YouSaid · the spoken record

Aahan Menon

lines on the record: 65
first: 2025-12-03
most recent: 2025-12-03
sittings or episodes: 1
sources: podcast

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“Yeah, totally. And yeah, I think it does lead through what you're saying about how it matters what you're trying to do with it. So if we just say that we are a couple of discretionary macro traders that are trying to know when's the moment to go buy long bonds because we think a recession is coming. And if we assume the situation that we just characterized, which is that, okay, what if we had a moment where real consumption expenditures go negative? But at the same time, we're in this moment like we just saw with Black Friday where top line revenue growth is expanding. Therefore, corporate earnings are still holding up well. But then you have negative real consumption expenditures. Like if you're a discretionary macro trading, you're trying to figure out, okay, if I see that happening to a go buy long bonds or is that traditional sequence of the recession playbook actually not useful because we're still seeing earnings growth increase? Like, yeah, what do you do there?”
2025-12-03 · Forward Guidance · The Hidden Fractures Behind America’s “Resilient” Economy | Aahan Menon · IDENTIFIED FROM THE TRANSCRIPT
“Aren't increasing as fast. Okay, we have more and more corporate profits. And so I think when you're thinking through differentiating between this nominal versus real kind of dynamic, which you want to isolate for is one, what are you trying to do with that information? And two, I think when you do actually look through kind of like how the nominal growth flows into earnings or how it affects bond markets or whatever, you're going to get these kind of meaningfully different and nuanced kind of outcomes. So yeah, does that answer your question?”
2025-12-03 · Forward Guidance · The Hidden Fractures Behind America’s “Resilient” Economy | Aahan Menon · IDENTIFIED FROM THE TRANSCRIPT
“The nominal growth dynamic basically flows straight through to corporate revenues, right? And then from corporate revenues, you typically have a whole bunch of costs, which are really just wages for the most part. And then associated other costs of goods sold. But big part of it is basically wages and the residual ends up being profits, right? What I think is super important to recognize, which I think a lot of investors got blindsided by over the last five years, is that that nominal growth just flows directly to profits unless there's a meaningful rise in wages. And so the rule of thumb, the real GDP growth is in sync with what's happening to the corporate profit cycle and the equity market cycle didn't work as well because you have this thing of like, oh yeah, the nominal wage, the nominal growth is increasing, but the wages...”
2025-12-03 · Forward Guidance · The Hidden Fractures Behind America’s “Resilient” Economy | Aahan Menon · IDENTIFIED FROM THE TRANSCRIPT
“Which was fine, right? And I think what you focus on boils down to what you're trying to do, right? And so if you're trying to forecast recessions or like try to get an NBER dated recession right, don't worry about all this stuff. Like you can just look at the employment numbers when it goes down. You got your recession. Boom, done. But if you are trying to do something along the lines of understand what is the macro context, right? Like, okay, we have nominal growth strong, rural growth weak, what does that mean for markets? I think you need to take kind of a targeted approach to which market you want to trade. So I think taking the example of equities.”
2025-12-03 · Forward Guidance · The Hidden Fractures Behind America’s “Resilient” Economy | Aahan Menon · IDENTIFIED FROM THE TRANSCRIPT
“Cash balance, or they have these capital gains that they're selling down, which turns into a cash balance, and all of those things are balance sheet concepts, right? And what all of that means is basically like a lot of spending in excess of labor trend is coming from wealth as opposed to income. So that's really like kind of how you would piece that together in the fastest way that you could. When it comes to the real versus nominal, I think it's a very relevant conversation because most investors in their careers, myself and Flutter, obviously, have just not seen a super stagflationary or inflationary type of backdrop. Like I'm not saying that we're in a big stagflation or something like that, but there have been periods in history, like particularly the 70s and stuff like that, where you did have contractions and roll output and you still had nominal growth.”
2025-12-03 · Forward Guidance · The Hidden Fractures Behind America’s “Resilient” Economy | Aahan Menon · IDENTIFIED FROM THE TRANSCRIPT
“It's going to get muddled if you have anyone pulling from their balance sheet, either in the form of cash balance or in the form of like earnings or in the form of leverage. Like if they're doing any of those things, the savings rate is not going to be a meaningful guide of whether consumption can continue or not. And so what we do know, like with a high degree of certainty, is that we do have a wealth distribution problem. And there is also an asset ownership distribution problem, right? Like that wealthier people own more assets in the United States. They have larger cash balances. They have all of these things. And so what seems to be the case is that while we don't have employment growth that's actually super strong anymore, the spending growth seems to happen. And this is kind of plugging for the error, right? When you plug for the error, what is the only place where these can come from? Either someone's levering up or they're spending their time.”
2025-12-03 · Forward Guidance · The Hidden Fractures Behind America’s “Resilient” Economy | Aahan Menon · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so the consumption numbers, I think one, like you're not going to get a clear answer. There actually is, it's going to be very hard for you, at least in a timely way. Maybe you can use the flow of funds accounts and do some back solving, but most of the flow funds accounts data is super laggy, like a year plus laggy sometimes. And so back solving like. The reason the savings rate thing doesn't work that well is because the savings rate thing is like an income statement concept, right? It's basically like, what is the income and what is the disposable income? How much of that goes into consumption? And then the difference between those two things is just the savings rate.”
2025-12-03 · Forward Guidance · The Hidden Fractures Behind America’s “Resilient” Economy | Aahan Menon · IDENTIFIED FROM THE TRANSCRIPT
“Or something year over year. Just you know, a stellar Black Friday. But when you look underneath the hood a bit more, you can see that volumes were actually decreasing. So you have an interesting situation where you're like, okay, well, they're still spending on a nominal basis. And, you know, we track corporate earnings or earnings growth on a nominal basis, like top line revenue of companies is a nominal metric. So I would love to just hear your perspective on how do you piece apart all these different cross-currences and get to a point where you actually have like a useful insight around consumption.”
2025-12-03 · Forward Guidance · The Hidden Fractures Behind America’s “Resilient” Economy | Aahan Menon · IDENTIFIED FROM THE TRANSCRIPT
“Okay, so let's go under the hood a little bit on the growth outlook. And I want to tap into specifically around consumption, because you mentioned there that there is a subset of economic participants that just keep spending. And I would love to hear a bit about your perspective on where are those incomes coming from and where is the marginal growth of those incomes coming from that keeps them being able to keep spending. Because it just, it feels like the past few years is just this constant thing of people thinking, oh, you know, look at where the savings rate is going, et cetera, that they're almost tapped out at any moment now, the floor is going to give out. But then they keep trucking along. And on top of that, I want to add in this question, it was a tweet I put out a few days ago that we were talking a bit about around just trying to quantify that strength. Do you want to quantify it as a nominal spending or real spending? And I think one of the great examples is we got this data from Black Friday last week about how Black Friday sales figures are up, I think nine.”
2025-12-03 · Forward Guidance · The Hidden Fractures Behind America’s “Resilient” Economy | Aahan Menon · IDENTIFIED FROM THE TRANSCRIPT
“That's not the camp I put myself in China. But the divergence has started to get really, really big. And you've started to really see that in things like labor relative to spending. So I think the overall picture is we're in an economy that's expanding. I think inflation by measured inflation numbers is going to start cooling because a lot of cyclical activity is starting to cool. But there are under the hood there are these divergences. And so a high-level good place, but nuanced concerns.”
2025-12-03 · Forward Guidance · The Hidden Fractures Behind America’s “Resilient” Economy | Aahan Menon · IDENTIFIED FROM THE TRANSCRIPT
“You'll get a different reading, but that's basically the nominal spending kind of number four to five percent. And then within that, though, there's like a lot of, I would say a lot of divergences because increasingly more and more of the growth is just coming from affluent consumers who do most of the spending in the economy. And then also the only businesses that are really doing a lot of meaningful investment today are these AI Capex type investors more classical old school economy type companies are not doing that type of investing. And so the aggregate numbers, which are really like, you know, the first thing you have to look at when you look at macro is like everything's fine. We're trending along, but you're starting to have like, you know, even when I look at the numbers and I've never been someone who's like under the hood, the economy is going to implode. Like I'm not one of.”
2025-12-03 · Forward Guidance · The Hidden Fractures Behind America’s “Resilient” Economy | Aahan Menon · IDENTIFIED FROM THE TRANSCRIPT
“I think. You basically wind back to the start of the year and then kind of think of how we got here. We came into the year with decently with strong economic data and GDP going strong, everything going pretty well. And then we had a bit of a scare from the tariff announcements. That was mostly like a market sentiment kind of thing. There was some effects which we're probably seeing now a little bit in terms of its impact on gross investment. But at the same time, you've had this really, really strong sojourn AI CapEx and you have just a consumer that just doesn't give up in the United States, right? And so between the AI CapEx and the consumer spending, nominal spending is still pretty good. You can say that normal spending is somewhere between like four and five percent, like depending on how fast your measure is or whatever.”
2025-12-03 · Forward Guidance · The Hidden Fractures Behind America’s “Resilient” Economy | Aahan Menon · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, there's a lot. And I understand when you talk to somebody like me that's doing systematic macro and doing intraday strategies and then like slower strategies and stuff, you're like, goddamn, what the fuck is this guy's view? I don't know what he's talking about. I get it. It's a daily struggle for me. I think the basic idea is you want to start with the big picture like we are in this conversation and then kind of work your way. You get faster and faster as you get to the positioning views, right? So the view on the economy is never going to change like overnight. That's not happening. But the view on whether something is cheap or expensive, depending on what you're trying to do can change really fast. So that's kind of like the high level table setting in terms of process. In terms of what's going on with the economy.”
2025-12-03 · Forward Guidance · The Hidden Fractures Behind America’s “Resilient” Economy | Aahan Menon · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, thank you. I appreciate that a lot. Yeah, it's been a minute since we last chatted. And you. I feel like oftentimes when people try to get your insight on the economy, it's really important to. Keep in mind what time Horizon you're speaking to because you have some models that are intraday, you have some that are just on a weekly basis, and then you have some high-level macroeconomic views. And I think it's really important to piece apart which phase that we're talking about. So let's start with that broad picture high timeframe outlook on the economy and how that gets reflected in markets. And I think really diving deep into the distinction between what is a market actually pricing and reflection of that economy. And it's an interesting one because we're coming out of the back of this government shutdown, the longest government shutdown we've had. So it feels like for those of us that aren't as in the weeds into the data being able to derive insights, we've been starved of data. But I know you have a lot of your own self-developed economic data points. So I would love to tap on that a little bit. And if you could just get everybody up to speed on what's been going on in the high level economy for the past.”
2025-12-03 · Forward Guidance · The Hidden Fractures Behind America’s “Resilient” Economy | Aahan Menon · IDENTIFIED FROM THE TRANSCRIPT
“Most big picture like where the economy is going to be six months from now, 12 months from now, like all that type of stuff, is actually completely useless for trading markets. What we do know with a high degree of certainty is that we do have a wealth distribution problem. And there is also an asset ownership distribution problem. While the CapEx is ongoing, that is business cycle stimulative. It is good for profits. Like, don't get in front of that train. I'm a non-believer in AI just being this absolutely transformative thing, which takes us to 6% real GDP growth a year. But at the same time, don't fight the profit juice.”
2025-12-03 · Forward Guidance · The Hidden Fractures Behind America’s “Resilient” Economy | Aahan Menon · IDENTIFIED FROM THE TRANSCRIPT