Alpha Exchange

Welcome to Episode 250 of the Alpha Exchange. To celebrate the milestone, I asked my dear friend, Jon Kalikow, to host the conversation, switching seats and having me as the guest. I launched the podcast in 2018 with a simple idea: to create space for long-form conversations that explore how market practitioners think about risk. Rather than focusing on predictions, the goal has always been to understand frameworks—how investors process information, respond to uncertainty, evolve through cycles. In this episode, we also explore some of my own thinking on risk. Here, I outline a simple framework built around four categories: economic, monetary, financial, and geopolitical. While distinct, these risks are deeply interconnected and understanding how they interact is critical in assessing market outcomes. Today’s market dynamics are fascinating in this context. We close the discussion with a look ahead—toward expanding the Alpha Exchange platform through live events, educational initiatives, and continued conversations that emphasize intellectual honesty, humility, and the ongoing exchange of ideas. I feel as convicted as ever about the business model which aims to create value through engagement. I hope you enjoy this episode and appreciate your ongoing support of the Alpha Exchange.

The “risk-free” rate figures prominently in how we’ve all been taught the foundations of finance. To price a security, start with the asset that is the safest and soundest and then add compensation for bearing uncertainty. It has always been self-evident that the global risk-free benchmark was the Treasury market. Deep, liquid and viewed as default free, US government bonds have been the recipient of capital during times of stress. And the reason is that the US has long been viewed as not just the world’s strongest economy but also a stabilizing force in global affairs. In this discussion, and with the help of four recent expert guests on the Alpha exchange, I argue that this is changing and the US is now becoming a chief source of risk. In the process, the Treasury market may be losing one its most important characteristics: the insurance feature. That is, its capacity to be durable to and even benefit from market shocks. We’ve all got to be asking, “how can US government bonds be a shock absorber when the US government is the source of the shock?” The implications for asset prices that result from a less stable US are significant and there are important questions to consider. I hope you find this discussion useful.

Kris Abdelmessih, author of the MoonTower Substack and founder of the options analytics firm MoonTower.ai., has spent years thinking about option pricing, volatility regimes, and the mental math traders use to translate volatility into price. In this context, it was great to welcome him back to the Alpha Exchange to explore his thought process. We begin with developments in commodity markets, particularly crude oil, and silver, where geopolitical tension and speculative flows have led to sharp changes in volatility surfaces. Kris explains how option skew in underlyings like oil can reprice rapidly during shock events, leading to inverted termstructure and a well bid call skew. These dynamics create unusual behavior in vertical spreads and probabilities implied by option prices. Kris describes how the relationship between spot moves and volatility changes across market environments, emphasizing that traders must continually recalibrate their models. What appears to be a stable relationship—such as the familiar beta between the S&P 500 and the VIX—can shift quickly depending on positioning and market structure. A major focus of our conversation is on the mental math traders use to interpret option prices without relying on models. Kris walks through several shortcuts that allow traders to move quickly between volatility, straddle prices, and probability estimates. These approximations help traders identify when prices look unusual and whether options markets imply probabilities that diverge from other markets. Finally, we discuss the work Kris is doing on financial education. Inspired by teaching his own children about investing and compounding, he has begun running small classes for students and sharing the materials publicly. The goal is simple: introduce younger investors to concepts like time value of money and long-term compounding earlier in life. I hope you enjoy this episode of the Alpha Exchange, my conversation with Kris Abdelmissih.

As Chairman and CEO, Zach Buchwald leads Russell Investments, a firm overseeing $370bln in client assets and celebrating its 90th anniversary in providing portfolio management services to institutions and individuals. Zach details the open-architecture model utilized at Russell, explaining how portfolios are constructed by combining best-of-breed managers and strategies across asset classes. He shares how these portfolios are managed through an outsourced chief investment officer framework, providing institutions with integrated portfolio construction, manager selection, and risk management. A central theme in our discussion is retirement, a large focus at Russell on behalf of its client base. Zach highlights the long-term shift from defined benefit pensions to 401(k) plans, and the structural and behavioral challenges individuals face in saving for retirement and the growing responsibility they now bear in planning. We discuss the power of compounding, the importance of staying invested through market volatility, and the role that portfolio design can play in helping investors avoid costly behavioral mistakes. While the 401(k) structure can work well when participants save early and remain invested, Zach notes that many Americans have not accumulated the assets necessary for retirement and that compounding requires both time and consistent exposure to the market. Default investment options, diversified portfolios, and disciplined asset allocation can help individuals remain invested through periods of volatility and capture the long-term growth of capital markets. I hope you enjoy this episode of the Alpha Exchange, my conversation with Zach Buchwald.

Amidst these very uncertain times in the economy, geopolitics, and asset prices, it was excellent to welcome Alberto Gallo, founder and CIO of Andromeda Capital Management, back to the Alpha Exchange. Our conversation first considers the long arc of post-crisis monetary policy. Here, Alberto argues that extended quantitative easing, while stabilizing in the short run, carried structural side effects over time—capital misallocation, corporate consolidation, and widening inequality. He notes that central bank balance sheets remain large and that markets today send mixed signals: stability in rates and credit alongside strength in precious metals. We then turn to Andromeda’s approach to finding value in credit markets. Alberto frames bonds as embedded short-volatility instruments and describes a strategy that seeks asymmetric gain-to-loss profiles, liquidity, and convexity. A major focus is the rapid expansion of private credit—five-year lockups, high-single-digit returns achieved in benign conditions, sector concentration in technology, and insurer ownership structures. With spreads near multi-decade tights, he questions whether investors are adequately compensated for default, liquidity, and volatility risk. We close on AI-driven capex, fiscal dominance, and elevated debt levels. Alberto frames the future as a distribution with meaningful tails and argues that current pricing reflects limited uncertainty at a moment of structural transition. You can learn more about the firm at https://andromedainvestors.com/

With early exposure to Paul Tudor Jones and then stints on the sell-side in credit research, Michael Contopoulos is now Deputy CIO of Richard Bernstein Advisors, a macro-oriented asset manager overseeing roughly $20 billion across long-only portfolios. Our discussion centers on portfolio construction in an era of extreme equity concentration and shifting global leadership.On the equity side, the firm is under-weight the most concentrated segments of U.S. equities and overweight international markets, citing valuation gaps, earnings acceleration abroad, and under-ownership by investors.Using his background in quantitative credit strategy and a Merton framework for modeling spread risk, Michael brings a structural lens to today’s corporate debt markets. Our conversation focuses on the surge in long-dated issuance tied to AI infrastructure build-outs. He argues that history rarely rewards lenders who finance capital-intensive growth booms at their peak.Drawing parallels to late-1990s telecom boom, Michael questions whether investors are being adequately compensated for duration and technology risk embedded in 40- and 50-year debt issued by hyperscalers building data centers. The core concern is twofold: that AI-driven revenue gains may not justify the scale of investment, and that infrastructure built today may not remain technologically relevant decades from now.I hope you enjoy this episode of the Alpha Exchange, my conversation with Michael Contopoulos.Editing and post-production work for this episode was provided by The Podcast Consultant (⁠https://thepodcastconsultant.com⁠)

It was a pleasure to welcome Louis Gave, the Founding Partner and CEO of Gavekal, back to the Alpha Exchange. Our discussion centers on what he describes as one of the most consequential and underappreciated macro developments today: the mispricing—and now the policy shift—of the Chinese renminbi. Louis is quite bullish on China.Louis argues that for much of the past decade, China has acted as a powerful deflationary force on the global economy. In response to US trade restrictions, Chinese policymakers redirected domestic savings away from real estate and toward industrial capacity. This dual dynamic—collapsing real-estate activity alongside surging industrial investment—produced a deflationary impulse that many underestimated.A central feature of this adjustment was a deliberately undervalued currency. Despite large trade surpluses, the renminbi remained weak even as inflation diverged sharply between China and the United States. Louise describes this as one of the clearest examples of a “wrong price” in global markets, particularly when measured against purchasing-power indicators such as housing, transportation, and services.The discussion highlights a notable inflection point: the renminbi has recently begun to strengthen, signaling a shift in policy stance. According to Louis, this change has important implications for global asset prices. A strengthening currency in China alters incentives for capital deployment, challenges the appeal of holding US dollar cash, and reinforces broader reflationary trends already visible across commodities, yield curves, and financial assets.I hope you enjoy this episode of the Alpha Exchange, my conversation with Louis Gave. Editing and post-production work for this episode was provided by The Podcast Consultant (⁠https://thepodcastconsultant.com⁠)

It is busy time, to say the least, for Libby Cantrill, Head of Public Policy at PIMCO. Today’s markets are grappling with vast uncertainties…in US fiscal policy, in Fed independence and leadership, in geopolitics, and in global trade. Libby is charged with helping both the clients and risk-takers of PIMCO better understand the implications of policy that is changing rapidly.Through her conversations with institutional, retail, and international clients, she outlines how uncertainty around US policy has become a central driver of investor concern early in 2026. Our discussion highlights how recent geopolitical developments — including tensions with Europe, rhetoric around Greenland, and renewed trade disputes — have amplified questions around US credibility and global leadership.Throughout the conversation, Libby frames the current environment as one in which policy volatility, rather than policy outcomes alone, is shaping investor behavior. Tariffs, fiscal deficits, and election-driven incentives have created a backdrop where markets must continuously reassess tail risks.We explore the challenge of reigning in US entitlements. Here, she describes two potential forcing mechanisms: bond market pressure or looming entitlement shortfalls. While the so-called bond vigilantes have periodically re-emerged, she notes that market selloffs have thus far been contained, suggesting that investors continue to grant the U.S. substantial runway. At the same time, projected shortfalls in the Trust Fund later this decade represent a political and economic inflection point that may eventually compel action.I hope you enjoy this episode of the Alpha Exchange, my conversation with Libby Cantrill. Editing and post-production work for this episode was provided by The Podcast Consultant (⁠https://thepodcastconsultant.com⁠)

Five years ago, on January 27th, 2021, the frenzied buying and speculation in Gamestop hit its apex. In this short podcast, I look back on one of the more fascinating, and dare I say, dangerous, risk events in modern day markets. The stock was subject to an outright speculative attack. But not the kind most CEOs complain about. This was not Soros taking down the British pound in 1992. This was a retail army of Reddit bandits whose buying power was nothing individually, but everything collectively. This was an attack not by a short seller, but against one. We learn a great deal about markets by studying periods when things run amuck. GME event is one of them, the most intense “stock up, vol up” episode in memory. Editing and post-production work for this episode was provided by The Podcast Consultant (⁠https://thepodcastconsultant.com⁠)

It was a pleasure to welcome Alex Urdea, Founder and CIO of Deep Ocean Partners to the Alpha Exchange. Alex traces his career from credit derivatives trading at a large bank to a risk management function at a hedge fund focused on distressed investing to ultimately building an asset-backed private credit platform focused on smaller, less trafficked segments of the lending universe. The conversation centers on how regulatory changes following the Global Financial Crisis, prolonged periods of low interest rates, and shifting investor preferences have reshaped where and how credit risk is priced. Alex describes how traditional public credit markets, including leveraged loans and high yield, have increasingly compressed spreads while loosening covenants, reducing compensation for bearing risk. In contrast, private credit has emerged as an alternative channel for borrowers unable to access bank balance sheets, particularly fast-growing businesses that are asset-rich but cash-flow constrained. He emphasizes that credit underwriting remains fundamentally about downside protection, liquidation value, and recovery — principles shaped by his experience in stress, distress, and complex capital structures. A theme central to our discussion is the distinction between risk monitoring and risk management. Alex explains how Deep Ocean combines asset-backed lending with data connectivity and real-time monitoring to identify potential issues earlier in the life of a loan, rather than relying solely on periodic reporting or mark-to-market signals. The conversation also explores how macro forces — including rate shocks, tariffs, and supply-chain disruptions — can impose themselves even on carefully underwritten credits, reinforcing the importance of portfolio construction and diversification. I hope you enjoy this episode of the Alpha Exchange, my conversation with Alex Urdea. Editing and post-production work for this episode was provided by The Podcast Consultant (⁠https://thepodcastconsultant.com⁠)

Today’s market landscape is defined by extremes that challenge conventional portfolio construction. A small group of mega-cap stocks now represents an unprecedented share of index weight, profit generation, and capital spending, raising important questions about valuation, diversification, and risk concentration. With this in mind, it was great to have Andrew Lapthorne, Global Head of Quantitative Research at Société Générale, back on the Alpha Exchange. Drawing on long-run valuation distributions and profitability data, Andrew examines whether today’s market qualifies as a valuation bubble, not through narratives, but through measurable historical comparisons. His analysis highlights that while headline index multiples appear defensible due to strong profits among a narrow group of companies, the average stock is more expensive than during prior bubble periods, including the late-1990s technology cycle. Our discussion also examines how passive investing and benchmark constraints have altered market behavior. With capital increasingly flowing through index vehicles, Andrew argues that valuation changes now affect entire indices rather than discrete groups of stocks, limiting opportunities for rotation into “cheap” segments. This dynamic has substantially increased tracking error for active managers and reinforced concentration, even among investors who recognize valuation risk but remain bound to benchmark exposure. I hope you enjoy this episode of the Alpha Exchange, my conversation with Andrew Lapthorne. Editing and post-production work for this episode was provided by The Podcast Consultant (⁠https://thepodcastconsultant.com⁠)

As I share my closing thoughts on 2025, I want to look back with an eye towards pointing out this year’s unique characteristics from a market risk perspective. I start this exercise by highlighting what I consider to be 2025’s three most interesting days from a vol and risk perspective: 1) the April 7th roller-coaster in the VIX 2) the September 10th surge in ORCL and 3) the October 21st melt-down in the GLD. Each of these helps us better understand some of the forces at work in today’s market. Next, I explore two important themes and their implications. First, the “stock up, vol up” dynamic that is increasingly common among stocks, even mega-caps. Here, the market assigns a higher implied volatility when pricing options on stocks that have often surged in value. It speaks to FOMO and a winner-take-all notion in which stocks are often treated as options. Second, I discuss the incredibly low level of both realized and implied correlation among stocks in the SPX. I consider this a risk hiding in plain sight and something that may be leading investors to underestimate the true level of risk they are taking.I thank you for being a listener this year and wish you a fantastic 2026.