About this episode

Andy Constan discusses the implications of AI funding and market dynamics in the current economic landscape.

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…

People in this episode

Guest: Andy Constan

Topics covered

• AI funding
• market risks
• long-term interest rates
• Fed policy
• corporate debt
• economic growth

Keywords

• AI CapEx
• Treasury yields
• inflation
• stock prices
• debt crisis
• corporate bond
• equity supply

Mentioned in this episode

Organizations: Nvidia

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