Jim Paulsen returns to Excess Returns to discuss why he is increasingly concerned about a meaningful stock market pullback, even though he does not expect a bear market. We cover the extreme divide between AI-driven “new era” stocks and the rest of the market, what oil and inflation could mean for the Fed, why tech earnings and market leadership have become so concentrated, and what investors should watch as the economy potentially shifts from inflation fears to growth fears.

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Topics Covered

• Why Jim thinks the economy could weaken into the summer and fall

• The risk of a sharp stock market pullback without a full bear market

• How inflation, oil prices and geopolitical conflict are affecting the market

• Why the Fed may face a difficult decision under Kevin Warsh

• The extreme divide between new era tech stocks and old era stocks

• Why AI and innovation need to benefit the broader economy to be sustainable

• How tech earnings have become concentrated in only two S&P 500 sectors

• Why small-cap tech and unprofitable tech leadership may be a warning sign

• What past oil price peaks suggest about stock market corrections

• Why investor focus may shift from inflation risk to growth risk

• How this bull market has been driven by a series of booms in Mag 7, Bitcoin, gold, oil and AI

Timestamps

00:00 Why AI has to benefit more than the tech sector
05:18 Inflation, oil prices and the impact of geopolitical conflict
10:54 New era stocks versus old era stocks
15:43 Corporate cash, AI spending and pressure on tech investment
20:17 Policy tightening and why economic momentum may slow
25:31 Why AI must spread beyond the companies building it
31:42 Why this tech boom is different from the 1990s
36:51 Why market breadth keeps fading back into large-cap growth
42:06 Small-cap tech and unprofitable tech start leading
46:15 Why the damage from oil shocks often comes after oil peaks
50:15 How the market could shift from inflation fear to growth fear
54:40 The bull market of booms in Mag 7, Bitcoin, gold, oil and AI
59:46 Jim’s main takeaway for investors now

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No information on this podcast should be construed as investment advice. Securities discussed in the podcast may be holdings of the firms of the hosts or their clients.