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Posted July 1, 2026 at 12:12 pm
Markets may be climbing, but rising uncertainty around inflation, the jobs report and Federal Reserve policy could test investors in the weeks ahead. Scott Bauer of Prosper Trading Academy joins the IBKR Podcast to discuss the VIX, AI-driven stocks and market volatility.
The following is a summary of a live audio recording and may contain errors in spelling or grammar. Although IBKR has edited for clarity no material changes have been made.
Hey, everyone. This is Jeff Praissman for Interactive Brokers. It’s my pleasure to welcome back to the IBKR Studio Scott Bauer from Prosper Trading Academy. Hey, Scott. How are you?
Jeff, great to be here. Thanks. You?
Oh, I’m doing excellent. For our listeners, Scott is a frequent guest. He comes in every other Wednesday morning to discuss the market, and you can find more from Scott at prospertrading.com, as well as on our website, ibkr.com. Click on Education. There are lots of great podcasts, webinars, and articles. So, Scott, as we always do, we always kind of talk about the week before and the week ahead. Over the past several sessions, we’ve seen equities close out one of their strongest quarters since 2020, despite some intramonth volatility. How do you interpret this divergence between the short-term turbulence and the strong broader market performance?
I think when you take a more macro view and not the day-to-day, the market is looking ahead, as it always does, and saying, “You know what? The conflict with Iran is probably going to be over sooner rather than later,” although it seems like we’ve been saying that for a couple months now. And that also maybe the entire situation with interest rates and the fact that the market is now pricing in hikes rather than cuts, which was kind of the base case for quite a while, maybe they think that the market is not going to get a rate hike. Because the market is always forward-looking, when we see that strong broader market performance, to me that tells us that brighter times or good times are ahead.
And it wouldn’t be a podcast without talking about tech and AI-driven names, right? They have led, as usual, recent gains, but they also show some sharp swings, right? Are we seeing a healthy consolidation, or is this kind of an early sign of overextension in market leadership?
I think there is some overextension, but each time we get these fairly volatile swings, specifically on the downside, we see them recover. So I do think that a lot of these stocks do have a lot more room to go on the upside. And at least for right now, Jeff, the pattern has been that when we’ve seen these downdrafts, they’ve been a buy.
Right. Yeah. And with the next non-farm payroll release approaching, what would, in your mind, constitute a market-moving surprise? And how would a different outcome impact equities and rate expectations? You talked about the market not pricing in a rate hike, but what happens if there’s some sort of surprise?
Yeah, I think a surprise would be another really, really strong print, a really strong report. That would then reinforce, “Okay, boy, the Fed really is tilted on the hawkish side here.” If we get a real weak print, the market probably is okay with that, but I don’t think that would have as much of an impact as a real strong print would. And the market may be selling off a bit on that.
And kind of sticking on this economics subject, we’re also heading into the next CPI report coming out next week, I believe. What components of inflation should investors focus on most? And what would signal meaningful progress or even a setback in this inflation fight we’re all dealing with?
Well, the ones that we typically focus on, I think, are still the ones we have to look at, and that is housing and shelter, right? It’s always important, and if rates are moving higher, that’s going to make it even worse for people, because what’s going to happen is the same scenario we’ve seen: people that have locked in at 3%, 3.5%, or 4% years ago are not moving.
They’re not refinancing, so the inventory out there is still really, really tight. So I think that’s going to be very important. And then also groceries, right? Food and beverage. We know that prices have not come down. Prices at the grocery store are still really elevated, and it is a struggle for people. So I think we really have to watch those two.
And, Scott, every time I have you on, we’ve got to talk about our favorite index. How has the VIX behaved over the past week, and where do you think it’s headed in the next five days?
The VIX has actually been really calm. We have seen the lower and upper range of the VIX really consolidate recently, almost from maybe 17 to 20. And 20 now has really been massive resistance, where in prior months we’ve seen the mid-20s and even that 30 blip. So the VIX has been really, really consolidated. And I think you can trade it that way, at least over the next several weeks. But we have earnings season ramping up right here again, and anybody that thinks that just because it’s summer things are calm, I would say just the opposite. There’s so much out there that can move this market one way or the other that the VIX is going to be more volatile than we have seen over the last several weeks or so.
Scott, as always, this has been great. And for our listeners, again, you can find more from Scott Bauer at prospertrading.com, as well as on our website. Have a great Fourth of July, Scott, and I’m looking forward to seeing you back in the studio in a couple of weeks.
Thank you, Jeff. Have a great one.
The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Interactive Brokers, its affiliates, or its employees.
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