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The most important charts and themes in markets and investing…
1) The Most Universal Tax of All
Thomas Sowell once said that inflation was the “most universal tax of all,” a “way to take people’s wealth from them without having to openly raise taxes.”
On that point, the confiscation of wealth continues apace.
Consumer prices in the US rose 3.7% over the last year, marking the 67th consecutive month above the Fed’s 2% inflation target.
The cumulative inflation over the past seven years has been absolutely punishing and this is why Americans remain so concerned about affordability. Because they know that even when the inflation rate eventually comes back down in the future, the cumulative damage from years of rising prices won’t disappear.
Real average hourly earnings have now declined on a YoY basis for six consecutive months, falling 0.7% over the past year.
This is a decline in prosperity for the American worker that will unfortunately continue for at least another month. The economic costs of war extend far beyond the battlefield. Higher energy prices drive up the cost of transportation, manufacturing, and food production. And the longer the Iran War continues, the more these costs compound, creating a growing inflationary burden for consumers.
2) Americans Are Left Paying the Bill
Washington doesn’t have a revenue problem. It has a spending problem.
Over the past decade, federal tax revenues have increased 65% while government spending has surged 92%.
The result?
The federal government spent $7.4 trillion in fiscal year 2026 while collecting $5.4 trillion in taxes.
That’s a nearly $2 trillion budget deficit, and we’re not even in a recession.
The national debt has now surpassed $40 trillion, more than doubling over the past decade.
Both political parties have contributed to this problem. They disagree on where the money should go, but agree on one thing: spending well beyond their means.
Americans will be left paying the bill, likely through a combination of higher taxes, higher borrowing costs, and the hidden tax of inflation.
3) Two Very Different Economies
There are two very different economies in America today.
In one economy, the AI infrastructure boom continues at a breathtaking pace, with spending on data center construction soaring to record highs.
In the other, construction spending across the rest of the private sector is actually declining.
We’re seeing a similar divergence in household wealth.
The wealthiest 0.1% of Americans now own a record 15% of all household wealth.
The bottom 50%? Just 2%.
And according to Federal Reserve data, the richest 10% of Americans have enjoyed substantial increases in inflation-adjusted net worth in recent years while the poorest households have seen declines.
The stock market may be near record highs, but that doesn’t mean everyone is participating equally in the gains. Nearly 1 in 5 American families fell behind on debt payments in 2025, the highest share since 2010.
4) Is the AI Spending Bill Coming Due?
The AI boom has generated extraordinary growth in S&P 500 revenues and earnings.
But it’s also fueling unprecedented spending and mounting concerns about how it will all be financed.
Consider Meta’s latest earnings report:
Revenues were up 26% year-over-year to a record $56 billion.
But free cash flow actually fell $2.1 billion, the first negative quarter since Meta went public in 2012.
How did that happen?
Meta’s 80% YoY increase in AI infrastructure spending (to $34.9 billion) outpaced the $32.8 billion in operating cash flow. Meta now expects total capex of $135-$145 billion in 2026, up from $72 billion in 2025.
SpaceX is telling a similar story. Over the first nine months of 2026, revenues surged 98% to $27 billion, but capital expenditures jumped 247% to $48 billion, resulting in negative $35 billion in free cash flow.
How is all this spending being financed?
Increasingly through debt and equity issuance. AI-related bond issuance has surged to $419 billion so far in 2026, 90% higher than all of 2025.
And the credit markets are starting to sound the alarm bells.
The cost of insuring against default through credit default swaps (CDS) has surged across AI-linked companies, with spreads among the hyperscalers hitting fresh new highs.
CoreWeave, a leading provider of cloud computing infrastructure for AI, has become the poster child for growing credit concerns. Its bonds maturing in 2032 are now yielding over 15%.
Trading in CDS tied to major AI companies has surged from less than $2 billion per week in July to more than $9 billion in September, reflecting growing demand for protection against credit risk.
AI is changing the world. But that doesn’t mean every dollar borrowed and spent building it will generate an attractive return. And the bigger the debt-fueled spending boom, the greater the financial risks if those returns fail to materialize.
5) The Worst Bond Trader in History
The Federal Reserve may go down as the worst bond trader in history.
During 2020 and 2021, the Fed bought trillions of dollars in Treasury bonds and mortgage-backed securities when interest rates were at their lowest levels in history.
Then inflation surged, interest rates skyrocketed, and bond prices collapsed.
The result?
At the end of June, the Fed was sitting on $878 billion in unrealized losses on its securities portfolio. And that was before the latest spike in yields which pushed the 10-year Treasury above 5%.
6) A Record Buyer’s Market
The housing market has shifted dramatically in favor of buyers.
But there’s still one big problem: lack of affordability.
The 30-year mortgage rate has climbed to 7.4%, more than double its 2021 lows.
Meanwhile, home prices remain elevated, keeping millions of prospective buyers on the sidelines. Pending home sales in the US have moved down to their lowest level since April 2020, a month where much of US economy was shut down.
The result is a historic imbalance between housing supply and demand with sellers outnumbering buyers by a record 63%.
Something eventually has to give.
Unless mortgage rates decline significantly or household incomes accelerate, the most likely path toward improved affordability will be slower home price appreciation or outright declines in the markets with the largest supply-demand imbalances.
7) A Few Interesting Stats…
a) Meta’s Reality Labs unit lost another $4.1 billion in Q3, bringing its cumulative losses since 2020 up to $92 billion. We’ve never seen a public company light money on fire to this extent.
b) The cost of flying home for Thanksgiving has never been more expensive. Average round-trip airfare: $402, up 31% from last year.
c) The percentage of US adults who say they drink alcohol has plummeted to 54%, the lowest in the history of a Gallup poll that goes back nearly 90 years.
d) 72 million Social Security beneficiaries will see a 3.6% cost-of-living adjustment (COLA) beginning in January 2027. The 30% increase in benefits over the past 6 years is the biggest 6-year increase since 1982-1987.
e) Americans now own over $60 trillion in stocks & mutual funds, more than 3x higher than a decade ago.
f) The average car on the road in America is now nearly 13 years old, an all-time high. That’s up more than 50% from 30 years ago (8.4 years). Why? Replacing them has gotten a lot more expensive and many cars last significantly longer.
And that’s it for this week. Thanks for reading!
Every week I do a video breaking down the most important charts and themes in markets and investing. Subscribe to our YouTube channel HERE for the latest content.
Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. Read our full disclosures here.
PakarPBN
A Private Blog Network (PBN) is a collection of websites that are controlled by a single individual or organization and used primarily to build backlinks to a “money site” in order to influence its ranking in search engines such as Google. The core idea behind a PBN is based on the importance of backlinks in Google’s ranking algorithm. Since Google views backlinks as signals of authority and trust, some website owners attempt to artificially create these signals through a controlled network of sites.
In a typical PBN setup, the owner acquires expired or aged domains that already have existing authority, backlinks, and history. These domains are rebuilt with new content and hosted separately, often using different IP addresses, hosting providers, themes, and ownership details to make them appear unrelated. Within the content published on these sites, links are strategically placed that point to the main website the owner wants to rank higher. By doing this, the owner attempts to pass link equity (also known as “link juice”) from the PBN sites to the target website.
The purpose of a PBN is to give the impression that the target website is naturally earning links from multiple independent sources. If done effectively, this can temporarily improve keyword rankings, increase organic visibility, and drive more traffic from search results.
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