Here is a number worth sitting with. Three companies, SpaceX, OpenAI, and Anthropic, have raised more than one percent of the entire United States economy in fresh capital so far this year. Not revenue. Not profits. Capital raises, straight into infrastructure, compute, and more infrastructure. That is a staggering amount of money flowing into a single thesis.

At the same time, the extra interest rate investors charge to lend to shakier companies sits at about 2.8 percentage points above safer government debt. That is not a panicked market. That is a calm one. Investors are not pricing in much risk right now, which is itself a signal worth taking seriously.

Put those two facts together and you get the real story of the summer of 2026: enormous capital commitments, low perceived risk, sticky inflation, and a Fed that is essentially frozen. That tension is what this letter is about.

The machine is running hot

Real economic output sits meaningfully above what most models would call its long-run potential. The gap between where the economy is and where it would be on a steady trend is roughly three percent. That is not a modest overshoot. It means the economy is running with its foot near the floor.

The fuel is investment, not consumption. Consumers contributed less than a third of estimated second-quarter growth. The heavy lifting is coming from capital spending, much of it tied to the current technology investment wave. Orders for capital equipment, the machines and hardware businesses buy to produce things, have been running at more than double the pace of the prior eight months. The catch is that actual deliveries are lagging badly because supply chains cannot keep up. That gap between orders and shipments is comparable to what we saw during the 2009 and 2010 recovery. Price pressure is building in exactly that pipeline.

Corporate profits, measured as a share of the whole economy, sit at about 12.4 percent. That is a high reading. History shows that strong profits tend to pull capital spending higher with roughly a two-year lag, so the current investment boom has a fundamental foundation under it. But the war in Iran, oil that was recently trading below seventy dollars a barrel after earlier shocks, and a federal government running a deficit of nearly eight percent of the economy are all part of that foundation too. Some of those supports are more durable than others.

Inflation, measured by the personal consumption expenditures index that the Federal Reserve officially targets, stands at about 4.1 percent on a year-over-year basis. The monthly pace is running hotter, closer to 5.5 percent at an annual rate for the most recent reading. Core inflation, which strips out food and energy, sits at about 3.4 percent year-over-year. A separate look at consumer prices by category shows shelter costs up about 3.6 percent and services up about 3.6 percent, while goods are up just around one percent. Services inflation is not cooling. That matters because services are where most of the economy lives.