This week on the Excess Returns Weekly Wrap, Jack Forehand and Matt Zeigler break down key investing lessons from recent conversations with Andy Constan, Liz Ann Sonders and Bob Robotti.
They examine why rising long-term interest rates can coexist with a strong stock market, how rolling recessions and the shift from labor income to corporate profits are shaping the economy, why AI's biggest beneficiaries may be in energy and old-economy materials, and whether the bond market can really lose control of long-term yields.
Topics covered:
Why higher long-term interest rates can be consistent with stronger economic growth and rising stock prices
How productivity growth, Treasury issuance and corporate bond supply can push real yields higher
Why the post-pandemic economy has experienced rolling sector recessions instead of a traditional synchronized business cycle
How stock market optimism can coexist with pessimism about unemployment, wages and the broader economy
Why labor compensation has fallen as a share of GDP while corporate profits have increased
What the labor-versus-capital shift may mean for inflation, investor sentiment and future policy
Why the AI capital spending boom creates demand for cement, aluminum, copper, natural gas and other physical inputs
How low-cost North American natural gas could support reindustrialization and give the U.S. a structural energy advantage
Why renewables and electrification still depend on traditional energy, commodities and industrial materials
How decades of underinvestment in energy and materials could create a long-duration capital cycle for value investors
Why deep natural demand for Treasuries makes a disorderly loss of control over the long end of the yield curve less likely
Timestamps:
02:15 Why rising rates and record-high stocks can coexist07:30 Rolling recessions and why the economy isn't moving in sync11:57 Labor vs. capital and the rise in corporate profit share17:39 Why the biggest AI beneficiaries may be cement, copper and natural gas25:26 Could the bond market really lose control of the long end?30:22 Where to find episode notes, transcripts and more
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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.
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