Recession Indicators Are Breaking. Inflation Isn’t | Megan Horneman on What Comes Next
Excess ReturnsJune 18, 202500:55:27

Recession Indicators Are Breaking. Inflation Isn’t | Megan Horneman on What Comes Next

In this episode of Excess Returns, we speak with Megan Horneman, Chief Investment Officer at Verdence Capital Advisors, about her firm’s 2025 outlook, “The Year of Fragile Optimism.” Megan shares her insights on consumer stress, inflation, tariffs, interest rates, valuation risks, and why she believes investors should avoid getting caught up in market narratives. We dive into each of her firm’s five key macro themes, with Megan providing thoughtful analysis on how investors should be thinking about portfolio positioning in an uncertain and highly concentrated market.

📌 Topics Covered:
• Why the consumer may be more fragile than it seems
• The danger of assuming inflation is behind us
• Why tariffs signal more than just economic friction
• The growing risks from ballooning national debt
• Why market valuations are setting a high bar for returns
• The case for international and small/mid-cap equities
• Fixed income positioning: where to avoid and where to look
• Opportunities (and cautions) in alternatives
• Why active management still matters
• The emotional mistakes investors must avoid

⏱️ Timestamps:
00:00 - Why credit card data reveals hidden consumer stress
02:00 - 2025 outlook: “The Year of Fragile Optimism”
05:20 - The inflation fight isn’t over
09:00 - The real message behind tariffs
13:00 - Tariffs, growth, and market volatility
15:00 - Constructing portfolios in uncertain times
20:00 - How to think about the national debt risk
24:00 - Why valuations are a concern again
28:00 - Small/mid-cap vs. Mag 7
30:30 - Growth vs. value: Megan’s case for balance
34:00 - The importance of international exposure
38:00 - Capital flight and US concentration risk
39:30 - Fed policy and the case for a cautious rate cut
42:00 - Do traditional recession indicators still work?
44:00 - Fixed income: risks, opportunities, and municipal bonds
48:30 - What to know before investing in alternatives
52:00 - Real assets and infrastructure in portfolios
53:00 - Active vs. passive: why Megan believes in active
54:40 - The one lesson every investor should learn
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