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We started GMG Research 5 years ago with an audience of 20. Today, our work is read in 63 countries, recognized among Substack’s Top 100 Finance publications, and featured multiple times on the front page of ZeroHedge. Thank you for supporting our work.

There’s an old poker rule: if you’ve been at the table for 30 minutes and you don’t know who the patsy is, you are the patsy. Markets are no different. Just remember, there are people far smarter and far more passionate than you on the other side of the trade. The difference between investing and being a degenerate matters again. As we head into 2026, the odds are changing.

1. Labor Market will be the controlling narrative, not inflation. Not a crazy concern for us.

Inflation is no longer the issue. Five-year inflation breakevens are hovering around ~2.3% — a level policymakers like.

Labor market is quietly deteriorating:

• Measures of labor slack are rising

• Roughly 70% of recent layoffs are efficiency-driven (automation, restructuring, cost control)

Labor now represents roughly 55% of total business-sector costs. If AI reduces that share by even 5% (which isn’t a lot)— The present value of those cash flows is enormous. This sets up an event in the labor market that is not typical of a regular cycle.

 

2. AI is a macro story. Tesla & xAI will lead the entire thing. Along with Google.

AI doesn’t stop at software. AI capex remains elevated with little sign of slowing. Hyperscalers are already demonstrating acceptable ROIC on AI spend, and visibility into monetization is improving. Its only going to get bigger.

The next phase is autonomy and robotics. Most people can’t even conceptualize what widespread autonomy looks like. We believe Tesla and Google will lead this entire transition.

This is the same underestimation we’ve seen before — early internet, mobile computing, cloud. By the time consensus “gets it,” the opportunity set is already crowded.

In our “3 MAJOR THEMES IN 2025” piece, our first theme was clear: Underestimated AI Impact and Infrastructure Spending.