In December 2020, $18 trillion of the world’s debt was trading at negative interest rates. I want you to think about that for a second. Investors were literally paying governments for the privilege of lending them money. It was the most extraordinary mispricing of risk in the history of capitalism.

That era is over. And earlier this month, it ended with an exclamation point.

G7 ten-year sovereign bond yields just hit levels not seen since 2004. In just six years, the market has erased sixteen years’ worth of declining yields. Barclays’ Ajay Rajadhyaksha said it best: “Long bonds broke. Not in one country. In all of them. Simultaneously. Four countries. Four different political systems. Four different central banks. But the same trade—‘get me out of duration!’”

Think about what that means. The United States, Japan, France, and the United Kingdom—all breaking to new highs in yield at the same time, in the middle of a massive supply shock. When four bond markets crack at once, that tells you something. It tells you this isn’t a blip. It’s structural.

The bottom line is stark: governments are effectively broke, and the bond market knows it. For forty-plus years, politicians climbed over each other to hand out presents—lower taxes here, higher spending there—all funded with borrowed money whose true cost was masked by steadily falling interest rates. Then rates started ratcheting higher after Covid, and governments just kept spending. Now the piper demands payment.

Consider the numbers. Sovereign bond debt across the developed world just hit an all-time high of $61 trillion—up from $55 trillion just one year earlier. The interest payments alone are running at 3.3% of GDP. And these governments need to borrow nearly $18 trillion this year just to keep the lights on—near 20-year highs relative to GDP, outside of the Covid spike. These debts will never be repaid at par.

Bonds are in a secular bear market. If you haven’t accepted that yet, the evidence is now overwhelming. As Warren Buffett has said: “Interest rates are like gravity for asset valuations.” When gravity reverses, everything that floated on cheap money comes back to earth. Hard and fast. These cycles last for decades—the previous bear ran from 1946 to 1981. We are barely six years into this one.

In other words, we are witnessing the end of the era of capital abundance and the beginning of an era of capital rationing. And when bonds are in a bear market, commodities move into a bull market. Rinse and repeat. Gold, silver, copper, energy—these are the assets that thrive in this environment. Gold at $4,515. Plan accordingly.

Scandium may be the most strategic metal you’ve never heard of. It’s a silvery-white element that China controls—roughly 85% of global supply—and the mid-May U.S.-China summit just put it on the front page. The White House released a Fact Sheet claiming that China will “address U.S. concerns” about supply-chain shortages of critical minerals, including scandium, yttrium, neodymium, and indium.

There’s just one problem: China never confirmed any of it. China’s state media coverage of the summit didn’t mention scandium once. Every other agreement—the Trade Council, agricultural products, beef and poultry, Boeing jets—got ink. Scandium was conspicuously absent. And China’s official line since then? Export controls on rare earths continue “in accordance with laws and regulations.” In other words, nothing has changed since China first restricted scandium exports in April 2025.

So why does this matter to you? Because scandium makes defense electronics dramatically faster and more powerful—we’re talking about the chips that control 6G communications and next-generation drone warfare. Performance improvements of up to five times over current technology. Ukraine and the Iran conflict have already proven what that kind of edge is worth on the battlefield. Lockheed Martin clearly sees it—they just signed a five-year offtake agreement with Sunrise Energy Metals, the company building the only primary scandium mine on earth. That stock is up 2,861% year-over-year.

Most investors still think rare earths are a niche trade. They’re wrong. This is the chokepoint of the 21st-century defense industrial base, and if you’re not paying attention, I urge you to start.

On May 14th, Latvia’s prime minister resigned—and the trigger wasn’t politics. It was airspace. Two Ukrainian drones struck a Latvian oil depot on May 7th, and the defense minister stepped down over the failure to intercept them. But the rot runs deeper than drones—Latvia’s anti-corruption bureau is in the middle of a criminal investigation into a major rail conversion project, with several high-ranking politicians under scrutiny.

Then Russia escalated. Russia’s Foreign Intelligence Service—the SVR—claimed that Ukrainian military personnel are operating from five bases inside Latvia, launching drones directly from NATO soil. The message was blunt: “The coordinates of the decision-making centers in Latvia are known, and the country’s membership in NATO will not protect the accomplices of terrorists from just retribution.”

Let me put this in plain English. NATO’s Article V is not an automatic declaration of war—it leaves each member to decide what aid it provides, if any. Washington might not come to the Baltics’ defense, especially if Moscow furnishes evidence of Latvian complicity in the attacks. Some in the Baltics know this. A former Latvian parliamentarian recently explained the logic: provoking a limited Russian strike is increasingly seen as a way to drag the U.S. back into active NATO engagement. That calculus should terrify you.

And one more thing… While the Baltics teeter, Central Europe is quietly consolidating power. Hungary’s new Prime Minister Peter Magyar—who replaced the breathlessly corrupt Viktor Orbán—made his first foreign trip to Warsaw to meet Poland’s Donald Tusk. The Visegrád Group is reforming. Poland, Hungary, Czech Republic, and Slovakia together command more voting weight in the EU’s Council of Ministers than France or Italy individually—and they represent roughly the same population. If you’re watching Europe, this matters.

Former Google CEO Eric Schmidt was booed by students during this month’s commencement season at the University of Arizona—booed, loudly, for talking about AI. He wasn’t alone. At Middle Tennessee State, Big Machine Records CEO Scott Borchetta met jeers the moment he mentioned AI—his advice to graduates facing the grimmest job market in years was “Deal with it… it’s a tool.” At the University of Central Florida, real estate executive Gloria Caulfield was booed for praising AI and wealthy corporate leaders. Stunned, she asked the crowd, “What happened?”

What happened is simple: the demographic that has always adopted new technology first—young people—is turning against AI. And they’re turning with a fury that should alarm every investor holding Magnificent 7 stocks. A new poll puts the numbers on it: 48% of Gen Z says the risks of AI in the workforce outweigh its benefits. That number is moving in the wrong direction. Excitement about AI dropped 14% since last year, and the proportion feeling “outright anger” spiked from 22% to 31%.

Most people dismiss this as youthful anxiety. I think that’s a mistake. It goes deeper than attitude surveys. 29% of all workers now admit to actively sabotaging their company’s AI systems. Among Gen Z workers specifically, that number hit 44%. That’s nearly half of an entire generation undermining the technology their employers are spending hundreds of billions to deploy. If you own tech stocks and aren’t factoring in a political backlash, you aren’t doing the math.

Here’s a number that should make you uncomfortable if you’re long the S&P 500: Europeans have parked $10.4 trillion in U.S. equities. Those holdings have nearly doubled in just three years. They hold another $2 trillion in U.S. Treasuries. And the math is starting to work against them—euro-based investors who hedge their U.S. 10-year Treasury holdings now face a negative yield of -1.207%, well below what they can get at home.

American stocks are yielding almost nothing. The S&P 500’s dividend yield sits at just 1.05%—the lowest this century. The U.S. market looks expensive because it is expensive. European and U.K. stocks offer meaningfully higher dividends, free cash flow, and earnings yields—and in the first quarter of this year, Europe delivered its strongest earnings growth in three years. Few investors realize that over the past decade, European earnings growth—excluding the Magnificent 7—has actually kept pace with the U.S.

And the policy shift is already underway. The European Commission’s new Industrial Accelerator Act aims to raise manufacturing from 14.3% to 20% of GDP by 2030—with conditions requiring 50% minimum European employment for strategic investments. France’s Jordan Bardella, the likely next president, is calling for a sovereign wealth fund and expanded nuclear capacity. The political will is consolidating. If you think $10.4 trillion stays parked in overvalued U.S. assets while all of this unfolds—I urge you to reconsider.

Last September, D.E. Shaw—one of the most sophisticated quantitative trading firms on the planet, a pioneer of algorithmic investing since the 1980s—did something nobody expected. They raised $5 billion for a fund called Cogence. Bloomberg described it as “its first hedge fund run by humans.” A purely discretionary strategy. No systematic component whatsoever. The firm that helped invent AI-driven trading was placing its biggest new bet on… people.

That decision tells you everything you need to know about what I call the Knowledge Monoculture. If you manage money in any form, this framework matters—because it explains why the smartest money on earth is now moving most aggressively toward markets where AI’s edge ends.

Here’s the idea. AI is debasing explicit knowledge—the codifiable, digitized, transferable kind—the same way central banks debase currency. So value is migrating—away from the kind of knowledge you can Google, and toward the kind you can only get from relationships, experience, and being in the room. Dining rooms, phone calls, negotiations, golf games. This is knowledge that cannot be scraped, modeled, or replicated at scale.

And the evidence is piling up. Goldman’s prime brokerage data shows quant managers lost 4.2% in mid-2025—during an otherwise calm market. Hedgeweek reported quant funds began 2026 with their worst drawdown since October. And here’s the number that tells the whole story: 95% of hedge fund managers now use generative AI tools. Think about that. They are all running functionally similar algorithms on functionally similar data. The result is crowding. And the result of crowding is fragility.

D.E. Shaw’s Cogence fund wasn’t a fluke. The pattern is everywhere. Millennium Management is raising $5 billion for its first private markets fund, investing in asset-backed credit, real assets, and corporate debt. Last week, Citi and BlackRock’s HPS Investment Partners announced a €15 billion direct-lending program across Europe. The smartest money in the world is all making the same move—away from the AI-saturated core and into markets where human judgment still determines outcomes.

These firms are not retreating from AI. They are expanding beyond it. And the direction of that expansion tells you everything. They’re moving into commodities—where knowing the mine owner matters more than knowing the model. Into critical minerals—where the edge comes from relationships with governments, not relationships with datasets. Into markets like China—where cultural and political intelligence can’t be scraped from the internet. In each case, the binding constraint is tacit knowledge—the one domain AI cannot reach.

If you’re a paid-up subscriber to the idea that indexing and passive strategies are “good enough,” this should give you pause. The AI-saturated core of liquid markets is becoming a monoculture—genetically identical, optimized for efficiency in calm conditions, and catastrophically fragile under stress. The edge is migrating. Make sure your capital migrates with it. Horse, meet water.

Alberta’s independence movement just crossed a critical threshold—10% of the province signed the petition, triggering a referendum likely this summer. Canada’s Supreme Court has already ruled such a vote is legal. If you hold Canadian energy stocks, the outcome matters. An independent, landlocked Alberta exporting in hard currency would face an intensely inflationary environment—and could ultimately seek U.S. statehood.

Beijing’s export ban on sulfuric acid is quietly cascading through the global supply chain. Chile—the world’s largest refined-copper producer—usually imports over 1 million tonnes annually, with a third from China. Chinese shipments to Chile have fallen to zero. That’s at least 3 million tonnes yanked from the global market—and it links energy prices to metals to fertilizers to food. Most investors aren’t connecting these dots yet.

Ten-year Japanese Government Bond yields have risen nearly 100 basis points since November 2025, and they show no sign of slowing down. Japan holds nearly $4 trillion in net external assets, including $1.2 trillion of U.S. Treasuries. If Japanese capital starts coming home—or outflows slow to a trickle—the damage to government finances across the G7, at a time of record refunding needs, could be enormous.

DeepSeek confirmed its latest model has been optimized to run on Huawei chips for inference—a visible milestone in China’s effort to build an alternative AI stack. Stanford’s 2026 AI Index shows the U.S.-China performance gap has narrowed to just 2.7%, down from 17.5% in 2023. The U.S. spent $285.9 billion on private AI investment in 2025 versus China’s $12.4 billion. China is closing the gap at a fraction of the cost. If you think export controls are containing this, think again.

Jordan Bardella of National Rally—currently France’s most popular party—is calling Franco-German relations “the bedrock of European independence,” pushing expanded nuclear capacity, a sovereign wealth fund for defense investment, and Schengen reform limiting free movement to EU citizens. If you’re watching European strategic autonomy and capital repatriation, this election is the catalyst to watch.