The Ascend Letter

The Macro Environment

Tuesday brought the news everyone had been waiting for. June CPI came in at 3.5%, below the 3.8% expected. Core dropped to 2.6% against 2.8% expected. Inflation cooling faster than expected is the exact print the market had been begging for.

But guess what…stocks fell anyway.

The S&P finished the week down 1.6%. The Nasdaq lost 2.9%. And semiconductors, the engine of this entire rally, are now down 20% from their June record, which is the textbook definition of a bear market. So the inflation problem eased and the market sold off harder. That tells you inflation was never what this week was about.

Two things were. The first is a question that has been sitting under the AI trade all year: when does all this spending actually pay for itself? Companies have been pouring hundreds of billions into data centers on the promise of returns that have not fully shown up yet. On Friday a Chinese startup released a model that competes with the best American ones, and the market got a fresh reminder that the frontier can be reached at a fraction of the cost. That is not a small thing when your thesis depends on spending being a moat.

I have been watching a related shift. As token costs rise, companies are figuring out they may not need a giant general purpose model at all. Starbucks is building an in-house tool to replace software it used to license. When your operations focus on one area, a smaller model trained on your needs is cheaper and it lives under your own roof. That is a real threat to the software companies renting out intelligence.

But notice what it is not a threat to. Whether the winner is a large model or ten thousand small ones, all of it still requires massive amounts of memory and compute. Remember we have not even started mass producing humanoid robots. Demand for compute can stay perfectly intact while the market argues about ROI on capital spending.

Which brings us to the second thing, and the one I think actually explains the week. This was not a "bubble popping". This was leverage unwinding.

Too many people were crowded on one side of the boat. Add borrowed money to a crowded trade and the problem multiplies. In Korea, roughly 1 in 30 investors got hit with a margin call. That's not investors reassessing the future of artificial intelligence. That's investors being forced to sell whether they want to or not. The real question is where the forced selling ends, and who still has cash left when it does.

One more thing worth keeping in mind. Summer is thin. People are on vacation, volume dries up, and fewer participants means the same amount of selling pushes prices further than it would in October. Some of what we just watched was the season, not the story. Liquidity is what separates the investor who can act during weeks like this from the one who can only react.

Planning Corner: In Memory of Eli

This last week I attended the funeral of a dear friend. Eli was 23. He inspired me with his work ethic, and he did the same for hundreds of others. A beloved son, brother, uncle, friend, and a leader to many.

A quote from the services has stayed with me all week.

What a beautiful reminder to live life to the fullest. Also this week, my hometown lost its fire chief along with his wife and three children, in a freak accident. A young family that is now survived by their sole daughter. A daughter that now faces the reality of losing her entire family in a single weekend.

Weeks like this remind you how fragile life is. So the first thing I would ask of you has nothing to do with money. Tell the people you care about what they mean to you, while you can. We never know which day is the last one.

The second thing does involve money, and it is one of the most powerful gifts you can leave behind. An estate plan.

I understand why people put it off. Nobody enjoys sitting down to face their own mortality. The alternative is leaving the people you love to untangle your financial life during the worst time of theirs, when they should be grieving instead of hunting for account statements.

Some of the most meaningful work I have done has been sitting with families in exactly that moment, taking the financial pieces off their plate so they could focus on each other. It is also the work that could have been made so much easier with a few decisions made years earlier.

Three things to do:

1. Have the conversation. Sit down with your spouse, your kids, or whoever would be handling things, and walk them through it. Where the assets are held. Who the beneficiaries are. Who your financial advisor is, if you have one. This one costs nothing but an afternoon. Maybe order some pizza and create a memory.
2. Get a simple will and trust in place. It does not need to be elaborate. An estate attorney (or even AI can draft the basics then have an attorney finalize) can put together something straightforward that spells out who receives what and who is in charge. Simple and done beats sophisticated and someday.
3. Check your beneficiary designations. Retirement accounts and insurance policies pass by beneficiary designation, which means those forms can override what your will says. If you have not looked at them since you opened the account, look now. Old employers, old marriages, and outdated forms cause real damage.

None of this is about you. It is about making sure the people you leave behind get to celebrate your life instead of stressing over your investments.

Do it for them. And then go tell them you love them.