Talk: Why Every Trader on Earth is Watching the 10-Year Treasury Now | WDWL
Speakers: Josh Brown (host, Ritholtz Wealth / The Compound); Nick Colas, co-founder, DataTrek Research (guest). Jessica Rabe (DataTrek co-founder) out sick — mentioned, not on mic.
Date published: Monday, 24 August 2026, 5:00 PM ET
Duration: 42:48
Source URL: https://www.youtube.com/watch?v=WaKDHRCC3NE
Memo date: Monday, 24 August 2026
Source type: YouTube English auto-generated captions (ASR), flattened continuous prose. No per-cue VTT in the working dump (timedtext JSON3 was retrieved as prose; local curl of the same URL returned an empty 200; WEB player was login-walled). Timestamps in this memo are estimated from YouTube chapter markers plus narrative position / linear interpolation over 42:48. Treat as plus or minus a couple of minutes, wider inside the long 2:59-26:54 rates block.
ASR quality note: Auto-captions, not a human transcript. Names, tickers, and numbers are often garbled. Common corrections applied here where context is strong (Colas, Rabe, DataTrek, iShares, CAGR, AI-related, neutral rate, laddered, RIAs, 10-year / "tens," Volcker, Anthropic, Claude, Baidu, Alibaba / BABA, Tencent, MSCI ACWI, T. Rowe Price, roll risk, principal, equal-weight). Remaining uncertainties flagged in-line (notably "four 75 basis point rate hikes"). Sponsor read (FM Investments / SGVA ultrashort Treasury ETF; ASR "Troll Price" = T. Rowe Price) is not investment content. This memo contains no trade recommendations. Colas's "keep duration short / under five years" is his client advice as Source, not ours.
How to read this document: Restatements of the conversation are Source. Interpretive links and underwriting judgments are Inference. Any fact not spoken in the transcript is External check needed. Speaker-stated numbers are used as spoken and attributed; they are not independently verified. Brown vs Colas attributed throughout.
YouTube chapters (used as timestamp anchors, not as spoken content): 0:00 Ad Read · 1:30 Intro · 2:59 Long Term Treasury Yields Just Keep Moving Higher · 26:54 We Publish an S&P 500 Fair Value Grid Every 2-3 Weeks · 34:48 Grab Bag of Other Recent DataTrek Client Notes/Discussions · 42:48 end.
Takeaway 1 — Real-rate breakout, not an inflation scare (Source, Colas, ~02:59-07:00). Colas is "focusing right now on the 30-year Treasury" because it has "broken out to plus 15 maybe 20 year highs in terms of yield." Nominal about 5.2-5.3% is split into inflation expectations that have been "dead flat" for 15-16 years (chart from 2010, roughly 1.5-2.5%) and a residual real yield that has "broken out" from about 2-2.5% to "pushing up on 3%." TLT (iShares long-duration Treasury ETF) compounded "almost 8% a year" through the 2010s (Brown restates 7.8%, 2010-2019) and -4.4% CAGR "this decade so far" / "the last 6 years," coupons reinvested. The 2010s hedge became "very destructive to portfolio returns."
Takeaway 2 — Four named drivers; duration "step stool" until the economy weakens (Source, Colas then Brown, ~09:00-14:00). Colas's four reasons real rates are high and climbing: (1) QE unwind — Fed "purposefully" depressed real rates in the early 2010s and 2020s; now "very stable Fed balance sheet with no bond buying"; (2) no recession since 2020 despite 2022 hikes, a 2025 "US trade policy shock," and oil shocks in 22 and 25, so the neutral rate "must be higher"; (3) federal deficits "remain high" and "credit quality is becoming into question"; (4) "AI-related long-term corporate borrowing" competing with Treasuries. His client conclusion (Source, not our advice): "keep on portfolio durations pretty short, like under five years" — until the US economy weakens (his trigger, not ours). Brown's gloss: you can ladder, but "you don't want to be laddered out to 30 years" — "more a step stool than a ladder." Time to extend is when data weakens; "we don't have any signs of that right now."
Takeaway 3 — Mega-cap IG issuance as a Treasury substitute (Source, Brown then Colas, ~14:00-19:30). Brown: "1.75 trillion in corporate bond issuance this year," "20 or 30% ahead" of this time in 2025; Oracle, Meta, Amazon, Alphabet in the market via bonds and sometimes secondary equity. High-grade "with the exception of Oracle." Colas's leap, which Brown says "a lot of people don't make": a Google 10-year vs a US 10-year is a live PM choice because Google's cash flows are "profound," global, well-managed — "at least as safe as the US government" as a repayment bet (not an equity-outperformance bet). Every dollar into high-grade corporates is "a dollar that does not go into a US Treasury." Most RIAs look at "the whole spectrum," not a pure-Treasury mandate.
Takeaway 4 — 5% on tens is the 2020s jitter trigger; the 2022 playbook is broken (Source, Colas + Brown, ~19:30-26:54). Colas: for most of this decade the threat level has been 5% on the 10-year. "We're not there yet... 470 472 today." At 5%, "the equity market's begun to really jitter." Speed of the move matters (orderly summer rise in the belly, not just the long end — Brown's TV talking point, Colas agrees) and there is still a level where equities "say I'm not so comfortable paying 20x for the S&P 500." Brown's addendum: 2022's "get out of jail free card" was that mega-caps were not big borrowers / had refinanced at 0% in 2020-21; Meta was the spending-cut poster child. Now they "sell stock on the secondary market and issue debt." "Oracle is the worst performing mega cap... rating that's almost been cut to junk." Colas: financial leverage plus cash that used to return to shareholders now funds AI — "reinvestment risk on top of roll risk." Hyperscaler cash flows remain cyclical (ads, high-end electronics). Breaking point on tens "maybe it's five, maybe it's six." 1990s 5% average is not the analogue: that decade inherited a Volcker disinflation from "15" / tens "peaked at 17." This cycle is "coming from 0 to 5." Yields "have no natural cap." If tens were guaranteed to stop at 5 for the rest of the decade, "multiples would expand by two points tomorrow."
Takeaway 5 — S&P YTD is 100% earnings revisions; base +6-16% next 12 months at ~20x (Source, Colas, ~26:54-34:48). DataTrek fair-value grid (this year + next year FactSet consensus; 10-year multiple range 14 to ~22, plus 24 as "peak from the dot bubble" and 26 "just to dream"): most cells show losses vs the current tape at 14/16/18x; "real payoffs" only at 20+. S&P "up like 12%... 12.1 as of Friday." Earnings revisions "up 15 and up 13%" this year and next; 2027 also "call it 13%." "The entire move... has been earnings revisions... no PE expansion at all... a little PE contraction" (some of it "kooky one-off" Amazon/Alphabet Q2 markups on SpaceX). Colas, sell-side in the 1990s: "Analysts never raise numbers during a year... start high and trim. That has not been this year." Drivers: tech and energy. Three upside scenarios only (they "don't discuss" downside): most likely +6 to 16% over the next 12 months with earnings still rising and multiples flat ~20x; better +13 to 28% if US-Iran resolves, oil to ~60-65 (not the 55-60 they "started the year"), diesel ~70-80 from "100 plus," multiple 22x — this was Colas's base until ~six weeks ago; dream +12 to 39% at 24x if AI capex also "show[s] its value" (Anthropic IPO "this year," Gemini confirmation, customers citing AI in beats). Coding is why AI demand exploded this year; "the non-coding side is the vast majority of the economy." DCF overlay: C / (R - G) — if growth is "18% for the next 5 years," he "honestly [doesn't] care if the 10 is at five or 6%."
What headlines likely miss (Inference, anchored to Source). Headlines will cover "30-year at multi-decade highs" and "who will buy Treasuries." The non-obvious stack is: (1) inflation expectations are not the moving piece — reals are; (2) AI IG paper as a substitute good for long Treasuries inside RIA/PM risk budgets, not just "tech is issuing"; (3) the 2022 duration-immunized mega-cap is gone, so a 5% 10-year print may hurt the same names that saved the index last time; (4) S&P richness with zero multiple expansion — the tape is an earnings story, so an estimate-cut is a price-cut, not a PE-mean-reversion cushion; (5) grab-bag: the spend is an AGI race, not an agents/ROI race, which is why Chinese open-source "hasn't super affected investor sentiment"; ultra-low sector correlations and hyperscaler leverage both embed a "no recession for the next 5 years" assumption; ~38-40% of MSCI ACWI is the "science project." Headlines will underweight the substitute-asset channel and the implicit five-year no-recession put.
Why this matters in weeks. 10-year vs 4.70-4.72 and the 5.00 Colas trigger; 30-year vs the 5.2-5.3% print he put on screen; whether the summer backup stays "orderly"; any mega-cap (especially Oracle) rating/issuance headlines; whether DataTrek's next 2-3 week grid still shows "most cells = losses" below 20x. Source for the levels; Inference that these are the near-term underwriting gates.
Why this matters in quarters. Whether YTD 2026 deficit is in fact already > full-year 2025 (Brown; External check needed); whether $1.75T IG/corporate issuance and the +20-30% vs 2025 pace persist; US-Iran / oil / diesel path that demoted Colas from a 13-28% base to 6-16% about six weeks ago; Anthropic IPO "this year" and whether customers start citing AI in beats (the 24x path); new Fed chair + oil as the two named reasons multiples have been stuck.
Why this matters in years. Neutral-rate regime if the post-2020 shock-absorption is structural; 40-year declining-rate tailwind now reversed ("5 going to 6," no natural cap); public mega-caps run as VC "science projects" (38% / ~40% of MSCI ACWI); AGI race as the reason the money is spent; US-China AI outcome treated as reserve-currency / deficit-sustainability (16 of the most valuable global companies US, other 4 "Asia and the Netherlands" as "offshoots of US tech"). If the US "lose[s] the AI race," Colas says the ability to run deficits on an expanding tax base "begins to go away."
Conviction in the speakers' framework as presented: High. Internally consistent: stable inflation expectations + rising reals; four supply/demand reasons that do not require a new inflation scare; 5% 10-year as a 2020s empirical jitter level, not a 1990s comfort level because of the path from zero; S&P as an earnings-revision market with a thin multiple cushion; AGI-not-agents explaining both the capex intensity and the muted reaction to Chinese OSS. Brown and Colas do not contradict each other on the rates map; Brown supplies the 2022-vs-now mega-cap credit overlay Colas then accepts.
Conviction in our ability to underwrite that framework from this source: Medium. No slides in the caption dump (charts described, not tabulated); timestamps estimated; large claims (30y 15-20 year yield highs; TLT +8% / -4.4%; 10y 4.70-4.72; $1.75T issuance; deficit YTD > 2025; S&P +12.1%; revisions +15/+13%; 6-16 / 13-28 / 12-39; ChatGPT +1300%; Claude +76%; MSCI 38%; 16/20 top companies) are speaker-stated and External check needed. "Four 75 basis point" 2022 hikes is ASR-ambiguous. A PM can open a research workstream from this memo; a PM cannot size duration or equity risk from the transcript alone.
Allocation-research implication (Inference, not a recommendation). Investigate — do not execute — a research barbell of (a) whether real yields stay the binding variable (inflation breakevens still ~1.5-2.5% vs reals toward 3%) so that long-duration beta (TLT-style) remains a failed 2010s hedge until growth actually breaks, versus (b) whether AI IG substitution + mega-cap roll risk makes the 5% 10-year print a tech-index event this cycle rather than a 2022-style quality-outperform event, while treating Colas's 6-16% / ~20x S&P path as the working earnings-revision base until Iran/oil or AI-ROI evidence upgrades it. What would change the view: 10-year through 5% (his jitter level); inflation expectations themselves breaking out (would falsify "it's reals, not CPI"); economy weakening enough that he would want long duration (his own extension trigger); estimate-cuts into a 20x tape; recession appearing inside the five-year "full stop" assumption that he says you must believe to stay "super long."
Chronological, faithful to what was said. Short quotes only where they carry the claim (max 20 words). All times estimated (plus or minus a couple of minutes). Brown = Josh Brown; Colas = Nick Colas.
(00:00-01:30) Sponsor: FM Investments / SGVA, "FM Accumulator Ultrashort Treasury ETF." Congratulates "Alex and the FM team on joining forces with T. Rowe Price" (ASR: "Troll Price"). Pitch: most ultrashort Treasury ETFs pay monthly taxable distributions; SGVA is "structured to avoid unwanted taxable distributions." Not investment content for this memo.
(01:30-02:59) Brown intro: What Did We Learn; "the most important topic of the past week for investors, allocators, portfolio managers, hedge funds" now that earnings season is "most of the way through." Guest: Nick Colas, co-founder of DataTrek Research, author of DataTrek's Morning Briefing "daily to 1500 plus institutional and retail clients." Jessica Rabe (ASR: "Jessica Rae") "on the bench... not feeling great." DataTrek YouTube channel flagged. Summer-is-almost-over color.
(02:59-04:30) Brown framing: typically "what happens in the bond market doesn't really have much of an impact on the stock market"; "right now the treasury bond market has come back... the front burner" because of volatility and competing narratives. Hands to Colas on "long-term Treasury yields specifically moving higher."
(04:30-07:00) Colas: Focus on the 30-year — "plus 15 maybe 20 year highs" in yield; "a lot of confusion" on cause. Chart: 30-year decomposed into inflation expectations vs residual real rates. Nominal "5.2 5.3%." Inflation leg (red): "dead flat" about 15-16 years, chart from 2010, "1 and a half and 2%... or 2 and a.5%." "What moves around a ton... is real rates," now "pushing up on 3%" vs "call it 2% 2 and a.5%." TLT (iShares; ASR: "EyesShares"): "compounded at almost 8% a year positive through the 2010s"; 2020s, because reals "exploded from being negative to being very positive," "CAGR... negative 4.4%." Long-end went from "massive money-making trade" to "very destructive to portfolio returns."
(07:00-09:00) Brown: Restates 7.8% CAGR 2010-2019 on "risk-free" (credit) long Treasuries — duration was the risk — which "led to a lot of allocators including TLT or something like it as... a permanent part of their asset allocation." Last 6 years compounding at -4.4% "for the risk-off asset." People thought it "should always be included... when the market's getting killed." Colas: "Precisely so." Returns "with coupons reinvested... total return." Trade "even worked in 2020" — "TLT was rallying. It was the anchor... destructive since."
(09:00-12:30) Colas — four reasons reals are high and climbing. (1) Artificially depressed by Fed QE / bond-buying in early 2010s and 2020s; "got real rates super negative"; "mission accomplished. This is the unwind... very stable Fed balance sheet with no bond buying." (2) "No recessions since 2020" despite "2022's aggressive rate hikes," "2025's US trade policy shock," "two different oil shocks in 22 and 25" so "the neutral rate of interest... must be higher than historically has been the case." (3) Federal budget deficits "remain high and credit quality is becoming into question... pretty well understood." (4) "A lot of AI-related long-term corporate borrowing... pulling demand away from treasuries" — "new players... issuing a lot of long-term debt that is competing directly with the Treasury bonds." Client conclusion (his): "you got to keep on portfolio durations pretty short, like under five years" until the US economy weakens — that would take away the "neutral rates have to be higher" topic and "should stabilize real rates at the long end."
(12:30-14:30) Brown: Advisors can ladder, "but you don't want to be laddered out to 30 years... more a step stool than a ladder." Time to get longer: "when the economic data is weakening and the risk of one of these shocks turning into an event." "We don't have any signs of that right now." Colas: Agrees; "the counter example of all these shocks since 2020 and no recession... just astounding." Explains "a lot of things in capital markets, not just... bonds." Brown restates: resilience so higher neutral; deficits — "already year-to-date the deficit is already larger than it was for all of 2025" (External check needed); "still feel safe but maybe a little less safe." Wants to "double click" on AI issuance.
(14:30-16:30) Brown: "I think the number is 1.75 trillion in corporate bond issuance this year" Headlines: "Oracle and Meta and Amazon and Alphabet" raising via secondary stock "oftentimes... bond offerings as well." "These are very high-grade credits... with the exception of Oracle." "Investing public is hungry for these deals." Asks Colas to explain "why Alphabet selling bonds would impact the price of a long-term treasury."
(16:30-19:30) Colas: Treasuries still "notionally the risk-free rate" and "money good." Thought experiment: Google 10-year vs US 10-year — which "more notionally secure"? US has "ability to tax"; Google has "cash flows which are profound... a global business and very well-managed." He "could argue [Google] is at least as safe as the US government." Bond investors "look at this more holistically"; they are "risk averse. The best they can do is get what they're promised." TLT "compound[ed] at negative 4% over the last six years. That's real risk." Google will "give me back my principal" (ASR: "principle") and pay the coupon without "insane volatility." Yield higher than a matched Treasury because Google "is not sovereign. Doesn't have the Marines and the Coast Guard and a navy." Brown: "Every dollar that goes into a high-grade corporate bond is a dollar that does not go into a US Treasury" Colas: "Essentially, yes... a trade-off every PM has to make." Pure-Treasury buyers aside, "most RIAs are looking at the whole spectrum."
(19:30-21:30) Brown: When do higher-yielding Treasuries compete with money-market cash for equity dollars? Colas: Recasts as "at what level do rates begin to threaten the economy" — equity investors worry about earnings. "For the most of this this decade it's been 5% on tens." At 5%, "borrowing costs are higher, economic growth slows and earnings become touchy." "We're not there yet on tens. We're at 470 472 today." "Trigger point, look at 10, look at 5%... at least over the 2020s, the equity market's begun to really jitter."
(21:30-23:00) Brown: TV consensus is that velocity matters more than the level; summer backup has been "orderly," "belly of the curve... not just the long end." Colas: "Fair point" — slow move gives equity investors "time... to judge how those changes in rates are affecting earnings." Fast move is "just a big shock." "So far, yes, it has been orderly." Counter: "it was not disorderly when... the 10s got to five in 23" Speed matters "but... there is a level where equities say I'm not so comfortable paying 20x for the S&P 500."
(23:00-26:00) Brown: 2021-22 hiking cycle "way more aggressive than anything our generation has experienced" (70s/80s analogue). 2022 "get out of jail free": largest index companies "had the least amount of interest rate risk because they weren't big borrowers." Meta "poster child" — cut no-ROI projects, stocks recovered. Mega-caps "refinanced so much of their debt at 0% in 2020 and 2021." "What's changed is we can't say that anymore... buyback companies to... sell stock... and issue debt" (ASR: "royal risk"). "Oracle is the worst performing mega cap... also the lone mega cap... debt rating that's almost been cut to junk." Asks why not to be "sanguine." Colas: 2022 tech "hardest hit"; S&P "ninth or 10th worst year... since 1928... down 19%." Nature of these companies "changed profoundly": (1) "financial leverage... much different now"; (2) "you don't have money going back to shareholders. You have money going into AI." No longer "steady 30% ROI ROE businesses" that reinvest what they need and "give... a lot of cash back." Now "reinvestment risk on top of roll risk." Offset: the technology is "pretty compelling and... potentially worldchanging." Market "willing to give the benefit of the doubt." He "worr[ies] a lot more about the AI side because ultimately it's going to have to fund those debt issues" "A much different package from what we had just three years ago."
(26:00-26:54) Brown: 5% trigger may matter more now: "heavily indebted projects all built around a single theme"; private credit/PE, "illiquidity," hyperscaler "liabilities or guarantees" that "didn't exist in 2022" to this extent. Colas: "A lot of the same honestly." Hyperscaler cash flows "still economically sensitive" (ads, high-end electronics). Breaking point "maybe it's five, maybe it's six" (autos, housing, spend, layoffs). Got to 5, no recession; "four 75 basis point rate hikes in 22" (ASR; four 75bp hikes vs 475bp total — External check needed), no recession; two oil spikes, no recession. "Five has been a level where the market begins to get worried." Brown (into grid): Ben Carlson — 1990s 10-year average 5%; "no real recession" after early-90s S&L (ASR: "SNL"); "one of the best stock market decades ever." Colas: Average was 5 but "coming down from 15" via "the Paul Volcker squeeze"; tens "peaked at 17." Tailwind "we do not have." Now "five going to six" from 1%. "Where you're coming from is oftentimes just important as where you are." Forty years of declining rates, "now on the up again." Yields "have no natural cap." If tens were guaranteed at 5 for the rest of the decade, "multiples would expand by two points tomorrow."
(~26:54-29:30) Colas — S&P fair-value grid published "every couple of weeks." "Eye chart"; he hits highlights. This year and next year FactSet earnings consensus; "standard multiples on the range over the last 10 years has been 14 to call it 22"; they add 24 (dot-com peak) and 26 ("just to dream"). "Most of this grid shows losses if you're trading at 14 16 18 times... real payoffs at 20 plus" "Market's still fairly richly valued and has not a lot of room for error if earnings miss"
(~29:30-31:00) Colas: S&P "up like 12% year to date. I think 12.1 as of Friday." Earnings revisions "The entire move for the S&P this year has been earnings revisions" Some of that is "kooky one-off earnings growth at Amazon and Alphabet... Q2 because of the markups on SpaceX." 2027 earnings also "call it... 13%." "Analysts never raise numbers during a year... start high and trim" "Amazing year for earnings growth because of tech and because of energy." "It's been 100% earnings, which is super unusual."
(~31:00-34:48) Three upside scenarios (Colas). Downside: "a thousand different ways... we don't discuss it. I think it's well understood." Most likely: +6 to 16% — "corporate earnings growth remaining strong and estimates keep increasing... Multiples stay flat at around 20." Brown clarifies: "from here... over the next 12 months" — "this will take us through 27." Maybe "a rally into year end a little sluggishness in the first half." No multiple expansion; "the spigot doesn't shut off." Brown: "everybody watching this would be thrilled with that." Better: +13 to 28% — earnings growth plus "a resolution to the US Iran conflict and therefore lower oil prices and multiples go to 22." Oil not back to "55 60 like they started the year" but "60 65 something reasonable"; diesel "back down to... 80 70 from 100 plus." Multiples "flat because we've had a huge oil shock and we have a new Fed chair." This "was my base case until about six weeks ago." "I think we're in the six to 16 band" Dream: +12 to 39% at a 24 multiple — earnings + lower oil + "AI capex begins to show its value in tech earnings." "The sun, the moon, the stars... all have to align." Brown: "Anthropic's IPO will be this year"; need Anthropic talking revenue generation, Alphabet confirming with Gemini, providers, and "the companies that are their customers simultaneously... specifically citing AI as the source of those surprises." Then "people will say the multiple in this market is too cheap for the revolution." Colas: "AI has exploded this year for one reason. It's coding" Brown: Can 5% tens coexist with 22x/24x? Colas: "They absolutely could." Business-school DCF: cash flow over risk-free "minus a growth rate" — "C over R minus G." "If incremental growth is outpacing incremental increases in... the discount rate" "If you're growing... 18% for the next 5 years. I don't care if the 10 is at five or 6%"
(~34:48-37:30) Grab bag 1 — Colas: AI capex "is not about where AI stands today. It is about what AI can do in the future." Data from "artificialanalysis.ai" (ASR: "artificial int analysis.ai"): since "November 22 when it launched, ChatGPT's intelligence is up 1300%. In the last year, Claude has improved by 76%." "AI is dramatically exceeding Moore's law, which is a double over two years or 41% CAGR." "The race is about getting to artificial general intelligence... that can teach itself." Silicon Valley podcasts: "It's strictly about getting to AGI first or second" Not "an agent that can help me pick airline tickets." Brown: If one platform gets to AGI "meaningfully faster," advantages may "compound... impossible to compete with." Colas: "Chinese open source models haven't super affected investor sentiment" "What you're investing in right now is 100% about getting to AGI as soon as possible." Once there, "the hierarchy becomes a little bit more set in stone" Monetization "becomes very different."
(~37:30-39:30) Grab bag 2 — Colas: "S&P sector and stock correlations are extremely low... 10 plus year lows" Reason: "this notion of a recession proof US economy." If nobody thinks a recession is "in the wings," "investors can pick and choose" — healthcare, financials, tech — "correlations fall apart and volatility at the aggregate level the VIX level is very low." "if you were worried about a recession you would not be plowing all this money" "no recession for the next 5 years. Period. Full stop" Brown: Tech founders, looking at 15 years of shocks shaken off, conclude "the risk to look for is not a vanilla business cycle correction... The risk is existential tech innovation."
(~39:30-41:00) Grab bag 3 — Colas: "Public equity investing is now a lot like VC investing." Top-of-S&P companies used to spin "every single dollar these companies make is going to a science project" "38% of MSCI ACWI is tech and big tech" Escape hatch: equal-weight S&P is "14% tech." "I see a point of it now" — you still own the companies smaller, "not as leveraged as you are as the market cap weighted indexes."
(~41:00-42:48) Grab bag 4 / close — Brown: Is the US-China AI race "the real existential wall of worry"? Colas: "It does." US reserve-currency status is "because this country does smart things with its capital." "You can run a deficit if you're innovating quickly and your tax base will expand" Brown: If China wins, "China's equipment and services will then proliferate... trade with other countries and sell AI products... currency flows." Colas restates: "16 of the top most valuable global companies by market cap are US companies" "innovation drives equity returns and reserve currency status" Brown: "We want Alphabet to win and not Baidu." Colas: Yes, and "you won't even be able to make a lot of money if Baidu wins or BABA wins" Close: DataTrek at datatrekresearch.com (ASR: "data research.com"); "simple signup box. No credit card." Tell Jessica to feel better.
Mark inference vs source throughout.
| Node | Role in their map | Source locus (est.) |
|---|---|---|
| 30-year UST / TLT (iShares) | Exhibit of real-rate breakout; 2010s ~+8% CAGR vs 2020s -4.4%; failed "risk-off" hedge | ~04:30-09:00 |
| Inflation expectations (30y) | Non-moving piece: ~1.5-2.5% for 15-16 years | ~04:30-07:00 |
| Real yields | The moving piece: ~2-2.5% to pushing 3%; why nominal 5.2-5.3% | ~04:30-07:00 |
| 10-year UST | Equity "jitter" trigger at 5%; print 4.70-4.72 "today"; 2023 twitch at 5 even when orderly | ~19:30-23:00 |
| Fed / QE unwind / balance sheet | First driver of high reals; "no bond buying," stable BS | ~09:00-12:30 |
| Neutral rate / US real economy | Second driver: no recession through 2022 hikes, 2025 trade shock, oil 22 and 25 | ~09:00-12:30, ~26:00 |
| Federal deficit / Treasury credit | Third driver; Brown: YTD 2026 already > all of 2025 | ~09:00-14:30 |
| AI IG issuers (Alphabet/Google, Amazon, Meta; Oracle as exception) | Fourth driver: substitute for long UST inside RIA/PM books; high-grade except Oracle (rating "almost... junk," worst mega-cap tape) | ~14:30-19:30, ~23:00-26:00 |
| Hyperscaler cash flows (ads, high-end electronics) | Still cyclical; must eventually service AI debt; private credit / PE / guarantees as new 2022-absent plumbing (Brown) | ~23:00-26:54 |
| S&P 500 / FactSet grid | Rich vs 14-18x; tape = earnings revisions +15/+13, PE flat-to-down; 20x is the "payoff" line | ~26:54-31:00 |
| Oil / diesel / US-Iran | Multiple-cap: 22x path; diesel 100+; Colas's base demoted ~6 weeks ago | ~31:00-34:00 |
| New Fed chair | Co-named (with oil shock) as why multiples have not expanded | ~31:00-34:00 |
| AI labs / Anthropic / Gemini / coding vs non-coding | 24x path requires customer-cited ROI; 2026 demand = coding; spend motive = AGI | ~32:30-37:30 |
| Chinese OSS / Baidu / BABA / Tencent / DeepSeek | Fast/good but not the AGI endgame; constrained profit if they "win" | ~36:30-42:30 |
| Equal-weight vs cap-weight S&P; MSCI ACWI | 14% vs ~38-40% tech; public markets as VC science project | ~39:30-41:00 |
| USD as reserve currency | Innovation + tax-base expansion, not just army/navy; lose AI race then deficit capacity erodes | ~17:30, ~41:00-42:30 |
Flow (Source, sequenced as they told it): Inflation expectations stay glued in a 1.5-2.5% band so the entire 30-year backup is a real-rate event. Reals are high because QE's artificial depression is over, the economy has not recessed through multiple shocks (so r-star is higher), deficits are large and growing (Brown: YTD already worse than 2025), and AI IG paper is a substitute good for long Treasuries in risk-averse PM/RIA books that just lived through TLT -4.4% CAGR. That substitution is rational at the credit level (Google as likely to repay as the sovereign) even if the corporate yield is higher for lack of Marines. Equities do not care until tens approach 5% (4.70-4.72 now), and they care more than in 2022 because the same mega-caps are now issuers with roll risk and AI reinvestment risk (Oracle as the live credit-tape exhibit). S&P YTD is an earnings-revision market at a ~20x multiple with no expansion cushion; upside fattens only if Iran/oil and/or AI-ROI land. Parallel implicit put: no recession for five years, which is why correlations and VIX are crushed and why hyperscalers will lever for AGI. That put is also why losing the US-China AGI race is, in Colas's telling, a reserve-currency problem.
Bottleneck that is binding on the long end (real-rate / duration demand). Source: inflation expectations "dead flat"; reals "pushing up on 3%"; four demand/supply reasons, of which AI IG substitution is the "new topic." Inference: the marginal buyer of long UST is being bid away by IG paper that clears a "risk-averse, get-my-principal-back" screen. Pricing power on long yields sits with (a) whether r-star stays high and (b) whether the AI issuance calendar keeps offering a substitute. Short-end / under-5y duration is Colas's stated place to hide until growth breaks — report as his, not ours.
Bottleneck that is not binding (inflation expectations, on his chart). Source: 15-16 years, 1.5-2.5%. Inference: an inflation-scare narrative for this backup is a misread on his evidence. If breakevens do break out, his decomposition is the first thing to re-underwrite.
Bottleneck at 5.00% tens (equity multiple / growth). Source: 2020s jitter level; 4.70-4.72 today; 2023 twitch at 5 even orderly; 20x S&P discomfort; "maybe five, maybe six" for the real-economy break (autos, housing, spend, layoffs). Inference: about 30bp of 10-year backup is the distance from "orderly TV comfort" to his empirical trigger — a thin buffer. Velocity is a modifier, not a substitute for the level.
Bottleneck inside mega-cap finance (issuance + roll + AI ROI). Source: buybacks to secondaries + bonds; Oracle nearly-junk / worst mega-cap; AI must "fund those debt issues." Brown: private credit, PE, illiquidity, hyperscaler guarantees. Inference: the 2022 "fortress net-cash quality" factor is no longer a free hedge against a rates shock. Pricing power has migrated from equity-holder residual (buybacks) to bondholder claim + capex.
Bottleneck on the multiple (oil/Iran + Fed chair + unproven non-coding AI). Source: multiples stuck because of oil shock + new Fed chair; 22x needs cheaper oil; 24x needs AI value in tech earnings and customer citations; coding is not the economy. Inference: the S&P is priced as if G stays mid-teens; the option on 22-24x is a macro (Iran) plus a micro (non-coding ROI) dual key — either can stay lost.
Hidden bottleneck (the five-year no-recession assumption). Source: low 10-plus-year sector correlations, low VIX, levered hyperscaler AGI spend, "believe that 100%" to be super-long; 38-40% of ACWI in the science project. Inference: this is the system's single point of failure. A garden-variety recession would re-correlate, lift vol, hit cyclical ad/device cash flows that service AI debt, and remove Colas's reason for staying short duration (he wants long duration when the economy weakens — a hedge that would then compete with forced de-risking).
H1 (Source-led): If 30y inflation expectations stay in the 1.5-2.5% band, further long-end backups are real-rate / r-star / supply events. Research breakevens vs real yields as the first split of any "bond tantrum" headline. Do not treat CPI-scare language as confirmed by this source.
H2 (Source-led): If AI IG issuance stays at Brown's about $1.75T / +20-30% pace, long UST have a substitute-good problem inside non-dedicated accounts. Diligence the share of RIA/core-plus that can legally/behaviorally swap UST for GOOGL/AMZN/META paper.
H3 (Source-led): 10-year 5.00% is a harder equity event than 2022 if mega-cap balance sheets now carry issuance and roll risk. Oracle is the named exhibit; do not assume "quality growth" automatically dampens a 5% print.
H4 (Source-led): S&P path is an estimate path at a stuck ~20x. Track revision breadth (tech + energy) and strip SpaceX markups. Iran/oil is the multiple-expansion key Colas already downgraded; AI-ROI in customer earnings is the 24x key he still treats as a dream.
H5 (Source-led): Cap-weight vs equal-weight is a science-project concentration choice (38-40% vs 14% tech), not a style-box hobby. DataTrek's long-standing equal-weight skepticism is explicitly softening.
H6 (Inference): Colas's "keep duration under 5y until the economy weakens" and "be super long only if you 100% believe no recession for 5 years" are the same coin. A growth scare would be the signal to extend duration in his framework and the signal that the equity/AGI complex's implicit put is failing — i.e., the hedge and the risk asset can be forced at the same time. Research that collision; do not treat his duration advice as a free lunch.
Each chain: [Primary observation] then [Second-order] then [Third-order] then [Investment relevance]. Links tagged.
They assigned no numeric probabilities. Colas did rank three upside S&P paths and explicitly parked downside as "well understood." Numeric weights below are analyst inference for research planning only, not theirs. Timeline anchors that are theirs: 10y 4.70-4.72 today, trigger 5%; 30y 5.2-5.3%; next-12-month S&P window "through '27"; Iran/oil demotion "about six weeks ago"; Anthropic IPO "this year"; "no recession for the next 5 years"; duration short until the economy weakens.
Analyst inference probability: roughly 25%. Maps to their "better" (+13-28% at 22x) and "dream" (+12-39% at 24x). Colas already abandoned the 13-28 band as base six weeks ago; the dream "need[s] all three things." Brown's Anthropic/Gemini/customer-citation checklist is a high bar.
Analyst inference probability: roughly 45%. Closest to their stated most-likely: S&P +6 to 16% over 12 months, multiples ~20, estimates still rising; Colas "we're in the six to 16 band"; summer rates orderly but not reversing; "keep duration pretty short, like under five years"; no signs of economic weakening; AI demand still coding-led; Iran unresolved.
Analyst inference probability: roughly 30%. They did not spec a downside S&P number ("thousand different ways"). This is Inference built from their own invalidation flags: 5% jitter, 20x discomfort, "not a lot of room for error if earnings miss," Oracle credit, cyclical hyperscaler cash flows, "maybe five, maybe six" for the real economy, "no natural cap" on yields, and the 100% no-recession belief required to stay super-long.
Invalidation hierarchy to put on a PM dashboard (mixed Source/Inference):
No buy/sell. Hypotheses and watch items only. Metrics that were not in the talk are labeled External check needed. Speakers' portfolio-construction comments (duration under 5y, step stool) are their advice as Source, not recommendations of this memo.
iShares TLT (exhibit, above); FactSet (data vendor); SpaceX (Q2 markup at AMZN/GOOGL); Ben Carlson (1990s 5% average — colleague of Brown); Paul Volcker / 17% tens (history); new Fed chair (unnamed; identity External check needed); OpenAI, Microsoft, AWS (customer/provider list on the 24x path); ChatGPT / Claude / Gemini (intelligence/ROI); Moore's law (benchmark); VIX (low, with correlations); healthcare and financials (examples of what you can pick when correlations are low); Marines / Coast Guard / Navy (sovereign-vs-Google rhetoric); FM / SGVA / T. Rowe Price (sponsor). None of these is a watchlist primary except as already broken out.
P1 — Must-do before any allocation-research decision
Rates tape vs the prints they spoke (P1). Rebuild, as of recording/publish date (Mon 24 Aug 2026, with "today" 10y 4.70-4.72 and 30y 5.2-5.3%): constant-maturity 10y and 30y, 30y TIPS/breakeven/real split, whether 30y yield is in fact at 15- or 20-year highs, TLT total-return CAGR 2010-2019 vs 2020-YTD 2026 vs last six years (they used both "this decade so far" and "last 6 years"; Brown 7.8% vs Colas "almost 8%"). Data: Treasury H.15, Bloomberg, iShares TLT factsheet. Expert: rates strategist to replicate the exact inflation-expectation series on his chart (5y5y? 30y breakeven? — not specified).
The 5.00% 10-year jitter rule (P1). Map 2020s S&P drawdowns vs 10y prints: did equities "jitter" at 5% this decade, and was 2023 an orderly 5% twitch as he said? Distance from 4.70-4.72 is ~28-30bp — option-implied probability of a 5% print over 1m/3m. Expert: equity-macro desk, not a duration PM only.
Issuance substitution (P1). Verify Brown's $1.75T corporate issuance YTD and "20 or 30% ahead" of 2025. Split IG vs HY, mega-cap AI (GOOGL, AMZN, META, ORCL, others) vs the rest, coupons vs matched UST, who bought (RIAs, foreign official, pensions, dedicated credit). Without this, "every dollar not in Treasuries" is rhetoric. Expert: DCM / IG strategist; SIFMA / Bloomberg issuance.
S&P grid identity (P1). Reproduce +12.1% YTD as of the Friday before 24 Aug 2026; FactSet NTM and this-year/next-year revision +15 / +13 (and 2027 ~13%); forward PE vs 14-26 grid; confirm "little PE contraction" and the SpaceX markup in AMZN/GOOGL Q2. If revisions are not +15/+13, the "100% earnings" punchline fails. Expert: house accounting for NTM EPS; AMZN/GOOGL 10-Q footnotes on SpaceX marks.
P2 — Needed to underwrite the changed mega-cap package and the r-star claim
Oracle vs the IG complex (P2). Is Oracle in fact the worst-performing mega-cap, and is the rating "almost... junk"? Peer net-debt / EBITDA / interest coverage vs 2022 for META, AMZN, GOOGL, MSFT. Secondary-equity vs bond mix 2025-26. Brown's private-credit / PE / hyperscaler-guarantee claim needs a map (SPVs, leases, residual-value guarantees) — none quantified on mic. Expert: IG analyst + rating-agency primary.
Deficit and r-star evidence (P2). Brown: YTD 2026 federal deficit already larger than all of 2025. CBO/Treasury Daily Treasury Statement. Colas's shock list: 2022 hike size (ASR "four 75 basis point" — reconcile to the 2022 path), 2025 trade-policy shock, oil 22 and 25 — did activity/unemployment actually "not notice"? Neutral-rate estimates (Laubach-Williams, NY Fed, FOMC longer-run) vs his qualitative "must be higher." Expert: fiscal analyst + Fed watcher.
Iran / oil / diesel / Fed chair (P2). Spot vs his 55-60 start, 60-65 "reasonable," diesel 100+ to 70-80. Conflict timeline vs "six weeks ago" base-case demotion. Who is the new Fed chair? Unnamed on mic. Expert: energy geopolitics; Fed personnel.
AGI-vs-OSS scoreboard (P2). artificialanalysis.ai (or equivalent) intelligence indices: ChatGPT +1300% since Nov 2022, Claude +76% last year, vs 41% Moore. Is that the site's own "intelligence" index, and does it mean what he thinks? Chinese OSS benchmark gaps vs US frontier. Anthropic IPO calendar. Expert: AI research engineer not on a lab IR call.
P3 — Process, identity, and long-horizon claims
Correlation / VIX / ACWI 38% (P3 but high intellectual value). Replicate sector and pair-wise stock correlations at "10 plus year lows," VIX "very low," MSCI ACWI tech+big-tech 38% (he rounds to 40), equal-weight S&P 14% tech. If the 38% is a stretched definition of "tech and big tech," the science-project concentration is overstated. Expert: index specialist.
ASR / identity cleanup (P3). Confirm DataTrek URL (datatrekresearch.com), 1,500+ briefing distribution, Jessica Rabe illness (color only), Ben Carlson 1990s-5% chart, "four 75 basis point" vs 475bp, "negative 4%" vs "-4.4%" TLT (he used both), 16+4 top global companies list. Keep unverified strings out of LP-facing lists.
Downside they refused to spec (P3). They said downside is "well understood" and did not put numbers on it. Build an internal bear grid at 14/16/18x on cut estimates so we are not hostage to their upside-only slide. This is our work, labeled Inference, not theirs.
Thesis risks (the framework is wrong)
Timing risks
Execution risks
External / policy / data risks
What would change the research view (actionable)
/workspace/compound-transcripts/WaKDHRCC3NE.md (YouTube English ASR, 7,571 body words; duration 42:48; published Mon 24 Aug 2026, 5:00:35 PM America/Toronto). Read in full. Factual claims in this memo were derived from that file, not from secondary write-ups./workspace/compound-transcripts/WaKDHRCC3NE_brief.md — used to list ASR garbles and to confirm title/series/speakers/URL/duration. Every quantitative claim above was re-derived from the transcript./workspace/pm-memos/2026-08-23-jordi-visser-ai-crypto-macro-nexus.md and /workspace/pm-memos/2026-08-04-gavin-baker-invest-like-the-best-ep485.md.Prepared 24 August 2026 for internal PM-research use (AP). Educational summary of a public interview; not investment advice. Estimated timestamps only. ASR caveats apply. Single primary source: WaKDHRCC3NE transcript.
Desk copy · not a trade recommendation · Josh Brown + Nick Colas (DataTrek) · Compound · 24 Aug 2026