Welcome back to The Deep Dive. It's Thursday,
February 12th, 2026. And you know, if you've
been trying to follow the news this week, it
really feels like you're watching two different
realities on a split screen. It really is a split
screen moment. It's jarring. I was going through
the stack for today. We've got this political
breakdown from Electoral Vote News and the Q1
market report from Horizon Investments. And honestly,
you would think they were describing two different
planets. Exactly. On one side of the screen,
you have Wall Street. And they are, let's be
honest, throwing an absolute party, a rager.
We're talking record corporate margins, this
AI boom that's just changing everything, and
money flowing everywhere. And then you flip to
the other side of the screen, Washington D .C.
And the building is basically on fire. We have
a government shutdown that's supposed to happen
tomorrow, which is fittingly Friday the 13th.
You've got a Justice Department that seems to
be at war with itself and political coalitions
that looked solid just a couple of years ago.
Now they're just fracturing in real time. So
that's our mission today. We're going to try
to make sense of these two realities. How can
the economy be enjoying what one of our sources
calls a tailwind Sunday? And we will get to that
while the political system is seemingly tearing
itself apart. And how long can that last? I mean,
eventually those two screens have to collide.
Economics is politics. Politics is economics.
They always find each other. Let's start with
the fire then. The political side, which is just
vividly described in this electoral vote news
report. Usually, you know, a committee hearing
is where excitement. goes to die. But this House
Judiciary Committee hearing with Attorney General
Pam Bondi That was something else. Oh, not at
all. Drama doesn't even begin to cover it. The
source called it a five hour festival of accusations.
But the key thing for you to understand is that
this wasn't just, you know, the usual partisan
back and forth Democrats yelling at Republicans.
Right. This was friendly fire. This was different.
Exactly. This was an internecine war. You had
representative Thomas Massey, a Republican from
Kentucky, a libertarian type, and he was going
for the jugular against his own party's attorney
general. And Mansi has been obsessed with the
Epstein files for years, right? This is his issue.
It is. He co -sponsored the law to get them released,
and his accusation against Bondi was. It was
incredibly specific and incredibly damaging.
He claims she redacted the names of Epstein's
clients, which the law explicitly forbids, but...
but she failed to redact the names of some of
the victims. Which, I mean, if that's true, that's
not just a mistake. It's a massive, massive breach.
It's worse than a breach. Massey looked right
at her and said, this is bigger than Watergate.
He is accusing the Attorney General of the United
States of a coverup. And when Bondi fired back,
she didn't even argue the facts of the law. She
just got personal, called him a failed politician.
It just sounds so broken. But there was another
moment in that hearing that really cut through
all the noise for me. It involved Representative
Pramila Jayapal and the victims themselves. Yeah,
this is the part of the source material that
just stops you cold. There were 11 of Epstein's
victims sitting right there in the hearing room.
Right behind Bondi. And Jayapal asked them to
stand up if they hadn't been able to get a single
meeting with the Department of Justice. And they
all stood. Every single one. And then Jayapal
asked Bondi to just turn around to face them
and apologize. And she refused. She refused.
She wouldn't even look at them. She called it
getting in the gutter with these theatrics. To
call victims standing in a congressional hearing
theatrics, that tells you everything you need
to know about the atmosphere in D .C. right now.
it's just completely paralyzed. And that paralysis
has a very real, very specific deadline. Midnight
tomorrow, Friday the 13th, the government shuts
down. We've all seen shutdowns before. They usually
kick the can down the road. But the source suggests
this one is different. Why? It's about which
agencies are involved. This isn't a total shutdown.
It's targeted at the Department of Homeland Security.
But here's the little detail that matters. ICE,
immigration and customs enforcement is funded
separately so they stay open. OK, so the border
operations continue, which makes the Democrats
angry because they want to use the budget to
control that. Correct. But The TSA, the Transportation
Security Administration, they are not funded
separately. So they shut down. They shut down.
Okay, so if I'm flying this weekend, I'm just
dealing with longer lines because the agents
aren't getting paid. It's an annoyance, but...
Is it a crisis? It becomes a crisis when you
look at what else is on those planes. The source
highlights this huge economic vulnerability that
I think most people don't think about. It's not
just passengers in suitcases. Passenger jets
carry a massive percentage of our nation's air
cargo. Oh, right. Like perishables, mail. Perishables,
fruits, vegetables, the U .S. mail, critical
medical supplies, all of that is in the hold
of the plane you're sitting on. So if the TSA
agents stop showing up? Which they do, historically,
when they don't get paid. then the passenger
flights get grounded. And when those flights
get grounded, the supply chain for all that essential
stuff just snaps. It's an economic wrecking ball.
And that's a perfect example of the two screens
colliding. The political dysfunction directly
threatening the economic engine. It is. And this
brings us to what the source calls the Trump
V2 .0 coalition. You know, he built this very
broad kind of contradictory group to get back
into power in 2024. And now in 2026, it seems
like the bill is coming due. A lot of people
are having buyer's remorse. Let's start with
the crypto folks. I mean, that was a huge get
for him demographically. They were promised everything.
They were promised the moon and they got, well,
gravity. Bitcoin has fallen from a high of one
hundred and twenty five thousand dollars down
to around seventy thousand. Volatility is part
of the game, though. They know that they do.
But it's the political betrayal that really stings
them. They were promised tax free gains. That
was the phrase. And instead, instead, the regulations
are still a mess and the tax man is still coming.
As one of Mr. In the report said, I didn't realize
he was removing the gains. Ouch. And it's not
just the finance guys. The source points to.
The populist podcasters. The Joe Rogans of the
world. Critical. These guys were so important
in mobilizing younger male voters. But what was
their number one issue? It wasn't tax cuts. It
was transparency. The Epstein files. The unredacted
Epstein files. They saw it as the key to burning
down a corrupt establishment. And as we just
discussed at that Bondi hearing. They're not
getting them. So now you have these huge media
figures with bigger audiences than cable news
who are starting to feel like they were conned.
And if they turn on the administration, that
base of support can erode really, really fast.
And you can add farmers to that list, right?
They're getting hit by tariffs. Right. They're
being offered about $12 billion in aid. But farmers
are a proud group. They don't want subsidies.
They call it welfare. They just want to sell
their crops. They want to sell their soybeans.
They want trade markets, not a government check.
And then you have... Minority voters who were
promised that prices would come down. That hasn't
really happened. No. And on top of that, you
have the ICE raids alienating a lot of Latino
voters who might have been persuadable on economic
grounds. So you have this fracturing coalition,
a paralyzed Congress, a shutdown threat. I mean,
if you only looked at that political screen,
you'd think the whole country was falling apart.
And yet. And yet we switch screens, we open the
report from Horizon Investments, and suddenly
the sun is shining, the birds are singing, and
money is literally falling from the sky. It is
the most jarring thing I've seen in a long time.
The chief investment officer at Horizon actually
calls it a Tailwind Sunday. I love that phrase.
It does make me a little hungry. So let's break
it down. What are the ingredients in this tailwind
Sunday? OK, so you start with the raw numbers.
Nominal GDP is tracking at seven to eight percent.
And for context, people should know four or five
percent is usually considered very strong. Eight
percent is. It's scorching hot. I mean, it's
the kind of growth you'd expect to see in a developing
country. Not a mature economy like the U .S.
On top of that, corporate margins are at all
time highs. And we're in an earnings season where
80 % of companies are beating expectations. So
where is all this coming from? The report uses
this term I mentioned, fiscal stimmy. It sounds
like slang for the COVID checks. Is that what
they mean? Sort of, but on a much bigger scale.
They actually identify two types of stimmy. First,
there is public fiscal stimmy. That's just the
federal government running a massive deficit,
about 5 % to 6 % of GDP. So even with all this
shutdown talk, the government is just pumping
cash into the economy. OK, and what's the second
type? This is the really interesting part. Private
Fiscal Stimmy. And what that means is AI CapEx.
Capital Expenditure. So the big tech companies
spending billions. It's not just big tech. It's
everyone. Microsoft, Google, yes, but also. industrial
firms, manufacturing firms. And this isn't just
buying software. This is pouring concrete and
steel. They're building data centers, upgrading
power grids, designing custom chips. It's a massive
infrastructure build out. The Horizon report
makes this really interesting comparison. They
say we shouldn't think of AI like the Internet.
We should think of it like electricity. That
is such a crucial distinction. The Internet was
a communication layer. Electricity. That's a
power source that runs everything. And the argument
is that AI is diffusing through the whole economy,
just like electricity did in the 1920s. It's
becoming the new baseline for how all work gets
done. And are we actually seeing that in the
productivity numbers yet, or is it still just
hype? It's finally showing up. The report points
specifically to legal work, medical diagnostics,
and writing code. In those fields, one person
can now do the work of three. And that drives
up margins, which drives up profits, which drives
up the stock market. They also mention these
green shoots in manufacturing, and they tie it
to something called the OBBA. Slaps. Yes. The
One Big Beautiful Bill Act. That is not the official
name, is it? I'm afraid it is. You have to appreciate
the branding, I guess. But silly name aside,
the data shows it's actually working. Global
manufacturing PMIs, which are basically surveys
asking factory bosses if they're buying more
stuff, are expanding for the first time in four
years. OK, so the Sunday is looking pretty good.
But every investment report has a but. What are
the headwinds? What could spoil the dessert?
Two big ones. The first one connects right back
to the political screen. Immigration. The political
crackdown on the border, all the raids, it's
choking off the supply of labor. Right. If your
economy is growing at 8%, but your workforce
isn't growing with it. You get bottlenecks, you
get inflation, you can't build all those data
centers if you don't have people to pour the
concrete. Makes sense. What's the second risk?
Consensus risk, meaning everyone agrees. The
consensus on Wall Street right now is that a
recession is basically impossible. And the report
notes that whenever 100 % of investors are on
one side of the boat, the boat gets very, very
tippy. Complacency. Exactly. Complacency is the
enemy. It means if a shock does hit, like, say,
a supply chain collapse from a TSA shutdown,
the market is absolutely not priced for it. And
this is where the two screens just crash into
each other, right? It's not just that the politics
can hurt the economy. The money from the economy
is actively warping the politics. Precisely.
And I think the best example of this collision
that the source points to is the governor's race
in California. Yeah, the report frames this race
as a proxy war. You have a crowded field of well
-known Democrats, Katie Porter, Xavier Becerra.
But then you have Matt Mahan, the mayor of San
Jose. And Mahan is, without a doubt, the tech
candidate. He's raising money at a staggering
rate. $10 million in the blink of an eye. Why?
What is the one issue that unlocks all that cash?
One issue. A wealth tax. He's against it. And
the tech billionaires in Silicon Valley are terrified
of it. So they're just pouring the profits from
this AI boom directly into his campaign to protect
those exact profits. It's purely transactional.
But where it gets really strange, strange bedfellows
territory, is on the issue of regulating AI itself.
Right, because usually big tech wants government
to just stay out of its way. Don't regulate us.
Not this time. The source points out that companies
like Palantir, figures like Peter Thiel, they
are spending a lot of money on the midterms,
but they are pushing for a federal AI law. That
seems completely backward. Why would Peter Thiel
want the government to regulate AI. Because they
want a weak federal law. What they're really
terrified of is states like California or New
York passing a really strict citizen bill of
rights. Ah, something that might ban facial recognition
or deep fakes. Exactly. So if they can get the
federal government to pass a weak law that includes
a line saying this preempts all state laws. And
then the strong state laws get wiped off the
map before they're even written. It's a shield.
They want a wet noodle of a federal law to protect
them from real regulation. And this has created
probably the most bizarre political alignment
of 2026. You have Representative Raja Krishnamoorthy,
who is a progressive Democrat, and Governor Ron
DeSantis, a hard -right Republican, on the exact
same side. And they're both fighting against
big tech on this. Yes. They both want strict
AI regulation. They want to protect citizens
from data harvesting and deepfakes. It just shows
you how this technology is completely scrambling
the old left -right political map. And while
the politicians are scrambling, the legal system
is kind of quietly dismantling the foundations
of democracy. Right. We have to touch on the
legal threads in the Electoral Vote News Report.
This is the stuff that's so important, but it
doesn't make the cable news headlines because
it's boring legal procedure. But it changes the
entire game. The big case to watch is Louisiana
v. Calais. What's at stake there? The entire
Voting Rights Act, the VRA. The argument being
made to the Supreme Court is that the VRA forces
states to discriminate based on race because
it mandates the creation of these majority minority
districts. If the court accepts that argument,
the VRA is effectively dead. That would just
undo 60 years of precedent. It would. But. There's
an even sneakier legal threat, a ruling from
the Eighth Circuit Court about private enforcement.
OK, that sounds really technical. What's the
impact of that? So historically, if your voting
rights were violated, you could sue. The NAACP
could sue the ACLU, any private citizen. That's
how the law was enforced. The Eighth Circuit
ruled that only the U .S. Attorney General can
bring those lawsuits now. If the attorney general
works for a president who doesn't want to enforce
the law, or an AG like Bondi who seems to be
in a constant state of crisis. Then no one sues.
And the law just becomes a zombie. It's still
in the books, but it has no teeth. It's unenforceable.
That is terrifying. It's a structural change.
And speaking of structure, the source does some
Senate math that paints a really bleak picture
for the Democrats long term. Yeah, it's a pure
geography problem. You need 50 or 51 seats to
control the Senate. Democrats are looking at
a map where only 19 states have consistently
voted against Trump. Which only gets them to
38 senators. Exactly. So they are starting with
a huge structural deficit. To get to 50, they
have to win in states that are, you know, naturally
hostile political territory for them. And the
source mentions that this could lead to some
really wild, drastic ideas being taken seriously.
Yeah, these are the break glass in case of emergency
ideas. One that's floated is splitting California
into two separate states, Northern and Southern
California. That sounds insane, but then you
remember we have two Dakotas, two Carolinas.
Exactly, and that would instantly give the Democrats
two more senators. Another idea is to expand
the House of Representatives to a thousand members.
A thousand? Wow. The idea there is to dilute
the power of the Electoral College. More representatives
means the small red states lose their outsized
advantage in presidential races. The fact that
these are even being discussed by serious people
just shows you how much strain the system is
under. It is. The economy is speeding up and
the political structure is seizing up. So to
try and synthesize all this for you listening,
you've got this tailwind Sunday economy. It's
hot. It's fueled by AI and government cash. At
the same time, you have a political class engaged
in what the source calls a festival of accusations.
While the legal guardrails of democracy are being
quietly unscrewed bolt by bolt, it creates this
massive cognitive dissonance, you know? If you
look at your 401k, you feel great. If you turn
on the news, you feel sick. And there's one final
story from the source material that I think just
perfectly chillingly captures this moment. It's
about the gravel wars and the Gallup poll. Yeah,
this detail is it's truly the most dystopian
thing in the whole stack. Gallup, the gold standard
of polling, they've measured presidential approval
for decades. They've stopped. They just quit?
They quit. The report explains that Trump's approval
rating fell from 47 percent to 37 percent. He
was furious. He attacked them. So rather than
fight him or worse, be tempted to fudge the numbers
to make him happy, Gallup just opted out. They
just decided we aren't going to measure this
anymore. That's profound. I mean, we spend this
whole time talking about headwinds and tailwinds
and all this data. But if our primary instruments
for measuring reality, like an approval poll
or maybe economic data next, if those instruments
just get turned off because the results are unpopular.
Then we are flying blind. We're in a plane that's
accelerating at 8 % GDP growth. The pilots are
fighting in the cockpit. And someone just taped
over the altitude gauge because they didn't like
what it said. That is a very sobering thought
to end on. It is. I think the takeaway for you
listening is that in 2026, you can't just rely
on the official summary anymore. You have to
look at the raw data yourself, the cargo flights,
the court filings, because the main dashboard
might just go blank. Keep an eye on that shutdown
deadline tomorrow and try to enjoy the Sunday
before it all melts. Thanks for diving deep with
us. See you next time.