Revisions, Rallies, and the Return of the (Not Dead) Cycle

In 1980, Julian Simon made one of the most famous bets in economic history.

He bet that human ingenuity would defeat scarcity.

Paul Ehrlich bet the opposite.

Simon won.

Commodity prices fell.

Technology advanced.

Supply responded.

The lesson became doctrine:

When prices rise, markets fix shortages.

That belief now underpins trillions of dollars in capital allocation.

It also underpins the AI boom.

But here’s the question investors are not asking:

What happens when prices can’t fix the bottleneck?

This week, we’re not debating AI.

We’re not debating energy transition.

We’re not debating scarcity narratives.

We’re examining something deeper:

When does the price mechanism stop working — and what does that mean for portfolio construction?

Inside this issue:

• Where Simon still works
• Where the mechanism slows
• Where it structurally fails
• And how to allocate when constraint becomes time-based, not price-based
  
  

Because in 2026, the edge is not identifying demand.

It’s identifying where capital hits physical delay.

Continue reading for the full allocator framework.

Welcome to MacroMashup — where we track the plumbing beneath the headlines.

We focus on funding markets, sovereign balance sheets, and the structural flows that determine which assets become collateral — and which become narratives.

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Calm Surface, Cracked Foundations

This week’s macro tape looks calm on the surface.

The Fed is in blackout mode, parked at 3.50–3.75%. No new dot plot. No press conference shock. Just a steady drip of inflation and labor data for markets to over-interpret.

There is good and bad in the delayed non-farm payrolls numbers:

• Good enough to push back on imminent recession/hard-landing narratives (headline beat, unemployment down, participation up).
• Not good enough to erase the story of a materially cooled labor market once you incorporate the 2025 revisions (-900k) and very narrow sector leadership.
• For markets: bullish for near-term risk sentiment vs "jobs scare" scenarios, but mildly bearish for front-end duration versus hopes of rapid cuts, with a tilt toward a slow-grind softening rather than a cliff.
• January is a volatile month, and not that reliable.

Equities rotate instead of breaking, though the AI scare continues to create anxiety at the white-collar end. The market is beginning to try picking winners and losers.

The 10-year chops around.

Nobody says they’re de-risking — but positioning keeps getting tighter.

Then geopolitics delivers peak 2026 energy: a political standoff over a literal bridge.

The Gordie Howe International Bridge — one of the most important trade crossings between Detroit and Windsor — is now a bargaining chip. The White House is threatening to block its opening unless the U.S. gets a “better deal,” up to and including revisiting permits.

When a concrete span becomes leverage, you’re being reminded of something bigger:

Critical infrastructure is no longer sacred.

It’s collateral.

Under the surface, the real story isn’t about bridges.

It’s about who funds what — and who stops funding it.

In this week’s Deep Dive for paid readers, we examine:

• Why the yen carry trade just lost its training wheels
  
• Why Japan’s bond market is no longer “sleepy”
  
• Why China is quietly telling banks to temper Treasury exposure
  
• And what happens when sovereign duration stops feeling frictionless
  

Bitcoin bled lower this week, behaving less like digital gold and more like a liquidity-sensitive risk asset. Hard assets are beginning to diverge — some are collateral, some are narrative.

The system is quietly repricing the difference.

Welcome to MacroMashup

A systems-level briefing on markets, energy, geopolitics, and capital flows.

MacroMashup is not a news recap.

We don’t chase headlines, hot takes, or moral theater. We focus on constraints — the physical, financial, and political limits that actually shape markets before narratives catch up.

Each edition connects:

• Macro policy and market structure
  
• Energy, infrastructure, and industrial reality
  
• Capital flows across assets, regions, and regimes

The goal isn’t prediction.

It’s orientation — so you can see regime shifts forming while others are still arguing about stories.

If you’re new here, start with the free section below.

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Markets are trading stories. Energy is trading physics.

The Fed met this week with one objective: don’t spook anyone.

Policy remains nominally unchanged. The language is softer. Powell is stuck in the narrow corridor where inflation isn’t dead, growth isn’t dead — but political tolerance for pain very much is. The only thing reporters really wanted to talk about wasn’t policy at all. It was politics…

And, it was succession.

Rick Rieder at BlackRock is now widely seen as the front-runner to replace Powell, a signal that markets are already gaming the next regime rather than listening to the current one.

Equities keep floating higher for the same reason they’ve been floating all year: relative attractiveness. Compared to everything else on the menu, stocks still look like the least-ugly chaos hedge.

The real tell isn’t in equities.

It’s in shiny rocks.

• Gold north of $5,000 and silver above $110 isn’t about CPI prints. It’s about trust.
  
• Central banks keep accumulating quietly.
  
• Retail is finally noticing.
  
• And silver’s industrial role in AI, solar, and electrification is turning a “store of value” into a supply-chain bottleneck.
  

Meanwhile, Minnesota has become the unwilling focal point of America’s immigration psychodrama.

The killing of Alex Pretti — an ICU nurse and U.S. citizen — by federal immigration officers in Minneapolis detonated a narrative shift. After video evidence dismantled the initial “terrorist” framing, the administration pivoted fast: reviews announced, Tom Homan dispatched, language softened.

State officials are suing. Judges are weighing restraining orders. Even some Republicans are blinking at the optics.

Layer in South Korea slow-rolling U.S. investment commitments — and getting tariff threats in response — and you’re watching an administration try to be pro-market, pro-tariff, tough on immigration, and allergic to viral video all at once.

Then there’s industrial policy.

Washington just wrote another check into the rare-earths casino: up to $277 million in direct support, plus a potential $1.3 billion in additional backing for USA Rare Earth — in exchange for equity and warrants. Venture logic, sovereign balance sheet.

So where does that leave us?

Here’s the MacroMashup snapshot:

• Macro regime: shifting from “central banks in charge” to “fiscal math in charge.” Bond markets are slowly realizing they’re financing deficits politics won’t fix.
  
• Policy reality: the tightening narrative is over. De-facto gradual monetization is in. Structurally negative real rates remain the path of least resistance.
  
• Asset implications:
  
  • Tailwinds for hard assets, energy, commodities, and durable cash-flow businesses
    
  • Bitcoin should benefit eventually — but hasn’t yet
    
  • Headwinds for long-duration paper claims dependent on stable real yields
    
• Market behavior:
  
  • Mega-caps and Treasuries can levitate on flows and AI narratives
    
  • Breadth is improving beneath the Mag 7
    
  • Volatility shocks are becoming a feature, not a bug
    
• Capital rotation: slow but real movement away from concentrated U.S. duration risk toward:
  
  • Energy and commodities
    
  • Geographically diversified real assets
    
  • Balance sheets built for financial repression, not perfection

That’s the surface.

Now let’s dig into where the energy story breaks down — and why the narrative no longer matches the operating system.