Welcome back to The Deep Dive. So this week,
the source material, it really forces us to look
at two, I mean, two completely opposed realities.
Yeah, they're pulled right from the notes. You've
got this institutional chaos on one hand. Exactly.
And then on the other, just this overwhelming
financial confidence. We are looking at the political
fallout from 2025 a year. Your source is called
the Democracy Demolition Derby. And we're setting
that right against the current macro environment
of early 2026. which is flashing these incredibly
strong market signals. We're talking the high
growth, low inflation. A textbook quad one environment.
That's it. So that juxtaposition is really the
mission today. How are these constitutional guardrails
so challenged, so systematically pushed against
last year? And at the same time, how is the market
telling us to position for massive growth right
now? It's a profound duality. We need to synthesize
the damage report and the dashboard readout for
you. OK, let's start with the political wire.
Your sources characterize Donald Trump's second
term as, well, maybe the most significant presidential
term since FDR's first. But they're careful to
add, not in a good way. Not in a good way, no.
The core assessment is that American institutional
democracy took a major, major beating in 2025.
The analysis is really structured around this
desire to, as they put it, monetize the presidency.
Power for the sake of power, for ego and for
money. Right. Running completely against what
the founders designed. So let's start with that
most fundamental power struggle then. The outright
nullification of checks and balances. The scale
of governing by decree is probably the first
signal. I mean, instead of legislation, the administration
signed a staggering 225 executive orders. 225.
That's not governing. That's just ruling by fiat.
It is. And it goes further than just XOs. We
saw a direct attack on Congress's power of the
purse. Right. The impounding of funds. Exactly.
Just illegally freezing money that Congress had
already appropriated for projects the administration
didn't like. Which, if I remember correctly,
was outlawed specifically after Nixon for this
very reason, right? That's the one. It was designed
to stop exactly this kind of maneuvering. And
that disregard, it extended to core constitutional
functions. Congress has the power to levy tariffs.
Yep, they were levied. on a whim with zero consultations.
Zero. And even more significantly, the power
to declare war. I mean, a cornerstone of congressional
authority was completely bypassed. The attack
on Iran, the capture of Nicolas Maduro in Venezuela.
No congressional authorization at all. It's a
fundamental violation. But what about sidelining
the Senate? That whole power to advise and consent,
how did they get around that? By, well, by sheer
disregard for the law, we saw repeated violations
of federal statutes. They were holding people
in acting positions way past the legal limits
without Senate confirmation. People like Alina
Haba and Lindsay Halligan serving as U .S. attorneys.
For months after the clock ran out. And then
you have that extraordinary example of asking
a private citizen, Elon Musk, to effectively
dismantle parts of the federal government. Which
would make him an officer of the United States.
It would. And that requires Senate sign -off.
If you connect this to the wider picture, the
administration waged a campaign of, I think the
source called it, systemic decapitation against
independent agencies. These are the agencies
designed to span presidencies to be non -political.
And they just removed officials with fixed terms,
firing General Charles Q. Brown, the chairman
of the Joint Chiefs, halfway through his four
-year term. And it wasn't just the military.
They went after the financial watchdogs, too.
Oh, yeah. They ordered the Federal Election Commission
to submit regulations for approval. They tried
to fire Fed Governor Lisa Cook. They gutted the
CFPB. And the reason the good cause for firing
commissioners at the FTC and the NLRB, what was
it? It was simply their prior appointment by
a Democratic president. That was it. If you can
fire an independent regulator for that, then
they're not independent anymore. They're not.
It's a total demolition of institutional independence.
And this dismantling of oversight, it seems to
have created the perfect environment for what
the sources are calling institutional extortion.
OK, the spoils system. When you look at the cash
for favors examples, it's less like traditional
influence and more like, I don't know. A shakedown.
What are the clearest examples of this? The sources
have several really explicit ones. Paramount
paid 16 million dollars to get approval for the
Skydance merger. And that was right after CBS
aired an interview that displeased the president.
Right. The payment is described as a fee to resolve
that displeasure. And look at the terms on Big
Tech. Intel was required to sell 10 percent of
its stock to the government to get eight and
a half billion for a chip factory. And Nvidia
had to give up 25 percent of revenue on certain
ships just to get permission to sell them to
China. It's not regulation. It's the government
demanding a slice of the pie in exchange for
permission to operate. It just blurs all the
lines. Speaking of blurring lines, what about
the Trump P meme coin? How does that fit in?
It's described as an open -ended bribery scheme.
It's a way for people seeking favors to openly
signal their loyalty, their financial backing.
And it comes with perks like dinners for the
top coin holders. And we see things happen right
after these signals. We do. There's the case
of Paul Walsack. He got a full pardon for tax
crimes just three weeks after his mother, a fundraiser,
paid a million dollars for a Mar -a -Lago dinner
ticket and spoke to the president. That kind
of transactional justice, it's blatant. And the
scale of it. The New York Times tracked 346 donors
who gave over half a billion dollars for explicit
favors. Palatir gives 10 million, then gets hundreds
of millions in federal contracts. A couple donates
a million to the inauguration. Their son becomes
ambassador to Finland. The speed of the transaction
is what's so different. And this targeting, it
wasn't just commercial. It was aimed at anyone
who might be an opponent. Absolutely. Threats
to big law firms. Lose your security clearances,
your federal contracts, unless you do free work
for them. And the media. Threats of law states
against the NYT, ABC. We saw that lead to self
-censorship, didn't we? We did. CBS News killing
that segment on the CECOT prison in Guatemala,
a story their own lawyers had cleared. The fear
of reprisal, that becomes the new guardrail.
Which brings us to the ultimate breakdown, the
Justice Department. Pam Bondi, Stephen Miller.
The sources say they see the Dado J as serving
the president, not the public. And that view
led directly to selective prosecution. prosecuting
opponents like Letitia James, James Comey, and
then you see immediate protection for allies.
The Duddo J dropped that $50 ,000 bribe case
against the border czar, Tom Homan. And the disregard
for due process and deportations is, well, it's
staggering. Half a million people, some of them
American citizens, shipped out with almost no
process at all. It's only possible because the
integrating mechanisms were gutted. They fired
the director of the Office of Government Ethics,
David Hurima. They killed the DOJ's anti -kleptocracy
team, reduced the public integrity section to,
what, 15 % of its prior size? You remove the
eyes and ears of oversight? And the corruption
becomes self -perpetuating. So that's the crucial
question, then. I mean, when you list it all
out like that, it's exhausting. This level of
chaos would have sunk any previous president.
How did it not cause a total political or economic
crash? Why did this just become the new Business
as usual. The sources point to three main reasons,
and it's really a structural failure. First,
there's the psychological part. A lack of guilt.
The president sees everything as a transaction.
It's not right or wrong. The idea of a norm violation,
it just doesn't register. Second, the political
fragmentation. The media polarization. Exactly.
And that narrative that any criticism from the
left is just partisan wokeness. It means half
the country just tunes out the warnings. It's
all dismissed as political noise. Making it totally
ineffective. And finally, the structural frailty.
The Constitution's only real penalty, impeachment.
It's just too heavyweight. It can't work if the
President's party controls even one chamber of
Congress. The guardrails failed when they were
actually tested. Speaking of tests, the capture
of Nicolas Maduro in Venezuela. How did the public
react to that? The initial polls were split right
down the middle. 40 % approval, 42 % disapproval.
And it was almost perfectly partisan. 74 % of
Republicans approved, 76 % of Democrats disapproved.
But what was the key number? That almost two
-thirds of Americans across party lines believe
Congress should have been consulted first. So
even with the deep divisions, the idea of checks
and balances still has public support. And the
Epstein files. The DOJ is reviewing 5 .2 million
pages. That's up from the 1 million we heard
about before. That volume is astonishing. 400
lawyers are being brought in to speed it up.
And the concern is that in that rush, information
the administration wants suppressed could slip
through. The sheer scope of it means the data
is no longer fully controllable. Okay, let's
make that pivot. The institutional scaffolding
is, well... Structurally unsound. And yet the
market is signaling clear skies. It seems like
all this political chaos is being priced at zero.
Let's look at why. We go from chaos to clarity
with the macro dashboard. The economy is firmly
in Quad 1. And for listeners, Quad 1 just means
growth is U .P. and inflation is down. It's the
sweet spot for risk assets. The sweetest spot.
The Fed can stay dovish while the economy picks
up speed. And our forecast has this holding for
the first third of 2026. It all points to a pro
-growth positioning. So why is the market prioritizing
this growth over the political risk? Because
liquidity and momentum are just stronger drivers
than institutional risk, at least in the short
term. If the economy is growing and the Fed is
stable, money flows into assets. It doesn't matter
what's happening in Washington. The market cares
about cash flow, not constitutional integrity.
For now. So what are the key market signals telling
you this Quad One story is real? The biggest
signal is the U .S. dollar. It is in a bearish
trade and trend setup, meaning it has a sustained
downward trajectory. The dollar index had its
worst year since 2017, down almost nine and a
half percent in 2025. And that single factor
powers everything else. It powers that whole
hashtag go anywhere alpha playbook. A weaker
dollar makes U .S. assets cheaper for foreign
buyers, and it makes commodities priced in dollars
instantly more valuable. It's the engine. OK,
what about rates? Is the bond market confirming
a dovish Fed? It is. The key short -term indicator,
the U .S .T. two -year yield, is also bearish
trade and trend. That signals the Fed is committed
to being accommodative. And Treasury volatility,
the move index, is collapsing to cycle lows.
Let's define move V for everyone. What does it
mean when bond volatility collapses? Move is
basically the VIX for the bond market. When it
collapses, it signals stability, low risk and
fixed income. That gives investors the confidence
to take on more risk in equities because they
don't see rate hikes on the horizon. And the
VIX itself, the fear gauge. Equity volatility
is sitting at 14 .51. That is squarely in what
we call the investable bucket between 9 and 19.
When the fear gauge is that low, it's a green
light for investors to be aggressive. The sources
say VIX could even fall to 12 .45. Which could
push the SPY to new all -time highs. Could perpetuate
freshly squeezed all -time highs, exactly. Low
volatility means high confidence. So where is
all that confidence flowing? What's getting the
alpha? Commodities are doing exactly what they
showed this environment. Precious metals are
just thriving. Look at the three -month gains.
Silver is up a staggering 55 percent. Platinum
up 36 percent. Copper up 14. That's all driven
by that currency dynamic. And inside the U .S.
stock market, where's the money going? It's all
flowing to high beta encyclicals, the sectors
that do best when growth accelerates. Consumer
discretionary, XLY. Technology, QQQ. Industrials,
XLI. And financials, KRE. They're all leading
the charge. And the defensive stuff is lagging.
Lagging badly. Staples, utilities. No one wants
safety when volatility is this low. High risk,
high reward is the playbook. And globally. Country
-level dispersion is the alpha engine, thanks
to the down dollar. Israel EIS is a great example.
Up over 7 .5 % month over month. The thesis is
simple. Go anywhere. Buy growth. It's a really
remarkable picture. You have political institutions
eroding at a pace we haven't seen in generations.
Meanwhile, financial markets are hitting all
-time highs and signaling suppressed risk. The
key takeaway from the political side is just
the sheer scope of that institutional dismantling.
Firing the inspector's general, the director
of the OGE, gutting the do -jays public integrity
section, that systematic removal of oversight
is the defining political act of 2025. And the
defining economic takeaway is that sharp, powerful
inverse correlation. The down dollar down 9 .4
percent last year is directly fueling those massive
commodity gains. The market dynamics are just
ignoring the political instability. And this
is the crux of the problem. The sources suggest
the only potential remedy left for a rogue president
is making future presidents prosecutable for
up to 10 years after they leave office. But that
solution depends entirely on a future hostile
administration actually having the political
will to enforce that law. Exactly. So if the
established constitutional checks impeachment,
the Senate and independent DOJ, if they all failed
under the stress of 2025 and this proposed legal
remedy is so fragile, so dependent on politics,
what functional non -political guardrail is actually
left to prevent this from happening again. That's
something for you to consider as you digest this
deep dive.