The hype is real. The numbers are staggering. But according to Schwab's Liz Ann Sonders and fixed income strategist Collin Martin, the most important thing investors can do right now is slow down and understand what they're actually looking at.
The conversation that opens Schwab's On Investing podcast this week covers three interconnected themes: the IPO wave gathering force in the markets, the Federal Reserve's increasingly complicated policy calculus under incoming chair Kevin Warsh, and a set of diverging economic signals that advisors would do well to interpret carefully.
The IPO Reality Check
The numbers being thrown around in headlines — estimates putting the collective market cap of the biggest anticipated IPOs at roughly $4 trillion — are real, but they're also misleading. Sonders was direct about why.
"What matters is the float, how much of the shares that are coming to market," she says. "So float-adjusted market cap collectively is kind of a fraction of what the total valuation of the companies is."
Historical tech IPOs typically offered between 10% and 20% of total shares to the public. The current cohort, by contrast, is talking about offering 4% to 9%. That matters enormously for anyone trying to assess what these listings actually mean for indexes like the S&P 500.
"It's probably less than 1% of the S&P 500 index in the aggregate," Sonders notes. "And you'll sometimes see numbers, you know, four or five times larger than that. But that's usually because they're not adjusting for that float."
There are structural considerations beyond the initial offering as well. Sonders flags that the phased expansion of float — typically over six to eighteen months following the IPO as lockup expirations cycle through — represents a longer-tail risk that doesn't get much attention in the pre-launch euphoria.
She also raised a question about index integrity. Discussions around potentially easing the profitability filter for S&P 500 inclusion deserve scrutiny. "One of the reasons why the S&P is generally considered a higher-quality index is because of that profitability," she says. Any changes to that standard would be worth watching closely.
The overarching message for investors is characteristically measured: "Make sure you understand how this fits in a portfolio and it is not just the chasing of the hype."
The Fed Under Warsh: A Two-Sided Risk Problem
Martin's read on the bond market and Federal Reserve outlook reflects the same discipline — clear-eyed acknowledgment of uncertainty without speculating past what the data actually supports.
"We think the Fed is probably not going to do anything for the next several meetings. We think they'll be on hold through the end of the year," he says. But he is careful not to frame that as a one-directional bet: "I don't think that a rate hike is necessarily more likely than a cut right now. I do see it as two-sided risks."
The arrival of Kevin Warsh as Fed chair adds complexity. Martin observed that Warsh may have come in with a dovish tilt — "that he probably would have been advocating for lower rates" — but that the current inflation trajectory makes that position difficult to sustain publicly or privately. "I think he'd risk credibility with his fellow policymakers if he were to try to advocate for lower rates."
For most investors, Martin argues, the precise direction of any single move matters less than the magnitude of the overall trajectory. "If we're talking about one hike at some point down the road, or even one cut, that might mean a move up or down in short-term interest rates, but I'm not sure if it's necessarily the start of a big trend."
Reading the Data: PMIs, Inflation, and the Labor Market
The conversation turns substantive on the question of diverging PMI readings — the ISM services index beating expectations while the S&P Global version slipped. Sonders walks through the structural differences between the two surveys: ISM covers 300 to 400 member companies that tend to be larger, while S&P Global surveys roughly twice as many companies using a more stratified sample designed to better mirror the economy's sector and size composition.
"S&P Global tends to be the better early signal if there's a change, even though ISM is still more of the market moving number," Sonders says. For advisors trying to interpret divergences between the two, the message is simple: "Pay attention to both."
On levels, both remain in expansion territory — ISM at 54.5, S&P Global at 50.7. "Given the proximity to 50, psychologically at least, that's an important level marker," Sonders notes. Direction matters. So does the demarcation line.
Looking ahead, Martin flags core CPI running close to 3% on a year-over-year basis as a meaningful concern — moving in the wrong direction. Consumer sentiment, meanwhile, sits at multi-decade lows even as the economy and equity markets tell a different story. The NFIB small business survey, the Fed's Z1 Financial Accounts, and the University of Michigan inflation expectations data all feature on their respective watch lists.
5 Key Takeaways for Advisors and Investors
- The trillion-dollar IPO headlines are not float-adjusted. The actual weight of incoming IPOs on indexes like the S&P 500 is likely less than 1% in aggregate. Advisors should help clients filter signal from hype when dollar figures dominate the financial press.
- Float expansion is a longer-term structural risk. The phased release of locked-up shares over six to eighteen months following an IPO can create sustained selling pressure. The risk doesn't end at the listing date.
- The Fed's path is genuinely two-sided. Hikes are not more likely than cuts right now — the balance of risks has shifted, but the direction is uncertain. Positioning portfolios around a single Fed outcome is a bet, not a strategy.
- PMI divergences require interpretation, not alarm. When ISM and S&P Global PMIs diverge, context matters. S&P Global may signal earlier; ISM moves markets. Both surveys remain in expansion territory — direction and proximity to the 50 threshold are the metrics to track.
- FOMO is a portfolio risk, not just a behavioral one. In an environment where gambling mentality and parabolic moves are present, Sonders' standard applies broadly: any investment decision driven primarily by fear of missing out deserves the same scrutiny as any other speculative position.
Footnote:
1 Liz Ann Sonders, Collin Martin. "IPOs in Focus as the Fed Holds the Line." Schwab Brokerage, 5 June 2026.
