. Now, AI is very likely uh contributing to that. I'm not sure how much, um, but I think in some ways what it's done is it's simply created hiring freezes. No one wants to hire now unless you can, you know, you want to first try to have AI do a job before you actually buy hire a human. And so I think that AI, I'm not sure if it's causing job losses yet, but it is causing reluctance for people to hire. Um, and so what is interesting to me is that there are actually, it's very interesting if you look at companies that deliver market data and analytics, like Gartner and some other companies like that. They have really fallen recently. It's very interesting. So, from on one hand, these companies have white-collar workers as their customers. At the same time, they're basically the kind of white-collar information workers who are um, you know, um actually um that that that business is now easily more easy to um to use AI for. So, for example, if you want a lot of market intelligence or data or something, now you can ask ChatGPT and it can do a degree of analysis, a degree of research, a degree of data science, um, you can pull the pieces together, and in some ways, the kind of knowledge work um that that is the white-collar realm is now being kind of automated in a way that you know blue-collar jobs were automated decades ago. So I think that AI is flowing hiring, and um and at this point, in terms of actual job losses, um it it probably will have a degree of that. But in some ways, like with hiring, it doesn't have to result in layoffs. If you just stop hiring, it almost is the same thing as layoffs.

James (Host):

Thank you. That's a really interesting perspective. Um, you know, you we talked about the 1990s. Uh, are there any other historical periods that feel relevant to you right now?

David (Guest):

I think that you know there is the kind of risk of inflation, and I've looked at some of the comparisons to earlier periods. If you look like in the 1970s, there was this kind of pressure on the Fed, which actually started in the 1960s, and you also had at the same time um a lot of um you know a lot of um um uh fiscal spending because of the Vietnam War. Now, it's different this time. We're spending on different things, but we also have a significant kind of fiscal deficit situation. We have potential pressure on the Fed and some inflation that's somewhat entrenched. So as time, I mean, there are definitely parallels to the 1970s here. Um and I think that it doesn't fully apply, but I wanted to mention it because I kind of look at this and I say, is this a 1970s situation all over again? And the reason why not is look at oil. Oil is right now, I mean, it was down today and it has struggled. And right now we're in a spot in some ways where um we are we don't we have not yet really entered that commodity super cycle everyone wants to talk about. And I think ultimately here we're in a spot where um oil is not going to drive inflation. We don't have a situation um you know, like a war that causes inflation, you know, like something like the Vietnam War or something. And so I think that there are similarities. You look at the rally in gold, you look at the geopolitical sort of uncertainty, like those there were similar things in the 70s, but I don't think that in magnitude they are bad enough. And I also think that we're in a spot where um it technology itself has made oil production so much more efficient. I mean, a lot of technology a lot of um, you know, they use all kinds of advanced technologies now for exploring an oil, and it's allowed us to lower the cost of production. So in some ways, I think technology is winning in a way now that it wasn't winning in the 70s. So I wanted to look at that because I often think about where are we on the scale of the 1970s? And there's sometimes I think where we're like kind of at a 10 in terms of tracking it, and other times, and I think right now we're kind of moving back away from that. But to me, the 90s um in some ways are similar, but then also the period um I think of Trump's first term in the kind of Obama's kind of the end of Obama, when you basically had this hyper focus on growth investing. And um I think that growth has increasingly taken over the stock market. So I think um in the 90s, you still had major companies like GE and GM that were still very large. Now, when we really look, I mean, the tech and the growth names are completely eclipsing those. So I think in some ways, um the model of the Obama years, the second half of the Obama years, when you really saw the emergence of um of some of the major the idea of cloud computing, subscription software, that I think remains very much in effect. And if the geopolitical worries don't become dominant again, I think that's essentially the kind of world that we remain in.

James (Host):

And looking ahead, uh what signals or indicators are you watching most most closely as we approach 2026?

David (Guest):

Well, I think it's gonna be does um inflation come back? Do tariffs turn into inflation? Um, and this is just very hard to know how exactly it worked. It's hard to know what the tariffs even are gonna be. I think it's interesting is is that in theory, um, and I have no way of judging this, but in theory, in the first half of next year, the Supreme Court could throw out a bunch of these tariffs. So it's important to remember that oral arguments um start, I think, on November 5th, for the Supreme Court, the challenge of these tariffs. Um, that is um is something that could be very important. So I think that's something that we'll definitely be watching. And the other thing is that when you look at a lot of data, there is a lot of anecdotal evidence of tariffs coming through. Like when you look at the Institute for Supply Management and a lot of these different purchasing managers reports. And the question is is that if companies really believe that the tariffs are gonna be permanent, I think they'll come through to inflation. But they're gonna hold their breath and wait and hold back as long as possible until they know. And the Supreme Court could decide it. So I think in some ways, that's a really big thing. And it also creates, though, a wall of worry where there's a lot of people who are scared of inflation coming that never does. It's like the recession that never happens, the financial crisis that never happens, and as a result, you have a wall of worry. Um, so that the inflation story is going to remain really important. The other one is to a certain extent, how much does de-dollarization really become an issue? Um, we have seen a lot of evidence of it happening. China is trying to do um, you know, bonds, I think they're called panda bonds and things like that. And the United States has benefited from so long for us having the global reserve currency. Now, we can say that there's obviously central banks have moved away from the dollar to to an extent buying things like gold and stuff. The question is a seismic change of this nature does it really happen, or does you you just have some movement and then nothing else changes? Or if it really changes, how fast can it really happen? So I think um the the knock-on effects of de dollarization, um that's something we're gonna have to see. Does it really turn out that people aren't gonna want to finance our deficits anymore? Do people want to stop investing in American companies overseas? Do we see a more substantial kind of um um you know disengagement from the United States? So I think those are the things that are gonna be important to watch going into the coming months and stuff.

James (Host):

And finally, you know, if you step back and think about how investors can stay grounded through technology and macro change, you know, what what mindset or discipline tends to separate those who navigate volatility well from those who don't?

David (Guest):

Well, it's all about having like a strategy that's defined because a decision made quickly is usually made poorly. Um, and so one of the things that TradeStation was originally built around. Is the idea of defined strategies. It started all the way back in the 90s as an automated trading system for futures at a time when that was completely groundbreaking and it remains our DNA. So I think for people who are active traders who love to trade, ultimately you have to realize that you're part of a you're like a machine. You're in in a bigger system where you're waiting for certain things and you are obeying your strategy, you are obeying um your risk management. Um and you define that and you let things come to you. Um and so I think that um when it comes down to it, there's always things happening in the market like we see today. Um, and you don't want it to define you. You basically wait for those things and you act on it, whether you're bullish or you're bearish, you're not rattled by it. Um, you don't let fear govern how you react to things. Um and so I think TradeStation that is always in core to what we do, and it's really the kind of um of customers that we love to have.

James (Host):

So we've unfortunately made it to the final question of the podcast. Uh we call it the trend drop. Uh, it's like a desert island question. So, you know, if you could watch only one thing or track only one market trend over the next few years, what would that be? It would just be the NASDAQ. That's a great answer. Well, David, I want to thank you so much for your time, your insight, and uh I'd love to have you back uh uh uh in the future because uh this was great. Thank you. Thank you, Jim. Thanks so much for listening to today's episode. And if you're enjoying trading tomorrow, navigating trends in capital markets, be sure to like, subscribe, and share. And we'll see you next time.