Real earnings on the S&P 500 were about $5 a share in 1921. They are around 250 now — a 50-fold increase in a century, and the reason the index's long-run record looks the way it does.
Every rally since has been read as a mood. Jonathan Treussard's point is that the mood has never been the mechanism: on his reading of the record, the market has panicked every single time earnings merely stopped growing, and it has not panicked for long when they kept going.
"And here is the baseline which is in the face of worry the market is doing what it has been taught to do when it's trying to be rational which is looking at earnings and earnings have been pretty strong certainly since they dipped in 2022. So to just address upfront the question of this wall of worry, the reality is sure, read the news, but watch the earnings."
Treussard runs money for a living, holds a doctorate in economics, and is the son-in-law of the academic who wrote Worry-Free Investing — which is where the inflation-protected-bond test he applies to his own clients comes from.
The full segment is covered here so you can skip it.
Here are the 12 insights that matter.
👤 Guest: Jonathan Treussard, founder of Treussard Capital Management, a PhD economist and wealth manager who writes the Wealth Empowered newsletter and hosts the Treussard Talks podcast
🎙️ Host: Chuck Jaffe, a financial journalist who spent years covering funds for the Boston Globe and now hosts Money Life daily
🧩 Other segments: Roy Schwartz, a co-founder of Axios, on his book Simplify; and Stan the Annuity Man, answering listener questions on pensions and lump-sum offers
📰 Published: 16 September 2026 on YouTube (Money Life with Chuck Jaffe) · recorded before the Fed's September decision
🔴 YouTube | ⏱️ length not available
Key Takeaways
The market is not ignoring the news; it is pricing earnings, which have been strong since the 2022 dip
Every time in a century that earnings merely stopped growing, there was concern that often tipped into panic
What he wants investors to watch is not a crisis but a plateau in corporate earnings
A decent share of the earnings pulling the market forward is AI capital spending financed with debt
Fixed obligations against uncertain outcomes are what create fragility, so a debt hiccup — not a debt crisis — would be the wake-up call
The 2029 Treasury yield went from about 3.6% in March to about 4.7%, and the 10-year has traded at and above 5%
He says the market is playing chicken with itself, and he does not know where the breaking point is
The recent blowup was a margin call, not a credit event: a fund went from $45B to $10B inside a week
$2T a year of white-collar wages now has an outside option, and a slowdown is what would make CFOs take it
He runs a two-asset test rather than an asset-allocation model: a risky blob of equities, and inflation-protected Treasuries as the reference point
At roughly 3% real, TIPS tell you the market price of consumption safety
1. Watch the Earnings
Jaffe opened by asking, on a scale, how worried Treussard actually is. The answer reframed the question.
He had just written the same argument in his newsletter. Anyone who follows the news has watched the war with Iran, the tariff announcements before it, and interest rates rise by well over 100 basis points from where they were before the end of February — and the stock market has held up anyway.
His explanation is not that investors are ignoring it. "And here is the baseline which is in the face of worry the market is doing what it has been taught to do when it's trying to be rational which is looking at earnings and earnings have been pretty strong certainly since they dipped in 2022. So to just address upfront the question of this wall of worry, the reality is sure, read the news, but watch the earnings."
That makes the thing to worry about the earnings themselves, not the headlines — the thing that has been keeping the train alive.
2. From $5 to 250
The historical case is the strongest passage in the interview, and he sourced it.
On Robert Shiller's data back to the 1800s, real earnings collapsed after the First World War, while the United States was still on the gold standard.
"Right around 1921, real earnings were roughly some version of $5 a share, if you will, if you were talking about the S&P 500. At last read, that number was something like 250. So, real earnings have grown over the course of a century to the tune of 50x, which is gigantic." That, he said, is why the long-run record for the index is what it is.
The pattern inside the century is the warning. "But every time on this incredible journey from 5 to 250, every time earnings even just stopped growing, there was massive concern, often tipping into panic."
"And so I guess what I would say is worry because it's probably a healthy thing to do to not be blissfully unaware, but worry about the right thing." The right thing is what sentiment would look like if earnings plateaued — already a wake-up call — or dipped even marginally.
3. Sentiment Isn't Alone
Jaffe pushed on the emotional side. He noted that on Treussard's last appearance in February, the argument was that investors had staked their financial lives on a post-crisis market and were not prepared for a 30% drawdown. His question: could sentiment itself be the thing that takes the market down — the moment enough people decide not to buy the dip?
Treussard agreed sentiment is part of how markets turn, but not on its own. He said he does not believe in sunspots, in the way academics use the term: everyone staring at the market and spooking themselves is not enough.
"But I do think any one thing could be the spook factor if earnings it just slow down, right?" The mood is the transmission, not the cause.
4. War Is Inflationary
He then laid out what is actually pressing on earnings, starting with the broadest input.
"Let's just start at the top, which is war in all of its forms throughout history is an inflationary process. That's what happens when you spend limited resources to go out of your way to basically make other productive units blow up." He was explicit that this is a statement about war in general, not about this one.
What makes this war unusually efficient at producing inflation is where it lands. "It happens to be that the one we're in now is right tapped into the one economic pathway that has a really solid way to generate inflation, namely the energy market."
The chain he draws runs from that to rates to the household: inflation pushes interest rates up, and the consumer sees the price at the pump going in one direction.
5. AI Capex Runs on Debt
The second pressure point is the composition of the earnings themselves.
A meaningful share of what has pulled the market forward is corporate spending on turning the economy into an AI economy, and a good deal of that spending is financed — through private vehicles as well as public ones.
"And as we know, anytime you introduce fixed obligation against uncertain outcomes, you create a real fragility."
What he is watching for is smaller than a crisis. Anything with a whiff of a debt hiccup, he said, would be the moment investors work out what has been driving earnings forward — AI spending, and the fact that the spending was borrowed.
6. Playing Chicken
Jaffe asked for a level: does a hike and a Treasury above 5% do it, or does it take a couple of hikes and a long bond at 5.5%?
Treussard said the interview was recorded before the Fed decision and that the market had talked itself into a corner — a hike looked pre-ordained on one side, while on the other, "we have a Fed chairman who seems to be very intent on quote unquote the market doing the work for the Fed instead of the Fed."
The move he used to size the tightening is a single security. "I was just looking at a 2029 Treasury this morning. In March, that yield was something like 3.6. Today, it was some version of like 4.7. just think about that move over the course of a few months. That's much more expensive money, right, for all involved."
"I think the market has been testing itself. it's playing chicken with itself. It's now officially taken the 10-year yield at and above 5% for, a minute to see what it feels like."
"And so I don't know where the breaking point is." What he will commit to is the direction: "Look, tighter financial conditions will make it less appetizing, less appealing to conduct economic activity."
7. The $45B Margin Call
His example of what breaking actually looks like is recent and specific, and he was careful about what it did and did not prove.
The setup was a fund long AI-exposed positions and short software companies. Software rallied briefly, the fund could not meet the margin call, and the damage followed from fixed debt rather than from anyone's view being wrong.
"And that's how you go from, managing $45 billion on Monday to managing$10 billion on Friday. That's not a that's not a good week for anybody."
"It happened to not be systemic, risk realization." That is the part he does not want read as reassurance.
The version that would be systemic is a failed refinancing. "But what if one of those firms that has been gorging on debt to be the server capital of our AI nation can't roll a piece of debt for whatever reason."
He marked the whole thing as a risk exercise, not a forecast. "And I repeat this is not an exercise in prediction." His line for it: "I tell people all the time if you know what's going to happen next that makes one of us."
"And still along that journey, the short term is how bad things happen to good people." "And that's all I'm saying is position yourself, take risk in a way that allows you to not be one of those good people to whom irreparably bad things happen over the short term."
8. Simple Beats Granular
Jaffe put a question about the industry's direction of travel: financial institutions keep adding tools and granularity, which does not obviously make anything easier.
"So, I think keep it simple and stupid is incredibly valuable." Particularly, he said, when what you are preparing for is a crisis.
"Simplicity means that you have a clean, you have a clean spreadsheet, if you will. You don't have a million lines. You have 10 lines to make decisions on if and when."
9. The TIPS Test
What he does instead of an allocation model is a two-line exercise, and he flagged it as academic rather than advice.
The first line is the risky blob: for most people, a single large exposure to equities. The question to ask of it is whether a 30% smaller blob next year would change how you live.
The second line is the reference asset. "But importantly, we have a thing called TIPS, Treasury inflation protected securities. And for better or worse, from an academic standpoint, they're kind of the closest thing we have to a risk-free asset." Safe in real terms, after inflation.
He named the caveats himself: they are not perfect, and the taxation upsets people who do not hold them in retirement accounts.
What they give you is a price. "Nonetheless, you can say, okay, I've got a risky blob and I have this op this outside option of something that's going to basically compensate me for inflation with a little more." At roughly 3% real — inflation plus three — the arithmetic gets an investor a long way toward deciding what they can tolerate.
The source is family as well as academic: his father-in-law wrote Worry-Free Investing, a book Treussard said everybody should pick up.
10. Bonds for 40 Years
Jaffe brought a claim from the previous day's show, where a technical analyst from Shadow Ridge Asset Management had said the market is three or four years into a 40-year cycle in which bonds will be, in the analyst's word, garbage. He asked whether investors are losing sight of their own needs while arguing about the call.
Treussard allowed that the analyst may well be right. A 40-year bond rally ran from about 1980 to about 2020 and has since turned, and he noted he lives in a town that had a bond king in Bill Gross — a good time to be one. It may now be a rough forty years to be a long-duration, unstructured bond manager.
But the call is not the question for the person listening. "They're not looking to be the next Bill Gross. They're not actually running a bond fund."
"What they're looking to do is make sure that they can sustain the kind of spending that they need to sustain and want to sustain over a particularly clear and structured horizon."
The distinction he draws is between the journey and the outcome. "If you buy a bond at 5% you know what your return is going to be." The marks along the way may be painful. "It might if you start comparing it to a bunch of things, regret abounds, but structure has a lot of value in this world."
11. $2T of White-Collar Wages
Asked how much investors should lean into AI, Treussard started with the labor market rather than the market.
"Today there is something and I have a slide deck on this on my website on the AI inflection point and I'm going off of memory here but we have something like 60 million white collar workers in this country and that wage bill is some version of $2 trillion a year right"
"I don't think that we're necessarily going to lose jobs forever but I recognize that AI now competes with humans for labor" — and the risk arrives through a slowdown. "And if we have anything that resembles a slowdown in the economy, I could see CFOs across the nation say" it would be worth saving a fraction of that wage bill.
The same logic explains the pressure on software businesses. Anyone who thought a subscription stream was a moat now faces a startup that used AI to build a cheaper alternative.
"And so what I'm saying to you is I think we're all competing with the machine. There's no question there."
His asymmetry is that the subscription goes first and the person goes last. People will happily cut software spending; they face a higher hurdle before replacing employees they are attached to — until, he said, a chief financial officer gets narrowly rational and decides to try it.
12. Two Markets, One Movie
He closed on where the AI question actually gets priced, and named both venues.
"Now when it comes to markets, I think this is a much more interesting and dynamic situation where as I said, I think we've got two markets competing for attention. Here we have the credit market saying how much more AI buildout debt can we kind of swallow and that's number one. The other one is painfully obvious which is the equity market."
"And this is where we've seen this movie before. The destination may be right, but our natural propensity as people is to exaggerate how we're going to get there and how well it's going to play out." His precedents are the railroads and tech stocks in the 1990s.
"And so, it's hard not to worry that we're facing something that resembles one of those prior scenarios."
Jaffe's counter was a history lesson of his own: "And at the same time, let's not forget that during the age of the railroad revolution, people were basically worried that if you were put on a vehicle that could travel more than 20 or 25 miles an hour, you might disintegrate. It didn't turn out that way either."
Treussard's answer separates the technology from the trade. He is not making a claim about the physical world but about financial markets: "And there are a lot of ways to make very smart investment decisions that are very poorly timed. And that's the challenge here."
Bonus Insights
The host's own framing of the rate decision, delivered before the interview, is the most useful number in the episode for anyone reading it after the fact. Jaffe said "In fact, two small rate hikes historically have been greeted by a market that is up a year later." It is three or more, on his account, where it starts to get frightening.
Jaffe also said he is not sure a cut is something to want. A market that slows down is better than a market that tanks, and the catalyst for the latter is frequently a policy mistake.
His observation about his own guests is worth recording: "But one thing you've heard plenty of people say on the show recently is they're all convinced the market will again tank." "They just don't necessarily know what the catalyst is."
Treussard's bottom line is that the wall of worry is not what breaks this market: earnings are, and a large share of the recent earnings rest on AI capital spending funded with debt at yields that have moved a full percentage point in months — so the thing to position against is not a headline but a plateau.
Products, Companies & Tools Mentioned
Treussard Capital Management (His firm, and the home of the Wealth Empowered newsletter, the Treussard Talks podcast and the AI inflection point slide deck he cites for the $2T wage figure)
Shadow Ridge Asset Management (Whose technical analyst, on the previous day's show, made the 40-year bond bear case Jaffe put to him)
Books & Resources Mentioned
Worry-Free Investing (Written by Treussard's father-in-law, and the source of the risky-blob-against-TIPS exercise he uses with clients)
Robert Shiller's long-run earnings data (The series back to the 1800s behind the $5-to-250 claim)
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