Muse, Moonshots and the House Always Wins

PodcastBehind the MarketsSamuel RinesSep 25

The discussion ranges from Iran and U.S.-China relations to investment in domestic quantum supply chains and the technical constraints facing superconducting systems. Speakers weigh Meta’s Muse and AI agents as potential sources of consumer competition, while noting differences in business capability and the market effects on compute and cybersecurity stocks. On the economic and market front, they discuss higher real rates, housing affordability, pricing power, and the possibility of further rate hikes and stronger yields. Long-range estimates for space launches are presented as contingent on significant challenges being resolved.

Artificial Intelligence Semiconductors Technology Stocks Interest Rates Geopolitical Risk Quantum Computing

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Key Takeaways

The speaker describes quantum computing as a major investment opportunity with a distinct scaling challenge: a quantum facility is estimated at $2 billion to $5 billion, below the roughly $20 billion to $30 billion cost of a semiconductor fab, but superconducting systems operating at 15 millikelvin face wiring and space constraints as they grow. He says the May 21 announcement of $2 billion for nine companies could spur attention to domestic quantum supply chains, and identifies publicly traded Q Trex, with an estimated $50 million market cap, as focused on the wiring problem.

Speakers describe Meta’s Muse as gaining consumer traction against OpenAI and Claude based on downloads, while acknowledging it may lack comparable business capabilities. Muse’s compute runs on AWS, which the speaker says benefits from the demand, and Meta’s unspecified release was highlighted for its potential reach among billions of users globally.

The guest argues that AI agents could make it easier for consumers to switch financial and telecom providers, potentially challenging entrenched monopolies; he links excitement about that possibility to the Nasdaq 100 reaching a new high. The speaker also connects agentic AI to the SaaS-disruption narrative and says cybersecurity stocks were moving because of AI’s cybersecurity needs, without claiming which companies will lose.

GEO-POLITICS

Iran Deal Incentives — The speaker says Iran has little incentive to make a deal before the midterm elections unless it receives a “super good deal,” which would draw criticism in the United States. In the speaker’s view, Trump has no good options on Iran before the elections.

“There is zero incentive for Iran to make any deal before the midterm elections.”—

Quantum Funding — The speaker says a May 21 U.S. government announcement involving nine companies and $2 billion through the Commerce Department and the CHIPS Act could have been a starting gun for quantum attention in 2026. The government, he says, is focused on building domestic supply-chain capability for the quantum ecosystem.

“I have met on a few occasions now, example, around got a lot of attention this year because if you remember back the starting gun of attention in 2026 for…”—

TECHNOLOGY

AI Switching — The guest argues that AI agents could make it easier for consumers to switch providers, potentially challenging entrenched monopolies in financial systems and telecoms. He links excitement about this possibility to the Nasdaq 100 reaching a new high.

“Clearly, you know, the day that we, you know, had almost a million downloads of it, those stocks that, so to speak, depend on sticky prices or, hey…”—

Oracle Provision — The guest says Oracle’s force majeure provision would apply if the project is not completed on time, but was not being invoked at the time of discussion. He describes it as protection against late delivery, not evidence that a force majeure event had occurred.

“Well, what's really interesting about the Oracle headline is a force majeure if they don't complete the project in time…”—

Muse Traction — The speakers describe Meta’s Muse as a strong consumer-facing AI competitor to OpenAI and Claude, citing downloads as evidence of traction. They acknowledge that Muse may not have the same business capabilities.

“But my goodness, if. Like try to compete with that on a personal level and it is going to be very difficult for OpenAI and Claude to compete with Muse…”—

ECONOMY

Rates And Housing — The speaker says June 2027 Fed funds pricing is nearly 100 basis points higher and that, if realized, it would raise borrowing costs. Mortgage rates above 7%, he says, would keep the housing market somewhat on hold.

“I mean, if you take a look at what June Fed funds is for 2027, you're a 100 basis points up almost…”—

Europe’s Energy Costs — One speaker assesses that the Iran war has hurt Europe more than the United States. He notes European gasoline and diesel prices were two to two-and-a-half times U.S. prices and presents the comparison as his assessment.

“So, yeah. So they're not happy. They're not happy of the Iran war because that has hurt them more than it's hurt The United States. But, you know, there…”—

MARKETS

Real Rate Drivers — The guest says real rates rose 40 basis points in three weeks while inflation expectations were stable and five-year, five-year inflation swaps edged down. GDP growth expectations were also rising; he identifies stronger real rates, not higher inflation expectations, as the driver described.

“The real rate has gone up 40 basis points the last three weeks, one of the strongest increases I've ever seen. Inflation expectations are pretty stable…”—

TIPS And Equities — The speaker puts the 10-year TIPS yield at 2.81 and describes it as a competitor to stocks. Comparing a 5% yield with a 20 P/E, he says the equity premium is narrowing, but does not suggest investors are making a wholesale shift out of stocks.

“It's a story of yields. I mean, the ten year tips at two eight one. You know mean? We haven't seen that in a long time…”—

Apple Valuation — The speaker considers Apple expensive as the top holding in a value index and characterizes it as a hardware company with weak software. This is his assessment, not an established valuation conclusion.

“Very interesting. Apple is... You know, I still think it's an expensive holding for the top weight in a value index. So it…”—

FORECASTS

Rate Hike Outlook — The guest says one rate hike may not be enough and that sentiment is building for two hikes in December, depending on whether an October move occurs. He adds that even two hikes might be only the beginning of stronger yields.

“Now, again, there's politics, whether it's gonna be in October, but there's increasing feeling there may have to be then two in December.”—

Real Rates And Yields

The speakers describe rising real yields amid strong growth, discuss possible rate hikes, and explain why resilient earnings have helped stocks hold up despite the bond-market challenge.

Muse And Price Competition

They consider whether Meta’s Muse agents could make switching providers and comparing prices easier, disrupting businesses that have benefited from consumer inertia.

Iran, Oil, And Rates

The discussion links oil-market uncertainty and Iran’s incentives to higher yields, tighter financial conditions, and the challenge facing stocks and cyclical investments.

Small-Cap Borrowing Costs

The speakers weigh stronger growth against rising borrowing costs for small companies, higher mortgage rates, and potential pressure on housing and value-oriented sectors.

Europe’s Energy Burden

A traveler describes full restaurants but limited visible technology in Europe, where much higher fuel prices leave consumers more exposed to the Iran conflict.

Oracle Project Delays

Sam argues that Oracle’s force majeure notice concerns potential late delivery rather than an immediate collapse in project revenues, and that the alarming headline may have little underlying impact.

Muse’s Consumer Edge

The hosts and guest share examples of Muse organizing inboxes, handling administrative tasks, and negotiating bills, arguing that its consumer usefulness could challenge established platforms.

AI Winners And Losers

They consider how Muse could reshape advertising, marketplaces, computing demand, and cybersecurity, while revisiting Meta’s investment case and Apple’s weaker software position.

Quantum Supply Chains

Chris reports that U.S. investment is building domestic quantum manufacturing capacity, while describing the specialized suppliers and infrastructure needed to expand the ecosystem.

Superconducting Hardware Limits

The discussion explains how cryogenic temperatures, space, and wiring constraints complicate scaling superconducting quantum systems, highlighting a small public company focused on the wiring challenge.

Yen And U.S.-China Ties

Sam cautions officials against challenging markets as the yen and Treasury yields move against expectations, then characterizes U.S.-China discussions as constructive while noting the symbolic importance of pandas.

Space Data Center Ambitions

Chris says near-term demonstrations of space-based computing are plausible, but estimates of thousands of annual launches by the mid-2030s depend on solving major engineering and investment challenges.

Pricing Power Returns

Sam warns that companies are emphasizing price increases after volume-focused discounts failed, citing Pepsi as an example of pricing power returning amid consumer and GLP-1-related headwinds.