Excess Returns

This month on Last Call, Kevin Muir, Aahan Menon, Ben Hunt and Brent Kochuba break down the market through four lenses: macro, inflation data, narrative and options positioning. They examine whether midterm election volatility is underpriced, why inflation may be more demand-driven and persistent than headline data suggests, how the Fed's credibility has shifted under Kevin Warsh, and why options markets still look remarkably complacent.

Follow Last Call on Spotify⁠⁠⁠⁠⁠⁠⁠⁠

⁠⁠⁠⁠⁠⁠⁠⁠Follow Last Call on Apple Podcasts⁠

Topics covered

• Why ending Fed forward guidance could create more uncertainty around interest rate decisions

• Kevin Muir's case that midterm election volatility is unusually cheap

• Why seasonal volatility, low implied correlation and election risk may favor owning protection

• Aahan Menon on inflation breadth and why 70 to 80 percent of PCE components are above the Fed's 2 percent target

• Why demand-driven inflation may be stickier than supply-driven inflation

• How oil shocks can feed into core inflation and increase pressure on the Fed to hike

• Ben Hunt on the sudden collapse in the Fed credibility narrative and why gold has responded

• The four risks facing the Fed and Treasury: oil, fading fiscal stimulus, insurance and private credit stress, and the long end of the Treasury curve

• Brent Kochuba on why implied volatility and put positioning show a market with very little fear

• Nvidia options positioning, potential resistance near 250 to 275, and what dealer gamma says about the stock

• Stanley Druckenmiller's AI-written Wall Street Journal op-ed and what AI-assisted writing means for investment thinking

Timestamps

00:00 Midterms, inflation, Fed credibility and options complacency

07:45 Kevin Muir on why midterm volatility may be underpriced

11:55 Why this midterm could be more volatile than the options market expects

16:36 Cheap volatility and how election risk could get repriced

20:39 Inflation breadth and why the headline numbers miss the bigger problem

25:43 Why cooling inflation data may hide persistent demand-driven pressure

33:31 Ben Hunt on why the Fed credibility narrative suddenly reversed

40:01 Four risks the Fed and Treasury cannot afford to ignore

44:43 What the options market says after Jackson Hole

49:10 Why Fed events can become an expensive options tax

53:14 Why falling volatility could help stocks push toward new highs

57:34 Druckenmiller, AI-written investment commentary and authenticity

01:01:53 Why writing is part of thinking in an AI world

Learn more about the Excess Returns podcast network:

https://excessreturns.co

No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.

Kevin Muir of The MacroTourist joins Matt Zeigler to break down the bond market, Scott Bessent's Treasury buybacks, the Treasury General Account, AI-driven earnings growth, leveraged ETF risk, gold and the U.S.-Canada trade fight. Kevin explains why rising long-term yields may be less surprising than investors think, how the AI capex boom can inflate earnings before costs show up, and why leveraged ETFs and policy uncertainty could make markets more fragile.

Kevin Muir on X
https://x.com/kevinmuir

The MacroTourist
https://themacrotourist.com

Topics covered

• Why stronger nominal GDP, large fiscal deficits and record corporate issuance are pressuring long-term Treasury yields

• How Scott Bessent's Treasury liquidity buybacks work and why investors are comparing them with QE and Operation Twist

• How replacing long-dated Treasuries with T-bills could ultimately force reserve management purchases by the Federal Reserve

• Why the Treasury General Account matters for liquidity and why attempts to manage the yield curve can distort market signals

• Jim Chanos's "earnings bubble" argument and how massive AI data-center capex can boost current earnings while costs are amortized

• Why stock prices can fall before forward earnings estimates roll over, and why retail investors may have an advantage over institutions

• How daily-reset leveraged ETFs create reflexive buying and selling and could amplify a semiconductor or single-stock selloff

• Why Kevin is bullish on gold again, the role of People's Bank of China demand, and how he combines fundamentals with technical signals

• Why platinum below production cost caught his attention and what rolling mini-bubbles in gold, silver and AI say about investor psychology

• What 2025 U.S.-Canada trade data says about autos, oil and gas, manufacturing, tariffs and the economic cost of policy uncertainty

Timestamps

00:00 Intro
06:31 Scott Bessent's Treasury buybacks and the bond market
10:39 How T-bill issuance could lead to debt monetization
18:25 The AI capex boom and the "earnings bubble"
22:27 The giant bet embedded in accelerating AI earnings
27:37 Why leveraged ETFs are changing market structure
32:00 How forced ETF unwinds can amplify a selloff
36:41 Why Kevin is bullish on gold again
41:57 Platinum, production costs and the precious metals trade
46:08 Sentiment extremes and why popular trades get dangerous
51:00 Globalization, manufacturing and America's distribution problem
55:00 Why oil and gas dominate the U.S.-Canada trade deficit
59:00 How tariff uncertainty can deter U.S. manufacturing investment
01:03:10 The trade math Kevin wants investors to see

Learn more about the Excess Returns podcast network:

https://excessreturns.co

No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.

Dan Rasmussen, founder and managing partner of Verdad Advisers and author of The Humble Investor, joins Kai Wu to examine the unraveling of private equity, the rise of private credit, and how AI is reshaping software, labor, and the economics of technology investing. They also explore the massive AI CapEx boom, why value investing has struggled in the intangible-heavy U.S. market, the unusual opportunity in Japanese small caps, and how investors can quantify intangible value in biotech.

Subscribe on Spotify⁠⁠⁠

⁠⁠⁠Subscribe on Apple

Topics covered:

• Why private equity became a consensus trade and why exits are now clogged

• How leverage and high debt costs threaten private equity returns

• What publicly traded private equity funds reveal about true volatility and NAV discounts

• How private equity shifted from old-economy buyouts into software and healthcare technology

• Why AI may have erased code as a software moat while strengthening other intangible advantages

• How ARR lending helped private credit finance software buyouts and created an obsolescence mismatch

• What AI is doing to hiring, junior roles, productivity and the composition of work

• Why the AI CapEx boom may be a crowded, path-dependent overinvestment cycle

• Why traditional value metrics work better in Japan than in the intangible-heavy U.S.

• How Tokyo Stock Exchange reforms, buybacks and dividends can unlock value in Japanese small caps

• How R&D spend, specialist ownership and short interest can help quantify biotech value

Timestamps:
00:00 Intro
04:03 Why private equity's debt burden changes the equity math
09:24 How private equity became a software momentum trade
13:29 Why code may no longer be a durable software moat
17:48 How private credit enabled software buyouts through ARR lending
23:56 AI productivity, jobs and why displacement is slower than expected
30:23 Why the AI CapEx boom may be the market's most crowded risk
34:29 Rational overinvestment, leverage and the timing risk in AI
38:46 Why consumers may capture more of AI's value than investors
44:07 Japan's below-book-value reform and the return of old-school value
51:03 Quantifying biotech value with R&D, specialist ownership and short interest
55:08 Dan's non-consensus views on private markets and Japan

Learn more about the Excess Returns podcast network:

https://excessreturns.co

No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.

Ian Cassel, founder of MicroCapClub and author of Stock Picker, joins Matt Zeigler to break down the mindset, temperament and core skills required to outperform as an active stock picker. They discuss microcap investing, position sizing, active patience, valuation, management quality, portfolio survival, benchmarking against the S&P 500 and how great investors evolve their edge over decades.

Stock Picker: How to Develop the Mindset, Temperament, and Strategy to Outperform Wall Street
https://amzn.to/4hU28ImTopics covered

• How an investor's motivations change as ambition gives way to family, legacy and the scarcity of time

• How Ian turned $20,000 into $120,000, then watched it fall to $8,000, and why that early win permanently shaped his risk tolerance

• Ian's four-part survival framework: recession-resistant growth, strong balance sheets, conservative valuation and signs of intelligent fanaticism

• Why balance-sheet strength is not just defensive and can let great companies act aggressively when competitors are forced to retreat

• Why Ian targets roughly a 25 percent CAGR without relying on multiple expansion

• The Judas goat lesson, talking your book on social media and why investors still have to do their own work

• Why comparing short-term returns can corrupt an investing process and why Ian measures himself against the S&P 500 over a 10-year horizon

• The five core stock-picking skills: identifying, analyzing, buying, selling and holding, plus why selling matters especially in microcaps

• Why position sizing should account for initial excitement, and why Ian now starts much smaller than he did earlier in his career

• Active patience, expanding your circle of competence and the difference between good, great and GOAT stock pickers

• Why temperament evolves with experience, why leverage can destroy otherwise good investing, and why the best investors keep sharpening their edge

• Why Ian is willing to back repeat-winner management teams before every piece of the business is fully in place

Timestamps

00:00 Intro
06:58 The $20,000 to $120,000 win and 90 percent loss
11:02 Ian Cassel's four-part survival framework
15:02 Why strong balance sheets create offensive optionality
19:03 The Judas goat and social media stock promotion
23:18 Why comparison is the enemy for stock pickers
29:39 The five core stock-picking skills
34:43 Active patience and knowing what you are looking for
39:28 Good, great and GOAT stock pickers
47:02 How investor temperament evolves over time
52:03 Leverage, situational awareness and surviving to compound
57:24 Betting on repeat-winner management before the numbers arrive

Learn more about the Excess Returns podcast network:

https://excessreturns.co

No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.

Liz Ann Sonders, Chief Investment Strategist at Charles Schwab, joins us to explain why today's economy and stock market are increasingly defined by rotation, instability and a changing stock-bond relationship. We discuss AI capital spending and earnings concentration, Treasury yields and the deficit, immigration and labor supply, investor sentiment, market breadth, portfolio rebalancing, IPOs and the growing economic importance of the stock market wealth effect.

Topics covered:

• Why the post-pandemic economy is moving through sector-level recessions and expansions instead of a traditional linear cycle

• The return of a more temperamental market regime, inflation volatility and the changing correlation between stocks and bonds

• Why volatility-based rebalancing may matter more than calendar-based rebalancing and why market leadership is broadening

• Immigration, labor shortages and why slower population growth changes how investors should interpret payroll data

• Federal deficits, entitlement spending, rising 30-year Treasury yields and why Treasury intervention cannot solve the underlying fundamentals

• How the AI spending boom, imports and hyperscaler capital expenditures are affecting GDP, bond issuance and capital markets

• Corporate profits versus labor compensation and why Liz Ann does not see an obvious near-term catalyst for convergence

• Kevin Warsh, reduced Fed guidance and why less communication could create more market uncertainty

• Attitudinal versus behavioral investor sentiment, the vibe session and why sentiment is becoming harder to use as a timing signal

• The AI cascade beyond mega-cap tech, the Neural Nine, small caps and why rotation may be the new momentum trade

• Margin debt, record household equity exposure and the risk that a future stock market decline feeds back into the economy

• S&P 500 earnings concentration, sell-side versus buy-side expectations, AI depreciation risk and the return of a major IPO cycle

Timestamps:

00:00 Liz Ann Sonders on the unusual 2026 market and economic cycle
05:49 Portfolio construction, diversification and volatility-based rebalancing
11:39 Immigration, labor supply and the new payroll breakeven rate
17:38 Why long-term Treasury yields are rising and what the Treasury can and cannot fix
22:07 Corporate profits versus labor compensation as a share of GDP
27:37 Attitudinal versus behavioral sentiment and lessons from 2022
32:13 The vibe session, consumer confidence and conflicting investor expectations
37:14 The Neural Nine, widening stock dispersion and rotation as the new momentum
41:21 Margin debt, leveraged speculation and where the real risk may be
45:52 S&P 500 earnings growth, concentration and the sell-side versus buy-side gap
50:27 Hyperscaler AI capex, debt financing and signals from the corporate bond market
55:05 IPOs, FOMO and why investors should be careful about chasing new issues
60:05 Where to follow the real Liz Ann Sonders and avoid impersonator scams

Learn more about the Excess Returns podcast network:

https://excessreturns.co

No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.

Andy Constan is back on First Principles to explain why record stock prices, rising long-term Treasury yields and sticky inflation can all coexist, and why the next major market risk may come from the financing behind the AI CapEx boom rather than the eventual return on that investment. We discuss Kevin Warsh and Fed balance sheet policy, Treasury issuance and the quarterly refunding announcement, corporate bond and equity supply, Nvidia's $500 billion financing structure, and Andy's "not enough pie" framework for comparing AI earnings expectations with GDP and productivity growth.

Follow First Principles on Spotify⁠

⁠Follow First Principles of Apple Podcasts

Topics covered

• Why rising long-term interest rates can be consistent with strong economic growth and record stock prices

• Why Andy does not see higher government interest costs creating an imminent U.S. debt crisis

• The "script to kill inflation" and why reducing the wealth effect may require lower stock, bond and asset prices

• How the Fed, Treasury and other policymakers have suppressed long-term interest rates and risk premiums

• Why Kevin Warsh's comments about the Fed balance sheet and letting the bond market "do the work" could signal a policy shift

• How Treasury bill issuance, coupon issuance and the quarterly refunding announcement can affect stocks, bonds and financial conditions

• Why the AI CapEx boom is shifting from cash flow funding toward massive corporate debt and equity issuance

• Andy's "hamburger thesis" and why the ability to finance AI infrastructure may matter before anyone knows the ultimate AI ROI

• Why capital markets can suddenly close after issuance booms and what that could mean for the AI investment cycle

• How Nvidia's $500 billion financing structure expands the pool of capital available to data center projects

• The "not enough pie" problem: why projected corporate earnings may require extraordinary GDP growth, productivity gains or a larger corporate share of the economy

• What Andy watches in new stock and bond deals for signs that investors are becoming unwilling to absorb more supply

Timestamps

00:00:08 Why stocks, long-term yields and inflation can all rise together
00:07:18 The "script to kill inflation" and why short-term rates may not be enough
00:12:48 How policymakers have suppressed long-term interest rates
00:16:53 The Warsh "drumbeat" and a possible shift in Fed balance sheet policy
00:21:56 Why markets may be underestimating Warsh's willingness to fight inflation
00:26:27 Treasury bills versus coupons and the limits of current financing policy
00:31:33 The "hamburger thesis" behind the massive AI CapEx funding shift
00:38:41 Why AI financing may matter more than AI ROI in the short run
00:42:55 Breaking down Nvidia's $500 billion data center financing structure
00:47:51 The "not enough pie" problem for AI earnings and economic growth
00:52:03 Demographics, productivity and the limits on future GDP growth
00:56:14 What issuance prices reveal about capital market stress

Learn more about the Excess Returns podcast network:

https://excessreturns.co

No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.

Bob Robotti, founder and CIO of Robotti & Company, joins Matt Zeigler and Bogumil Baranowski to explain why bottom-up value investing may be entering one of its best opportunity sets in decades. They discuss AI and reindustrialization, inflation and interest rates, passive investing, capital cycles, private equity, long-term ownership, and why today's neglected industrial businesses may offer opportunities that the market is missing.

Bob Robotti on X
https://x.com/BobRobotti

Robotti & Company
https://www.robotti.com

Topics covered

• How Bob finds misunderstood businesses with latent earnings power

• Why his "grassroots macro" process starts with company-level supply and demand

• How AI spending is increasing demand for energy, copper, aluminum, cement and other physical assets

• Why North America's natural gas advantage could support a long-term reindustrialization cycle

• Why persistent inflation could force higher interest rates and lower valuation multiples

• Why no competitive moat is permanent, even for today's dominant technology companies

• How passive investing and shorter time horizons can create opportunities for fundamental stock pickers

• Why prolonged downturns can improve industry economics through consolidation and reduced capacity

• Why Bob views himself as an active owner rather than an activist investor

• Why he is skeptical of today's private equity model and its expansion into retirement portfolios

• The NewMarket investment that taught him the cost of selling a great business too early

• Why he thinks individual company research can outperform indexing over the next decade

Timestamps

00:00 Intro
04:02 Grassroots macro and the search for latent earnings power
08:37 Why Bob started his own investment firm
13:00 How AI creates demand for the physical economy
17:59 Why Bob avoids the mega-cap technology companies
22:00 Inflation, interest rates and the valuation risk investors may be missing
26:07 Why no competitive moat is permanent
31:36 How passive investing creates opportunities for stock pickers
36:00 Why Bob believes the "fallen" areas of the market can rise again
40:06 How bad business conditions create better long-term investments
44:39 Active ownership, boards and understanding businesses from the inside
48:59 Why Bob is skeptical of modern private equity
55:15 The biggest loss of his career: selling a winner too early
01:03:32 The one investing lesson Bob would teach everyone

Learn more about the Excess Returns podcast network:

https://excessreturns.co

No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.

In this episode of The Jim Paulsen Show, Jim explains why weakening labor data, softening inflation, and lagged policy tightening could shift markets from inflation fears toward growth and recession fears. He also breaks down why the AI productivity boom may be overstated, how AI capital spending is supporting the economy, why Treasury yields look too high, and why investors may want to rebalance from new era technology stocks toward old era stocks and bonds.

Subscribe to the Jim Paulsen Show on Spotify⁠⁠⁠

⁠⁠⁠Subscribe to the Jim Paulsen Show on Apple Podcasts

Topics Covered

• Why weak jobs data and benign inflation have changed the outlook for the Federal Reserve

• Labor force contraction, stalled job growth, and the risks facing consumer spending

• Housing affordability, services activity, real income, savings, and signs of economic weakness

• How the stock-bond correlation can reveal a shift from inflation fears to growth and recession fears

• Why Jim expects Fed rate cuts before year-end and sees downside risk for Treasury yields

• How higher oil prices, bond yields, and the dollar can hit stocks and the economy with a lag

• Why today's AI productivity boom may be a mirage rather than a repeat of the 1960s or 1990s

• How AI CapEx, core capital goods orders, and technology stocks are linked

• Why the 10-year Treasury yield may be mispriced relative to growth and inflation

• The widening divide between new era and old era stocks and what it could mean for portfolio allocation

Timestamps

00:00 Jim's outlook: weak jobs, benign inflation, and growth fears
04:11 Labor force rollover and consumer warning signs
09:06 Real income collapse and economic surprise data
13:06 Why bond yields could fall below 4 percent
17:45 Why Jim expects Fed cuts instead of hikes
22:07 How policy tightening hits the economy with a lag
26:16 Why productivity gains can be a recession mirage
30:20 What a true productivity boom looks like
34:38 AI stocks as a leading signal for capital spending
39:08 Why Treasury yields may be mispriced
44:31 Oil, core inflation, and the case for easing
48:32 New era versus old era correlation as a warning
52:54 Why today's AI economy may be more vulnerable than dot-com
57:22 Portfolio allocation takeaways: bonds, old era, and tech

Learn more about the Excess Returns podcast network:
https://excessreturns.co

No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.

T. Rowe Price technology portfolio manager Dom Rizzo joins Jack Forehand and Kai Wu to break down the AI investment cycle, hyperscaler capital spending, semiconductor demand, and why the recent tech selloff may look more like 1998 than the end of the boom. They discuss AI return on investment, OpenAI and Anthropic, open versus closed models, financing the data center buildout, the future of software, labor productivity, and how to construct a global technology portfolio.

Topics covered

• Why Dom sees similarities between the 2026 semiconductor correction and the 1998 selloff

• Why hyperscaler AI CapEx could accelerate from already historic levels

• What cloud revenue growth and operating margins say about AI return on invested capital

• Why end-user productivity is the key test for sustainable AI demand

• Open-weight models versus frontier labs and where AI economic value may accrue

• Why chips, memory, logic semiconductors, TSMC and ASML sit at critical points in the AI value chain

• How equity, debt and operating cash flow could finance the next stage of the data center buildout

• Why semiconductors remain cyclical even in a structurally capital-intensive AI boom

• Why AI agents could turn traditional enterprise software into data pipes

• AI productivity, labor displacement and the case for faster GDP growth

• How Dom thinks about technology portfolio construction, risk factors and global stock selection

Timestamps

00:00 AI, the tech correction and the 1998 comparison
04:07 Why the AI capital spending cycle may only be halfway
12:33 The real test for AI demand: end-user ROI
17:00 Why frontier models may capture most of the economic value
21:23 Where the biggest AI moats and profit pools could emerge
28:12 Financing the AI buildout with equity and debt
36:03 Are semiconductors in a supercycle or still cyclical?
41:43 What AI agents mean for traditional software companies
46:03 AI productivity versus labor displacement
51:01 Building a portfolio for a technology revolution
56:06 Global tech opportunities and Dom's stock-picking framework

Learn more about the Excess Returns podcast network:

https://excessreturns.co

No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.

Richard Bernstein and David Rosenberg reunite to debate the Federal Reserve, inflation, the AI investment boom, market bubbles, gold and the case for international diversification. The former Merrill Lynch colleagues examine whether the Fed should raise rates, how AI CapEx is reshaping the U.S. economy, why credit markets may lead the AI trade, what is driving gold, and where investors may find opportunities outside the mega-cap U.S. market.

Topics covered

• Why the Taylor Rule points toward higher rates and why Rosenberg thinks the Fed should not hike

• What slowing GDP growth, productivity and labor costs suggest about underlying inflation

• How AI CapEx and data center spending may be misallocating capital away from housing and the broader economy

• Why the current AI boom differs from the late-1990s technology bubble

• How credit spreads, CDS markets and financing costs could signal trouble in the AI trade before equities do

• What real interest rates, the U.S. dollar and central bank demand mean for gold

• Why Bernstein views gold as a portfolio spare tire rather than a short-term trade

• Why non-U.S. stocks and international markets may offer a better valuation and growth opportunity

• How AI exposure extends beyond the Mag Seven into financials, industrials and utilities

• Why CAPE valuations, leverage, sentiment and market positioning point to a highly speculative U.S. market

• Why diversification becomes most unpopular when investors may need it most

• What Bob Farrell's market rules say about crowded positioning and consensus forecasts

Timestamps

00:00 Introduction
08:31 Why Rosenberg thinks the Fed should not hike
16:02 AI, data centers and capital misallocation
25:08 What is driving gold: real rates, the dollar and central banks
36:11 Why Bernstein sees a secular shift toward non-U.S. stocks
41:41 How AI concentration extends beyond the technology sector
48:31 International diversification as protection from AI concentration
54:06 Bob Farrell's Rule 9 and the danger of consensus
1:00:06 The housing-cycle warning Bernstein and Rosenberg saw before the financial crisis

Learn more about the Excess Returns podcast network:

https://excessreturns.co

No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.