Welcome to another deep dive. I am incredibly
glad you could join us today because we have
a really fascinating mission ahead of us. We
really do. Yeah, we are taking a stack of incredibly
diverse, honestly pretty dense sources and we
are going to connect the dots. Today, we're looking
at massive global market shocks and truly wild
political maneuvering. A profound economic simulation
that perfectly explained why the modern economy
can feel so rigged against the average person.
It is quite the stack of reading today. I mean,
we are pulling from the latest market and economic
data in the Leidenberg report, a sweeping political
roundup from electoral vote, and a truly eye
-opening macroeconomic analysis from Hedgeye.
Right. Now, before we jump into the deep end,
I need to make something very clear to you, the
listener. Our sources today contain highly politically
charged content covering both left -wing and
right -wing figures. Very charged. Yeah. So we
are not taking any sides here. We are not endorsing
any of the viewpoints, candidates, or political
actions mentioned. Our only job today is to impartially
report on the factual content provided in your
source material and help you understand the ideas
within it. That is the goal. We're here to analyze
the data, synthesize the trends, and basically
unpack the underlying systems at play. OK, let's
unpack this because the global geopolitical and
market news over the weekend was... Intense.
We need to start with the hard news right out
of the Leidenberg data. Right. The Middle East.
Exactly. After weeks of military buildup, the
United States and Israel launched coordinated
airstrikes across Iran, targeting nuclear and
military infrastructure. And as you might expect,
this caused an immediate shockwave. The initial
reaction was swift, particularly in the energy
sector. Oil prices surged sharply as markets
quickly assessed the risk of a broader regional
conflict. Because everyone instantly worries
about the supply lines. Precisely. The primary
concern here is always potential disruptions
in the Strait of Hormuz. When you have a critical
artery for global oil flows sitting right in
the middle of a conflict zone, the risk premiums
get priced in almost instantaneously. And the
stock markets reacted to that uncertainty immediately.
The S &P 500 closed down 0 .42%, and the Nasdaq
Q dropped 0 .94%. But this geopolitical shock
is crashing into a domestic economy that was
already flashing some, well. some rather concerning
warning signs. If we look at the inflation reality
outlined in the data, the January producer price
index or PPI rose 0 .5%. Right. That came in
above the 0 .3 % forecast, making it the strongest
monthly gain since September. And just to clarify
for everyone listening, the PPI measures inflation
at the wholesale level. before those costs are
passed on to you at the grocery store or the
mechanic. Yes, it is the cost of doing business.
So this is signaling renewed wholesale inflation
pressure. And it gets more intense when you look
under the hood and strip out volatile categories
like food and energy. The core numbers. Exactly.
The core PPI surged 0 .8 percent in January alone.
The Leidenberg report points out that this is
driven heavily by the services sector and companies
passing through higher tariff related costs to
maintain their margins. So what does this all
mean for the person listening? I mean, we have
airstrikes, the threat of a wider conflict, and
wholesale inflation ticking back up. You would
assume the Federal Reserve is trapped in a corner.
Completely trapped. They can't easily cut interest
rates in that environment. Right. And you would
think average people would be panicking about
their borrowing costs and grocery bills. But
the data presents this massive paradox. Amidst
all of this, people actually seem quite optimistic.
It is a striking contradiction, but the numbers
absolutely bear it out. The Conference Board
Consumer Confidence Index actually rose to 91
.2 in February. Up from 89 in January. Right.
In spite of everything happening on the global
stage and at the wholesale level, how does that
square with reality? It really comes down to
how people are viewing their immediate livelihoods
rather than macroeconomic abstractions. The share
of consumers who say jobs are plentiful rose
to 28%. Plentiful. Yeah. When people feel secure
in their employment, they tend to shrug off broader
systemic risks. That localized confidence pushes
the expectations index, which measures views
on future business conditions, job prospects,
and income growth. It pushes it up 4 .8 points
to 72 .0. Which is the largest gain we've seen
since last July. So the takeaway for you listening
is that the economy is painting this incredibly
resilient but highly pressured picture. Prices
are firm, geopolitical risks are escalating,
but households are feeling secure enough about
their paychecks to keep the engine running. It
creates a fascinating tension. The Fed has to
remain extremely cautious about cutting rates
because of that 0 .8 % core wholesale inflation
jump. But the consumer base is signaling they
are ready to keep spending anyway. And that consumer
resilience, paired with his underlying frustration
about the cost of living, is translating directly
to the ballot box. Oh, absolutely. Primary season
is officially underway, with North Carolina,
Arkansas and Texas all picking candidates. And
the turnout numbers in the electoral vote reporting
are absolutely staggering. The enthusiasm metrics
are off the charts compared to recent cycles.
In Texas alone. The number of people requesting
a Democratic primary ballot is up an unbelievable
240 percent compared to 2022. 240 percent. That
is massive. And GOP ballots are also up 125 percent.
Meanwhile, over in North Carolina, unaffiliated
voter turnout is up 40 percent. People are highly,
highly motivated to get involved right now. What's
fascinating here is analyzing the crossover voting
happening in places like Texas. The massive spike
in Democratic ballot requests in a historically
GOP dominated state points to a significant throw
the bums out energy. Yeah, that's a good way
to put it. The electoral vote analysis suggests
we might be seeing a highly strategic crossover
voting from independent or frustrated voters
who are just looking to disrupt the status quo.
Both primaries for the U .S. Senate race in Texas
are hyper competitive and feature incredibly
polarizing figures. On the right, you have Attorney
General Ken Paxton challenging incumbent Senator
John Cornyn. Right. And on the left, Representative
Jasmine Crockett and State Representative James
Tolerico are battling it out. Yeah. It feels
like voters are are treating the primary as the
actual general election in terms of urgency?
Political strategists are certainly treating
it that way. The Democratic Congressional Campaign
Committee, or DCCC, is capitalizing on this apparent
localized enthusiasm by dropping their red -to
-blue target list. These are the swing districts?
Yes, 12 swing districts where they are deploying
massive resources and they are carefully selecting
candidate profiles to match the specific nuances
of these districts. the curation is super obvious.
In Iowa's first district, they are backing Christina
Bohannon. She has degrees in engineering and
law. And the critical detail here is that she
lost this exact seat by just 799 votes back in
2024. Razor thin margin. Exactly. Then in Pennsylvania's
10th, they're running Janelle Stelson, a former
TV journalist. The source notes that Stelson
is positioned to provide a stark sanity contrast
for voters there. And down in Tennessee's 5th
District, they are backing Mayor Chas Malder,
who has already proven he can build a coalition
and get elected in a very Trump -friendly city.
It shows a very calculated approach to flipping
the House. But electoral vote highlights a sudden,
unexpected 13th target opening up in Montana.
Representative Ryan Zink is retiring from Montana's
1st District. Citing military injuries that require
surgery. Right, which turns what is usually a
relatively safe red seat into a potential battleground
overnight. Montana is a red state, but it definitely
has an independent street. The Republican front
-runner to replace CINC is Aaron Flint, a right
-wing radio host who the source describes as
quite controversial. He actively relitigates
the 2020 election and campaigns on climate change
being a hoax. Which gives the Democrats a real
opening if moderate voters in Montana decide
they want a less -fringy representative. It is
a perfect example of how local political desperation
and narrative control can flip an entire power
dynamic. Absolutely. And honestly, that same
raw, bare -knuckle power struggle is bleeding
directly into the corporate world. Let's look
at the fascinating corporate drama around Warner
Bros., Discovery, or WBD. This might be the most
striking example in the reading of political
power overtly dictating corporate mega -mergers.
Yeah, it reads like a thriller. WBD was looking
to sell its assets. Netflix came to the table
and offered $83 billion for WBD studios and their
massive catalog of movies and television shows.
But Netflix explicitly did not want CNN, which
WBD also owns. From a business perspective, that
makes total sense. Netflix is a streaming platform.
They want evergreen entertainment content, not
a 24 hour live news network. Right. Both management
teams reportedly agreed. And it looked like a
done deal until Donald Trump injected himself
into the process. According to the electoral
vote source, Trump was highly interested in the
fate of CNN. He reportedly met directly with
Netflix CEO Ted Sarandos and heavily implied
that the Department of Justice would simply never
approve the Netflix acquisition. So Sarandos
leaves that meeting and suddenly out of nowhere
Paramount swoops in with an alternative bid.
A bid backed by Larry Ellison, who the source
points out is a known crony of Donald Trump.
Paramount bids $111 billion for the entire WBD
portfolio, crucially including CNN. Netflix drops
out and Paramount secures the deal. Here is where
it gets really interesting. Why would Paramount,
a company already navigating its own complex
financial realities, spend an extra $28 billion
just to grab CNN and some aging cable channels?
The source explains the motive quite clearly.
The goal is to install a Trump -friendly CEO
who can turn CNN into what they describe as Foxlight.
Foxlight? Yes. It is a maneuver to neutralize
a prominent media critic and fundamentally reshape
the national news narrative. The source goes
so far as to draw parallels to how the government
dictates corporate buyouts for political reasons
in places like China. It is institutional narrative
control playing out in plain sight. And this
obsession with controlling the narrative, often
at the expense of actual substance, seems to
be a running theme across the political spectrum
this week. It absolutely is. Performance often
overshadows policy. I was looking at the breakdown
of Representative James Comer's highly anticipated
release of the Clinton's testimonies regarding
Jeffrey Epstein. This was hyped up as a massive
bombshell that would shake the foundations of
Washington. It landed with a complete thud. Bill
Clinton basically testified that he was friends
with Epstein before he was a known criminal.
And the biggest drama from the entire hearing
was Hillary Clinton getting mad at Representative
Lauren Boebert for breaking committee rules to
take photos for social media. It was a high -profile
fishing expedition that yielded no substantive
catch. It serves as content for political fundraising
rather than meaningful oversight. Then you have
the sheer distortion of reality to fit a narrative.
GOP Senate candidate Michelle Tafoya recently
went on television and claimed that 28 % of Californias
are homeless. When the real number is a shade
under 0 .5%, that is a mathematical error of
about 5 ,600%. It highlights how statistics are
entirely unmoored from reality in service of
a talking point. And the left is playing their
own version of institutional opacity. The DNC
completely scrapped its 2026 midterm convention,
ostensibly to save money. But more tellingly,
they're refusing to release their 2024 election
autopsy. The source notes that the internal review
confirms the Gaza issue was a fatal blow to the
Kamala Harris campaign. By burying the autopsy,
the party avoids reopening a deeply divisive
wound, preferring opacity over public accountability.
We even see this gatekeeping And who gets honored?
Speaker of the House Mike Johnson denied the
late Jesse Jackson the honor of lying in state
at the U .S. Capitol, an honor previously given
to civil rights leaders like Rosa Parks. Jackson
is lying in state in South Carolina instead.
A decision regarding institutional honors that
was likely calculated with a very specific political
base in mind. It all feels like a circus of performance.
Even Donald Trump, who usually skips the White
House press correspondence dinner to avoid being
mocked by stand -up comedians, is attending this
year. But the headliner isn't a comedian at all.
No, it's not. It's a mind reader named Oz Perlman.
You certainly cannot say modern politics lacks
entertainment value. True. But to your earlier
point, all of this, the inflation squeezing wallets,
the voter frustration driving massive primary
turnout, the corporate consolidation, the performative
politics, it all funnels into this overwhelming
feeling people have that the system is structurally
stacked against them. Which brings us to the
centerpiece of our deep dive. I was reading through
the macroeconomic analysis from Michael W. Green
at Hedgeye and his simulation. absolutely blew
my mind. It's incredible work. It takes that
abstract feeling of a rigged economy and proves
it with brutal mathematical precision. It's called
The Summerslide Part 2, The Rise of the Gerontocracy.
Walk me through the mechanics of green simulation
because it sounds like a board game, but the
implications are terrifying. The beauty of green
simulation is its simplicity. He sets up thousands
of computer agents to represent everyday workers.
Every agent gets a job paying exactly $55 a year.
Okay. Their base cost of living is non -negotiable
and set at $50 a year. So mathematically, everyone
has a theoretical 10 % savings rate. And unemployment
is set at a steady 4 % with a standard three
-month average duration. So everyone faces the
exact same macroeconomic conditions. Correct.
But here is the critical variable in the simulation,
the restart haircut. The restart haircut. Yes.
Every time an agent loses a job, it costs them
$10 to get back on their feet. Wait, let's pause
on that. What does that $10 haircut look like
in real life? In the real world, that $10 represents
the friction of transition. It is the lost security
deposit when you have to move for a new job.
It is the cost of expensive out -of -pocket health
insurance to bridge the gap between employers.
Oh, well. It is the price of a new suit for an
interview or dipping into savings to fix your
car so you can actually commute. It is $10 wiped
out from their savings purely as a penalty for
experiencing unemployment. And then Green splits
these agents into two classes to see how they
fare over a 40 -year working life. They had the
exact same talent, the exact same work ethic,
the exact same salary. Everything is equal. The
only difference is their starting wealth buffer.
A high SES or high socioeconomic status group
starts the simulation with a $500 buffer. Which
equates to 10 years of breathing room. And the
low SES group starts with just a $50 buffer.
Exactly one year of subsistence. I'm looking
at the numbers and the divergence in outcomes
is staggering. The results are brutal. The high
SES group survives the 40 -year working life
99 .8 % of the time. They barely notice the unemployment
shocks. Their massive buffer easily absorbs the
$10 restart haircut, and their wealth continues
to compound. Right. But the low SES group, they
face a 13 % ruin or bankruptcy rate. Purely because
of that $10 friction cost. Yes. They enter what
Green calls the capital decay regime. Because
they start with so little, the restart costs
and the occasional unemployment shock completely
overwhelm their 10 % savings rate. That makes
total sense. They spend their entire working
lives just trying to recover from the previous
financial setback, rather than ever actually
compounding their wealth. It mathematically proves
that the most critical factor in economic success
in this model isn't talent and it isn't hard
work. It is redundancy. It is the starting wealth.
Exactly. But the simulation gets even darker
when green adds families and retirement into
the mix. This is where we see the reality of
the modern sandwich generation. Think about the
30 to 50 year olds right now who are caught in
the middle. In the simulation, an agent can only
afford to have a child if they have maintained
a certain buffer. Each child costs $25 a year
to raise. That's half their salary. Right. And
simultaneously, these active workers have to
pay 10 % of their salary into a retiree pool.
That's the equivalent of Social Security and
Medicare taxes. Plus their own rent. Plus facing
those constant restart risks. So this sandwich
generation is funding literally everything in
the economy, but they compound absolutely nothing
for themselves. Every single dollar of their
labor is consumed by the sheer cost of societal
survival. And this brings us to the core insight
of the hedge -eye piece. If we connect this to
the bigger picture, we do not live in a meritocracy.
We live in a bufferocracy. A bufferocracy. Yes.
When Green analyzed the terminal wealth at the
end of the simulation, he found that the bottom
80 % of retirees are basically broke, facing
the exact same struggles as the young families.
But the top 20 % of retirees, quintile five,
they pull away entirely. I saw that chart in
the notes. It's a complete decoupling from the
rest of the economy. They have zero labor risk.
meaning they never face the $10 restart haircut,
they have zero child costs because their kids
are grown, and they are the demographic primarily
collecting the transfer payments funded by the
young workers. Green observes that they haven't
just accumulated capital, they've become capital.
They act as a wealth object that extracts value
from the labor force and never resets. Meanwhile,
the hedge eye data points out a massive blind
spot in how we measure economic health. If you
look at the average wealth of the entire simulation,
it goes up. The economy looks phenomenal on paper.
Green calls this the ensemble illusion. The ensemble
illusion. This raises such an important point
about how we interpret data. It does. The average
wealth is dragged upward entirely by that top
20 % of retirees hoarding capital. But the median
wealth, the financial reality for the typical
household, completely flatlines. It is an economy
where the most profitable strategy isn't to innovate
or invent the future. but to have simply been
born early enough to accumulate capital before
the ladder was pulled up. It explains the frustration
we see in those Texas primary numbers perfectly.
It connects the micro frustrations directly to
the macro structure. Wow. Okay, we need to take
a cosmic breather. Yes, please. Seriously, let's
look up from the spreadsheets and the ballot
boxes for a second. In the Leidenberg data, buried
among the inflation numbers, they noted something
beautiful that happened on February 28th. A rare
six planet alignment lit up the night sky. Oh,
that's wonderful. Yeah. Mercury, Venus, Jupiter,
Saturn, Uranus, and Neptune all paraded across
the horizon. A rare celestial event just offers
all a little bit of perspective. A welcome reminder
that the universe operates on a much grander
scale than our current economic cycles or political
squabbles. Absolutely. But before we sign off,
I want to leave you, the listener, with one final
thread to pull on. Based on that hedge -eye simulation,
we know the sandwich generation is currently
funding the entire economy. They're paying for
the kids, they're paying the retiree transfers,
but they are compounding absolutely nothing for
themselves. So here is the provocative question
to mull over. If the ultimate buffer against
ruin is simply being born early enough to accumulate
wealth before the ladder was pulled up, what
exactly happens to the global economy in 20 years?
Right. when this fully drained sandwich generation
reaches retirement age themselves but has no
capital to become the new gerontocracy who will
be left to fund the system? Oof, that is a heavy
structural question and definitely something
to explore on your own. Thank you so much for
joining us on this deep dive into the sources
today. We will catch you next time as we continue
to unpack the forces shaping our world. Stay
curious.