David Woo joins Capital Thesis for a wide-ranging conversation on global markets, artificial intelligence, monetary policy, and geopolitics.David is a Columbia PhD economist and former Bank of America Merrill Lynch strategist, where he led research across global interest rates, foreign exchange, emerging markets, fixed income strategy, and economics.In this episode, David explains why he believes the surge in AI-related capital spending and debt issuance is playing a major role in pushing long-term bond yields higher. He discusses the Federal Reserve’s reaction function, the divergence between core CPI and core PCE, tight credit spreads, and what could happen to the U.S. economy if the AI investment boom begins to unwind.We then turn to the U.S.-China AI race. David argues that Chinese AI models have closed the technological gap with the United States much faster than expected and explains why that could have major implications for U.S. technology valuations, AI profitability, trade policy, and the broader economy.The conversation also moves into geopolitics, including Iran and the Strait of Hormuz, Russia and Ukraine, Taiwan, and how David is thinking about hedging major tail risks across markets.CHAPTERS00:00 Intro01:00 David Woo Introduction01:36 What Is the Bond Market Telling Us?06:55 AI CapEx, Debt Issuance & Higher Yields10:03 Kevin Warsh & the Fed Reaction Function13:10 Why Core CPI and Core PCE Are Diverging18:12 Credit Spreads, Recession Risk & Market Complacency21:56 China’s AI Challenge to the U.S.25:37 Is the U.S. Losing the AI Race?26:10 Could the U.S. Ban Chinese AI Models?31:20 Gold, Oil, Options & Hedging Tail Risks32:55 Iran, Oil & the Strait of Hormuz40:30 Taiwan, Russia & Ukraine44:11 David Woo’s Advice for InvestorsCapital Thesis features conversations with leading investors, economists, strategists, and capital allocators on markets, macroeconomics, investing, and global affairs.Subscribe for future episodes.DISCLAIMERThe views and opinions expressed in this podcast are those of the participants and are provided solely for informational and educational purposes. Nothing discussed in this episode constitutes financial, investment, legal, tax, or other professional advice, nor should it be construed as an offer, solicitation, or recommendation to buy or sell any security, financial instrument, or investment product.Capital Thesis and its host are not registered investment advisers. Guests may hold positions in securities, assets, or investments discussed during the conversation. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results.Listeners should conduct their own research and consult with a qualified financial professional before making any investment decisions.
