Episode summary
Inflation Is Rising. Stocks Aren’t Breaking. What If Markets Already Know?
Excess Returns
· · Hosts: Kevin Muir, Aahan Menon, Ben Hunt, Brent Kochuba
Summary
The episode argues that several market risks are being priced too cheaply at the same time. The host and guests focus on three overlapping themes: a Fed that is losing the reassuring power of forward guidance, an inflation backdrop that looks broader and more persistent than the latest headline prints suggest, and an options market that still shows very little fear. The conversation frames Kevin Warsh’s Jackson Hole comments as a shift toward more uncertainty around rate decisions, which could mean more volatility in the short end and in stocks.
On inflation, a guest argues that the important signal is breadth, not just the latest CPI or PCE reading. He says roughly 70% to 80% of PCE components are above the Fed’s 2% target and that the recent slowdown has been driven more by supply effects than by a true cooling in demand. That leads to a stickier inflation view and a more hawkish policy implication.
The narrative discussion says the credibility story around the Fed has “gone supernova,” with gold responding to the loss of trust. In the options segment, the market is described as complacent: put ownership is light, implied volatility is low, and the S&P and Nvidia both look positioned for rallies unless a fresh shock changes the regime.
Key takeaways
- The host says ending forward guidance could mean more uncertainty around Fed meetings and more volatility in rates and equities.
- A guest argues that 70% to 80% of PCE components are above the Fed’s 2% target, which supports a sticky inflation view.
- The inflation work suggests demand-driven inflation is still running hot even when headline prints look cooler.
- Ben Hunt says the Fed-credibility narrative has “burst and skyrocketed,” and that gold is responding to the trust break.
- Brent Kochuba says implied volatility is cheap, put open interest is low, and the market looks like it wants an excuse to rally.
- On Nvidia, options positioning suggests resistance around the 250 to 275 area even after strong earnings.
Notable quotes
“The narratives around the Fed losing credibility have just burst and skyrocketed”
“It's not just the headline number. It's the fact that all of the components under the headline number which go into the headline number are currently extremely elevated”
“about 70 to 80% of PCE components now above that 2% target”
“persistent oil price shocks always tend to result in more co-inflation over time”
“implied do not care. People don't own put options at large”
How the episode opens
My call is that right now no one's talking about the midterms. No one's worried about it. There's no insurance premium put into it. — It's not just the headline number. It's the fact that all of the components under the headline number which go into the headline number are currently extremely elevated and elevated in a way where they're inconsistent with the Fed's policy target. The narratives around the Fed losing credibility have just burst and skyrocketed. It's gone just supernova in a way that I really haven't seen in looking at narratives in a long long time.
The thing I take away from this is implied do not care. People don't own put options at large. Put imp uh put open interest is very low.
It's just a market that in my view just wants an excuse to rally. You're watching Excess Returns. This is Last Call, our monthly market rap show where we look backwards to look forwards.
We get some of our favorite people to come in, give us a fresh piece of content. I'm here with Jack Forehand. How you doing, Jack?
I'm doing good. Well, I I realize, Matt, after after we did this last time, like we usually put clips at the front of this, and there will be clips at the front of this one, but I realize that uh when you put us in the private jet at the front of this thing, it it definitely hurts the viewership because I don't I think people do not necessarily realize that that is an AI video and a joke and that I think people might have thought we were like these hardcore traders who were like showing off our wealth or something like that. So, I've got to kind of reverse this time.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- inflation breadth
- fed credibility
- midterm election volatility
- options complacency
- ai-written investment commentary
Companies and tickers mentioned
- NVDA
- Nvidia
Watch the episode
Watch “Inflation Is Rising. Stocks Aren’t Breaking. What If Markets Already Know?” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Excess Returns, this episode and its artwork belong to Excess Returns. Octagon is not affiliated with the show; this page is an independent summary.
