Daily Briefing — Wed 14 Oct 2026

Daniel Brooks

Good morning, Walter. It's Wednesday, October fourteenth, twenty twenty-six, here in Costa Rica. Ten new episodes hit your queue overnight, six of them finance, so we'll go deep on the strongest and keep the rest to a line.

Daniel Brooks

First, Monetary Matters with Jack Farley. This is the day's best finance listen. Ben Inker, co-head of asset allocation at GMO, which manages about eighty billion, lays out why he thinks the A I bubble pops from equity supply over the next twelve to eighteen months. His history frame is familiar. Transformational tech, canals, railroads, autos, the internet, usually creates a bubble because capital floods in before anyone knows who gets the returns. He says compute and models look more like competitive businesses than winner-take-all ones, because switching costs are low and open-source keeps models interchangeable.

Daniel Brooks

The tradable part is the supply thesis. Inker argues markets have become more price-inelastic as passive and tracking-error-obsessed active managers refuse to sell into strength. So new supply matters more than it used to. He points to SpaceX, then Anthropic and OpenAI, as the largest I P Os in history. In aggregate he puts them around six to seven and a half percent of U S market cap over about twelve months, versus a prior peak near two and a half to four percent in ninety-nine, two thousand, and twenty twenty-one. His named rule of thumb is that the market does about four percent worse per percent of market cap that arrives via I P O in a given year. At six percent supply, that's roughly twenty-four percent worse than a normal year, which he frames as a serious headwind, not a guaranteed crash. If A I demand disappoints and compute becomes abundant, he says the equity hit could be thirty-five to fifty percent in the epicenter names, while quality hyperscalers with real non-A I businesses fare better than single-line builders. Portfolio tilt from GMO today favors non-U S and value over U S growth. Seventy-one minutes. Worth the full listen if you care about A I positioning.

Daniel Brooks

Next, Excess Returns, a ClickBeta conversation with Barry Ritholtz, Dave Nottig, and Matt Ziegler. On A I for investing, Nottig says the early dream of black-box stock-picking funds flopped. Everyone got the same summarization tools at once, so any edge evaporated, and the few A I stock-picking E T Fs have been meh. Ritholtz's working rule is you won't be replaced by A I, you'll be replaced by someone who uses it better. The market stats that stuck. At all-time highs, eighty-three percent of the S and P was ten percent off fifty-two-week highs in the third quarter, and forty-two percent was down twenty percent. Breadth is narrowing. On the I P O wall, he notes SpaceX, Anthropic, and OpenAI at currently discussed valuations would be about five point two trillion combined, versus about four point one trillion for all U S tech I P Os from nineteen eighty through twenty twenty-five. And on bonds, Ritholtz says this is the first time this century he finds them attractive. He likes five-to-seven-year investment-grade and munis, TIPS for inflation hedges, and warns against junk and circular A I-funded credit. About sixty-seven minutes. Worth it for the breadth numbers and the bond turn.

Daniel Brooks

Third, Top Traders Unplugged, You Got Options. Jim talks with Christian Mueller-Glissmann, head of asset allocation research at Goldman. I worked from the first twenty-four minutes of audio plus the episode framing, so note that aloud. His core idea is that the bond market is becoming the speed limit for equities. Coming into the year, people hoped for Goldilocks. Low unemployment, high margins, elevated valuations. Instead the A I CapEx boom pushed the cycle into a mid-cycle acceleration and a major private-sector re-leveraging, which helped earnings but pressured bonds as nominal growth rose. He also pins much of the recent inflation impulse on the Middle East energy shock, not only CapEx. As earnings tailwinds peak and rates headwinds bite, equities consolidate. He draws a useful distinction. He does not see a classic valuation bubble that bursts overnight. He sees more of an earnings bubble in parts of the market, which can deflate slowly as CapEx is depreciated over years. Hyperscaler free cash flow looks negative because of A I spend. Strip that out and the underlying platform and cloud businesses are still highly profitable. The comfort, such as it is, is that an earnings bubble takes longer to unwind than a valuation mania, and Q three earnings will be a check on whether monetization is catching CapEx. Worth about the first half hour if you follow sixty-forty and vol allocation.

Daniel Brooks

Fourth, Animal Spirits, episode four eighty-six. Ben Carlson and Michael Batnick run the title question, are higher rates worse than Z I R P. Carlson argues that today's four-to-five percent rates are worse for the real economy than zero rates were in the twenty-tens, mainly because housing is dead and housing is about twenty percent of the economy. Batnick pushes back and prefers two-to-three percent over four-to-five, without wanting a return to zero. They also hit concentration. Citing Michael Cembalest, A I stocks since January twenty twenty-four have been about two thirds of price return, sixty percent of earnings growth, and eighty-one percent of CapEx. Soft-landing talk around A I gets the usual shove. If the CapEx thesis fails, there may be no soft landing. About seventy-three minutes of banter. Skim unless you want the housing-versus-Z I R P debate.

Daniel Brooks

Fifth, a quick pass on three shorter finance items. On E T F Prime, Nate Geraci talks with the S E C's Brian Daly after the comment period closed on novel E T Fs, prediction markets, leverage, single-stock, crypto, and private-asset wrappers. Daly, speaking personally, credits Rule six-c-eleven for streamlining launches. The wrapper scaled from roughly two thousand to under six thousand funds and from about four trillion to sixteen trillion in A U M, with around one hundred twenty-five fund I P Os a month. Listen if you issue or trade exotic E T Fs. On Robeco, Mike Mullaney of Boston Partners walks U S midterms. He says markets aren't priced for a blue wave, midterm years average about a nineteen percent drawdown since nineteen sixty-two, and historically the year after the midterm trough averages about plus thirty-two percent. Twenty-five minutes of election macro, not a trade ticket. Skip unless you want the political checklist.

Daniel Brooks

Non-finance next. Perform with Andy Galpin is a solo follow-up on testosterone after his Ben House episode. Standalone, about a hundred and one minutes. His strongest claim from recent analyses is that testosterone does not simply fall because of aging itself. Older men often have lower levels, but age isn't the independent driver the way lifestyle constraints are. Body fat, calorie surplus or deficit, sleep, and psychological stress dwarf supplements in magnitude. Remove the constraint and levels often rebound. Resistance training still matters for muscle, and testosterone can amplify hypertrophy, but the lab story needs free testosterone and S H B G, not a single total-T number. He is not anti-T R T. He wants accurate information and the big levers fixed first. Given your earlier interest in the Galpin and House conversation, this is the non-finance episode worth a full or near-full listen.

Daniel Brooks

Three quick closers. The W H O O P podcast has Kristen Holmes and Greg Grosicki on alcohol. Their data point, one drink above your personal average raises resting heart rate about two to three beats and cuts H R V about four to five milliseconds, and exercising hard the same day can worsen the hit. Useful if you track recovery. The Indicator from Planet Money is a nine-minute consumer-rage mailbag, dishwasher rebate sludge, shrinkflation cereal boxes, car-rental fees, and a roach story, framed with Thaler's nudges versus sludge. Easy yes. And El Reporte Delfino covers Costa Rica politics this morning, new Sala suplentes, Trejos under pressure on trade talks, Stockwell complications, and a Snoop cancellation. I only had a rough Spanish transcript, so treat that as a headline pass.

Daniel Brooks

That's your briefing for Wednesday. If you only have time for one, make it Ben Inker on Monetary Matters. Have a great day, Walter.