OK, so let's just jump right into this. Let's
do it. Because it is the morning after Wednesday,
February 25th, 2026. And, you know, if you were
anywhere near a screen last night, you definitely
saw the spectacle. Oh, absolutely. You had President
Trump's historic State of the Union address.
You had the Democratic rebuttal. Yeah. All the
pomp, the circumstance. And I mean, just the
sheer length of the thing. Yeah, it was actually
the longest state of the union on record. It
really felt like a marathon. But. And here is
the thing we really want to get into for this
deep dive. While all the cameras were trained
on Washington, something much quieter was happening.
Right. Something I'd argue is actually much more
significant. People were in voting booths in
Pennsylvania and Maine. And that is exactly why
we are looking at this today. Because, you know,
you can listen to the speeches, which gives you
the rhetoric of the moment, or you can look at
the actual votes and the underlying money, which
gives you the reality. Right. So that is our
mission today. We are not just going to recap
the applause lines from last night. We are going
to connect the dots between the president's what
he called the golden age rhetoric and the cost
of living reality that the Democrats are hammering
on. Exactly. And then we are going to look under
the hood at the economic engine driving all of
this. Yeah. Why do these two realities feel so
completely different depending on who you are?
Yeah, we are going to get into the K -shaped
economy and specifically there is this fascinating
financial maneuver involving blue chip art and
tax loopholes. It really explains how the very
top just keeps winning while everyone else is,
you know, stressing over the grocery bill. The
buy, borrow, die strategy. That's the one. I
can't wait to get to the math on that. But first,
we have to start with the main event from last
night, the State of the Union. Right. So the
big word being thrown around by pundits this
morning is restraint, which honestly feels like
an odd word to use given the usual history here.
It does sound odd, but surprisingly, yes. If
you look at the structure of the speech, the
tone was notably disciplined last night. Very
disciplined. I mean, we are 13 months into the
second term. There has been a lot of volatility
recently. Think about the whole Greenland annexation
idea that caused so much chaos just last month.
Oh, yeah. Or the massing of forces near Iran.
But last night... He didn't touch the Supreme
Court. He didn't attack his critics within his
own party. Which is usually a staple of these
addresses. Normally we get at least five or ten
minutes of just airing grievances. Exactly. But
this was a total pivot. It was what some are
calling a patriotic projection. Right. He focused
heavily on the upcoming 250th anniversary of
1776. The whole theme was that the Golden Age
is upon us. It was very aspirational. Yeah, it
felt like he was strictly trying to build a legacy
argument. But it is really interesting what he
did. deliberately left out, don't you think?
I mean, you mentioned Greenland earlier. Complete
silence on Greenland. It just vanished. Vanished.
That was the biggest foreign policy noise of
the entire last month and nothing. Also, there
was absolutely no mention of housing affordability
or health care. Which are huge for voters right
now. Right. And notably, no mention of the Jeffrey
Epstein scandals that have been consuming so
much oxygen in Washington lately. Not at all.
And despite the military buildup we just talked
about, he offered no specific policy clarity
on Iran. He really just stuck to that winning
narrative. Right. He even had that line where
he said, people are telling him, Mr. President,
we're winning too much. We can't take it anymore.
A very classic Trump line. Very. But the restraint
didn't actually last the entire night. There
was some unscripted friction. You could really
feel the tension in the room when he pivoted
to immigration and the Democrats. Yeah, that
is where the script seemed to fray. He called
the Democrats crazy for not standing up for crime
victims. But the real flashpoint came when the
room reacted to the recent events in Minneapolis.
Right, the shooting of Alex Prettie. Yes. For
a little context for you listening, Priddy was
a nurse who was killed by federal agents during
an ICE raid last month. So when Trump started
talking about aggressively supporting ICE, things
got very heated. Members of Congress actually
shouted at him. Right. Representatives Rashida
Slave and Ilhan Omar shouted back. Omar specifically
yelled, Alex wasn't a criminal. which is a massive
breach of usual protocol, but it shows just how
raw the nerve is right now. And how did he respond?
He essentially just dismissed the entire party
right from the podium. He said, these people
are crazy. Wow. So for all the talk of a golden
age and unity for the 250th anniversary, the
deep divisions over immigration and policing
were right there on the surface. It was a reminder
that the restraint is largely stylistic. The
substantive conflict is very much alive. And
that dynamic set the stage. perfectly for the
Democratic rebuttal. Because talk about a contrast.
You have Trump talking about 1776 in glory. And
then you immediately cut to Virginia Governor
Abigail Spanberger. Who has really become a rising
star for the Democrats. And her strategy last
night was fascinating to watch. Completely different
tone. Totally. She completely ignored the Golden
Age rhetoric. She didn't engage with the culture
war elements at all. She went straight for the
wallet. Her opening line was just brutal in its
simplicity. Yes. She asked, is the president
working to make life more affordable? That was.
her entire thesis. Right. While Trump was up
there touting tariffs and stock market highs,
Spanberger focused entirely on the cost of living.
She set up the central conflict of the midterms
right there. Exactly. She is betting that while
voters might enjoy the idea of a golden age,
they actually vote based on the price of milk
and rent. And that brings us perfectly to the
second part of our deep dive, because while Spanberger
was asking that affordability question on television,
voters in Pennsylvania and Maine were actually
answering it in the voting booth. And the answer
was a very loud yes for the Democrats. This is
the blue pulse that political insiders are whispering
about this morning. Let's break down Pennsylvania
first. Special elections, they're always a huge
bellwether. They are massive. And the stakes
yesterday were incredibly high. Control of the
Pennsylvania House of Representatives was literally
on the line. Because the margins are razor thin.
Razor thin. We are talking a 100 to 98 majority.
If Republicans had flipped just one seat, the
entire balance of power shifts. And that affects
everything in a key swing state. So let's look
at House District 22. This is in the Lehigh Valley,
basically Allentown? Correct. This is a bell
leather district. It is about 62 % Latino, relatively
low income. It is exactly the kind of demographic
that analysts say has been shifting toward Trump
over the last few years. Right. And get this.
Recently, Democratic voter registration in this
specific district dropped by 17 points. 17 points.
That is a collapse. If I saw those numbers as
a campaign manager, I'd be terrified. It is a
massive statistic. So on paper, this looked like
a prime opportunity for a Republican upset. The
narrative lately has been that working -class
Latinas are living the Democratic Party. But
that is not what happened yesterday. Not even
close. The Democrat, Ana Tabercio, she is a school
board member. She owns a local business called
A &M Tax and Services. She won decisively. She
crushed it. She won over 67 % of the vote against
the Republican, Robert E. Smith Jr. Wait. Let's
reconcile that for a second. Registration hangs
by 17 points, which suggests people are walking
away from the party label. But the Democratic
vote share stays huge. What does that actually
tell us? It tells us that party identification
might be fading, but when push comes to shove,
these voters are still pulling the lever for
Democrats locally. Tabrisio ran hard on affordability
and education. Those are Spamburger's exact themes.
Right. So despite the Golden Age talk from the
top of the ticket, the ground game in Allentown
held firm. It really suggests the much talked
about realignment might be more about labels
than actual voting behavior. That is a crucial
nuance. Just because someone drops their Democratic
registration doesn't mean they are suddenly voting
Republican. Exactly. And it wasn't just Allentown.
Right. There was another one. Yes. In Allegheny
County, House District 42. Democrat Jennifer
Masoko won her race. She is a teacher and a union
leader. So the Democrats preserved their effective
majority in the statehouse 100 to 98. So the
Rust Belt firewall held. But we also saw something
really interesting in New England. Let's move
up to Maine. Right. Maine House District 94 up
in Lewiston. Another special election yesterday.
Democrat Scott Harriman defeated the Republican
Janet Bowdoin. Bode wants one who's in the news
recently regarding the flags, right? That's her.
She was known for trying to ban pride flags.
Harriman is a city counselor. But there is another
very important layer to this Lewiston race. The
ICE raid. Yes. Lewiston was the site of a recent
highly publicized ICE raid. They actually called
the operation Catch of the Day. Catch of the
Day. That sounds like a restaurant special, not
a federal law enforcement operation. It really
does. But that was the official name. And going
into yesterday, there was a lot of speculation
that An aggressive enforcement action like that
might mobilize Republican voters or perhaps suppress
turnout in certain communities. But Harriman
won comfortably anyway. He did. Which suggests
that the heavy culture war approach banning flags
aggressive border style raids in New England
might not be playing as well with voters as the
GOP hopes. So if we synthesize all of this data
from last night the president is on television
saying everything is great we are in a golden
age but the actual voters in Pennsylvania and
Maine are saying We are voting for the local
candidates talking about our schools and our
grocery bills. It is a total split screen reality.
The red energy was dominating the speech, but
the blue ground game won the actual night. But
why is there such a massive disconnect? Why does
the economy feel like a golden age to the president
and his supporters, but a daily struggle for
the voters in Allentown? Well, this is where
we have to look under the hood. We have to look
at the actual shape of the economy. Economists
are increasingly referring to our current situation
as a K -shaped economy. OK, so visualize the
letter K. Right. The vertical line on the left
is the past. That is when everyone's economic
fortunes were generally moving together. Then
the arms branch off. The top arm goes sharply
up. That represents the wealthy. The bottom arm
angles down. That is everyone else. And the data
actually supports this visual. Overwhelmingly,
look at the stock market. The top 20 percent
of income earners now own nearly 90 percent of
all corporate equity and mutual funds. 90 percent.
Yes. And the top 1 percent alone holds a 39 .1
percent share. They are soaring. So when the
stock market hits record highs, which the president
is celebrating as proof of a golden age, that
financial benefit is almost entirely captured
by the top arm of the K. Well, the bottom arm
is dealing with a totally different reality.
Exactly. The bottom half of households and even
the middle class are stagnating. Their share
of wealth is declining. For them, the golden
age is just inflation. They see the Dow Jones
go up on the news, but their rent goes up faster.
But here is where it gets really fascinating.
It is not just that the top arm has more money.
It is that they play by a completely different
set of mathematical rules. Yes, they do. We found
this incredible case study about how the ultra
wealthy actually access their wealth without
triggering any taxes. This is the buy borrow
die strategy. And a recent disclosure from the
Epstein files gave us a perfect, concrete example
of exactly how this mechanism works. Right. This
involved the billionaire Leon Black. He was the
CEO of Apollo Global Management. Correct. So
in the files, it was revealed that Black took
out a massive loan from Bank of America. We are
talking a $484 million loan. Nearly half a billion
dollars. Now, if you or I go to the bank for
a loan, they want to see our W -2, our credit
score. to give us an interest rate that is, well,
not great right now. No, not at all. But Leon
Blath didn't use a paycheck as collateral. He
used exotic collateral, he used his art collection,
blue chip paintings by Picasso, Giacometti, Titian,
and Matisse. He essentially pawned his Picasso.
In a sense, yes. But the terms are nothing like
a pawn shop. This loan was taken out in 2015,
but the underlying principle is exactly the same
today. The interest rate on his $484 million
loan was only 1 .43%. 1 .43%. That is basically
free money. It is. And here's why this strategy
is so critical to understand. Why take a loan
at all? Why not just sell a Picasso if you want
some cash? Because if you sell the asset, you
trigger a huge tax bill. Precisely. Let's walk
through the math. If you sell a piece of art,
you have to pay capital gains tax. For collectibles,
that is about 28%. Plus, there is a 3 .8 % net
investment income tax. So you are already at
31 .8%. Right. So on a $100 million sale, you
are losing nearly $32 million straight to the
government. But if you borrow against that painting
at 1 .43%, you pay zero tax. Zero. Zero. You
get the cash entirely tax free. And you can use
that cash to invest in private equity or hedge
funds that yield a return way higher than the
1 .43 % interest you are paying the bank. So
you keep the painting on your wall. you literally
still get to look at the Picasso and you get
half a billion dollars in tax -free cash. Yes.
But wait, eventually you do have to pay the loan
back, right? You can't just hold the debt forever.
And that brings us to the die part of buy borrow
die. A little morbid, but go on. When an ultra
wealthy individual passes away, their heirs inherit
the assets. Under U .S. tax law, those assets
receive what is called a step -up in basis. Meaning
what? Meaning the official taxable value of the
Picasso is reset to whatever it is worth on the
exact day of death. So all that gain in value
over the decades? It is wiped out for tax purposes.
If the heirs sell the painting the very next
day, they pay zero capital gains tax, the bank
loan gets paid off from the estate, and the cycle
just starts all over again for the next generation.
That is just a completely different economic
universe. It really is. And it's not just one
guy doing this. The art finance market is absolutely
booming. It is estimated to be between 38 and
45 billion dollars right now, and it is expected
to top 50 billion by 2028. Wealth advisors literally
call art the most under -leveraged asset on the
planet. The most under -leveraged asset, which
is just a banker's way of saying they haven't
squeezed enough loans out of these paintings
yet. Exactly. Now, compare that reality to the
voter we talked about in Allentown. If you earn
a high wage through your labor, just working
a job, you could be paying roughly 45 % in combined
taxes. Between federal, state, and payroll. Right.
You cannot borrow against your future labor at
1%. You have to sell your time, pay the tax immediately,
and try to live on what is left. That is the
K -shape right there in action. The top arm is
borrowing against a tition at 1%. The bottom
arm is paying income tax and carrying high interest
on their credit cards. And that completely explains
the political disconnect we saw last night. When
the president talks about a golden age, he is
looking at asset prices. He is looking at the
value of the portfolios and the collateral. And
he is right. If you own assets, life is golden
right now. But when Governor Spanberger asks,
is life more affordable? She is talking to the
people who don't have exotic collateral. She
is talking to the people whose wages are flat.
And the election results in Pennsylvania and
Maine heavily suggest that, at least for now,
the affordability argument is winning over the
golden age argument at the ballot box. It really
puts the upcoming 250th anniversary into a strange
perspective. Yeah. You know, life, liberty and
the pursuit of tax -free liquidity. That is one
way to put it, but it does create a serious structural
problem for the GOP narrative heading into the
midterms. You simply can't tell someone who is
drowning in grocery bills that they are living
in a golden age. just because corporate equities
are up, the metrics of success have completely
decoupled. So synthesizing everything we've looked
at today, we have a split -screen country, you
have a president projecting success by relying
on the top of the K shape, and an opposition
successfully mobilizing the bottom of the K shape
by focusing entirely on the cost of daily life.
The State of the Union was the Air War. Big themes,
patriotic visuals, looking back at 1776. The
special elections were the ground war, checking
accounts, local issues, looking ahead to 2026.
And historically, the ground war usually dictates
the midterms. If the Democrats keep holding swing
districts like we saw in Pennsylvania, winning
over working class voters on economic issues,
that golden age narrative is going to hit a wall
of reality in November. The economics of 2026
are very complicated if you don't have a Matisse
to leverage. That is the absolute takeaway for
me. Yeah. The Golden Age depends entirely on
where you sit on that K curve. If you're on the
top arm, the view is spectacular. If you're on
the bottom arm, you are wondering what everyone
is celebrating. Exactly. And the real danger
is what happens if those two arms get too far
apart. Well, that is where we are going to wrap
it up for today. But we'll leave you with a final
thought to mull over. As we approach this big
250th birthday for the country, and the rhetoric
about this golden age gets louder, ask yourself
this. If the top arm of the K -shape becomes
completely untethered from the daily economy,
if they're essentially operating in a tax -free,
asset -backed universe of their own, do we even
share a single currency of political reality
anymore? Or are we basically two different countries
just sharing the same birthday cake? That is
the defining question of the decade. Keep looking
at the numbers, not just the headlines. Thanks
for diving in with us today. Thanks for listening.