#143 - Jeffrey Sherman: Preparing for a New Regime

Sherman says the bond market, not the Fed, will ultimately determine how far the AI capex boom can run.

• New regime, old playbook: Sherman says investors should discard the post-GFC (2010-2020) "financial repression" framework and instead look to the early-2000s era of 3-4% inflation, 7% nominal GDP, and un-managed bond yields.
• Fed credibility test looms: Sherman argues a 25bp hike wouldn't cool AI capex, but would signal seriousness; if the Fed pauses after a hot CPI print, he expects long bonds to sell off ~10bps.

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