19 February 2025

Jeff Hirsch on Why Big Federal Spending Plus Inflation = “Superbooms”

1Frameworks

6Insights

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Frameworks in this episode

Finance7 steps

Federal Spending Superboom Cycle

Track spending, inflation, peace, and technology to identify secular booms

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Insights & moments

The myth-busts, hot takes, explainers, and tools worth keeping.

Myth Buster· 1

Myth Buster08:36

Why Saber Rattling Alone Does Not Create a Superboom

Threats involving Greenland, Panama, or Canada are not themselves the relevant market catalyst. Hirsch argues that investors should watch actual federal expenditure, security deals, resource agreements, and their economic effects rather than provocative rhetoric.

Threats are weaker signals than enacted spending
Security and raw-material agreements can carry economic value
Global competition may increase strategic investment
Political rhetoric should not be mistaken for fiscal evidence

“I think it's not so much the threat of war. It's overall federal spending”
Jeff Hirsch · 08:56

“But it's really about the spending in general.”
Jeff Hirsch · 09:06

#geopolitics#federal spending#trump#security

Hot Take· 2

Hot Take07:48

Modern Military Spending Is Becoming Technology Spending

The conflicts in Ukraine and Israel illustrate how drones, cyber operations, signal jamming, and other technologies are changing defense expenditure. Hirsch expects rising military budgets to channel significant capital into technology companies and defense-tech hybrids.

Modern conflicts rely heavily on drones and cyber capabilities
Military budgets increasingly fund technology
Defense and commercial technology ecosystems overlap
Security competition can sustain investment demand

“Ukraine and Israel have shown us and proven that the conflict is all about tech.”
Jeff Hirsch · 07:51

“So all that military spending you may find its way into technology. I mean, let's call it defense tech.”
Jeff Hirsch · 08:02

#defense tech#drones#cybersecurity#military

Hot Take13:06

AI Today May Resemble the Internet in the Early 1990s

Hirsch compares the present AI cycle with the period before Windows 95 and mass internet adoption. The analogy suggests the technology remains early in its commercial development despite already attracting intense investment and attention.

Today's AI market may still be in an early adoption phase
The early internet offers a historical technology analogy
Ancillary technologies can expand alongside the core platform
Long-term growth can coexist with near-term volatility

“Think about AI and all the related tech, about where we were in like ninety two to ninety five with Windows ninety.”
Jeff Hirsch · 13:07

“Look, my view is that we're kind of at that period of time in this technological boom.”
Jeff Hirsch · 13:19

#ai#internet#technology cycle#windows 95

Explainer· 2

Explainer03:34

Why Historical Events Matter More Than Fixed Market-Cycle Lengths

Hirsch rejects arbitrary 17- or 18-year market-cycle lengths in favor of boundaries created by consequential historical events. Assassinations, armistices, war resolutions, and withdrawals help identify when spending and conflict regimes begin or end.

Market cycles should be anchored to causal events
Wars and their endings establish meaningful regime boundaries
A market bottom can precede confirmation through new highs
Calendar duration alone does not explain the mechanism

“We looked at it, and what Yale discovered was that these events in history that create these these cycles”
Jeff Hirsch · 03:44

“We were looking for the end of the combat, you know, in Afghanistan, to sort of spark the end of the war, end of the…”
Jeff Hirsch · 04:38

#market cycles#history#secular markets

Explainer11:37

Healthcare AI's Opportunity Depends on Digitizing Medical Data

AI could improve diagnosis, disease analysis, and treatment selection, but medical information remains insufficiently digitized. Hirsch presents healthcare AI as a promising extension of the technology boom whose progress depends on converting fragmented analog records into usable data.

AI may improve diagnosis and treatment matching
Medical data remains partly analog
Digitization is a prerequisite for broader AI adoption
Healthcare could become an important AI subsector

“Medical data, as you know is still analog huge, but it's not quite digitized enough yet.”
Jeff Hirsch · 12:05

“So add that to the list of technologies is you know medical and healthcare AI.”
Barry Ritholtz · 12:12

#healthcare ai#medical data#digitization#diagnostics

Takeaway· 1

Takeaway10:09

Why Hirsch Favors Technology and Energy Over Consumer Staples

When asked which sectors benefit from the current environment, Hirsch emphasizes technology and the energy needed to power it. Drones, robotics, AI, exploration, production, and equipment providers appear better aligned with the spending outlook than defensive consumer staples.

Technology is the primary sector thesis
Energy demand rises with AI and computing infrastructure
Robotics and drones bridge commercial and defense demand
Consumer staples are not the preferred expression of the thesis

“I think it's tech. I really think it's too tech.”
Jeff Hirsch · 10:25

“But I think energy and tech and all this new technology that is that we're fighting wars with that we're operating everything on is where…”
Jeff Hirsch · 11:00

#technology#energy#sector allocation#ai