The Frontier

Aiden Gerb argues that rising US Treasury yields are driven by the market pricing in a higher terminal rate, not by fiscal or inflation worries. Strong nominal GDP and credit growth mean the market must price in tighter Fed policy.

Aiden Gerb notes that US economic growth has become dangerously narrow and is almost entirely sustained by hyperscaler AI capex. Manufacturing construction has slowed, leaving power and data center builds as the primary drivers of private non-residential spending.

Aiden Gerb points out that much of the current hyperscaler capex is nominal inflation rather than real economic expansion. High chip and memory prices absorb a massive share of technology budgets, which limits the real GDP contribution of AI investments.

Aiden Gerb states that recent US job gains are narrowly concentrated in sectors supporting AI and data center construction. Conversely, the housing market remains severely depressed, and the Fed cannot easily cut rates to revive it without risking bond volatility.

Aiden Gerb characterizes the US economy as a system of trickle-down markets where the stock market functions as the economy. Because wealthy households dominate aggregate spending, policy makers must prop up equity values to keep the consumption engine running.

Aiden Gerb highlights that the nominal rise of the S&P 500 is largely an illusion of currency debasement. When priced in gold rather than dollars, the index remains flat and sits below its 2008 level.

Aiden Gerb explains that Donald Trump aims to secure US AI leadership by shifting hardware manufacturing reliance away from China toward Japan and South Korea. Under this strategy, these allies must invest heavily in US infrastructure in exchange for market access.

Aiden Gerb argues that the primary global trade war since the financial crisis has been fought between Japan and Europe for export market share. Japan has won this conflict, which has left European industrial giants hollowed out and forced to cut jobs.

Aiden Gerb presents data showing that German corporate bankruptcies have risen every single month since the COVID-19 pandemic. This trend is not confined to small businesses, as employment in bankrupt large firms is also rising.

Quinn argues that policy interventions designed to boost market liquidity are counterproductive because they stoke demand into a capacity-constrained economy. Lowering yields sends capital straight into commodities like oil, exacerbating the underlying inflation problem.