Episode summary
James Aitken: It Pays To Shave With Occam's Razor
On The Tape
· · Hosts: Danny Moses · Guests: James Aitken
Summary
James Aitken argues that the macro backdrop has shifted enough to make bonds attractive again, especially parts of the Treasury curve and TIPS. He says higher nominal and real yields now offer a better risk-reward than many high-flying assets, even if bonds may not hedge as reliably as they did in a lower-inflation era. He also cautions that risk parity may work less well if inflation stays sticky and bonds do not rally as much in a downturn.
He frames today’s market around a government-underwritten AI and national-resilience capex boom that is boosting demand now but may not translate cleanly into future supply. In his view, that spending is inherently inflationary in the near term, while markets are only beginning to question downstream economics, leverage, and circular financing in the AI ecosystem. He says the result is healthy differentiation between winners and losers, not necessarily project cancellations.
Aitken is also skeptical that policy makers have solved the inflation problem. He describes Scott Bessent as buying time in Treasuries and expects Kevin Worsh to keep hiking to re-anchor inflation expectations. He sees the dollar as still supported by inertia in global asset allocation, and he praises Mark Carney for pragmatic reforms in Canada, especially on capital attraction and energy policy.
Key takeaways
- Aitken says bonds and TIPS are now attractive on a risk-reward basis, even if they are less reliable hedges than in prior cycles.
- He expects the AI boom to remain inflationary near term because it is government-underwritten capex that creates demand before it creates supply.
- Aitken thinks market participants are starting to discriminate between AI winners and losers as downstream economics and leverage matter more.
- He says Scott Bessent is mainly buying time in the Treasury market, while Kevin Worsh is likely to keep hiking rates to re-anchor inflation.
- He argues the dollar remains supported by global allocation inertia and still benefits from relative U.S. earnings growth and AI exposure.
Notable quotes
“I try to help people stay out of trouble. I work for myself. I work with extraordinary people all around the world”
“what I've been doing very gently depending on the client's mandate over the past month, what am I recommending they allocate to on a riskreward basis? Bonds”
“this is a government sponsored AI capex boom, it's a national imperative”
“none of it replaces judgment. None of it. None of it replaces judgment”
How the episode opens
Welcome to the On the Tape podcast. I'm your host Danny Moses and today I welcome back a dear friend and I would say one of the top financial plumbers in the world, James Aken to the pot. You can call James a macro strategist, but he's much more than that.
His publication, Notes from a Small Island, is more than just James' thoughts on global financial markets and products. It's a culmination of James' experience as a trader and insights from the contacts and friends he has met along the way. You know you have contributed something to the investment world when James recognizes you in one of his notes with his trademark hat tip.
James was last on in March 2025 and having gone back and listened to our conversation, many of the challenges the markets faced then are still being dealt with today and in some cases becoming more pressing. In addition to the challenges the broader markets are facing today, James shares his thoughts on both US fiscal and monetary policies, including thoughts on Scott Bessant and Kevin Worsh. How investor psychology and behavior are more important than ever to understand when assessing the markets.
We discuss if we are seeing the emergence of a sovereign bond crisis as yields continue to move higher across the globe. We hit the AI trade and where James is telling his clients to look for opportunities. James shares how he thinks his friend Canada's Prime Minister Mark Carney is handling the challenges he is facing.
We could do all of that and a lot more. So, please enjoy my conversation with James Aken. James, welcome back to On the Tape.
We have so much to get to, but before we do, for those that don't know you, maybe a quick background on yourself, Aken Adviserss, and when you began writing notes from a small island.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- occams razor investing
- treasury curve and tips
- inflation and fed policy
- ai capex boom
- dollar and leverage scrutiny
Companies and tickers mentioned
- Aitken Advisors
Watch the episode
Watch “James Aitken: It Pays To Shave With Occam's Razor” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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