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Reformed Millennials - Learn Earn and InvestThis podcast covers growth investing in Canada and is dedicated to identifying the latest trends in tech, the consumer and business. We discuss ways Millennials can leverage these trends to better invest their time and money. Author: Reformed Millennials
The Reformed Millennials Podcast covers a wide ranging topic arc focusing on Sports and Investing. RM Pod is dedicated to identifying the latest trends in technology, sport and investing. We discuss the ways Millennials can leverage these trends to better invest their time, fandom and money. reformedmillennials.substack.com Language: en Genres: Business, News, Politics Contact email: Get it Feed URL: Get it iTunes ID: Get it |
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West Edmonton Mall Military, Sauron, and the Skyrocketing Cost of Money
Wednesday, 2 September, 2026
Welcome back everyone. Summer’s over, whether we agreed to it or not, and you can feel everyone with impact returning to their desks. It shows up in the inbox, on the timeline, and most of all in the bond market.Market Update📈📉Warsh gave his Jackson Hole keynote and dropped the pretence: “we have work to do.” Core PCE is running 3.3 percent against a 2 percent target, headline 3.7 on oil, and the market has genuinely priced a September rate hike into play. That’s a stunning shift from March. You can see it in the ten-year, in gold, and especially in small caps, which carry the highest financing costs and get hurt first when the tail of the curve rises.IMPORTANT MARKET STRUCTURE CHANGE: While the Fed talks tough, the Treasury has been quietly running a yield-cap operation, buying down the long end of the curve, because mortgage rates ripping higher into a midterm cycle is a political problem. The Fed is actively tightening while the Treasury tries to loosen, two arms of the same government pulling against each other, and the Fed chair doing the tightening is the one Trump picked himself. And the Treasury is losing. Yields sit above where they were when the operation started.Why? Go back to the Ben Thompson question we covered two episodes ago: are we going to have enough money? For eighteen months the bottlenecks were GPUs, optics, power and the market has worked diligently toward solving each one. The new bottleneck is capital. For the first time in roughly twenty years, the hyperscalers are issuing serious amounts of debt, and per Cembalest’s new Eye on the Market piece, their 2026 issuance is about $320 billion, which works out to roughly 70 percent of all new long-duration Treasury borrowing this year. When Washington goes to raise money, it now competes with Microsoft and Google for the same buyers, and frankly, on the financial metrics, some of those companies are maybe more creditworthy than the government. That competition is what’s pushing the long end up, and the long end is what sets your mortgage rates.The AI infrastructure layer, the biggest contributor to S&P earnings growth for two years, has ground sideways to down, with many names off nearly 40 percent from the June peaks. Beating earnings and guiding up wasn’t enough:Earnings season is over and essentially all of the bottleneck tech companies beat and guided higher. It didn’t matter. When the cost of capital rises, your multiple compresses, and beat-and-raise stops being enough. The market wants perfection.Is the spending justified? The revenue says yes. Google Cloud’s backlog jumped $52 billion in a single quarter to over half a trillion dollars. AWS grew 37 percent, Azure 43, Google Cloud 82. Earnings revisions are at the high end of anything we’ve seen in thirty years. Two asterisks belong on all of it, though. First, capex and R&D from these companies went from $460 billion in 2024 to nearly $900 billion over the last twelve months, so some of the market’s earnings strength is the spending itself. Second, an unusually large share of S&P earnings right now comes from unrealized gains on stakes in Anthropic, OpenAI, and SpaceX, positions marked up from raises done at $200 to $500 billion valuations. Anthropic is expected to go public in about eight weeks at something like $2 trillion. Those are real gains on paper, and paper is doing some of the market’s lifting.My honest read: none of this is fatal. The proverbial trains are full and running on time, and demand for the railway has never been more justified. Expect a choppy six to eight weeks while the bond market finds and appropriate yield level, and remember that these rate limiters are healthy. Bubbles without governors are the ones that end in 2008. Bubbles with them tend to leave behind the railways and the fiber, the things that define the next century. I think AI ends up delivering something like the railway plus the internet combined. But from here, you have to know exactly what you own. It won’t be as easy as it was twelve months ago.Canada note: the Bank of Canada is expected to hold at 2.25 for a seventh straight meeting. Our headline CPI of 2.8 is gasoline-driven and our core is bang on target at 2 percent, so there’s no case to hike. The loonie sits at 1.39, banks don’t see a Canadian hike until 2027, and anywhere between 1.30 and 1.40 the economy is happy. Meanwhile Alberta’s Q1 fiscal update landed with oil averaging roughly $90 against a $60.50 budget assumption. As Albertans, we are on the right side of nearly every force squeezing everyone else.Why this isn’t the dot-com rerunThe question every client asks: is this a bubble yet? Here’s the framework that finally made it click for me.The internet had one dimension of exponential growth: user count. Everyone paid a flat fifty or a hundred bucks a month, and using it ten times more didn’t cost ten times as much. One curve, and once penetration hit about 50 percent, it saturated. That was March 2000.AI has two dimensions which is different than the Internet/fiber era.Penetration crossed 50 percent a few months ago, right on schedule. But usage per person is just leaving the station. Median enterprise AI spend is about $12 per employee per month today. The plausible destination is around 10 percent of a white-collar salary, call it $1,200 a month. And it’s already visible: a16z said this week that their portfolio founders are running at multiples of the median. The internet stopped at fifty bucks a month. This doesn’t stop at twelve.And the unit economics of the infrastructure have changed underneath us. A gigawatt costs $40 to $60 billion to build, roughly 70 percent of it flowing to Nvidia. But look at SpaceX’s filings renting compute to the labs and the software companies: in some cases a gigawatt is generating on the order of $100 billion in revenue. Put out $40 to make $100 in a year and tell me that’s malinvestment. The usual caveat stands, all exponential growth is an illusion before the ceiling arrives. But this ceiling has an extra dimension holding it up.The backlash, and the window of opportunityThe next leg of risk isn’t chips or money. It’s politics. The blanket hatred of data centers on social media is real and spreading: New York has its moratorium, Virginia is wobbling, and now Texas, the build-anything state, just imposed a temporary pause. Mel’s framing deserves to be quoted at length. This is an arms race, the first our generation has seen since the space race, and the question isn’t whether the world is going there, it’s who arrives first and captures the upside. Skepticism about water and power is legitimate, and we have institutions and regulators built to answer exactly those questions. But ask who benefits when North America blocks its own growth. It’s China, period, end of story. And a society that can be talked into fighting itself over obvious opportunities is a society that can be divided and conquered without anyone setting foot on a battlefield.Her challenge to listeners was the best moment of the episode: whenever a TikTok take hardens your politics, ask yourself whether TikTok would permit that same discourse about the Chinese government inside China. You know the answer. So why is it happening here?For Alberta, every moratorium elsewhere makes our window wider and more valuable than it was six months ago. Bring-your-own-generation, anchor tenants paying their own freight, ratepayer bills going down. We have the model. The only question is whether we defend it before someone imports the fear.CUSMA/USMCAThe escalation, quickly: on August 25 Canada suspended negotiations and announced a dollar-for-dollar response to US 50 percent tariffs on $27.6 billion of Canadian exports, effective September 8, with groceries largely carved out, alongside a $7.5 billion support package. Trevor Tombe’s estimate in The Hub is worth reading carefully: the aggregate impact is small, about 2.5 percent on the average export rate, but the aggregate hides the real concentration of impact... JOBS: Roughly 90,000 jobs are at risk, 36,000 of them in Ontario, 9,000 in Alberta.Mel’s reframe: this is not an economic conversation, it’s a political one, on both sides of the border. And the real strategy is about 2036, not 2026. Trump is using tariffs and industrial policy to rebuild American primary aluminum, with an Oklahoma smelter that would double US production, because aluminum is autos, aerospace, defence, and infrastructure. The CHIPS Act taught the lesson: control of critical industrial capacity beats cheap imports. Canada can eventually negotiate tariffs down. What we cannot negotiate back is American demand once the plants are built and the supply chains reroute around us. And the unfortunate reality is that this outlasts Trump; Gavin Newsom has said as much on Canada. The next Democratic administration may be more polite about it, but wont be any easier to deal with.The uncomfortable truth: successive Canadian governments sold voters a lie that we could have our cake and eat it too, and the first step out of the lie is telling the truth about how dependent we actually are. Admitting you’re not in charge, ironically, is what starts giving you back control. Meanwhile the US Treasury Secretary went on CNBC and joked that Canada might sic the two submarines from West Edmonton Mall on them. They’re mocking us and we’re walking into it. (Joke’s on them. We don’t have submarines at the mall anymore.)CLOSING THOUGHTS: Keep the human brain on top of the robot legsWe closed with Lord of the Rings and Tolkien, of all things, via an essay that reads The “Lord of the Rings as a technology parable”. Sauron pours his power into an external object so it can act at scale, and the amplified power is no longer his. We’ve already handed our sense of direction to the GPS and our memory to the search bar; writing and thinking are next in line. Tolkien’s definition of the Machine was precise: external devices used as a substitute for developing your own inner powers. His test is the one to carry into the agent era. Is the tool helping you grow, or offering to grow for you?The centaur versus the reverse centaur. A human head on machine legs is the goal. A machine head on human legs is the trap. Mel’s practical guardrail was the right note to end on: use AI intentionally for commerce, for the government report you have to summarize. Don’t use it to find out what happens at the end of Pride and Prejudice. Some things are the journey, and the journey is where the joys of life are.And yes, Mel has never seen The Lord of the Rings. She has promised to watch it over the holidays and report back to Jay.New episodes every two weeks. Keep learning, keep earning, and keep investing.Podcast & YouTube Recommendations🎙* All Eyes on the 10yr Yield* A16Z on the new Token EconomicsEpisode Article Links:* Michael Cembalest’s “Rear Window” (Eye on the Market, Sept 1), the source for the Treasury twist and the hyperscaler-borrowing stat, plus a masterclass in grading your own calls in public* Trevor Tombe in The Hub on what the new tariffs actually cost, read past the headline* The Tolkien technology essay that framed our close* And Ben Thompson on Invest Like the Best from two weeks back, if you missed it, since this whole episode was downstream of his “enough money” question* Canada’s Aug 25 countermeasures release and the Sept 8 counter-tariff product list* Meta’s $16.7B settlement — CNBC plus the Al Jazeera explainer confirming your on-air detail: $5.3B (30%) is contingent on TikTok and YouTube adopting matching guardrails* Bessent’s “two submarines” clip — Mediaite and CTV Edmonton’s hometown angle* The Norton late-capitalism book from Mel’s notes This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit reformedmillennials.substack.com
