Excess Returns Last Call: January 2026 | AI Capex, Private Credit Problems and the Unstable Market
8 snips
Jan 31, 2026 
Kai Wu, quantitative researcher at Sparkline Capital, on AI capital spending and rising corporate CapEx. Ben Hunt, narrative analyst at Perscient, on private credit risks and media-driven narratives. Brent Kochuba, options-flow specialist, on options positioning, hedging flows, and short-dated volatility. They discuss market instability, private credit bubbles, options-driven spasms, and the Magnificent Seven’s shift toward heavy infrastructure.
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Instability Over Uncertainty
- Markets today feel driven by instability rather than ordinary uncertainty, which creates more fragile outcomes.
- That instability arises from competing narratives and frequent policy and geopolitical shifts, increasing downside risk.
Options Expose Hidden Jump Risk
- Options prices reveal actual market expectations and positioning that sentiment alone cannot.
- Tight short-dated option pricing creates jump risk and can trigger sudden market spasms when reality deviates.
Dispersion Amplifies Market Moves
- Single-stock option demand has become highly dispersed versus cheap index options, signaling concentrated bullish bets.
- That dispersion can unwind into sharp S&P moves when single-stock trades reverse and dealer hedges spill onto the index.