What's up guys, I'm nobody special and our special guest today is the founder and CEO of Unicast Research, Loxca Napati. She is with us to talk about what to expect in 2026 based on the look ahead that Unicast Research just put out a few days ago. Lox, welcome back. Thank you for joining us and how are you doing this morning? I'm doing fine, Ajay. Thanks for having me again. It is my pleasure. It's always a pleasure to have you here and I always learned so much when I talk with you and I wanted to tailor this interview around your 2026. Look ahead that we you just put out and you were nice enough to share with me. Sean right here, this was dated December 30th and I've had a couple of days to read over this and there's some pretty interesting themes that you see playing out in 2026 and let's just go right from the top. You led with the TLDR which was very polite of you, 2026 reality check. The best short opportunities would be in consumer and credit sensitive sectors, commercial real estate, auto dealers, OEMs, banks with CRE and auto exposure, private credit, funded public firms, travel and hospitality sectors, lenders with ABS and ABL exposure, with a focus on collateral or lack thereof. Interesting note there along with restaurants and consumer centric businesses. So I'm seeing a couple of themes here, right? Some of this stuff is nothing too new, CRE that's been out there for a while. But you're also drawing a lot of attention to the health of the consumer here and I couldn't help but notice the thing about collateral there. So what are you seeing in markets? What are you seeing in the data that makes you zero in on these topics for 2026? Well it's interesting because it's not about what we are seeing, it's about what we are not seeing concerning concerns us, especially on after the demise of tricolor and first brands. And those are bad, so first brands backed by a private credit. And tricolor and first brands is quietly scouring all the investors or it should. And if one of them, you know, have collateral double plushed, the chances are others are too. And no one knows about it and no one will ever know about it until either the bank takes action to do the auditing like J.P. Morgan did or the auditors need to initiate or require saying that hey we wanted to audit this pool of loans. So what we are not seeing is what's concerning us and that is leading us to deduce that 2026, you know, we will still drive the first brands and tricolor incidents because the investors haven't gotten their money back or creditors haven't gotten their money back and we are expecting more of those brands tricolor kind of incidents in 2026. So first brands and tricolor obviously the double pledge collateral stories there, the big blowups in the credit markets, two notable auto sector, you know, one was parts, the other was used cars, had an article this morning talking about how auto sales are expected to decline again in 2026, something like 15.8 million new car sales they're predicting this year. So a lot of energy around the automotive sector, do you see the private credit risk as particularly concentrated in the auto sector or was that just kind of the first of many for whatever reason that was exposed? Private credit is not that omnipresent sort of speak in auto sector consumer credit yet. What they are doing is they are pivoting what we are seeing is they are pivoting from BDCs into consumer credit into auto sector. So that is concerning us, banks they are trying to take market share away from banks and it's not that big of a deal yet but it concerns us because once it shifts to private credit, once private credit gets in world, there is no transparency, there is no filing, there is no tracking like we are doing with the SEC in ABS, there is no tracking how the loan is performing unless it's too late. So that's what's concerning us and no private credit is not that much involved yet in terms of market share, in terms of a far auto lending. Now it's interesting you should mention that private credit taking market share from the banks because the banks seem happy to oblige them because as the banks are losing market share in some of these sectors that are typically risky and have more stringent capital requirements associated with lending into them, yes the banks are losing that business to the private credit firms but where are the private credit firms getting the capital that they're lending into those sectors, the banks, the same banks, right so are they really losing any market share or are they just making the same loans with lower capital requirements using a middleman to take all the risk. Exactly and they have been doing it for quite a while and it just moves the risk from banks balance sheet onto the balance sheet that nobody can see which is private credit. And ultimately if the losses get big enough those private credit that private credit risk could eventually bleed into banks if it gets big enough as the banks are holding the notes on the loans to those private credit firms. So really it's just a shell game moving the risk around at the end of the day it hasn't been eliminated it's just somewhere we can't see it. The risk has been is being transferred to invisibility. You don't know where the risk is you don't know who's holding the risk private credit in terms bundles everything up and it goes into the ABS market you don't know where it is you don't know how to track it so that's what concerns us and that should concern every single investor and I shared with you something where private credit managers were interviewed by one of the reporters and some of them said well you know it shouldn't siding for his brand incident default should not scare any investors or they shouldn't make a big deal about it because it's private credit it's not AAA so I don't know what they are surprised about. What this tells us is that private credit managers are normalizing bad underwriting. Trichlor could have been avoided if J.P. Morgan you know did some due diligence. First brands could have been avoided if they did a proper auditing. So red flags have been there but nobody cared and they underrooted anyways and now they are normalizing this process especially in private credit where no one can't see what's in there and this is not institutional money alone Jack and I am concerned because institution investors you know they make a lot of money they lose some money they are aware of the risks aware of where they're investing what concerns me is that individual investors they are 401k so private credit is infiltrating into all of them and they are not aware they are not aware what private credit is I think one of the articles that I wrote where this guy is like I don't want to invest in private credit it doesn't come out as private credit per se if I can pull it up right here so it doesn't say private credit fund in the 401k investment it's I think it's embedded into managed accounts it's embedded into target data funds high yield ETFs absolutely many different mechanisms they use yes so you know you have the you know I'm happy to share this link with you and I discuss which funds are pushing this into individual investors 401k state street cap global advisors Apollo great great and black rock and Goldman Sachs so everybody has some kind of ETFs that has private credit or private asset investments in it and they are plugging it in and and and and one of them is Van BDC income ETF I think that lost more than 5% or 6% last year and folks if that's one theme I saw in 2025 that I expect to continue in the 2026 it's that 401k's and IRAs are going to be used as a dumping ground in order to socialize losses associated with Wall Street's lack of due diligence and you know look at this quote here that I have highlighted on this tweet that you flag based on this interview with these were private credit fund managers I think defaults aren't a scandal
they're the expected reality of underwriting risk and the market forgot that. Almost as if to suggest you deserve these losses, right? Like I just lost a whole bunch of your money because I didn't bother to check who I was lending it to and it's your fault because you forgot to expect losses. That's pretty brazen to be talking like that. Not really indicative of somebody who say, "Learn his lesson and is promising to do better next time." Well, private credit is, I wouldn't go as for us saying, it's going rogue, but they are everywhere. And if anyone is suggesting you to, "Hey, invest in this particular ETF, it will provide return." Make sure you read the fine prints and see what's in the ETF and what are you investing in instead of trusting the person who's suggesting you to invest in that particular ETF. - I navigate that often on my channel and it's not so easily done either because it's really easy to hide this stuff, the prospectus doesn't always list everything and it shouldn't be that hard to make sure your retirement isn't being dumped into this kind of stuff, but unfortunately it is. I want to zero in on another theme that you mentioned from your look ahead for 2026 and you describe this as the core story of 2026, the expansion of the lower K will get into the shape of the K in a second here. You include this quote from the Chipotle Mexican Grill third quarter conference call from their CEO. A particularly challenged cohort is the 25 to 35 year old age group. We believe this trend is not unique to Chipotle and is occurring across all restaurants and many discretionary categories. This group is facing several headwinds, including unemployment, increased student loan repayment and slower real wage growth. We tend to skew younger and slightly over index to this group relative to the broader restaurant industry. So this was Chipotle Mexican Grill CEO trying to explain the dreadful quarter that they posted and it basically saying, hey, the young demographics, young professionals, recent college graduates are really struggling here and that's why our quarter was so bad. And when you say the expansion of the lower K, I also wanted to elaborate a little bit. This chart here from Business Insider kind of shows what's meant by the K shaped economy where you have some event, in this case, it would be say the bid, the big, the germ that we all caught. And you had one segment of the economy did really well, the wealthier segments. Some parts of the economy recovering, but the other parts headed lower. And you're anticipating that this lower K, the purple line here is going to get bigger this year. More people will join that lower K. What do you see as driving this? Is this just a continuation of the affordability crisis or is there something getting worse here? - Well, it's constantly has been percolating since for a long period of time. And we have to keep in mind that we are entering into a statulationary economic environment. And it's not good for the end consumers. Okay, so nobody wants to say the bad S word. The statulation is frowned upon. And but at some point in time, we have to address the reality. We also have to factor, before responding, I wanted to set up a stage and address why we think the lower K will expand and continue to expand in 2026. We also have to remember, as we kick off 2026, we will have the one big beautiful bill at kicking it. Some aspect of the bill will be enforced in January. And some part of the bill is expected to be enforced, some are in June. And one big beautiful bill act is, one of the benefits it's sides is, during the tax refund period, which is in the next, in the first second quarter, would be roughly up to 1000 per individual. - And that's the, they are expecting returns to be up to $1,000 bigger for individuals. Is that correct? - Yes. But what we have to think about, and what everybody forgets, is we are entering 2026 with $38 trillion in debt. That represents 120% of our GDP. A year ago, that total draws national debt, is 2.23 trillion higher. Five years ago, it was 11 trillion higher. So at this rate, at this rate of daily growth over the past three years, if it's hard to continue, the US will reach roughly estimated 39 trillion by March 2026. Now, - Three months. - Also, third, fourth quarter. Household debt includes roughly 1.65 trillion in student debt, 1.66 trillion in auto debt, and 1.23 trillion in credit card debt. So with the consumer debt around 19 trillion, give or take. So, the reason this is a problem, for, and the reason this is going to, in a long term, expand the lower K, is because a rising debt will reduce the GDP in longer term. And growing national debt will impact on GDP, reduces the per person income. And it will also reduce the number of jobs that is available. And at the end, it will all impact the investment. So we don't have a clear data of BNPL. We are in a place where it looks like nobody cares about the debt, but the debt will have a long term consequences. So when you ask me, oh, when this is happening, since when this lower K is going to expand, it's been happening for a long, long time. And everybody was happy, and Twitter is full of happy people saying, oh, GDP is 4.3%. That is an incorrect and misrepresented number. First of all, it's a delayed report. Second of all, companies did a ton of inputs early in the year to avoid new tariffs. That inflated the earlier quarter, especially third quarter. So then third quarter showed lower imports and higher exports as a swing. So that pretty much made GDP look better than it is. And if you look at it, the spending, the majority of the GDP spending was focused on either healthcare or gonement spending. So those considered as consumption. It's not like the country is having a real growth in the GDP. It's just a very, very misplaced and miscoded number. So what we are thinking is that, yes, the thousand dollars might boost the consumers a little bit. But as we go into the second quarter and third quarter, the people who are making 100,000, 200,000 will cascade down into the lower K. And the people who are making 75,000 cascade down to people who are making 50,000. If you factor inflation in, this is going to consistently expand the lower K. I'm sorry I've been going nonstop, but I start saying this. It's a critical and understanding what I'm trying to convey. Yeah, I'm in agreement with what you're saying there. I do think the lower K will be expanding. And I do think you're going to see, you know, like we saw in this article, I was reading this morning on my live stream about the auto sector. That a lot of new car buyers are not just trading down to a new subcompact car, or buying cheaper cars. They're leaving the new car market entirely. They're into used or they're just keeping their older car on the road longer. And so and this is in the cohort of 75 to 150,000 bracket. You know, people would make a good living or being driven down into that lower K. I was going to say on the GDP commentary you had there, it was pretty interesting. Yes, the number looked good, the absolute number of the 4.3% GDP growth. But you correctly pointed out we're running what, $2.7 trillion deficits, right? That is borrowed money that is inflating the GDP numbers. And let's be honest, the government, whether through inflation or outright default, the government intends to default on that debt one way or another. You've got by now pay later driving consumption higher. I suspect a large number of people who are using by now pay later debt to consume have no intention of ever paying that back. No. And you've got the data center build out that has been driving a lot of economic growth. And I think within that space you've got a lot of people borrowing money.
they have no intention of ever paying back. And so, we're a debt-based credit-based economy here, and we're championing these growth numbers, but these growth numbers are it's all borrowed money that we're never going to see again, which I do think leads into the stagflationary situation that you described where it's inevitably going to result in higher unemployment and higher inflation. It's it's it's it's a scary reality to live in, and one of our sources that we constantly speak to corrects us every time we have a call. So you don't understand most people take on a weekly basis. Can I get by this week? Do I have enough money this week? Can I get by this month? Do I have enough money to get by this month? They don't think more than a month at a time. So the entire economy is consumption-based, and they are based on what can you have it right now? If you can pay in four equal installments, they don't look at it as the amount that's going to go out of their wallet in like next month. They look at it, hey, it's like a thousand dollar XYZ item, I can only pay $30 today, so I'm good to go. So and that is that problem has been a snowballing for a long period of time. And we are at a stage where it can no longer snowball. And I have to say that by now pay later lenders are sticking by their 2.4, 2.5% delinquency rates that just do not pass the SNF test. Not when delinquency rates are higher in virtually every other debt category, except for mortgages pretty much every other debt category delinquency rates are higher. And these are categories where the consequences of delinquency are higher and more severe than they are for by now pay later. And I think there is a reckoning in that BNPL space that's coming. I don't know when. I don't know what's going to trigger it. But the data that they are presenting to the public right now just seems to be true. No, it's not real. I have been we have been working on that aspect because you have a firm, you have Clarner. You have to consider that these binoculars are being funded by private credits. So some of the delinquencies and defaults based on the agreement that they sign with the corresponding private credit from the they are taking the money from, some risk can be transferred back to the private credit. And some risk will lie with the aforementioned Clarner. So we are still working on that. But it looks like hey, you know, if it is too much in your balance, she'd just kick it off to me where no one can see it and wash it back and send it again. So and that's what's concerning us because it's a it's a Schrodinger's economy. It's just the economy is great until like anybody opens the box and you know, how what is going to trigger that is what we have been scrambling our heads every day. Yeah. And if any of you guys are out there, our poker players, go watch a firm CEO Max Levkin give any interview where he talks about the linkancies and what watch his body language as he's talking about the linkancies and tell me you wouldn't put him all in on that bet if you were sitting across from a poker table because that guy is just he strikes me as a terrible terrible liar. All right, I also want to elaborate a little bit on something else you put in. You had a lot to say about commercial real estate in your 2026 look ahead. And a lot of familiar themes from 2025 that to be honest with you, I'm pretty surprised these themes didn't blow up last year for all intents and purposes they should have. You're saying as in prior years, extended pretend has been a key theme for the US commercial real estate market in 2025. We expect it to continue into 26 as a CRC re market faces a massive maturity wall. Lenders have been extending CR re loans and auto loans and are about to mature helping borrowers avoid a big interest rate shock and giving lenders time for interest rates to fall. The strategy appears to be working for banks based on the linkancy ratios, but we expect banks both in CR re and autos to continue extending and pretending in 2026. So before I get too deep into this, let's stop there. The maturity wall in 2026, I've been hearing that for a couple of years and the extended pretend which they've been doing for several years now, will they be able to just continue this throughout this year or is there some limit to how much of this they can do? Sure, they can continue it for 2026 because unless there is a major red flag that triggers a bank to do the audit or to just close out the loan, they will continue doing it. Jack and that's that's a no brainer for them because as long as they can extend it and modify the loan, we go to us and back securities data. We analyze them every day and the number of modifications in auto loans continues to increase. As I mentioned earlier, if you are a borrower and you got laid off and you have savings and you can pay only 100 a month, you can go to the bank and the bank can modify the loans in such a way that the monthly payment can be 100 dollars a month. On an asset that depreciates faster than a hundred dollars a month. That's amazing. Wow. The people are buying assets that depreciating and paying a 100 month loan on an asset that's depreciating and people are taking hundreds and thousands of student loan on a degree that would never get them a job while unemployment is increasing. I, 2026 is not going to be pretty and the expansion of the lower K should trouble the people who are on the upper K. Now when I hear commercial real estate, I automatically go to office but I often forget that it's a much bigger category commercial real estate also includes commercial. If the lower K expands, I'd expect commercial real estate retail locations continue to suffer. Mals continue to go out of business. It also includes multifamily residential and as the lower K expands, you'd expect people to miss rent payments more evictions. So commercial real estate isn't just an office thing now virtually every category within the commercial real estate space. Is that risk here, isn't it? Very and it explains why I can take a random shot and say that almost all the banks are colluding with each other and trying to make it in such a way. Everything is extending and everything is fine because if one person start to mark to market and everybody will be exposed and everything will be like House of Cons, collapse overnight but they are all colluding together and extending and they will continue to do so. And you know, you can only avoid price discovery for so long, right? Everybody's looking at the silver market right now and you see what happens when you push off price discovery for so long when it finally does happen, it becomes violent and that's what we've seen in silver markets and I see so many sectors private equity is doing it commercial real estate is doing it. I guess I'll get into some of the other categories. I want to talk about if I keep my list going here but I want to read on a little bit more. According to S&P Global Market Intelligence, banks accounted for nearly 60% of the originated CRE mortgages, maturing in 2025, who are newly built classification model. Still that ratio was projected to decline for the next five years as banks have been dialing back their exposure. Private credit has been playing a bigger role in the CRE market, taking market share from traditional lenders. Still banks have also partnered with private credit firms to invest in CRE, which can be seen in the substantial increase in lending to non-depository financial institutions. So that's another instance there, isn't it? Of the banks are losing market share, but they're not really losing market share or are they they're just lending to the middleman. They are transferring the risk. So about everybody like us can see and question to a place that no one can see and if you can't see anything then you don't know what's happening unless it's too late. So where are these private credit, these non-depository financial institutions, NDFI, as the shadow banks? What are they going to do with all that commercial real estate? Are they going to sit on it? Wait for it to go bad? No, they're going to park it somewhere else. They might park it in the us back securities and we are trying to get
access into a platform that tracks the ABS for private credit and for the private companies that are now public. We have to bite the bullet and subscribe to it because Dowellick helped us to analyze the data to see how the loans are performing whether they are modifying loans over there or whether they are extending it or whether it's deteriorating. So we are working towards exploring that data bank. Now looking forward to seeing what you find in that category, I'm sure plenty of cockroaches lying in that area. A lot of them. All right now you've got another little segment and you look ahead and this one got me excited because this is near and dear to my heart, the AI Data Center implosion you're calling for in 2026. We expect the implosion of the data center narrative as we venture into 2026 AI data centers face significant hurdles with power availability and infrastructure leading to delays, higher costs and potential grid instability. And I tell you it was just last night I saw my friend Justario posted that core weave very quietly on Friday published in 8k where they have revised, extended and pretended a lot of the covenants and one of their debt facilities to push out majorities to reduce liquidity thresholds of that trigger their default provisions to delay some of the debt service coverage ratio triggers of their default covenants. All things indicative of liquidity problems brewing in the data center space. We've seen a lot of project delays in data centers from core weave and Oracle so we're already seeing some really early emphasis early signs there. What do you see as triggering something like this? Is it just a power cost or do you see some? It's a cost of power and you know you build something. It's not like a mall you build something you build they come. It's just you build something in the two two big data centers and you don't have any power to run them. But who does that? The 101 you have to figure out whether you have sufficient infrastructure to begin a project in the first place that you can run and you just built the entire data center and now it's sitting idle and it's expected to sit idle for two years. Now that's that's interesting when a data center is built and sits idle for two years because the real value in a data center it's just a steel building maybe you got a power plan attached but it's a steel building full of GPUs and other networking equipment rapidly depreciating. Yes. Networking equipment rapidly obsolete becoming obsolete. So these data centers if they sit for two years before they get hooked up to the power grid that value the entire math behind that investment has just gone up and smoke utterly hasn't it with those two years of all. Absolutely and before I go hobbits impact consumers power electricity bill is going through the roof and we've been talking about the grid instability for six years now because with EVs you need great stability your or the grid infrastructure in the United States is very very very antique you need an upgraded one so it's so surprising that you don't fix the infrastructure first and then start the project you start the project and then you worry because there is no power and no infrastructure. And power infrastructure does not move quickly right you can call yourself like for scale or you can do your tech bro you know put that stupid thing on your head like you do it a TED talk and and make all these promises about the vision and how fast you're going to build the power grid doesn't care it just doesn't care good intentions don't pump electrons. I thank you and it's been going on since 20 way before 2015 I can't find the exact date but if if we had started working on building out and upgrading our infrastructure that we very much need for the advancement in innovation and everything we should have started 10 years ago we would have had something by now and now we have data centers and it's it's going to be like another ghost project that would never get never worked on and and somebody asked me oh are you recommending Nvidia as a shot I said we are not touching that as a shot and they asked me why I said I haven't looked at Nvidia but I can say something they are selling shovels code and code chips to all these data centers you know I'm not an engineer but one the chips will be a little outdated by the time they have the power to run the entire data center. So let me do my disclosure real quick since you mentioned Nvidia I have to disclose I am personally short Nvidia and I cannot wait for the day I no longer hear this picks and shovels talking point it is so tired and worn out you know okay maybe there is a gold rush going on and maybe Nvidia is selling the picks and shovels let me ask you has anybody found any gold yet no no so how long are you going to keep selling those picks and shovels for if nobody everybody who bought one went digging and found no gold you're not going to keep selling picks and shovels so that's my my short no I completely agree and to counterpoint we don't recommend if we don't trade on our recommendations we don't trade period due to compliance but we stay away from stocks like Nvidia or Kervana because yes it could be a great shot but when when is the top you know we don't know how long they can shell the shovels sell the shovel is a good point but I don't know when that is the risk right I mean I am standing in front of the most raging bull run in history and betting it's going to stop so that is not a trade I took lightly you teased a little bit when we were talking beforehand you have a report coming out in the days ahead what can you tell us about that report you guys have coming out without giving away the beans I understand but it's in this space isn't it yes and they are sitting on their hands and they don't have the power necessary to run the data center that they built and they are very very happy and you know offering dividends that they can give so you have a dividend paying data center firm that has built a data center that they can't turn on because they don't have power okay and what can we do what is that unexpected when will you be putting that report out um end of this month end of this month we are reaching we have reached out to a couple of engineers who at least used to work or aware of things going on so we haven't heard back from them and like see what they have to say yeah well I guess you worry about you know can you turn the thing on before you build it seems like a rational thought process to me but I am not an AI bro so I couldn't I couldn't tell you there one other category here something that I think is an important detail maybe we could just talk about this one briefly you also mentioned data throttling and this has been something that I have been worried about for years I have seen this creep of politics into the economic data not just under this administration I saw it under the last one too but I do see it getting worse um you're saying we are not China or Russia there is no indication at least officially that macro data is systematically suppressed however we've been skeptical for a while about the quality of the macro data we've been receiving the ladies government shutdown has validated our skepticism we expect frequent data delays from the BLS and other government agencies in 2026 I mean this is some we're not quite banana republic yet but we're getting there aren't we with some of the things that have been done to the data recently well Jack I was trying to be politically correct when I was writing it to our clients and everyone but I think we are there um I can't um we can't in conscious good conscience say that the data we are receiving is kosher so what we do we if they say the unemployment is 4.1 we check the US US6 unemployment and that would be close to 8 or 8 or 9 and then we add at least two points more to say okay that's the reality so that's the best we could do but it's not like hey this is the data that the government has has released and the data is accurate let me model my analysis and projections based on that they're we do not
really on that because it is. I can tell you I these job reports and we get another one on Friday this week assuming it's on time. I tell you that the truth is hiding in those job reports. It's just nobody ever talks about it. Like if you actually open the attachments and you look at the household numbers the full time, the part time, the multiple jobholders, you can see what is happening in the labor market in that data. The problem is that never makes the headline that never makes it to the press. Only the headline jobs added which always gets massively downwardly revised months later and the headline you you too I think is the unemployment rate that they trump it and you're right. You're sick and much better measure. I think you three is the one we try. Is you three is that the headline it's one of the use. Yeah, you three is the headline used to you six as the one that's hidden and it's been for a while ahead line to an economy. Yeah, and you know in this last jobs report which they're out saying oh look 65,000 jobs were added in in November. Never mind the fact that more than 100,000 were lost in October which was released on the same day. So it was actually a big net loss and unemployment in those two combined reports. Didn't see any of that mentioned in the chest bumping celebrations. But a big spike in U6 unemployment in that last non-Farm payrolls from I think we went from 8.0 to 8.7. And it's going to go up to 9.0 something and then you add another two points to that U6 number. That is something as close to reality as you can get. So we are in a very we think that when the GDP number gets revised down and when it so from 4.3 to maybe 2.0 something then we have a reality then we have some economic numbers coming in. In all logical reason J.Pa would hold the interest rate. And if he still cuts the interest rate this January then he's going to cut the rate in a situation where he's not supposed to cut. And I'd say that's another thing that is really concern me is there was a lot of talk about the Fed and how they were torn and three dissensions. And this was the most divided Fed we've ever seen with this rate cut that they just passed the last month. That in my opinion is just such a BS talking point. That was one of the most dovish FOMCs that I have ever seen. They cut rates into high inflation and they started QE up again. What do they call it reserve purchase or systemic reserve purchases? You have print and money and pump it into the economy. And that was unanimously decided on by the Fed. It's like they just decided we're going to have a couple of people vote no on the rate cut just so it can look like we're standing up to Mr. Orange and maintaining Fed independence. And then here is the most dovish policy outcome we've seen since 2021 and we're calling it hawkish somehow. I was really amazed by the media reaction and how how dovish that FOMC meeting really was. You know what I agree with you. You know what else is cares me is that we are entering a period where it's so similar about this rally how the Fed reacting before 2007 2008 before 2000 1999 2000 and all of this and at the end of the day banks get big banks get bailed out. Tech guys get bailed out. The end consumers are broke. The end consumers lose all their money the retirement money that's in 401k that's in private credit they are the one lose everything and the thing and the circus goes on it happens all over again. So this time what's concerning and this is going to persist not only in 2026 into 2027 this is this is not an organic bull market and the data is all over the place no one knows the reality of the economy because the data is not echoing the reality. So it's it's a very interesting period we are in Tren Jack. And another thing that really concerns me talking about the data and the inaccuracy is the imputation in the CPI math and imputation is just BLS speak for we made it up we couldn't go measure for whatever reason we couldn't go measure and prices so we took some other data points came up with some arbitrary formula and we imputed. Yeah. Just made up a number and we inserted that and I think it's something close to 40% of the data points in CPI are now being imputed. Just 40%. Yeah well don't forget there's also your hedonic adjustments those are also happening oh that's an improvement and so it doesn't count as a price increase even though the pre improvement model is no longer available so if you don't want to pay for the improvement you don't have the choice but it's still not inflation see also you know all the bells and whistles they shove in the new cars now and yet there are no base models available at a cheaper price no it's not worth a dollar. New car is $50,000 and that's the average half of them are more than that so I mean five years as pre 2020 if you have $50,000 to splurge you can get a nice Porsche. Yeah and that's why more people are being pushed into that lower K. Yeah they're driving old cars they're keeping their old car on the road or they're buying used instead of new and you know it's only a matter of time before that works its way in asset prices. The more money they are going to print the inflation will never go down and yeah that's so what's that? I think of campaign issue here affordability will be front and center in these midterm elections we're already seeing I mean something phenomenal happened last week Ron DeSantis and Bernie Sanders both came out opposing new data center construction on grounds of affordability all right I mean what kind of political bastard child with those two produce Ron DeSantis ultra conservative and Bernie Sanders who is you know just a step above Stalin on the economic spectrum those two and the same camp opposing data centers on grounds of affordability you can see the price of electricity and the cost of living will be a campaign issue and it was in these you know offseason elections last year and the Republicans got their clock cleaned on that that topic so it's going to be interesting to see how that plays out. You have normally electricity you have water water is an issue for data center they are there is news that they have been used that we are reading where they are taking form lands away for the data centers so you have the food water electricity everything and expecting the price to not go up this is not affordable you cannot afford to live you cannot afford to live in a healthy way you cannot afford to eat in a healthy way you cannot afford to work you cannot afford to do anything the lower case is expanding and the lower case is angry and that is a problem that sooner or later the upper case has to face and while we are on listing things getting more expensive let's mention memory while we are at it ram is in most electronic devices that you can't even get anymore because Sam Altman bought it up micron exited the consumer ram business because it is all going to data centers so laptops computers personal electronic devices the chrome book my daughter uses for school all that stuff going to get more expensive now everything is expensive i ordered something from del six months ago it came back and it didn't have a fan it broke down my send it back this is i don't think they have enough pods enough resources to give it to normal people like us because everything is going to data centers my question is what does the data center do that's a good point tell us the glue our pizzas together i don't know make make it fake a i slop asian guy videos about silver news that never happened maybe we're just discounting the real value that these data centers are providing the to the economy note sarcasm carbona is 432 i know people who are short this and every time i get a chance i tell everyone do not short it but this is a fraud no one cares you cannot call it top so you cannot short it so market is extremely overvalued we don't know when it's going to include but lowercase already seeing it jack they cannot afford anything so lowercase is feeling the recession for them recession is already here since 2022 what's that since 2022 i think the average person has felt recession now
90% of the economy, that's true. - That is absolutely true. - So Lux, I've got your website up here at UnicusResearch.com, which I highly recommend. Tell me, where else can we see your work? - You guys can see log into contrarianunicus.substact.com. We are currently offering a discounted confidential insights, memberships. You're welcome to sign up, or if you wanted to sign up and read everything that is available for free, you're welcome to do that as well. We do not provide short recommendations or research on our substack. For that, you're welcome to send us an email.
[email protected]. - All right, and I will put links to all of that stuff right down below in the description. Lux, thank you very much. I always appreciate your research and your time. Thank you for sharing your 2026 look ahead with me. I will give you the final word. - Just wanted to share to all the listeners that please be careful about your invest your money. Please do your own due diligence and any questions you have, you're welcome to ask Jack or us. We are happy to guide you for a couple of minutes. We don't cater to individual investors, but we will happy to share a couple of pointers, whether it's risky to invest there or not. But please be aware of private credit no before you invest. - Yeah, I mean, and you could see it in that quote that you sent me where they're saying, "Oh, this is expected. "The market forgot that." It's your fault your money went up in smoke when you trusted me to lend it to somebody. - Yes. - Really amazing stuff. - It's, I mean, you should put up the post because it is very arrogant tone. I don't care. It's not a triple A. You know, it's not a triple A. Where are you investing? - Yeah. That's some top shelf gas lighting right there, isn't it? - That is, that's the, that's a HVLA, Ben Jack. - One more plug I didn't mention Unicast Research on Twitter as well. I'm gonna put a link down below to that. Highly recommend you follow locks on Twitter as well. Thanks again, locks for taking the time to talk to us today and everybody else. Until next time, live small and dream big.
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