👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the Internet.

🎶 Vibin’

As many of you know, I’m always on the lookout for canaries in the coal mine. Most often, they’re false canaries, but still worth pointing out anyway.

So, in keeping with the topic discussed in the Charticle™ below, this week I’m vibin’ to Cream’s 1967 hit, Strange Brew. Far out, man.

💭 Quote of the Week‌

📈 Chart of the Week

Is Something Strange Brewing in Credit?

In the movie Ghostbusters, the first sign of trouble is subtle: a stack of library cards floating in the air at the New York Public Library. Library cards don’t scare anyone. The Stay Puft Marshmallow Man shows up later.

The credit market may be floating some library cards right now.

This week’s chart shows the high-yield option-adjusted spread (OAS), the extra yield investors demand to own junk bonds over Treasuries, against the S&P 500. The spread axis is inverted (flipped), so when the blue line falls, bonds are too.

For most of the past 3 years, the 2 lines have moved together. Look at August 2024, April 2025 and this past spring. Each time spreads jumped, stocks fell. Each time stocks recovered, spreads tightened right along with them.

That’s what you’d expect. Bondholders and stockholders have claims on the same companies, but bondholders have less to gain and operate in a less liquid market. So credit has a long history of smelling trouble first.

In 2007, junk spreads hit their tightest level in June. The S&P 500 didn’t peak until October 9. By December 2008, spreads were above 20%.

In 2014, spreads started widening in the summer as oil cracked, while stocks kept making new highs until May 2015. The catch-down came that August, and again in early 2016.

Now look at the right edge of the chart. Spreads went from 2.66% on September 21 to 3.40% on October 22, a 74 basis point jump in a month. The S&P 500 closed at 7,663 on the 22nd, within a couple percent of its record.

To be fair, 3.40% is still a tight spread. COVID pushed it near 11%. What is interesting to me is the speed, and where the stress is showing up: right where AI meets debt. CoreWeave’s bonds were yielding above 15% after back-to-back days of selling, and its stock fell about 15.5% on October 15. That same day, a hot CPI print briefly pushed the 10-year Treasury yield above 5.30%.

So how does this resolve? I see 4 possible paths.

Path 1: stocks follow bonds lower. The 2007 and 2014-15 playbook. Credit was right, equities were late, and the catch-down hurt. This is the simplistic base case.

Path 2: credit heals. Spreads blew out in August 2024 and April 2025, and both times they snapped back within weeks. If this is a rate scare plus indigestion from a wave of jumbo AI bond deals, a calmer 10-year could close the gap from the bond side.

Path 3: both lines are right. The S&P 500 is cap-weighted, and its biggest companies significant amounts of operating cash flow. They don’t need the junk market. The high-yield index is the leveraged economy: smaller companies, private-equity buyouts and the AI “neoclouds” that buy GPUs with borrowed money. Spreads could keep widening while a handful of megacaps hold up the index, and the damage shows up in places the headline number hides. We’ve already seen a bit of this.

Path 4: a slow burn. Part of the megacaps’ AI growth comes from customers who borrow to buy their chips and capacity. If borrowing costs keep climbing, orders slow, and stocks follow credit through earnings over the coming quarters.

My guess (and it’s speculation, of course) is some mix of 3 and 4. Those are harder to see coming than Path 1, because the index can look fine while the situation under the hood gets worse.

Either way, in my opinion, a 74 basis point move in a month is credit telling us something. I’d rather own protection while it’s cheap, before stocks agree with the bond market. By the time the Marshmallow Man is stomping down Central Park West, insurance is already expensive.

Sources: FRED, ICE BofA US High Yield Index Option-Adjusted Spread (BAMLH0A0HYM2); FRED, S&P 500 (SP500); Axios, “CoreWeave roils the markets, raises warning flag for the AI trade” (Oct. 15, 2026); Bloomberg, “Global Credit Markets Show Strain as Jumbo Bond Deals Weigh on Investors” (Oct. 2, 2026).

🚙 Interesting Drive-By’s 🚙

🎯 Panic Is Not a Strategy, Nor Is Greed - Liz Ann Sonders shows a 60/40 portfolio left alone from 2009 drifted to nearly 85% stocks right before the 2020 crash, which is how a “balanced” retiree ends up making the biggest bet of their life without ever deciding to (and why the gap between the risk you can afford and the risk you can stomach only shows up in a selloff).

💰 The “Gotcha Tax” and Other Year-End Considerations for Clients - Medicare’s IRMAA surcharge is a cliff priced on income from two years ago, so a married couple $1 over a threshold pays about $2,300 more in premiums, and Drew Boyer’s example shows the last $105,000 of a big Roth conversion costing 31.8% all-in (the rate that matters before Dec. 31 is the marginal one).

🤔 One Man’s Quest to Build a Very Small Data Center on a Remote Plot of Sand - In a Colorado county of 7,000 people, a data center founder opened his pitch by agreeing the hyperscalers can be “parasitic” and still faced two-plus hours of skeptical public comment, which is a reminder that the binding constraint on the AI build-out may be the county commission, not the chips.

🤔 Is America too risk averse? - In 1955 a bad batch of polio vaccine was linked to 204 polio cases and 11 deaths, yet the shots resumed in less than a week, and James Pethokoukis’ contrarian point is that an older, richer America now treats every hypothetical harm from AI or a reactor as a reason to stop.

🤔 Can America Escape the Course of Empire? - Jacob Wolf walks through Thomas Cole’s five 1830s paintings of an empire rising, peaking and collapsing into ruins, and his warning for a country that has mostly known the “consummation” stage is that “civilization is not the same as progress” (the cycle only breaks if each generation pays to maintain what it inherited).

👋🏼 Parting Thought

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the Internet.

🎶 Vibin’

Apropos of this week’s Charticle (see what I did there?), I’m vibin’ to Bob Seger’s Old Time Rock and Roll. It’s a classic for sure, but in this case it’s from the 1983 film Risky Business.

If the price of getting to see my teenage crush, Rebecca De Mornay on screen again is having to watch a young Tom Cruise dance around in his tighty-whities, then so be it. Enjoy.

💭 Quote of the Week‌

📈 Chart of the Week

Risky Business

Gambling, Investing, and the Importance of Understanding the Difference

In the 1983 movie Risky Business, a teenage Tom Cruise watches his dad’s Porsche roll off a pier into Lake Michigan, then spends the rest of the film scrambling to cover the loss. Young people taking big swings with money they can’t afford to lose is an old story.

This week’s chart shows it’s now a $17 billion a year industry.

That’s gross gaming revenue from legal U.S. sports betting: dollars wagered minus bettors’ winnings. Put plainly, it’s the money the sportsbooks extracted from the U.S. economy. It grew from $0.9 billion in 2019 to $17.0 billion in 2025, about 19 times bigger in six years. Add up the bars and it’s roughly $56 billion since 2019.

In 2025, Americans wagered $166.9 billion. The house kept about 10 cents of every dollar.

So who’s paying? Mostly the young. Pew found that 31% of adults under 30 bet on sports in the past year (36% of young men), versus 12% of those 65 and older. A Siena/St. Bonaventure poll from February found that 52% of men aged 18 to 49 have an active online sportsbook account. The skew is real, and it’s steep.

Gambling and investing both involve taking risk. The resemblance mostly ends there.

Gambling results in a binary outcome: you win or you lose. When the final whistle blows, your stake is either multiplied or gone. Investing doesn’t work that way. Owning a business (or an index of 500 of them) gives you a claim on earnings that keep coming, and there’s no final whistle.

And the math runs in opposite directions. Sports betting is negative-sum: the platforms’ $17 billion is the bettors’ collective loss. Investing on the whole, though not in every investor’s case, has been a net positive over time. Investors benefit from a growing economy and growing corporate earnings, which drive investment returns. Plenty of individual investors lose money, but the pie keeps getting bigger.

There is one place where the line blurs. Zero-days-to-expiration (0DTE) options expire the same day they’re traded, and held to the close they behave a lot like a sports bet: they either pay off or expire worthless. There’s no long run to bail you out. In July 2026, 0DTE contracts hit a record 66.2% of S&P 500 index (SPX) option volume. A September study by OptionMetrics estimates retail traders account for 30% to 35% of it.

I use options every day, to hedge and to generate income. A same-day lottery ticket on the index is a different animal.

Here’s the irony that bugs me. Younger investors are exactly the people who should be taking more risk. They have decades to recover from market drawdowns and let compounding do the heavy lifting. Time is the one edge they have over the rest of us, and the sportsbook spends it for them.

Some quick math. Say a 25-year-old moves $50 a week from parlays into a broad index fund. At a hypothetical 7% annual return, that’s about $519,000 at age 65. The same $50 a week at the sportsbook, for most a losing proposition, compounds in the other direction.

Joel Goodsen got into Princeton anyway. Most bettors won’t get that lucky.

Investing adds to the accumulation of wealth. Gambling extracts it.

Sources: American Gaming Association via CDC Gaming Reports, “Commercial gaming revenue was new record $78.7 billion in 2025”; Pew Research Center, “Americans increasingly see legal sports betting as a bad thing for society and sports” (Oct. 2, 2025); Siena Research Institute / St. Bonaventure University, American Sports Fan Survey 2026, Release 2; Cboe, “Cboe Global Markets Reports Trading Volume for July 2026” (Aug. 5, 2026); OptionMetrics, “How Much of 0-DTE Is Really Retail? Evidence from SPX and SPY Options” (Sept. 28, 2026); Statista, “America’s Sports Betting Boom.”

🚙 Interesting Drive-By’s 🚙

💡 People Are Rejecting Screens and Returning to Communal Events - Ted Gioia points to a DJ who draws 60,000 people to a stadium while barely moving on stage, plus Joey Politano’s data showing musicians’ income shifting to live shows as digital revenue collapses, and his read is that the crowd itself is the product (the in-person economy is the one part of culture AI can’t stream).

💰 The Shrugflation Triangle: How AI, Oil, and Treasuries are Impacting the Economy - Kyla Scanlon ties oil, AI and Treasuries into one loop where the two biggest borrowers (Washington and the AI builders) shrug off higher rates while everyone else pays them, and the detail retirees should notice is where the AI debt is landing: SpaceX’s $40 billion chip loan is investment grade, so insurers and pension funds can buy it (hidden risk in the part of the portfolio that’s supposed to be boring).

🚀 Tesla Unveils Flying Car - Tesla’s new Roadster flipped through the air on SpaceX thrusters and claims 0-60 in 0.81 seconds, but the part worth watching is the plumbing (SpaceX tanks, Optimus actuators, Terafab chips) that makes a Tesla-SpaceX merger look less like a rumor, and the part worth discounting is the 2028 production date on a flying version that isn’t street-legal.

🤔 Runway: Learning From Watching the World - Packy McCormick and Runway’s co-CEO make the case that AI trained on endless video can learn physics well enough to run robots, which is a smart answer to robotics’ data shortage, but read it knowing Runway is the newsletter’s paying sponsor and every growth number in it (like $100 million of new annual revenue in one quarter) is the company’s own.

💡 This is 74: Mountaineer, Conductor, Painter and more - Dierdre Wolownick (Alex Honnold’s mom, and in 2017 the oldest woman to climb El Capitan) says age only matters for counting birthday candles as long as your health holds, and her honest catch is the retirement risk few people plan for: the longer you live, “the lonelier you get.”

👋🏼 Parting Thought

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the Internet.

🎶 Vibin’

No related theme this week. I’m just vibin’ to a performance by two of my favorite blues artists, Bonnie Raitt and Keb Mo’ and their live rendition of No Gettin’ Over You, which Bonnie wrote. Best improvised line from the tune? “Blues for Breakfast”… Enjoy.

💭 Quote of the Week‌

📈 Chart of the Week

The Shock Absorber Is Shaking

Stock investors expect drama. Bond investors usually don’t. This week’s chart shows that deal is on shaky ground.

Through September 30, the MOVE index (the bond market’s version of the VIX, measuring expected swings in Treasury yields) was up about 73% for the year. The VIX was up about 9%. Rewind to late March, with the Middle East war in its second month: the VIX was up more than 100% and bonds were the calm ones. Six months later, they’ve traded places.

A caveat for the purists. MOVE is quoted in basis points of yield and the VIX in percent of price, so the raw levels don’t compare. Here’s my back-of-envelope translation. A MOVE near 105 implies yields swinging about 1.05 percentage points a year. On a 10-year Treasury (duration of roughly 7.7), that’s about 8% price volatility, half the VIX’s 16. On the 30-year (duration near 14.5), it’s about 15%. That’s equity-sized volatility in the asset you bought to avoid equity volatility.

So what’s rattling the long end of the yield curve? Four things, arriving together:

• The Fed raised rates on September 16, its first hike in three years, and at month-end markets put the odds of another in October at about 70%.

• The Bank of Japan is tightening. This is forcing a continued unwinding of the so-called “Yen Carry Trade”, and what Ed Yardeni calls the “Revenge of the Bond Vigilantes.”

• Washington’s interest bill is about $1.1 trillion a year, up from $300 billion at the end of 2018.

• The 30-year Treasury hit 5.50% on September 24, its highest since 2004. It finished this week near 5.6%.

Yardeni also notes that inflation expectations have barely moved. That points to term premium: investors want more yield to compensate for lending long to a government that keeps borrowing.

And the cushion? The iShares 20+ Year Treasury Bond ETF (TLT) was down 9.8% for the year as of September 28, at its lowest close since its 2002 launch. Long bonds are supposed to protect you when the shock is weak growth. When the shock is inflation or the government’s balance sheet, stocks and bonds fall together. Ask anyone who owned a 60/40 portfolio in 2022.

Stocks have shrugged so far, mostly because analysts expect third-quarter S&P 500 earnings to grow 29%. Morgan Stanley’s Andrew Pauker says “Equities can tolerate 5% yields if growth is strong,” but the scenario to avoid is “an accelerated move higher in the long end.”

We take a risk first approach to investing. Dennis DeBusschere of 22V Research says recession risk “could increase materially if 10yr yields move quickly above the ~5.5% level.” The 10-year closed Friday near 5.25%. Add a fast quarter-point and the shrugging could very well stop, with stocks and bonds falling together.

The better path is a Fed pause, a calmer Japan, and a MOVE that drifts back down, the way it did after the spring spike.

I suggest that at 5.25%, a 10-year Treasury can absorb roughly a two-thirds-point rise in yields over a year before its total return goes negative. That’s a real cushion, and it comes from income. For protection against a stock selloff, I want something built to pay off when stocks fall. Bonds used to do both jobs. Right now they’re doing one.

James Carville said in 1993 that he wanted to come back as the bond market, because “you can intimidate everybody.” Thirty-three years later, the bond market is still at it.

Sources: Axios, “Bond market zig zags threaten S&P 500’s smooth ride” (Matt Phillips, Oct. 2, 2026); Benzinga, “MOVE Index Tops 100: Bond Volatility Gauge Jumps 35%”; Saxo, “Bond vol overtakes equity vol,” Sept. 25, 2026; Saxo, “Bond vol rose, bonds barely moved,” Sept. 30, 2026; investingLive, “FOMC rate decision: Fed hikes for the first time in three years”; TheStreet, Stock Market Today, Oct. 9, 2026; Bloomberg News, Sept. 29, Yardeni Interview.

🚙 Interesting Drive-By’s 🚙

💰 From TINA To TIGA: Diversification Pays Again - The 10-year Treasury yields 5.3%, the S&P 500’s forward earnings yield is 5.2% and the CAPE sits at 41.5 (the 1999 peak of 44 led to a decade of -0.9% a year), so Michael Lebowitz is right that stock investors are getting paid “zero premium” for the risk, and a retiree who can lock in 5% from Treasuries no longer needs a stock-heavy portfolio to hit the number.

🤓 Exploring Apprenticeship Growth during the Past Two Economic Expansions - Registered apprenticeships grew 26% nationally from 2021 to 2025 with construction carrying the load, but the St. Louis Fed’s numbers bury two warnings: computer and math apprenticeships fell almost 60% over the same stretch, and only 46% of apprentices finish (the build-out is hiring hands while the entry-level tech ladder loses rungs).

🤔 If you are reading this, congratulations (and thank you) - Alex Berenson cites nonfiction sales in England down about 25% from 2019 to 2025 and warns that “a post-literate world doesn’t reward challenge or difficulty,” which for investors means the simple story with one villain keeps beating the careful argument (so, thank you for reading this far).

🤔 Why Were Victorian Elites So Effective? - The men who ran the richest country on earth went to Oxbridge when nearly everyone who applied got in, worked a few hours a day and spent February to July at balls that peaked after 1am, and Samuel Hughes makes a real case that the networking was the work (a useful thought if AI ever hands the rest of us a Victorian-length workday).

🚀 New Satellite Engine Could Use Earth’s Atmosphere as Fuel To Stay in Orbit Indefinitely - So far it’s a vacuum-chamber test on 50-60 watts, but if a satellite can turn the drag killing it into fuel, the binding constraint on low-orbit constellations (asset life, not launch cost) starts to disappear.

👋🏼 Parting Thought

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the Internet.

🎶 Vibin’

This weekend we are in my wife’s home town for the wedding of her nephew and his fiancée. It’s always life affirming to see two wide-eyed twenty-somethings start a new life together with all their hopes and dreams ahead of them.

Because I’m a life-long Tom Jones fanboy, because I’m a long time fan of the Art of Noise, because Prince was a bad@$$ songwriter, and because (as you know) I’m a sucker for a good cover…this week I’m vibin’ to Kiss. Enjoy.

💭 Quote of the Week‌

📈 Chart of the Week

Write-Offs and Long Shots

My colleagues and I have been focusing on a couple of important issues recently. One is the impact that the One Big Beautiful Bill Act (OBBBA) is having on our economic growth. The other is the scrutiny some of the dodgier tax schemes have been getting. This week’s chart brings both to mind.

The Saratoga racing season ended a month ago, but the results of August’s yearling sales are worth a look. They’re about as clean a tax-policy experiment as you’ll find.

The OBBBA made 100% bonus depreciation permanent for property acquired after January 19, 2025. Racehorses count. Buy a $1 million yearling, put it in training, and you can deduct the whole price in year one.

Buyers noticed. Keeneland’s September sale in Lexington, KY grossed $510.5 million through the ring in 2025, up 24% from 2024. (The chart’s 2025 bar, $531.5 million, includes post-sale deals.) This September added another 5%, to a record $536.7 million. Here in Saratoga, the Fasig-Tipton sale grossed $118.2 million in August, up 17%.

The best evidence is what didn’t move. In 2025, Ontario’s yearling sale, where buyers get no U.S. write-off, saw its median fall 21%. And that year the gains piled up at the top: Keeneland’s median rose 14% while the New York-bred median rose 3%.

Now for the fine print. Bonus depreciation moves the deduction forward in time; the total stays the same. Sell the horse (or lose it in a claiming race) and the sale price, up to what you deducted, gets taxed as ordinary income. Losses only offset your salary or portfolio gains if you materially participate; otherwise they sit in the passive bucket. And without a profit in 2 of 7 years, you lose the presumption that your “business” is a business at all.

The states don’t play along either. Kentucky and New York both decouple from bonus depreciation for state income tax. Their help comes elsewhere.

Kentucky exempts breeding stock, and horses under 2 sold to nonresidents, from sales tax. Its historical horse racing machines pay an effective tax of about 7.3%, against 33% to 55% for slots elsewhere, and that money feeds purses.

New York has exempted racehorse purchases from sales tax since 1994. Its New York-bred program runs about 800 restricted races a year and pays breeders up to 40% of a New York-sired winner’s purse, funded by betting handle and video lottery revenue. I’d bet those awards are a big reason the New York-bred sale set a record median of $100,000 this year.

So can a racehorse make money? Rarely. An Australian study of about 3,000 yearlings sold in 2003 found that only 6.3% of the most expensive ones earned back their purchase price, before a dime of training bills. On the seller side, University of Kentucky researchers found that fewer than half of 74,789 U.S. yearling sales from 2001 to 2018 turned a profit for the breeder.

Here’s my take. A tax break this well known gets baked into the price, so much of it flows to the breeders selling the horses. And Uncle Sam covers at most 37% of your loss; you eat the rest.

My rule for any investment: merit first, tax second. If the deal only works after taxes, it’s a hobby. Hobbies are fine, but it’s important to budget for yours like one.

There’s an old joke on the backstretch: the easiest way to make a small fortune in horse racing is to start with a large one.

Sources: Genuine Impact, “The Weirdest Bull Market You Haven’t Heard About: Racehorses”; Keeneland, 2026 September Sale results; Keeneland, 2025 September Sale results; Fasig-Tipton, 2026 Saratoga Sale statistics; NYTB, 2026 New York-bred sale results; Paulick Report, “100 Percent Bonus Depreciation Drives Demand for Quality at Sales”; NJCPA, “No Horsing Around” (OBBBA, placed-in-service and hobby-loss rules); Dean Dorton, depreciation for Thoroughbred owners; State bonus depreciation conformity table (NY and KY); KRS 139.531, Kentucky sales tax and the horse industry; NY Tax Dept. TSB-M-95(6)S, racehorse sales tax exemption; OwnerView, New York incentive programs; Paulick Report, Australian yearling ROI study (2011); Bryant and Stowe, “Estimated Profitability of Thoroughbred Yearlings Sold in Auctions in the United States, 2001-2018,” Sustainability (2020).

🚙 Interesting Drive-By’s 🚙

🎯 Revitalizing America’s Markets at 250 - SEC Chairman Paul Atkins says U.S. listings have fallen roughly 40% since the mid-1990s and public investments are now “concentrated in a handful of companies,” so index investors own a narrower slice of the economy while the growth stays private.

💰 Who Gets Paid When AI Does the Shopping? - Amazon’s $69B in 2025 ad revenue was roughly double its $34B operating income outside AWS, and that ad business is exactly the profit pool AI shopping assistants go after (a16z’s math, and a16z is betting on the assistants).

📉 AI and the Fall? of the Creative Class - America has shed more than 200k creative-industry jobs in 4 years without a recession (Hollywood alone is down nearly a third), and Joseph Politano’s uncomfortable point is that the trillions bet on AI only pay off if the damage spreads to bigger professions.

🤔 The 1990s and the Internet - Arnold Kling quit Freddie Mac in 1994 to build a website on the bet that everything would move online and first movers would own it, and his line on Sun Microsystems (”being right helped destroy it”) is the best one-liner I’ve seen for today’s AI build-out.

🚀 Fork 4: Earth vs. The Stars - Peter Diamandis pitches SpaceX as the railroad to the solar system, but Starship’s $100-200/kg is, in his own words, “a design target, not an achieved price,” and the real railroads opened the West while bankrupting plenty of their bondholders.

💡 I Have Been Writing About AI For 6 Years: Something Changed This Summer - Alberto Romero borrows Scott Aaronson’s line that the singularity is “wildly unevenly distributed,” which is why one person sees a nothingburger and another sees the end of history (and exactly how risk hides in plain sight).

👋🏼 Parting Thought

This week, my friend, mentor, sharer of the same birthday, and the big brother I never had, finally succumbed to the cancer dragon he had so valiantly battled for so long.

To the Dragon Slayer, I say, “Lay down your sword and rest, my friend. I hope you will look down on all of us who loved and admired you and know that we truly believe that the world is a much poorer place without you in it.” Love you, DWR. RIP ❤️

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the Internet.

🎶 Vibin’

Interest rates keep going up. Not because of the Fed’s recent increase in the Fed Funds Rate which they control. I believe it’s because of the twin forces of inflationary pressures from the conflict in the Middle East (elevated diesel prices affect the overall economy much more than elevated gasoline prices) and an inexplicable and ongoing “Energy Bunny” sort of growth in the economy.

So, this week I’m vibin’ to the Red Hot Chili Peppers cover of Stevie Wonder’s hit, Higher Ground. I chose the cover rather than the original because of its chaotic representation of the song. ‘Cuz it feels like that’s where we live right now.

💭 Quote of the Week‌

📈 Chart of the Week

Winning the Game

William Bernstein’s old advice to investors: once you’ve won the game, stop playing. Corporate pension plans just won the game.

This week’s chart shows the Milliman 100, the 100 largest U.S. corporate pension plans. They’re about 112% funded, the highest level since 2001. Milliman puts the surplus at $141 billion as of August 31. A year earlier the funded ratio was 104.9%.

Two things did the heavy lifting. A strong stock market grew the assets, and the discount rate used to value pension liabilities climbed to 6.00%, which shrinks the present value of what plans owe. Rising assets and shrinking liabilities is about as good as it gets for a pension actuary.

So what does a plan sponsor do with a surplus? Lock it in.

That could be a risk for equities, and it’s mechanical. When stocks outperform bonds, a plan’s equity weight drifts above target and gets trimmed back. Citadel Securities notes that strong funding pushes plans to “de-glide” and immunize portfolios, creating the potential for mechanical equity selling and fixed income buying, especially around quarter-end.

“De-glide” is the word I’d underline. Most corporate plans run a glide path: every time funded status crosses a trigger, they permanently move money out of stocks and into long bonds that match their liabilities. Quarterly rebalancing reverses when markets turn. Glide-path moves usually don’t.

Twenty years ago, the Milliman 100 plans held 61.7% of their assets in stocks and 28.6% in bonds. By the end of 2025 that had flipped: 24.1% in stocks and 52.7% in bonds. That trend has run one way for 20 years.

The other 23.3% is a grab bag of real estate, private equity and debt, hedge funds, commodities, and cash. That bucket has more than doubled since 2005, much of it can’t be sold quickly, and Milliman notes the companies’ SEC filings generally don’t say what’s in it. So when a plan trims risk, the selling lands on what it can actually trade, and public stocks are the easiest thing to sell.

And bonds are worth owning again. As of September 24, Treasury yields were above 5% from the 5-year out to the 30-year, with the 10-year at 5.18%. The 10-year TIPS yield was 2.85%, a real return you can lock in for a decade. For a plan that’s already won, a contractual 5% beats swinging for the fences.

Now, the case against my own argument. JPMorgan pegged June’s quarter-end rebalance at roughly $165 billion of net global equity selling. U.S. pensions were about $55 billion of it, with Japan’s and Norway’s giant funds and the Swiss National Bank supplying most of the rest. That sounds like a lot until you set it against a U.S. stock market worth something like $65 to $70 trillion. The U.S. pension piece is less than 0.1% of that, and buybacks and dip-buyers can absorb it.

And the rest of the institutional crowd hasn’t won the game. Milliman has the 100 largest public pension plans at 88.2% funded, an $816 billion hole. College endowments ($944 billion across 657 schools) keep about 86% in equities and equity-like strategies, and they spent 4.9% of assets last year. Private foundations have to pay out 5% a year. A 2.85% real yield doesn’t fund that, so don’t expect endowments and foundations to join the selling in size. They’ll rebalance at the margin, but they run no glide path.

What I expect is a missing buyer. Over the next few quarters, the most patient institutional money in the country keeps walking from stocks toward bonds, at a time when equities are priced for perfection and bonds are earning real money again. My guess is that shows up as sloppier quarter-ends, a lower ceiling on stock multiples, and perhaps steadier demand for the long end of the yield curve.

The same math applies to individuals approaching retirement. If you’ve already won the game, it’s worth asking how best to “de-glide” (and, in a taxable account, how to step back without handing a big slice of the winnings to the IRS).

Sources: Milliman Pension Funding Index, September 2026; Milliman 2026 Corporate Pension Funding Study; Milliman Public Pension Funding Index, 7/31/2026; Citadel Securities, “September Setup: The Asymmetry Has Changed” (8/31/2026); Treasury yields as of 9/24/2026 (Forbes Advisor); 10-year TIPS yield, FRED DFII10; JPMorgan quarter-end rebalancing estimate via Investing.com (June 2026); U.S. market cap context, 24/7 Wall St. (6/22/2026); FY25 NACUBO-Commonfund Study of Endowments; Mercer summary of the FY25 NACUBO-Commonfund Study.

🚙 Interesting Drive-By’s 🚙

💸 The Reindustrialization of America Is Underway - Apollo pegs the cost of rebuilding US industrial capacity at $2 trillion to $6.5 trillion as manufacturing has slid from roughly 28% of GDP in the 1950s to about 9% today, a real Silicon Industrials trend worth owning, but read that number as the size of the opportunity the firm wants to finance, not a settled forecast.

👀 Abbott put Texas data centers on ice until his power grid audit finishes - Texas just froze new data-center permits pending an ERCOT grid audit (due back Oct 19) as an NBC poll found 64% of Americans less likely to vote for a candidate who backs local data centers, a reminder that the AI-capex bull case has priced chips, power, and capital but not permits and voter backlash, the layer that freezes fastest.

🤔 A Practical Take on Longevity for Advisors & Clients - The piece counts more than 200,000 waking hours ahead for a 65-year-old who reaches 100 and urges advisors to plan for it, but longevity optimism is itself a planning risk: building a retirement around the best case when the median falls well short is its own failure mode, so plan the distribution, not the dream.

💡 Sidestepping - In a guest post on Chip Conley’s Wisdom Well, a mother realizes her grown daughters have “hired me back, unofficially, as an advisor,” a quiet lesson that the shift from managing to being asked, from correcting to bearing witness, is the same patience a risk-first strategy (and a good advisor) demands.

🤔 Safety in Numbness: why disagreeing with LLMs is a good sign - Azeem Azhar argues that LLMs, like the MFA programs that grew from 15 in 1975 to 250 by 2012, norm everyone toward the middle of a distribution where outliers are unwelcome, so consistently disagreeing with the model is a sign you are still thinking from the edge, which is exactly where investing alpha lives.

👋🏼 Parting Thought

My family and I are in Ft. Worth, TX this weekend for a (long overdue) family reunion. H/T to our daughter for inspiring this week’s Parting Thought.

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

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👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the Internet.

🎶 Vibin’

Lately, we’ve seen a whirlwind of mixed messages on the economy, AI, and financial markets in general. Sorting out the signal from the noise is never easy, but it feels harder than ever these days.

With that in mind, I figured we were due for a good ol’ fashioned mashup video. So this week, I’m vibin’ to Stayin’ in Black, the Bee Gees + AC/DC. Enjoy.

💭 Quote of the Week‌

📈 Chart of the Week

A Long Term Look at “Normal”

Pull back far enough and the panic about “high rates” starts to look a little silly.

This week’s chart runs from 1870 to today. That’s 156 years of what it cost Uncle Sam to borrow for the long haul. The shaded band marks 3% to 6%. Yields sat inside it 62% of the time.

The 10-year bond yield is sitting around 5% right now. That puts us square in the middle of the fairway.

The abnormal stretch on this chart is the decade and a half we just left. After the Great Financial Crisis, and again after Covid, rates fell to places they’d never been in a century and a half. The 10-year kissed roughly 1% in 2020. Money was basically free. Savers got nothing. And a whole generation of investors, borrowers, and corporate treasurers wired their assumptions to a number history says almost never shows up.

The spike the other way was just as strange. Yields ran to nearly 14% in 1981, when Volcker was breaking the back of inflation. I don’t think we can file that under normal either.

So we spent 15 years anchored to one extreme, and now we’re drifting back toward the boring middle. I think that’s healthy. Well priced risk is also healthy. When capital costs something, people allocate it with more care.

So now have to talk about the Fed, because someone always asks.

Everyone seems to want to trace the long end back to the last FOMC meeting. I think that’s mostly noise. The Fed has real command of the short end of the curve. The long end answers to a different set of bosses: inflation expectations, the term premium investors demand for locking up money a decade at a time, the economic growth outlook, and the sheer flood of Treasury supply Washington keeps issuing.

The recent bump in the funds rate will tug the front of the curve around. My view is it does little lasting damage, or good, to the 10-year. If long rates keep climbing from here, the culprit is fiscal deficits and inflation risk, not the people setting the overnight rate.

We think of risk first, because that’s our job. A 5% world only hurts if you spent the free-money years betting it would last forever. Very long-duration portfolios, business models that only work at zero, real estate underwritten at 3% into eternity. Those are what crack when normal comes back.

For everyone else, this is good news wearing a scary costume. Bonds pay again. Cash pays again. The tradeoff between reaching for risk and sitting in safety actually works.

Rates came home. The hard part is we forgot what home looked like.

Sources: Capital Group, Federal Reserve Bank of St. Louis, Robert Shiller. Long-term U.S. government bond yields, 1870 to 2026 (10-year Treasury from 1962; 2026 data as of 9/14/2026).

🚙 Interesting Drive-By’s 🚙

💸 Ground Broken on a Rust Belt Powerhouse - A dying Pennsylvania coal town gets a $10 billion, 2-gigawatt AI data center on 660 acres, the concrete reminder that the AI trade is a power-and-land story where 68% local opposition and strained grids are the friction the market is not pricing.

🤔 It’s Hard to Wipe Out Humanity, Even for Super AI - Pethokoukis writes from a pro-progress brand, so treat him as the doomers’ mirror image, but his demand is the keeper: anyone claiming superintelligence ends the species should show the concrete step-by-step mechanism before we halt development.

🎯 No Blanket Immunity for AI Companies, Ever - Berenson runs deliberately hot, but the point holds: keep the labs liable rather than granting a “responsible AI” safe harbor, because a lab-written immunity standard is a margin moat that shifts the cost of failure onto the public.

💰 Stop Panicking About AI - The AI doom is loudest from the executives racing to multi-trillion-dollar IPOs, so follow the money, because catastrophizing conveniently argues for fewer competitors and lighter antitrust while ordinary liability would do the real work.

💡 The Second Retirement Nobody Talks About - Buck’s frame is that retirement has a second phase almost nobody plans for, a shift around age 80 when the danger is mismatching the spending curve to the health curve, because the biggest bills (the $3,800 to $7,000-plus monthly care years) tend to arrive when the portfolio has the least runway to recover.

📈 Interest Rates Can’t Take Down the US Economy Anymore - Pompliano is talking his book (the piece routes into crypto-backed loan products), and “rates can’t bite anymore” is textbook this-time-is-different, but the half-true kernel worth engaging is that an asset-light, tech-weighted economy may respond to Fed tightening with longer and more muted lags.

👋🏼 Parting Thought

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the Internet.

🎶 Vibin’

In terms of volatility, markets are channeling Alfred E. Neuman and seem to be in full “What, me worry?” mode.

This week I’m vibin’ to Call Me the Breeze by Lynyrd Skynyrd from 1974, here in a loose live take with ZZ Top’s Billy Gibbons sitting in. It’s J.J. Cale’s ode to having no worries, no plans, and no fixed address. Sounds about right for this market.

💭 Quote of the Week‌

📈 Chart of the Week

📉 When Everything Moves Together

This week’s Chart might make one a little uneasy, and that’s precisely because it looks so calm.

Realized correlation across the S&P 500 has fallen to roughly 0.10, one of the lowest readings in 25 years. Stocks are doing their own thing. The AI winners rip, staples drift, energy zigs while tech zags. On the surface, a stock-picker’s paradise.

But consider the last two times correlations sank to these levels. February 2007 and January 2018.

Feb 2007: correlations bottomed. The market felt bulletproof after a long, quiet climb. Then on February 27 an 8.8% drop in Shanghai spilled over, the S&P dropped about 3.5% in a day, and the VIX spiked more than 60%. Markets shrugged it off and made new highs into October. Then correlation went vertical through the 2008 collapse and stayed pinned near 1 as the S&P lost 57%.

Jan 2018: same setup. 2017 was the calmest year on record, and January’s melt-up pushed correlation to the floor. Two weeks later came Volmageddon. The VIX more than doubled on February 5, the short-vol XIV fund got wiped out, and the S&P fell about 10% in nine trading days.

Then COVID, for good measure. Correlation wasn’t at a record low going in, but the mechanism was essentially the same. In March 2020 pretty much everything sold off together, the VIX closed at an all-time high of 82.69, and the S&P dropped 34% in 33 days.

The pattern of returns has been generally consistent, and a little cruel.

Before the trough: strong, steady gains. That’s what drives correlation down in the first place. Individual stories dominate, volatility bleeds out, and diversification looks like it’s working beautifully.

During the trough: more of the same, which is the whole problem. Low correlations are the market’s way of telling us that nobody’s worried about the same thing at the same time.

After the trough: some sort of macro shock arrives and correlations spike. Everything in investors’ portfolios starts moving in lockstep, downward, and the diversification investors thought they had evaporates at the worst possible moment. Across asset classes, the same thing happens. In 2008 credit and equities went down together. In 2022 so did stocks and bonds, the 60/40’s worst year in a generation, maybe ever.

But here’s the message, and I think it matters. Low correlations set the stage. They can’t tell you when the show starts. February 2007 preceded the real damage by more than a year. January 2018 preceded it by two weeks. This week’s Chart tells you the fuel is dry. It says nothing about when the match gets lit.

What’s my take on the current level of 0.10? Cheap insurance. When correlations are this low, so is the cost of protecting against the day they aren’t. That’s usually the best time to buy the hedge nobody wants, back when everybody’s still convinced they don’t need it.

Sources: CNBC, Feb 27 2007 selloff; Bloomberg, “The Day the VIX Doubled” (Volmageddon); CNBC, VIX record close 82.69, Mar 16 2020

🚙 Interesting Drive-By’s 🚙

• 💸 The Great Health Plan Replacement - Read it as a map of where venture capital wants disruption to go rather than neutral analysis, because a16z is a large investor in exactly the “alternative health plans” it champions here, but the underlying tell is real: AI is collapsing the operational overhead that kept a roughly $1 trillion employer-insurance market sleepy and legacy-dominated for decades, so the biggest fixed cost in most households may finally face real competition.

• 💡 The Forecaster’s Paradox - Ridley writes from an explicit rational-optimist brand, so the examples are picked to fit the thesis, but the paradox holds and it pays: innovation looks inevitable looking backward yet is almost never predicted looking forward, and the edge hiding in that is that the direction of a durable trend and the timing of its payoff are two different bets.

• 🤔 Behind Door #2, Everyone Dies - Take the reporting with real skepticism, but even a conservative 1% chance of an extinction-level outcome implies about 80 million lives, that’s some seriously convex tail-risk math.

• 🤓 The Quiet Turning - Green’s market-structure beat (passive flows quietly distorting price discovery, trust functioning as plumbing) and the Fourth Turning idea of institutions torn down before they are rebuilt, framed here as “what happens when everybody knows that everybody can check.”

• 🚀 Why Optimists Live Longer - Desalination costs are down more than 70% since 1990 and two SpaceX veterans are pitching a 25-pound, $749 portable unit as the “Starlink of drinking water,” the atoms-innovation cost curve that turns a basic need into an investable abundance story.

• 🧬 Insilico’s AI-Designed Drug Shows Biological Age Reversal - A genuine convergence: a first-in-class TNIK inhibitor that generative AI took from target to preclinical in roughly 18 months, published in Nature Biotechnology, sitting exactly where the AI, longevity, and demographics stories meet.

👋🏼 Parting Thought

25 years ago this past Friday, 9/11 happened. We must never forget. Everyone who was alive at the time has a story about where they were that fateful day. I have my own.

American Airlines flight 277 - the 5th plane, we were told some time later - was set to depart Boston for San Diego mere minutes before the first ever nationwide ground halt. We had already pushed back from the gate, about to taxi for takeoff. Then the plane stopped and returned to the gate - without explanation.

Myself, my fellow passengers, and the flight crew owe our lives to Ben Sliney, FAA National Operations Manager, who on his first day in that role had the fortitude to do what had never been done, ordering the halt of 4,500 flights across the U.S. I will be forever grateful for what he did that morning 25 years ago.

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! As we celebrate this Labor Day weekend, let’s enjoy another Sunday Drive around the Internet.

🎶 Vibin’

It’s Labor Day weekend, and after three straight editions on capital versus labor in the Sunday Drive, the Vibe picks itself. Working Man is the song a Cleveland DJ put on the air in 1974 and turned into the break that got Rush signed, and it still plays like the drive home after a long shift.

This week I’m vibin’ to Working Man by Rush from 1974.

💭 Quote of the Week‌

📈 Chart of the Week

💸 Cassandra and the Capital Cycle

At the risk of sounding a bit Cassandra-esque, I return this week with my cautionary tale of the potential for poor returns on capital in the coming years from the current AI cycle. You may remember Cassandra, a figure from Greek mythology who was cursed to speak the truth and be believed by no one. The capital-cycle warning works the same way. It is accurate, it is old, and it is dull, so it gets waved off right up until it’s too late.

This week’s Chart shows that on only rare occasions over the last couple of decades did GE (pre-2024 breakup), General Electric, a company J.P. Morgan and Thomas Edison built in 1892, earn its cost of capital.

GE historically had one edge: GE could borrow cheaper than anyone, so its customers borrowed cheaply to buy GE machines. The AAA rating held for over 50 years. Then GE Capital grew into the fifth-largest lender in the country, and the strength quietly became the fragility. The empire cheap money built, cheap money eventually broke.

Here’s the takeaway for me. The technology was real at every step. Electricity, jet engines, medical imaging, all genuine, all world-changing. What sank the returns was the money invested. Too much capital, invested and then mis-invested, competing away the very profits that drew it in.

We have seen this movie before. Railroads in the 1870s laid tens of thousands of miles of track and handed shareholders years of losses. Telecom in the late 1990s poured more than $500 billion into fiber, roughly 80 million miles of it, and left something like 85% of it dark and unlit. Bandwidth got cheap, customers won, and the firms that funded the buildout went bankrupt. The internet was real. The payoff to the people who wired it was not.

Which brings us to the current investment cycle. Big tech spent close to $400 billion on AI infrastructure in 2025. Bain estimates data centers will need something like $2 trillion in annual revenue by 2030 to justify the spend. Current AI revenue sits near $20 billion. That gap is no rounding error, to say the least. Meta, Microsoft and Alphabet are each spending more of their revenue on capex than AT&T did at the peak of the telecom bubble.

The trap is that none of them can stop. Ease off while a rival keeps building, and you risk obsolescence. So everyone builds, capacity floods in, and the group competes away the returns it is racing to capture.

The more recent and concerning wrinkle is the addition of significant amounts of debt to fuel the AI investment boom. It was one thing for the big spenders to crash their free cash flow margins. But now, they’ve run way past that with the addition of debt, some direct, some indirect, and they’re doing so by increasingly creative means. This makes me want to bring out my worry beads.

AI may change the world. Whether this much capital, moving this fast, earns a return in excess of its cost is a very different question.

Sources: The Collapse of GE’s House of Debt Was 130 Years Coming (Bloomberg, David Fickling, 2021); Surviving the AI Capex Boom (Sparkline Capital); Parallels Between the Hyperscalers and the Telecom Firms of the 1990s (MOI Global).

🚙 Interesting Drive-By’s 🚙

🤔 Can the ‘Vanguard Effect’ Upend Wealth Management? - The risk-first read is that the “Vanguard effect” cuts against Vanguard: the same investor-owned, cost-obsessed machine that made index funds unbeatable now runs into custody’s thin margins and, worse, the independence problem, because the moment Altruist is seen steering flows to Vanguard funds the RIAs it needs start to walk (one analyst’s flat “some RIAs will leave”), which is the hidden-vs-visible-risk lens on the plumbing under every RIA relationship: the visible win is cheaper advice, the hidden risk is captured architecture.

👀 Vanguard’s Altruist Deal Tells You Where Custody Is Headed - Read the messenger before the message: this is a signed op-ed by the CEO of Apex Fintech, a custody-and-clearing rival, arguing custody has gone from invisible plumbing to strategic differentiator, so the useful signal is not his self-serving thesis but the tell inside it, that even a competitor concedes the tech gap got too wide to build across, which is why Vanguard bought rather than built.

⏰ Is AI a Bubble Yet? Our Five Gauges - The verdict (boom, not bubble) matters less than the scoreboard: Azhar and Warren’s five gauges read zero red and two amber today on roughly $126B of trailing-twelve-month AI revenue, but funding quality has been sliding since September 2025 and their base case flips both funding quality and economic strain red in 2027, so this reads as a countdown more than a green light, with demand the visible green and the financing plumbing the hidden amber.

💸 Follow the Capital: AI Is Becoming a Physical Infrastructure Story - The AI trade has quietly become a construction-and-power story, four hyperscalers carrying north of $700B of 2026 capex while U.S. corporate AI-infrastructure debt has jumped to roughly $220B from about $12.5B in 2025, and Schneider’s tell is the gap between announced and actually built, tracked by satellite: if timelines slip or finished sites sit idle, that is the second-derivative crack that tends to precede a capex correction.

💡 Great Writers Aren’t Obsolete. AI Makes Them More Valuable Than Ever. - Schachtel argues AI writes mediocre prose by design, optimizing for the average likely response and increasingly feeding on its own output, so the contrarian upside buried in the doom is that an independent point of view drawn from lived experience becomes the scarce, appreciating asset exactly as the machine floods the zone with perspective-free copy.

🤔 How many people does synthetic fertilizer feed? - Ritchie’s number is that roughly half the people alive (about 3.5 billion) are fed by crops grown with synthetic nitrogen, so one 1910 industrial process, Haber-Bosch, sits under the entire food supply, a single point of failure most investors never think to price.

👋🏼 Parting Thought

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the Internet.

🎶 Vibin’

This week, the world lost a treasure and is a much poorer place without her. I spent the last several days pondering how best to honor the passing of our beloved Dolly Parton. After all, she did write over 3,000 songs. Which one to choose? Jolene? 9-to-5? Coat of Many Colors? I Will Always Love You?

All great choices, but instead I landed on…. a cover: Dolly’s rendition of the un-coverable Stairway to Heaven. While metaphorically appropriate, it’s also a wonderful example of who she was. Not only was she brave enough to cover a song that few dare to try, but in true Dolly-esque fashion, she made it her own. RIP Dolly. We will always love you. 💔

💭 Quote of the Week‌

📈 Chart of the Week

👶 The Baby Bummer Meets the Machines

I firmly believe that the key to successful investing over the coming decade or more will be what happens at the intersection of demographic shifts, longevity research, and the impact of AI on society and the global economy. Which is why it’s a recurring theme in the Sunday Drive.

This week’s Chart comes from a recent NBER working paper by Seth Benzell, Larry Kotlikoff, and Victor Ye. The title is dry (”The Global Transition”). The finding is not, at least not to me. Demographics are quietly redrawing the map of economic power, and the UN’s latest numbers redrew it again just last year.

Kotlikoff’s team built a 17-region model of the world economy, ran it out to 2100, and did one simple experiment. They fed it the UN’s 2017 population forecast, then the 2024 one, and watched what changed. Seven years apart, same model, and the answer moved a lot. Now, it’s just a model which, as all models do, simplifies a very complex data set, but I do find the results interesting and discussion-worthy.

Let’s start with the bad news. Fewer babies means fewer workers, which means aging retirees hold more of the wealth than young savers can absorb. That’s a global savings glut. I know that’s hard to believe in our current world of global debt and deficits, but there it is.

In the model, aggregate return on capital falls from 5.9% today to under 2% by 2100. Pension math breaks down. World payroll tax rates roughly double, and the effective U.S. tax burden on income climbs from 38% to 47%.

The geopolitical punchline is sharper. Under the older 2017 numbers, China’s share of world output grew to 25.6% by 2100 and the economic baton passed from us to them. Under the 2024 numbers, China’s collapsing fertility cuts that share to 14.9%, while the U.S. rises to 14.4%. The baton stays home. Not because America got stronger, but because China got older, faster.

Then the authors add AI, and the story flips again. If automation transforms production the way many think it might, the capital glut disappears, the return on capital jumps back to 6%, and the U.S. share of world output doubles to roughly 26%, well ahead of China’s 17%.

Why does America win the AI scenario? It’s a simple idea. The U.S. has the world’s most expensive labor and the highest productivity. So, it has the most to gain from machines that replace workers, and it adopts them first. China, with cheap labor, rationally waits. By the time it catches up, the century is over.

Howeveer, one important lever swings the whole thing: immigration. Cut U.S. net migration to zero and America’s 2100 output share drops from 14.4% to 9.2%, below three fifths of China’s. The demographic edge the U.S. enjoys is largely an immigration edge.

So what do I take from this, as an investor rather than a forecaster?

Own the machines. If labor’s share of output continues to shrink while capital’s grows, then owning the productive assets, not earning a paycheck, is the ballgame for the rest of the century. Pretty much the same conclusion I landed on last week, just viewed through a different lense.

I think it’s vital to keep a sharp eye on real rates, always important, but increasingly moreso. The aging demographic story says rates will fall for decades. The AI story says they snap back to 6%. Both can’t be true, and the tension between them will be one of the most important open questions in the investing landscape over the coming years.

Demographics set the board. AI decides who plays it well.

Sources: Benzell, Kotlikoff & Ye, “The Global Transition: The Impact of Demographics and AI on Economic Power,” NBER Working Paper 35618, August 2026. UN World Population Prospects (2017 and 2024 revisions).

🚙 Interesting Drive-By’s 🚙

🤔 AI, Robots, and ROK - Shapiro’s contrarian read is that AI gains flow to the downstream users who apply it, not the compute suppliers funding it, and the U.S. lead rests on a strained grid and 30-plus-month transformer lead times while China installs one of every two industrial robots on earth.

💡 The Death of the Company - Diamandis argues AI agents dissolve the coordination costs that justify the firm, bullish for a two-person shop with AI leverage and quietly bearish for the large-cap operating-leverage story if headcount stops being a moat (treat the 100x and 90-day claims as projections).

🤔 The Robber Barons: Neither Robbers nor Barons - Henderson’s revisionist case is that the 1880s robber barons won by cutting prices and flooding output (Standard Oil cut refined-oil prices 61% as output rose 393%), the pro-concentration steel-man now aimed at the Mag 7 (verify the figures; Econlib is classical-liberal).

💰 Why Vanguard and Altruist Create a More Viable Competitor to Schwab, Fidelity - Vanguard’s $4.6 billion all-cash buy of Altruist puts custody, technology, and advisor distribution in one manufacturer’s stack, so the open architecture every RIA leans on becomes a promise rather than a structural fact (verify the price against Vanguard’s release).

👀 Gen Z Is Mistaking Sports Betting for Investing - a Betterment survey found more than half of Gen Z has redirected investing money into sports gambling and about a quarter now call betting a long-term strategy, a bull-market lesson that risk is free and the mirror image of risk-first de-risking (single-vendor survey, verify).

👋🏼 Parting Thought

Trying to stay focused on what’s most important these days…

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

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👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the Internet.

🎶 Vibin’

Lately, I’ve been missing the music of the ‘80s, the shoulder pads, and all the HAIR, including mine! The emergence of MTV made the strength and production value of a song’s video a huge key to its success. This week, for no particular reason (😉), I’m vibin’ to Steve Winwood’s 1986 hit, Higher Love; great video, great song, great vibe, GREAT voice. Enjoy.

💭 Quote of the Week‌

📈 Chart of the Week

🍼 From Birth to 80, and the 80 That Follow

Most weeks, the article discussing the Chart of the Week focuses on investing or financial market related topics. But every now and again, I run across a chart or, in the case of this week, an infograph, that is really thought provoking and focused on longer-term trends.

As I reflected on it, it’s amazing just how far we’ve come in the postwar period and how our lives and society have changed. It also prodded me to continue thinking, given all the changes that appear to be coming at us in the future, about what might the next generation’s life be like? How can we prepare for it, yes, as investors but also as a society? Very Fourth Turning-esque, I admit.

A baby born in the U.S. in 1946 arrived into a country where one home in three lacked full plumbing, almost nobody had air conditioning, and a third of adults never finished high school. Roughly one newborn in thirty didn’t live to a first birthday. Real disposable income per person was under eleven thousand dollars in today’s money, and a boy could expect to see about 64.

Eighty years later that same person is turning 80 in a country that is nearly unrecognizable. Income per capita is almost five times higher. Infant mortality fell by a factor of six. Life expectancy jumped more than twelve years. We fly, on average, three times a year instead of once a decade, and food went from thirty cents on the household dollar to under thirteen. Nobody voted for this. It accumulated, quietly, one boring year of compounding at a time. That is the most underrated force in human affairs, and it is exactly why the doomsayers have been wrong for eight straight decades.

So here is the more interesting question, the one that actually matters for the babies being wheeled home from the hospital this week: what does their chart look like in 2106?

You’re right to consider the rest of this article to be speculation, because it is. But in my view, the direction feels solid enough to bet on.

Health care and longevity are the lever. The Boomer story was about not dying young. The next story is about not aging fast. If longevity research delivers even half of what its serious proponents claim, meaning we start treating aging itself as the condition rather than playing whack-a-mole with its symptoms, a child born in 2026 may come to see 100 the way we now see 80: common, unremarkable, and mostly healthy. That one change rewrites everything downstream of it.

Labor is where it gets uncomfortable. AI is doing to cognitive work roughly what the tractor did to the farm. The boomer spent a career trading hours for dollars. Their great-grandchild may find, outside of some of the trades and many service jobs, the machines are simply better at most of the hours. That is not automatically a tragedy; the farm emptied out and we did not starve, we got everything else instead. But the transition is where the pain lives, and pretending otherwise is quite foolhardy, in my opinion.

Which makes capital the quiet protagonist of the coming century. If labor’s share of the pie shrinks, then owning a slice of the machines, the land, the energy, and the ideas becomes the whole ballgame. But here is the uncomfortable part: returns to capital may compound faster than ever because labor is getting cheaper. Whoever owns the robots owns the output. How we spread that ownership, and not merely the output it throws off, is the political question of the next fifty years. Early signs of shifting political winds are starting to show up already in recent elections, and I personally believe we will see these accelerate. Again... The Fourth Turning.

Education stops being a one-time download you finish by 22 and becomes a lifelong operating system. A 100-year life with a 20-year career half-life demands three or four reinventions. The kid born today will “graduate” a dozen times, and the diploma that matters most may be the one earned at 70.

And space is the wild card I am the most intrigued by and hopeful for. For the first time, the cost curve is finally bending the right way. If we get manufacturing, mining, and eventually energy off the planet, the whole zero-sum framing of Earth’s fixed resources quietly dissolves. That is a physics problem slowly turning into an engineering problem.

So is the future of the coming generation bright or bleak? My answer to that, at least today is: bright, with an asterisk. Materially, the babies of 2026 will almost certainly live longer, healthier, wealthier, and freer than any humans who have ever drawn breath. Abundance is the base case, not the moonshot.

The asterisk is not scarcity. It is distribution and meaning. When the machines make the stuff and time itself is no longer scarce, the hard questions stop being how do we get enough and become who owns it and what are we here for. Those are better problems to have. But, they are still problems, and they are the kind that don’t solve themselves through compounding.

The Boomers spent eighty years proving the pessimists wrong about the material world. I suspect the generation in the maternity ward this morning will do the very same thing, and then spend the rest of their unusually long lives arguing about everything that’s left. Sounds about right to me.

Sources: Chart of the Week data compiled from BEA, U.S. Census Bureau, EIA, NCHS, SSA, FHWA/NHTSA, BLS, and BTS. 1946 figures used where annual data exists, otherwise 1950 or nearest published year; current column reflects most recent available year, 2020 to 2025.

🚙 Interesting Drive-By’s 🚙

📉 The Economy Is Growing. So Why Is It Losing Jobs? - labor’s share of nonfarm business output just hit a 75-year low of 52.9% even as output rose on flat hours, the cleanest macro fingerprint yet of an economy paying capital and not work, and the hard-data companion to last week’s K-shape read.

🤔 Economists Should Be Worried About Birth Rates - the fashionable “automation will cover the missing workers” comfort leans on the one paper whose own lead author (Acemoglu) elsewhere pegs AI’s total-factor-productivity gain at under 0.53%, so the demographics bill does not simply get automated away.

💰 Breaking the AUM Mold: Separating Planning From Investments - the 1% AUM fee has looked durable mainly because a 15-year bull market kept lifting the denominator, so the same drawdown that panics clients also cuts the revenue that pays to hold their hands, which is the case for pricing planning as its own product.

🤔 Who Gets Rich When Everyone Can Code - cheaper AI production does not flatten the winner-take-all curve, it just lengthens the long tail (the top 1% of app publishers already take 93% of revenue), so the value pools at the distribution and platform layer, not among the millions of new builders.

💡 The Art of Self-Promotion - in an AI-slop-saturated attention economy the maker now owns distribution too, and “self-promotion, if your product is good, is self-respect” is a useful gut-punch for any buy-side lifer who assumes good work sells itself.

🏠 FBI and Prosecutors Warn Property Owners About Deed Fraud - the paid-off home is the asset retirees check least, and forged quit-claim deeds exploit exactly that gap (the FBI logged 58,141 real-estate-fraud victims and $1.3 billion in losses over 2019-2023), a hidden risk with a nearly free fix in county deed alerts and title insurance.

👋🏼 Parting Thought

The bond market be like, “Come at me, bro.”

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the Internet.

🎶 Vibin’

This week has been one of reunion. Two of my daughter’s teammates from the 2018 Skidmore College Equestrian Team came to visit, one from Washington D.C. and one from New York City. The Skidmore Riding Team is the most highly decorated collegiate equestrian team in the country with nine national championships, including 2018 on which all three of them competed. It has been really nice to see them all together again and enjoying Saratoga Springs. #SkidEq4Life

So, a shoutout to the two newest subscribers to the Sunday Drive for suggesting this week’s vibe (though maybe not the version they had in mind). Courtesy of Janine and Erin, I’m vibin’ to B.B. King’s live rendition of Let the Good Times Roll. Enjoy.

💭 Quote of the Week‌

📈 Chart of the Week

Is the Gap in the K-Shaped Economy Narrowing?

The “K-shaped economy” became shorthand for a two-track world: the top arm of the K climbing while the bottom stalls or slides. We have been living inside that letter for several years now, and most of the recent data has done nothing to challenge it. The last few weeks brought some genuinely soft prints, enough to have people whispering about a labor market cooling and possibly even a looming recession. So it would be easy to file this week away as more of the same.

This week’s chart, from the Bank of America Institute, says something else, and it is more hopeful than the headlines.

The chart splits after-tax wage growth into household income terciles. The provocative bit is the crossing: in July, wage growth for lower-income households passed higher-income households for the first time since December 2024. The green line, the top 5%, which spiked near 10% last year and has since decelerated back toward the pack. The blue line, the lower-income cohort, is curling up to meet it. The two arms of the K are bending back toward each other.

BofA sees the same compression in spending, not just wages. Lower-income consumption is growing faster; upper-income spending is slowing. When the wage data and the spending data tell the same story, I start to pay attention.

So is the economy becoming less K-shaped? Maybe. One month is not a trend, and I would not build a thesis on a single crossing. But the more interesting question is not whether it happened. It is why.

Here is the cause I think most folks are not fully appreciating: rent.

For renters, housing is almost always the single largest line in the budget. Roughly a third of American households already spend more than 30% of income on housing and utilities, and for about 16% of us, shelter alone eats more than half of what comes in. When rents are ripping higher, as they have the last several years, that line item crowds out everything else, and it crowds out the bottom of the income distribution first, because those households rent and have the least slack. That is the machinery that builds the lower arm of the K in the first place.

But now it’s flipped. Rent growth has flattened, and flat rents quietly hand money back to exactly the households that were most squeezed. The dollar that is not going to the landlord this month can go to groceries, a car repair, a small indulgence, or the electric bill. That is real wage growth by another name, and it shows up as the bottom of the K finally lifting.

None of this erases the soft labor data, and a cooling job market could widen the gap again. But for one month at least, the gap narrowed. In an economy we keep drawing as a K, that is worth noticing.

Sources: Bank of America Institute, “Has the wage growth ‘K’ closed?” and the July 2026 Institute Employment Report; Axios, “Spending narrows between lower- and higher-income Americans”; housing cost-burden figures from the Joint Center for Housing Studies, The State of the Nation’s Housing 2025.

🚙 Interesting Drive-By’s 🚙

💰 How to Get Rich in America - Scanlon’s data is the alarming part and her causal story the softer part: capital’s share of output climbed from 7% to 11.7% since 1980 while labor’s slid from 58% to 51%, and Americans 70+ now hold 32% of household net worth (up from 20% two decades ago), so the great-wealth-transfer story and the speculation-as-rational-response story turn out to be the same story read from opposite ends of the age curve.

🤔 Apple Is the King of AI and Nobody Noticed - Treat the “NVIDIA is obsolete” conclusion as provocation rather than forecast (the piece cherry-picks run-it-at-home inference and skips that training still lives in the datacenter), but the frame sharpens the capex-vs-revenue lens: if a ~$9,500 Mac Studio can run the same trillion-parameter models that need $60,000 to $75,000 of NVIDIA gear, some of the AI build-out may be pouring concrete for compute that quietly migrates to hardware you already own.

🤓 It’s Time to Complicate - Green (the passive-flows Cassandra, now launching Tier1 Alpha) makes his sharpest case yet that index ownership leaves the tape reflexive and fragile because the marginal bid answers to fund flows rather than fundamentals, so give the structural diagnosis full weight and the “here’s the fund to exploit it” conclusion the skepticism you owe any manager raising assets against his own thesis, then keep the line worth keeping regardless: the race to zero fees “confused cost with value.”

🏠 Don’t Let Inherited Vacation Homes Tear Apart Families - The family lake house feels like the safest, most sentimental asset on the balance sheet yet it is the one that quietly hands heirs an illiquid, cash-hungry liability with no governance, so Green’s fix is to put real numbers on the annual carrying cost to strip out the emotion and then pin down ownership shares, usage, and buyouts in an LLC or trust before a death forces the conversation.

💡 We Made Bell Labs Illegal - Harrison argues foundational innovation needs three things almost no US institution can still assemble (monopoly-insulated “rent” for patient capital, a concrete deployable mission, and a research-to-manufacturing “loading dock”) that antitrust and the 7-to-10-year venture cycle dismantled, with TSMC as his lone modern example, which turns the AI-capex question sharp: are today’s hyperscaler cash machines building the next transistor or just financializing the last one?

🚀 Nuclear Rockets Are Coming - The physics is sound (nuclear thermal engines run two to three times a chemical rocket’s specific impulse, cutting a Mars transit to 3 to 4 months from 6 to 9) but the 2028-testing, 2030-deployment dates are a professional optimist’s calendar with no clean public-market vehicle to own the thesis, so read it as an abundance-of-progress piece.

👋🏼 Parting Thought

How the economy and financial markets feel these days…

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the Internet.

🎶 Vibin’

My wife and I were recently at a local restaurant which features live music. Playing that evening was a very talented local duo, both singing and playing acoustic guitars. One song they played seemed to fit the mood this week. No theme, just relaxing to a classic hit by Willie Nelson that sets the tone for the Dog Days of Summer. I hope you enjoy the beautiful Angel Flying Too Close to the Ground.

💭 Quote of the Week‌

📈 Charts of the Week

🪜 The First Rung Is Missing

Two charts this week, and together they tell a story about our younger generations.

The first chart shows that new business applications are still strong; Americans keep forming companies at a healthy clip. But look at the red line: applications from businesses with a “high propensity to hire” are rolling over. The right-hand panel is instructive. Across millions of small businesses, payroll spend has gone flat-to-negative while spending on tech services (AI very much included) is accelerating toward 15% year-over-year. New firms are being born. They’re just not being born hungry for employees.

That’s a quiet revolution, and it lands hardest on the young. The entry-level job, the mailroom, the analyst seat, the “we’ll train you” hire, has always been the bottom rung of the career ladder. It’s also, in large part, exactly the work a capable model now does for the price of a subscription. When a two-person startup can rent the output of a junior employee instead of hiring one, the rung disappears. You can’t climb a ladder that’s missing its first step.

Now the college question, which everyone loves to argue and nobody wants to answer honestly. The New York Fed still pegs the return on a bachelor’s degree around 12.5%, so on average the diploma still pays. But averages hide everything interesting. Engineering grads clear roughly $949,000 in extra lifetime earnings; nearly a quarter of programs post negative returns. Small wonder confidence in higher education has slid to 38% from 57% a decade ago, and that 44% of graduates say their own degree didn’t pay off. When 64% say they wouldn’t take the loan again, that isn’t anti-intellectualism. It’s a market repricing a product whose implied guarantee, the good first job, just got automated.

Younger folks are responding rationally. In one survey, 39% ranked trade school as the best return on investment, against just 25% for a four-year degree. A welder’s torch, a nursing license, an HVAC van: none of that gets vacuumed up by a chatbot, and none of it arrives with $30,000 of debt attached. Meanwhile, the second chart shows 43% of Gen Z considering starting a business in 2026, more than any generation before them, with another third eyeing gig or freelance work. Call it intent rather than outcome (most won’t follow through), but the direction is unmistakable. If the ladder won’t hire you, you build your own.

Here’s the twist that ties both charts together: AI is what makes the exit ramp passable. Sixty percent of new business owners used AI to launch in 2025, double the rate just two years earlier. The same tool that ate the entry-level job is also the co-founder, the marketing department, and the back office for a twenty-three-year-old with a laptop and no employees. The technology closing the front door is quietly holding the side door open.

So which is it: crisis or renaissance? Maybe both, and the answer turns on whether a young person can get to the tools before the tools get to their first paycheck. The generation that learns to direct AI will do just fine. The one waiting around to be hired and trained may be waiting a long while. That’s the provocation worth sitting with, and for those of us thinking about who funds the next few decades of retirements, it’s not a small one. 🤷🏼‍♂️

Sources: a16z, Charts of the Week | Mauldin Economics, Is College Worth It? | Credible, Is College Worth It? Survey

🚙 Interesting Drive-By’s 🚙

👀 A Bird’s Eye View for Data Center Site Selection - The risk hiding inside the AI capex number is that it’s a paper figure, since satellite timelapse shows hyperscale construction lagging the announcements and permits investors mark to, while a Harvard Kennedy School draft finds the power-bill costs leaking to non-host counties even as the jobs and tax revenue stay local.

💡 The End of the Age of Heroes - OpenAI’s claim that its “Astra” model cracked ten open problems in math signals the end of the lone-genius era, but Smith’s sharper point is economic: the entire US academic-math payroll is only $4 to 5 billion (about what America spends on Halloween candy), a rounding error the system will keep funding for “professional math-understanders.”

📉 Foundations: Market Structure & What The Heck Just Happened - Burry’s risk-first read (paywalled past the setup) is that the S&P 500’s 12.09% annualized real return since 2011 rests on a dividend contribution of just 1.76%, a 1st-percentile reading across 145 years, because buybacks and RSU withholding have replaced the only non-reversible leg of shareholder return and left the whole bull case leaning on earnings quality.

🤔 A Global Weighing Machine - Harrison argues Graham’s comfort blanket (short-run voting machine, long-run weighing machine) is breaking because reflexivity and social-media speed now let the votes reach in and edit the asset itself, with SVB’s $142 billion two-day run (81% of the balance sheet) as proof the scale never got a say.

💰 Capital Allocation Is Dead - The risk Harrison names is that the sum-of-the-parts machine a generation trained on has quietly stopped working (he modeled Figma at $200M ARR and got mocked for overshooting, then it blew past his number), so every allocator is now really betting one of four worldviews (quality, narrative, leverage, or time) rather than a spreadsheet.

🚀 The next frontier is under your feet - Read this downside-free “subterra” survey (Fervo geothermal selling power to Google, Quaise melting granite with millimeter waves, The Boring Co. pitched as a possible next trillion-dollar company) as theme and voice rather than data, since it’s a promoter’s list of pre-revenue names selling a market that doesn’t exist yet (Kola took 19 years to reach 7 miles).

🎯 Inherited Assets and Divorce: Avoiding Costly Mistakes - The hidden-risk point advisors miss is that an inheritance stops being “separate” the moment it’s touched, since dropping a bequest into a joint account or spending marital cash on an inherited house lets commingling quietly reclassify it as marital property a divorce court can divide, so only sole titling, segregated records, and a pre- or postnuptial agreement preserve the claim.

👋🏼 Parting Thought

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the Internet.

🎶 Vibin’

While most recent headlines are focused on Iran, the Fed, mid-term elections, and all manner of. mainstream concerns, I’m thinking about the recent implosion of Leopold Aschenbrenner’s hedge fund, Situational Awareness, its impact on the equity markets during the month of July, and the potential knock-on effects it may or may not have.

So, the 25 year old Wunderkind with no investment experience, but an allegedly insightful 2024 essay on AI investing, grew his hedge fund from $225mm to $45 BILLION in less than two years (Source: Bloomberg). Then it blew up. 💥💣

More on this topic below in the Chart of the Week section, but this week I’m vibin’ to Iggy Pop’s Real Wild Child, ‘cuz…. kids these days. 🤷🏼‍♂️

💭 Quote of the Week‌

📈 Chart of the Week

💥 Situational Awareness: Oh, The Irony!

This week’s Chart is a vivid illustration of the power of leverage, in both directions. George Soros’ term “reflexivity“ comes to mind when one looks at the forced selling that occurred in July in many of the high flyers that had done so well in recent years... and it may have been catalyzed by a single hedge fund.

A 25-year-old with no trading experience took a fund from roughly $225 million at launch in 2024 to as much as $45 billion by early July. Through June 30 it was up 439%. In a matter of days near the end of July, the whole public book was gone, sold in a single pre-market block to Ken Griffin’s Citadel at a discount.

That’s Leopold Aschenbrenner’s Situational Awareness, and the cause of death matters more than the headline. This is a textbook example of the perils of excess leverage and a lack of risk control in portfolio construction.

The investment thesis was defensible. Long the picks-and-shovels of AI (SK Hynix, Micron, CoreWeave, Nebius, SanDisk), short the software names he figured AI agents would hollow out (Adobe). Reasonable people own some version of that trade. Plenty do.

The 4x is what turned a rough month into a liquidation.

Here are the mechanics, in plain English.

When you borrow three dollars for every one of your own, a 20-25% drop in your book doesn’t dent your equity, it erases it. At that point your prime broker stops asking politely.

Goldman, JPMorgan, and Bank of America issued margin calls, and when a call can’t be met, the broker sells your positions for you, at whatever price clears, right now. Leopold’s longs were off 35% or more on the month while the Adobe short went against him at the same time.

Squeezed on both sides, with borrowed money magnifying every tick, you don’t get to wait for the thesis to play out.

The part that should stick with you: six days before Citadel took the book, Aschenbrenner told his investors that July’s selloff offered “some of the most attractive opportunities since early 2025” and asked them to wire fresh capital by August 1. He may even have been proven right in time. It didn’t matter. The money never showed, and the forced de-leveraging began.

Keynes had it right a century ago. The market can stay irrational longer than you can stay solvent. Solvency is the whole game. Being right about AI in 2030 is worth precisely nothing if an unmet margin call liquidates you in week three of the drawdown.

Now we return to this week’s Chart, because this is where it stops being about one cocky kid and starts being about the equity market in general.

The Chart shows assets and net exposure of US-listed leveraged ETFs. Asset levels recently touched a record near $200 billion, up about 55% in a matter of months, and net exposure ran past $450 billion. Roughly 85% of it is held across the general AI investing sector. The same trade Aschenbrenner ran, wrapped in a ticker any investor can buy.

Many of these products carry Situational Awareness’s fatal reflex written into the prospectus. A 2x or 3x fund has to rebalance every single day to hold its target exposure. When the underlying rises, it buys more. When it falls, it sells. By prospectus, it is contractually required to sell into weakness, the same forced selling a margin call produces, except automated and running across millions of accounts at once. Daily rebalancing flows hit a record $50 billion this year, quadruple where they started 2026, and now amount to something like 1.6% of all S&P 500 futures volume. On a down day, that’s a wall of mechanical selling that arrives exactly when the tape is already soft.

One fund blowing up is a story. A structural bid that flips to a structural offer the moment stocks fall is a market feature, and it’s a lot bigger than $45 billion.

So here are my two (unlevered) cents. Leverage is effectively a promise to sell at the worst possible moment. It takes a temporary loss, the kind a patient investor rides out, and turns it into a permanent one, because you no longer control the timing of your exit. The broker does. Or the fund’s rebalancing rule does. You’re a passenger.

When an investor is approaching retirement, or already there, the order in which their losses arrive matters more than their magnitude. While a risk-management first approach to investing is much less thrilling than 439%, it also leaves an investor still standing in August.

The irony writes itself. The Wunderkind named the fund, and the viral essay behind it, “Situational Awareness.” The one thing 4x leverage guarantees is that you lose exactly that, right when you need it most, because at the bottom you’re not the one driving anymore.

So if you’re levered up, buckle up. It’s a long drive, and the road’s wet.

Sources: CNBC: Situational Awareness fire sale · CNBC: why the fund imploded · CNBC: forced to unwind all public positions · SpotGamma: Anatomy of a Margin Call · Benzinga: Leveraged ETF rebalancing hits $50 billion · ETF.com: Leveraged ETFs in 2026

🚙 Interesting Drive-By’s 🚙

🤔 Warsh’s Challenges, Financial Regulation - John Cochrane and Amit Seru argue every crisis is really a bank run, so Warsh’s Fed should regulate run-prone short-term liabilities instead of piling more asset-risk rules on top of Dodd-Frank.

💰 Philanthropy’s Other Third Wave - Craig Shapiro argues the best mission-driven company folds Carnegie’s make-a-fortune-then-repair-it model into a single ledger, though he concedes the thesis lives or dies on telling real mission from purpose-washing (and he’s a VC talking his own book).

💡 Building Worlds That Train Robots - Fei-Fei Li’s World Labs claims robots can learn complex manipulation with zero real-world data by turning one physical task into thousands of simulated variations, but it’s an a16z-published, portfolio-adjacent bet against a sim-to-real gap that has humbled robotics for decades.

🤔 The Project of Software is Complete - Freddie deBoer’s contrarian bet is that the era of genuinely new software categories is over, since LLMs only churn out redundant bits while the prizes we actually want (cancer, fusion, longevity) live in the world of atoms code can’t touch.

🚀 The Rational Optimist’s Guide to the Galaxy - A field guide to ~30 private space firms riding launch costs from $54,500/kg on the Shuttle toward a hoped-for sub-$100 on Starship, though half of SpaceX’s $2T valuation rests on orbital data centers that won’t scale until the 2030s.

📉 Big Trouble for Big Tech, Part II - Atlas Analytics finds the overvaluation everyone pins on the Mag 7 is now broad-based (even small caps are rich), so spreading a retiree across sectors buys less protection than the label promises.

👀 First ‘space mirror’ satellite gets green light to deliver sunlight - The FCC licensed Reflect Orbital’s demo mirror, but its planned 50,000-satellite constellation could brighten night skies 200-300% and enclose a shared public good, the dark sky, for private gain.

👋🏼 Parting Thought

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! This weekend, my wife and I are celebrating another marital trip around the sun. Cheers to 34 years! 🥂❤️

Celebrate with us, and enjoy another Sunday Drive around the Internet.

🎶 Vibin’

Over the last few weeks, and especially this week it seems, a lot of things started to matter: interest rates mattered, the conflict in Iran mattered, the conflict in Ukraine mattered, runaway AI capex and strained free cash flow mattered.

Just a few weeks ago, the market didn’t seem to be bothered by much and nothing seemed to matter. So as the summer doldrums approach, I’m vibin’ to Queen’s epic hit from 1975, Bohemian Rhapsody.

Nothing really matters, anyone can see. Nothing really matters. Nothing really matters to me…

💭 Quote of the Week‌

📈 Chart of the Week

When Bonds Stop Helping

The case for a 60/40 stock and bond portfolio largely rests on one assumption: when stocks fall, bonds rise and cushion the blow. This week’s Chart shows how conditional that assumption really is. It shows the rolling 24-month correlation between stocks and bonds going back to 1975. Above zero, the two move together. Below zero, they offset each other, which is the behavior a classic 60/40 portfolio is counting on.

Notice how the sign periodically flips. From 1975 through the late 1990s it was mostly positive. Around 2001 it went negative and stayed there for two decades, the era that seemingly built the 60/40’s reputation, with bonds rallying while equities fell in 2000-02, in 2008, and in 2020. Since 2022 it has snapped back to positive.

It’s tempting to explain this with the level of inflation: high inflation in the 1970s and 80s, low inflation after. That story doesn’t really hold. Inflation fell steadily through the entire 1990s, from 5.4% in 1990 to 1.6% by 1998, and the correlation stayed positive the whole time. The level of inflation is not the switch.

What flips the sign is the relationship between inflation and growth, which essentially comes down to whether the economy is being driven by supply shocks or demand shocks.

When inflation and growth move in opposite directions, a supply-shock world, an inflation scare means higher yields and a weaker growth outlook at the same time: “stagflation”. Bonds fall, stocks fall, and the Fed is tightening into the weakness. Bonds behave like a bet on inflation, and they move with stocks. That described the 1970s and early 80s.

It also described the 1990s, because the market’s operative fear was overheating and Fed tightening, not recession. In 1994, Greenspan doubled the funds rate from 3% to 6% and the bond market was crushed while stocks went nowhere. Good news on growth was bad news for bonds. The same force moved both markets.

When inflation and growth move together, a demand-shock world, a recession brings disinflation and rate cuts. Bonds rally when stocks are falling. They become a hedge against deflation rather than a bet on inflation. That was the world from 2001 to 2021, and it’s what made 60/40 feel safe. The regime break wasn’t lower inflation. It was inflation turning pro-cyclical, once the fear of recession replaced the fear of overheating.

Academic work lines up with what we see in the Chart. John Campbell and his co-authors found that the correlation between inflation and the output gap was negative from roughly 1979 to 2001, then turned positive, and the stock-bond correlation changed sign right alongside it.

2022 showed what the supply-shock world costs. The S&P 500 returned -18.11% on a total-return basis. The Bloomberg US Aggregate, the core bond benchmark, fell 13.01%, its worst year in the history of the index. The safe half of the portfolio cushioned nothing. A 60/40 investor was hit on both sides at once.

The right edge of the chart is what matters for allocation decisions now. The correlation has been positive since 2022. If inflation stays sticky and volatile, a reasonable expectation given fiscal deficits, conflict in the Middle East, and tariff uncertainty, the negative correlation that made 60/40 feel safe may not return for years.

The concern for investors is concrete. Most portfolios still seek to de-risk the way they did in 1995: sell stocks, buy bonds. If bonds and stocks are moving together, that trade buys far less protection than it used to, and it often realizes a tax bill on the way out.

There are other tools that can be added to the equation. For example, one might cushion their portfolio’s downside with equity options, keeping the stock exposure they want while limiting the loss that many investors, particularly those in or nearing retirement, can’t afford. It has a cost. Protection always does. But it holds up even when both halves of the traditional portfolio move together, which is the environment the Chart shows we are in.

The 60/40 still works as a starting point. Its protection depends on a correlation that has now changed its sign, and that is worth considering before the next drawdown, not after.

Sources: S&P Dow Jones Indices (S&P 500 2022 total return -18.11%); Bloomberg US Aggregate Bond Index (2022 total return -13.01%); U.S. Bureau of Labor Statistics CPI data (1990-1998); Campbell, Pflueger & Viceira, “Bond-Stock Comovements,” and Campbell, Sunderam & Viceira, “Inflation Bets or Deflation Hedges?”

🚙 Interesting Drive-By’s 🚙

🤔 Finance and the Economy - Arnold Kling throws out “aggregate demand” as circular dogma (a recession happens because demand fell, and we know demand fell because there was a recession) and pins downturns on the financial sector instead, where intermediaries fund long-term risky assets with short-term riskless deposits, a structure that snaps under stress and drags the real economy down with it. His closing worry is the one worth stealing: AI companies with no free cash flow now carry hundred-billion-dollar valuations from venture capitalists, stock investors, and bond buyers alike, so if something breaks, the hit lands first on financial intermediation and then on everything it was funding.

🤔 Capital Allocation Is Dead - Kyle Harrison argues the analysis-first, sum-of-the-parts machine a generation trained on has quietly stopped working, because its core move is extrapolation and with the best assets extrapolation is always wrong on the low side (he modeled Figma at $200M ARR by 2022, got laughed at for overshooting, then watched it blow past even that). His reframe is that every allocator now aggregates around one of four worldviews rather than a spreadsheet, quality, narrative, leverage, or time, a sharp counterweight to the pure risk-first AI-capex takes since he’s a believer who still flags where opportunity falls off into hype.

💡 Networking in Life’s Second Half: What’s Different - Bill McGuire reframes second-act networking as contributing to a community rather than collecting contacts, with the payoff coming from relationships compounded over years instead of a stack of fresh business cards. The line worth stealing is that the hard part is just deciding to walk through the door and consistency beats hunting for the perfect event, a useful counter for any retiree who’s been told their social world has to shrink.

👀 First ‘Space Mirror’ Satellite Gets Green Light to Deliver Sunlight - The FCC just licensed Reflect Orbital’s single demonstration mirror, a 60-foot thin film that beams sunlight to 5-6 km ground zones, but the stated plan is a 50,000-satellite constellation by 2035 that astronomers warn could raise global night-sky brightness 200-300% and render ground-based telescopes obsolete. The honest frame is a private firm monetizing a shared public good, the dark sky, with the externality landing on everyone else, a tragedy of the commons wearing a 24/7 solar-power pitch.

🚀 The Next Frontier Is Under Your Feet - Stephen McBride’s unabashed bull survey argues “subterra” is the next frontier now that fracking-era steerable drills, high-pressure pumps, and fiber-optic rock sensing turned digging from a luck business into an engineering one, touring enhanced geothermal (Fervo selling power to Google), Pipedream’s underground delivery pipes, and boreholes for burying nuclear waste and reactors. Treat it as theme and voice rather than data, since it’s a promoter’s list that’s almost all pre-revenue (Kola only reached 7 miles in 19 years), so the real lens is single-point-of-execution risk on companies selling a market that doesn’t yet exist.

😡 How the CFP Board Sold Out the Public & the Profession - Allan Roth walks through how the CFP Board quietly converted in early 2023 from a 501(c)(3) public charity into a 501(c)(6) trade group, dropping “benefit the public” from its mission while over 9,000 CFPs who show up clean on LetsMakeAPlan.org actually carry a BrokerCheck disclosure (up from 6,300 in 2019) and nearly 1,000 have criminal disclosures (up from 140 in 2019). For anyone selling retirees a tax-efficient alternative to the double-dipped 5.29%-fee annuity the author opens with, the takeaway is that the credential now does the marketing rather than the vetting, so the fiduciary gut-check still falls on the advisor and the client.

👋🏼 Parting Thought

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the Internet.

🎶 Vibin’

It’s still early on in Q2 earnings season but we’ve already seen a good bit of financial violence, particularly in semiconductor stocks. So this week, I’m vibin’ to Right Back Where To Where We Started from the classic 1977 sports movie, Slapshot. Let’s put on the foil and get ready for next week.

💭 Quote of the Week‌

📈 Chart of the Week

The Rate That Prices Everything

The 30-year real Treasury yield is the price of patient money. It’s what you earn, after inflation, for handing capital to Uncle Sam for three decades and asking no favors in return. Nearly every other asset gets priced off it, or its 10-year cousin, whether investors admit it or not.

For most of the 2010s that price sat near zero, and for a stretch it went negative. Free money, in real terms. That’s the soil everything seemed to grow in: private equity, venture, long-duration tech, zombie companies kept alive on cheap refinancing, houses bid to the sky. When the risk-free real rate is zero, investors pay up for distant cash flows. The alternative pays nothing.

At 2.9%, the alternative pays something again. And that quietly rewrites the math for every risk asset on the board.

Start with stocks. The case for paying a rich multiple for earnings rests on a low discount rate. Raise the real rate and the present value of future profits falls, and it falls hardest for the companies whose earnings live furthest out. Growth stocks are typically long-duration assets. In theory they take the biggest hit here. The equity risk premium, the extra you’re paid for owning stocks instead of that safe 2.9%, has thinned to a sliver.

In theory, gold should be the other casualty. It throws off no cash, so a higher real rate is pure opportunity cost, the classic headwind. Except gold has ripped anyway. That tells us the market is voting for the second story in this week’s Chart, the one about term premium and a debt load nobody wants to fund cheaply. When gold climbs into rising real rates, it’s likely pricing a cheaper dollar down the road, not deflation.

Real estate feels it straight on. Cap rates track real yields, so higher yields mean lower building values and refinancings that no longer pencil out. Commercial property is still grinding through exactly that repricing.

Here’s the part that should keep us honest. Real rates are the highest in 17 years, and risk assets, by and large, seem to be behaving like it doesn’t matter. Either growth is genuinely about to accelerate, which would justify the shrug, or investors have simply gotten comfortable ignoring the denominator.

Many of us have seen what happens when the denominator stops being ignored. It tends to happen all at once. I’m not making a call here, I’m just doing what I’m usually trying to do: looking for things to worry about that the financial markets appear to not be worried about.

Sources: BofA Global Investment Strategy and Bloomberg.

🚙 Interesting Drive-By’s 🚙

📉 Leveraged Stock ETFs Are as Stable as a Row of Dominoes - Aaron Brown walks through the $150 billion pile of 450-plus leveraged single-stock ETFs built since 2022, where volatility drag quietly mauls the retail buyers but the real danger sits upstream with the yield-hungry funds that sold the structuring banks their crash protection, the same setup that vaporized the monolines in 2008. Each fund is individually 2x-compliant, yet they share one fuse in the AI-capex trade and all rebalance into the same closing auction on the same afternoon, so they’re hedged individually and fused collectively.

💸 The Second Derivative: Why No One Understands the AI Boom - Groundbreaker argues the AI build-out is being financed like 2008 rather than 2000, a stack of take-or-pay leases, GPU-collateralized loans, and asset-backed notes sold to insurers that seizes up rather than gently de-rating the way patient dot-com equity did. Everyone watches the level and the growth rate while nobody watches the second derivative, so the machine breaks the moment demand simply stops accelerating against all the fixed supply the boom just poured.

🏠 The Missing Middle: Where Do We Live Between 55 and 80? - Chip Conley flags a demographic mismatch the senior-living industry quietly baked in, communities designed for healthy mid-60s residents now filling up with people who move in at 83 to 85 after a health event, leaving roughly 25 years of active, solvent, community-hungry adults with nowhere purpose-built to go. His reframe is that America has a belonging shortage sitting on top of millions of empty bedrooms, so the retirement question isn’t only whether you have enough money but where and how you’ll actually live.

🤔 Are Index Funds Communist? Part III - Be Water makes the deliberately provocative case that market-cap weighting is a rich-get-richer allocation rule, where every new passive dollar flows disproportionately to whatever already has the largest weight, so the index doesn’t measure the market so much as it programs where capital is allowed to go. It’s more polemic than proof, but the underlying mechanism is real and it’s the same one that makes today’s top-heavy S&P a hidden-risk story rather than a diversification story.

🤓 Ridley: Why Our Public Sector Is So Unproductive - Matt Ridley pairs Jevons (everything AI touches, from transistors to tokens, gets radically cheaper and we promptly use vastly more of it) against Baumol (sectors with stagnant efficiency like healthcare, education, and government just get more expensive as they compete for the same labor). His unnerving data point is that UK public-sector productivity has shown zero gain since 1997 despite the entire internet-and-mobile era, and his bet is that bureaucracy simply expands to swallow whatever efficiency AI hands it.

👀 Are Prediction Markets Doomed to Fail? - Contrary Research lays out how “prediction market” is largely a regulatory costume for sports gambling, with sports contracts over 90% of Kalshi’s volume and combined Kalshi/Polymarket monthly volume leaping from under $5 billion last September to $24 billion by April, rivaling US sportsbook handle. Because they charge thin exchange-style fees instead of a 10% hold, the real engine isn’t the bets at all but the interest earned on idle customer cash, worth knowing before anyone mistakes these for neutral forecasting tools.

👋🏼 Parting Thought

In light of the recent incident at Yellowstone National Park where an elderly grandpa got ragdolled by an elderly bison, I offer this PSA:

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the Internet.

🎶 Vibin’

This week saw an increase in geo-political tensions in both Iran and Russia. Commodities were up, but not a lot. Bonds were down, but not a lot. The S&P 500 was up, but not a lot. Other equity markets were down, but not a lot. So all in all, the markets pretty much just said, “I don’t care…. on to Q2 earnings season.”

So this week, I’m vibin’ to I Love It! from the Swedish Pop Duo, Icona Pop. 🤷🏼‍♂️

💭 Quote of the Week‌

📈 Chart of the Week

📈 The Estimates Are Climbing, And That’s The Weird Part

The most dangerous words in investing are “this time is different.” This week’s Chart does show us something that looks different. You can decide if it is.

Sell-side analysts almost always start the year too optimistic, then walk their numbers down as reality sets in. Over the past 20 years, the bottom-up EPS estimate for a given quarter has fallen an average of 4.2% while that quarter was still in progress. Down over five years (2.0%). Down over ten (2.7%). Down basically always.

2026 seems to have broken the pattern. Analysts raised the Q2 estimate by 3.4% during the quarter, the largest in-quarter increase since 2021. The full-year 2026 number climbed 6.3% in just three months, from about $320 to $340 per share. That green line in the Chart is heading up while every historical version heads down.

So what’s driving it? Two things, mostly. Energy estimates for the year jumped 41% on firmer prices. And the AI infrastructure trade kept feeding on itself, with Information Technology and Communication Services full-year estimates up 9% and 12%, respectively. Companies are guiding higher too. Of the S&P 500 names that gave Q2 guidance, 57% guided up, against a 41% norm. And revenue backs up the profit story: Q2 sales are tracking 12.2% growth, the best in three years. So there’s a real business underneath the optimism.

But here’s where I get nervous. This growth is narrow. Nine of eleven sectors saw their 2026 estimates rise, but the dollars are quite lopsided. Three companies, Alphabet, Amazon, and Meta, account for roughly 70% of the entire increase in 2026 earnings expectations. Strip out a handful of names and the picture goes back to ordinary.

The full-year number is genuinely big: 24% expected growth, against just under 10% in 2024 and about 12% in 2025. Call it what it is. A small group of enormous companies hoping (promising?) to earn their way into some very large capital expenditure budgets. Those same three have guided to combined 2026 capex of roughly half a trillion dollars. The estimates assume that spend turns into profit, on schedule.

Maybe it does. A lot is going right, and I’m not betting against these franchises. But concentrated growth is concentrated risk, dressed up as an index. When three stocks carry the number, three disappointments carry it back down. The estimates went up for once. They can still come down the ordinary way.

Sources: FactSet Earnings Season Preview: Q2 2026 · FactSet: Largest Increases to Quarterly EPS Estimates Since 2021 · 24/7 Wall St: Just 3 Companies Drive 70% of the S&P 500’s 2026 Growth Expectation

🚙 Interesting Drive-By’s 🚙

💸 Hyperscaler Capex to Exceed Cash Flow by Q3 2026 - Epoch AI’s Isabel Juniewicz pulls straight from SEC filings to show operating cash flow at the five biggest hyperscalers growing about 23% a year while capex grows about 70%, with the lines crossing to zero free cash flow around Q3 2026. Oracle has already crossed and Amazon is crossing now, so the AI buildout is about to be funded with debt and fresh equity rather than cash on hand, the moment the risk stops being hypothetical.

🤔 The Real Economy Comeback No One Saw Coming - Anthony Pompliano leans on Jim Bianco’s data showing that in one down week the S&P fell about 2% while the roughly 425 non-AI names rose 2.3%, a rare crack in the everything-is-AI trade. He reads it as capital rotating from buybacks back to real capex, though a single week of breadth is a thin reed to hang a regime change on.

🤓 Stretch Marks: A Case Study in Financial Engineering - Marc Rubinstein dissects Strategy’s funding machine, now holding 847,363 bitcoin, roughly 4% of all that will ever exist, propped up by a preferred-stock structure that has raised over $10 billion since last summer. With bitcoin down about 30% this year, it’s a clean study of how fast financial engineering turns from clever to fragile once the underlying asset stops cooperating.

💡 Invisible Companies - Jay Barney, Haiyang Zhang, and Jerry Neumann argue the most durable edge isn’t a moat but “competitive neglect,” the boring, low-status businesses nobody bothers to notice, the way Constellation Software compounded at roughly 34% a year since its 2006 IPO against Berkshire’s 11% by buying niche software everyone else ignored. The risk they flag at the close: if every AI is trained on the same datasets and playbooks, invisibility either gets stripped away or quietly hardcoded, and spotting what the models can’t see may become the last advantage left.

🤔 On the Inevitability of an AI Bubble - Ben Carlson revisits his own 2023 call that an AI bubble was inevitable, noting Nvidia has gone from a $755 billion company then to north of $5 trillion now, with tech and communication services together half the S&P 500. He argues it may still not qualify as a bubble under Asness’s definition, which is either reassuring or exactly what you’d expect to hear near a top.

🤔 29 Loaded - Jack Raines marks turning 29 with a list of reflections that double as risk lessons, from “optionality is a depreciating asset” to “perceived risk is usually an exaggeration of realized risk.” The one worth taping to a screen: the utility of money depreciates with age, so hoarding it for a someday that keeps receding carries its own quiet cost.

👋🏼 Parting Thought

Manic markets be like…

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! This weekend, I’d like to wish a Happy 250th Birthday to the greatest nation on earth. 🇺🇸

Celebrate with me as we enjoy another Sunday Drive around the Internet.

🎶 Vibin’

This is the 222nd edition of the Sunday Drive and it marks a return once again of the only Vibe of the Week that we’ve ever repeated. As in prior years, I’m again vibin’ to the legendary Whitney Houston (RIP) and her performance of the Star Spangled Banner at the 1991 Super Bowl.

It is the most beautiful rendition of our National Anthem that I’ve ever heard, and is an annual tradition for the July 4th edition of The Sunday Drive. 🇺🇸

💭 Quote of the Week‌

📈 Charts of the Week

⚡ No Country Gets Rich In the Dark, But There’s a Price

The first Chart this week reminds us that there’s no such thing as a low-energy rich country. Every economy in the top-right corner uses a lot of electricity per person. Every one down in the bottom-left does not. Wealth and watts travel together, and they have for a century.

For the last 40 years or so, domestic GDP kept climbing while electricity demand stayed flat. We got more efficient, shipped heavy industry overseas, and swapped incandescent bulbs for LEDs. Growth without more power. That era just ended.

This week’s second Chart shows that since 2019, US electricity prices are up 42% while everything else in the goods and services basket rose 29%. The two lines tracked each other for years, then split around 2023, right as data-center demand started to kick in. I should point out that fuel costs, grid upgrades, and weather feed that number too, so this isn’t AI alone. But the timing is hard to ignore.

Data centers used roughly 4.4% of US electricity in 2023. Berkeley Lab’s range for 2028 runs from 6.7% to 12%. Even the low end is a demand shock the grid hasn’t felt since air conditioning went mainstream.

So does more electricity mean more GDP? Perhaps, maybe even probably. The first Chart shows a correlation, and a correlation won’t tell you which way the arrow points. Rich countries use lots of power because they do lots of valuable things, not the reverse. If the new watts run AI that genuinely lifts productivity, we’ll see accelerating real growth. If they run models that never earn their keep, you could end up with a very expensive space heater and a write-down.

Now let’s consider the supply side, which is where this gets interesting.

Start with the more traditional way of adding power: burn gas. New turbines carry 5-to-7-year wait times. GE Vernova is booked into 2029. Grid interconnection queues run 5 to 6 years, and the average project waits more than 2,100 days just to plug in. Demand gets signed in quarters. Firm gas-fired capacity shows up in years.

Gas isn’t the only source of new electricity supply. In 2025, solar and battery storage were about 81% of all new US generating capacity, and the EIA expects solar, wind, and batteries to be more than 99% of what gets added in 2026. Solar alone is more than half of it. A solar farm goes from permit to power in months, not the better part of a decade. So the fastest new electricity supply in America is already renewable, by a wide margin.

The catch: the sun doesn’t shine at night, and a data center wants a steady gigawatt around the clock. Solar paired with batteries firms a lot of that load, though not all of it, and the same interconnection queue that slows gas slows renewables too. So cheap solar bends the cost curve down without fully solving the “always-on power right next to the campus” problem.

Then there’s the wild card, which is highly speculative and one we’ve talked about before: move the data center off the planet.

Orbital compute stopped being pure science fiction in the past year. SpaceX is the acknowledged frontrunner, but there are others as well. Google’s Project Suncatcher plans to put its own AI chips in orbit, with prototype satellites targeted for early 2027. Starcloud launched a satellite carrying an Nvidia H100 in late 2025 and is already talking about a 5-gigawatt, solar-powered cluster in space. Axiom Space put its first data-center nodes in low earth orbit this past January. The pitch is simple physics: in the right orbit a solar panel is up to 8 times more productive than on the ground and generates almost continuously, with no land to fight over and no local ratepayer footing the bill.

But let’s not get carried away just yet. Some speculate that launch costs need to fall by roughly an order of magnitude for the economics to work, and radiation and on-orbit servicing are still unsolved at scale. This likely relieves nothing on the grid this decade. But directionally it’s the pressure valve. If even a slice of AI training eventually runs on free sunlight in orbit instead of a gas plant in Ohio, some of the demand pushing up terrestrial electricity prices lifts off with it.

Which brings us back to the price question. Will more supply cool the increases? Not soon. The demand looks price-inelastic where it counts, because a hyperscaler spending tens of billions on chips doesn’t really flinch at its power bill. Cheap solar shaves the cost of each new megawatt, and orbital compute might someday route demand off the grid entirely, but near term the marginal buyer sets the price and it climbs until something breaks.

The spread between those two lines in the second Chart two is very much something we should keep an eye on. I believe it will have significant bearing on economic growth here in the U.S. as well as on the upcoming mid-term elections, and even more so on the 2028 election.

Sources: Berkeley Lab, 2024 United States Data Center Energy Usage Report · EIA via Electrek: 99%+ of new US capacity in 2026 will be solar, wind + storage · S&P Global: US gas-fired turbine wait times as much as seven years · Utility Dive: GE Vernova gas turbine backlog into 2029 · DCD: Google Project Suncatcher · GeekWire: Starcloud space-based data centers

🚙 Interesting Drive-By’s 🚙

🇺🇸 From Promise to Turning Point: The Road to the Battles of Saratoga - Sean Kelleher (Past’s Paths) walks the 1777 northern campaign that turned Burgoyne’s tidy Hudson-corridor plan into the collapse that brought France in and made the Revolution global, a hometown turning-point story timed to Saratoga 250 and the July 4th festivities at the Race Course.

🤔 The Cost of Status - Jack Raines (Young Money) makes the case that the kid with $700,000 sunk into his schooling by 18 has the most to lose, since the prize for winning a finite status game is only entry into the next one, a sharp counterweight to the wealth-transfer optimism running through retirement planning right now.

🧠 On the Production and Dissemination of Knowledge in the AI Era - Cyril Hédoin (The Archimedean Point) argues AI companies are running the academic-publishing playbook, training for free on knowledge they never paid for and then fencing it behind subscriptions that jump from $25 to $200 a month, with the real hold-up arriving once businesses are too dependent to walk away.

🤓 10-Year Treasury Yield Long-Term Perspective: June 2026 - Jennifer Nash (Advisor Perspectives) stacks six decades of the 10-year against the Fed funds rate and inflation, and June’s read is the tell: a 4.44% yield against 4.25% inflation leaves a real yield near zero, with FedWatch pricing a 27% chance of a hike rather than a cut, the sticky-inflation setup where equities keep trusting the bond market to do the Fed’s fighting.

🤔 The Occupational Hazard of Wisdom - Chip Conley (Wisdom Well) lands a jolt of a stat: of the five figures people name as history’s wisest, four (Gandhi, Jesus, MLK, Socrates) were murdered and the fifth, Confucius, was never hired, his point being that real wisdom takes the courage to stand apart, not another credential to accumulate.

⚽ Why ‘High-Emotional’ Videos of World Cup Tourists Are Going Viral - Northeastern researchers note the same algorithms that usually reward doomscrolling are now boosting feel-good clips of Scots in traffic cones and Europeans discovering ranch dressing, a rare burst of celebratory globalism landing right as Pew has U.S. favorability near its lowest since 2002, proof there’s still a market for human connection in an algorithm-driven world.

👋🏼 Parting Thought

Getting your point across…

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the Internet.

🎶 Vibin’

I expect tonight to be an exciting and cathartic evening. My son and I will have the good fortune to see Rush in concert tonight at Dickie’s Arena in Ft. Worth, TX, my hometown. Rush was my favorite band in high school and beyond, and I’m thrilled beyond belief that I get to see them once again after the loss of their beloved drummer, The Professor, Neil Peart (RIP). Anika Niles, the drummer they’ve found to join them on their 50-Something Tour is truly a phenom and apparently doing a great job stepping into perhaps the biggest shoes in rock-n-roll history. I can’t wait to see that for myself.

An added bonus this weekend has been the opportunity to spend time with my brother and his family, as well as getting my Tex-Mex and BBQ fix on top of that!

So many songs to choose from… but I am vibin’ this week to Limelight because it’s going to be great to see them in it once again. Enjoy.

💭 Quote of the Week‌

📈 Chart of the Week

👴🏼 The Kids Are De-Risking the Wrong Direction

This week’s Chart is from a Bank of America study of households with $3M+ in assets which found Gen Z and Millennial investors holding just 32% of their portfolios in stocks, as compared to 58% for the Gen X and Boomer crowd. The gap gets filled with 15% in alternatives and 13% in crypto. Two-thirds of the youngsters told BofA they no longer believe stocks and bonds can deliver above-average returns. Not an earth shattering finding but interesting nonetheless.

Certainly older investors have built significant wealth over the last 40 years, in large part from equity markets, The younger investing cohort hasn’t had time to do that yet.

But...

An interesting question is what longevity does to the math underneath all of this.

Ninety-two percent of these same wealthy households told BofA that longer life expectancy is now a core factor in their planning. Fair enough. We’ve bolted something like 30 extra years onto the human lifespan over the last century, and a healthy 60-year-old today is underwriting a retirement that could run four decades. A liability that long needs a growth engine that long. And the only asset that has reliably outrun inflation over 30-year stretches, through every war, panic, and policy blunder we can point to, is equities.

So look at the Chart again with that in mind. The Boomer sitting at 58% stocks isn’t being naive about risk. She’s matching a 30-year liability with a 30-year asset. The kid at 32%, loading a 13% crypto sleeve that has never funded a real retirement drawdown, is the one taking the bet most people would call reckless if it didn’t have a youthful, contrarian spin.

Now, the kids aren’t crazy to want diversification, and some of these allocations will almost certainly look smart in hindsight. A lot can go right.

But here’s the part that gets lost and something I focus on a lot: the danger in a multi-decade retirement isn’t a bad year. It’s sequence-of-returns risk, the brutal arithmetic of drawing income out of a portfolio while it’s down. Trading the proven long-horizon asset class for illiquid alternatives and a coin that swings +/-70% is exactly the kind of move that wrecks the first ugly decade of a 40-year plan.

If I had to bet, I’d take the Boomers’ instinct over the kids’ enthusiasm. Stay invested in the asset that actually compounds. The job is figuring out how to ride equities through the inevitable drawdowns without selling at the bottom or sending a bunch of your assets to Uncle Sam, That is a risk-management problem, not an asset-allocation one.

I’d say that the young investors got one thing right, though. They’re planning to live a very long time. Allocating more to equities and allowing them to compound over a long investment horizon is in my opinion, still the best way to fund that long life.

Sources: Bank of America press release · Bank of America Institute summary

🚙 Interesting Drive-By’s 🚙

🤔 The VIX Isn’t Broken, It’s Just Being Outplayed - ETF.com’s Dave Nadig and “Vixologist” Jim Carroll argue the fear gauge dozing in the high teens is being drained of signal as risk migrates into same-day 0DTE bets and a plethora of options strategies.

🚪 The World-Building Doors Are Open, Again - Josh Elman marks his arrival at a16z with a manifesto calling AI-first consumer apps the next great build-out, worth reading for the map of where consumer money wants to go as long as you keep one eye on the incentive, since a brand-new VC needs founders convinced the door is open before anyone funds them walking through it.

💰 Longevity and Wealth Transfer Are Making Family Finances More Complex - Rethinking 65 unpacks the 2026 Bank of America Private Bank study of households with $3 million or more, where 67% of heirs aged 21 to 45 say stocks and bonds can no longer beat average returns yet only 33% understand trusts and just 20% of business owners have a documented succession plan, so the great transfer is arriving faster than the planning meant to catch it.

🤔 How Many People Does Synthetic Fertilizer Feed? - Our World in Data’s Hannah Ritchie estimates roughly half the people alive, about 3.5 billion, are fed by crops grown with synthetic nitrogen, which means one 1910 industrial process, Haber-Bosch, sits under the entire population’s food supply as a single point of failure most investors never bother to price.

👀 SpaceX Just Unveiled Their First ‘AI Satellite’ - 24/7 Wall St. details AI1, a 70-meter orbital data center carrying up to 150 kW of compute, where shedding heat in a vacuum is still the unsolved problem and the timing right before the IPO should make any buyer cautious about how much of the valuation now rests on a market that doesn’t exist yet.

👋🏼 Parting Thought

Happy to be back in the Great State of Texas, if only for a few days.

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

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👋🏼 Hello friends! Happy Summer Solstice and Happy Father’s Day to all who celebrate. Now, let’s enjoy another Sunday Drive around the Internet.

🎶 Vibin’

After a week full of chatter about thousands of newly minted millionaires and the world’s first trillionaire, I find it helpful to remember a more humble time when one would peel the foil off a TV dinner and call it a feast.

This week I’m vibin’ to TV Dinners by ZZ Top from 1983 and the Golden Age of MTV. It’s the bluesy throwaway buried on Eliminator, the same record that gave us “Gimme All Your Lovin’.”

Enjoy.

💭 Quote of the Week‌

📈 Chart of the Week

Does the Bull Market End With the Boomers?

It’s been a while since we had a demographic-related Chart, so when I ran across this one, I found it interesting enough to write about.

Here’s the worry on the minds of many investors. Baby Boomers hold about $89.7 trillion in net worth, more than the Silent Generation, Gen X, and Millennials combined. Boomers and the generation ahead of them own close to 70% of all the stocks, and they’re retiring. Somewhere between 40 and 50 million of them already are.

So the story writes itself.

The cohort that bought equities for 40 years turns into sellers. Required minimum distributions accelerate. Target-date funds quietly swap stocks for bonds on a fixed glidepath. The relentless bid that Josh Brown described back in 2014, the steady river of 401(k) money that bought every dip without caring about the news, runs in reverse. Call it the relentless ask.

It’s a reasonable theory, but I believe it’s mostly wrong, at least as the reason this bull market ends.

Start with where the money sits. The top 10% of households own about 87% of all stocks. Wealth that concentrated doesn’t get spent down in retirement. It gets bequeathed. A retiree worth eight figures sells a sliver to fund their lifestyle and leaves the rest to compound, because they can’t spend it and don’t need to.

Then there’s longevity, which I believe is an important factor in determining the future of our economy. For a 65-year-old couple today, there’s a 64% chance at least one of them sees their 90s. Retirement now runs 30 years or more. You can’t fund three decades of inflation out of bonds, so Boomers have to keep owning stocks, and most of them will.

And someone is standing on the other side of the trade. There are roughly 73 million Millennials, a slightly larger cohort than the (living) Boomers, hitting their prime earning and saving years right as the Boomers start drawing down their savings. The single largest age group in America is now 33 to 37. They invest earlier and in greater numbers than Boomers did at the same age. The buyers are already here.

One more thing. Demographics are the most forecastable data in all of finance. We’ve known the Boomer cliff was coming for 50 years, and so does the market. Slow, telegraphed, decades-long tides don’t end bull markets. Surprises do.

Which is where the real risk lives, in my opinion. Brown’s word was relentless, not endless. He warned the bid “will suck in the maximum amount of people taking the largest amount of risk just at the point where it will come to an ignominious end.”

I believe the major risk to the equity markets sits somewhere other than a gentle 30-year drawdown.

It’s true that the automatic, price-agnostic flows that smoothed the bull market on the way up could prove just as automatic and just as price-agnostic on the way down, in a market where a handful of names seem to carry the whole thing. That’s the relentless bid’s dark twin, but that’s a forseeable risk and only part of the story.

So does the bull market end with the Boomers? I don’t think so. I think that it ends the way bull markets always end, when corporate earnings growth slows and valuations are stretched and not reflective of that slowdown.

Leaving arguments regarding passive versus active management aside, I believe that fundamentals matter more then flows, even generational ones.

Sources: Federal Reserve, Distributional Financial Accounts (net worth by generation); Ben Carlson, “What Happens to the Stock Market When Baby Boomers Sell?” and “Rich Old People”, A Wealth of Common Sense; Josh Brown, “The Relentless Bid, Explained” and “The Trouble with Relentless Bid Theories”, The Reformed Broker.

🚙 Interesting Drive-By’s 🚙

🤔 The Death of the Summer Job - Larissa Phillips argues the vanishing teen summer job quietly took the grit and competence that busing tables built better than any trip to Europe.

🚀 SpaceX is building a planetary starter kit - Kevin Gee concedes SpaceX’s ~$2.1tn post-IPO cap is “wildly overvalued” by any standard method, then makes the possibility case (not the price case) for a vertically integrated machine whose loops only compound on one balance sheet, which leaves the whole thesis resting on Elon staying the single “integrating core.”

🚀 Tech should live in places that love technology - Adam Singer reads Starbase’s 212-to-6 incorporation vote (97% of an electorate that’s almost entirely SpaceX employees) as proof that atoms-innovation now clusters wherever governance gets out of the way, a clean Silicon Industrials data point whose unspoken risk is that a company town this concentrated is also a single point of failure tethered to one founder and one mission.

🤔 It Is an Active Decision to Go Passive in Equities - JPMorgan AM warns the top 10 names now run ~40% of the S&P 500 (61% of the Russell 1000 Growth), so buying the index is itself an undiversified active bet that yesterday’s winners keep winning, with the firm’s own large-cap forecast at 6.7% a year over the next decade, less than half the last.

📉 xAIr Supply - Michael Green makes the case that the AI bubble is really a financing problem: AI is turning capital-light monopolies into capital-intensive infrastructure firms, so the passive bid that quietly absorbed a decade of buybacks may now have to swallow a wave of equity issuance instead, right as the S&P declined to bend its rules to fast-track SpaceX into the index.

🧠 Good News: Your Brain Isn’t Retiring Anytime Soon - Chip Conley reframes aging as a function of engagement rather than odometer reading, arguing that learning Spanish at 67 or starting a business at 58 is brain maintenance because novelty keeps the wiring elastic.

👋🏼 Parting Thought

Make the most of the longest day.

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the Internet.

🎶 Vibin’

Well, the SpaceX IPO finally happened this week...

I feel like this is a seminal moment in the history of capital markets, the ramifications of which have yet to be revealed to us. But they will eventually, and I believe they will be significant.

For no particular reason (h/t Forest Gump), this week I’m vibin’ to The Joker by the Steve Miller Band from 1973. The “space cowboy” line has been stuck in my head for days.

💭 Quote of the Week‌

📈 Chart of the Week

The Quiet in the Index Is the Real Risk

This week’s Chart contains a one-line caption: Worry about individual stocks is at an all-time high. I think the caption has the story backwards.

The line in the Chart shows the spread between two fear gauges.

The VIX measures how nervous traders are about the whole market, the S&P 500, over the next month. Think of it as the price of insurance on the index.

The VIXEQ does the same thing for individual stocks and averages them weighted by market cap. Subtract one from the other and you get how much more it costs to insure a single name than the index. That gap just hit about 30, the widest in more than a decade, up from a long-run norm closer to 10.

Apollo’s Chief Economist, Torsten Slok, sees that as fear of individual companies. I mostly see it as plumbing.

Implied volatility is a major determinant of how options are priced. And prices come from supply and demand, not feelings. Two different things are happening in two different options markets, in my view.

On single stocks, there’s a flood of buying. Retail traders piling into call options on Nvidia and other tech names before earnings. Same-day options on whatever name is hot that week. Dealers forced to buy stocks on the calls they’ve written in order to keep their hedges flat.

All that demand bids up the price of single-stock options, and that shows up as high implied volatility. Some of it is worry. A lot of it is gambling.

On the index, the opposite is happening. There’s now a giant business built around selling index options for income. Covered-call ETFs, buffer products, pensions writing calls every month. All that selling pushes the price of index insurance down, and that shows up as a muted VIX.

In my opinion, the spread is so wide because one market is being bought hard and the other is being sold hard. Worry is part of it, yes. The mechanics of the options market could be most of it.

Now the part that actually matters for investors. The risk worth watching sits on the calm side of the ledger. A VIX at 15 in a market this concentrated, where a handful of stocks carry the whole thing, is not the same animal as a 15 in a broad and participative market. The steady option selling that holds the VIX down works right up until it doesn’t.

That spread will narrow at some point, perhaps significantly. It always has. There are two ways it can get there. Single-stock vol could fall, but I doubt it, because the options-market shifts driving it look structural rather than temporary.

Or... Index vol rises to meet it. That’s the path I’d bet on, and the trigger could be almost anything that wakes the index up from a risk perspective: a crack in one of the megacaps, a rate or inflation scare (or both), a credit event nobody sees coming.

A muted VIX is a sign of confidence, but when that remains the case for too long, confidence becomes complacency. The quiet you see in the volatility of the index is the thing most worthy of worry.

Sources: Apollo Chief Economist (Torsten Slok), “Worry about individual stocks is at an all-time high” (data via Bloomberg, Macrobond); Mandy Xu, Earnings Angst Drives VIXEQ-VIX Index Spread to Record High, Cboe, Oct. 13, 2025; There’s a record disconnect unfolding in the trading pits right now, CNBC, May 29, 2026

🚙 Interesting Drive-By’s 🚙

📉 The Lowest Consumer Sentiment EVER - Ben Carlson on a head-scratcher: sentiment just hit its lowest in the survey’s 75 years, below the GFC and Covid, even with stocks near highs and unemployment at 4.3%.

🤔 If You Can’t Get a Job Today, It’s Your Fault - Auren Hoffman argues the entry-level market isn’t soft (4.3% unemployment, junior hiring up 8.7% at big firms) but mismatched, and what gets you hired now is something you built, not the college brand.

🚀 It’s Hardware’s Turn to Eat the World - Stephen McBride coins “Silicon Industrials,” firms like Tesla, SpaceX, and Anduril that bolt a software brain onto real machines to claim the $93 trillion physical economy that software never touched.

🤔 The AI Boom vs. the Dot-Com Boom - A clear-eyed look at what broke the 2000 bubble and where AI rhymes.

🤔 Quantum Computing: Hype or the Real Deal? - Michael Lebowitz cuts past the 13,000x-faster Willow headlines to the number that governs the timeline: it still takes 1,000 to 10,000 physical qubits to make one reliable one, so a useful machine sits a decade out.

🤔 Venture Capital’s Fourth Turning - Kyle Harrison lands on the number every LP should be staring at: $3.2 trillion of unrealized value trapped in private markets with exits nowhere in sight, which is why 72% of LPs are already cutting allocations.

👋🏼 Parting Thought

Today we celebrate the 249th birthday of our American Flag. 🇺🇸

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

Share The Sunday Drive by Mike Allison