The Julia La Roche Show · Sep 29, 2026 · 56m · 40m saved
With Andy Constan, Founder and CIO of Damped Spring, previously at Bridgewater Associates and Brevan Howard
US GDP is about $30 trillion, Andy Constan said, and the earnings AI companies are promising add up to more than the whole economy can deliver.
Most investors now expect strong growth, and bond yields have finally risen to price it in. Constan said that is exactly when markets become vulnerable to disappointment, and he is short US stocks and long long-term bonds.
"Recessions just don't happen that often. But calling for a slowdown is a completely different thing and a way to make money in markets."
Andy Constan, founder and CIO of Damped Spring, on The Julia La Roche Show, started his career at Salomon Brothers, analyzed every futures trade of the 1987 crash for the Brady Commission at 23, and built his macro framework at Bridgewater Associates and Brevan Howard.
The full interview is covered here so you can skip it. 56 minutes of audio, 16 minutes of reading.
Here are the 15 insights that matter.
Key Takeaways
AI companies are claiming more than 100% of the economy, in his view, so some of their earnings forecasts must fail
Funding the AI build-out needs borrowing on a scale he called overwhelmingly large relative to any historical funding
Rates have spiked six times since COVID and fallen back within weeks each time; he doubts policymakers can do it a seventh time
He is short equities and at his maximum long in long-term bonds, each sized to about a 3% worst-case loss
The 60/40 portfolio should have been declared dead in 2020, not now, he said
Long-dated real yields of roughly 2.75% to 3.25% give bonds room to rise when the economy slows
Warsh's September hike did not impress him, because the data left the Fed chair no choice
Killing demand-driven inflation takes lower asset prices, costlier borrowing and job losses, and he is not betting it happens
This boom is driven by public debt, not private debt, which he said leaves no clean historical analog
Same-day options and levered ETFs echo 1987's portfolio insurance, he said, having studied every futures trade of that crash
1. His Four-Pillar Framework
Constan said every asset class is driven by the same economic forces, and he sorts them into four groups.
Growth, inflation, risk premium and positioning
The first three are growth expectations, inflation expectations and what he calls the risk premium: the expected extra return from holding an asset rather than cash, which he ties to the supply and demand of money and credit against the supply of things to invest in. The fourth, on his time frame, is how investors are positioned, because the drivers are of little use without knowing what is already priced and who owns it.
"So that's the four pillars of my framework." — Andy Constan
He said he learned and refined it at Bridgewater Associates and Brevan Howard, and has used it since at Damped Spring. The second half of his career has been spent in macro.
