👋🏼 Hello friends. To quote a line from the 1986 movie, Ferris Bueller’s Day Off, “Life comes at you pretty fast.”

Earlier in the evening on Saturday, this week’s edition of the Sunday Drive was complete and scheduled to go out at the usual 8am Sunday morning delivery time.

Then the happenings at the White House Correspondent’s Dinner occurred.

There will be a lot of information and discussion on this matter in the coming days, and I don’t have anything substantive to offer at the moment.

I ask that you understand that this week’s edition of the Sunday Drive was written prior to the events of Saturday night. There’ll be a time to reflect and comment, but I hope you’ll read this edition of the Sunday Drive with that in mind.

🎶 Vibin'

After all the geo-political headline driven market turmoil of the last couple of months, financial markets seem to have recently found the fortitude to look past the news and focus on corporate earnings.

Thus far, Q1 earnings season has been quite solid. The coming week will see a number of mega-tech companies report their results, and the market appears to be anticipating continued strength from that group’s earnings as well.

So with some sense of relief (for now), this week I’m vibin’ to The Rolling Stones’ 1980 hit, Emotional Rescue. Enjoy.

💭  Quote of the Week‌

📈  Chart of the Week

The 99.7% Discount: AI, Aging, and the Reinvention of Work

Take a long look at this week’s Chart.

In 2005, launching even a modest business required $40,000 or more in upfront costs: legal documents, a website, marketing strategy, business plan, logo, financial model. Today, the same toolkit costs roughly $100. That’s a 99.7% drop in twenty years, with most of the collapse occurring in the last 36 months.

If you’re not a small business owner, you might shrug at this. You shouldn’t. Because the chart isn’t really about startups — it’s about the option value of leaving the system, and who is finally able to exercise that option.

The conventional story about AI and work is that it’s coming for the young. The recent college graduate, the entry-level analyst, the junior associate, those are the jobs that get hollowed out first.

There’s truth to that, and the implication is worth flagging: the traditional apprenticeship ladder is being compressed at the bottom. Where do you learn the craft if AI is doing the entry-level work? I don’t think anyone has a good answer yet.

But there’s a less-told story that’s quietly perhaps more important, and it shows up in the data.

According to Peter Diamandis, the mean age of founders behind the top 0.1% fastest-growing companies in America is 45, not 25. Americans aged 55 to 64 are one of the fastest-growing segments of new entrepreneurs, and the 70-to-80 cohort has shown the steepest acceleration since 2020.

From November 2025 through January of this year, Americans filed 1.56 million new business applications — the highest three-month total since the government began tracking the data in 2004.

That’s not a tech-bro story. That’s a demographic story.

Here’s why it matters.

For decades, the implicit deal in white-collar work was: trade your twenties and thirties for skill, your forties and fifties for compensation, and exit through a retirement door that, increasingly, nobody can comfortably walk through.

Longer life expectancies, gutted defined benefit plans, and equity markets that don’t always cooperate have made the traditional glide path more aspirational than actual.

What AI changes is the exit ramp.

Brian Clark, writing at Further, frames the shift cleanly: the most valuable workers in the AI economy are no longer “knowledge workers”, they’re outcome producers. Information is now essentially free.

What AI can’t do is own the result. It can analyze your client’s marketing problem; it can’t be held accountable for solving it. It can draft the strategy; it can’t guarantee the implementation. That accountability, backed by judgment, pattern recognition, and a network built over decades, is precisely what older professionals already have. AI is demolishing the team-of-fifteen that used to be required to translate that judgment into deliverables.

The people best positioned to thrive in the AI economy may not be the digital natives. They may be the analog veterans with AI as a force multiplier.

I’ll admit my bias here. I retired after a 22-year career at Eaton Vance at the end of 2021 and launched New Lantern Capital the following year. Shortly after that, I joined forces with Investment Research Partners, another young entrepreneurial venture and a group of kindred spirits. This week’s Chart isn’t an abstraction to us, it represents a tailwind we’re currently riding.

The economic and investing implications could be very interesting. We’re entering a period where the labor market bifurcates more sharply: the top of the experience curve and the bottom of the cost curve both win. The middle, mid-career knowledge workers who don’t own outcomes and aren’t senior enough to direct them, gets squeezed. And if a meaningful share of 55-to-75-year-olds opts into entrepreneurship rather than retirement, the second-order effects on consumer spending, healthcare demand, real estate, and Social Security claiming behavior are all non-trivial. Speculative, but certainly worth watching.

The Takeaway: The chart at the top isn’t a story about software costs. It’s a story about agency. For the first time in modern economic history, the optimal time to start a business may not be at 25 — it may be at 55, or 65, or 70. The barriers haven’t just fallen; they’ve inverted. Experience used to be expensive to monetize without a firm behind you. Now it’s the most leverageable asset you own.

If you’ve spent thirty-five years accumulating expertise and you’re wondering what’s next, the data is telling you something. You owe it yourself to listen.

Sources: Peter Diamandis, “Can Anyone Become an Entrepreneur?” (Metatrends, 04/23/2026); Brian Clark, “From Knowledge Worker to Outcome Producer in the Age of AI” (Further, 04/21/2026).

🚙 Interesting Drive-By's 🚙

🤔 Has Private Equity Become a Ponzi Scheme?

💡 From Knowledge Worker to Outcome Producer in the Age of AI

⁉️ Will Private Credit Cause the Next “Great Financial Crisis"?

👀 Playing God: How Scientists Are Reengineering the Genetic Code of Life

💸 The Incoming Fed Chairman Thinks Deflation Is A Major Risk

👋🏼 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

Share The Sunday Drive by Mike Allison

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

🎶 Vibin'

This past week, equity markets continued to recover from the March lows amid the seemingly improved situation in the Middle East (subject to change at any moment, of course).

So I thought an upbeat bouncy tune would be the right vibe for this week. I believe that The Heart of Rock & Roll by Huey Lewis & The News fits the bill quite nicely. I hope you’ll agree.

💭  Quote of the Week‌

📈  Charts of the Week

Similar Setup, Very Different Story

The S&P 500 is back at all-time highs. You’d be forgiven for assuming nothing has changed. But look at this week’s two Charts above and you’ll see something worth paying attention to: price is essentially where it was, but the forward P/E is not.

That gap is the whole story this week.

The first Chart tells it visually. It shows the S&P 500 and forward Price/Earnings ratio, both indexed to 100 for comparability. The S&P 500 peaked on January 27th, 2026. The forward P/E peaked even earlier, back on October 28th, 2025. Today, the market is at an all time high. But the forward P/E? It’s roughly 10% below the October peak. The market has recovered its price losses, but it has not recovered its valuation losses. That’s not a contradiction. It might actually be the most important sentence in this week’s piece.

The math is simple: if price is flat-to-up but the P/E multiple is down, earnings estimates must have moved higher. And they have, significantly.

Heading into Q4 2025, the forward 12-month P/E stood at 22x, above both the 5-year average of 20x and the 10-year average of 19x. Today, it sits at 19.5x, roughly splitting the difference. That’s a meaningful compression in the multiple, driven almost entirely by rising earnings expectations.

Where are those estimate revisions coming from?

Most of the upward revisions has been concentrated in two sectors: Information Technology and Energy. IT has seen the largest dollar-level increase in earnings of all eleven sectors since December 31st, with Energy a close second. Within technology, the move has been sharp, driven largely by semiconductor names like Micron and Oracle, whose AI-related earnings revisions have been nothing short of extraordinary. The semiconductor buildout underpinning AI infrastructure doesn’t seem to be slowing down, and the earnings estimates are reflecting that reality.

For Q1 2026, Information Technology is projected to report earnings growth of +45.0% year-over-year, with Materials at +24.2% and Financials at +15.1%. Those are not small numbers.

The laggard? Health Care. The sector is expected to report earnings decline of -9.8% in Q1 2026, though the bulk of that drag traces back to a Merck one-time acquisition charge — ex-Merck, the sector’s growth rate would be closer to +2.8%. Energy has been the wild card, whipsawing on geopolitical developments and oil price volatility.

Here’s the comparison that really matters.

When the S&P 500 recovered to all-time highs in late June 2025, following the spring’s tariff-driven selloff, the forward P/E sat at approximately 22.5x. The April 8th, 2025 low had carried a forward P/E of 18.0x, meaning the entire recovery was accompanied by a dramatic 24% expansion in the market’s earnings multiple.

This time around, the script is different. The market has recovered on earnings growth. That should, or at least could, prove to be a more durable foundation.

The asterisk is that forward estimates are exactly that: forward. Analysts are currently calling for full-year 2026 S&P 500 earnings growth of 17.4%. That’s an ambitious number in an environment where tariffs, geopolitical uncertainty, and slowing consumer demand could all have an impact. Guidance this earnings season — not the Q1 headline numbers — will tell us whether those estimates are grounded in reality or still anchored to a world that no longer exists.

The Takeaway: The market’s return to all-time highs is being powered by earnings revisions, not multiple expansion. Compared to the June 2025 recovery, today’s valuation setup is meaningfully more attractive, but the quality of those forward estimates is now the central question. Watch what companies say about the next six months. That’s where the real data lives.

Sources: FactSet Earnings Insight | RBC Wealth Management | Investing.com | IG International

🚙 Interesting Drive-By's 🚙

🤔 The Organizational Singularity Is Here

💡 The Trillion-Dollar Perception Gap Between Silicon Valley and Normal People

👀 Collab Holdings - A different approach to private equity

😳 Intelligence Goes Physical

😡 AI Will Be Met With Violence, and Nothing Good Will Come of It

👋🏼 Parting Thought

2026 has been a tough year for guys named Claude.

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

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Time for another Sunday Drive around the internet.

Before we start, I want to address an omission from the 208th edition published two weeks ago. The March 29th edition marked the 4 year anniversary of the Sunday Drive. I am grateful to all of you who have come along on this journey with me. Let’s keep going…together.

🎶 Vibin'

This week’s vibe has a double meaning.

Next month, my whole family will be reunited once again in Saratoga Springs, NY. After nearly two years away, the daughter-bear is moving back home and we couldn’t be more excited.

Also, this past week, the entire team at Investment Research Partners gathered in Charleston, SC for our semi-annual get-together, days filled with business updates, strategy sessions, good food and team building. Being a largely remote organization, these events are especially meaningful and rewarding. Our team has now grown to 12 but we are a tight-knit group and feeling more and more like a family as time goes by.

So this week, I’m vibin’ to the classic 1979 hit from Sister Sledge, We Are Family. Enjoy.

💭  Quote of the Week‌

📈  Chart of the Week

The Dow’s Hall of Fame Problem

I found this week’s Chart to be not just interesting, but also borderline comical.

Since August 2020, Exxon Mobil, unceremoniously dumped from the Dow Jones Industrial Average after 92 consecutive years as a member, has returned roughly +271%. Salesforce, the company brought in to replace it, is down approximately -32%. That’s a gap of more than 300%, and it’s not a fluke. It’s a pattern.

The Dow committee removed Exxon at the worst possible moment: the COVID oil crash, with shares near $42, at peak pessimism about the future of fossil fuels. They added Salesforce at peak euphoria — a software darling trading at roughly 110x earnings. The committee was, in effect, selling the unloved and buying the beloved. Classic buy high, sell low.

And they’ve done it again. In November 2024, Intel, down 54% on the year and the Dow’s worst performer, was shown the door and replaced by Nvidia, which had just completed back-to-back years of gains of 240% and 170%. Returns since? Intel +40%, Nvidia +26%. The script is writing itself.

This isn’t just anecdotal. Arora, Capp, and Smith (2005) studied all Dow changes from 1929 through 2006 and found that in 32 of 50 cases, the deleted stock outperformed its replacement, with removed stocks averaging annualized returns of 15.9% versus 11.5% for additions over the following year.

Rob Arnott at Research Affiliates documented an even starker version of this in the S&P 500: additions entered at valuation premiums averaging over four times those of the stocks they replaced. He was so convinced by the data that he launched an ETF in 2024 specifically designed to buy index deletions and hold them for five years.

The structural reason is simple. The Dow uses purely subjective criteria: “reputation, sustained growth, and interest to a large number of investors.” Translation: companies get added when their cultural moment peaks. By the time a business is iconic enough for the Dow, its best growth is usually behind it. Walgreens, added June 2018, lost 63% in 2024 alone before being taken private. AIG, added in 2004, needed a $182 billion government bailout four years later. Microsoft and Intel, both added November 1, 1999, at the peak of the dot-com bubble, spent the better part of a decade underwater from their inclusion prices.

To be clear, not every deletion is a buy. Kodak, Sears, and Bethlehem Steel were all removed before going bankrupt. The signal is strongest when the removal reflects cyclical distress rather than secular decline: Exxon during COVID, GE during restructuring, Intel after missing the AI cycle. Those are the ones where the committee is extrapolating a bad trend at precisely the moment it could be about to reverse.

The Dow has a hall of fame problem: it inducts companies after they’ve already won. That’s great for plaques. It can be terrible for returns.

Source: StockCharts.com | ZeroHedge

🚙 Interesting Drive-By's 🚙

🤔 The Age of AI May Be the Best Argument Yet for the Liberal Arts

💡 70 Is the New 53 — And Voiceover Might Be the Real Fountain of Youth

👀 AI Is Already Showing Up in the Hard Data

💣 The Hole - Private credit is the fuse. The bomb is underneath the life insurance industry

😡 Why Does Everyone Hate AI? Luddites, Maslow’s Hierarchy, and a PR Crisis

👋🏼 Parting Thought

H/T to the Dragon Slayer…

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

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy an Easter Sunday Drive around the internet.

Before we get started, I’d like to share a professional update.

Shortly after my retirement from Eaton Vance a little over four years ago, I launched the New Lantern Hedged Equity Fund, a privately offered fund available only to accredited investors. The fund is an equity-based alternative to fixed income allocations or equity allocations in need of de-risking.

I’m happy to announce that this past week, the fund celebrated its three year anniversary, an important milestone in the life of any investment vehicle. If you’re interested in learning more about the fund’s strategy and performance, HERE is our most recent video.

I’m also excited to tell you that later this year, we plan to offer the strategy to a broader audience with the launch of our own ETF. More to come…

Now let’s start driving.

🎶 Vibin'

With all the goings on around the world, particularly in the Middle East, and the daily (hourly?) shifts in associated narratives, this week I’m vibin’ to Sheryl Crow’s Everyday is a Winding Road. Hang in there…

💭  Quote of the Week‌

📈  Chart of the Week

The Tide That Moves Everything

I found this week’s Chart very thought provoking. It tracks the Global Liquidity Cycle for advanced economies going back to 1965. Sixty years of data. The pattern is interesting and shows a near-rhythmic 65-month wave, roughly 5 1/2 years from trough to trough, pulsing through markets like a heartbeat.

Understanding this cycle, I’d argue, is one of the most underappreciated edges that long-term investors can have.

Here’s the core idea: global liquidity: the aggregate availability of money and credit across central banks, commercial banks, and cross-border capital flows, doesn’t move randomly. It oscillates. And those oscillations have historically lined up remarkably well with the broad rhythm of risk asset performance.

When liquidity expands, financial assets generally flourish. When it contracts, not so much.

Think of it like the tide. You can have a beautiful beach, perfect weather, and a great boat, but if the tide is going out, you’re going to have a harder time than you expected.

Which brings me to where we are right now.

As the Chart shows, the current cycle likely peaked somewhere in Q4 2025 or early 2026. The absolute level of global liquidity remains enormous, some estimates put it near $188 trillion. But what matters most to markets is the rate of change, not the level. And the momentum is fading.

Several forces are converging. The Fed has ended quantitative tightening, but the ECB, Bank of England, and Bank of Japan are still shrinking their balance sheets. China’s PBOC has been injecting stimulus, providing a partial offset, but the net effect across advanced economies is a decelerating liquidity environment. Layered on top of that: trillions in global debt requiring refinancing over 2026–2028, rising bond market volatility, and recently a firmer dollar, all of which tend to tighten financial conditions.

None of this means a crash is imminent. Liquidity cycles create headwinds, not cliffs. But it does argue for a more selective, risk-aware posture, particularly for portfolios that were positioned for the tailwind of an expanding cycle.

For investors approaching or already in retirement, this matters enormously. The sequence of returns risk that threatens retirement portfolios is often amplified at exactly these inflection points in the liquidity cycle.

The tide is going out. That doesn’t mean you can’t swim — it just means you need to know where the rocks are.

Source: CrossBorder Capital.

🚙 Interesting Drive-By's 🚙

🤔 Financialization Has Corrupted the Financial Industry

💡 Viktor is an AI Co-Worker For Your Entire Team

👀 How Japan Has Changed Over the Last 20 Years

💥 Ending the Quarter With a Bang

💰 Kevin Warsh and a New Monetary Policy Regime

👋🏼 Parting Thought

Happy Easter ✝️

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

Share The Sunday Drive by Mike Allison

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

🎶 Vibin'

Markets are trying to process and price the uncertainties coming from the current conflict with Iran, in particular the knock-on effects of an extended closure of the Strait of Hormuz. What happens in that particular piece of geography over the coming weeks and months is a major pressure point for the global economy.

With that in mind, this week I’m vibin’ to the 1982 collaboration of Queen and David Bowie, Under Pressure, because that’s how investors, policy makers, and pretty much everyone are likely feeling these last few weeks.

💭  Quote of the Week‌

📈  Chart of the Week

Down But Not (Washed) Out

The S&P 500 closed last week at yet another year-to-date low, extending what is now its longest weekly losing streak since the 2022 bear market. If your social media feed and the financial headlines are any indication, you’d be forgiven for thinking the market is crashing.

But here’s the thing: the data isn’t confirming the panic, and to me, that’s actually the bearish part of the story this week’s Chart is telling us.

The Chart tracks NYSE New Highs minus New Lows, plotted beneath the S&P 500 going back 10 years. There’ve been four prior episodes where this breadth indicator crashed to deeply negative readings: the COVID collapse, the 2022 rate shock bear market, the 2023 growth scare, and the 2025 correction. Each of those red spikes downward corresponded with genuine, capitulation-level selling, the kind of indiscriminate, get-me-out-at-any-price washout that, historically, sets up powerful recoveries.

The S&P 500 is down 7% year-to-date.

Now look at the circled reading on the far right of the Chart. That’s where we are today: +11.

Not deeply negative. Not a washout. Not capitulation.

The distinction matters enormously. Feeling oversold and being oversold are two very different things. The market can absolutely bounce from here, and may well do so. But in my opinion, the breadth evidence is not yet consistent with a durable bottom. Prior lows that stuck were accompanied by breadth readings that looked far worse than what we’re seeing now. We haven’t seen that kind of broad-based, indiscriminate selling yet.

There’s more. Return dispersion across S&P 500 stocks has surged to more than 5 standard deviations above its long-term average, a level only seen during the Dot-Com crash, the Global Financial Crisis, and the COVID reopening. That kind of internal fragmentation is more characteristic of a market still searching for its footing than one that has found it.

Meanwhile, the Equal Weight S&P 500 and the Russell 2000 are barely clinging to their 200-day moving averages, while the S&P 500 and the Nasdaq have already slipped below theirs. The divergence between cap-weighted and equal-weighted indices is telling us something: this isn’t just a big-cap problem, but large caps are making it look worse than the average stock experience.

The macro backdrop isn’t helping. Volatility is elevated, though not extremely so, across all major asset classes simultaneously: equities, bonds, currencies, commodities. That kind of cross-asset volatility is unusual and typically signals that investors are repositioning broadly, not just rotating within equities.

The Takeaway: Sentiment is bearish. The headlines are scary. The losses are real. But the breadth data is telling us that the market hasn’t yet experienced the kind of panic-driven washout that typically marks a durable low. That doesn’t mean we can’t rally from here; markets do what they want. It means that investors looking for an “all clear” signal should probably wait for the data to confirm what the headlines are already screaming.

As I’ve said before, when you least expect it, expect it. The market has a way of delivering the most pain to the most people. Right now, it feels like many investors are positioned for a quick recovery. That alone gives me pause.

Patience, not panic. But not complacency either.

Source: YCharts | The Chart Report | Ned Davis Research

🚙 Interesting Drive-By's 🚙

💰 How America Quietly Got Rich

🤔 Life is Not a Journey

💡 Bicycles for the Mind

👀 The Liquidity Illusion is Cracking

🎯 AI’s Early Gift to Consumers

👋🏼 Parting Thought

Umm… Tiger, it might be time to let someone else do the driving from now on.

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

Share The Sunday Drive by Mike Allison

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

🎶 Vibin'

There’s certainly a lot of turmoil in the world these days, especially in the Middle East. It’s a confusing time, but I find it helpful to hold to my conviction that, in the end, faith and optimism always carry the day.

So this week, I’m vibin’ to Toto’s classic hit, Hold The Line.

💭  Quote of the Week‌

📈  Chart of the Week

Why Fertilizer Could Be the Real Inflation Story

This week’s Chart tells a familiar story: energy prices are surging. Heating oil up 107%. Brent crude up 56%. WTI crude up 44%. The boxes drawn around those numbers tell you what the market is focused on. But there may be a far more consequential story hiding just below the surface.

The closure of the Strait of Hormuz, now entering its fourth week following U.S.-Israeli strikes on Iran, isn’t just an oil shock. It’s a fertilizer shock. The agricultural reckoning that follows could potentially dwarf the energy price spike in both duration and breadth.

Nearly 50% of global urea exports originate from countries west of the Strait and transit through that critical waterway. Urea is the world’s most widely used solid fertilizer, the input that makes large-scale corn, wheat, and soybean production economically viable. Prices for urea have already surged more than 30% since the war began, and at least 21 ships carrying nearly a million metric tons of fertilizer cargo are physically stranded in the Gulf.

The timing couldn’t be worse. This disruption falls in the middle of spring planting season, which generally runs from mid-February to early May in the Northern Hemisphere. Even if the Strait reopens soon, restarting production and transport for fertilizers could take weeks, weeks that Northern Hemisphere farmers simply do not have.

What does this mean for grocery bills? More than many realize. Higher fertilizer costs squeeze grain yields, and grain is the feedstock for virtually all livestock. Cattle, hog, and poultry producers are all downstream consumers of corn and soybeans. The Chart shows live cattle up 14% and lean hogs up 8.6% over the past year, and those figures predate the full fertilizer crunch working its way through the supply chain. Chicken, not shown in the chart, faces similar pressure.

Oxford Economics has already raised its Q2 2026 fertilizer price forecast by roughly 20%, with risks “skewed to the upside.” Energy costs represent approximately half the total retail food bill, meaning the inflationary impulse from this shock is broad-based and persistent, not a one-month blip in the CPI.

The energy commodities in the Chart are attention-grabbing. But I’m watching the agricultural commodities. The second-order effects of a fertilizer shortage are slower, stickier, and harder to reverse. I believe that’s the inflation story for the next 12-18 months, and I don’t think that it’s been fully priced in yet.

Sources: Center for Strategic & International Studies, The Fertilizer Institute

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💰 Want to Open a Trump Account (and Get $1,000) for Your Child?

🤔 Artificial Intelligence Faces a Fertility Test

💡 Will AI Kill Spreadsheets?

👀 AI Job Loss Tracker

🤷🏼‍♂️ What the Heck Is a Zero-Employee Business?

👋🏼 Parting Thought

Yesterday was “Agony of Defeat Guy” Day.

56 years ago, on March 21, 1970, a 22-year old Slovenian ski jumper Vinko Bogataj took the iconic spill at the World Ski Jumping Championships in West Germany and it was forever memorialized in the intro to ABC’s Wild World of Sports.

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

Share The Sunday Drive by Mike Allison

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

🎶 Vibin'

St. Patrick’s Day is right around the corner. To honor my wife’s heritage as well as my good friend, MW, who is an American, but also an Irish citizen, this week I’m vibin’ to The Irish Tenors’ version of When Irish Eyes Are Smiling. ☘️

💭  Quote of the Week‌

📈  Chart of the Week

When the Bond Market Gets Nervous

Every once in a while the bond market clears its throat. When it does, equity investors should at least look up from their screens.

This week’s Chart shows the $MOVE Index, often referred to as the bond market’s equivalent of the VIX. It measures implied volatility in U.S. Treasury options, essentially how uncertain investors are about the future path of interest rates. After spending much of mid-2025 in a relatively calm range, the index has surged to roughly 95, marking new nine-month highs.

That’s not a trivial move.

The Treasury market sits at the center of the global financial system. Every discounted cash-flow model, every mortgage rate, every corporate borrowing cost ultimately traces back to the Treasury curve. When volatility in that market rises, it usually means investors are suddenly less confident about where interest rates are headed.

And when the discount rate becomes unstable, risk assets tend to get wobbly.

Historically, spikes in the MOVE Index have often preceded turbulence in risk assets. The logic is straightforward: equity valuations depend heavily on the assumed path of interest rates. When bond traders begin aggressively repricing that path, a stock market narrative built on stable discount rates can unravel quickly.

On the other hand…

Bond volatility does not automatically mean equities are in trouble. In fact, there are plenty of episodes where the MOVE spikes while stocks remain surprisingly resilient. The bond market is often reacting to macro uncertainty that may not immediately translate into weaker corporate earnings.

In other words, the bond market can be nervous without the economy actually breaking.

What did catch my attention in the Chart, however, is the trend. The MOVE didn’t jump from calm to chaos overnight. It bottomed near the mid-50s earlier in the year and has been grinding higher for weeks before this latest breakout. That kind of slow-building rise in volatility suggests a deeper disagreement forming about the future path of policy rates.

In my experience, persistent uncertainty tends to matter more than single-day spikes.

There’s also a structural factor worth considering. Over the past two years the Treasury market has been absorbing an enormous amount of new supply while the Federal Reserve has stepped back as a marginal buyer. That shift alone can create more volatility in rates, even if the underlying economy remains stable.

So what should stock investors do with all this?

Probably not panic.

But it is a reminder that the calm backdrop for interest rates that supported equity valuations through much of 2025 may be fading. When bond volatility rises, the market’s margin for error shrinks, particularly for long-duration assets where valuations depend heavily on future cash flows.

Think mega-cap growth stocks, speculative tech and healthcare, and anything trading on distant earnings expectations.

The bond market hasn’t necessarily sounded an alarm yet.

But it has definitely raised an eyebrow.

And when the largest and deepest market in the world starts getting uneasy, it’s usually worth paying attention.

🚙 Interesting Drive-By's 🚙

💯 Being Human Is Cool Again

🤔 Older Americans Power a Gray-Shaped Economy

💡 AI For Boring Businesses

🎯 America Built a Workforce That Never Exits

🤷🏼‍♂️ Something Feels Weird About This Economy

👋🏼 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

Share The Sunday Drive by Mike Allison

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

🎶 Vibin'

Given the tensions around the world, and in particular the Middle East, I thought it might be nice to vibe to something that reminds us that love conquers all.

H/T to my daughter for surfacing On My Soul, just released a few days ago by Bruno Mars. I hope you enjoy it because you’ll likely hear it played at every wedding you attend for the next 20 years.

💭  Quote of the Week‌

📈  Charts of the Week

History Doesn’t Repeat, But It Rhymes

As I write this week, I fully acknowledge that the situation in the Middle East is very fluid and the shelf life of this piece could be very short. However, given the importance of current events, I thought it was still worth discussing.

This week’s Charts tell a story that feels eerily familiar, and yet fundamentally different.

The first Chart shows ship traffic through the Strait of Hormuz, one of the most important energy arteries on the planet. In February 2026, daily transits ranged between roughly 100 and 123 large vessels. By the first week of March, that number collapsed to just four or five ships per day, effectively a shutdown.

That’s not a disruption. That’s a chokepoint going dark.

If the Strait remains closed for an extended period of time, the economic implications are obvious. Roughly a third of globally traded crude exports originate from producers that rely on the Strait, including Saudi Arabia, Iraq, Kuwait, and the United Arab Emirates. Meanwhile, Qatar sends about one-fifth of global LNG exports through the same corridor. When that artery tightens, energy prices move fast. Crude prices have already surged, and refined fuels: diesel, jet fuel, and LNG have jumped even faster.

For investors with a sense of economic history, the parallels with the 1973 Oil Embargo and the 1979 Oil Crisis are obvious. Those events triggered the stagflationary spiral that defined the decade: rising energy costs, falling real incomes, and central banks trapped between inflation and recession.

But the second Chart highlights a crucial difference between then and now.

Since 1990, the energy intensity of global GDP, the amount of energy required to produce a dollar of output, has fallen dramatically. Oil intensity alone has dropped by roughly half, while coal and natural gas show similar long-term declines. Decades of technological progress, efficiency improvements, and the shift toward service-based economies have fundamentally changed the relationship between energy consumption and economic growth.

In the 1970s, oil wasn’t just transportation fuel, it was embedded everywhere: industry, heating, electricity, chemicals, and manufacturing. When supply collapsed, economic output collapsed with it.

Today, the system has more resilience. Electric vehicles, more efficient aircraft, improved building standards, and digital services all reduce the oil-to-GDP link. That doesn’t mean an energy shock wouldn’t hurt. It simply means the direct economic damage is smaller than it once would have been.

The real risk, as always, lies somewhere else.

Repeated shocks: the pandemic, war-driven energy disruptions, supply chain fragmentation, and now geopolitical conflict all begin to change expectations. When households and businesses start assuming that inflation will remain high, behavior changes. Wages adjust, but not usually enough. Pricing adjusts. Policy becomes harder.

That’s the real ghost of the 1970s.

Not the oil itself, but the psychology that followed.

Sources: Energy Institute Statistical Review of World Energy; Lloyd’s List/Seasearcher

🚙 Interesting Drive-By's 🚙

🤔 The Doorman Fallacy

💯 Superschools For Every Kid

🎯 Dr. Tokens or: How I Learned to Stop Worrying and Love the AI Bubble

💡 Power in the Age of Intelligence

🚀 Why Are Startups Growing Faster Than Ever Before?

📈 The Rise of Hyper-Creators

👋🏼 Parting Thought

Does anyone else feel like the world is being held together these days with duct tape and chewing gum?

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

Share The Sunday Drive by Mike Allison

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

🎶 Vibin'

Many of us “of a certain age” grew up in a world where there was a fairly well defined path. Get a good education. Find a good firm to be a part of, and contribute to. Build a career.

But these days, there seems to be much to worry about in terms of what many professional paths might look like in the future, much that doesn’t seem logical or sensible or predictable.

So this week, I’m vibin’ to Supertramp’s classic, The Logical Song.

💭  Quote of the Week‌

📈  Chart of the Week

On Second Thought…

For decades, venture capital operated on a simple exit playbook: build, scale, and eventually distribute gains through an IPO or strategic sale. This week’s Chart shows that exits have become “a third, a third, a surprising third”. The playbook seems to have been quietly rewritten. Secondary transactions, just 3% of exits a decade ago, now rival IPOs and M&A as a core liquidity channel.

At its core, a secondary transaction is simply the transfer of existing ownership. No new capital reaches the company. Instead, liquidity flows to founders, employees, early investors, or limited partners (LPs) who want to rebalance risk or return capital. What’s changed is not the mechanism, but the motivation and scale.

One innovation engine has been the General Partner (GP)-led continuation fund. Rather than selling crown-jewel assets into a weak IPO or M&A market, managers now roll them into new vehicles, offering existing LPs a choice: cash out or stay invested. This vehicle appears to have solved a structural mismatch: venture funds have finite lives, but great companies compound over decades. Continuation funds effectively refinance duration.

A second form, LP-led secondaries, have evolved from distress sales into portfolio management tools. Large allocators now actively shape vintage exposure, geography, and sector weightings through secondary sales.

Direct secondaries add a third layer, enabling employee liquidity programs that double as talent retention tools, a subtle but powerful shift in how private companies compete for human capital.

Macro forces accelerated the shift. When the IPO window effectively closed in 2022 and distributions evaporated, secondaries filled the void. Liquidity didn’t disappear; it rerouted.

Today’s estimated $130–150 billion annual secondary market across private assets reflects institutional acceptance, tighter pricing spreads, and specialized buyers ranging from dedicated secondary funds to sovereign wealth capital. (Source: Pitchbook).

The implications extend beyond venture capital. A robust secondary market reduces liquidity risk, lowers the cost of capital, and may ultimately support higher private-market allocations in institutional portfolios. In effect, secondaries transform venture capital from a blind-pool, long-duration bet into a more actively managed asset class.

Speculatively, we may be watching the emergence of what might think of as a true private-market yield curve, where duration, liquidity, and pricing can be actively traded rather than passively endured. If so, the “surprising third” isn’t just a new exit path. It’s a structural evolution in how capital compounds outside public markets.

On second thought, the real story isn’t that secondaries grew. It’s that venture capital may have finally built a liquidity mechanism sophisticated enough to match the scale of the ecosystem it created.

🚙 Interesting Drive-By's 🚙

💯 The Week AI Stopped Asking Permission

🤔 Latest Data on State Income Tax Rates Reveals a Widening Divide in America

🎯 The End of Work? Not Yet - Maybe Not Ever

💡 What I’m Telling My Kids About AI

📈 The Number Is Going Up: AI Speculation, Market Concentration, and the Upward Vacuum of Value

👋🏼 Parting Thought

The AI angst that many folks are wrestling with 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

Share The Sunday Drive by Mike Allison

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

🎶 Vibin'

Recent events in my life have reminded me just how grateful I am to have such an amazing family - both personally and professionally. My friends and colleagues at Investment Research Partners are an amazing group and I count myself as exceedingly fortunate to have them in my life.

So this week, I’m vibin’ to Neil Young’s classic, Heart of Gold.

💭  Quote of the Week‌

📈  Chart of the Week

Timing is Everything: The Lag Between Productivity Growth and Job Growth

One mistake investors often make is assuming that economic progress and labor-market health move in lockstep. History suggests otherwise. Productivity can surge while job growth stalls.This week’s Chart shows just such an example: strong real GDP growth alongside weakening payroll gains deep into an expansion.

This divergence isn’t a bug. It’s a feature of technological change.

Technology Moves Fast. Labor Markets Move Slowly.

Major technological shifts, from electrification to the internet to today’s AI buildout, follow a familiar pattern. Productivity improves first. Employment adjusts later.

Why? Because capital moves faster than human skills evolve.

A firm can deploy AI copilots, automation software, or robotics in months. Retraining a workforce takes years. Educational pipelines, credentialing systems, and social expectations are slow-moving institutions. The result is a temporal mismatch: output rises while labor growth lags.

We saw versions of this in the early 2000s productivity boom, and again in the post-Global Financial Crisis recovery, when GDP rebounded faster than employment. What feels different today is the speed and scope. AI doesn’t just automate routine tasks, it compresses the skill curve across knowledge work, from coding to legal research to marketing.

In other words, we are not just automating labor. We are redefining what it means to be skilled.

The Jobless Boom as a Transitional Phase

The phrase “jobless boom” sounds a bit dystopian, but I think it describes a transitional phase rather than a permanent condition.

When productivity surges, firms initially produce more with the same or fewer workers. Margins expand. Output rises. Earnings growth accelerates.

But over time, new industries emerge. Entire job categories, unimaginable at the outset, begin to absorb displaced or sidelined labor. The lag can span years or even decades. The automobile eliminated blacksmith jobs but created mechanics, highway engineers, and logistics networks. The internet destroyed travel agencies but birthed digital marketing and e-commerce ecosystems.

The key variable is timing.

Investors who misread this lag risk extrapolating short-term labor weakness into long-term economic pessimism, or conversely, assuming that productivity gains will immediately translate into wage growth and consumption strength.

Neither happens on schedule.

AI and the Collapse of Barriers to Entry

I also think there is an underappreciated second-order effect at work here: AI may lower barriers to entrepreneurship faster than it displaces jobs.

Historically, starting a business required capital, specialized labor, and operational infrastructure. Today, AI tools can function as a fractional workforce, handling coding, design, customer service, marketing copy, and financial modeling.

A single founder can now operate with leverage that once required a team of ten.

This shift matters. If displaced workers can redeploy themselves as entrepreneurs, enabled by AI, the employment recovery may not come from traditional payrolls but from a proliferation of small, highly productive firms.

Think fewer employees per firm, but more firms overall.

Investment Implications: Watching the Lag

For investors, I think the main takeaways are:

• Productivity booms do not immediately translate into job growth.

• Labor-market weakness during technological transitions may mask underlying economic strength.

• The future of work may skew toward AI-enabled entrepreneurship rather than traditional employment recovery.

Timing is everything—not just in markets, but in how innovation diffuses through society.

And if history rhymes, the current “jobless boom” may prove less a warning sign than a waypoint on the path to a more productive and more decentralized economic future.

🚙 Interesting Drive-By's 🚙

💯 Welcome To the Jobless Boom

🤔 What If AI is NOT a Bubble?

🎯 The Lobster Revolution: Why 24/7 AI Agents Just Changed Everything

💡 Bayes and Base Rates: How History Can Guide Our Assessment of the Future

🤓 R.I.P. chatbot era (2023 – 2025)

📈 Software Not a Macro Problem

👋🏼 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

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy a Sunday Drive around the internet.

🎶 Vibin'

As we all know, yesterday was Valentine’s Day. ❤️ So, I’m vibin’ to a collaboration between Ed Sheeran and Taylor Swift - Happy Valentine.

Only it’s not…

Ready for the plot twist? The whole thing - the song, the video, all of it - was generated by AI.

It’s absolutely amazing to me how quickly things are moving in the world of creative content creation. There are those who are afraid of it, but I am not one of them. I choose to embrace it and imagine how beautiful the creative works of the future will be given the tools that are rapidly becoming available to creators. Enjoy.

💭  Quote of the Week‌

📈  Chart of the Week

Navigating Markets Through the Lens of Dunning–Kruger

The first Chart above shows a graphical version of Gartner’s Technology Hype Cycle that is very familiar to many investors. Interestingly, it is quite similar to the Dunning-Kruger effect shown in the second Chart.

In a world of AI-driven angst and optimism, retail investor-driven meme stocks, concentrated stock indexes, and fiscal and monetary policy uncertainty, I think it’s worth considering how investors ought to be thinking about the navigational challenges of the current environment.

The Behavioral Cycle Behind Market Cycles

The Dunning–Kruger effect describes a cognitive bias in which individuals with limited knowledge overestimate their competence, while true expertise often brings humility. Markets can exhibit the same arc:

• Technology Trigger / “Know-Nothing” Phase → A new theme emerges (AI, crypto, EVs). Early adopters understand the nuance; the crowd does not.

• Peak of Inflated Expectations / “Mt. Stupid” → Prices detach from fundamentals as narrative overwhelms analysis.

• Trough of Disillusionment / Valley of Despair → Reality intervenes. Capital is destroyed. Weak hands exit.

• Slope of Enlightenment → Survivors refine business models; investors regain discipline.

• Plateau of Productivity / Sustainability → Cash flows validate the theme; long-term winners compound.

If you think about it, this is really less a technology cycle than a human behavior cycle.

Using Dunning–Kruger as an Investing Construct

Most investors try to identify what will win. But I think a more durable edge can come from understanding where we are on the curve.

1. Avoid buying confidence; buy competence.

The best opportunities often emerge when confidence collapses but underlying adoption continues. Think Amazon post-2000 or cloud software in 2009–2012. Today’s analogs may exist within AI infrastructure, industrial automation, or energy systems supporting data centers.

2. Narrative intensity is a contrary indicator.

When taxi drivers, TikTok influencers, and your dentist are day-trading the same theme, you are likely near the peak. Elevated retail participation and options activity often signal late-cycle speculation rather than early-cycle discovery.

3. The valley is where institutions are built.

Capital scarcity forces discipline. Companies shift from “growth at any cost” to unit economics and free cash flow. This is where durable compounders are born.

4. Expertise requires surviving the valley.

Investors who endure drawdowns without abandoning their original thesis develop the pattern recognition that separates process from outcome.

A Practical Framework for Today

I think that we may be oscillating between the peak and early disillusionment in parts of the AI ecosystem, particularly in application layers, while infrastructure and power generation may be earlier in the slope of enlightenment. However, it does seem as though semiconductors may still be at or near the peak of expectations.

Rather than attempting to time changes in market sentiment, investors might consider:

• Scaling into positions during narrative fatigue

• Favoring balance sheets over storytelling

• Tracking adoption metrics instead of price momentum

• Separating enabling infrastructure from end-user hype

Final Thought

Markets don’t simply price cash flows, they also price confidence. The Dunning–Kruger lens reminds us that the greatest risk is not ignorance, but the illusion of understanding. Investors who recognize where confidence diverges from competence can potentially create a structural investing edge.

🚙 Interesting Drive-By's 🚙

💯 Buying Futures, Renting the Past: How Speculation and Nostalgia Became the Economy

🎯 Lessons From Mt. Stupid

🤔 What the Team Behind Cursor Knows About the Future of Code

💡 The Longevity Manifesto

💰 Anthropic’s Historic $30bn Funding Round

👋🏼 Parting Thought

A (half) joking comment on the challenges facing Gen Z…

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

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s take a Sunday Drive around the internet.

Many of you know that I started The Sunday Drive as a way to stay connected with friends and former colleagues when I retired from Eaton Vance at the end of 2021. It was and is a way to share more of myself and my life beyond just investing. A couple of examples are HERE and HERE. Today I do something similar.

This past week, the Lord called my 90-year old mother home. Now she is at peace and forever in His loving embrace. ✝️❤️

Please forgive the brevity of this edition.

🎶 Vibin'

This week, I’m vibin’ to one of the songs that will be played at my mother’s funeral this week, Alan Jackson’s version of I’ll Fly Away.

💭  Quote of the Week‌

📈  Chart of the Week

Many charts allow for various interpretations. This week’s Chart is one of those.

According to the Chart, insider selling is at a 5-year high. The obvious and most typical interpretation is that company executives and other insiders see trouble ahead for their companies.

However, I think it’s also worth considering that after such a dramatic rise in equities over the last several years, it’s understandable that insiders would want to take some chips off the table for the sake of diversification and prudent long term planning.

As is most often the case, the answer is that there is no single answer but likely a combination of the two.

Not particularly insightful, I know. But I thought it was an interesting chart worth adding to the mosaic of our investment thinking.

🚙 Interesting Drive-By's 🚙

💯 You Spent Your Whole Life Getting Good at the Wrong Thing

📉 The Fall of the Nerds: The age of humans who could think like computers is drawing to a close.

🤔 The End of Illusion: Financial Repression Unmasked

💡 A Plan For UHI (Universal High Income)

💰 The Devil Wears Prada 2: How a Fashion Film Quietly Turns Cultural Buzz Into Sales

👋🏼 Parting Thought

Sending positive energy to Santa Clara, CA this evening…

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

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy a Sunday Drive around the internet.

🎶 Vibin'

Given the frigid temperatures we’ve been dealing with the last several weeks, I’m very much looking forward to tomorrow - Groundhog Day - and saying to Punxsutawney Phil, “Please, please, please don’t see your shadow!”

Although the song is in a very different context, this week I’m vibin’ to Foreigner’s classic hit, Cold As Ice and praying for an early Spring.

💭  Quote of the Week‌

📈  Chart of the Week

Navigating AI Risk: Returns and Real Growth

I ran across a very interesting piece from The Carlyle Group entitled, “Bubbles as a Feature, Not a Bug” and I thought it was worth discussing.

As markets grapple with the scale and speed of artificial intelligence adoption, the real economic story is often obscured by headline-chasing narratives about bubbles and “irrational” valuations.

But from a strategic investment and macro lens, the Carlyle piece offers a compelling reframing: what looks like a price bubble may instead be the early pricing of a deep structural shift in economic productivity, a shift that ultimately routes value far downstream from the hardware and frontier infrastructure that has historically been bid up in early cycles.

1) Future Investment Returns: Where Value Actually Accrues

The historical analogies in the piece — from electrification to the internet — are instructive precisely because they show how broad, diffuse returns emerged over long term horizons:

• In the electrification era of the early 20th century, early electrification hardware stocks soared, then corrected. The much richer, sustained returns accrued to firms that harnessed electricity to reshape production and consumption. Durable goods manufacturers, for instance, delivered double-digit, decade-plus returns after broader infrastructure prices peaked.

• Similarly, the 1990’s internet boom’s real economic payoff was downstream, in efficiencies unlocked across logistics, retail distribution, and network effects that traditional valuation frameworks initially missed.

Applied to AI, this suggests that the near-term froth in frontier compute and platform equities is less an outright bubble than the market’s early attempt to price an expansive reshape of enterprise economics. Strong returns could actually come from:

• incumbents who integrate AI into core workflows and unlock persistent margin expansion,

• firms that leverage AI to restructure supply chains and data-enabled business models,

• new categories of services that monetize the attention, automation, and prediction layers above base compute.

From an investment perspective, one theme is pretty clear: half-life matters. Early hardware and semiconductor returns may be fleeting, but the more durable returns could come from structural adopters and business model reinventers, the downstream beneficiaries that capture long term productivity gains.

2) Productivity-Led Growth: Beyond the “Bubble” Narrative

Most productivity narratives around AI focus on automation lifting output or lowering labor costs. But the Carlyle analysis points to a broader lens on productivity:

• AI’s largest impact is not just efficiency but the redefinition of workflows, supply chains, and decision-making itself, the equivalent of factories moving from steam to electrified lines, or retail moving from bricks to connected digital ecosystems.

• Even when AI doesn’t directly transform results (e.g., basic data center demand), it catalyzes productivity improvements, accelerating digitization projects, data capture initiatives, and analytic infrastructures that firms had long postponed.

• Productivity growth isn’t uniform; it diffuses through sectors over years. That’s the pattern seen in electrification and early internet adoption: initial investment surges unlock a cascade of follow-on gains across manufacturing, distribution, and consumption platforms.

So perhaps the smarter way to think about AI’s economic lift for the economy is not as a capex supercycle, but as a multi-stage productivity wave: first infrastructure, then workflow transformation, then ecosystem expansion. The result is latent GDP growth driven as much by organizational redesign as by the underlying technology itself.

Bottom Line

I don’t view AI as a binary bubble or bust story. Like electricity and the internet before it, AI’s economic value will migrate downstream, creating years of compound returns and productivity expansion that only become obvious in hindsight. The near-term speculative froth reflects the market’s attempt to price innovation, but tomorrow’s durable winners will be those capturing the enhanced economic output unlocked by AI-driven productivity, not simply owning the frontier compute stack.

Source: Carlyle: Bubbles as a Feature Not a Bug (Navigating AI Risk)

🚙 Interesting Drive-By's 🚙

💯 The AI Jobs ‘Bloodbath’ That Keeps Getting Postponed

📈 The AI Boom Loop: Recursive machine intelligence could turn automation into compounding innovation

💡 Small Is the New Big

🎯 Participation Inflation: When Participation Gets Expensive

🤔 Empathy, Housing, AI, and the Trick of Nostalgia

💰 Retirement Isn’t Just Financial, It’s Existential

👋🏼 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

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy a Sunday Drive around the internet.

🎶 Vibin'

With the renewed tariff chatter this past week, Greenland for sale(?), and all the other chaotic banter in Davos, navigating the markets seems to have gotten very… tricky.

So this week, I’m vibin’ to Run DMC’s 1986 classic, It’s Tricky and reminiscing about the days when rap was still fun.

💭  Quote of the Week‌

📈  Chart of the Week

A “Normal” Japan and the Unwinding of the Carry Trade

This week’s Chart shows that following the global inflation scare of 2021-22, long term interest rates in Japan have continued to rise, but unlike in other countries, at an accelerating pace.

Some say this is due to Japan’s reemergence as a “normal” economy which is being framed as a curiosity: an end to deflation, a long-overdue policy shift, a local story.

That framing misses the point. I believe that’s really happening is the dismantling of a 30-year global funding regime, i.e. the so-called carry trade, and that should matter deeply to anyone managing portfolios for investors approaching or already in retirement.

Carry Me…

For decades, Japan’s zero-rate policy quietly subsidized global risk-taking. The yen wasn’t just a currency. Yen-based debt was capital: cheap, abundant, and reliably available. That mattered because it helped suppress volatility, compress yields, and mitigate drawdowns, conditions that retirement portfolios came to implicitly rely on.

To see why, let’s consider how the yen carry trade has historically worked.

One version was conservative but massive in scale: borrow yen at near-zero rates, hedge the currency, and buy higher-yielding U.S. Treasuries or investment-grade credit. Japanese institutions did this relentlessly. The result? Persistent demand for global bonds and downward pressure on yields.

Another version was more aggressive: borrow yen, don’t hedge the currency, and deploy the capital into equities, high yield bonds, emerging markets, or, more recently, tech stocks and crypto. As long as the yen stayed weak and volatility stayed low, leverage paid off. And for years, it did.

That trade is now starting to break down.

Japan’s policy rate is near 0.75%, long-term yields are rising as the Chart shows, and global rate differentials are narrowing just as U.S. and European central banks approach the downshift phase of their cycles.

Deleveraging By Another Name

The carry is evaporating. When carry disappears, leverage doesn’t gently fade—it unwinds.

This matters for retirement portfolios because many of the assumptions embedded in “balanced” allocations were built in a world where:

• Volatility was structurally suppressed

• Global liquidity flowed one way

• Drawdowns were shorter and recoveries faster

Those assumptions are fragile in a post-carry-trade world.

As yen-funded leverage retreats, three risks rise simultaneously:

1. Higher volatility

   Carry trades dampen volatility on the way in and amplify it on the way out.

2. Correlation creep

   When leverage unwinds, diversification often fails at the worst possible time. Assets that looked uncorrelated suddenly move together.

3. Valuation compression

   Many assets, especially equities, benefited from a global discount rate artificially lowered by carry flows. Remove the subsidy, and multiples could come under pressure.

Think Different(ly)

This doesn’t mean markets will collapse. It means the tailwinds quietly supporting traditional portfolios could be weaker, while left-tail risks could become stronger.

For retirement-oriented investors, the takeaway isn’t tactical, it’s structural.

Risk management can’t continue to rely on backward-looking volatility measures or static 60/40 logic. It has to acknowledge that a major shock absorber in the global system is being removed.

Japan being “normal” again is not a footnote. It’s a reminder that regimes change, and retirement portfolios built for the last one will need protection for the next.

Sources: RSM US, LLP; World Economic Forum, Financial Times, The Overshoot

🚙 Interesting Drive-By's 🚙

💯 The American Dream Needs a Factory Reset

💣 BOOM: Congress Imposes Public Utility Rules on UnitedHealth, CVS, and Cigna

🥩 Mark Hyman: At Last, the Truth About Food

🇺🇸 America’s 250th Isn’t Just a Birthday

🤔 Yes, We’re Growing Old, But We’re Also Growing Whole

💰 The Great Bifurcation: How a Broken Labor Market and Seven Companies Became the American Economy

👋🏼 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

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy a Sunday Drive around the internet.

🎶 Vibin'

I’ll bet you didn’t know that Elvis Presley wasn’t the first artist to record the classic Hound Dog. No, that honor belongs to Willie Mae “Big Mama” Thornton, who was (finally!) inducted into the Rock and Roll Hall of Fame in 2024.

This week I’m vibin’ to her 1953 OG version of the hit song made even more famous by Elvis three years later. Enjoy.

💭  Quote of the Week‌

📈  Charts of the Week

Performance, Construction and Diversification

You’ve probably seen headlines crowning NVIDIA as the unstoppable force powering the stock market in 2025. It was the largest contributor to the S&P 500 Index’s total return last year, a title it earned not by being the best performer, but by performing reasonably well and being the biggest company in the index. That’s the message of the first Chart this week.

Here’s the nuance that most financial media coverage misses: NVIDIA wasn’t even in the top decile of 2025’s S&P 500 constituents (Source: YCharts). 74 S&P 500 stocks outperformed NVIDIA last year. Yet because of its gargantuan index weight, the stock still ranked #1 in contribution to index performance, a reminder that size can trump performance in a market-cap weighted index.

Let that sink in: 74 stocks beat NVIDIA in total return, but the stock carried the market more than any other stock because it’s nearly 8% of the index all by itself.

Broken Concentration

While we picked on NVIDIA, highlighting it as an example of the impact one stock can have on S&P 500 performance, the second Chart this week shows just how concentrated the index has become.

When most investors invest in the S&P 500, they believe they’re buying a diversified basket of 500 companies. The reality is much narrower.

• The top 10 stocks now command around 40% of the index’s market cap, a level never before seen.

• More strikingly, only about 44 names are driving the index’s returns, the lowest effective number of contributors in roughly 35 years.

Having a handful of mega-caps rowing the boat is not very effective diversification, in my opinion.

This dynamic explains why the S&P 500 can climb even when most of its constituents aren’t breaking new ground. Passive flows reinforcing the largest weights, combined with the sheer scale of tech earnings and buybacks, create a feedback loop that elevates a few names to de facto market leadership.

Mag Seven Reality Check

The so-called Magnificent Seven: Apple, Microsoft, Alphabet, Amazon, Meta, Tesla, and NVIDIA dominate the market narrative. But even here, performance is mixed: only two of the Mag Seven outperformed the S&P 500 in 2025, reminding us that sheer size and media messaging don’t always align with performance outcomes.

So How Does This Resolve Itself?

What feels like 500 stocks can behave like 40 — or fewer. In markets where concentrated leadership can both elevate and destabilize, understanding the mechanics behind why the index moves matters just as much as what moves it.

It seems to me that this concentration situation can resolve itself in one of two ways:

• Mean Reversion: The mega-caps underperform significantly, taking the overall market down with them and passive flows reverse, which would exacerbate equity declines.

• Leadership Broadens: The mega-caps underperform, but not by so much that they tank the market, allowing everything else time to catch up, likely outperforming significantly and passive flows continue to support equities.

If the goal is more effective diversification, investors should shift to broader exposure to other indices, geographies and asset classes.

🚙 Interesting Drive-By's 🚙

📈 Concentrated Risk = Generational Wealth?

Tax Alpha Insider

Concentrated risk = generational wealth?

Basis Northwest is coming to Seattle. Check out the announcement for more info…

Read more

4 months ago · 13 likes · Brent Sullivan

💯 Humanoid Robots Arrive Just As Humans Stop Showing Up

💡 Location Independence Is the New 401(k)

🤔 The Apprenticeship Severance: AI Eliminated Entry-Level Jobs and Nobody Saw It Happening

💰 From Capital Gains to Dividend Income

👋🏼 Parting Thought

Diversification…

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

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy a Sunday Drive around the internet.

🎶 Vibin'

Despite burgeoning pockets of softness in the labor market and emerging signs of consumer weakness in household debt metrics, somehow the economy keeps on trucking along, with no recession apparently in sighteven . In fact, there is some evidence that shows that GDP growth might accelerate over the course of 2026.

So with that in mind, this week I’m vibin’ to the Grateful Dead and their classic, Truckin’. Enjoy.

💭  Quote of the Week‌

📈  Chart of the Week

Thoughts on Productivity-Led Economic Growth

This week’s Chart shows a marked upturn in productivity in the first half of this decade as compared to the last.

While still below the levels of the mid-1990s to mid-2000s during the height of the internet-driven “New Economy”, I believe that productivity is poised to go even higher from current levels, perhaps reaching or exceeding prior levels. Many would agree that we are in the early days of an AI-driven “Next New Economy” with much progress to come.

I’ve been thinking and reading a lot about the reasons why productivity has increased so much this early into the current innovation cycle. What will be the impacts on demand growth, interest rate policy, inflation, and the like? Recently, I ran across an interesting term related to these questions and I thought it was worth discussing.

The “Tenure Dividend”

In recent labor market commentary, “tenure dividend” refers to a productivity boost that firms are experiencing because their current workforce has above-average tenure, meaning fewer new hires and quits, and a larger share of employees who are already fully onboarded and have experience and familiarity with the firm’s operations. This dynamic can mechanically raise output per hour worked because experienced workers are more productive relative to new hires who need weeks or months to ramp up.

Why Is It Showing Up Now?

Several related labor market trends are creating conditions for a tenure dividend:

• Hiring and quit rates have trended down. Businesses are reducing headcount more through attrition than layoffs, and have shown a hesitancy to hire younger workers. That leaves a workforce skewed toward longer-tenured employees.

• Reduced onboarding costs. Firms aren’t needing to spend as much on training and ramping up new workers, a non-trivial drag on productivity in normal times. Some reports suggest that new hires take ~6 months to reach full productivity, with some taking up to 12–18 months. With fewer new starts, average productivity per hour worked is elevated.

• Composite labor quality increases. Experienced workers know firm-specific processes, internal tools, and corporate cultural norms that reduce friction and accelerate problem-solving relative to new hires. This contributes to an experienced workforce effect that elevates output measures relative to total hours worked.

This is essentially short-run efficiency gain from composition and scale: even if hiring is weak and total employment growth is slow, the composition of employment, more seasoned workers and fewer novices, can temporarily lift productivity metrics without a broader cyclical rebound.

Is Too Much Of a Good Thing a Bad Thing?

• Not always positive for innovation or long-run productivity. Some research suggests that very long tenure can correlate with reduced innovation or slower organizational change, especially if labor markets are rigid and mobility is low. This could offset or reverse the tenure dividend over time.

• Measured productivity doesn’t always reflect broader quality gains. The tenure dividend is primarily about measured output per hour worked. It doesn’t necessarily signal fundamental improvements in growth capacity, investment, or human-capital accumulation. It’s partly a statistical/composition effect.

• Tenure overall is not rising steadily. Longer average employer tenure isn’t universal; U.S. median tenure is still relatively low by historical standards (~3.9 years in early 2024), though older cohorts show much higher tenure.

What Does This Mean For Investors?

• Short-term productivity bump: Firms may report higher measured productivity (e.g., output per hour, unit labor costs) even in a sluggish macro environment, simply because the workforce has fewer novices and fewer separations.

• Signal for cost containment: Low hiring and quitting often accompany broader caution on demand; the tenure dividend can thus be a cost-efficiency artifact rather than a demand-driven productivity boom.

• Caveat on innovation and adaptability: While experienced workers reduce training costs and friction, over-reliance on long tenure could dampen fresh ideas and adaptability, potentially weighing on long-run competitive dynamics.

The tenure dividend may help firms sustain earnings growth and profit margins, even in a sluggish demand environment. However, I don’t believe it will be a long term driver of investment returns by itself. We’ll also need demand-led growth for markets to be sustained.

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💯 The Most Underrated Trend of the 2020s

💡 The Great Repricing of Risk - Across Rates, Credit, AI, and Crypto

🩺 Your AI Doctor Will See You Now

👋🏼 Parting Thought

Flashback to middle school, when we were taught some pretty valuable lessons…

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

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy this year’s first Sunday Drive around the internet.

🎶 Vibin'

As 2026 greets us, I can’t shake a creeping sense of unease about what lurks beneath the surface of the current investing environment. I worry (as always) about risks we don’t see, perhaps in private credit and/or private equity.

So with that in mind, this week I’m vibin’ to one of my all time favorite artists, the amazingly talented vocalist and jazz guitarist, George Benson and his Grammy-winning 1976 hit, This Masquerade. Enjoy.

💭  Quote of the Week‌

📈  Chart of the Week

Big Things Happen When a Word Changes Its Class

Googol: the number represented by 1 followed by 100 zeros.

While doing a search for available domain names, the founders of Google originally misspelled the name of their new company. They found the incorrect spelling to be more visually appealing and the name Google stuck.

What they built changed the internet and the advertising business forever… and changed the word “google” (googol) from a noun to a verb.

This week’s Chart shows the accelerating pace of change across a variety of growth cycles in computing power. Each cycle exhibited exponentially faster growth.

We stand today in the midst of another growth cycle in the form of what we refer to as Artificial Intelligence (AI). The speed with which this rapidly accelerating growth cycle has emerged has not disappointed and is consistent with historical patterns. Each cycle is exponentially faster than the prior cycle.

This cycle, too, has a new word that has changed its class. Compute.

Compute has historically been something one did, an activity, a verb. But in today’s parlance of AI, compute is now a thing, something that is created and measured, something sold and consumed…a noun.

Few would disagree that the AI growth cycle is indeed something significant and transformative.

Unprecedented levels of energy and capital are being poured into the creation of “compute” as our economy is being transformed, quite quickly it seems.

One way I think about AI is, in a sense, a rapid shortening of the distance between energy (power) and intelligence. Tremendous and accelerating amounts of “compute” are being created to drive that shift.

What we choose to do with the intelligence enabled by all of that “compute”, as a society and as an economy remains to be seen. Given the speed of the AI cycle, real answers could come much more quickly than most people imagine.

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🤔 Conviction Capitalists - The Clash of Conviction versus Consensus

📈 Our Post-Scarcity, ASI Economy - “Artificial Superintelligence (ASI)”

💯 Ten Things That Are Going Right in America - Is our society slowly putting itself back together?

💡 The Non-Linear Economy - Most of us are playing a game that no longer exists.

👀 Who Will Get Canned in 2026? - Disruptive technology doesn't replicate human work. It repackages it.

🎯 The Ouroboros Protocol - Systemic Fragility in the Post-2025 AI Capital Cycle

👋🏼 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

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends!

As is becoming a tradition for the year’s final edition, this week we’ll lay out our outlook for 2026 in the form of a collection of Fearless Forecasts. We’ll also report on how we did in 2025.

Now, let’s enjoy 2025’s last Sunday Drive around the internet.

🎶 Vibin'

As we approach the end of the journey that was 2025, and peer around the corner to contemplate what might lie ahead in 2026, it’s worth the time to take a breath and rest up for the onslaught of activity that will surely come in a week or so.

With that in mind, this week I’m vibin’ to Bob Seger’s classic hit Turn the Page, because that’s certainly what we’re about to do.

💭  Quote of the Week‌

📈  Chart of the Week

The Chart of the Week shows, at least according to Carlyle, that the big AI spenders have returned to a sustained level of relative overvaluation - meaning that their P/Es are well above those of the rest of the S&P 500.

In my opinion, in the near to intermediate term, there’s more risk to their earnings multiples than their earnings.

As these companies are transitioning from asset light to asset heavy enterprises, with significantly increased capital expenditures related to their AI spending, the stocks would very well re-rate lower to be more reflective of the fundamentals of free cash flow that is becoming significantly impaired by that cap ex.

This is a topic we’ll delve into much more in the coming year, but my New Year’s Wish is the Goldilocks scenario where any downward pressure on the multiples of the largest names happens in an orderly fashion where other names in the investment universe perform better, not just in relative terms, but in absolute terms as well.

Hey, a fella can dream can’t he?

🔮 Fearless Forecasts for 2026

Once again, we lay out our outlook for the coming year as a collection of fearless forecasts.

But first, in the spirit of “often wrong, but never in doubt”, let’s see how we did in 2025.

2025 Report Card (link to 2025 Forecasts):

1. U.S. Equity Returns Moderate: We see a moderation of U.S. equity market returns, in particular the S&P 500 compared to 2023 and 2024. Result: The S&P 500 did moderate over 2023 and 2024, but not by much.

2. Better Performance Outside the Mega-Caps: Mid-cap and higher quality small cap stocks outperform mega-cap stocks. Results: Wrong! The S&P 500 outperformed the Equal-Weighted S&P 500 quite handily…again.

3. Fixed Income Performs Poorly: Bond returns are tepid or worse. Result: Not wrong against a strong equity market performance, but bonds performed pretty well versus history.

4. Inflation Returns: We see a modest but meaningful return of inflation. Result: Depending on which components of inflation you look at, this forecast was only partially wrong, but on average, wrong nonetheless.

5. Commodities Make a Comeback: Commodities perform very well. Result: This was a pretty broad forecast that should’ve been more targeted. Precious metals performed quite well, but Energy performed poorly.

6. U.S. Dollar Weakens: We see a weaker dollar against other major currencies. Result: Correct.

7. DOGE is Real + Return of the Bond Vigilantes: The U.S. makes some meaningful progress on slowing the rate of U.S. fiscal spending, which is still pacing near pandemic levels. Result: Wishful thinking on my part, I guess. Some progress on fiscal spending at the margin was made, but on the whole I was wrong.

8. Europe Reawakens: Stocks in developed European markets start to narrow the performance gap with U.S. stocks. Results: Correct, though Emerging Market equities performed even better.

9. AI Goes Nuclear: An AI-focused data center which is self-sufficient in terms of power and incorporates its own on-site, “baby” nuclear power plant will be announced. Result: Not substantively wrong, but wrong as to timing. This will take a lot longer than one year to play out.

10. Bitcoin Crashes Again: Bitcoin will have (another) 50+% drawdown. Result: Directionally correct, but wrong in terms of magnitude with the drawdown being more in the 30% range.

And now…

Fearless Forecasts for 2026

1. The AI Hyperscalers Re-Rate Lower: As mentioned in the Chart of the Week section above, the big AI names end the year with lower forward P/E multiples than when the year began.

2. Natural Gas Prices Increase Meaningfully, as the commodity transitions from one of Supply-Driven Demand to Demand-Driven Supply given the power needs of terrestrial data centers. Fuel to power data centers begins to compete with Liquified Natural Gas (LNG) exports and the wide gap between Henry Hub gas and delivered LNG narrows.

3. Orbital Data Centers Take Center Stage: With power emerging as the binding constraint for terrestrial data centers, space-based data centers, powered by virtually unlimited and free solar power, become the next leg of growth in AI spending.

4. AI Leadership Becomes an Explicitly-Stated Policy Goal, pitched as a matter of national security.

5. Electricity Rationing, or the fear of it, becomes a real issue in the upcoming midterm elections.

6. Inflation Surprises to the Downside, given the accelerating impact of AI on productivity and the labor market.

7. We See a Major Private Credit/Private Equity Failure, not as big as what caused the Great Financial Crisis, but big enough and disruptive enough to force material deleveraging across global allocations.

8. The U.S. Dollar Has a Major Rebound, but it turns out to be a “bear market rally” and ultimately the dollar resumes its decline against other major currencies.

9. The Best Performing Equities are Latin American Equities, both in local and USD terms, continuing what I believe could be a multi-year period of strong performance.

10. The New England Patriots Win Superbowl LX, causing NFL Commissioner Roger Goodell to fire the entire NFL Officiating crew. He replaces them with Somali Warlords in order to ensure more predictable results in the future.

As always, some or all of these forecasts could turn out to be dead wrong, but laying them out in this format helps frame our current thinking and lays out a base case for the year. New information and events throughout the year could certainly present themselves and alter our views, but for now… We are fearless.

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💡 Bursting the Bubble in the AI Debate

👀 2025 in 25 Stats: The Data That Explains the Year

🎯 The Return of the Weirdo: Will This Be the Cool New Thing of 2026?

👋🏼 Parting Thought

Seems that I’m not the only one who is concerned about Private Credit…

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

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! First, please accept my apology for the errant distribution earlier this past week of the template I use to create each week’s edition of the Sunday Drive. I am very grateful for your time and attention each week and hope you’ll forgive me for adding unnecessary clutter to your email inbox.

Christmas comes later this week and I hope all you have a wonderful Holiday. 🎄

Let’s enjoy a Yuletide-inspired Sunday Drive around the internet.

🎶 Vibin'

In keeping with the Holiday spirit, this week I’m vibin’ to one of my favorite renditions of a classic. For those who celebrate, I wish you a very Merry Christmas. Please enjoy Josh Groban’s O Holy Night.

💭  Quote of the Week‌

📈  Chart of the Week

Recession Fears in 2025: From Panic to Perspective

If you wanted a real-time case study in how markets process uncertainty, overreact, recalibrate, and eventually move on, 2025 has certainly delivered.

This week’s Chart tracks the implied probability of a U.S. recession during 2025, derived from prediction-market pricing. It’s an unfiltered window into investor psychology, one that tells us as much about narrative risk as it does about economic reality.

At the start of the year, recession odds hovered around 18–20%. Not low, but hardly flashing red. This reflected lingering unease from late-cycle dynamics: restrictive monetary policy, elevated real rates, geopolitical noise, and the ever-present fear that this time tightening would finally break something.

The Spring Panic Trade

Then came spring.

Between March and late April, recession odds surged above 60%, briefly touching ~70%. This wasn’t subtle. It was a full-blown panic phase, driven by a clustering of headline risks rather than a sudden collapse in fundamentals.

Tariffs announced on Liberation Day re-ignited trade-war trauma, one of the few policy tools with a historical track record of, in many minds, self-inflicted economic damage. At nearly the same time, consumer confidence fell to a five-year low, reinforcing the idea that higher prices and policy uncertainty were finally biting. Add in the February 28 update from the Atlanta Fed, which projected negative Q1 GDP growth, and the narrative wrote itself: stagflation, policy error, recession.

Importantly, markets weren’t reacting to realized deterioration; they were discounting possibility. That distinction matters. Prediction markets don’t ask “are we in a recession?” They ask “what are the odds something goes wrong from here?” In the spring of 2025, the list of things that could go wrong felt especially long.

The Fever Breaks

The inflection point arrived in mid-May with the announcement of a U.S.–China trade deal. This wasn’t about incremental GDP math. It was about removing a left-tail risk that markets had aggressively priced in.

Once the worst tariff fears were taken off the table, recession odds fell sharply and never looked back.

From that point forward, the data did what it usually does outside of actual recessions: it stabilized. Payroll growth in early July surprised to the upside, with 147,000 jobs added, undercutting the idea that the labor market was rolling over, at least on a broad basis. Financial conditions eased. Credit spreads behaved. Equity markets resumed acting like equity markets.

Even the October–November government shutdown, a classic headline-friendly growth scare, barely registered in context. Recession odds continued grinding lower, finishing the year near 2%.

The Lesson (Again) and a Peak at 2026

The most important takeaway isn’t that recession fears were wrong. It’s that markets are exquisitely sensitive to policy-driven uncertainty, especially when starting from a late-cycle, high-rate environment.

In 2025, the economy never fell apart. But for several months, investors were forced to handicap outcomes with asymmetric downside and limited visibility. When that fog lifted, so did recession fears.

This is why narrative discipline matters. Spring 2025 rewarded those who could separate volatility from deterioration and resist extrapolating worst-case scenarios from short-term noise.

This week’s Chart reminds us that markets don’t just price fundamentals—they price fear. And fear, almost always, is mean-reverting.

As we stand on the edge of a new year ahead, some complacency seems to have crept into market expectations. 2026 could very well be a year of volatility of the sort we haven’t seen in recent years.

Why? Because the market doesn’t seem to be expecting it.

In my experience, investors would be well advised to remember this old adage: “When you least expect it, expect it.”

Sources: Polymarket, Atlanta Federal Reserve, U.S. Bureau of Labor Statistics, Conference Board.

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💯 The Discomfort Premium: The Operating System For Lives That Compound

💡 What Becomes Valuable When AI Makes Creative Work Easy

🧐 The End of (Demographic) History

🎯 Rural Revolt Over Data Centers Threatens AI Expansion

👋🏼 Parting Thought

The Reason for the Season:

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

Share The Sunday Drive by Mike Allison

Please forgive this mistake and join me on our usual Sunday Drive this weekend.

See you then!

-Mike