In this week's Stansberry Investor Hour, Dan welcomes Ben Hunt back to the show. Ben founded Epsilon Theory, a newsletter with more than 100,000 readers that examines markets through the lens of narrative. He's also the president and co-founder of Perscient, an AI research firm and software company.

Ben kicks things off by explaining why interest rates have been going up and why the rise might not be as much of a short-term event as folks believe. He says that while the war in the Middle East has contributed to the short term, there is such a surge of borrowing coming from the Big Tech companies that the government sees this as a chance to make money from it. And unlike the conflict that has no definite end date and could conclude relatively soon, the hyperscalers will be borrowing for a greater period of time. Ben says that those companies are the new "too big to fail," so they will do whatever it takes to protect themselves from a loss, including obtaining a government backstop on their debt. But he wants there to be a limit to how much the businesses can gain in the event of continued rapid success...

What saved the U.S. banking system [during the Great Depression] was the United States government put the full faith and credit of the United States behind the senior unsecured debt of every bank in the country... Losses were never assigned to equity. And without that assignment of loss to the people who took a risk and it didn't work out... sorry, but you don't get to be a billionaire on the risk assumption of the taxpayer... If you're going to be too big to fail, then you can't have the outsized, privatized gains. That's all I'm asking. I get that we don't want to have a collapse of the Western financial system. I don't, either. But if we're going to provide that sort of backstop, there has to be a ceiling.

Next, Ben shares why there could be concerns for annuity reinsurers. While the insurance industry can handle rising interest rates, if they increase too much, too quickly, that jeopardizes wealth managers who advise their clients to put their money in annuities. And with insurers using Treasurys as a hedge, if rates also have an impact on the Treasurys, they'll be devastated. And then, Ben wonders with all of the data-center build-out spending whether there will be room for three competitors at the top...

It's a really big question here, because is there room for three? Is there room for Google? Is there room for Anthropic and OpenAI? I don't know, but they all have to pursue the game as if there is room, or at least [as if] there's going to be a winner. If this ends up being a "winner takes most" environment... that's a real problem if you put your money on one of the two that's not in the most. I don't know what kind of market this is... and I think it's too early to tell you what kind of world [it will be]. Maybe it's a Coke and Pepsi world, where two of them can exist. Fine, but maybe it's not.

Finally, Ben provides his thoughts on AI. He believes that AI is becoming so integrated into our way of life that it has changed our way of thinking. Additionally, because it has surpassed being used for labor and has reached the point where it can "think" as well as humans, occupations like mathematicians may no longer be needed, and those who pursue such fields do so as a hobby. But while AI can provide us with rapid answers and is used in writing, Ben believes that as long as the need for conversation exists, humans will always be at the center of creating – and that cannot be replaced...

If you're reading something or something is being written to give the answer with a capital "A," then yeah, read whatever AI is going to write for you. But I thought in my writing, "This is my art. I'm trying to express a human value in trying to connect with another human reader. I'm a human writing for other humans." There's no substitute for that. That's true for any [time in] history, for music. It's true for anything else... An AI [has] never worked a day in its life. And it never struggles with anything. And it's never experienced anything. And so, when I read your [writing], I want us to have a conversation because I value that experience and where it's coming from.

Click on the image below to watch the video interview with Ben right now. For the audio version, click "Listen" above.

(Additional past episodes are located here.)

The transcript is coming soon.

This Week's Guest

Ben Hunt is the president and co-founder of Perscient, an AI research firm and software company that pioneered the use of language models and unstructured data analysis for investment strategies. In 2013, he launched Epsilon Theory, a newsletter and website that examines markets through the lens of narrative. Epsilon Theory offers fresh perspectives and insights into market dynamics for its more than 100,000 readers.

Before Epsilon, Ben managed a billion-dollar hedge fund and served as chief strategist and chief risk officer for a $13 billion asset manager. He earned a PhD from Harvard University, was a tenured political-science professor, and has co-founded three technology companies.