The Ascend Letter

The Macro Environment

For most of this year, the inflation story had one villain: oil. Watch crude, the thinking went, and you would know where prices were headed.

That story just broke.

From February into April, oil and the 2 year Treasury yield moved in lockstep. Both climbing, both whispering that inflation was coming back. Then in May, oil rolled over. And the 2 year yield? It kept on rising. If oil were really the thing driving inflation, that is not what happens. Something else is doing the work.

That something is the AI buildout. AI capital spending has driven roughly three quarters of the economy's growth this year. Read that again. Strip out the data centers, the chips, and the power feeding them, and growth nearly flatlines. The whole economy is leaning on a single theme.

In reality, the short run and the long run point in opposite directions here. Over time, AI is powerfully deflationary. It will make things cheaper and faster than we can picture today. But we are not in the long run yet. We are in the buildout, and the buildout is the opposite. Pouring hundreds of billions into construction, equipment, and electricity is inflationary right now. The thing that will eventually lower prices is raising them first.

You can see it in the market's split personality. Money crowds into anything wearing the AI label, while the rate sensitive corners (banks, homebuilders, materials, and small caps) sit in the waiting room. A market running on one engine is not the same as a healthy one. It just means liquidity is chasing whatever story is printing.

So where does the money actually end up? Think back to the gold rush. The miners mostly went broke. The people selling the picks and shovels got rich. Right now the AI model makers are in a price war, racing to be the fastest and cheapest, burning cash to do it, each one leapfrogged the moment it pulls ahead. Businesses are already swapping one model for another just to trim costs. The models are becoming commodities. What keeps climbing, no matter which one wins, is the demand for compute. In this rush, compute is the pick and the shovel.

Planning Corner: Permission to Spend

The hardest part of my job has nothing to do with picking investments.

It is sitting across from someone who spent forty years saving every dollar they could, and telling them it is finally okay to spend some of it.

You would think that is the easy conversation. It is often the hardest one I have. When saving has been your identity for decades, flipping the switch to actually enjoy the money can feel reckless, even wrong. So people keep pinching pennies on a nest egg that could comfortably send them anywhere they want to go.

If that is you, or someone you love, a few plain moves:

1. Give yourself a paycheck. Set a fixed amount to pull from your savings each month and treat it like income. Structure turns "am I allowed to spend this?" into "this is mine to use," and it quietly removes the guilt.
2. Fund one thing you keep putting off. Pick a single someday item, the trip, the cabin, the thing for the grandkids, and actually do it this year. Not all of them. Just one. Permission granted.
3. Keep your safety money separate from your living money. Once your essentials and your cushion are covered and secure, the rest was never a high score to protect. It was the whole point. You are allowed to use it.

You did not save for thirty years to leave it all on the table. A good plan grows the money, yes. But at some point, its real job is to give you permission to enjoy what you already earned.