TLDR: The single biggest question on everyone's mind is: Are we in an AI bubble?

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* Market update

* Recommendations and Links

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Market Update📈📉

Now, history is our best guide here. Think about the great capital cycles of the past. The railroads in the 1840s had a simple feedback loop: the government gave them land, they announced a route, speculators drove up land prices, proving the "territorial development" thesis and fueling more railroad construction. Boom. The gilded age.

Then came the telecom bubble of the '90s. The loop was even faster. A company announced a network buildout, their stock price soared on the promise of infinite internet traffic, and they'd use that soaring stock to raise more money to build more networks. Higher stock prices validated the spending.

So, what about today's AI buildout? The key idea is that more compute and more data lead to better models, unlocking a new frontier.

But when you look closely, the one thing we're missing is that hyper-speculative feedback loop seen in past bubbles.

We're not quite there... yet.

The Real Bottleneck

The real story isn't just about chips; it's about the picks and shovels. This AI capital cycle is a three-legged stool: Compute, Data Centers, and the most critical leg, Power.

And that's where the lag is. While a chip cycle might be about 12 months, building a data center takes years. Building a new power plant to run it? That takes even longer. We're seeing companies like GE Vernova booking power plant slots for 2027 and 2028.

This makes power the "golden screw" – the one critical piece that holds everything up. Just like tiny, cheap microcontrollers were the bottleneck for the auto industry a few years ago, massive power plants are the bottleneck for AI today. The industry's eyes are shifting from chips to data centers and power grids, and that's where you'll see the first signs of oversupply when the cycle eventually turns.

The Market's Dilemma

Now, this massive, multi-year buildout is happening against a very confusing economic backdrop.

Last week, Fed Chair Powell basically admitted the FOMC is torn. They're stuck between stubbornly high inflation and a weakening labor market.

The new "Dot Plot," which shows where committee members think rates will be, is all over the place. For 2026, forecasts range from a rate hike to seven more cuts. That's not a consensus; that's a shrug.

But the market? It sees things very differently.

Fed Funds Futures are pricing in an 80% chance of two more rate cuts this year. This is the classic

"bad economic news is good for stocks" setup, because it means cheaper money is on the way.

This dynamic is what's fueling Big Tech.

Companies like Nvidia, Microsoft, and Google are crushing the S&P 500 because they have both a powerful secular growth story in AI and the market betting on lower rates to fund that growth.

So the central tension right now is this:

a massive, long-term AI capital buildout, which desperately needs cheap capital, is running headfirst into a Federal Reserve that is openly broadcasting its own uncertainty.

The big question is, which force wins? Can the AI narrative continue to power the market higher, or will the economic reality of a divided Fed finally cool things down?

Pocket Lobbyist Insights:

* Carney said the Israeli government is "working methodically to prevent the prospect of a Palestinian state from ever being established” at the UN General Assembly on Monday afternoon.

* Trump–in his UN General Assembly Speech–critical of Europe; a country Canada has decided it will more closely ally with economically to offset tariff disputes.

* 25 Republican members of Congress and Senators are calling on Carney to ‘reconsider’ his government’s decision.

* Constitution gives Congress the power to regulate foreign commerce, though the President negotiates trade agreements; Congress has an up/down vote (no amendments with limited debate) on implementing the bill.

* Canada recognizing Palestinian statehood and potential blowback from the Trump administration on tariff negotiations (in addition to United Kingdom, Australia and Portugal).

Best Links of The Week🔮

* “Plans for massive AI investments often lead to larger increases in market value for the companies making the investments. Investors are clamoring for companies spending big on AI, with companies like Nvidia and Alibaba seeing large increases in market value after announcing AI investment plans. The market enthusiasm for AI investments has added significant value to companies like Meta, Microsoft, Alphabet, and Amazon, with their market capitalization boosted by about $1.8 trillion this year.” Source: Bloomberg

* “Microsoft is bringing Anthropic’s Claude Sonnet 4 and Claude Opus 4.1 AI models to its Microsoft 365 Copilot today. It’s a big move that expands model choice beyond just OpenAI’s range of models in Microsoft 365 Copilot, and it will allow Microsoft’s customers to access Anthropic models in Researcher and Microsoft Copilot Studio.” Source: The Verge

* “Instagram has reached 3 billion monthly users and is changing its home screen navigation bar to highlight private messaging and Reels. The app is running tests, including one in India where the app will open directly into Reels, and another that lets users influence their content algorithm by selecting or hiding topics. The changes are part of a broader effort to leverage Instagram's most popular features, with private messaging and video watching being the most popular ways people use the app.” Source: Bloomberg

* The Fed cut rates from the Transcript “At today’s meeting, the committee decided to lower the target range for the federal‑funds rate by a quarter percentage point to 4 to 4 ¼ percent, and to continue reducing the size of our balance sheet.” – Federal Reserve Chair Jerome Powell