America’s AI Boom Is Squeezing Main Street | Weekly Roundup

Bitcoin

Across the shows: 1 speaker in other episodes, 0 bullish and 1 bearish calls, past 30 days

• Quinn Thompson · Lekker CapitalBullish

  Long-term bullish on Bitcoin as balance sheet expansion drives debasement.

  Quinn argues that balance sheet expansion and monetization of debt will keep producing debasement. Yields are mean-reverting to some extent but remain in a steady uptrend, and the damage already done means policymakers must print heavily to repair the economy and keep the population afloat. He sees current moves as front-running that eventual debasement, which supports a long-term bullish case for Bitcoin.

  “So that's another thing that I think you're right in terms of like balance sheet expansion, monetization, like long term bullish debasement, Bitcoin, etcetera”at 37:25

US Treasuries & yields

• Aidan Garrib · PGM Global

  US long yields are rising because markets price a higher Fed terminal rate, not inflation or fiscal worries.

  The ten-year yield has surged, but inflation expectations sit near 2.4% and have been flat for about six years, and term-premium measures have barely moved, so fiscal and inflation worries are not the main driver. The ACM risk-neutral rate and the Fed dots rose together, showing the market pricing a higher Fed path. Nominal GDP near 6.6% with credit growth around 3% and the Fed at 3% makes a 4% ten-year yield inconsistent unless more hawkish policy is priced in.

  “it isn't inflation worries or fiscal worries necessarily that are driving the broad part of Treasury yields higher, but it's actually just the Fed, the market saying the Fed needs to hike more.”at 7:22

• Quinn Thompson · Lekker Capital

  Policy support for equities and liquidity flows into commodities, which worsens the yield problem.

  Policy actions meant to support equities and juice liquidity, including buybacks, are flowing into commodities, and a chart shows oil rising more than the Nasdaq when yields came down. That makes the yield problem worse, so the market is signalling that policymakers need to stop juicing assets before yields can recalibrate lower.

  “all of your actions to support equity markets and stimulate and juice liquidity are flowing directly into commodities, which then makes the yield problem worse.”at 17:45

• Quinn Thompson · Lekker Capital

  The cost of money is structurally higher, and the thirty-year yield will likely not return to 4.6% soon.

  The thirty-year yield is at 5.6%, up from 4.6% six months ago, and the chart shows a multi-year breakout. Even if the Iran war ends, yields will not simply pull back, so the cost of money is now structurally higher by a large degree and the long-end level will not return to 4.6% in the next few years.

  “Those yields aren't just like the Iran war is not going to just end those yields. Even if it does, yields aren't just going to pull it back. Like the cost of money is now structurally higher by a large degree than it was six months ago.”at 37:09

• Aidan Garrib · PGM Global

  Policymakers are engineering captive Treasury demand from banks, pensions and stablecoins.

  Aidan says policymakers will mandate that institutions buy Treasuries, such as by scrapping the supplementary leverage ratio so banks buy more and pushing DC and defined benefit pensions to buy. Pension plans are overfunded after COVID, with a 3% liability growth and a hurdle rate near 3.3%, so CIOs would cover the hurdle with 10-year Treasuries and buy less private equity, private credit and CLOs. Stablecoins buying T-bills at the front end is another channel. He sees this as the escape valve for the debt load.

  “I think like this is what they're trying to do is just engineer captive demand for treasuries”at 40:14

US rates & the Fed

• Aidan Garrib · PGM Global

  The Fed should hike rather than cut, since cuts would push long yields and mortgage rates higher.

  Cutting rates would increase bond volatility and mortgage-backed security volatility, and long yields would rip higher, which would not solve the housing problem. The Fed therefore needs to tighten to flatten the curve, bringing down the long end where most real-economy borrowing is priced, and then get a more even-keeled growth outlook rather than one driven by hyperscaler spending.

  “we can't cut rates because if we cut rates, then you're going to increase bond vol, you're going to increase mortgage backed security vol... treasury yields are going to rip higher. That's not going to solve anything.”at 13:56

• Quinn Thompson · Lekker Capital

  A barrage of Fed speakers pushed front-end yields down and steepened the curve, pushing rates lower.

  The Fed sent an unusually large number of speakers in one day, more than in many previous instances, to talk the market lower on rates and higher on equities. That pushed the front end down substantially and pulled SOFR futures higher, steepening the curve, though the long end also benefited.

  “when they sent their onslaught of Fed speakers... It steepened the curve tremendously because it brought the front end down a lot more.”at 15:07

• Aidan Garrib · PGM Global

  The Fed's recent hike restored credibility but did little to control inflation.

  Responding to whether a rate hike is stimulative, the speaker argues the hike mainly showed the market that the Fed is not a puppet of the administration, which gave it credibility. He does not think the hike meaningfully affects inflation, but the credibility gain is helping moderately at the long end of the curve.

  “gives the Fed some credibility... I don't think it really impacts inflation all that much. I think it just impacts Fed credibility, which then is what's helping moderately at the long end of the curve.”at 34:14

AI infrastructure & data centers

• Aidan Garrib · PGM Global

  Hyperscaler AI capex drives most US growth, but its growth is set to slow sharply next year.

  Hyperscaler AI capex (Amazon, Alphabet, Meta, Microsoft) grew over 90% year over year in 2026, which explains nominal GDP near 7%. Consensus forecasts put next year's growth at roughly 30-35%. Because the growth is so concentrated in this one spending category, the economy looks narrow and exposed to any slowdown in AI model development, power supply, or local data center opposition.

  “the growth rate in hyperscaler AI CapEx was over 90% year over year... But next year, that's forecast to fall to close to 30, 35%.”at 10:42

• Quinn Thompson · Lekker Capital

  Policymakers chose an AI-only economy that crowds out everything else, a self-fulfilling and political choice.

  Outside AI and the Magnificent Seven, the speaker sees no jobs, no stock gains and no spending: all CapEx is AI. Policymakers stimulate this AI-only economy, which crowds out everything else and becomes self-fulfilling, so the arrangement is a political decision rather than a market outcome.

  “It's a political question because they've chosen to stimulate and induce this AI only economy, which has then become a self fulfilling prophecy because by doing that, you crowd everything out.”at 25:40

US housing

• Aidan Garrib · PGM Global

  US housing has been badly damaged, and residential construction employment signals a weakening economy.

  Residential construction employment leads the economy and recession bands, because home sales drive spending on furniture, appliances and building materials. That has now slowed sharply, and mortgage rates are the key obstacle, so the housing market is one of the economy's weakest pillars.

  “residential construction employment is a leading indicator for the economy. It leads all those recession bands... So it tends to drive the economy and now that's really slowed.”at 13:09

• Quinn Thompson · Lekker Capital

  Homebuilders are being decimated by higher yields and mortgage costs, hitting Main Street.

  The thirty-year yield rose from about 4.6% to 5.6% in roughly six months, and mortgage rates rose even more. Buyers reliant on financing can afford a noticeably smaller or cheaper house, so homebuilders are among the sectors being hit hardest by the policy-driven rise in yields.

  “Homebuilders, regional banks, equal weight small caps, utilities. These things are getting decimated because of their actions that are stimulating, inducing...”at 18:37

US inflation

• Quinn Thompson · Lekker Capital

  Jobs and inflation data will keep coming in hot for the next one to three months.

  Strong data on both jobs and inflation are expected to persist for the next month or two or three. That raises the risk that Fed members who talk the market dovish will be proven wrong, as Waller was twice before, when data then shut the door on the dovish narrative.

  “the data... will continue to come in hot, both probably jobs, at least for the next month or two or three and an inflation, too.”at 15:58

• Aidan Garrib · PGM Global

  Core inflation ex food, energy and shelter is trending toward 2%, giving the Fed short-term breathing room.

  Using the three-month annualized change in prices, a proxy the Fed watches, core ex food, energy and shelter is trending lower toward 2%. A mildly soft inflation print supports this, though the target is not yet reached. That gives the Fed short-term room to sound dovish while energy and supply pressures persist.

  “core ex food, energy and shelter is trending lower towards like 2%. Now, are we there yet? No, but I think this gives them at least some short term like breathing space here.”at 20:50

Oil & fuels

• Aidan Garrib · PGM Global

  Diesel prices are ripping, and a possible US diesel export ban would push fuel costs into inflation.

  Diesel and gasoline prices are surging, and the Strait of Hormuz closure has tightened supply. Policymakers may have to ban diesel exports to cool domestic prices, but that would still filter diesel-price increases into broader inflation, which would bring the Fed's inflation problem right back.

  “Trump's going to either have to ban diesel exports, you're going to see diesel prices rip filtering into inflation.”at 22:29

• Quinn Thompson · Lekker Capital

  A diesel export ban would cut domestic diesel output, since refiners would cut utilization rates.

  A diesel export ban would lower the price for end consumers, which is a demand tailwind, but it would also cut supply because producers would rein in refinery utilization and produce less diesel. That stimulates demand into supply constraints and shows how policy is fighting physical market forces.

  “They're talking about a diesel export ban that likely reduces the amount of diesel production because producers will then rein in refinery utilization rates, produce less.”at 26:44

US dollar

• Quinn Thompson · Lekker Capital

  If supply problems are not solved, policy will paper over them with monetization and debasement.

  Monetization does not fix supply problems, so the choice is either to let supply heal on its own or to paper over everything with debasement. The speaker suggests the policy path leans toward debasement, which then supports the long-term case for balance sheet expansion.

  “we're either going to let the supply problems heal themselves or we're going to paper over everything with with debasement.”at 27:35

• Aidan Garrib · PGM Global

  US stock gains mostly reflect a falling dollar; the S&P 500 is flat in gold terms.

  Measured in gold, the S&P 500 is flat and below its 2008 levels, while in dollar terms it has risen sharply. The speaker concludes that much of the stock market's gain comes from dollar debasement rather than real equity value creation.

  “You look at the S and P 500 in gold terms or in dollar terms... So much of stocks going up isn't stocks going up like dollars going down.”at 31:42

Europe's economy

• Aidan Garrib · PGM Global

  Europe is losing export share and hollowing out manufacturing; German bankruptcies keep rising.

  Aidan cites weak German export volumes to China and the US, Europe's trade-weighted euro near an all-time high, and job cuts at Volkswagen and BMW as evidence that Europe has lost the export share battle to Japan. German corporate bankruptcies have risen every month since COVID and now include the largest 10% of firms by employment. He says the single mandate and zero-deficit rules leave Europe with two options: devalue the currency and accept inflation, or tame inflation and hollow out manufacturing further, which he sees as the pressure needing a shift toward reindustrialization.

  “So the message of this chart is every single month since Covid more and more firms have been going bankrupt.”at 47:11

• Quinn Thompson · Lekker Capital

  Europe lacks AI and commodities, so structural growth lags; shocks expose it.

  Quinn argues Europe lacks AI, the main driver of global growth now centered in Korea, Japan and the US. As a bloc it has little commodity base and little control over commodity flows, faces wars on its eastern and southern fronts, and no single control of money supply or bond markets since each country depends on ECB policy. These structural weaknesses look like a dull, repeated narrative until external energy, geopolitical or economic shocks expose them, and Quinn expects more to come because those situations are unresolved.

  “Europe doesn't have AI. So they don't have the number one driver economic growth globally, which is occurring in Korea and Japan and The US.”at 48:26

Central banks outside the US

• Aidan Garrib · PGM Global

  The ECB is hiking into supply shortages and stagflation, making a forced policy mistake.

  Europe's central bank is compared to a character who keeps stepping into the same trap. It is tightening into supply shortages and stagflation, so the hikes are forced policy mistakes that do not address the supply-driven inflation.

  “Europe where the ECB just looks like... it's like forced policy, you know, mistakes, right? So they're hiking into like supply shortages and stagflation.”at 5:01

AI chips & semiconductors

• Aidan Garrib · PGM Global

  Hyperscaler AI capex is increasingly nominal, inflated by memory and chip price increases rather than real volume.

  Amazon said memory prices will absorb 30% of its 2026 AI data center spend, versus 8% in 2023-2024. Microsoft's roughly $190 billion guide includes about $25 billion that is just higher pricing from the chip shortage and related constraints. Much of the capex boom is therefore nominal, which weakens its contribution to real GDP growth.

  “a lot of this CapEx spend isn't like real... from an economic perspective, it's nominal... memory prices are going to absorb 30% of our 2026 AI data center spend versus just 8% in twenty twenty three-twenty four.”at 11:01

Banks

• Quinn Thompson · Lekker Capital

  Regional banks are being decimated by higher yields, a Main Street sector hit by policy-driven rates.

  Regional banks are among the sectors that have been decimated as yields rise, alongside homebuilders, equal-weight small caps and utilities. The speaker treats them as representative of Main Street, so their weakness signals the economic damage from the rate path.

  “Homebuilders, regional banks, equal weight small caps, utilities. These things are getting decimated... Those all those companies and sectors being hit the hardest, they're representative of Main Street.”at 18:37

Middle East & Iran

• Aidan Garrib · PGM Global

  The Strait of Hormuz is closed and nearby facilities are bombed out, so supply is not coming back soon.

  The Strait of Hormuz is closed and half the relevant facilities are bombed out, so the supply shock is not expected to resolve. The speaker links this to a sulfuric acid shortage, a key input for metal refining and fertilizer, which is crimping industrial activity and feeding into food prices.

  “the Strait Of Hormuz is closed and half these facilities are bombed out and it's not coming.”at 21:33

US stock market outlook

• Aidan Garrib · PGM Global

  US equities can keep rising, but only the narrow AI-driven segment, while the rest of the world looks weaker.

  The market keeps running higher as long as nothing breaks, the labor market does not crack, and fiscal transfers continue. Gains are concentrated in the hyperscaler and AI-linked names, while other equity markets lack hyperscaler capex and AI exposure and face real-world constraints, so they look more circumspect.

  “the market just keeps running higher as long as nothing is actually breaking... The US equities, I think, can continue to do well here. Well, at least the narrow section of them.”at 24:44

Power demand & the grid

• Quinn Thompson · Lekker Capital

  The US economy is capacity constrained in power and oil, so stoking demand pushes up prices.

  The economy is capacity constrained in power, with electricity prices rising, and in oil and commodities. Continued stimulus adds demand into those constraints, so the stimulus worsens the inflation and yield problem rather than creating healthy real growth.

  “It's capacity constrained in power. Electricity prices are rising. It's capacity constrained in oil and commodities.”at 26:23

US elections & politics

• Quinn Thompson · Lekker Capital

  Midterm incentives push policymakers to support markets, though a clearing event could flip that.

  The midterms are a strong incentive for policymakers to boost markets through support measures. The speaker notes this could reverse if policymakers instead chose a clearing event that lets yields fall and gives Main Street room to recover.

  “we're moving into midterms, which we know is a hugely incentivized date on the calendar to try and boost things into from like a market support perspective.”at 27:53

US consumer

• Aidan Garrib · PGM Global

  The US economy depends on wealthy households' consumption, so the stock market effectively is the economy.

  BLS consumer expenditure data show the bottom 30% of households account for less than 15% of total consumption, while the second-wealthiest decile alone is 15.4%, and survey undercounting of the wealthy likely understates their share, which is closer to 60%. Wealthy consumers spend based on stock prices because their wealth effect from equities outweighs labour income, so keeping stocks high is needed to keep consumption going.

  “the bottom 30% account for less than 15% of total consumption... you basically have the stock market is the economy because you have a consumption driven economy that is driven by wealthy people who are consuming based on what stock prices are doing.”at 29:54

US deficit & government debt

• Quinn Thompson · Lekker Capital

  Debasement and money printing will be needed to fix the non-AI economy.

  Quinn says the damage the US government has done to the economy is evident in the steady uptrend in yields, and that repairing it will require a large amount of debasement and printing. He argues this is already being front-run by markets and that it will be necessary to right the ship for the parts of the economy not driven by AI.

  “All of this stuff is front running the level of debasement and printing, I think, that is going to be required to right the ship, if you will, for the non AI parts of the economy.”at 38:01

Tariffs & trade policy

• Aidan Garrib · PGM Global

  Reshoring from China would require massive US inflation; administration accepts some inflation.

  Aidan argues the US cannot reshore what China produces without massive inflation. Imported inflation is already 5.6% year over year, Chinese-origin goods are at about 3% and Korean semiconductors at 12.6%. Trump is using alliance deals with Japan and Korea, with Japan spending about $500bn on energy infrastructure and data center capex, to move hardware production to allies while the US leads AI. He reads the short-term inflation as something the administration tolerates while managing messaging to keep the public and bond market calm.

  “there's just no way that we're going to reshor what China does without massive inflation in The US.”at 40:57

Japan's economy

• Aidan Garrib · PGM Global

  Japan has won the export share battle with Europe; BOJ hiking on strong growth.

  Aidan argues the real trade war has been between Japan and Europe for export market share, since global growth has been weak since the GFC. Japan's net international investment position has held up after decades of trade surpluses, and it is now burning some FX reserves to squeeze yen shorts at 160. Europe's flows are hollowing out while growth in Japan is strong and real wages are rising, which is why the BOJ is hiking.

  “Japan has won that battle. ... Japan like the BOJ's hiking because like growth is strong, real wages are up”at 44:58

European politics

• Aidan Garrib · PGM Global

  AfD's rise could be the shot across the bow forcing the EU to fix the economy.

  Aidan says Chancellor Merz is deeply unpopular and the AfD is gaining support in Germany. If the European Commission cares more about staying in power than fixing the economy for ordinary people, the AfD's rise is the warning shot that could push it to act. He hedges that he may be wrong and that the bankruptcy trend could continue for years.

  “if you're of the view that the European Commission doesn't really care about fixing the economy for the average person... Like having the AFD rise in Germany is going to be that shot across the bow.”at 52:10