How To Trade The AI Productivity Boom | Weekly Roundup

May 29, 2026

AI Summary

5 min read

How To Trade The AI Productivity Boom | Weekly Roundup

The hosts of Forward Guidance return from a holiday-shortened week to confront a market that feels increasingly synthetic—where the VIX sits below 16 after touching 40, where single-stock call skew is in the 98th percentile, and where the policy apparatus appears to be deliberately engineering outcomes that benefit asset owners at the direct expense of everyone else. The conversation ranges from the Fed's rate path to the AI productivity boom to the deteriorating health of the American consumer, but the through-line is a single uncomfortable observation: the system is working exactly as designed, and that may be the most dangerous thing about it.

The Fed's Impossible Position

The episode opens with a chart showing that by traditional Taylor rule models, the Fed should be hiking rates right now. The fed funds rate sits below policy rule prescriptions even using the Fed's own R-star estimate, and by some measures the market is pricing the first rate hike by the end of 2026. But the hosts argue this misses the point. The Fed and Treasury are running a coordinated wartime policy: suppressing oil prices through SPR draws, suppressing yields through balance sheet support, manipulating currencies. All of these are stimulative measures that increase the odds of an energy price shock seeping into core inflation.

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What you'll learn

1 (01:30) **The Fed's Rate Dilemma & Policy Paradox** - Host opens by questioning whether rate hikes are warranted given Taylor rule models show Fed funds below policy prescriptions, even with R-star estimates.
2 (05:48) **The AI Productivity Boom vs. The Social Contract** - Despite market manipulation "working" to suppress volatility, the panel flags a broken social contract as the key failure.
3 (09:32) **Crypto's Existential Question: Store of Value vs. AI's Productivity** - Host questions crypto's role in a world of 15% GDP growth driven by AI productivity.
4 (12:20) **Historical Parallel: Gold (2010-2014) vs. AI Infrastructure Today** - Host draws a comparison between the gold blow-off top in 2012 and the current exodus of capital from crypto into AI infrastructure.
5 (14:35) **Market Mechanics: The Dispersion Trade & Euphoric Positioning** - Host presents slides on implied correlation and vol-of-VIX to explain the current market structure.
6 (17:35) **Iran Geopolitics: No Leverage & Draining Inventories** - Panel analyzes the Iran situation, noting the US has no leverage and is begging for a resolution.
7 (20:53) **Stagflationary Risk: The "Transitory Phase" of Depleting Buffers** - Host warns that tax refunds from the "big beautiful bill" are running out, leaving consumers exposed to an energy shock.

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Show Notes

This week, we're back to discuss whether the economy is entering an AI driven productivity boom and what that means for markets. We deep dive into whether the Fed should actually be hiking rates, growing signs of consumer weakness, how we're thinking about positioning in this environment and more. Enjoy!

Timestamps:

(00:00) Introduction

(01:22) Should The Fed Be Hiking Rates?

(07:53) The AI Productivity Boom

(14:28) An Update On Market Structure

(18:28) The Consumer Is Struggling

(36:21) How To Trade This Market

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