It's Been Dead for 18 Months | Jim Paulsen on the Hidden Market Leadership Change

We Asked Jim Paulsen Why the AI Rally Is Getting Riskier — And a Meaningful Correction May Be Coming

Jim Paulsen returns to Excess Returns to discuss why he is increasingly concerned about a meaningful stock market pullback, even though he does not expect a bear market. We cover the extreme divide between AI-driven “new era” stocks and the rest of the market, what oil and inflation could mean for the Fed, why tech earnings and market leadership have become so concentrated, and what investors should watch as the economy potentially shifts from inflation fears to growth fears. Jim Paulsen on X https://x.com/jimwpaulsen [https://x.com/jimwpaulsen] Paulsen Perspectives https://paulsenperspectives.substack.com/ [https://paulsenperspectives.substack.com/] Topics Covered * Why Jim thinks the economy could weaken into the summer and fall * The risk of a sharp stock market pullback without a full bear market * How inflation, oil prices and geopolitical conflict are affecting the market * Why the Fed may face a difficult decision under Kevin Warsh * The extreme divide between new era tech stocks and old era stocks * Why AI and innovation need to benefit the broader economy to be sustainable * How tech earnings have become concentrated in only two S&P 500 sectors * Why small-cap tech and unprofitable tech leadership may be a warning sign * What past oil price peaks suggest about stock market corrections * Why investor focus may shift from inflation risk to growth risk * How this bull market has been driven by a series of booms in Mag 7, Bitcoin, gold, oil and AI Timestamps 00:00 Why AI has to benefit more than the tech sector 05:18 Inflation, oil prices and the impact of geopolitical conflict 10:54 New era stocks versus old era stocks 15:43 Corporate cash, AI spending and pressure on tech investment 20:17 Policy tightening and why economic momentum may slow 25:31 Why AI must spread beyond the companies building it 31:42 Why this tech boom is different from the 1990s 36:51 Why market breadth keeps fading back into large-cap growth 42:06 Small-cap tech and unprofitable tech start leading 46:15 Why the damage from oil shocks often comes after oil peaks 50:15 How the market could shift from inflation fear to growth fear 54:40 The bull market of booms in Mag 7, Bitcoin, gold, oil and AI 59:46 Jim’s main takeaway for investors now No information on this podcast should be construed as investment advice. Securities discussed in the podcast may be holdings of the firms of the hosts or their clients.

New Era Boom. Old Era Bust | Jim Paulsen on the Economy AI Is Hiding

In this episode of the Jim Paulsen Show, we discuss why the U.S. economy may be weaker beneath the surface than the headline numbers suggest. We cover inflation, the Fed, oil risk, the Mag 7, AI spending, market concentration, international stocks, bonds, and Jim’s “bust booming” framework for understanding an economy where the new era is booming while much of the old economy is close to stall speed. Jim Paulsen on X https://x.com/jimwpaulsen [https://x.com/jimwpaulsen] Paulsen Perspectives https://paulsenperspectives.substack.com/ [https://paulsenperspectives.substack.com/] Topics Covered * Why Jim thinks the U.S. economy is getting closer to stall speed * How the Iran conflict and oil prices could affect inflation, growth and the Fed * Why Jim believes the inflation fears are very different from the 1970s * Why raising rates may not solve a supply-driven oil shock * The case for Fed easing if growth becomes the dominant concern * Why tech and the Mag 7 may underperform even without crashing * How small caps, value stocks, equal weight indexes, international stocks and emerging markets fit into the same broad market bucket * Jim’s “bust booming” framework for the U.S. economy * Why new era investment spending is driving an unusually large share of GDP growth * Why Main Street sentiment may be so weak despite strong stock market headlines * How AI spending compares with the 1990s internet buildout * Why a shift from inflation obsession to growth focus could change the market backdrop * Why Jim thinks investors may want to reconsider long bonds Timestamps 00:00 Intro and Jim’s current market outlook 04:00 Iran, oil risk and why the conflict may be closer to resolution 08:46 Why slower growth could force the Fed to cut rates 13:44 International stocks, the dollar and broad market leadership 18:05 Why today’s inflation problem is not the 1970s 23:14 Defining the “bust booming” economy 28:17 Why the old era economy is near stall speed 32:25 How policy may be missing almost 90 percent of the economy 37:37 What happens if new era spending slows 41:51 How investors can think about new era exposure 46:36 AI spending, productivity and the 1990s internet comparison 50:17 Why AI disruption could require more policy stimulus 53:00 The major shift from inflation obsession to growth focus

The Walmart Indicator Just Hit 2008 Levels | Jim Paulsen on the Big Difference This Time

This episode of Excess Returns features Jim Paulsen breaking down the current macro environment through a series of powerful indicators, including oil, interest rates, consumer behavior, and market sentiment. The discussion explores whether today’s environment signals a slowing economy—or the early stages of a new bull market hidden beneath the surface. Paulsen walks through a wide range of charts and frameworks, from the Walmart vs. luxury retail signal to private credit stress, productivity trends, and policy uncertainty, offering a data-driven perspective on where markets and the economy may be headed next. Paulsen Perspectives Substack https://paulsenperspectives.substack.com [https://paulsenperspectives.substack.com/] Topics Covered * Why the recent oil spike hasn’t impacted inflation and interest rates as expected * Slowing economic growth vs. recession risk and what the Fed might do next * The Walmart vs luxury retail indicator and what it signals about the economy * Private credit risks and how they differ from traditional credit crises * Why many indicators point to a new bull market rather than a bear * The role of sentiment, volatility, and uncertainty in driving market returns * Market rotation from mega-cap “new era” stocks to broader market leadership * Corporate profits divergence and the opportunity in the rest of the economy * Liquidity, cash levels, and positioning as potential fuel for markets * Productivity trends and whether AI-driven gains are real or overstated Timestamps 00:00 Intro and current macro backdrop 01:05 Oil spike and limited impact on yields and inflation 04:45 Growth outlook and why recession may still be avoided 07:10 Fed policy and the stagflation question 10:15 Walmart vs luxury retail indicator explained 13:40 Private credit stress vs traditional credit cycles 17:00 Why this isn’t 2008 and how balance sheets differ 19:50 Private credit risks and market spillover effects 22:15 Bear market fears vs signs of a new bull 23:45 Consumer confidence and its impact on returns 25:05 Oil spikes historically as buy signals 26:15 VIX, volatility, and market bottoms 27:05 Yield curve steepening and market implications 28:05 Sentiment indicators and what they really reflect 30:00 Market rotation and broadening beyond mega caps 32:45 Passing the baton from tech to broader markets 35:15 Corporate profits divergence and future potential 37:00 Policy uncertainty and why it can be bullish 42:05 Liquidity, cash levels, and risk allocation 43:20 Options positioning and put-call signals 44:05 Gold vs commodities and risk appetite 45:10 Consumer credit contraction and market signals 46:20 Polymarket recession probabilities as sentiment 47:30 Economic sentiment collapse and contrarian signals 48:10 Interest rate expectations and positioning 49:05 Unemployment trends and historical market bottoms 50:25 Productivity trends and AI impact on the economy

1% Growth. Zero Jobs | Jim Paulsen on the Recession Investors Are Missing

In this episode of the Jim Paulsen Show, Jim joins Jack Forehand and Justin Carbonneau to break down the macro forces shaping today’s markets and economy. Jim explains why the economy may be far weaker than headline GDP numbers suggest, how technology and AI investment are masking weakness in the broader economy, and why leadership in the stock market may be shifting. The conversation also explores the market implications of geopolitical conflict, the relationship between policy and market leadership, and how investors should think about AI’s long-term economic impact. Topics covered in this episode * How geopolitical events like the Iran conflict affect markets, volatility, oil prices, and investor sentiment * Why market reactions to geopolitical shocks often fade once the situation is “vetted” by investors * The relationship between oil prices, the US dollar, and global financial markets * Why Paulsen remains constructive on international stocks and emerging markets despite recent volatility * Why energy and food now represent a much smaller share of consumer spending than in past inflation cycles * The argument that inflation fears may be overstated given structural disinflationary forces in the economy * How AI and technological innovation can destroy some jobs while simultaneously creating new economic demand * Why technological progress often lowers costs and expands markets rather than simply eliminating work * The concept that the “new economy” driven by technology investment is now large enough to influence overall GDP growth * Paulsen’s analysis showing that roughly 11 percent of the economy tied to new-era investment is growing rapidly while the remaining 89 percent is barely growing * Why the broader economy may resemble a recession even while headline GDP remains positive * How the dominance of large technology companies in indexes like the S&P 500 may be masking weakness in the broader market * The historical “toggle” between technology leadership and broader market leadership in equity markets * Why policy conditions like the yield curve and monetary easing often drive leadership shifts toward value, small caps, and cyclical stocks * Whether the Federal Reserve could begin easing policy without a traditional recession * Why policy support may eventually broaden the bull market beyond technology stocks Timestamps 0:00 Jim Paulsen on geopolitical volatility, oil prices, and market reactions 2:50 How investors should think about the Iran conflict and market implications 10:50 The relationship between oil prices, the US dollar, and safe-haven flows 12:20 Why Paulsen likes international and emerging market stocks 14:30 Why higher oil prices may not lead to sustained inflation 18:40 AI disruption and the economic debate around jobs and productivity 23:00 How innovation historically creates new demand and economic growth 29:40 Technology is the tail wagging the economic dog 33:30 Why the “new economy” is growing far faster than the rest of the economy 37:00 Evidence that most of the economy may already resemble a recession 41:00 Profit growth disparity between technology and the rest of the economy 45:40 Why the stock market can mask weakness in the broader economy 46:30 The historical leadership toggle between tech and the broader market 49:00 Valuation differences between technology and other sectors 50:30 How policy conditions influence market leadership 55:00 Signs that leadership may already be shifting beyond tech 57:00 Could the Fed ease without a traditional recession 59:00 What a policy shift could mean for the next phase of the bull market

It's Been Dead for 18 Months | Jim Paulsen on the Hidden Market Leadership Change

In this episode of the Jim Paulsen Show, Jim joins Jack Forehand and Justin Carbonneau to break down what’s really happening beneath the surface of today’s market and economy. Jim explains why recent market strength may be masking a major leadership transition, why tech’s dominance is quietly fading, and how policy, labor market stress, and uncertainty are shaping the next phase of the cycle. The conversation spans equity leadership, AI and productivity, animal spirits, jobs data, inflation, and why periods of peak uncertainty have historically created opportunity for long-term investors. Main topics covered • The emerging shift in market leadership away from mega-cap tech toward small caps, cyclicals, value, and international stocks • Why tech has underperformed the broader market for over a year and what that signals for portfolio positioning • How Fed policy, liquidity, the dollar, and the yield curve drive broader market participation • The idea of a bull within a bull and why this cycle looks different from past tech-driven markets • AI, productivity growth, and why recent productivity gains may be misleading • Why measuring productivity in a service- and technology-driven economy is increasingly difficult • Economic policy uncertainty, market volatility, and why uncertainty has historically favored equity investors • Warning signs in the labor market, including job growth, unemployment duration, youth employment, and layoffs • Why weakening jobs data could force further monetary and fiscal easing • Inflation trends, policy trade-offs, and what matters more for markets going forward Timestamps 00:00 Market leadership shifts and why small caps and cyclicals are showing new strength 05:00 Tech underperformance and what it means for the broader market 08:00 Can the market rise while tech underperforms 14:00 Animal spirits and early-cycle behavior in overlooked stocks 16:20 AI, productivity, and why recent gains may be a mirage 23:40 Economic policy uncertainty and why markets climb the wall of worry 31:45 The labor market under the hood and why jobs matter most for policy 39:30 Structural changes since the financial crisis and the loss of animal spirits 49:45 Additional labor market warning signs and savings drawdowns 55:50 Inflation trends and why policy support may continue