Forward Guidance The AI Economy Is Leaving Labor Behind | Weekly Roundup
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Nov 27, 2025 This week, the hosts explore the Fed's surprising rate-cut shifts, highlighting how market reactions are more about positioning than fundamentals. They discuss AI's role in boosting capital expenditure while masking deep economic issues and the alarming trend of AI replacing entry-level jobs. The conversation also touches on political pressures leading up to 2025 and the true cost of living being significantly underestimated. A debate on the risks of AI investments rounds out the discussion, emphasizing the implications for labor and future economic policies.
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Markets Move On Fed Vibes
- Fed messaging has become the single dominant driver of market moves, not fundamentals.
- Traders now front-run Fed vibes and position based on expected policy whipsaws.
Systematic Flows Amplify Short-Term Rallies
- Market structure and systematic flows (CTA, vol-targeting, buybacks) amplify price moves independent of fundamentals.
- Low VIX and month-end rebalancing force levered players to relever, pushing stocks higher into thin holiday liquidity.
AI CapEx Masks Main Street Weakness
- AI CapEx is propping up parts of the economy and masking weakness elsewhere.
- Political incentives likely force government support of AI build-out regardless of AGI certainty.