Excess Returns

Tian Yang, head of research at Variant Perception and portfolio manager of the VPX ETF, explains how investors can use adaptive leading indicators, capital cycle analysis and behavioral signals to navigate a market shaped by AI spending, inflation and government intervention. He breaks down why the macro backdrop remains risk-on, what would signal a true market top, why a Federal Reserve rate hike may still be unlikely and how AI could reshape profits, jobs and portfolio construction.

Variant Perception
https://www.variantperception.com/

Variant Perception Cycle Aware US Equity ETF
https://etf.variantperception.com/

Topics covered

• How first-principles thinking separates causal signals from noisy data

• Why static recession indicators and consumer sentiment have become less reliable

• How Variant Perception combines growth, inflation, policy and liquidity into a Macro Risk Indicator

• Why AI capital spending and low savings rates are supporting economic resilience

• How AI profits could broaden from hardware bottlenecks to adopters and complementary assets

• Why the sovereign technology race may extend the AI investment cycle

• What savings rates, liquidity, leverage and cash settlement reveal about recessions and market tops

• How potential SpaceX, Anthropic and OpenAI supply could affect public equity markets

• What capital cycle and crowding signals say about semiconductors and hyperscalers

• Why headline inflation may stay high without creating persistent core inflation

• How the K-shaped consumer, labor market and Federal Reserve reform shape the policy outlook

• How AI could widen economic inequality, compress wages and change investment research

• How the VPX ETF uses adaptive sector tilts, stock selection and active risk

Timestamps

00:00 First principles, causal data and leading indicators
04:48 Why traditional recession indicators stopped working
09:00 Building the Macro Risk Indicator
13:02 How AI CapEx is keeping the economy resilient
17:18 Is the AI boom different from past bubbles?
21:32 Why rising savings rates often precede recessions
26:11 Why the market-top warning is amber, not red
30:58 Are semiconductors still cyclical?
36:22 Why an oil shock may not force the Fed to hike
42:12 How Kevin Warsh could reform the Federal Reserve
46:50 The increasingly bifurcated economy
51:11 How AI is changing investment research
55:38 Active risk, playing the game and avoiding forced errors

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.

Brent Donnelly joins Matt Zeigler to explain how professional traders build a durable edge through risk management, trading psychology, probabilistic thinking, and creative market analysis.

Drawing from his new book, Trade Outside the Box: Advanced Thinking for Professional Traders, Brent breaks down why trading strategies decay, why rationality beats intelligence, how to avoid risk of ruin, and how lessons from poker, behavioral finance, and real-world experience can improve decision-making.

Trade Outside the Box: Advanced Thinking for Professional Traders
https://amzn.to/4h9bi3e

Brent Donnelly on X
https://x.com/donnelly_brent

Spectra Markets
https://www.spectramarkets.com

Topics covered:

• Why fundamentals, technical analysis, behavioral finance, and quantitative methods are necessary but not sufficient for trading success

• How traders can develop an edge by connecting markets to poker, psychology, biology, auto racing, and video games

• Why profitable trading strategies decay as more investors discover and copy them

• How changing volatility regimes force traders to adapt their style and avoid becoming a one-trick pony

• Why mismatching a long-term investment thesis with a short-term stop loss can destroy a good idea

• How trading journals and P&L data help separate normal variance from a broken process

• Why the house money effect can make traders more reckless after large gains

• Why rationality, flexibility, and expected value matter more than credentials or raw intelligence

• How Bayesian thinking helps traders update probabilities and fight confirmation bias

• The difference between independent thinking and blind contrarianism

• Why avoiding risk of ruin, protecting family and health, and defining success beyond money are essential to a sustainable trading career

Timestamps:

00:00 Introduction to Brent Donnelly and Trade Outside the Box
04:00 Why smart analysts often produce fully priced trade ideas
08:00 Poker discipline and avoiding boredom trades
12:00 How lead-lag correlation trading lost its edge
16:35 Matching a trade's stop loss to its time horizon
21:00 What trading data reveals about win rates and expected value
25:00 The house money effect and the danger of overearning
29:00 Why rational traders beat smarter traders
33:00 Strong opinions weakly held and Bayesian updating
37:00 Curating a balanced diet of bullish and bearish information
41:00 Using creativity and outside disciplines to find market edge
45:11 Avoiding risk of ruin and the lessons of Jesse Livermore
50:29 The Serenity Prayer and focusing on what traders can control
55:00 Choosing family and health over markets
59:00 Why your first thought may not be your own

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.

On this episode of our new market wrap show Last Call, we examine the hidden rotation beneath calm stock market indexes, including sharp AI and semiconductor volatility, small-cap strength, forced fund liquidations, higher rates and changing Federal Reserve guidance.

Jack Forehand and Matt Zeigler are joined by Jim Paulsen, Ben Hunt, Brent Kochuba, Cameron Dawson and Dave Nadig to discuss stock market correction risk, the economics of the AI data center buildout, options flows, market leverage, regulation and what could drive volatility next.Follow Last Call on Spotify⁠⁠⁠⁠⁠⁠⁠

⁠⁠⁠⁠⁠⁠⁠Follow Last Call on Apple Podcasts⁠

Topics covered

• Why market indexes can hide sharp rotation, dispersion and volatility in semiconductors and high-beta technology stocks

• Jim Paulsen's Policy Pain framework linking oil, Treasury yields, dollar strength and lagged effects on stocks, bonds and economic growth

• Why technology stocks could enter a bear market while old-economy sectors, small caps and value stocks hold up

• Ben Hunt's World War AI thesis comparing the AI infrastructure buildout with inflation-adjusted World War II spending

• How hyperscalers, equity issuance, private credit and government financing could crowd out consumers and businesses

• Why data centers could consume nearly one quarter of U.S. electricity and lead to higher prices, rationing and government intervention

• What the Situational Awareness fund liquidation and Citadel portfolio transaction reveal about forced market flows

• How options correlations and narrow market breadth can separate a technical rebound from a fundamental AI bottom

• Risks from speculative retail investments, weakened regulators, leverage and cyclical semiconductor profit margins

• Why reduced Fed forward guidance could create surprise policy decisions and greater algorithmic market volatility

Timestamps

00:00 Market rotation and AI volatility beneath the indexes04:07 Jim Paulsen on Policy Pain and market vulnerability09:23 Why tightening hurts stocks before helping bonds14:23 Tech bear market risk and a possible leadership shift18:23 Ben Hunt on World War AI, private credit and systemic risk26:00 Data center electricity demand and the energy constraint31:29 Brent Kochuba on the Situational Awareness liquidation36:00 The forced buying behind the AI stock rebound40:00 Why the liquidation bounce may not signal an AI bottom44:00 How forced flows distort fundamental market narratives48:00 Retail investing pitches, liquidity and cycle FOMO52:00 Deregulation by destaffing at the SEC and CFTC56:00 Semiconductor operating leverage and fragile S&P 500 margins01:00:07 Jack's grievance with the YouTube algorithm01:04:29 What happens when the Fed stops giving forward guidance01:08:34 How markets could react to a surprise Fed decision

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.

We are excited to announce the launch of a new podcast, Why Am I Reading This Now? with Ben Hunt. Stories and narratives are increasingly shaping markets, and Ben and his team at Perscient have developed a unique system for measuring how those narratives emerge, spread and change.

In each episode, Ben and Matt Zeigler will examine the major issues facing investors through this narrative lens, helping listeners better understand the stories driving markets and what they could mean for the economy, policy and investment outcomes.

We have included this first episode in the Excess Returns feed. To continue receiving new episodes, subscribe to the Why Am I Reading This Now? podcast on all major podcast platforms using the links below.

Subscribe on Spotify

Subscribe on Apple

Topics covered

• Why AI CapEx and data center construction have become critical drivers of US economic growth
• How hyperscalers are shifting from cash flow financing to debt, equity issuance and private credit
• Why a slowdown in AI infrastructure spending could threaten markets, the economy and the financial system
• How trillions of dollars in AI investment may crowd out consumer credit, business investment and government borrowing
• Why data centers could consume a dramatically larger share of US electricity production
• How energy shortages could lead to higher utility costs, rationing and price controls
• Why the Iran war and higher oil prices may create a lasting increase in global energy costs
• How Perscient tracks the return of bearish AI narratives and growing political opposition to data centers
• Why both political parties may support government ownership, loan guarantees, bailouts and economic stimulus
• How competition with China could become the narrative used to justify greater government control of the AI industry

Timestamps

00:00 Introducing Why Am I Reading This Now? with Ben Hunt
04:00 How debt, equity issuance and private credit are financing AI CapEx
08:06 Data center electricity demand and the energy crowding-out problem
13:21 Why an AI bailout may become politically inevitable
17:30 Oil shifts from a temporary shortage to a structural supply reduction
22:00 The bearish AI narrative returns as political opposition grows
26:00 Government ownership, price controls and the AI competition with China

Rupert Mitchell of Blind Squirrel Macro joins Matt Zeigler to explain how surging AI capital spending, mega-cap share issuance and expensive U.S. technology stocks could reshape global equity leadership. They discuss the case for equal-weight stocks, energy equities, gold, UK small caps, Uzbekistan and Turkey, along with the risk that a surprise Federal Reserve hike could trigger a broader unwind in leveraged markets.

Rupert Mitchell on X
https://x.com/SquirrelMacro

Blind Squirrel Macro
https://www.blindsquirrelmacro.com

Topics covered

• Why the S&P 500 versus the rest of the world remains Rupert's chart of truth

• How the Bushy portfolio uses international equities, gold, commodities and hedges as an alternative to a traditional 60/40 portfolio

• Why positive stock-bond correlation has weakened the diversification case for long-duration bonds

• How AI data center spending, mega IPOs and new share issuance could reverse the buyback-driven de-equitization of U.S. markets

• Why Rupert is long the equal-weight S&P 500 and short the Nasdaq 100 as market leadership broadens

• How China's growing power in oil markets may create a price collar that supports energy producers, refiners, midstream companies and offshore services

• What a surprise Federal Reserve hike or death shot could mean for technology stocks, private credit, private equity and leveraged risk assets

• Why deeply discounted UK small and mid-cap stocks may benefit from buybacks, takeovers, pension capital and investment trust activism

• The opportunity in Uzbekistan's privatization program and the role of Templeton in improving governance

• Why Turkey's inflation-tested companies, strategic geography and cheap valuations may offer an attractive emerging-market setup

Timestamps

00:00 Intro
04:00 Bushy portfolio changes across energy, commodities and precious metals
08:54 How AI capital spending and equity issuance threaten the buyback era
13:00 Equal-weight valuations and the long RSP, short QQQ trade
17:02 China's oil price collar and the energy equity re-rating
22:18 The Fed death shot and the danger of an unpriced hike
30:06 Peak populism and the historic valuation gap in UK equities
34:10 M&A, pension capital and UK investment trusts
38:50 Uzbekistan's privatization opportunity
43:39 Turkish equities, inflation and geopolitical leverage
49:13 Why stress-tested businesses may offer better value
53:39 Blind Squirrel Macro and Benny and the Squirrel

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.

On the latest 100 Year Thinkers, Robert Hagstrom joins Matt Zeigler and Bogumil Baranowski to revisit the 25th anniversary edition of The Warren Buffett Portfolio and explain why volatility is not the same as investment risk.

They discuss concentrated portfolios, active share, business valuation, behavioral finance, complex adaptive systems, and Warren Buffett’s warning that the market’s casino can overwhelm its cathedral.

The Warren Buffett Portfolio – 25th Anniversary Edition
https://amzn.to/3TVXoru

Robert Hagstrom on X
https://x.com/RobertGHagstrom

Equity Compass
https://www.equitycompass.com/

Topics covered

• Why Markowitz’s definition of risk as variance shaped modern portfolio theory

• Why Buffett views permanent capital loss, not volatility, as the real investing risk

• What Hagstrom’s study of 3,000 portfolios revealed about concentration and market outperformance

• The difference between know-something investors and investors better served by indexing

• How benchmark awareness creates closet indexers and weakens active management

• What loss aversion and prospect theory explain about investor behavior

• Why Darwin, William James, and complex adaptive systems offer better models for markets

• Buffett’s cathedral and casino metaphor for business ownership versus speculation

• The El Farol problem, Jim Simons, and why successful market models stop working

• Why options trading, leveraged ETFs, and record single-stock dispersion may be strengthening the casino

• How to evaluate portfolios using cash flow, return on invested capital, and look-through earnings

• Why permanent capital and System 2 thinking are essential for focused investing

Timestamps

00:00 Intro
04:00 Why Markowitz defined risk as variance
11:47 What 3,000 portfolios revealed about concentration
17:17 Know-something versus know-nothing investors
22:23 Kahneman, loss aversion, and modern portfolio theory
26:58 Darwin, pragmatism, and adaptive markets
32:28 Buffett’s cathedral and casino metaphor
37:37 The El Farol problem and why markets resist prediction
42:08 Why investors crave market forecasts
46:16 Why investing is most intelligent when businesslike
51:38 Record stock dispersion, options, and leveraged ETFs
56:00 Measuring portfolio progress through business economics
01:00:43 Why permanent capital enables focus investing
01:04:43 How markets survive widespread investor mistakes

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.

Wes Gray joins us to explain how factor investors should think about high market valuations, S&P 500 concentration, value investing, small caps, artificial intelligence and the behavioral challenge of staying invested for the long term. He also breaks down Section 351 ETF exchanges, including how appreciated portfolios can move into an ETF without an immediate taxable sale, why direct-indexing portfolios are a major use case and how the ETF wrapper is reshaping asset management.

Wes Gray on X
https://x.com/alphaarchitect

Alpha Architect
https://alphaarchitect.com

ETF Architect
https://etfarchitect.com

Long-Only Value Investing: Does Size Matter?
https://alphaarchitect.com/wp-content/uploads/2022/11/AA-JBISFactorInvesting22LongOnlyValueInvesting.pdf

Even God Would Get Fired as an Active Investor
https://alphaarchitect.com/wp-content/uploads/2021/08/Even_God_Would_Get_Fired_as_an_Active_Investor.pdf

Topics covered

• Why high valuations may lower long-term expected returns without providing a reliable market-timing signal

• How S&P 500 concentration creates a major large-cap, quality and growth factor bet

• Why earnings and operating income may be better value metrics than book-to-market in an intangible economy

• Why valuation may matter more than company size for long-only value investors

• How unprofitable companies and low-quality stocks can distort small-cap value indexes

• Whether AI has changed the historical relationship between growth and value investing

• How AI may eliminate short-term trading edges while leaving long-horizon opportunities intact

• Why even an investor with perfect foresight could suffer severe drawdowns and get fired

• How passive investing flows may affect market prices and factor returns

• How Section 351 exchanges can solve problems created by appreciated SMAs, tax-loss harvesting and direct indexing

• The 25/50 diversification rules, cost-basis transfer and tax-deferral mechanics of ETF conversions

• Why assets continue moving from mutual funds, hedge funds and separate accounts into ETFs

• Why enduring underperformance may be necessary to earn higher long-term returns

Timestamps

00:00 Alpha Architect, ETF Architect and building an ETF platform
04:00 Can factor investors time a market bubble?
08:03 Intangible assets and the problems with book-to-market
13:42 The quality problem inside small-cap value indexes
18:18 Has technology changed the growth-versus-value equation?
23:25 Can AI create lasting investment alpha?
27:42 Are investors behaving better today?
34:39 How Section 351 ETF exchanges work
39:48 The diversification rules for tax-deferred ETF conversions
44:34 How cost basis and deferred taxes carry into the ETF
49:07 Mutual fund, hedge fund and SMA conversions
54:13 Why investors should embrace underperformance

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.

Aahan Menon, founder of Prometheus Research, joins Jack Forehand to explain what systematic macro data says about economic growth, inflation, Federal Reserve policy, oil prices, AI investment and the outlook for stocks and bonds. They examine why nominal GDP remains stable, why traditional recession indicators have failed, how consumer dissaving is boosting corporate profits, and why today's unusually balanced regime probabilities make this a difficult time for large macro bets.

Aahan Menon on X
https://x.com/AahanPrometheus

Prometheus Research
https://www.prometheus-macro.com

Topics covered

• Why geopolitical volatility and disrupted market trends make concentrated macro bets unusually difficult

• What Prometheus Research's daily GDP nowcast says about stable nominal growth

• Why AI capital spending matters but consumer spending still drives the US economy

• How household dissaving and the wealth effect are supporting corporate profits

• Why the economy and Federal Reserve policy may be increasingly sensitive to stock prices

• How oil prices are driving inflation volatility and changing expectations for interest rates

• Why demand-driven inflation is more persistent than supply-driven inflation

• How technology investment has weakened traditional recession and business-cycle indicators

• The value and limitations of timing Federal Reserve policy with systematic macro data

• What macro regime probabilities, valuations and expected returns suggest for stocks, bonds and diversification

Timestamps

00:02 Why this is a difficult time for big macro bets
05:02 A daily GDP nowcast shows stable nominal growth
09:21 Consumer dissaving and the future economic risk
13:23 The wealth effect linking stocks, spending and profits
17:52 Oil prices and extreme inflation volatility
22:23 Separating persistent demand inflation from supply shocks
27:27 Why traditional recession indicators stopped working
32:55 How technology is changing the business cycle
37:42 Why timing Federal Reserve cycles matters for bond returns
42:28 The limitations of alternative data and short histories
47:33 Macro regime forecasts and expected returns
51:54 Why the macro backdrop still supports equities
56:19 Why investors can finally get paid to diversify

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.

Azeem Azhar joins Kai Wu to break down the real economics of the AI boom, including the $110 billion demand base, where profits may accrue across chips, hosting, foundation models and applications, and whether spending can translate into enterprise productivity. They discuss AI infrastructure bottlenecks, open-source competition, vertical integration, organizational redesign, software moats, human judgment and the signals investors can use to identify companies turning AI adoption into durable competitive advantage.

The State of the AI Economy
https://intelligence.exponentialview.co/assets/ev-state-of-ai-economy-2026.pdf

Why AI Isn't Showing Up on Your Bottom Line
https://www.exponentialview.co/p/why-ai-isnt-showing-up-on-your-bottom-line

Azeem Azhar on X
https://x.com/azeem

Exponential View
https://www.exponentialview.co/

Topics Covered

• The size and growth rate of real generative AI demand

• How the AI stack divides between chips, hosting, foundation models and applications

• Why memory and energized data centers may be the key AI infrastructure bottlenecks

• Open-source models, proprietary pricing and enterprise assurance

• Vertical integration and foundation model labs moving into applications

• How AI value could flow to consumers rather than infrastructure providers

• Why AI productivity requires workflow and organizational redesign

• What investors can learn from earnings calls, hiring and enterprise spending

• Forward-deployed engineers, consulting firms and vendor lock-in

• Which intangible business moats strengthen or weaken as intelligence becomes abundant

Timestamps

00:00 The economics and sustainability of the AI boom
06:34 Mapping the four layers of the AI stack
10:43 Vertical integration and cross-stack competition
15:31 Why memory is becoming an AI infrastructure bottleneck
20:01 Open-source models versus proprietary AI
24:36 Why foundation model labs are moving up and down the stack
28:51 Could AI profits become consumer surplus?
33:00 Why more copilots cannot create an AI-native company
37:17 Job postings and the intangible investments behind AI adoption
44:16 Can forward-deployed engineers transform legacy companies?
49:15 Which business moats strengthen or weaken in the AI economy?
54:20 Do foundation models really have network effects?
59:00 Why judgment, verification and human provenance become more valuable
01:04:56 The exponential gap in data centers and education
01:10:06 How Azeem uses AI to deepen research and generate ideas

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.

On the Latest First Principles, Andy Constan explains what the options market is signaling about the AI and semiconductor boom, why he believes earnings expectations have outrun the size of the economy, and where the next risks may emerge. We discuss speculative call buying, single-stock volatility, AI capital spending, consumer dissaving, the Fed put, Kevin Warsh's monetary policy framework, and the looming reset of US tariffs.Topics covered:

* Why parabolic moves in AI infrastructure and semiconductor stocks may reflect a speculative bubble

* What rising single-stock volatility and unusually low market correlations reveal beneath a calm index

* Why out-of-the-money calls became more expensive than puts and what that says about investor positioning

* How investors can hedge concentrated stock gains by selling calls and buying protective puts

* Why the AI bubble may be hiding in earnings expectations rather than traditional valuation multiples

* Andy's economic pie framework and why projected corporate profits may exceed the GDP available to support them

* How AI competition, open-source models, job displacement and subsidized token usage affect the return on AI investment

* Why capital spending and consumer dissaving are supporting economic growth, and where those drivers could weaken

* Whether the Federal Reserve could eventually buy equity ETFs and the inflationary consequences of a permanent Fed put

* How lower short-term rates and a smaller Fed balance sheet could rebalance Main Street and Wall Street

* Why expiring Section 122 tariffs could create a near-term shift in inflation, growth and the federal deficit

Timestamps:

00:02 Why the options market is flashing a warning on AI stocks

04:02 Extreme stock dispersion beneath a calm market

08:49 The signals of a speculative call-buying frenzy

13:00 How to hedge a stock position without calling the top

18:36 Why earnings expectations may be the real AI bubble

23:00 The economic pie cannot support every company's forecasts

27:00 AI job displacement and the widening gap between winners and losers

31:59 How capital spending and consumer dissaving are sustaining growth

36:00 When the return on AI investment starts to matter

40:26 Could the Fed buy stocks in the next financial crisis?

44:53 How Kevin Warsh might respond when markets and employment collapse

48:58 Lower rates, a smaller balance sheet and wealth inequality

52:59 The tariff deadline investors may be overlooking

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.