In this episode of Excess Returns, we welcome back Cullen Roche of Discipline Funds for an in-depth conversation on the economy, markets, demographics, AI, and investing frameworks. Cullen cuts through the noise to explain the real forces shaping inflation, interest rates, the role of the Federal Reserve, and why he believes the U.S. faces more disinflationary pressures than inflationary risks. We also dive into his “defined duration” investing framework and preview his upcoming work on portfolio strategies.
Topics Covered
Why fears of a looming debt crisis may be misplaced
Inflation outlook, tariffs, and the Fed’s “soft landing” challenge
The importance of Fed independence and risks of politicization
Immigration, demographics, and long-term disinflationary trends
How AI is reshaping productivity, inequality, and the job market
Defined Duration Investing and asset-liability matching
Lessons from all-weather strategies and the Permanent Portfolio
Cullen’s “Forward Cap Portfolio” and future of global markets
Timestamps
00:00 – Cullen on debt crisis fears
02:32 – State of the U.S. economy post-COVID
05:18 – Inflation, tariffs, and shelter costs
10:25 – Soft landing vs. rolling recessions
14:07 – The Fed’s role and impossible job
19:25 – National debt and Ray Dalio’s crisis warning
27:52 – AI boom and disinflationary forces
31:01 – Immigration, demographics, and inflation
37:23 – Aging population and wealth inequality
43:00 – How AI impacts productivity and jobs
52:00 – Defined Duration Investing explained
1:01:34 – Portfolio strategies: Permanent Portfolio & risk parity
1:03:54 – Cullen’s “Forward Cap Portfolio”
1:06:31 – Closing thoughts and future projects
