Jackson Hole Preview: Will Fed Tank Markets This Week? | Chance Finucane

Watch on YouTube ↗  |  August 21, 2025 at 16:04  |  41:02  |  The David Lin Report
Speakers
Chance Finucane — Chief Investment Officer of Oxbow Advisors
David Lin — Founder & Host, The David Lin Report / ex-Anchor, Kitco News

Summary

Chance Finucane, CIO of Oxbow Advisors, expects the Fed to deliver at most a modest September cut and warns that markets are overvalued and dangerously concentrated in AI/tech momentum. He favors diversified, high-quality portfolios with short-term Treasuries, energy, precious metals, and investment-grade corporate bonds while waiting for better equity entry points.

  • Market pullback is led by high-momentum AI/tech winners, but Oxbow views it as profit-taking rather than a change in the AI narrative.
  • Chance expects one September Fed cut at most if inflation stays near 3%, and sees further cuts as unlikely unless labor weakens.
  • He warns that S&P 500 valuations above 22x forward earnings could revert toward 16-18x, implying a possible 25-30% drawdown.
  • AI capex and data-center spending are a major overinvestment risk, with Meta's free cash flow pressure cited as a warning sign.
  • He is cautious on AI-related industrials, utilities, and momentum-factor exposure because they are priced for continued good news.
  • Oxbow maintains energy and precious-metals allocations, including gold miners, as long-term inflation and diversification hedges.
  • Income portfolios favor short-term Treasuries and short-term investment-grade corporates; equity portfolios focus on high-quality businesses with less volatility.
  • He prefers balanced sector exposure over concentrated S&P 500/Nasdaq 100 bets and is waiting for better entry points.
Ideas
Chance Finucane Chief Investment Officer of Oxbow Advisors 3:51
S&P overvalued; 25-30% drop possible.
The S&P 500 and Nasdaq 100 are now 40-50% weighted in their top 10 companies, all tied to the AI theme, while defensive sectors have shrunk from about 25% to 15% of the index despite stable earnings contribution. That leaves less ballast if the AI trade disappoints; he prefers balanced sector exposure.
SPY QQQ HIGH
Chance Finucane Chief Investment Officer of Oxbow Advisors 9:06
Rate cuts may lift 10-year yields.
A Fed rate cut with inflation near 3% could drive inflation higher and push long-term Treasury yields higher, as happened in Germany, the UK, and the US after prior cuts. A 10-year yield back toward 5% would pressure equity valuations and could cause a stock drawdown.
10-year US Treasury yield MED
Chance Finucane Chief Investment Officer of Oxbow Advisors 21:45
Momentum factor due for mean reversion.
Momentum has outperformed other factors for years, but factors tend to mean-revert; he expects momentum to pull back toward its long-run average, especially in names that have risen by multiples in a year or two. The firm is not anti-momentum but does not want to chase it.
MTUM MED
Chance Finucane Chief Investment Officer of Oxbow Advisors 23:38
AI capex overinvestment risks valuations.
AI is a promising long-term trend, but data center capex is staggering and may be an overinvestment. Companies will need hundreds of billions in new revenue to justify spending, and declining free cash flow removes valuation support if the theme cracks. Current enthusiasm may not be the best entry point.
AIQ HIGH
Chance Finucane Chief Investment Officer of Oxbow Advisors 24:04
Meta FCF halving threatens valuation support.
Meta's free cash flow is projected to halve from 2024 to 2026 as AI capex rises, from $54B to $27B. A similar FCF cut in 2021-2022 coincided with a 75% share price drop; now the stock is higher, leaving less valuation support if the AI theme disappoints.
META MED
Chance Finucane Chief Investment Officer of Oxbow Advisors 27:44
AI supplier industrials and utilities overpriced.
AI-related industrial suppliers and utilities have been priced for all good news from the data center buildout. That spending will not last perpetually, and when the buildout cycles down these shares could see significant drawdowns; he would not touch the industrial AI plays at current valuations.
AI-related industrial companies UTILITIES HIGH
Chance Finucane Chief Investment Officer of Oxbow Advisors 33:19
Energy allocation offers value and yield.
They maintain about a 15% energy allocation in the high-income portfolio. Oil is rangebound around $55-80, but energy companies are solidly profitable, generate strong cash flow, pay good dividends, and trade about 5-10% below his fair value estimates; he sees it as a long-term diversifier with emerging-market demand and inflation exposure.
XLE HIGH
Chance Finucane Chief Investment Officer of Oxbow Advisors 35:43
Gold and silver favored on money printing.
They still like gold and silver and retain allocations to both. Continued money printing and accelerating money supply growth in developed economies should support precious metals over the long term, even though they have their own cycles.
GLD SILVER HIGH
Chance Finucane Chief Investment Officer of Oxbow Advisors 36:39
Gold miners cheap with strong cash flow.
Gold miners have improved management and are not overinvesting. With gold above $3,000, they are cheap on free cash flow, have started to outperform bullion, and could appreciate further or return more cash to shareholders if profits stay solid.
GDX MED
Chance Finucane Chief Investment Officer of Oxbow Advisors 38:54
Short-term Treasuries yield 4%, defensive.
Short-term Treasuries are the base of the income strategy, yielding about 4%, and half of the long-term growth stock portfolio is also held in short-term Treasuries to earn carry and protect against downside while waiting for better equity entries.
SHY HIGH
Chance Finucane Chief Investment Officer of Oxbow Advisors 39:11
Short-term IG corporates offer extra yield.
They see an opportunity in shorter-term investment-grade corporate bonds to earn a little more yield than short-term Treasuries without taking significant duration or credit risk.
VCSH MED
Chance Finucane Chief Investment Officer of Oxbow Advisors 39:22
High-quality stocks beat GDP with less risk.
The long-term growth stock portfolio is split 50/50 between high-quality businesses across 40 industries that can grow faster than 5% nominal GDP with less share-price volatility, aiming to participate in upside while protecting better on the downside.
High-quality stocks MED
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This The David Lin Report video, published August 21, 2025, features Chance Finucane discussing SPY, QQQ, 10-year US Treasury yield, MTUM, AIQ, META, AI-related industrial companies, UTILITIES, XLE, GLD, SILVER, GDX, SHY, VCSH, High-quality stocks. 12 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Chance Finucane  · Tickers: SPY, QQQ, 10-year US Treasury yield, MTUM, AIQ, META, AI-related industrial companies, UTILITIES, XLE, GLD, SILVER, GDX, SHY, VCSH, High-quality stocks